INVESTMENT IN REAL ESTATE LOANS

6 Months Ended

Jun. 30, 2022

Investment in real estate loans, net is as follows (in thousands):


	June 30, 2022		December 31, 2021
Real estate loans	$	2,100	$	2,350
Allowance for credit losses	(2,100)		(2,350)

	$	—	$	—

The amortized cost bases of our Investment in real estate loans, net approximate their fair values.

Real Estate Development Loans

During the year ended December 31, 2019, we executed a mezzanine loan to fund up to $28.9 million for a mixed-use

development project that includes the AC/Element Hotel, retail space, and parking. In December 2021, we modified the loan agreement to increase our funding commitment by $1.0 million. During the six months ended June 30, 2022, we completed the funding of our entire $29.9 million commitment. The loan was converted to equity in June 2022 upon the exercise of our Initial Purchase Option to acquire a 90% equity interest in the AC/Element Hotel. The loan was recorded as Investment in hotel properties, net on our Consolidated Balance Sheets at December 31, 2021.

Seller-Financing Loans

On June 29, 2018, we sold the Holiday Inn in Duluth, GA and the Hilton Garden Inn in Duluth, GA for an aggregate selling

price of $24.9 million. We provided seller financing totaling $3.6 million on the sale of these properties under two, 3.5 year

second mortgage notes with a blended interest rate of 7.38% that are further collateralized by a personal guarantee from the

principal of the borrower. During the year ended December 31, 2020, we recorded an allowance for credit losses in an amount equal to the outstanding balance of the loans due to a borrower default caused by the negative effects of the Pandemic. On June 1, 2021, we amended the terms of the seller-financing loans and extended the maturity date of each loan to December 31, 2022. Interest is accruing at a rate of 9.00% monthly, including 5.00% payable in cash and 4.00% paid-in-kind. Semiannual principal payments of $0.3 million began on April 15, 2022. At June 30, 2022, the outstanding principal balance of the notes of $2.1 million is fully reserved.