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These excerpts taken from the CSE 10-Q filed May 11, 2009. Commercial
Real Estate “A” Participation Interest
As of March 31, 2009, the carrying value of the
“A” Participation Interest was $1.1 billion in a
$4.1 billion pool of commercial real estate loans and
related assets.
The activity with respect to the “A” Participation
Interest for the period from December 31, 2008 to
March 31, 2009 was as follows ($ in thousands):
During the three months ended March 31, 2009, we recognized
$17.2 million in interest income on the “A”
Participation Interest.
The “A” Participation Interest is reported at the
outstanding principal balance less the associated discount and
the interest is accrued as earned. The discount is accreted into
interest income over the estimated life of the instrument using
the interest method.
The “A” Participation Interest is governed by a
participation agreement that is structured to minimize our
exposure to credit risk. We have pari passu rights in the
underlying loans pursuant to which we receive 70% of all
borrower principal repayments from the underlying loans and
properties. In addition, under the participation agreement,
iStar FM Loans, LLC, the holder of the “B”
Participation Interest, assumed all future funding
CapitalSource
Inc.
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
obligations with respect to the loans underlying the
participation agreement. Accordingly, although the holder of the
“B” Participation Interest continues to increase its
percentage of the overall funding of the underlying loans, we
continue to receive 70% of all borrower repayments. Thus, the
structure of the “A” Participation Interest
accelerates the paydown of the “A” Participation
Interest, relative to the paydown of the overall underlying
portfolio of assets. This accelerated paydown serves to reduce
our exposure to credit risk. Additionally, the “A”
Participation Interest is structured so that we do not have loan
and property-level risk. We receive payments based on the cash
flows of the entire underlying pool of assets and not any one
asset in particular. Therefore, we will incur a loss only if the
portfolio, as a whole, fails to perform at least to the extent
of the “A” Participation Interest balance.
Commercial
Real Estate “A” Participation Interest
As of March 31, 2009 and December 31, 2008, the
“A” Participation Interest had an outstanding balance
of $1.1 billion and $1.4 billion, respectively, net of
discount. For further information on the “A”
Participation Interest, see Note 7, Commercial Lending
Assets and Credit Quality, in our accompanying consolidated
financial statements for the three months ended March 31,
2009.
These excerpts taken from the CSE 10-K filed Mar 2, 2009. Commercial
Real Estate “A” Participation Interest
As of December 31, 2008, the “A” Participation
Interest had an outstanding balance of $1.4 billion, which
includes $3.7 million of related accrued interest
receivable. For further information on the “A”
Participation Interest, see Note 7, Commercial Lending
Assets and Credit Quality, in our accompanying audited
consolidated financial statements for the year ended
December 31, 2008.
Commercial
Real Estate “A” Participation Interest
As of December 31, 2008, the “A” Participation
Interest had an outstanding balance of $1.4 billion, which
includes $3.7 million of related accrued interest
receivable. For further information on the “A”
Participation Interest, see Note 7, Commercial Lending
Assets and Credit Quality, in our accompanying audited
consolidated financial statements for the year ended
December 31, 2008.
Commercial
Real Estate “A” Participation Interest
On July 25, 2008, we acquired the “A”
Participation Interest, which at the date of acquisition was a
$1.9 billion interest in a $4.8 billion pool of
commercial real estate loans. On the date of acquisition, we
recorded the “A” Participation Interest at its
estimated fair value of $1.8 billion, a $63.1 million
discount to the underlying principal balance of the instrument.
As of December 31, 2008, the “A” Participation
Interest had an outstanding balance of $1.4 billion, net of
discount. For further information on the “A”
Participation Interest, see Note 7, Commercial Lending
Assets and Credit Quality, in our accompanying audited
consolidated financial statements for the year ended
December 31, 2008.
Commercial
Real Estate “A” Participation Interest
On July 25, 2008, we acquired the “A”
Participation Interest, which at the date of acquisition was a
$1.9 billion interest in a $4.8 billion pool of
commercial real estate loans. On the date of acquisition, we
recorded the “A” Participation Interest at its
estimated fair value of $1.8 billion, a $63.1 million
discount to the underlying principal balance of the instrument.
As of December 31, 2008, the “A” Participation
Interest had an outstanding balance of $1.4 billion, net of
discount. For further information on the “A”
Participation Interest, see Note 7, Commercial Lending
Assets and Credit Quality, in our accompanying audited
consolidated financial statements for the year ended
December 31, 2008.
Commercial
Real Estate “A” Participation Interest
As discussed in Note 3, Acquisition, on
July 25, 2008, we acquired the “A” Participation
Interest, which, at the date of acquisition was a
$1.9 billion interest in a $4.8 billion pool of
commercial real estate loans. On the date of acquisition, we
recorded the “A” Participation Interest at its
estimated fair value of $1.8 billion, a $63.1 million
discount to the underlying principal balance of the instrument.
