Notes Receivable

3 Months Ended

Mar. 31, 2023

4.	Notes Receivable

Notes receivable consist of a mezzanine loan and working capital loans. The following table sets forth information regarding our investment in notes receivable at March 31, 2023 (dollar amounts in thousands):


Interest			Type of	Gross				Type of
Rate	IRR	Maturity	Loan	Investment			# of loans	Property
5.0%	—	2023	Working capital	$	380		1	ALF
5.0%	—	2024	Working capital		788		1	ALF
4.0%	—	2024	Working capital		13,531		1	SNF
5.0%	—	2025	Working capital		932		1	ALF
7.5%	—	2027	Working capital		550		1	ALF
8.0%	11.0%	2027	Mezzanine		25,000		1	ALF
6.5%	—	2030	Working capital		138		1	SNF
7.1%	—	2030	Working capital		1,607		2	ALF
7.0%	—	2031	Working capital		2,693		1	ALF
8.0%	—	2032	Working capital		1,317		1	SNF
				$	46,936	⁽¹⁾	11

(1)	Excludes the impact of credit loss reserve.

The following table is a summary of our notes receivable components as of March 31, 2023 and December 31, 2022 (in thousands):


	March 31, 2023		December 31, 2022
Mezzanine loans	$	25,000	$	36,815
Other loans		21,936		22,157
Notes receivable credit loss reserve		(469)		(589)
Total	$	46,467	$	58,383

The following table summarizes our notes receivable activity for the three months ended March 31, 2023 and 2022 (in thousands):


	Three Months Ended March 31,
		2023			2022
Advances under notes receivable	$	605		$	34,791	⁽²⁾
Principal payments received under notes receivable		(12,641)	⁽¹⁾		(1,287)
Provision (recovery) for credit losses		120			(333)
Net (decrease) increase in notes receivable	$	(11,916)		$	33,171

(1)

During 2023, we received $4,545, which includes a prepayment fee and the exit IRR totaling $190 from a mezzanine loan prepayment. The mezzanine loan was on a 136-unit ILF in Oregon. Additionally, another $7,461 mezzanine loan was effectively prepaid through converting it as part of our $51,111 investment in a participating interest in an existing mortgage loan that is secured by a 203-unit ALF, ILF and MC located in Georgia. We recorded $1,380 of interest income in connection with the effective prepayment of the mezzanine loan.

(2)

During 2022, we originated a $25,000 mezzanine loan for the recapitalization of a five-property seniors housing portfolio. The mezzanine loan has a term of approximately five years, with two one-year extension options and bears interest at 8% with an IRR of 11%. The five communities are located in Oregon and Montana, have a total of 621 units, and include independent living, assisted living and memory care.