Property Loans, Net of Loan Loss Allowances

9 Months Ended

Sep. 30, 2022

Property Loans Net Of Loan Loss Allowance [Abstract]

Property Loans, Net of Loan Loss Allowances

10. Property Loans, Net of Loan Loss Allowances

The following tables summarize the Partnership’s property loans, net of loan loss allowances, as of September 30, 2022 and December 31, 2021:

	September 30, 2022
	Outstanding Balance		Loan Loss Allowance			Property Loan Principal, net of allowance		Maturity Date	Interest Rate
Senior Construction Financing (1)
Centennial Crossings	$	24,250,000	$	-		$	24,250,000	9/1/2023	LIBOR + 2.50%
Hilltop at Signal Hills		18,968,334		-			18,968,334	8/1/2023	SOFR + 3.07%
Legacy Commons at Signal Hills		28,166,905		-			28,166,905	2/1/2024	SOFR + 3.07%
Magnolia Heights		1,000,000		-			1,000,000	7/1/2024	SOFR + 3.85%
Oasis at Twin Lakes		24,018,657		-			24,018,657	8/1/2023	LIBOR + 2.50%
Osprey Village		1,000,000		-			1,000,000	8/1/2024	SOFR + 3.07%
Scharbauer Flats Apartments		24,160,000		-			24,160,000	1/1/2023	LIBOR + 2.85%
Willow Place Apartments		1,000,000		-			1,000,000	10/1/2024	SOFR + 3.30%
Subtotal		122,563,896		-			122,563,896
Other
Avistar (February 2013 portfolio)	$	201,972	$	-		$	201,972	6/26/2024	12.00%
Avistar (June 2013 portfolio)		251,622		-			251,622	6/26/2024	12.00%
Greens Property		850,000		-			850,000	9/1/2046	10.00%
Live 929 Apartments		495,000		(495,000	)		-	7/31/2049	8.00%
Subtotal		1,798,594		(495,000	)		1,303,594
Total	$	124,362,490	$	(495,000	)	$	123,867,490

(1)The property loans are held in trust in connection with TOB trust financings (Note 15). The property loans and associated GILs are on parity and share a first mortgage lien position on all real and personal property associated with the underlying property. Affiliates of the borrowers have guaranteed limited-to-full payment of principal and accrued interest on the property loans. The borrowers may elect to extend the maturity dates for periods ranging between six and twelve months upon meeting certain conditions, which may include payment of a non-refundable extension fee. The variable index interest rate components are typically subject to floors that range from 0% to 0.50%.

	December 31, 2021
	Outstanding Balance		Loan Loss Allowance			Property Loan Principal, net of allowance		Maturity Date	Interest Rate
Senior Construction Financing (1)
Centennial Crossings	$	11,354,386	$	-		$	11,354,386	9/1/2023	LIBOR + 2.50%
Hilltop at Signal Hills		1,000,000		-			1,000,000	8/1/2023	SOFR + 3.07%
Legacy Commons at Signal Hills		2,604,230		-			2,604,230	2/1/2024	SOFR + 3.07%
Oasis at Twin Lakes		20,607,362		-			20,607,362	8/1/2023	LIBOR + 2.50%
Osprey Village		1,000,000		-			1,000,000	8/1/2024	SOFR + 3.07%
Scharbauer Flats Apartments		9,708,598		-			9,708,598	1/1/2023	LIBOR + 2.85%
Willow Place Apartments		1,000,000		-			1,000,000	10/1/2024	SOFR + 3.30%
Subtotal		47,274,576		-			47,274,576
Senior Acquisition Financing
Magnolia Crossing	$	13,424,579	$	-		$	13,424,579	12/1/2022	SOFR + 6.50%	(2)
Subtotal		13,424,579		-			13,424,579
Other
Avistar (February 2013 portfolio)	$	201,972	$	-		$	201,972	6/26/2024	12.00%
Avistar (June 2013 portfolio)		251,622		-			251,622	6/26/2024	12.00%
Cross Creek		11,101,887		(7,393,814	)		3,708,073	12/1/2025	6.15%
Greens Property		850,000		-			850,000	9/1/2046	10.00%
Live 929 Apartments		1,355,534		(1,355,534	)		-	7/31/2049	8.00%
Ohio Properties		2,390,446		-			2,390,446	12/1/2026 - 6/1/2050	10.00%
Subtotal		16,151,461		(8,749,348	)		7,402,113
Total	$	76,850,616	$	(8,749,348	)	$	68,101,268

(1)The property loans are held in trust in connection with TOB trust financings (Note 15). The property loans and associated GILs are on parity and share a first mortgage lien position on all real and personal property associated with the underlying property. Affiliates of the borrowers have guaranteed limited-to-full payment of principal and accrued interest on the property loans. The borrowers may elect to extend the maturity dates for periods ranging between six and twelve months upon meeting certain conditions, which may include payment of a non-refundable extension fee. The variable index interest rate components are typically subject to floors that range from 0% to 0.50%.

