NOTES PAYABLE AND SPECIAL ASSESSMENT OBLIGATIONS

As of March 31, 2020 and December 31, 2019, our notes payable and special assessment obligations consisted of the following (in thousands):



	March 31,			December 31,
	2020			2019
$37.0 million note payable to MidFirst Bank secured by a first lien on MacArthur Place, interest-only payments due monthly at the 30-day LIBOR (0.99% and 1.76% at March 31, 2020 and December 31, 2019, respectively) plus 3.25% to 3.75% depending on compensating balances and meeting certain financial thresholds and terms (total effective interest rate of 5.10% and 5.26% at March 31, 2020 and December 31, 2019, respectively), matures October 1, 2020, with construction completion and repayment guarantees provided by the Company.	$	36,819		$	35,454
$11.0 million note payable to JPMorgan Chase Funding Inc. secured by the $13.2 million first mortgage note on Broadway Tower, bearing interest at one month LIBOR plus 3.45%. The Company paid off the note in full during the three months ended March 31, 2020 in connection with the sale of the property.	—			11,000
$4.9 million note payable secured by real estate in New Mexico, annual interest only payments based on annual interest rates of prime plus 3.0% through maturity date of December 31, 2022 (total effective rate of 7.75% and 8.50% as of March 31, 2020 and December 31, 2019, respectively).	4,940			4,940
Special assessment bonds dated between 2002 and 2007, secured by the residential land located in Dakota County, Minnesota, annual interest rate ranging from 6%-7.5%, maturing various dates through 2022.	61			61
Total notes payable	41,820			51,455
Less: deferred financing fees	(81		)	(178		)
Notes payable, net of deferred financing fees	$	41,739		$	51,277

Interest expense for the three months ended March 31, 2020 and 2019, was $0.8 million and $0.5 million, respectively, exclusive of capitalized interest related to the MacArthur Loan of $0.0 and $0.5 million for the three months ended March 31, 2020 and 2019, respectively.

Senior Indebtedness

MacArthur Place

In connection with our purchase and renovation of MacArthur Place, we secured a $32.3 million acquisition and construction loan, which was subsequently increased to $37.0 million, from MidFirst Bank (the “MacArthur Loan”), of which (i) $19.4 million was utilized for the purchase of MacArthur Place, (ii) $13.5 million was used to fund planned hotel improvements, and (iii) the balance was used to fund interest reserves and operating capital. The MidFirst Loan also required the establishment of certain additional reserve accounts in the amount of $2.0 million for anticipated future spa renovations.

The principal balance of the MacArthur Loan was $36.8 million and $35.5 million at March 31, 2020 and December 31, 2019, respectively. The loan bears floating interest equal to the 30-day LIBOR rate (0.99% at March 31, 2020) plus 3.50%, which may be reduced by up to 0.50% if certain conditions are met, which were met as of March 31, 2020. The loan has an initial term of three years which matures on October 1, 2020, subject to the right of the Company to extend the maturity date for two one-year periods, provided that the loan is in good standing and upon satisfaction of certain other conditions, including meeting a specified minimum debt service ratio and payment of an extension fee equal to 0.35% of outstanding principal per extension. The Company is required to make interest-only payments during the initial three-year term. During the three months ended March 31, 2020, the Company made loan draws totaling $1.4 million, all of which were used to fund MacArthur Place renovation costs.

The MacArthur Loan is secured by a deed of trust on all MacArthur Place real property and improvements, and a security interest in all furniture, fixtures and equipment, licenses and permits, and MacArthur Place related revenues. The Company agreed to provide a construction completion guaranty which shall be released upon payment of all project costs and receipt of a certificate of occupancy. In addition, the Company provided a loan repayment guaranty equal to 50% of the loan principal along with a guaranty of interest and operating deficits, as well as other customary carve-out matters such as bankruptcy and environmental matters. Under the guarantees, the Company is required to maintain a minimum tangible net worth of $50.0 million and minimum liquidity of $5.0 million throughout the term of the loan. The Company was in compliance with these covenants and guarantees at March 31, 2020. The Company is required to establish various operating and reserve accounts at MidFirst Bank which are subject to a cash management agreement. In the event of default, MidFirst Bank has the ability to take control of such accounts for the allocation and distribution of proceeds in accordance with the cash management agreement.

New Mexico Land Purchase Financing

As of March 31, 2020, the Company had an outstanding note payable in the amount of $4.9 million, secured by certain real estate located in New Mexico with a carrying value of $6.8 million. The note bears interest at the Prime Rate as reported by The Wall Street Journal plus 3% and requires interest only payments payable on December 31 of each year with the principal balance and any accrued unpaid interest due upon the earlier of 1) December 31, 2022, or 2) sale of the underlying collateral property. The note may be prepaid in whole or in part without penalty, and includes certain maturity extension provisions which the Company may choose to exercise.

JPMorgan Chase Funding Inc. Master Repurchase Agreement

In connection with the purchase of the $13.2 million first mortgage note secured by Broadway Tower in May 2019, we obtained an $11.0 million loan (under a master repurchase agreement) from Chase Funding. In January 2020, the Company sold Broadway Tower and paid off the related Chase Funding indebtedness.

Our notes payable and special assessment obligations have the following scheduled maturities as of March 31, 2020 (in thousands):



Year	Amount
2020	$	36,846
2021	26
2022	4,948
Less: deferred financing costs of notes payable	(81		)
Total	$	41,739