COMMERCIAL LOAN AND MASTER LEASE INVESTMENTS

3 Months Ended

Mar. 31, 2022

COMMERCIAL LOAN AND MASTER LEASE INVESTMENTS

COMMERCIAL LOAN AND MASTER LEASE INVESTMENTS

NOTE 4. COMMERCIAL LOAN AND MASTER LEASE 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 real estate or the borrower’s pledge of its ownership interest in the entity that owns the real estate. The 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.

2022 Activity. On January 26, 2022, the Company originated a construction loan secured by the property and improvements to be constructed thereon for the second phase of The Exchange at Gwinnett project located in Buford, Georgia for $8.7 million. The construction loan matures on January 26, 2024, has a one-year extension option, bears a fixed interest rate of 7.25%, and requires payments of interest only prior to maturity. At closing, a loan origination fee of $0.1 million was received by the Company. Funding of the loan will occur as the borrower completes the underlying construction. As of March 31, 2022, the Company has not disbursed any funds to the borrower.  

On March 11, 2022, the Company sold the Carpenter Hotel ground lease located in Austin, Texas for $17.1 million. The lease with Carpenter Hotel included two tenant repurchase options. Pursuant to FASB ASC Topic 842, Leases, the initial $16.25 million investment was recorded in the consolidated balance sheets as a commercial loan and master lease investment at the time of acquisition. The carrying value at the time of sale totaled $17.3 million.

The Company’s commercial loan and master lease investments were comprised of the following at March 31, 2022 (in thousands):

Description	Date of Investment	Maturity Date	Original Face Amount		Current Face Amount		Carrying Value		Coupon Rate
Westland Gateway Plaza – Hialeah, FL	September 2020	N/A		21,085		21,085		21,151	N/A
Mortgage Note – 4311 Maple Avenue – Dallas, TX	October 2020	April 2023		400		400		394	7.50%
Mortgage Note – 110 N Beach Street – Daytona Beach, FL	June 2021	December 2022		364		364		364	10.00%
Construction Loan – The Exchange At Gwinnett – Buford, GA	January 2022	January 2024		8,700		—		(79)	7.25%
			$	30,549	$	21,849	$	21,830

The Company’s commercial loan and master lease investments were comprised of the following at December 31, 2021 (in thousands):

Description	Date of Investment	Maturity Date	Original Face Amount		Current Face Amount		Carrying Value		Coupon Rate
Carpenter Hotel – 400 Josephine Street, Austin, TX	July 2019	N/A	$	16,250	$	16,250	$	17,189	N/A
Westland Gateway Plaza – Hialeah, FL	September 2020	N/A		21,085		21,085		21,148	N/A
Mortgage Note – 4311 Maple Avenue – Dallas, TX	October 2020	April 2023		400		400		394	7.50%
Mortgage Note – 110 N Beach Street – Daytona Beach, FL	June 2021	December 2022		364		364		364	10.00%
			$	38,099	$	38,099	$	39,095

The carrying value of the commercial loan and master lease investments portfolio at March 31, 2022 and December 31, 2021 consisted of the following (in thousands):

	As of
	March 31, 2022		December 31, 2021
Current Face Amount	$	21,849	$	38,099
Imputed Interest over Rent Payments Received		66		1,002
Unaccreted Origination Fees		(81)		(2)
CECL Reserve		(4)		(4)
Total Commercial Loan and Master Lease Investments	$	21,830	$	39,095