Real Estate Debt Investments

9 Months Ended

Sep. 30, 2020

The following table presents the Company’s one debt investment (dollars in thousands):


			Carrying Value(1)
Asset Type:	Principal Amount		September 30, 2020 (Unaudited)		December 31, 2019		Fixed Rate		Unlevered Current Yield		Final Maturity Date
Mezzanine loan(1)	$	74,182	$	55,038	$	55,468	10.0	%	10.3	%	Jan 2021

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(1)As a result of impairments and other non-cash reserves recorded by the joint venture, the Company’s carrying value of its Espresso unconsolidated investment was reduced to zero in the fourth quarter of 2018. The Company has recorded the excess equity in losses related to its unconsolidated investment as a reduction to the carrying value of its mezzanine loan, which was originated to a subsidiary of the Espresso joint venture. As of September 30, 2020 and December 31, 2019, the cumulative excess equity in losses included in the mezzanine loan carrying value were $19.1 million and $18.6 million, respectively.

The Company evaluates its debt investment at least quarterly based on: (i) whether the borrower is currently paying contractual debt service in accordance with its contractual terms; and (ii) whether the Company believes the borrower will be able to perform under its contractual terms in the future, as well as the Company’s expectations as to the ultimate recovery of principal. The Company considers historical credit loss information, current conditions, the effects of expectations of changes in future macroeconomic conditions as well as reasonable and supportable forecasts.

As of September 30, 2020, the Company’s debt investment was performing in accordance with the contractual terms of its governing documents. Although various defaults under leases and senior secured loans existed as of September 30, 2020, none of these defaults resulted in a default under the Company’s debt investment as of September 30, 2020. The Company continues to assess the collectability of principal and interest and expects to receive full payment of contractual interest and recover the principal outstanding. As of September 30, 2020, contractual debt service has been paid in accordance with contractual terms. The Company is in discussions with its borrower regarding the upcoming maturity of the debt investment.

For the nine months ended September 30, 2020, the mezzanine loan represented 100.0% of the Company’s interest income on debt investments as presented on the consolidated statements of operations.