OPERATING PROPERTIES, REAL ESTATE HELD FOR SALE AND OTHER REAL ESTATE OWNED

3 Months Ended

Mar. 31, 2020

Real Estate [Abstract]

OPERATING PROPERTIES, REAL ESTATE HELD FOR SALE AND OTHER REAL ESTATE OWNED

OPERATING PROPERTIES, REAL ESTATE HELD FOR SALE AND OTHER REAL ESTATE OWNED

As of March 31, 2020, we held total REO assets of $86.2 million, of which $7.4 million were held for sale, $45.5 million were held as operating properties, and $33.3 million were classified as other real estate owned. As of December 31, 2019, we held total REO assets of $104.0 million, of which $25.5 million were held for sale, $45.2 million were held as operating properties and $33.3 million were classified as other real estate owned.

REO Asset Sales

On May 29, 2019, the Company foreclosed on the membership interests of a commercial office building in St Louis, Missouri, known as Broadway Tower, which were pledged as collateral on a mezzanine note held by the Company. On January 22, 2020, the Company completed the sale of Broadway Tower for a selling price of $19.5 million, net of purchase price adjustments, and paid off at closing the $11.0 million note held by Chase Funding securing the property. Subsequent to payment of closing costs and the Chase Funding indebtedness, the Company’s net proceeds were $8.0 million. While the Company did not record a loss on sale during the three months ended March 31, 2020, the disposal of Broadway Tower resulted in a loss on sale of $1.5 million, which was recorded as an impairment charge during the year ended December 31, 2019 when the impairment was determinable. The Company had no other asset sales during the three months ended March 31, 2020 or 2019.

REO Planned Development and Operations

Costs related to the development, renovation or improvements of the Company’s real estate assets are generally capitalized, while costs and expenses related to operating, holding and maintaining our operating properties and REO assets are expensed as incurred. Costs that are expensed as incurred are included in operating property direct expenses and as expenses for non-operating real estate owned in the accompanying unaudited condensed consolidated statements of operations. For the three months ended March 31, 2020 and 2019, these costs and expenses were $3.5 million and $2.4 million, respectively. Cash outlays for capitalized costs totaled $0.7 million and $4.7 million during the three months ended March 31, 2020 and 2019, respectively, and consisted primarily of renovation costs for MacArthur Place.