Drive Shack Inc. Current report filing

Current report filing

SEGMENT REPORTING AND VARIABLE INTEREST ENTITIES (Tables)

SEGMENT REPORTING AND VARIABLE INTEREST ENTITIES (Tables)

12 Months Ended

Dec. 31, 2013

Segment Reporting And Variable Interest Entities Tables

Summary financial data on Newcastle’s segments is given below, together with reconciliation to the same data for Newcastle as a whole:


																			Excess
																			MSRs and
	Senior			Debt Investments (A)															Consumer			Inter-segment
	Housing (A)			CDOs			Other Debt (B)			Golf			Corporate			Media (C)			Loans			Elimination (D)			Total
Year Ended December 31, 2013
Interest income	$	3		$	119,292		$	98,968		$	—		$	198		$	—		$	—		$	(4,746	)	$	213,715
Interest expense		10,781			24,996			54,534			—			3,817						—			(4,746	)		89,382
Net interest income (expense)		(10,778	)		94,296			44,434			—			(3,619	)		—			—			—			124,333
Impairment (reversal)		—			(9,338	)		(10,431	)		—			—			—			—			—			(19,769	)
Other revenues		85,267			—			2,056			—			—			—			—			—			87,323
Other income (loss)		11			23,946			11,344			—			—			—			—			—			35,301
Property operating expenses		52,713			—			1,005			—			—			—			—			—			53,718
Depreciation and amortization		26,905			—			219			—			4			—			—			—			27,128
Other operating expenses		20,982			741			3,144			—			47,277			—			—			—			72,144
Income tax expense		1,038			—			—			—			—			—			—			—			1,038
Income (loss) from continuing operations		(27,138	)		126,839			63,897			—			(50,900	)		—			—			—			112,698
Income (loss) from discontinued operations		—			—			(46	)		—			—			6,311			33,378			—			39,643
Net income (loss)		(27,138	)		126,839			63,851			—			(50,900	)		6,311			33,378			—			152,341
Preferred dividends		—			—			—			—			(5,580	)		—			—			—			(5,580	)
Net income attributable to noncontrolling interests		—			—			—			—			—			(928	)		—			—			(928	)
Income (loss) applicable to common stockholders	$	(27,138	)	$	126,839		$	63,851		$	—		$	(56,480	)		5,383		$	33,378		$	—		$	145,833

December 31, 2013
Investments	$	1,463,758		$	925,690		$	1,279,549		$	358,439		$	—		$	—		$	—		$	(87,528	)	$	3,939,908
Cash and restricted cash		31,263			2,377			—			22,890			23,492			—			—			—			80,022
Other assets		55,430			47,285			3,442			34,898			987			—			—			(155	)		141,887
Assets of discontinued operations		—			—			—			—			—			690,746			—			—			690,746
Total assets		1,550,451			975,352			1,282,991			416,227			24,479			690,746			—			(87,683	)		4,852,563
Debt		(1,076,828	)		(645,938	)		(1,149,547	)		(181,910	)		(51,237	)		—			—			87,529			(3,017,931	)
Other liabilities		(61,886	)		(19,194	)		(2,235	)		(185,552	)		(44,528	)		—			—			154			(313,241	)
Liabilities of discontinued operations		—			—			—			—			—			295,267			—			—			295,267
Total liabilities		(1,138,714	)		(665,132	)		(1,151,782	)		(367,462	)		(95,765	)		(295,267	)		—			87,683			(3,626,439	)
Preferred stock		—			—			—			—			(61,583	)		—			—			—			(61,583	)
Noncontrolling interest		—			—			—			(366	)		—			(60,913	)		—			—			(61,279	)
GAAP book value	$	411,737		$	310,220		$	131,209		$	48,399		$	(132,869	)	$	334,566		$	—		$	—		$	1,103,262


																			Excess
																			MSRs and
	Senior			Debt Investments (A)															Consumer			Inter-segment
	Housing (A)			CDOs			Other Debt (B)			Golf			Corporate			Media (C)			Loans			Elimination (D)			Total
Year Ended December 31, 2012
Interest income	$	—		$	197,007		$	91,818		$	—		$	170		$	—		$	—		$	(6,044	)	$	282,951
Interest expense		1,688			56,767			53,700			—			3,813			—			—			(6,044	)		109,924
Net interest income (expense)		(1,688	)		140,240			38,118			—			(3,643	)		—			—			—			173,027
Impairment (reversal)		—			(7,381	)		1,717			—			—			—			—			—			(5,664	)
Other revenues		18,026			—			2,049			—			—			—			—			—			20,075
Other income (loss)		(82	)		260,025			2,351			—			—			—			—			—			262,294
Property operating expenses		11,539			—			1,404			—			—			—			—			—			12,943
Depreciation and amortization		5,784			—			1,191			—			—			—			—			—			6,975
Other operating expenses		6,846			916			3,359			—			35,079			—			—			—			46,200
Income (loss) from continuing operations		(7,913	)		406,730			34,847			—			(38,722	)		—			—			—			394,942
Income (loss) from discontinued operations		—			—			(68	)		—			—			—			39,236			—			39,168
Net income (loss)		(7,913	)		406,730			34,779			—			(38,722	)		—			39,236			—			434,110
Preferred dividends		—			—			—			—			(5,580	)		—			—			—			(5,580	)