The activity with respect to the “A” Participation
Interest for the period from July 25, 2008 to
December 31, 2008 was as follows ($ in thousands):
During the period from July 25, 2008 to December 31,
2008, we recognized $54.2 million in interest income on the
“A” Participation Interest.
The “A” Participation Interest is reported at the
outstanding principal balance less the associated discount and
the interest is accrued as earned. The discount is accreted into
interest income over the estimated life of the instrument using
the interest method.
The “A” Participation Interest is governed by a
participation agreement that is structured to minimize our
exposure to credit risk. We have pari passu rights in the
underlying loans pursuant to which we receive 70% of all
borrower principal repayments from the underlying loans and
properties. In addition, under the participation agreement,
iStar FM Loans, LLC, the holder of the “B”
Participation Interest, assumed all future funding obligations
with respect to the loans underlying the participation
agreement. Accordingly, although the holder of the “B”
Participation Interest continues to increase its percentage of
the overall funding of the underlying loans, we continue to
receive 70% of all borrower repayments. Thus, the structure of
the “A” Participation Interest accelerates the paydown
of the “A” Participation Interest, relative to the
paydown of the overall underlying portfolio. This accelerated
paydown serves to reduce our exposure to credit risk.
Additionally, the “A” Participation Interest is
structured so that we do not have loan and property-level risk.
We receive payments based on the cash flows of the entire
underlying pool of assets and not any one asset in particular.
Therefore, we will incur a loss only if the portfolio, as a
whole, fails to perform at least to the extent of the
“A” Participation Interest balance.
NOTES TO
THE CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
Commercial
Real Estate “A” Participation Interest
As discussed in Note 3, Acquisition, on
July 25, 2008, we acquired the “A” Participation
Interest, which, at the date of acquisition was a
$1.9 billion interest in a $4.8 billion pool of
commercial real estate loans. On the date of acquisition, we
recorded the “A” Participation Interest at its
estimated fair value of $1.8 billion, a $63.1 million
discount to the underlying principal balance of the instrument.
The activity with respect to the “A” Participation
Interest for the period from July 25, 2008 to
December 31, 2008 was as follows ($ in thousands):
During the period from July 25, 2008 to December 31,
2008, we recognized $54.2 million in interest income on the
“A” Participation Interest.
The “A” Participation Interest is reported at the
outstanding principal balance less the associated discount and
the interest is accrued as earned. The discount is accreted into
interest income over the estimated life of the instrument using
the interest method.
The “A” Participation Interest is governed by a
participation agreement that is structured to minimize our
exposure to credit risk. We have pari passu rights in the
underlying loans pursuant to which we receive 70% of all
borrower principal repayments from the underlying loans and
properties. In addition, under the participation agreement,
iStar FM Loans, LLC, the holder of the “B”
Participation Interest, assumed all future funding obligations
with respect to the loans underlying the participation
agreement. Accordingly, although the holder of the “B”
Participation Interest continues to increase its percentage of
the overall funding of the underlying loans, we continue to
receive 70% of all borrower repayments. Thus, the structure of
the “A” Participation Interest accelerates the paydown
of the “A” Participation Interest, relative to the
paydown of the overall underlying portfolio. This accelerated
paydown serves to reduce our exposure to credit risk.
Additionally, the “A” Participation Interest is
structured so that we do not have loan and property-level risk.
We receive payments based on the cash flows of the entire
underlying pool of assets and not any one asset in particular.
Therefore, we will incur a loss only if the portfolio, as a
whole, fails to perform at least to the extent of the
“A” Participation Interest balance.
NOTES TO
THE CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
Commercial
Real Estate “A” Participation Interest
The “A” Participation Interest is recorded at
outstanding principal, net of the unamortized purchase discount.
For SFAS No. 107 disclosures, the fair value is
estimated based on a discounted cash flow analysis, using rates
currently being offered for securities with similar
characteristics as the underlying collateral.
Commercial
Real Estate “A” Participation Interest
The “A” Participation Interest is recorded at
outstanding principal, net of the unamortized purchase discount.
For SFAS No. 107 disclosures, the fair value is
estimated based on a discounted cash flow analysis, using rates
currently being offered for securities with similar
characteristics as the underlying collateral.
This excerpt taken from the CSE 10-Q filed Nov 10, 2008. Commercial
real estate “A” Participation Interest
On July 25, 2008, we acquired the “A”
Participation Interest, which at the date of acquisition was a
$1.9 billion interest in a $4.8 billion pool of commercial
real estate loans. On the date of acquisition, we recorded the
“A” Participation Interest at its estimated fair value
of $1.8 billion, a $63.1 million discount to the
underlying principal balance of the instrument. For further
information on the “A” Participation Interest, see
Note 9, Commercial Lending Assets and Credit
Quality, in our accompanying consolidated financial
statements for the nine months ended September 30, 2008.
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