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Notes Receivable, Net | 3 Months Ended
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Mar. 31, 2020
Accounts And Notes Receivable Net [Abstract] |
Notes Receivable, Net | 3. Notes Receivable, Net The Company’s notes receivable, net were generally collateralized either by the underlying properties or the borrowers’ ownership interests in the entities that own the properties, and were as follows (dollars in thousands):
|  | March 31, |  |  | December 31, |  |  | March 31, 2020 |
Description |  | 2020 |  |  | 2019 |  |  | Number |  |  | Maturity Date |  | Interest Rate |
Core Portfolio (a, b) |  | $ | 135,467 |  |  | $ | 76,467 |  |  |  | 7 |  |  | Apr 2020 - Dec 2027 |  | 4.7% - 9% |
Fund II |  |  | 33,316 |  |  |  | 33,170 |  |  |  | 1 |  |  | Dec 2020 |  | 1.75% |
Fund III |  |  | 5,306 |  |  |  | 5,306 |  |  |  | 1 |  |  | Jul 2020 |  | 18.0% |
Total notes receivable |  |  | 174,089 |  |  |  | 114,943 |  |  |  |  |  |  |  |  |  |  |
Credit loss reserves |  |  | (930 | ) |  |  | — |  |  |  |  |  |  |  |  |  |  |
Notes receivable, net |  | $ | 173,159 |  |  | $ | 114,943 |  |  |  | 9 |  |  |  |  |  |  |
| (a) | Includes two notes receivable from OP Unit holders, which are collateralized by their OP Units, with balances totaling $6.5 million at March 31, 2020 and December 31, 2019.
| (b) | Includes $38.7 million for the Brandywine Note Receivable, which is collateralized by the remaining 24.78% undivided interest in Town Center (Note 4). On April 1, 2020, this note was converted to the remaining interest in Town Center (Note 15).
During the three months ended March 31, 2020, the Company:
| • | recorded credit loss reserves of $0.4 million upon the adoption of ASC 326 (Note 1);
| • | increased the balance of a Fund II note receivable by the interest accrued of $0.1 million;
| • | made a loan for $54.0 million with an interest rate of 9% structured as a redeemable preferred equity investment in a property at 850 Third Avenue in Brooklyn, NY;
| • | issued a new Core note for $5.0 million with an interest rate of 8% collateralized by our partner’s 50% share of the LUF Portfolio (Note 4) in Washington, D.C.; and
| • | recorded additional credit loss reserves of $0.5 million related to new transactions and recent market volatility.
One Core note aggregating $21.0 million including accrued interest (exclusive of default interest and other amounts due on the loan) was in default at March 31, 2020 and December 31, 2019. On April 1, 2020, the loan matured and was not repaid. The Company has reserved all of its rights and remedies under the applicable loan documents and otherwise with respect to the borrower and guarantor. The Company believes that the collateral is sufficient to cover all indebtedness to which it is owed on the loan. During the year ended December 31, 2019, the Company:
| • | redeemed its $15.3 million Fund IV investment plus accrued interest of $10.0 million;
| • | provided seller financing to the buyer in the amount of $13.5 million with an effective interest rate of 5.1%, collateralized by Pacesetter Park, in connection with the sale of the property (Note 2);
| • | funded an additional $4.3 million on a Core note receivable from an OP Unit holder;
| • | increased the balance of a Fund II note receivable by the interest accrued of $0.4 million;
| • | stopped accruing interest on one Fund III loan, due to the estimated market value of the collateral. The note had $4.7 million of accrued interest at each of December 31, 2018 and December 31, 2019 and was guaranteed by a third party;
| • | extended the maturity for a Core note receivable to June 20, 2020 (Note 15); and
| • | modified one Core loan to defer $0.4 million of interest until maturity. Subsequent to modification, the first mortgage, which aggregated $20.8 million including accrued interest, was in default as of December 31, 2019.
With the exception of new notes that originated in 2019 and 2020 as disclosed above, no notes were issued in the last three years. 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. Earnings from these notes and mortgages receivable are reported within the Company’s Structured Financing segment (Note 12). The Company’s estimated reserve for credit losses related to its Structured Financing segment has been computed for its amortized cost basis in the portfolio, including accrued interest (Note 5), factoring historical loss experience in the United Sates for similar loans, as adjusted for current conditions, as well as the Company’s expectations related to future economic conditions. Due to the lack of comparability across the Structured Financing portfolio, each loan was evaluated separately. As a result, for non-collateral dependent loans with a total amortized cost of $90.3 million, inclusive of accrued interest of $6.0 million, credit loss reserves have been recorded aggregating $0.9 million at March 31, 2020. For certain loans in this portfolio, aggregating $95.0 million, inclusive of accrued interest of $5.2 million, at March 31, 2020, there has been no credit loss reserve established because (i) these loans are collateral-dependent loans, which due to their settlement terms are not expected to be settled in cash but rather by the Company’s possession of the real estate collateral; and (ii) at March 31, 2020, the Company believes that the collateral for these three loans was sufficient to cover its investment.

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- Definition The entire disclosure for claims held for amounts due a entity, excluding financing receivables. Examples include, but are not limited to, trade accounts receivables, notes receivables, loans receivables. Includes disclosure for allowance for credit losses. + References Reference 1: http://www.xbrl.org/2009/role/commonPracticeRef -Publisher FASB -Name Accounting Standards Codification -Topic 310 -SubTopic 10 -URI http://asc.fasb.org/subtopic&trid=2196772 + Details
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