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Other Real Estate Related and Other Investments
 12 Months Ended
Dec. 31, 2022
Investments, All Other Investments [Abstract]  
Other Real Estate Related and Other Investments OTHER REAL ESTATE RELATED AND OTHER INVESTMENTS
As of December 31, 2022 and 2021, the Company’s other real estate related investments, at fair value, consisted of the following (dollar amounts in thousands):
As of December 31, 2022
InvestmentFacility Count and Type
Principal Balance as of December 31, 2022
Book Value as of December 31, 2022
Book Value as of December 31, 2021
Weighted Average Contractual Interest RateMaturity Date
Senior mortgage secured loan receivable
18 SNF/Campus
$75,000 $72,543 $— 8.4 %(1)6/30/2027
Mortgage secured loan receivable
5 SNF
22,250 21,345 — 10.2 %(2)8/1/2025
Mortgage secured loan receivable
4 SNF
24,900 23,796 — 9.0 %(2)9/8/2025
Mezzanine loan receivable
9 SNF
15,000 14,672 15,155 12.0 %11/30/2025
Mezzanine loan receivable
18 SNF/Campus
25,000 24,012 — 11.0 %6/30/2032
Total$162,150 $156,368 $15,155 
(1)    Rate is net of subservicing fee.
(2)    Term secured overnight financing rate (“SOFR”) used as of December 31, 2022 was 4.33%. Rates are net of subservicing fees.
The following table summarizes the Company’s other real estate related investments activity for the year ended December 31, 2022 and 2021 (dollars in thousands):
For the Year Ended December 31,
2022
2021
Origination of other real estate related investments$147,150 $— 
Accrued interest, net1,165 155 
Unrealized loss on other real estate related investments(7,102)— 
Net increase in other real estate related investments, at fair value$141,213 $155 
In September 2022, the Company extended a $24.9 million term loan as part of a larger, multi-tranche real estate secured term loan facility to a skilled nursing real estate owner. The secured term loan was structured with an “A” and a “B” tranche (with the payments on the “B” tranche being subordinate to the “A” tranche pursuant to the terms of a written agreement between the lenders). The Company’s $24.9 million secured term loan constituted the entirety of the “B” tranche with its payments subordinated accordingly. The secured term loan is primarily secured by four skilled nursing facilities operated by an operator in the Southeast. The “B” tranche secured term loan is set to mature on September 8, 2025, with two one-year extension options and may (subject to certain restrictions) be prepaid in whole or in part before the maturity date for an exit fee ranging from 1% to 3% of the loan plus unpaid interest payments; provided, however, that no exit fee is payable in connection with portions of the loan being refinanced pursuant to a loan (or loans) provided by or insured by the United States Department of Housing and Urban Development, Federal Housing Administration, or a similar governmental authority. The “B” tranche secured term loan provides for an earnout advance of $4.7 million if certain conditions are met. The "B" tranche secured term loan bears interest at a rate based on term SOFR, calculated as a fraction, with the numerator being the difference between (i) the monthly payment of interest of term SOFR plus a 4.50% spread and (ii) the amount of such monthly payment of interest of term SOFR plus a 2.85% spread, and with the denominator being the average daily balance of the outstanding principal amount during the applicable month, with such fraction expressed as a percentage and annualized, with a term SOFR floor of 1.0% and less a subservicing fee of 100% over 9.00%. The “B” tranche secured term loan requires monthly interest payments. The Company elected the fair value option for the “B” tranche secured term loan.
In August 2022, the Company extended a $22.3 million term loan as part of a larger, multi-tranche real estate secured term loan facility to a skilled nursing real estate owner. The secured term loan was structured with an “A” and a “B” tranche (with the payments on the “B” tranche being subordinate to the “A” tranche pursuant to the terms of a written agreement between the lenders). The Company’s $22.3 million secured term loan constituted the entirety of the “B” tranche with its payments subordinated accordingly. The secured term loan is primarily secured by five skilled nursing facilities, four of which are operated by an existing operator and one of which is operated by a large, regional skilled nursing operator. The “B” tranche secured term loan is set to mature on August 1, 2025, with two one-year extension options and may (subject to certain restrictions) be prepaid in whole or in part before the maturity date for an exit fee ranging from 2% to 3% of the loan plus unpaid interest payments; provided, however, that no exit fee is payable in connection with portions of the loan being refinanced pursuant to a loan (or loans) provided by or insured by the United States Department of Housing and Urban Development, Federal Housing Administration, or a similar governmental authority. The "B" tranche secured term loan bears interest at a rate based on term secured overnight financing rate, calculated as a fraction, with the numerator being the difference between (i) the monthly payment of interest of term SOFR plus a 4.25% spread and (ii) the amount of such monthly payment of interest of term SOFR plus a 2.75% spread, and with the denominator being the average daily balance of the outstanding principal amount during the applicable month, with such fraction expressed as a percentage and annualized, with a term SOFR floor of 1.0% and less a subservicing fee of 50% over 8.25%. The “B” tranche secured term loan requires monthly interest payments. The Company elected the fair value option for the “B” tranche secured term loan.
