Drive Shack Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

6 Months Ended

Jun. 30, 2016

Schedule of useful lives of property, plant, and equipment

Depreciation is calculated using the straight-line method based on the following estimated useful lives:



Buildings and improvements	10-30 years
Capital leases - equipment	4-7 years
Furniture, fixtures and equipment	3-7 years

Schedule of certain assets and liabilities of Variable Interest Entities

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.



	June 30, 2016
	(Unaudited)		December 31, 2015
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
Other bonds and notes payable	—		4,672
Financing of subprime mortgage loans subject to call option	362,931		380,806
Accounts payable, accrued expenses and other liabilities	—		29
Total liabilities of consolidated VIEs for which creditors or beneficial interest holders do not have recourse to the general credit of Newcastle	$	362,931	$	478,440

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 equal to or in excess of those obligations. Additionally, the assets in the table below exclude intercompany balances that eliminate in consolidation.



	June 30, 2016
	(Unaudited)		December 31, 2015
Assets of consolidated VIEs that can only be used to settle obligations of consolidated VIEs
Real estate securities, available-for-sale	$	—	$	46,392
Subprime mortgage loans subject to call option	362,931		380,806
Restricted cash	—		128
Receivables and other assets	—		77
Total assets of consolidated VIEs that can only be used to settle obligations of consolidated VIEs	$	362,931	$	427,403

Schedule of holdings in variable interests

The following represents Newcastle's unconsolidated VIEs at June 30, 2016, 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	$	78,890	$	106,086	$	9,910
Newcastle CDO VI	$	53,089	$	180,213	$	—


(A)	Face amount.


(B)	Newcastle CDO V includes $45.2 million face amount of debt owned by Newcastle with a carrying value of $9.9 million at June 30, 2016. Newcastle CDO VI includes $76.5 million face amount of debt owned by Newcastle with zero carrying value at June 30, 2016.


(C)	Represents Newcastle’s maximum exposure to loss from this entity.

- Definition

Tabular disclosure of the significant judgments and assumptions made in determining whether a variable interest (as defined) held by the entity requires the variable interest entity (VIE) (as defined) to be consolidated and (or) disclose information about its involvement with the VIE, individually or in aggregate (as applicable); the nature of restrictions, if any, on the consolidated VIE's assets and on the settlement of its liabilities reported by an entity in its statement of financial position, including the carrying amounts of such assets and liabilities; the nature of, and changes in, the risks associated with involvement in the VIE; how involvement with the VIE affects the entity's financial position, financial performance, and cash flows; the lack of recourse if creditors (or beneficial interest holders) of the consolidated VIE have no recourse to the general credit of the primary beneficiary (if applicable); the terms of arrangements, giving consideration to both explicit arrangements and implicit variable interests, if any, that could require the entity to provide financial support to the VIE, including events or circumstances that could expose the entity to a loss; the methodology used by the entity for determining whether or not it is the primary beneficiary of the variable interest entity; the significant factors considered and judgments made in determining that the power to direct the activities of a VIE that most significantly impact the VIE's economic performance are shared (as defined); the carrying amounts and classification of assets and liabilities of the VIE included in the statement of financial position; the entity's maximum exposure to loss, if any, as a result of its involvement with the VIE, including how the maximum exposure is determined and significant sources of the entity's exposure to the VIE; a comparison of the carrying amounts of the assets and liabilities and the entity's maximum exposure to loss; information about any liquidity arrangements, guarantees, and (or) other commitments by third parties that may affect the fair value or risk of the entity's variable interest in the VIE; whether or not the entity has provided financial support or other support (explicitly or implicitly) to the VIE that it was not previously contractually required to provide or whether the entity intends to provide that support, including the type and amount of the support and the primary reasons for providing the support; and supplemental information the entity determines necessary to provide.

+ References + Details