(2)The index is subject to a floor of 0.25%.

The Partnership recognized a provision for loan loss and associated loan loss allowance of zero and approximately $330,000 for the three and nine months ended September 30, 2021 related to the Live 929 Apartments property loan as the Partnership determined it was probable the outstanding balance will not be collectible.

During the three and nine months ended September 30, 2022 and 2021, the interest to be earned on the Live 929 Apartments property loan was in nonaccrual status. The discounted cash flow method used by management to establish the net realizable value of the property loan determined the collection of the interest accrued was not probable. In addition, interest to be earned on the Cross Creek property loan and approximately $983,000 of property loan principal for the Ohio Properties was in nonaccrual status for the three and nine months ended September 30, 2021 as, in management’s opinion, the interest was not considered collectible.

Activity in the First Nine Months of 2022

In January 2022, the Partnership received approximately $1.0 million of principal and interest due on the Live 929 Apartments property loan upon restructuring of the outstanding debt of Live 929 Apartments. The principal payment and related loan loss allowance were considered in the troubled debt restructuring of the Partnership’s investments in Live 929 Apartments discussed further in Note 6.

In March 2022, the Ohio Properties property loans were repaid in full. The Partnership received approximately $2.4 million of principal and approximately $4.3 million of accrued interest upon redemption.

In April 2022, the Partnership provided a property loan to Poppy Grove Apartments in the amount of $825,000 to fund the design and predevelopment costs for upcoming affordable housing developments in Elk Grove, CA.

In June 2022, concurrent with the acquisition of the Magnolia Heights GIL (Note 7), the Partnership committed $10.3 million to provide a property loan for the construction of the underlying property on a draw-down basis. The property loan and associated GIL are on parity and share a first mortgage position on all real and personal property associated with the secured property.

In August 2022, the outstanding property loans due from Cross Creek were restructured and the Partnership advanced additional funds totaling approximately $7.7 million. In September 2022, the underlying Cross Creek property was sold and the Partnership received $13.0 million as redemption proceeds to satisfy all outstanding balances, which consisted of $11.4 million of principal payments and approximately $1.7 million of accrued interest. All property loan balances due from Cross Creek were previously on non-accrual status and fully reserved, so the Partnership recognized approximately $1.7 million of other interest income upon redemption.

In September 2022, the Magnolia Crossing property loan was repaid in full. The Partnership received proceeds of approximately $14.1 million representing outstanding principal and accrued interest upon redemption.

In September 2022, the Partnership advanced additional principal totaling $900,000 under the Poppy Grove Apartments loan. The Poppy Grove Apartments property loan was subsequently paid in full in September 2022.

Activity in the First Nine Months of 2021

Concurrent with the acquisition of GILs (Note 7), the Partnership committed to provide property loans for the construction of the underlying properties on a draw-down basis as summarized below. The property loans and associated GILs are on parity and share a first mortgage position on all real and personal property associated with the secured property.

•$32.2 million commitment related to Legacy Commons at Signal Hills;

•$21.2 million commitment related to Hilltop at Signal Hills;

•$25.5 million commitment related to Osprey Village; and

•$21.4 million commitment related to Willow Place Apartments.

In March 2021, the Partnership amended the property loan with Live 929 Apartments to increase the total available loan amount to $1.5 million from $1.0 million. The property loan is subordinate to the MRBs associated with the property.

In August 2021, the Partnership received approximately $328,000 as payment in full for outstanding principal and interest on the property loan due from Arbors at Hickory Ridge.

The following table summarizes the changes in the Partnership's loan loss allowance for the three and nine months ended September 30, 2022 and 2021:

	For the Three Months Ended September 30,					For the Nine Months Ended September 30,
	2022			2021		2022			2021
Balance, beginning of period	$	7,888,815		$	8,635,162	$	8,749,348		$	8,305,046
Provision for loan loss		-			-		-		$	330,116
Other reductions (1)		(7,393,815	)		-		(8,254,348	)		-
Balance, end of period	$	495,000		$	8,635,162	$	495,000		$	8,635,162

(1)The reduction in the loan loss allowance for the three and nine months ended September 30, 2022 is due to the redemption of all Cross Creek property loan balances in September 2022 and a principal payment received on the Live 929 Apartments property loan as part of the restructuring of the outstanding debt of Live 929 Apartments (Note 6) in January 2022.