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Loans Held for Investment (Tables)

9 Months Ended

Sep. 30, 2021

Receivables [Abstract]

Summary Investment Holdings

The following table provides a summary of the Company’s loan portfolio as of September 30, 2021 and December 31, 2020:

			September 30, 2021																		December 31, 2020
			Fixed Rate						Floating Rate (1)(2)(3)						Total						Fixed Rate						Floating Rate (1)(2)(3)						Total
Number of loans			5						14						19						6						14						20
Principal balance			$	92,808,312					$	389,281,253					$	482,089,565					$	56,335,792					$	367,838,966					$	424,174,758
Carrying value			$	93,656,356					$	386,806,296					$	480,462,652					$	56,464,310					$	365,816,205					$	422,280,515
Fair value			$	93,571,526					$	384,826,180					$	478,397,706					$	56,284,334					$	363,122,860					$	419,407,194
Weighted-average coupon rate			12.94		%				7.44		%				8.50		%				12.17		%				7.95		%				8.51		%
Weighted-average remaining  term (years)			1.23						1.12						1.14						1.78						1.44						1.48

_______________

(1)These loans pay a coupon rate of LIBOR plus a fixed spread. Coupon rate shown was determined using LIBOR of 0.08% and 0.14% as of September 30, 2021 and December 31, 2020, respectively.

(2)As of September 30, 2021 and December 31, 2020, amounts included $162.8 million and $184.2 million of senior mortgages used as collateral for $93.6 million and $107.6 million of borrowings under a term loan, respectively (Note 9).

As of September 30, 2021, amounts also included $42.2 million of senior mortgages used as collateral for $25.3 million of borrowings under a revolving line of credit. Borrowings under the term loan bear interest at an annual rate of LIBOR plus 4.25% with a LIBOR floor of 1.00%. Borrowings under the revolving line of credit bear interest at a minimum rate of 4.0%.

(3)As of both September 30, 2021 and December 31, 2020, twelve of these loans are subject to a LIBOR floor.

Investment Holdings, Schedule of Investments

The following table presents the activities of the Company’s loan portfolio for the nine months ended September 30, 2021 and 2020:

			Loans Held for Investment						Loans Held for Investment through Participation Interests						Total
Balance, January 1, 2021			$	417,986,462					$	4,294,053					$	422,280,515
New loans made			163,504,926						—						163,504,926
Principal repayments received			(101,659,237)						(4,250,000)						(105,909,237)
PIK interest (1)			1,955,109						—						1,955,109
Net amortization of premiums on loans			(46,043)						—						(46,043)
Accrual, payment and accretion of investment-related fees and other,    net			938,233						(44,053)						894,180
Realized loss on loan repayments (2)(3)			(651,553)						—						(651,553)
Provision for loan losses			(1,565,245)						—						(1,565,245)
Balance, September 30, 2021			$	480,462,652					$	—					$	480,462,652

			Loans Held for Investment						Loans Held for Investment through Participation Interests						Total
Balance, January 1, 2020			$	375,462,222					$	3,150,546					$	378,612,768
New loans made			84,629,411						1,129,112						85,758,523
Principal repayments received			(28,690,175)						—						(28,690,175)
PIK interest (1)			2,893,620						—						2,893,620
Net amortization of premiums on loans			(46,043)						—						(46,043)
Accrual, payment and accretion of investment-related fees, net			792,606						16,343						808,949
Provision for loan losses			(1,356,737)						—						(1,356,737)
Balance, September 30, 2020			$	433,684,904					$	4,296,001					$	437,980,905

_______________

(1)Certain loans in the Company’s portfolio contain PIK interest provisions. The PIK interest represents contractually deferred interest that is added to the principal balance. PIK interest related to obligations under participation agreements amounted to $1.0 million and $1.1 million for the nine months ended September 30, 2021 and 2020, respectively.

(2)On September 2, 2021, the Company foreclosed on a hotel property encumbered by a first mortgage and the related subordinated mezzanine loan, both of which were held by the Company, with an aggregate principal balance $14.6 million. On September 23, 2021, the hotel property was sold to a third party for $13.8 million. The net proceeds from the sale, together with a payment under a contractual guarantee of $0.8 million from the borrower, were used to pay off both loans in full. In connection with the loan repayment, the related obligation under participation agreement of $6.4 million was simultaneously satisfied. In connection with the loan repayment, the Company recorded a loss of $0.4 million related to the write-off of the interest accrued but uncollected in the third quarter of 2021, excluding the amount attributable to obligations under participation agreements of $0.1 million.

(3)Amount also included realized loss of $0.3 million related to the TDR transaction described below.

Schedule of Accounts, Notes, Loans and Financing Receivable

The tables below detail the types of loans in the Company’s loan portfolio, as well as the property type and geographic location of the properties securing these loans as of September 30, 2021 and December 31, 2020:

						September 30, 2021																		December 31, 2020
Loan Structure						Principal Balance						Carrying Value						% of Total						Principal Balance						Carrying Value						% of Total
First mortgages						$	383,044,928					$	385,439,932					80.2		%				$	254,042,847					$	255,093,989					60.5		%
Preferred equity investments						89,044,637						89,182,058						18.6		%				141,590,632						142,002,144						33.6		%
Mezzanine loans						10,000,000						10,160,225						2.1		%				28,541,279						28,923,140						6.8		%
Allowance for loan losses						—						(4,319,563)						(0.9)		%				—						(3,738,758)						(0.9)		%
Total						$	482,089,565					$	480,462,652					100.0		%				$	424,174,758					$	422,280,515					100.0		%

