MORTGAGE LOANS, NET

9 Months Ended

Sep. 30, 2019

SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Abstract]

MORTGAGE LOANS, NET

MORTGAGE LOANS, NET

Lending Activities

As of September 30, 2019, the Company held four portfolio loans with a balance of $11.7 million, net of valuation allowances, two of which were performing loans bearing a weighted-average interest rate of 9.8% as of September 30, 2019. As of December 31, 2018, the Company held six portfolio loans with a balance of $23.2 million, net of valuation allowances, three of which were performing loans bearing a weighted-average interest rate of 9.4%. As of September 30, 2019 and December 31, 2018, the Company held two and three non-performing portfolio loans, respectively, two of which have been fully reserved and have a zero carrying value as of September 30, 2019. The valuation allowance was $15.3 million as of September 30, 2019 and $13.1 million as of December 31, 2018. During the nine months ended September 30, 2019, one performing loan with a principal balance of $3.0 million was repaid in full. In addition, during the nine months ended September 30, 2019, we foreclosed on one of the Company’s mezzanine loan investments that had a carrying value of $8.2 million as of the date of foreclosure, which had been in default since September 2018. In May 2019, we foreclosed on the loan collateral consisting of 100% of the membership interests in the limited liability company owning the underlying property. We recorded the acquired assets and assumed liabilities at fair value and consolidated the operations commencing on the foreclosure date. See additional discussion in Notes 5 and 8.

During the three months ended September 30, 2019, and 2018, we recorded mortgage interest income of $0.3 million and $0.7 million, respectively. During the nine months ended September 30, 2019 and 2018, we recorded mortgage interest income of $1.4 million and $2.0 million, respectively.

While the Company has not originated any new loans in 2019, we funded $2.0 million during the nine months ended September 30, 2019 for a $13.1 million construction loan that was originated during 2018. As of September 30, 2019, our remaining commitment under that loan was $11.1 million.

As disclosed in Note 16, we sold a $12.3 million mezzanine note subsequent to September 30, 2019 at a discount and recorded a corresponding provision for credit loss of $2.6 million during the three and nine months ended September 30, 2019 which is reflected in the accompanying condensed consolidated financial statements.