In June 2022, the Company extended a $75.0 million term loan to a skilled nursing real estate owner as part of a larger, multi-tranche, senior secured term loan facility. The senior secured term loan was structured with an “A” tranche, a “B” tranche, and a “C” tranche (with the “C” tranche being the most subordinate). The Company’s $75.0 million term loan constituted the entirety of the “C” tranche with its payments subordinated accordingly. The senior secured term loan facility is secured by an 18-facility skilled nursing portfolio in the Mid-Atlantic region, operated by a large, regional skilled nursing operator. In connection with the senior secured term loan facility and the borrower’s acquisition of the skilled nursing portfolio, the Company also extended to the borrower group a $25.0 million mezzanine loan. The “C” tranche of the senior secured term loan bears interest at 8.5%, less a servicing fee equal to the positive difference, if any, between the lesser of the contractual interest payment and actual payment of interest made by the borrower and a hypothetical interest payment at a rate of 8.25%, resulting in an effective interest rate of 8.375%. The “C” tranche senior secured term loan is set to mature on June 30, 2027 and may (subject to certain restrictions) be prepaid in whole or in part before the maturity date for an exit fee ranging from 1% to 3% of the loan plus unpaid interest payments through the end of the month of prepayment; provided, however, that no exit fee is payable in connection with portions of the loan being refinanced pursuant to a loan (or loans) provided by or insured by the United States Department of Housing and Urban Development, Federal Housing Administration, or a similar governmental authority. The mezzanine loan bears interest at 11% and is secured by a pledge of membership interests in an up-tier affiliate of the borrower group. The mezzanine loan is set to mature on June 30, 2032, and may (subject to certain restrictions) be prepaid in whole or in part before the maturity date, commencing on June 30, 2029, for an exit fee ranging from 1% to 3% of the loan plus unpaid interest payments through the date of prepayment. The “C” tranche senior secured term loan and mezzanine loan both require monthly interest payments. The Company elected the fair value option for both the “C” tranche term loan and the mezzanine loan.
The fair value option is elected on an instrument by instrument basis and must be applied to an entire instrument and is irrevocable once elected. The Company’s primary purpose in electing the fair value option for these instruments was to align with management’s view of the underlying economics of the loans and the manner in which they are managed.
As of December 31, 2022 and 2021, the Company’s other loans receivable, included in prepaid expenses and other assets, net on the Company’s consolidated balance sheets, consisted of the following (dollars in thousands):
As of December 31, 2022
Investment
Principal Balance as of December 31, 2022
Book Value as of December 31, 2022
Book Value as of December 31, 2021
Weighted Average Contractual Interest RateMaturity Date
Other loans receivable$9,596 $9,600 $3,161 8.5 %9/1/2023 - 9/30/2025
Expected credit loss— (2,094)— 
Total$9,596 $7,506 $3,161 
The following table summarizes the Company’s other loans receivable activity for the year ended December 31, 2022 and 2021 (dollars in thousands):
For the Year Ended December 31,
2022
2021
Origination of loans receivable$14,500 $1,253 
Principal payments(6,307)(393)
Accrued interest, net(4)(6)
Provision for loan losses, net(3,844)— 
Net increase in other loans receivable$4,345 $854 
Expected credit losses and recoveries are recorded in provision for loan losses, net in the consolidated statements of operations. During the year ended December 31, 2022, the Company recorded a $4.6 million expected credit loss related to two other loans receivable that were placed on non-accrual status, net of a loan loss recovery of $0.8 million related to a loan previously written-off. During the year ended December 31, 2022, the Company fully reserved and wrote-off $2.5 million, related to one other loan receivable, in connection with the sale of six SNFs and one multi-service campus. As of December 31, 2021, the Company had no expected credit loss and did not consider any loan receivable investments to be impaired.
The following table summarizes the interest and other income recognized from the Company’s loans receivable and other investments during the years ended December 31, 2022, 2021 and 2020 (dollar amounts in thousands):
For Year Ended December 31,
Investment202220212020
Mortgage secured loans receivable$4,853 $— $2,044 
Mezzanine loans receivable3,489 1,825 305 
Preferred equity investments(1)
— — 24 
Other284 331 270 
Total$8,626 $2,156 $2,643 
(1)    As of December 31, 2022 and 2021, the Company had no preferred equity investments.