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NOTES AND INTEREST RECEIVABLE
 12 Months Ended
Dec. 31, 2014
NOTES AND INTEREST RECEIVABLE  
NOTES AND INTEREST RECEIVABLE

NOTE 3.       NOTES AND INTEREST RECEIVABLE

 

A portion of our assets are invested in mortgage notes receivable, principally secured by real estate. We may originate mortgage loans in conjunction with providing purchase money financing of property sales. Notes receivable are generally collateralized by real estate or interests in real estate and personal guarantees of the borrower and, unless noted otherwise, are so secured.  Management intends to service and hold for investment the mortgage notes in our portfolio. A majority of the notes receivable provide for principal to be paid at maturity. Our mortgage notes receivable consist of first, wraparound and junior mortgage loans (dollars in thousands).

 

 

 

 

 

 

 

 

Maturity

 

Interest

 

 

 

 

 

 

Borrower

 

 

 

Date

 

Rate

 

Amount

 

Security

Performing loans:

 

 

 

 

 

 

 

 

 

 

 

     Foundation for Better Housing, Inc. (Holland Lake) (1)

12/19

 

12.00%

 

   $           4,698

 

Secured

 

     Foundation for Better Housing, Inc. (Holland Lake) (1)

12/17

 

12.00%

 

              1,674

 

Secured

 

     Foundation for Better Housing, Inc. (Overlook at Allensville) (1)

11/19

 

12.00%

 

              2,472

 

Secured

 

     Foundation for Better Housing, Inc. (Overlook at Allensville) (1)

12/17

 

12.00%

 

              1,408

 

Secured

 

     Foundation for Better Housing, Inc. (Preserve @ Prairie Pointe) (1)

03/19

 

12.00%

 

              1,810

 

Secured

 

     Foundation for Better Housing, Inc. (Preserve @ Prairie Pointe) (1)

03/17

 

12.00%

 

              1,156

 

Secured

 

     Foundation for Better Housing, Inc. (Vista Ridge) (1)

04/19

 

12.00%

 

              3,923

 

Secured

 

     Foundation for Better Housing, Inc. (Vista Ridge) (1)

06/17

 

12.00%

 

              1,492

 

Secured

 

     HGH Residential, LLC (Tradewinds Development)

07/19

 

12.00%

 

              6,131

 

Secured

 

     One Realco Corporation (1,2)

01/17

 

3.00%

 

              7,000

 

Unsecured

 

     Realty Advisors Management, Inc. (1)

12/16

 

2.20%

 

            20,387

 

Unsecured

 

     Unified Housing Foundation, Inc. (Cliffs of El Dorado) (1)

12/32

 

12.00%

 

              2,097

 

100% Interest in Unified Housing of McKinney, LLC

 

     Unified Housing Foundation, Inc. (Echo Station) (1)

12/32

 

12.00%

 

              1,481

 

100% Interest in Unified Housing of Temple, LLC

 

     Unified Housing Foundation, Inc. (Inwood on the Park) (1)

12/32

 

12.00%

 

              5,059

 

100% Interest in Unified Housing Inwood, LLC

 

     Unified Housing Foundation, Inc. (Kensington Park) (1)

12/32

 

12.00%

 

              3,936

 

100% Interest in Unified Housing Kensington, LLC

 

     Unified Housing Foundation, Inc.  (Lakeshore Villas) (1)

12/32

 

12.00%

 

              2,000

 

Unsecured

 

     Unified Housing Foundation, Inc.  (Lakeshore Villas) (1)

12/32

 

12.00%

 

              9,096

 

Membership interest in Housing for Seniors of Humble, LLC

 

     Unified Housing Foundation, Inc. (Limestone Canyon) (1)

12/32

 

12.00%

 

              3,057

 

100% Interest in Unified Housing of Austin, LLC

 

     Unified Housing Foundation, Inc. (Limestone Canyon) (1)

12/32

 

12.00%

 

              4,663

 

100% Interest in Unified Housing of Austin, LLC

 

     Unified Housing Foundation, Inc. (Limestone Ranch) (1)

12/32

 

12.00%

 

              2,250

 

100% Interest in Unified Housing of Vista Ridge, LLC

 

     Unified Housing Foundation, Inc. (Limestone Ranch) (1)

12/32

 

12.00%

 

              6,000

 

100% Interest in Unified Housing of Vista Ridge, LLC

 

     Unified Housing Foundation, Inc. (Parkside Crossing) (1)

12/32

 

12.00%

 

              2,272

 

100% Interest in Unified Housing of Parkside Crossing, LLC

 

     Unified Housing Foundation, Inc. (Reserve at White Rock Phase I) (1)                                                         12/32

