Quarterly report pursuant to Section 13 or 15(d)

SEGMENT REPORTING AND VARIABLE INTEREST ENTITIES (Tables)

v2.4.1.9
SEGMENT REPORTING AND VARIABLE INTEREST ENTITIES (Tables)
3 Months Ended
Mar. 31, 2015
Segment Reporting [Abstract]  
Schedule of segment reporting
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)
 
 
 
 
 
Discontinued
 
 
 
 
 
CDOs
 
Other Debt (B)
 
Golf
 
Corporate
 
Operations
 
Eliminations
 
Total
Three Months Ended March 31, 2015
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest income
$
15,922

 
$
12,595

 
$
35

 
$
4

 
$

 
$
(1,478
)
 
$
27,078

Interest expense
(2,583
)
 
(9,579
)
 
(5,097
)
 
(946
)
 

 
1,478

 
(16,727
)
Inter-segment elimination
(1,478
)
 

 
1,478

 

 

 

 

Net interest income (expense)
11,861

 
3,016

 
(3,584
)
 
(942
)
 

 

 
10,351

Impairment (reversal)
337

 
68

 

 

 

 

 
405

Operating revenues

 

 
60,826

 

 

 

 
60,826

Other income, net
530

 
(37
)
 
8

 

 

 

 
501

Loan and security servicing expense
96

 

 

 

 

 

 
96

Operating expenses - golf (C)

 

 
52,971

 

 

 

 
52,971

Repairs and maintenance expenses - golf

 

 
1,966

 

 

 

 
1,966

Cost of sales - golf

 

 
6,053

 

 

 

 
6,053

General and administrative expense

 

 
249

 
1,428

 

 

 
1,677

Acquisition and transaction expenses (D)

 

 
36

 

 

 

 
36

Management fee to affiliate

 

 

 
2,668

 

 

 
2,668

Depreciation and amortization

 

 
6,753

 

 

 

 
6,753

Income tax expense

 

 
46

 

 

 

 
46

Income (loss) from continuing operations
11,958

 
2,911

 
(10,824
)
 
(5,038
)
 

 

 
(993
)
Income from discontinued operations, net of tax

 

 

 

 
115

 

 
115

Net income (loss)
11,958

 
2,911

 
(10,824
)
 
(5,038
)
 
115

 

 
(878
)
Preferred dividends

 

 

 
(1,395
)
 

 

 
(1,395
)
Net loss attributable to noncontrolling interests

 

 
181

 

 

 

 
181

Income (loss) applicable to common stockholders
$
11,958

 
$
2,911

 
$
(10,643
)
 
$
(6,433
)
 
$
115

 
$

 
$
(2,092
)

 
Debt Investments (A)
 
 
 
 
 
Discontinued
 
 
 
CDOs
 
Other Debt (B)
 
Golf
 
Corporate
 
Operations
 
Total
March 31, 2015
 
 
 
 
 
 
 
 
 
 
 
Investments, net (E)
$
440,436

 
$
834,633

 
$
316,049

 
$

 
$

 
$
1,591,118

Cash and restricted cash
14,149

 
3,778

 
11,933

 
48,016

 

 
77,876

Other assets
1,575

 
2,100

 
33,637

 
136

 

 
37,448

Assets of discontinued operations

 

 

 

 
6,883

 
6,883

Total assets
456,160

 
840,511

 
361,619

 
48,152

 
6,883

 
1,713,325

Debt, net (E)
277,464

 
792,337

 
162,806

 
51,230

 

 
1,283,837

Other liabilities
1,386

 
6,352

 
158,406

 
16,246

 

 
182,390

Liabilities of discontinued operations

 

 

 

 
502

 
502

Total liabilities
278,850

 
798,689

 
321,212

 
67,476

 
502

 
1,466,729

Preferred stock

 

 

 
61,583

 

 
61,583

Noncontrolling interests

 

 
(145
)
 

 

 
(145
)
Equity attributable to common stockholders
$
177,310

 
$
41,822

 
$
40,552

 
$
(80,907
)
 
$
6,381

 
$
185,158

 
 
 
 
 
 
 
 
 
 
 
 
Additions to investments in real estate excluding intangibles and other liabilities, net of other assets acquired
$

 
$

 
$
385

 
$

 
$

 
$
385

 
Debt Investments (A)
 
 
 
 
 
Discontinued
 
 
 
 
 
CDOs
 
Other Debt (B)
 
Golf
 
Corporate
 
Operations
 
Eliminations
 
Total
Three Months Ended March 31, 2014
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest income
$
30,722

 
$
16,952

 
$
41

 
$
11

 
$

 
$
(1,274
)
 
$
46,452

Interest expense
(6,128
)
 
(12,663
)
 
(3,698
)
 
(955
)
 

 
1,274

 
(22,170
)
Inter-segment elimination
(1,274
)
 
1,274

 

 

 

 

 

Net interest income (expense)
23,320

 
5,563

 
(3,657
)
 
(944
)
 

 

 
24,282

Impairment (reversal)
432

 
814

 

 

 

 

 
1,246

Operating revenues

 

 
62,632

 

 

 

 
62,632

Other income, net
13,610

 
2,198

 

 

 

 

 
15,808

Loan and security servicing expense
156

 
701

 

 

 

 

 
857

Operating expenses - golf (C)

 

 
57,129

 

 

 

