NOTES PAYABLE AND SPECIAL ASSESSMENT OBLIGATIONS

At March 31, 2017 and December 31, 2016, our debt, notes payable and special assessment obligations consisted of the following (in thousands):



	March 31,			December 31,
	2017			2016
Note Payables, Net of Discount, Continuing Operations
$5.9 million note payable secured by real estate in New Mexico, annual interest only payments based on annual interest rate of prime plus 2.0% through December 31, 2017, and prime plus 3.0% thereafter (6.0% and 5.5% at March 31, 2017 and December 31, 2016, respectively), matures December 31, 2019.	$	5,940		$	5,940
Unsecured note payable under class action settlement, face amount of $10.2 million, net of discount of $2.1 million and $2.8 million at March 31, 2017 and December 31, 2016, respectively, 4% annual interest rate (14.6% effective yield), interest payable quarterly, matures April 28, 2019.	8,300			8,106
Total Notes Payable, Continuing Operations	14,240			14,046
Less: Deferred Financing Costs of Notes Payable, Continuing Operations	(100		)	—
Total Notes Payable, Continuing Operations, Net	$	14,140		$	14,046

Notes Payable and Special Assessment Obligations, Assets Held for Sale
$3.7 million community facility district bonds dated 2005, secured by residential land located in Buckeye, Arizona, annual interest rate ranging from 5%-6%, maturing various dates through April 30, 2030.	$	3,067		$	3,067
$2.3 million special assessment bonds dated between 2002 and 2007, secured by residential land located in Dakota County, Minnesota, annual interest rate ranging from 6%-7.5%, maturing various dates through 2022.	514			514
Total Notes Payable and Special Assessment Obligations, Held for Sale	$	3,581		$	3,581

Note Payables, Net of Discount, Discontinued Operations*
$50.0 million non-recourse note payable secured by first liens on operating hotel properties and related assets, bears annual interest at the greater of a) 7.25% or b) one-month LIBOR plus 6.75%, actual interest of 7.40% at December 31, 2016, original maturity of February 1, 2018, interest only payable monthly, principal due at maturity, subject to a carve-out guarantee by the Company. This note payable was repaid in February 2017 upon sale of the underlying collateral.	$	—		$	50,000
Total Notes Payable, Discontinued Operations	—			50,000
Less: Deferred Financing Costs of Notes Payable, Discontinued Operations	—			(447		)
Total Notes Payable, Discontinued Operations, Net	$	—		$	49,553

* This note was paid off in connection with the sale of the Sedona assets and has been reclassified into Liabilities of discontinued operations as of December 31, 2016 in the accompanying condensed consolidated balance sheet.

Interest expense for the three months ended March 31, 2017 and 2016 was $1.5 million and $2.1 million, respectively, of which $1.1 million and $1.0 million, respectively, is included in income from discontinued operations in the accompanying condensed consolidated statement of operations.

Senior Indebtedness

In January 2015, the Company, through various of its subsidiaries, entered into certain loan agreements, promissory notes and related agreements with Calmwater Capital 3, LLC (“Calmwater”), including a $50.0 million non-recourse loan secured by first liens on the Company’s Sedona hotels. This loan was repaid in full in February 2017 upon sale of the Sedona hotels.

Land Purchasing Financing

During 2015, the Company obtained seller-financing of $5.9 million in connection with the purchase of certain real estate located in New Mexico at a purchase price of $6.8 million. The note bears interest at the WSJ Prime Rate as of December 31, 2015 (recalculated annually) plus 2% through December 31, 2017, and the WSJ Prime Rate plus 3% thereafter. Interest only payments are due on December 31 of each year with the principal balance and any accrued unpaid interest due at maturity on December 31, 2019. The note may be prepaid in whole or in part without penalty.

Other Notes Payable Activity

During the fourth quarter of 2015, a wholly-owned subsidiary of the Company borrowed $5.4 million pursuant to a non-revolving credit facility with the Banc of California, National Association (the “BOC Facility”). The BOC Facility was secured by a $7.2 million mortgage receivable, guaranteed by the Company, was scheduled to mature on April 30, 2016, and bore interest at a per annum rate equal to the greater of (i) the prime rate as published by The Wall Street Journal (the “WSJ Prime Rate”) plus 1.25%, or (ii) 4.5%. During the three months ended March 31, 2016, we repaid the BOC Facility in full upon collection of the mortgage receivable that served as collateral for that loan.

Note Payable to Related Party

In December 2014, the Company borrowed $5.0 million from SRE Monarch Lending, LLC (“SRE Monarch”) pursuant to an unsecured non-revolving credit facility (“SRE Note”). The Company used the loan proceeds to make a scheduled payment under the Company’s then-senior loan. SRE Monarch is a related party of Seth Singerman, one of the Company’s directors and an affiliate of one of our preferred equity holders. The SRE Note bears interest at a per annum base rate of 16%, and is subject to increase in the event it is not repaid in full on or prior to the or extended maturity date.

During 2015 and 2016, the Company entered into a series of amendments to extend the SRE Note’s maturity date to December 22, 2016. The Company paid all accrued interest at the date of each amendment and paid various extension fees totaling $0.2 million during the three months ended March 31, 2016, which fees were amortized over the loan term. The SRE Note was repaid in full in December 2016.

Revolving Line of Credit with SRE Monarch Lending, LLC

In March 2016, a subsidiary of the Company executed an agreement with SRE Monarch for a $4.0 million secured revolving line of credit facility (“SRE Revolver”). The SRE Revolver bore interest at a per annum base rate of 5% and was to mature on the earliest to occur of: 1) December 22, 2016 (after entering into a series of loan amendments extending this date); 2) the sale of the land serving as collateral under the SRE Revolver, or 3) the sale of Gabella. The SRE Revolver was secured by certain land owned by a subsidiary of the Company and was guaranteed by the Company. The full amount of the SRE Revolver was drawn during 2016. For the year ended December 30, 2016, we incurred total fees of $0.5 million in connection with the SRE Revolver, which were amortized to interest expense using the effective interest method over the term of the line of credit. In December 2016, the Company paid all of the outstanding principal and unpaid accrued interest concurrent with the sale of Gabella.

Under terms of the SRE Revolver, the Company was obligated to pay SRE Monarch an amount equal to five percent (5%) of the net sale proceeds upon sale of the land that serves as collateral under the SRE Revolver prior to March 31, 2017 ("Facility Exit Date"). In the event that no sale of the collateral has occurred or is expected to occur prior to the Facility Exit Date, we were obligated to pay SRE Monarch an amount equal to five percent (5%) of the presumed net sales proceeds based on the appraised value of the collateral. In the first quarter of 2017, we paid SRE Monarch $0.2 million to settle this obligation.

Our debt, notes payable and special assessment obligations have the following scheduled maturities as of March 31, 2017 (in thousands):



Year	Amount
2017	$	249
2018	255
2019	14,504
2020	267
2021	278
Thereafter	2,268
Total	$	17,821