Note 5 – Commercial Mortgage Loans

The Company’s commercial mortgage loan portfolio was comprised of the following at December 31, 2012:


Description	Date of Investment		Maturity Date		Original Face Amount		Current Face Amount		Carrying Value		Coupon			Amortization Schedule	Property Size
Hotel - NY, NY		Jan-10		Feb-15	$	32,000	$	31,571	$	31,571		8.25	%	30 year	151 rooms
Office Condo (Headquarters) - NY, NY		Feb-10		Feb-15		28,000		27,419		27,419		8.00		30 year	73,419 sq. ft.
Hotel - Silver Spring, MD		Mar-10		Apr-15		26,000		25,273		25,273		9.00		25 year	263 rooms
Mixed Use - South Boston, MA (1)		Apr-12		Dec-13		23,844		17,287		14,105		1.98		Interest only	20 acres
Condo Conversion - NY, NY (2)		Dec-12		Jan-15		45,000		45,000		44,553		9.00		Interest only	119,000 sq. ft.

Total/Weighted Average					$	154,844	$	146,550	$	142,921		7.82	%

(1)

This loan is a senior sub-participation interest in a $120,000 first mortgage that bears interest at a rate of LIBOR plus 172 basis points and includes a one-year extension option subject to repayment of $33,000 of the entire first mortgage (of which the Company will receive its pro rata portion) and the payment of a 0.50% fee of the outstanding balance of the entire first mortgage.

(2)	Includes a 1.00% origination fee, a LIBOR floor of 0.50%, two one-year extension options subject to certain conditions and the payment of a 0.50% fee for each extension.

During April 2012, a $24,000 two-year fixed rate first mortgage loan on a 155-room boutique hotel in midtown Manhattan was repaid. The loan had an interest rate of 8.00%. The Company repaid $15,444 of borrowings under the Company’s $100,000 master repurchase facility entered into with JPMorgan Chase Bank, N.A. (the “JPMorgan Facility”) in conjunction with this repayment.

The Company’s commercial mortgage loan portfolio was comprised of the following at December 31, 2011:


Description	Date of Investment		Maturity Date		Original Face Amount		Current Face Amount		Coupon			Amortization Schedule	Property Size
Hotel – NY, NY		Jan-10		Feb-15	$	32,000	$	31,798		8.25	%	30 year	151 rooms
Office Condo (Headquarters) – NY, NY		Feb-10		Feb-15		28,000		27,644		8.00		30 year	73,419 sq. ft.
Hotel – Silver Spring, MD		Mar-10		Apr-15		26,000		25,564		9.00		25 year	263 rooms
Hotel – NY, NY		Aug-10		Aug-12		24,000		24,000		8.00		Interest only	155 rooms

Total					$	110,000	$	109,006		8.31	%

The Company evaluates its loans for possible impairment on a quarterly basis. The Company regularly evaluates the extent and impact of any credit deterioration associated with the performance and/or value of the underlying collateral property as well as the financial and operating capability of the borrower/sponsor on a loan by loan basis. Specifically, a property’s operating results and any cash reserves are analyzed and used to assess (i) whether cash from operations are sufficient to cover the debt service requirements currently and into the future, (ii) the ability of the borrower to refinance the loan, and/or (iii) the property’s liquidation value. The Company also evaluates the financial wherewithal of any loan guarantors as well as the borrower’s competency in managing and operating the properties. In addition, the Company considers the overall economic environment, real estate sector, and geographic sub-market in which the borrower operates. Such loan loss analyses are completed and reviewed by asset management and finance personnel, who utilize various data sources, including (i) periodic financial data such as debt service coverage ratio, property occupancy, tenant profile, rental rates, operating expenses, the borrower’s exit plan, and capitalization and discount rates, (ii) site inspections, and (iii) current credit spreads and discussions with market participants. An allowance for loan loss is established when it is deemed probable that the Company will not be able to collect all amounts due according to the contractual terms of the loan. The Company has determined that an allowance for loan losses was not necessary at December 31, 2012 and 2011.