 
57,129

Repairs and maintenance expenses - golf

 

 
2,518

 

 

 

 
2,518

Cost of sales - golf

 

 
5,956

 

 

 

 
5,956

General and administrative expense

 

 
307

 
2,095

 

 

 
2,402

Acquisition and transaction expenses (D)

 

 
775

 
387

 

 

 
1,162

Management fee to affiliate

 

 

 
5,893

 

 

 
5,893

Depreciation and amortization

 

 
5,826

 
37

 

 

 
5,863

Income tax expense

 

 
140

 

 

 

 
140

Income (loss) from continuing operations
36,342

 
6,246

 
(13,676
)
 
(9,356
)
 

 

 
19,556

Income from discontinued operations

 

 

 

 
(15,299
)
 

 
(15,299
)
Net income (loss)
36,342

 
6,246

 
(13,676
)
 
(9,356
)
 
(15,299
)
 

 
4,257

Preferred dividends

 

 

 
(1,395
)
 

 

 
(1,395
)
Net loss attributable to non-controlling interests

 

 
139

 
$

 
522

 

 
661

Income (loss) applicable to common stockholders
$
36,342

 
$
6,246

 
$
(13,537
)
 
$
(10,751
)
 
$
(14,777
)
 
$

 
$
3,523

(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:
 
March 31, 2015
 
Investments
 
Debt
Non-Recourse
Outstanding
Face Amount
 
Carrying
Value
 
Outstanding
Face Amount
 
Carrying
Value
Subprime mortgage loans subject to call options
$
406,217

 
$
406,217

 
$
406,217

 
$
406,217

Other
 
 
 
 
 
 
 
Unlevered real estate securities (F)
52,327

 
12,252

 

 

Levered real estate securities
389,056

 
409,037

 
386,120

 
386,120

Other investments
N/A

 
6,555

 

 

Residential mortgage loans
931

 
572

 

 

 
$
848,531

 
$
834,633

 
$
792,337

 
$
792,337


(C)
Operating expenses-golf includes rental expenses recorded under operating leases for carts and equipment in the amount of $1.1 million and $1.4 million for the three months ended March 31, 2015 and 2014, respectively.
(D)
Includes all transaction related and spin-off related expenses.
(E)
Net of $36.6 million of inter-segment eliminations.
(F)
Excludes eight securities with a zero value, which had an aggregate face amount of $113.8 million.
Schedule of other debt segment investments and debt
(B)
The following table summarizes the investments and debt in the other debt segment:
 
March 31, 2015
 
Investments
 
Debt
Non-Recourse
Outstanding
Face Amount
 
Carrying
Value
 
Outstanding
Face Amount
 
Carrying
Value
Subprime mortgage loans subject to call options
$
406,217

 
$
406,217

 
$
406,217

 
$
406,217

Other
 
 
 
 
 
 
 
Unlevered real estate securities (F)
52,327

 
12,252

 

 

Levered real estate securities
389,056

 
409,037

 
386,120

 
386,120

Other investments
N/A

 
6,555

 

 

Residential mortgage loans
931

 
572

 

 

 
$
848,531

 
$
834,633

 
$
792,337

 
$
792,337

Schedule of certain assets and liabilities of Variable Interest Entities
The following table presents certain assets of VIEs, which are included in the Consolidated Balance Sheets. The assets in the table below include those assets that can only 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.
 
March 31, 2015
 
 
 
(Unaudited)
 
December 31, 2014

Assets of consolidated VIEs that can only be used to settle obligations of consolidated VIEs
 
 
 
Real estate securities, available-for-sale
$
219,475

 
$
219,490

Real estate related and other loans, held-for-sale, net
197,251

 
230,200

Residential mortgage loans, held-for-sale, net
3,164

 
3,211

Subprime mortgage loans subject to call option
406,217

 
406,217

Other investments
20,546

 
20,308

Restricted cash
14,149

 
11,790

Receivables and other assets
1,575

 
1,927

Assets of discontinued operations
6,883

 
6,803

Total assets of consolidated VIEs that can only be used to settle obligations of consolidated VIEs
$
869,260

 
$
899,946


The following table presents certain liabilities of consolidated VIEs, which are included in the Consolidated Balance Sheets above. The liabilities in the table below include 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.

 
March 31, 2015
 
 
 
(Unaudited)
 
December 31, 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
$
216,464

 
$
227,673

Other bonds and notes payable
25,317

 
27,069

Financing of subprime mortgage loans subject to call option
406,217

 
406,217

Accounts payable, accrued expenses and other liabilities
1,386

 
2,391

Liabilities of discontinued operations
502

 
447

Total liabilities of consolidated VIEs for which creditors or beneficial interest holders do not have recourse to the general credit of Newcastle
$
649,886

 
$
663,797

Schedule of holdings in variable interest entities
Newcastle had variable interests in the following unconsolidated VIEs at March 31, 2015, in addition to the subprime securitizations which are described in Note 6:
Entity
 
Gross Assets (A)
 
Debt (A) (B)
 
Carrying Value of Newcastle's Investment (C)
Newcastle CDO V
 
$
115,835

 
$
143,480

 
$
8,538


(A)
Face amount.
(B)
Newcastle CDO V includes $42.4 million face amount of debt owned by Newcastle with a carrying value of $8.5 million at March 31, 2015.
(C)
This amount represents Newcastle’s maximum exposure to loss from this entity.