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 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.

In light of the COVID-19 Pandemic, the Company began marketing its commercial loan portfolio in advance of their upcoming maturities to further strengthen the Company’s liquidity. The Company received multiple bids including a bid offering a value that was at a discount to par. Additionally, the Company implemented the guidance regarding CECL effective January 1, 2020, which resulted in an allowance reserve of approximately $252,000. The CECL reserve combined with the impairment related to marketing the loan portfolio resulted in an aggregate impairment charge on the loan portfolio of approximately $1.9 million, or $0.30 per share, after tax.

On January 13, 2020, the Company originated a $3.5 million first mortgage loan secured by the fee simple interest in a redevelopment property located in Honolulu, Hawaii. The loan is interest-only with a term of one-year with a fixed interest rate of 11.0%. The Company received an origination fee of 2%, or $70,000.

On February 28, 2020, the Company originated an approximately $3.4 million first mortgage loan secured by property sold by the Land JV of approximately 12 acres, which consisted of a land sale and conveyance of certain interests. The loan is interest-only with a term of one-year with a fixed interest rate of 9.50%. The Company received an origination fee of 1.5%, or approximately $51,000.

The Company’s commercial loan investments were comprised of the following at March 31, 2020:


Description	Date of Investment	Maturity Date	Original Face Amount		Current Face Amount		Carrying Value		Coupon Rate
First Mortgage – 72-Acre Land Parcel, Orlando, FL	June 2019	June 2020	$	8,000,000	$	8,000,000	$	7,967,650	12.00%
Mortgage Note – 400 Josephine Street, Austin, TX	July 2019	July 2020		8,250,000		8,250,000		8,228,421	11.50%
Ground Lease Loan – 400 Josephine Street, Austin, TX	July 2019	N/A		16,250,000		16,250,000		16,539,509	N/A
LPGA Buyer Loan – Daytona Beach, FL	October 2019	October 2020		2,070,000		2,070,000		2,053,118	7.50%
First Mortgage – Redevelopment Property, Honolulu, Hawaii	January 2020	January 2021		3,500,000		3,500,000		3,445,067	11.00%
First Mortgage – 12-Acre Land Parcel, Daytona Beach, FL	February 2020	February 2021		3,375,000		3,375,000		3,328,939	9.50%
Impairment / CECL Reserve				—		—		(1,904,500)
			$	41,445,000	$	41,445,000	$	39,658,204

The carrying value of the commercial loan investment portfolio at March 31, 2020 consisted of the following:


	Total
Current Face Amount	$	41,445,000
Imputed Interest over Rent Payments Received on Ground Lease Loan		289,509
Unaccreted Origination Fees		(171,805)
Impairment / CECL Reserve		(1,904,500)
Total Commercial Loan Investments	$	39,658,204

As of March 31, 2019, the Company had no commercial loan investments.