SEGMENT REPORTING AND VARIABLE INTEREST ENTITIES

v3.3.1.900

SEGMENT REPORTING AND VARIABLE INTEREST ENTITIES	12 Months Ended
	Dec. 31, 2015
Segment Reporting [Abstract]
SEGMENT REPORTING AND VARIABLE INTEREST ENTITIES	SEGMENT REPORTING AND VARIABLE INTEREST ENTITIES Newcastle conducts its business through the following segments: (i) debt investments financed with collateralized debt obligations (“CDOs”), (ii) other debt investments (“Other Debt”), (iii) investments in golf properties and facilities (“Golf”) and (iv) corporate. The corporate segment consists primarily of interest income on short-term investments, general and administrative expenses, interest expense on the junior subordinated notes payable (Note 11) and management fees pursuant to the Management Agreement (Note 13). Summary financial data on Newcastle’s segments is given below, together with reconciliation to the same data for Newcastle as a whole:                               Debt Investments (A)                       CDOs   Other Debt (B)   Golf   Corporate   Discontinued Operations   Eliminations   Total Year Ended December 31, 2015                           Interest income $ 32,488   $ 66,233   $ 152   $ 23   $ —   $ (3,005 )   $ 95,891 Interest expense (6,587 )   (38,244 )   (16,520 )   (3,783 )   —   3,005   (62,129 ) Inter-segment elimination (3,005 )   —   3,005   —   —   —   — Net interest income (expense) 22,896   27,989   (13,363 )   (3,760 )   —   —   33,762 Total impairment (reversal) 12,569   6,832   —   —   —   —   19,401 Total operating revenues —   —   295,856   —   —   —   295,856 Total other income (expense) 30,270   (4,003 )   13,180   54   —   —   39,501 Loan and security servicing expense 283   8   —   —   —   —   291 Operating expenses - golf (C) —   —   236,971   —   —   —   236,971 Operating expenses-golf, repairs and maintenance expenses —   —   8,450   —   —   —   8,450 Cost of sales - golf —   —   31,681   —   —   —   31,681 General and administrative expense —   —   2,983   7,640   —   —   10,623 General and administrative expense - acquisition and transaction expenses (D) —   60   1,364   (301 )   —   —   1,123 Management fee to affiliate —   —   —   10,692   —   —   10,692 Depreciation and amortization —   —   28,682   (48 )   —   —   28,634 Income tax expense —   —   345   —   —   —   345 Income (loss) from continuing operations 40,314   17,086   (14,803 )   (21,689 )   —   —   20,908 Income from discontinued operations, net of tax —   —   —   —   646   —   646 Net income (loss) 40,314   17,086   (14,803 )   (21,689 )   646   —   21,554 Preferred dividends —   —   —   (5,580 )   —   —   (5,580 ) Net loss attributable to noncontrolling interests —   —   293   —   —   —   293 Income (loss) applicable to common stockholders $ 40,314   $ 17,086   $ (14,510 )   $ (27,269 )   $ 646   $ —   $ 16,267                             December 31, 2015                           Investments $ 46,392   $ 669,736   $ 302,379   $ —   $ —   $ —   $ 1,018,507 Cash and restricted cash 128   1,082   19,981   28,929   —   —   50,120 Other assets 77   365,104   33,765   409   —   —   399,355 Assets of discontinued operations —   —   —   —   —   —   — Total assets 46,597   1,035,922   356,125   29,338   —   —   1,467,982 Debt, net 97,605   740,921   81,091   51,225   —   —   970,842 Other liabilities 29   107,125   166,973   12,891   —   —   287,018 Liabilities of discontinued operations —   —   —   —   —   —   — Total liabilities 97,634   848,046   248,064   64,116   —   —   1,257,860 Preferred stock —   —   —   61,583   —   —   61,583 Noncontrolling interests —   —   (257 )   —   —   —   (257 ) Equity (deficit) attributable to common stockholders $ (51,037 )   $ 187,876   $ 108,318   $ (96,361 )   $ —   $ —   $ 148,796 Summary segment financial data (continued).                               Debt Investments (A)                       CDOs   Other Debt (B)   Golf   Corporate   Discontinued Operations   Eliminations   Total Year Ended December 31, 2014                           Interest income $ 84,938   $ 50,093   $ 147   $ 44   $ —   $ (7,595 )   $ 127,627 Interest expense (22,142 )   (41,874 )   (19,783 )   (3,818 )   —   7,595   (80,022 ) Inter-segment elimination (7,595 )   1,861   5,734   —   —   —   — Net interest income (expense) 55,201   10,080   (13,902 )   (3,774 )   —   —   47,605 Total impairment (reversal) (3,303 )   884   —   —   —   —   (2,419 ) Total operating revenues —   —   291,537   —   —   —   291,537 Total other income 41,780   26,819   5,863   —   —   —   74,462 Loan and security servicing expense 238   961   —   —   —   —   1,199 Operating expenses - golf (C) —   —   244,234   —   —   —   244,234 Operating expenses - golf, repairs and maintenance expenses —   —   9,870   —   —   —   9,870 Cost of sales - golf —   —   30,271   —   —   —   30,271 General and administrative expense 14   2   1,435   7,722   —   —   9,173 General and administrative expense - acquisition and transaction expenses (D) —   2,919   1,941   619   —   —   5,479 Management fee to affiliate —   —   —   21,039   —   —   21,039 Depreciation and amortization —   —   26,880   87   —   —   26,967 Income tax expense —   —   208   —   —   —   208 Income (loss) from continuing operations 100,032   32,133   (31,341 )   (33,241 )   —   —   67,583 Loss from discontinued operations, net of tax —   —   —   —   (35,189 )   —   (35,189 ) Net income (loss) 100,032   32,133   (31,341 )   (33,241 )   (35,189 )   —   32,394 Preferred dividends —   —   —   (5,580 )   —   —   (5,580 ) Net loss attributable to noncontrolling interests —   —   329   —   523   —   852 Income (loss) applicable to common stockholders $ 100,032   $ 32,133   $ (31,012 )   $ (38,821 )   $ (34,666 )   $ —   $ 27,666                             December 31, 2014                           Investments, net (E) $ 473,209   $ 833,293   $ 323,969   $ —   $ —   $ —   $ 1,630,471 Cash and restricted cash 11,790   877   21,637   55,137   —   —   89,441 Other assets (F) 1,927   2,190   30,983   91   —   —   35,191 Assets of discontinued operations —   —   —   —   6,803   —   6,803 Total assets 486,926   836,360   376,589   55,228   6,803   —   1,761,906 Debt, net (E) 310,636   791,499   161,474   51,231   —   —   1,314,840 Other liabilities 2,391   4,528   164,897   16,475   —   —   188,291 Liabilities of discontinued operations —   —   —   —   447   —   447 Total liabilities 313,027   796,027   326,371   67,706   447   —   1,503,578 Preferred stock —   —   —   61,583   —   —   61,583 Noncontrolling interest —   —   36   —   —   —   36 Equity (deficit) attributable to common stockholders $ 173,899   $ 40,333   $ 50,182   $ (74,061 )   $ 6,356   $ —   $ 196,709 Summary segment financial data (continued).                               Debt Investments (A)                       CDOs   Other Debt (B)   Golf   Corporate   Discontinued Operations   Eliminations   Total Year Ended December 31, 2013                           Interest income $ 119,292   $ 98,968   $ —   $ 198   $ —   $ (4,746 )   $ 213,712 Interest expense (24,996 )   (54,534 )   —   (3,817 )   —   4,746   (78,601 ) Inter-segment elimination (4,746 )   4,746   —   —   —   —   — Net interest income (expense) 89,550   49,180   —   (3,619 )   —   —   135,111 Total impairment (reversal) (9,338 )   (10,431 )   —   —   —   —   (19,769 ) Total other income 23,946   11,344   —   —   —   —   35,290 Loan and security servicing expense 741   3,113   —   3   —   —   3,857 General and administrative expense —   18   —   17,440   —   —   17,458 Management fee to affiliate —   —   —   28,057   —   —   28,057 Depreciation and amortization —   —   —   4   —   —   4 Income (loss) from continuing operations 122,093   67,824   —   (49,123 )       —   140,794 Income from discontinued operations, net of tax —   —   —   —   11,547   —   11,547 Net income (loss) 122,093   67,824   —   (49,123 )   11,547   —   152,341 Preferred dividends —   —   —   (5,580 )   —   —   (5,580 ) Net income attributable to noncontrolling interests —   —   —   —   (928 )   —   (928 ) Income (loss) applicable to common stockholders $ 122,093   $ 67,824   $ —   $ (54,703 )   $ 10,619   $ —   $ 145,833 (A) Assets held within non-recourse structures, including all of the assets in the CDO segment, 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, 2015   December 31, 2014   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 Subprime mortgage loans subject to call options 380,806   380,806   380,806   380,806   406,217   406,217   406,217   406,217 Other                               Unlevered real estate securities (G) 37,404   12,642   —   —   167,457   12,265   —   — Levered real estate securities (H) 102,660   105,963   348,625   348,625   390,771   407,689   385,282   385,282 Real estate related and other loans 238,449   149,198   11,660   11,490   —   —   —   — Other investments N/A   20,595   —   —   N/A   6,479   —   — Residential mortgage loans 922   532   —   —   934   643   —   —   $ 760,241   $ 669,736   $ 741,091   $ 740,921   $ 965,379   $ 833,293   $ 791,499   $ 791,499 (C) Operating expenses - golf includes rental expenses recorded under operating leases for carts and equipment in the amount of $4.6 million and $5.0 million for the years ended December 31, 2015 and 2014, respectively. (D) Includes all transaction related and spin-off related expenses. (E) Net of $35.1 million of inter-segment eliminations as of 2014. (F) In the first quarter of 2015, Newcastle adopted ASU 2015-03 (see Note 2) which requires retrospective application to all prior periods. Accordingly, Other assets is reduced by $0.4 million for deferred financing costs as of December 31, 2014. (G) Excludes eight securities with zero value, which had an aggregate face amount of $116.0 million. (H) These investments represent purchases that were traded on December 31, 2015 but settled on January 13, 2016. The debts represent repurchase agreements collateralized by sold investments that were traded on December 31, 2015 and settled on January 13, 2016. See Note 5 for additional detail.   