NOTE 4. COMMERCIAL LOAN INVESTMENTS

Our investments in commercial loans or similar structured finance investments, such as mezzanine loans or other subordinated debt, have been and are expected to continue to be secured by commercial or residential real estate or the borrower’s pledge of its ownership interest in the entity that owns the real estate. The first mortgage loans we invest in or originate are generally for commercial real estate located in the United States and its territories, and are current or performing with either a fixed or floating rate. Some of these loans may be syndicated in either a pari-passu or senior/subordinated structure. Commercial first mortgage loans generally provide for a higher recovery rate due to their senior position in the underlying collateral. Commercial mezzanine loans are typically secured by a pledge of the borrower’s equity ownership in the underlying commercial real estate. Unlike a mortgage, a mezzanine loan is not secured by a lien on the property. An investor’s rights in a mezzanine loan are usually governed by an intercreditor agreement that provides holders with the rights to cure defaults and exercise control on certain decisions of any senior debt secured by the same commercial property.

On July 5, 2019, the Company originated an approximately $8.3 million first mortgage loan secured by the leasehold interest in the Carpenter Hotel in Austin, Texas. The loan is interest-only with a term of one-year with a fixed interest rate of 11.50%. The Company received an origination fee of 1%, or $82,500.

On July 5, 2019, the Company acquired approximately 1.4 acres of land under the Carpenter Hotel in Austin, Texas (the “Carpenter Purchase”), for approximately $16.25 million. Separately, the Company entered into a new 99-year ground lease (the “Ground Lease”) whereby the Company leased back the land to the seller. The Ground Lease includes annual escalations and certain future repurchase rights. Pursuant to FASB ASC Topic 842, Leases, due to the future repurchase rights, the Ground Lease does not qualify for treatment as a property purchase and has been accounted for on the consolidated balance sheets as a commercial loan investment (the “Ground Lease Loan”). The Company has imputed interest on the Ground Lease Loan which is being recognized as interest income on commercial loan investments in the Company’s consolidated statements of operations.

On June 14, 2019, the Company originated an $8.0 million first mortgage bridge loan secured by 72 acres of land in Orlando, Florida. The loan is interest-only with a term of one-year with two 1-year extensions with a fixed interest rate of 12.00%. The Company received an origination fee of 2%, or $160,000.

On October 17, 2019, the Company originated an approximately $2.1 million first mortgage loan secured by the LPGA golf assets which were sold on October 17, 2019. The loan is interest-only with a term of one-year with two six-month extensions with a fixed interest rate of 7.50%. The Company received an origination fee of 1.5%, or approximately $31,000.

The Company’s commercial loan investment portfolio was comprised of the following at December 31, 2019:


	Date of	Maturity	Original Face		Current Face		Carrying
Description	Investment	Date	Amount		Amount		Value		Coupon Rate
First Mortgage – 72-Acre Land Parcel, Orlando, FL	June 2019	June 2020	$	8,000,000	$	8,000,000	$	7,927,869	12.00%
Mortgage Note – 400 Josephine Street, Austin, TX	July 2019	July 2020		8,250,000		8,250,000		8,207,964	11.50%
Ground Lease Loan – 400 Josephine Street, Austin, TX	July 2019	N/A		16,250,000		16,250,000		16,443,942	N/A
LPGA Buyer Loan – Daytona Beach, FL	Oct 2019	Oct 2020		2,070,000		2,070,000		2,045,398	7.50%
			$	34,570,000	$	34,570,000	$	34,625,173

The carrying value of the commercial loan investment portfolio at December 31, 2019 consisted of the following:


	Total
Current Face Amount	$	34,570,000
Imputed Interest over Rent Payments Received on Ground Lease Loan		193,943
Unaccreted Origination Fees		(138,770)
Total Commercial Loan Investments	$	34,625,173

As of December 31, 2018, the Company had no commercial loan investments.