Income (loss) applicable to common stockholders	$	(7,913	)	$	406,730		$	34,779		$	—		$	(44,302	)	$	—		$	39,236		$	—		$	428,530

December 31, 2012
Investments	$	181,887		$	1,417,729		$	1,911,639		$	—		$	—		$	—		$	—		$	(62,336	)	$	3,448,919
Cash and restricted cash		9,720			2,064			—			—			222,178			—			—			—			233,962
Other assets		5,111			7,429			4,777			—			202			—			—			(157	)		17,362
Assets of discontinued operations		—			—			—			—			—			—			245,069			—			245,069
Total assets		196,718			1,427,222			1,916,416			—			222,380			—			245,069			(62,493	)		3,945,312
Debt		(120,525	)		(1,097,013	)		(1,575,316	)		—			(51,243	)		—			—			62,336			(2,781,761	)
Other liabilities		(5,084	)		(37,259	)		(2,856	)		—			(44,969	)								157			(90,011	)
Liabilities of discontinued operations		—			—			(74	)		—			—			—			(406	)		—			(480	)
Total liabilities		(125,609	)		(1,134,272	)		(1,578,246	)		—			(96,212	)		—			(406	)		62,493			(2,872,252	)
Preferred stock		—			—			—			—			(61,583	)		—			—			—			(61,583	)
GAAP book value	$	71,109		$	292,950		$	338,170		$	—		$	64,585		$	—		$	244,663		$	—		$	1,011,477


																			Excess
																			MSRs and
	Senior			Debt Investments (A)															Consumer			Inter-segment
	Housing (A)			CDOs			Other Debt (B)			Golf			Corporate			Media (C)			Loans			Elimination (D)			Total
Year Ended December 31, 2011
Interest income	$	—		$	218,475		$	78,234		$	—		$	167		$	—		$	—		$	(5,840	)	$	291,036
Interest expense		—			86,110			53,950			—			3,815			—			—			(5,840	)		138,035
Net interest income (expense)		—			132,365			24,284			—			(3,648	)		—			—			—			153,001
Impairment (reversal)		—			(3,876	)		4,986			—			—			—			—			—			1,110
Other revenues		—			—			1,899			—			—			—			—			—			1,899
Other income (loss)		—			175,702			4,793			—			—			—			—			—			180,495
Property operating expenses		—			—			1,110			—			—			—			—			—			1,110
Depreciation and amortization		—			—			12			—			—			—			—			—			12
Other operating expenses		—			1,058			3,622			—			24,525			—			—			—			29,205
Income (loss) from continuing operations		—			310,885			21,246			—			(28,173	)		—			—			—			303,958
Income (loss) from discontinued operations		—			—			(11	)		—			—			—			572			—			561
Net income (loss)		—			310,885			21,235			—			(28,173	)		—			572			—			304,519
Preferred dividends		—			—			—			—			(5,580	)		—			—			—			(5,580	)

Income (loss) applicable to common stockholders	$	—		$	310,885		$	21,235		$	—		$	(33,753	)	$	—		$	572		$	—		$	298,939


	(A)	Assets held within non-recourse structures, including all of the assets in the senior housing and CDO segments, are not available to satisfy obligations outside of such financings, except to the extent net cash flow distributions are received from such structures. Furthermore, creditors or beneficial interest holders of these structures generally have no recourse to the general credit of Newcastle. Therefore, the exposure to the economic losses from such structures generally is limited to invested equity in them and economically their book value cannot be less than zero. Therefore, impairment recorded in excess of Newcastle’s investment, which results in negative GAAP book value for a given non-recourse financing structure, cannot economically be incurred and will eventually be reversed through amortization, sales at gains, or as gains at the deconsolidation or termination of such non-recourse financing structure.
	(B)	The following table summarizes the investments and debt in the other debt segment:


	December 31, 2013								December 31, 2012
	Investments				Debt				Investments				Debt
Non-Recourse	Outstanding Face Amount		Carrying Value		Outstanding Face Amount*		Carrying Value*		Outstanding Face Amount		Carrying Value		Outstanding Face Amount*		Carrying Value*
Manufactured housing loan portfolio I	$	102,681	$	91,924	$	74,248	$	66,446	$	118,746	$	100,124	$	90,551	$	81,963
Manufactured housing loan portfolio II		128,975		128,117		93,863		93,536		153,193		150,123		117,907		117,191
Subprime mortgage loans subject to call options		406,217		406,217		406,217		406,217		406,217		405,814		406,217		405,814
Real estate securities		56,466		50,961		39,665		36,095		63,505		53,979		44,585		40,572
Operating real estate		N/A		6,597		6,000		6,000		N/A		6,672		6,000		6,000
Subtotal		694,339		683,816		619,993		608,294		741,661		716,712		665,260		651,540
Other
Real estate loans		—		—		—		—		80,298		29,831		—		—
Unlevered real estate securities		129,563		4,296		—		—		229,299		68,863		—		—
Levered real estate securities		514,994		551,270		516,134		516,134		1,112,796		1,049,029		923,776		923,776
Other Investments		N/A		6,160		—		—		N/A		6,024		—		—
Residential mortgage loans		45,323		34,007		25,119		25,119		55,997		41,180		—		—
	$	1,384,219	$	1,279,549	$	1,161,246	$	1,149,547	$	2,220,051	$	1,911,639	$	1,589,036	$	1,575,316


*	As of December 31, 2013 and December 31, 2012, aggregate face amounts of $133.9 million and $71.1 million (carrying values of $87.5 million and $62.5 million), respectively, of debt represents intersegment financing, which is eliminated upon consolidation.

(C)	In February 2014, the media segment was spun off from Newcastle and will not be reported as a segment in future filings.

(D)	Represents the elimination of investments and financings and their related income and expenses between the CDO segment, the other debt segment and the golf segment as the corresponding inter-segment investments and financings are presented on a gross basis within each of these segments.

Schedule of other debt segment investments and debt

The following table summarizes the investments and debt in the other debt segment:


	December 31, 2013								December 31, 2012
	Investments				Debt				Investments				Debt
Non-Recourse	Outstanding Face Amount		Carrying Value		Outstanding Face Amount*		Carrying Value*		Outstanding Face Amount		Carrying Value		Outstanding Face Amount*		Carrying Value*
Manufactured housing loan portfolio I	$	102,681	$	91,924	$	74,248	$	66,446	$	118,746	$	100,124	$	90,551	$	81,963
Manufactured housing loan portfolio II		128,975		128,117		93,863		93,536		153,193		150,123		117,907		117,191
Subprime mortgage loans subject to call options		406,217		406,217		406,217		406,217		406,217		405,814		406,217		405,814
Real estate securities		56,466		50,961		39,665		36,095		63,505		53,979		44,585		40,572
Operating real estate		N/A		6,597		6,000		6,000		N/A		6,672		6,000		6,000
Subtotal		694,339		683,816		619,993		608,294		741,661		716,712		665,260		651,540
Other
Real estate loans		—		—		—		—		80,298		29,831		—		—
Unlevered real estate securities		129,563		4,296		—		—		229,299		68,863		—		—
Levered real estate securities		514,994		551,270		516,134		516,134		1,112,796		1,049,029		923,776		923,776
Other Investments		N/A		6,160		—		—		N/A		6,024		—		—
Residential mortgage loans		45,323		34,007		25,119		25,119		55,997		41,180		—		—
	$	1,384,219	$	1,279,549	$	1,161,246	$	1,149,547	$	2,220,051	$	1,911,639	$	1,589,036	$	1,575,316


*	As of December 31, 2013 and December 31, 2012, aggregate face amounts of $133.9 million and $71.1 million (carrying values of $87.5 million and $62.5 million), respectively, of debt represents intersegment financing, which is eliminated upon consolidation.

Schedule of holdings in variable interest entities

Newcastle had variable interests in the following unconsolidated VIEs at December 31, 2013, in addition to the subprime securitizations which are described in Note 7:


Entity	Gross Assets (A)		Debt (B)		Carrying Value of Newcastle’s Investment (C)
Newcastle CDO V	$	200,616	$	226,615	$	2,002

CDO VIII Repack ^(D)	$	146,645	$	146,645	$	104,308


	(A)	Face amount.
	(B)	Newcastle CDO V includes $39.8 million face amount of debt owned by Newcastle with a carrying value of $2.0 million at December 31, 2013. CDO VIII Repack includes $116.8 million face amount of debt owned by Newcastle with a carrying value of $104.3 million at December 31, 2013.
	(C)	This amount represents Newcastle’s maximum exposure to loss from this entity.
	(D)	See Notes 13 and 14 for information about the securitization that is collateralized by certain Newcastle CDO VIII Class I Notes.

- Definition

Tabular disclosure of the profit or loss and total assets for each reportable segment. An entity discloses certain information on each reportable segment if the amounts (a) are included in the measure of segment profit or loss reviewed by the chief operating decision maker or (b) are otherwise regularly provided to the chief operating decision maker, even if not included in that measure of segment profit or loss.

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