 

12.00%

 

              2,485

 

100% Interest in Unified Housing of Harvest Hill I, LLC

 

     Unified Housing Foundation, Inc. (Reserve at White Rock Phase II) (1)                                                      12/32

 

12.00%

 

              2,555

 

100% Interest in Unified Housing of Harvest Hill, LLC

 

     Unified Housing Foundation, Inc. (Sendero Ridge) (1)

12/32

 

12.00%

 

              5,174

 

100% Interest in Unified Housing of Sendero Ridge, LLC

 

     Unified Housing Foundation, Inc. (Sendero Ridge) (1)

12/32

 

12.00%

 

              4,812

 

100% Interest in Unified Housing of Sendero Ridge, LLC

 

     Unified Housing Foundation, Inc. (Timbers of Terrell) (1)

12/32

 

12.00%

 

              1,323

 

100% Interest in Unified Housing of Terrell, LLC

 

     Unified Housing Foundation, Inc. (Tivoli) (1)

12/32

 

12.00%

 

              7,966

 

100% Interest in Unified Housing of Tivoli, LLC

 

     Unified Housing Foundation, Inc. (Trails at White Rock) (1)

 

12.00%

 

              3,815

 

100% Interest in Unified Housing of Harvest Hill III, LLC

 

     Unified Housing Foundation, Inc. (1)

06/17

 

12.00%

 

              1,261

 

Unsecured

 

     Unified Housing Foundation, Inc. (1)

12/17

 

12.00%

 

              1,207

 

Unsecured

 

     Unified Housing Foundation, Inc. (1)

12/15

 

12.00%

 

              2,665

 

Unsecured

 

     Unified Housing Foundation, Inc. (1)

12/16

 

12.00%

 

              3,657

 

Unsecured

 

     Various non-related party notes

Various

 

Various

 

              3,503

 

Various secured interests

 

     Various related party notes (1)

Various

 

Various

 

              6,393

 

Various secured interests

 

     Accrued interest

 

 

 

 

 

 

 

              8,606

 

 

Total Performing

 

 

 

 

 

 

 

 

 $       149,484

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-Performing loans:

 

 

 

 

 

 

 

 

 

 

 

     Leman Development, Ltd (2)

07/11

 

7.00%

 

              1,500

 

Unsecured

 

     Tracy Suttles (2)

 

 

 

12/11

 

0.00%

 

              1,077

 

Unsecured

 

     Various non-related party notes

Various

 

Various

 

                 507

 

Various secured interests

 

     Accrued interest

 

 

 

 

 

 

 

                   77

 

 

Total Non-Performing

 

 

 

 

 

 

 

 $           3,161

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

      Allowance for estimated losses

 

 

 

 

          (18,279)

 

 

Total

 

 

 

 

 

 

 

 

 

 $       134,366

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 (1)  Related party notes

 

 

 

 

 

 

 

 

 

 

 (2)  An allowance was taken for estimated losses at full value of note.

 

 

 

 

 

 

 

Junior Mortgage Loans. We may invest in junior mortgage loans, secured by mortgages that are subordinate to one or more prior liens either on the fee or a leasehold interest in real estate. Recourse on such loans ordinarily includes the real estate on which the loan is made, other collateral and personal guarantees by the borrower.  At December 31, 2014, 14.9% of our assets were invested in junior and wraparound mortgage loans.

 

As of December 31, 2014, the obligors on $131.2 million or 91.2% of the mortgage notes receivable portfolio were due from related parties.  The Company recognized $14.3 million of interest income from these related party notes receivables.

 

As of December 31, 2014, $3.1 million or 2.1% of the mortgage notes receivable portfolio were non-performing.

 

The Company has various notes receivable from Unified Housing foundation, Inc. (“UHF”).  UHF is determined to be a related party due to our significant investment in the performance of the collateral secured under the notes receivable.  Payments are due from surplus cash flow from operations, sale or refinancing of the underlying properties. These notes are cross collateralized to the extent that any surplus cash available from any of the properties underlying these notes will be used to repay outstanding interest and principal for the remaining notes.  Furthermore, any surplus cash available from any of the properties UHF owns, besides the properties underlying these notes, can be used to repay outstanding interest and principal for these notes.  The allowance on the notes was a purchase allowance that was netted against the notes when acquired.

 

In 2010, the Company agreed to reduce the interest rate from 12% to 5.25% for a five year period on the surplus cash flow notes receivable from UHF.  As of January 1, 2013, the Company agreed to extend the maturity on these surplus cash flow notes receivable for an additional term of five years in exchange for the early termination of the reduced interest rate.