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Notes Receivable | 12 Months Ended
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Dec. 31, 2023
Notes Receivable. |
Notes Receivable | 7. Notes Receivable Notes receivable consists of mezzanine loans and working capital loans. The following table summarizes our investments in notes receivable at December 31, 2023 (dollar amounts in thousands):
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Interest | ​ | ​ | ​ | ​ | ​ | ​ | Type of | ​ | Gross | ​ | ​ | ​ | ​ | Type of | ​
Rate | ​ | IRR | ​ | ​ | Maturity | ​ | Loan | ​ | Investment | ​ | ​ | # of loans | ​ | Property | ​
4.0% | ​ | — | ​ | ​ | 2024 | ​ | Working capital | ​ | $ | 13,531 | ​ | ​ | 1 | ​ | SNF |
5.0% | ​ | — | ​ | ​ | 2025 | ​ | Working capital | ​ | ​ | 732 | ​ | ​ | 1 | ​ | ALF | ​
7.5% | ​ | — | ​ | ​ | 2027 | ​ | Working capital | ​ | ​ | 550 | ​ | ​ | 1 | ​ | ALF | ​
8.0% | ​ | 11.0 | % | ​ | 2027 | ​ | Mezzanine | ​ | ​ | 25,000 | ​ | ​ | 1 | ​ | ALF | ​
8.8% | ​ | 12.0 | % | ​ | 2028 | ​ | Mezzanine | ​ | ​ | 17,000 | ​ | ​ | 1 | ​ | ALF | ​
6.5% | ​ | — | ​ | ​ | 2030 | ​ | Working capital | ​ | ​ | 138 | ​ | ​ | 1 | ​ | SNF | ​
7.3% | ​ | — | ​ | ​ | 2030 | ​ | Working capital | ​ | ​ | 500 | ​ | ​ | 1 | ​ | ALF | ​
7.3% | ​ | — | ​ | ​ | 2030 | ​ | Working capital | ​ | ​ | 957 | ​ | ​ | 1 | ​ | ALF | ​
7.0% | ​ | — | ​ | ​ | 2031 | ​ | Working capital | ​ | ​ | 2,693 | ​ | ​ | 1 | ​ | ALF | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | $ | 61,101 | (1) | ​ | 9 | ​ | ​ | ​
​
(1) | Excludes the impact of credit loss reserve.
The following table is a summary of our notes receivable components at December 31, 2023 and 2022 (in thousands):
​ | ​ | ​ | ​ | ​ | ​ | ​
​ | At December 31,
​ | 2023 | ​ | 2022 |
Mezzanine loans | $ | 42,000 | ​ | $ | 36,815 | ​
Working capital loans | ​ | 19,101 | ​ | ​ | 22,157 | ​
Notes receivable credit loss reserve | ​ | (611) | ​ | ​ | (589) | ​
Total | $ | 60,490 | ​ | $ | 58,383 | ​
​ The following table summarizes our notes receivable activity for the years ended December 31, 2023, 2022 and 2021 (in thousands):
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | Year Ended December 31, | ​
​ | ​ | 2023 | ​ | ​ | 2022 | ​ | ​ | 2021 | ​
Advances under notes receivable | $ | 20,377 | (1) | $ | 37,192 | (2) | $ | 16,353 | (3)
Interest reserve withheld | ​ | — | ​ | ​ | — | ​ | ​ | 353 | ​
Principal payments received under notes receivable | ​ | (14,687) | (4) | ​ | (6,843) | ​ | ​ | (2,694) | ​
Write-off of notes receivable | ​ | (3,561) | (5) | ​ | — | ​ | ​ | — | ​
Provision for credit losses | ​ | (22) | ​ | ​ | (303) | ​ | ​ | (140) | ​
Net increase in notes receivable | $ | 2,107 | ​ | $ | 30,046 | ​ | $ | 13,872 | ​
(1) | During 2023, we originated a mezzanine loan to recapitalize an existing 130-unit ILF/ALF/MC in Georgia and construction of 89 additional units. The loan term is five years at an initial yield of 8.75% and an IRR of 12.0%.
​
(2) | During 2022, we originated a $25,000 mezzanine loan for the recapitalization of five ALFs located in Oregon and Montana. 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 have a total of 621 units and include independent living, assisted living and memory care.
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(3) | During 2021, we originated a $4,355 mezzanine loan and withheld a $353 interest reserve. The mezzanine loan has a three-year term with two 12-month extensions. The initial rate is 8.0% for the first 18 months increasing to 10.5% thereafter with an 10.5% IRR. Additionally, we provided HMG Healthcare, LLC with a $25,000 secured working capital loan to facilitate the transition of the 11 properties from Senior Care and Abri Health and funded $9,900 under this working capital loan.
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(4) | 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.
​
(5) | During 2023, we wrote-off an uncollectible working capital note.
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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 -Topic 310 -SubTopic 10 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//310-10/tableOfContent + Details
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