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Notes Receivable

12 Months Ended

Dec. 31, 2024

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, 2024 (dollar amounts in thousands):


Interest							Type of		Gross						Type of
Rate		IRR			Maturity		Loan		Investment				# of loans		Property
8.0%		11.0	%		2027		Mezzanine		$	25,000			1		ALF
0.0%		—			2028		Working capital			1,429			1		SNF
8.8%		12.0	%		2028		Mezzanine			17,000			1		ALF
6.5%		—			2030		Working capital			138			2		SNF
7.4%		—			2030		Working capital			1,457			2		ALF
0.0%		—			2031		Working capital			2,693			1		ALF
									$	47,717	⁽¹⁾		8

(1)	Excludes the impact of credit loss reserve.

The following table is a summary of our notes receivable components at December 31, 2024 and 2023 (in thousands):


	At December 31, 2024			At December 31, 2023
Mezzanine loans	$	42,000		$	42,000
Working capital loans		5,717			19,101
Notes receivable credit loss reserve		(477)			(611)
Total	$	47,240		$	60,490

The following table summarizes our notes receivable activity for the years ended December 31, 2024, 2023 and 2022 (in thousands):


	Year Ended December 31,
		2024			2023			2022
Advances under notes receivable	$	340		$	20,377	⁽³⁾	$	37,192	⁽⁵⁾
Principal payments received under notes receivable		(13,434)	⁽¹⁾		(14,687)	⁽⁴⁾		(6,843)
Write-off of notes receivable		(290)	⁽²⁾		(3,561)	⁽²⁾		—
Recovery (provision) of credit losses		134			(22)			(303)
Net (decrease) increase in notes receivable	$	(13,250)		$	2,107		$	30,046

(1)

During 2024, we received $12,103 towards the paydown of a $13,531 working capital note. The remaining $1,428 balance of the working capital note is interest free and will be repaid in installments through 2028. Additionally, we received an aggregate of $1,331 related to the payoff of three working capital notes.

(2)	During 2024 and 2023, we wrote-off uncollectible working capital notes.

(3)	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%.

(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 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.