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COMMERCIAL LOANS AND INVESTMENTS | 12 Months Ended
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Dec. 31, 2023
COMMERCIAL LOANS AND INVESTMENTS |
COMMERCIAL LOANS AND INVESTMENTS | NOTE 4. COMMERCIAL LOANS AND INVESTMENTS Our investments in commercial loans or similarly structured investments, such as preferred equity, mezzanine loans or other subordinated debt, have been and are expected to continue to be secured by real estate or the borrower’s pledge of its ownership interest in the entity that owns the real estate. The investments are associated with commercial real estate located in the United States and its territories, and are current or performing with either a fixed or floating rate. Some of these loans may be syndicated in either a pari-passu or senior/subordinated structure. Commercial first mortgage loans generally provide for a higher recovery rate due to their senior position in the underlying collateral. Commercial mezzanine loans are typically secured by a pledge of the borrower’s equity ownership in the underlying commercial real estate. Unlike a mortgage, a mezzanine loan is not secured by a lien on the property. An investor’s rights in a mezzanine loan are usually governed by an intercreditor agreement that provides holders with the rights to cure defaults and exercise control on certain decisions of any senior debt secured by the same commercial property. 2023 Activity. On February 21, 2023, the borrower of the 4311 Maple Avenue mortgage note repaid the principal balance of $0.4 million, leaving no remaining balance outstanding as of December 31, 2023. On March 1, 2023, the Company originated a $15.0 million first mortgage loan secured by the Founders Square property located in Dallas, Texas. The loan is interest-only with a term of three years with a fixed interest rate of 8.75%. On December 20, 2023, simultaneous with the sale of the property, the Company originated a $15.4 million first mortgage loan secured by the Sabal Pavilion property located in Tampa, Florida. The loan is interest-only with a term of six months with a fixed interest rate of 7.50%. During the year ended December 31, 2023, the Company funded $2.2 million to the borrower and received $0.6 million in principal repayments under the construction loan originated in January 2022 and secured by the property and improvements to be constructed thereon for the second phase of The Exchange at Gwinnett project located in Buford, Georgia. As of December 31, 2023, there is no remaining commitment to the borrower. The Company’s commercial loans and investments were comprised of the following at December 31, 2023 (in thousands):
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Description |  | Date of Investment |  | Maturity Date |  | Original Face Amount |  | Current Face Amount |  | Carrying Value |  | Coupon Rate
Construction Loan – The Exchange At Gwinnett – Buford, GA | ​ | January 2022 | ​ | January 2024 | ​ | $ | 8,700 | ​ | $ | 1,857 | ​ | $ | 1,854 | ​ | 7.25%
Preferred Investment – Watters Creek – Allen, TX | ​ | April 2022 | ​ | April 2025 | ​ | ​ | 30,000 | ​ | ​ | 30,000 | ​ | ​ | 29,937 | ​ | 8.75%
Mortgage Note – Founders Square – Dallas, TX | ​ | March 2023 | ​ | March 2026 | ​ | ​ | 15,000 | ​ | ​ | 15,000 | ​ | ​ | 14,892 | ​ | 8.75%
Promissory Note – Main Street – Daytona Beach, FL | ​ | June 2023 | ​ | May 2033 | ​ | ​ | 400 | ​ | ​ | 400 | ​ | ​ | 400 | ​ | 7.00%
Mortgage Note – Sabal Pavilion – Tampa, FL | ​ | December 2023 | ​ | June 2024 | ​ | ​ | 15,400 | ​ | ​ | 15,400 | ​ | ​ | 15,393 | ​ | 7.50%
​ | ​ | ​ | ​ | ​ | ​ | $ | 69,500 | ​ | $ | 62,657 | ​ | $ | 62,476 | ​ | ​
CECL Reserve | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | (627) | ​ | ​
Total Commercial Loans and Investments | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | $ | 61,849 | ​ | ​
​ With respect to the $1.5 million improvement loan at Ashford Lane originated in May 2022, during the year ended December 31, 2023, the Company took possession of the improvements that were funded by such loan pursuant to the applicable security agreement and, accordingly, the carrying value of the investment was reclassified as building and improvements. 2022 Activity. On January 26, 2022, the Company originated a construction loan secured by the property and improvements to be constructed thereon for the second phase of The Exchange at Gwinnett project located in Buford, Georgia for $8.7 million. The construction loan matures on January 26, 2024, has a one-year extension option, bears a fixed interest rate of 7.25%, and requires payments of interest only prior to maturity. At closing, an origination fee of $0.1 million was received by the Company. Funding of the loan occurs as the borrower completes the underlying construction. As of December 31, 2022, the Company had funded $3.2 million to the borrower, leaving a remaining commitment of $5.5 million to the borrower. During the year ended December 31, 2022, the Company received principal payments totaling $2.9 million, leaving an outstanding loan balance of $0.2 million as of December 31, 2022. On March 11, 2022, the Company sold the Carpenter Hotel ground lease located in Austin, Texas for $17.1 million. The lease with Carpenter Hotel included two tenant repurchase options. Pursuant to FASB ASC Topic 842, Leases, the initial $16.25 million investment was recorded in the consolidated balance sheets as a commercial loan investment at the time of acquisition. The carrying value at the time of sale totaled $17.3 million, resulting in a loss of $0.2 million. On April 7, 2022, the Company entered into a preferred equity agreement to provide $30.0 million of funding towards the total investment in Watters Creek at Montgomery Farm, a grocery-anchored, mixed-use property located in Allen, Texas (the “Watters Creek Investment”). Pursuant to FASB ASC Topic 810, Consolidation, and as further described in Note 7. “Investment in Joint Ventures,” the Company determined it is not the primary beneficiary of the entity underlying the Watters Creek Investment; accordingly, the $30.0 million was recorded in the consolidated balance sheets as a commercial loan investment at the time of acquisition. The Watters Creek Investment matures on April 6, 2025, has two one-year extension options, bears a fixed interest rate of 8.50% at the time of acquisition with increases during the initial term as well as the option terms, and requires payments of interest only prior to maturity. At closing, an origination fee of $0.15 million was received by the Company. ​ On April 29, 2022, the Company originated a construction loan secured by the property and improvements to be constructed thereon for the WaterStar Residential and Retail project located in Kissimmee, Florida for $19.0 million. The construction loan matures on August 31, 2022, bears a fixed interest rate of 8.00%, and requires payments of interest only prior to maturity. At closing, an origination fee of $0.1 million was received by the Company. Funding of the loan occurred as the borrower completed the underlying construction. The entire $19.0 million was funded to the borrower, leaving no remaining commitment. As of December 31, 2022, the borrower had repaid the $19.0 million construction loan principal balance. ​ On May 9, 2022, the Company originated an improvement loan for a tenant at the Ashford Lane property located in Atlanta, Georgia for $1.5 million. The improvement loan matures on April 30, 2025, bears a fixed interest rate of 12.00%, until the location is open at which time the fixed interest rate will be 10.00%, and requires payments of interest only prior to maturity. Funding of the loan will occur as the borrower completes the underlying improvements. As of December 31, 2022, the Company had funded $1.5 million to the borrower. ​ On July 28, 2022, the Company sold the Westland Gateway Plaza located in Hialeah, Florida for $22.2 million. The lease with Westland Gateway Plaza included a tenant purchase option. Pursuant to FASB ASC Topic 842, Leases, the initial $21.1 million investment was recorded in the consolidated balance sheets as a commercial loan investment at the time of acquisition. The carrying value at the time of sale totaled $21.2 million, resulting in a gain of $1.0 million. On November 4, 2022, the borrower of the 110 N Beach St. mortgage note repaid the principal balance of $0.4 million, leaving no remaining balance outstanding at December 31, 2022. ​ ​ The Company’s commercial loans and investments were comprised of the following at December 31, 2022 (in thousands): ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Description |  | Date of Investment |  | Maturity Date |  | Original Face Amount |  | Current Face Amount |  | Carrying Value |  | Coupon Rate
Mortgage Note – 4311 Maple Avenue – Dallas, TX | ​ | October 2020 | ​ | April 2023 | ​ | $ | 400 | ​ | $ | 400 | ​ | $ | 395 | ​ | 7.50%
Construction Loan – The Exchange At Gwinnett – Buford, GA | ​ | January 2022 | ​ | January 2024 | ​ | ​ | 8,700 | ​ | ​ | 220 | ​ | ​ | 173 | ​ | 7.25%
Preferred Investment - Watters Creek – Allen, TX | ​ | April 2022 | ​ | April 2025 | ​ | ​ | 30,000 | ​ | ​ | 30,000 | ​ | ​ | 29,887 | ​ | 8.50%
Improvement Loan - Ashford Lane – Atlanta, GA | ​ | May 2022 | ​ | April 2025 | ​ | ​ | 1,500 | ​ | ​ | 1,453 | ​ | ​ | 1,453 | ​ | 12.00%
​ | ​ | ​ | ​ | ​ | ​ | $ | 40,600 | ​ | $ | 32,073 | ​ | $ | 31,908 | ​ | ​
The carrying value of the commercial loans and investment portfolio at December 31, 2023 and 2022 consisted of the following (in thousands):
​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | As of
​ |  | December 31, 2023 |  | December 31, 2022
Current Face Amount | ​ | $ | 62,657 | ​ | $ | 32,073
Unaccreted Origination Fees | ​ | ​ | (181) | ​ | ​ | (161)
CECL Reserve | ​ | ​ | (627) | ​ | ​ | (4)
Total Commercial Loans and Investments | ​ | $ | 61,849 | ​ | $ | 31,908
​

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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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