Notes Receivable

12 Months Ended

Dec. 31, 2012

Notes Receivable

Notes Receivable

6. Notes Receivable

Of the $1.16 billion Realty Income invested in 2012, approximately $35.1 million was loaned in the form of a note receivable, which is secured by the properties on which the note receivable was placed.  The note receivable is recorded to other assets, net, on our consolidated balance sheet as of December 31, 2012 and matures in March 2014.  We receive monthly interest income on this note receivable at an interest rate of 7.6%.  As part of the origination of the note receivable, we received a fee of $260,000, which is recorded in accounts payable and accrued expenses on our consolidated balance sheet as of December 31, 2012.  This loan origination fee is being amortized to interest income over the remaining term of the note receivable, using a method that approximates the effective-interest method.

In 2011, Realty Income assumed a note receivable in conjunction with a property acquisition, which is secured by the property on which the note receivable was placed.  This note receivable is recorded to other assets, net, on our consolidated balance sheets as of December 31, 2012 and 2011, and matures in December 2013.  We receive interest income on this note receivable at an interest rate of 8.1%.