Variable Interest Entities The VIEs in which Newcastle has a significant interest include (i) Newcastle’s CDOs, in which Newcastle has been determined to be the primary beneficiary and therefore consolidates them (with the exception of CDO V), since it has the power to direct the activities that most significantly impact the CDOs’ economic performance and would absorb a significant portion of their expected losses and receive a significant portion of their expected residual returns. Newcastle’s CDOs are held in special purpose entities whose debt is treated as non-recourse secured borrowings of Newcastle. The following table presents certain assets of consolidated VIEs, which are included in the Consolidated Balance Sheets. The assets in the table below include only those assets that can be used to settle obligations of consolidated VIEs, and are in excess of those obligations. Additionally, the assets in the table below exclude intercompany balances that eliminate in consolidation.   December 31,   2015   2014 Assets of consolidated VIEs that can only be used to settle obligations of consolidated VIEs       Real estate securities, available-for-sale $ 46,392   $ 219,490 Real estate related and other loans, held-for-sale, net —   230,200 Residential mortgage loans, held-for-sale, net —   3,211 Subprime mortgage loans subject to call option 380,806   406,217 Other investments —   20,308 Restricted cash 128   11,790 Receivables and other assets 77   1,927 Assets of discontinued operations —   6,803 Total assets of consolidated VIEs that can only be used to settle obligations of consolidated VIEs $ 427,403   $ 899,946 The following table presents certain liabilities of consolidated VIEs, which are included in the Consolidated Balance Sheets. The liabilities in the table below include third-party liabilities of consolidated VIEs due to third parties only, and exclude intercompany balances that eliminate in consolidation. The liabilities also exclude amounts where creditors or beneficial interest holders have recourse to the general credit of Newcastle.   December 31,   2015   2014 Liabilities of consolidated VIEs for which creditors or beneficial interest holders do not have recourse to the general credit of Newcastle       CDO bonds payable $ 92,933   $ 227,673 Other bonds and notes payable 4,672   27,069 Financing of subprime mortgage loans subject to call option 380,806   406,217 Accounts payable, accrued expenses and other liabilities 29   2,391 Liabilities of discontinued operations —   447 Total liabilities of consolidated VIEs for which creditors or beneficial interest holders do not have recourse to the general credit of Newcastle $ 478,440   $ 663,797         Newcastle’s subprime securitizations and CDO V are also considered VIEs, but Newcastle does not control the decisions that most significantly impact their economic performance, and no longer receives a significant portion of their returns. Newcastle deconsolidated CDO V as of June 17, 2011 as a result of an event of default which allowed Newcastle to be removed as collateral manager and prevents purchasing and selling of certain collateral within CDO V. In addition, Newcastle’s investments in RMBS, CMBS, CDO securities and real estate related and other loans may be deemed to be variable interests in VIEs, depending on their structure. Newcastle monitors these investments and analyzes the potential need to consolidate the related securitization entities pursuant to the VIE consolidation requirements. These analyses require considerable judgment in determining whether an entity is a VIE and determining the primary beneficiary of a VIE since they involve subjective determinations of significance, with respect to both power and economics. The result could be the consolidation of an entity that otherwise would not have been consolidated or the de-consolidation of an entity that otherwise would have been consolidated. As of December 31, 2015, Newcastle has not consolidated these potential VIEs. This determination is based, in part, on the assessment that Newcastle does not have the power to direct the activities that most significantly impact the economic performance of these entities, such as if Newcastle owned a majority of the currently controlling class. In addition, Newcastle is not obligated to provide, and has not provided, any financial support to these entities. Newcastle had variable interests in the following unconsolidated VIEs at December 31, 2015, in addition to the subprime securitizations which are described in Note 6: Entity   Gross Assets (A)   Debt (B)   Carrying Value of Newcastle’s Investment (C) Newcastle CDO V   $ 80,062   $ 107,113   $ 9,731 (A) Face amount. (B) Newcastle CDO V includes $44.1 million face amount of debt owned by Newcastle with a carrying value of $9.7 million at December 31, 2015. (C) This amount represents Newcastle’s maximum exposure to loss from this entity.