Loans

9 Months Ended

Sep. 30, 2025

The Company made preferred equity investments in two separate joint ventures which in turn acquired multi-family properties in the locations identified below. In accordance with GAAP, these investments are treated as loans. These investments are unsecured and are subordinate, including the payment of the returns thereon, to the mortgage debt encumbering the property acquired by the applicable joint venture. Information as to these investments at September 30, 2025 is summarized below (dollars and thousands):

Note 6 – Loans (continued)


Location	Investment Date	Annual Return		Current Return		Hurdle Return		Invested Amount		Redemption Date	Deferred fees
Wilmington, NC	October 2024	13	%	6.00	%	7.00	%	$	7,000	November 2031	$	(120)
Kennesaw, GA	November 2024	13	%	6.50	%	6.50	%	11,250		June 2029	(147)
								$	18,250		$	(267)

These investments provide for (1) an Annual Return (as set forth in the table above) compounded monthly, to the Company, of which the Current Return (as set forth in the table above) is payable monthly to the extent of available cash flow, and the Hurdle Return also to be paid monthly from remaining cash flow if any, pari passu or after the sponsor's receipt of its management fees and specified returns on its investment and (2) the total amount invested by the Company, including any unpaid portion of the Current Return and the Hurdle Return, to be payable to the Company, prior to any payments to the sponsor, upon the earlier to occur of certain events (e.g., sale of the property or the refinancing of the mortgage underlying the property) and the redemption date specified above. The Current Return is recorded as interest income when it is due from the sponsor and the Hurdle Return is recognized as interest income when it is received. Deferred loan fees are capitalized and recorded into income over the life of the investment. The Company's exposure to loss is limited to its original Invested Amount (as set forth in the table above).

The following table provides the net carrying value of the loans made by the Company (i.e., the Preferred Equity Investments) that are outstanding (dollars in thousands):


	September 30, 2025		December 31, 2024
Unpaid principal balance	$	18,250	$	18,250
less: allowance for credit loss	(270)		(270)
less: deferred loan fees	(267)		(313)
Net carrying value	$	17,713	$	17,667

During the three and nine months ended September 30, 2025, the Company recorded $324,000 and $949,000 respectively, of interest income, representing the full amount of the Current Return (including loan fee amortization of $15,000 and $46,000, respectively), payable with respect to these loans. As of September 30, 2025, these loans were current in their payment of the Current Return.