Note 5 – Commercial Mortgage Loans

The Company’s commercial mortgage loan portfolio was comprised of the following at March 31, 2013:


Description	Date of Investment		Maturity Date		Original Face Amount		Current Face Amount		Carrying Value		Coupon			Property Size
Hotel - NY, NY		Jan-10		Feb-15	$	32,000	$	31,501	$	31,501		Fixed			151 rooms
Office Condo (Headquarters) - NY, NY		Feb-10		Feb-15		28,000		27,351		27,351		Fixed			73,419 sq. ft.
Hotel - Silver Spring, MD		Mar-10		Apr-15		26,000		25,186		24,935		Fixed			263 rooms
Mixed Use – South Boston, MA (1)		Apr-12		Dec-13		23,844		16,890		14,444		Floating			20 acres
Condo Conversion – NY, NY (2)		Dec-12		Jan-15		45,000		45,000		44,602		Floating			119,000 sq. ft.

Total/Weighted Average					$	154,844	$	145,928	$	142,833		7.84	%

(1)

This loan is a senior sub-participation interest in a $120,000 first mortgage. In December 2012, the borrower exercised a one-year extension option subject upon repayment of $33,000 of the entire first mortgage (of which the Company received its pro rata portion) and the payment of a fee on the outstanding balance of the entire first mortgage.

(2)	This loan includes two one-year extension options subject to certain conditions and the payment of a fee for each extension.

During March 2013, the Company consented to the transfer of the controlling ownership of the borrower under the Silver Spring, Maryland loan. In conjunction with its consent, the Company received a $280 fee which will be recognized over the remaining life of the loan.

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			Property Size
Hotel - NY, NY		Jan-10		Feb-15	$	32,000	$	31,571	$	31,571		Fixed			151 rooms
Office Condo (Headquarters) - NY, NY		Feb-10		Feb-15		28,000		27,419		27,419		Fixed			73,419 sq. ft.
Hotel - Silver Spring, MD		Mar-10		Apr-15		26,000		25,273		25,273		Fixed			263 rooms
Mixed Use – South Boston, MA (1)		Apr-12		Dec-13		23,844		17,287		14,105		Floating			20 acres
Condo Conversion – NY, NY (2)		Dec-12		Jan-15		45,000		45,000		44,553		Fixed			119,000 sq. ft.

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

(1)

(2)	This loan includes two one-year extension options subject to certain conditions and the payment of a fee for each extension.

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 March 31, 2013 and December 31, 2012.