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Notes Receivable, Net and Other

9 Months Ended

Sep. 30, 2023

Notes receivable, net are summarized in the table below (dollars in thousands):


	Interest Rate		September 30, 2023		December 31, 2022




Certificate of Occupancy Note (1) (3)
Face amount	7.0	%	$	—	$	5,250
Discount (2)			—		(188)

Notes receivable, net			$	—	$	5,062

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(1) The outstanding principal balance and all accrued and unpaid interest was due and payable on or before July 9, 2025. The note was paid in full on July 14, 2023.

(2) The discount represented the imputed interest during the interest-free period.

(3) The note receivable was secured by the 1.65-acre land parcel adjacent to the Hilton St. Petersburg Bayfront.

No cash interest income was recorded for the three and nine months ended September 30, 2023 and 2022.

We recognized discount amortization income as presented in the table below (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
Line Item	2023		2022		2023		2022
Other income (expense)	$	9	$	86	$	188	$	252

As of September 30, 2023, the Company has a note receivable with the manager of 815 Commerce MM who also holds a non-controlling interest in 815 Commerce MM for $5.7 million. See discussion in note 2. The Company has a maximum note commitment of up to $9.5 million, which is the total of balancing deposits required by the property construction lender. The note bears interest at 18.0% per annum. The note receivable is payable within 30 days after demand. If the manager fails upon demand to repay the note receivable with interest, the Company will have the right to convert the unpaid principal plus all accrued interest thereon to an additional capital contribution in which case the deemed additional capital contributions by the manager will be deemed to have not occurred and the percentage interests and the residual sharing percentages of the members shall be adjusted. The note receivable may be prepaid in whole or in part.

The following table summarizes the note receivable (dollars in thousands):


	Interest Rate		September 30, 2023		December 31, 2022




Note receivable	18.0	%	$	5,721	$	—

The following table summarizes the interest income associated with the note receivable (in thousands):


	Three Months Ended September 30,		Nine Months Ended September 30,
Line Item	2023			2023
Other income (expense)	$	192		$	212

On September 1, 2022, the Company sold the Sheraton Ann Arbor. See note 5. Under the purchase and sale agreement, $1.5 million of the sales price is deferred, interest free, until the last day of the 24th month following the closing date (September 30, 2024). The components of the receivable, which is included in “other assets” in the consolidated balance sheet, are summarized below (dollars in thousands):


	Imputed Interest Rate		September 30, 2023		December 31, 2022
Deferred Consideration
Face amount	10.0	%	$	1,500	$	1,500
Discount (1)			(142)		(240)
			$	1,358	$	1,260

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(1) The discount represents the imputed interest during the interest-free period.

We recognized discount amortization income as presented in the table below (in thousands):


	Three Months Ended September 30,		Nine Months Ended September 30,
Line Item	2023		2022		2023		2022
Other income (expense)	$	34	$	10	$	98	$	10

We review receivables for impairment each reporting period. Under the model, the Company estimates credit losses over the entire contractual term of the instrument from the date of initial recognition of that instrument and is required to record a credit loss expense (or reversal) in each reporting period. Our assessment of impairment is based on considerable management judgment and assumptions. No impairment charges were recorded for the three and nine months ended September 30, 2023 and 2022.