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NOTES AND INTEREST RECEIVABLE

3 Months Ended

Mar. 31, 2020

NOTE 5. 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 guarantees, 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.

Below is a summary of our notes receivable as of March 31, 2020 (dollars in thousands):

Maturity

Interest

Borrower

Date

Rate

Amount

Security

Performing loans:

Prospectus Endeavors 4, LLC

01/23

12.00%

5,907

Secured

Prospectus Endeavors 6, LLC

10/22

12.00%

496

Secured

Oulan-Chikh Family Trust

03/21

8.00%

174

Secured

H198, LLC (McKinney Ranch Land)

09/20

6.00%

4,554

Secured

Forest Pines phase I

11/20

5.00%

2,869

Secured

Spyglass Apartments of Ennis, LP

11/20

5.00%

5,335

Secured

Bellwether Ridge

05/20

5.00%

3,853

Secured

Parc at Windmill Farms

05/20

5.00%

7,697

Secured

Autumn Breeze Apts

10/21

5.00%

1,414

Secured

Plum Tree

10/21

5.00%

492

Secured

Parc at Ingleside

12/21

5.00%

1,827

Secured

RNC Revolving Line of Credit

09/24

5.00%

8,851

Secured

Steeple Crest

10/20

5.00%

6,665

Secured

RAI PFBL 2018 Purch Fee Note Weatherford

12/21

12.00%

525

Secured

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

12/32

12.00%

1,481

Secured

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

12/32

12.00%

3,639

Secured

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

12/32

12.00%

3,933

Secured

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

12/32

12.00%

2,000

Secured

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

12/32

12.00%

6,369

Secured

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

12/32

12.00%

2,732

Secured

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

12/32

12.00%

1,953

Secured

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

12/32

12.00%

2,000

Secured

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

12/32

12.00%

4,000

Secured

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

12/32

12.00%

1,323

Secured

Unified Housing Foundation, Inc. ⁽¹⁾

12/21

12.00%

10,401

Unsecured

Unified Housing Foundation, Inc. ⁽¹⁾

06/20

12.00%

5,314

Unsecured

Unified Housing Foundation, Inc. ⁽¹⁾

03/22

12.00%

4,782

Unsecured

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

07/21

12.00%

838

Secured

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

07/21

12.00%

773

Secured

Unified Housing Foundation, Inc. (Marquis at Vista Ridge) ⁽¹⁾

07/21

12.00%

839

Secured

Unified Housing Foundation, Inc. (Timbers at the Park) ⁽¹⁾

07/21

12.00%

432

Secured

Unified Housing Foundation, Inc. (Bella Vista) ⁽¹⁾

08/21

12.00%

212

Secured

Unified Housing Foundation, Inc. ⁽¹⁾

10/21

12.00%

6,832

Unsecured

Unified Housing Foundation, Inc. ⁽¹⁾

12/32

12.00%

497

Unsecured

Unified Housing Foundation, Inc. ⁽¹⁾

03/23

12.00%

Unsecured

Unified Housing Foundation, Inc. ⁽¹⁾

03/23

12.00%

1,482

Unsecured

Unified Housing Foundation, Inc. ⁽¹⁾

03/23

12.00%

4,792

Unsecured

Unified Housing Foundation, Inc. ⁽¹⁾

03/23

12.00%

716

Unsecured

Unified Housing Foundation, Inc. ⁽¹⁾

03/23

12.00%

317

Unsecured

Realty Advisors Management, Inc. ⁽¹⁾

12/22

2.28%

20,387

Unsecured

One Realco Corporation

01/23

3.00%

7,000

Unsecured

Other related party notes ^{(1) (2)}

Various

1,825

Various secured interests

Other non-related party notes

Various

11,692

Various secured interests

Accrued interest

11,637

Total Performing

170,918

Allowance for estimated losses

(12,557

)

Total

158,361

⁽¹⁾

Related party notes.

⁽²⁾

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

We invest in 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 guarantees.

At March 31, 2020, we had mortgage loans and accrued interest receivable from related parties, net of allowances, totaling $96.9 million and recognized interest income of $8.1 million related to these notes receivables. During the quarter just ended, the Company collected $5.0 million and purchased from a related party $7.4 million of notes receivables with an interest rate of 12% and maturity date of March 2023.

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.