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NOTES RECEIVABLE AND PREFERRED EQUITY INVESTMENTS, NET | 9 Months Ended
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Sep. 30, 2014
Mortgage Loans on Real Estate [Abstract] |
NOTES RECEIVABLE AND PREFERRED EQUITY INVESTMENTS, NET | NOTES RECEIVABLE AND PREFERRED EQUITY INVESTMENTS, NET As of September 30, 2014, the Company’s notes receivable and preferred equity investments, net, aggregated $94.4 million, and were collateralized either by underlying properties, the borrowers' ownership interests in the entities that own properties and/or by the borrowers' personal guarantee subject, as applicable, to senior liens, as follows:
(dollars in thousands) |  |  |
Description | Effective interest rate (1) | First Priority liens | Net Carrying Amounts of Notes Receivable as of September 30, 2014 |  | Net Carrying Amounts of Notes Receivable as of December 31, 2013 | Maturity date
First Mortgage Loan | 6.0% | — |  | $ | — |  |  | $ | 6,400 |  | Demand
Mezzanine Loan (2) | 10.0% | 83,686 |  | 7,895 |  |  | 9,089 |  | Demand
First Mortgage Loan | 5.5% | — |  | 4,000 |  |  | 42,000 |  | 4/1/2016
Zero Coupon Loan (3) | 24.0% | 166,200 |  | 4,847 |  |  | 4,431 |  | 1/3/2016
Mezzanine Loan | 15.0% | — |  | 30,879 |  |  | 30,879 |  | 11/9/2020
Mezzanine Loan | 15.0% | — |  | — |  |  | 3,834 |  | Upon Capital Event
Preferred Equity | 8.1% | 20,855 |  | 13,000 |  |  | 13,000 |  | 9/1/2017
Construction Loan | 7.7% | — |  | 12,000 |  |  | 12,000 |  | 1/1/2015
Mezzanine Loan | 12.7% | 18,900 |  | 8,000 |  |  | — |  | 10/3/2015
Preferred Equity | 13.5% | — |  | 4,000 |  |  | — |  | 5/9/2016
Other | LIBOR + 2.5% | — |  | 4,000 |  |  | 3,000 |  | 12/30/2020
Other | 18.0% | — |  | 3,157 |  |  | — |  | 7/1/2017
Individually less than 3% (4) | 2.7% to 11.6% | — |  | 2,631 |  |  | 2,023 |  | 12/31/20 to 5/1/2024
Total |  |  | $ | 94,409 |  |  | $ | 126,656 |  |
Notes: (1) Includes origination and exit fees (2) Comprised of three cross-collateralized loans from one borrower, which are non-performing (3) The principal balance for this accrual-only loan is increased by the interest accrued (4) Consists of three loans as of September 30, 2014 During January 2014, the Company received a repayment of $6.4 million, representing the full principal amount on a note receivable. During January 2014, the Company also received a payment of $1.4 million for a mezzanine loan with a carrying value, net of reserves, of $0.7 million. The Company recognized income of approximately $0.7 million relating to the payoff, which is included in Other, a component of revenue in the accompanying 2014 Consolidated Statement of Income for the nine months ended September 30, 2014. During April 2014, the Company made a $13.0 million loan, which is collateralized by a property and bears interest at 12.7% and matures October 2015. During July 2014, the borrower repaid $5.0 million of the loan. The outstanding balance at September 30, 2014 was $8.0 million. During April 2014, the Company made a $1.9 million loan, which is collateralized by a property, bears interest at LIBOR plus 375 basis points and matures May 2024. During April 2014, the Company converted a $38.0 million loan into an equity interest in 152-154 Spring Street (Note 4). 6. NOTES RECEIVABLE AND PREFERRED EQUITY INVESTMENTS, NET (continued) During April 2014, the Company received payment of $10.3 million representing principal and accrued interest on a mezzanine loan for which the Company had a carrying value of $8.5 million, net of a $2.0 million reserve. Following the full collection of all amounts due under this note, the Company recognized income of approximately $2.0 million, which is included in Other, a component of revenue in the accompanying 2014 Consolidated Statement of Income for the nine months ended September 30, 2014. During May 2014, the Company made a $4.0 million preferred equity investment in an entity which owns a property located in the Bronx. The investment has a preferred return of 13.5% and matures May 9, 2016. During July 2014, the Company made an additional $1.0 million loan, which is collateralized by Common OP Units, to an existing borrower, bringing the total outstanding amount to $4.0 million. This loan bears interest at LIBOR plus 250 basis points and matures December 2020. During July 2014, the Company made a $4.8 million loan, which is collateralized by the borrower's interest in a property, bears interest at 18.0% and matures July 2017. As of September 30, 2014, $3.2 million has been drawn down on the loan. During September 2014, the Company received payment of $1.9 million on a note, representing $0.7 million of accrued interest and $1.2 million of principal. The Company monitors the credit quality of its notes receivable on an ongoing basis and considers indicators of credit quality such as loan payment activity, the estimated fair value of the underlying collateral, the seniority of the Company's loan in relation to other debt secured by the collateral and the prospects of the borrower. As of September 30, 2014, the Company held three non-performing notes aggregating $7.9 million for which payment was delinquent. Based primarily on the indicators noted above, the Company has established a reserve of $0.1 million as of September 30, 2014 related to these notes. The following table reconciles the allowance for notes receivable from December 31, 2013 to September 30, 2014:
(dollars in thousands) | Allowance for Notes Receivable
Balance at December 31, 2013 | $ | 3,681 |
Additional reserves | 88 |
Recoveries | (3,681 | )
Charge-offs and reclassifications | — |
Balance at September 30, 2014 | $ | 88 |

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- Definition The entire disclosure for mortgage loans on real estate, this includes the supplemental information pertaining to each mortgage loan receivable that equals or exceeds three percent of the carrying amount of mortgages. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 10 -Section S99 -Paragraph 6 -Subparagraph (SX 210.5-04.(c) Schedule IV) -URI http://asc.fasb.org/extlink&oid=27047687&loc=d3e5864-122674 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 29 -Article 12 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 04 -Paragraph c -Subparagraph Schedule IV -Article 5 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 948 -SubTopic 310 -Section S99 -Paragraph 1 -Subparagraph (SX 210.12-29) -URI http://asc.fasb.org/extlink&oid=6589523&loc=d3e617274-123014 + Details
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