						September 30, 2021																		December 31, 2020
Property Type						Principal Balance						Carrying Value						% of Total						Principal Balance						Carrying Value						% of Total
Office						$	212,435,064					$	213,199,243					44.4		%				$	182,698,225					$	183,053,751					43.3		%
Infill land						79,495,651						79,895,793						16.6		%				10,442,567						10,537,512						2.5		%
Multifamily						78,724,866						79,265,718						16.5		%				150,873,173						151,768,347						35.9		%
Hotel - full/select service						56,847,381						57,365,987						11.9		%				49,142,809						49,393,251						11.7		%
Mixed use						16,586,603						16,586,603						3.5		%				16,767,984						16,767,984						4.0		%
Student housing						31,000,000						31,468,871						6.5		%				3,000,000						3,204,375						0.8		%
Industrial						7,000,000						7,000,000						1.5		%				7,000,000						7,000,000						1.7		%
Hotel - extended stay						—						—						—		%				4,250,000						4,294,053						1.0		%
Allowance for loan losses						—						(4,319,563)						(0.9)		%				—						(3,738,758)						(0.9)		%
Total						$	482,089,565					$	480,462,652					100.0		%				$	424,174,758					$	422,280,515					100.0		%

During the first quarter of 2021, the Company reclassified the property types of collateral on certain loans to multifamily to better reflect the tenant mix of each property. Additionally, the Company categorized hotel properties further to hotel - full/selected service and hotel - extended stay. The prior period amounts have been reclassified to conform to the current period presentation.

						September 30, 2021																		December 31, 2020
Geographic Location						Principal Balance						Carrying Value						% of Total						Principal Balance						Carrying Value						% of Total
United States
California						$	194,558,815					$	195,789,977					40.7		%				$	200,279,688					$	200,990,328					47.6		%
New York						89,044,637						89,182,058						18.5		%				79,187,004						79,310,276						18.8		%
Georgia						52,921,315						53,194,876						11.0		%				74,116,787						74,505,752						17.6		%
Pennsylvania						52,000,000						52,464,277						10.9		%				—						—						—		%
North Carolina						39,570,042						39,774,232						8.3		%				33,242,567						33,438,806						7.9		%
Utah						28,000,000						28,308,646						5.9		%				—						—						—		%
Texas						13,625,000						13,721,970						2.9		%				3,848,712						3,887,200						0.9		%
Massachusetts						7,000,000						7,000,000						1.5		%				7,000,000						7,000,000						1.7		%
South Carolina						3,000,000						3,160,225						0.7		%				3,000,000						3,204,375						0.8		%
Washington						2,369,756						2,185,954						0.5		%				23,500,000						23,682,536						5.6		%
Allowance for loan losses						—						(4,319,563)						(0.9)		%				—						(3,738,758)						(0.9)		%
Total						$	482,089,565					$	480,462,652					100.0		%				$	424,174,758					$	422,280,515					100.0		%

The following table allocates the principal balance and the carrying value of the Company’s loans based on the loan risk rating as of September 30, 2021 and December 31, 2020:

						September 30, 2021																								December 31, 2020
Loan Risk Rating						Number of Loans						Principal Balance						Carrying Value						% of Total						Number of Loans						Principal Balance						Carrying Value						% of Total
1						—						$	—					$	—					—		%				—						$	—					$	—					—		%
2						2						25,000,000						25,040,664						5.2		%				1						7,000,000						7,000,000						1.6		%
3						13						354,419,928						356,837,523						73.5		%				14						323,696,475						325,284,285						76.4		%
4						1						58,419,764						58,429,227						12.1		%				3						72,861,587						73,079,804						17.2		%
5						—						—						—						—		%				1						3,848,712						3,887,200						0.9		%
Other (1)						3						44,249,873						44,474,801						9.2		%				1						16,767,984						16,767,984						3.9		%
						19						$	482,089,565					484,782,215						100.0		%				20						$	424,174,758					426,019,273						100.0		%
Allowance for loan losses																		(4,319,563)																								(3,738,758)
Total, net of allowance for loan losses																		$	480,462,652																							$	422,280,515

_______________

(1)Because these loans have an event of default, they are removed from the pool of loans on which a general allowance is calculated and are evaluated for collectibility individually. As of September 30, 2021 and December 31, 2020, the specific allowance for loan losses on these loans were $3.4 million and $2.5 million, respectively, as a result of a decline in the fair value of the collateral.

Allowance for loan losses

The following table presents the activity in the Company’s allowance for loan losses for the nine months ended September 30, 2021 and 2020:

						Nine Months Ended September 30,
						2021						2020
Allowance for loan losses, beginning of period						$	3,738,758					$	—
Provision for loan losses						1,565,245						1,356,737
Charge-offs (1)						(984,440)						—
Recoveries						—						—
Allowance for loan losses, end of period						$	4,319,563					$	1,356,737

Summarizes the recorded investment of TDR

The following table summarizes the recorded investment of TDR as of the date of restructuring:

Number of loans modified						1
Pre-modified recorded carrying value						$	18,503,470
Post-modified recorded carrying value (1)						$	13,625,000

_______________

(1)As of September 30, 2021, the principal balance of this loan was $13.6 million and the carrying value of this loan, which includes the present value of the exit fee, was $13.7 million. There is no allowance for loan losses recorded for this new senior loan.

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