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NOTES RECEIVABLE
 6 Months Ended
Jun. 30, 2011
Loans, Notes, Trade and Other Receivables Disclosure [Text Block]

6. NOTES RECEIVABLE


At June 30, 2011, the Company’s notes receivable, net, aggregated $45.5 million, and were collateralized either by the underlying properties or the borrowers’ ownership interest in the entities that own the properties and/or by the borrowers’ personal guarantee as follows:


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Description

 

Effective
interest
rate

 

Maturity date

 

First
priority
liens

 

Net carrying
amount of
notes
receivable

 

Extension
options

 

 

 

(dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mezzanine Loan

 

 

10.0

%

7/2011

 

$

—

 

$

2,530

 

 

—

 

Mezzanine Loan

 

 

13.0

%

9/2011

 

 

28,925

 

 

2,980

 

 

—

 

Mezzanine Loan

 

 

13.0

%

9/2011

 

 

6,000

 

 

1,964

 

 

—

 

First Mortgage Loan

 

 

10.8

%

9/2011

 

 

—

 

 

10,000

 

 

—

 

Mezzanine Loan

 

 

10.2

%

11/2011

 

 

9,348

 

 

8,000

 

 

1 x 1 year

 

Other Loan

 

 

14.5

%

12/2011

 

 

—

 

 

8,585

 

 

—

 

Other Loan

 

 

24.0

%

1/2016

 

 

166,200

 

 

3,394

 

 

—

 

Mezzanine Loan

 

 

17.5

%

1/2017

 

 

37,700

 

 

2,173

 

 

—

 

Mezzanine Loan

 

 

15.0

%

Upon Capital Event

 

 

11,925

 

 

3,834

 

 

—

 

Individually less than 3%

 

 

10% to 13.0

%

9/2011 to 12/2011

 

 

17,334

 

 

1,997

 

 

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

 

 

 

 

 

 

$

45,457

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


During May 2011, the Company received a payment of $54.7 million on a mezzanine loan, representing $33.8 million of principal, $13.4 million of accrued interest, and a $7.5 million exit fee.


During February 2011, the Company made a mezzanine loan for $3.8 million which accrues interest at 15% and is payable upon a capital event. The Company also received a payment of $1.9 million on a mezzanine loan.


Allowances for real estate notes receivable are established based upon management’s quarterly review of the investments. In performing this review, management considers the estimated net recoverable value of the loan as well as other factors, including the fair value of any collateral, the amount and status of any senior debt, and the prospects for the borrower. Because this determination is based upon projections of future economic events, which are inherently subjective, the amounts ultimately realized from the loans may differ materially from the carrying value at the balance sheet date.


The activity in the allowance for notes receivable for the six months ended June 30, 2011 is as follows:


 

 

 

 

 

(dollars in thousands)

 

Allowance for
Notes Receivable

 

 

 

 

 

 

 

 

 

Balance at December 31, 2010

 

$

4,964

 

Provision for losses on notes receivable

 

 

180

 

 

 

 

Balance at June 30, 2011

 

$

5,144