Investment in Mortgage Notes

Investment in mortgage notes, including related accrued interest receivable, at December 31, 2016 and 2015 consists of the following (in thousands):



		2016		2015
(1)	Mortgage note and related accrued interest receivable, 9.50%, paid in full January 5, 2016	—		19,944
(2)	Mortgage note and related accrued interest receivable, 9.75%, paid in full April 22, 2016	—		22,188
(3)	Mortgage note, 5.50%, paid in full October 11, 2016	—		2,500
(4)	Mortgage note and related accrued interest receivable, 9.00%, due March 11, 2017	1,454		1,454
(5)	Mortgage note and related accrued interest receivable, 9.00%, due July 31, 2017	1,375		1,257
(6)	Mortgage note and related accrued interest receivable, 7.00%, due October 19, 2018	1,637		—
(7)	Mortgage notes, 7.00% and 10.00%, due May 1, 2019	164,743		164,543
(8)	Mortgage note, 7.00%, due December 20, 2021	70,304		—
(9)	Mortgage note and related accrued interest receivable, 7.85%, due December 28, 2026	5,635		—
(10)	Mortgage note and related accrued interest receivable, 10.65%, due June 28, 2032	36,032		36,032
(11)	Mortgage note and related accrued interest receivable, 9.00%, due December 31, 2032	5,327		5,469
(12)	Mortgage notes and related accrued interest receivable, 9.50%, due April 30, 2033	30,849		30,680
(13)	Mortgage note and related accrued interest receivable, 10.25%, due June 30, 2033	3,508		3,488
(14)	Mortgage note, 11.31%, due July 1, 2033	12,530		12,781
(15)	Mortgage note and related accrued interest receivable, 8.71%, due June 30, 2034	7,230		4,900
(16)	Mortgage note and related accrued interest receivable, 9.50%, due August 31, 2034	12,473		12,392
(17)	Mortgage note and related accrued interest receivable, 11.10%, due December 1, 2034	51,250		51,450
(18)	Mortgage notes, 10.28%, due December 1, 2034	37,562		37,562
(19)	Mortgage note, 10.72%, due December 1, 2034	4,550		4,550
(20)	Mortgage note, 8.00%, due January 5, 2036	21,000		—
(21)	Mortgage note, 10.25%, due May 31, 2036	17,505		9,147
(22)	Mortgage note and related accrued interest receivable, 9.75%, due July 28, 2036	18,219		3,443
(23)	Mortgage note and related accrued interest receivable, 9.75%, due July 31, 2036	6,083		—
(24)	Mortgage note, 9.75%, due December 31, 2036	4,712		—
(25)	Mortgage notes, 7.25%, due November 30, 2041	100,000		—
	Total mortgage notes and related accrued interest receivable	$	613,978	$	423,780

(1) The Company's first mortgage loan agreement with Basis Schools, Inc. that was secured by a public charter school and the underlying land located in Washington D.C. was paid on January 5, 2016. In connection with the full payoff of this note, the Company received a prepayment fee of $3.6 million, included in mortgage and other financing income.

(2) The Company's first mortgage loan agreement with Fiber Mills, LLC and Music Factory Condominiums, LLC that was secured by the North Carolina Music Factory located in Charlotte, North Carolina was amended and restated during the year ended December 31, 2016. In conjunction with the amendment, the Company funded an additional $21.8 million. On April 22, 2016, the note was paid in full. In conjunction with this payoff, the Company wrote off $335 thousand of prepaid mortgage fees to costs associated with loan refinancing or payoff.

(3) The Company's mortgage loan agreement with Alko Ranch, LLC that was secured by approximately 159 acres of land and a winery facility was paid in full on October 11, 2016.

(4) The Company's first mortgage loan agreement with LBE Investments, Ltd. is secured by approximately 12 acres of land located in Queen Creek, Arizona. The note requires accrued interest and principal to be paid at maturity.

(5) The Company's first mortgage loan agreement with HighMark Land, LLC is secured by approximately 20 acres of land located in Lincoln, California. The note requires accrued interest and principal to be paid at maturity.

(6) The Company's first mortgage loan agreement with Miramesa Star LLC, is secured by a theatre development project on approximately seven acres of land located in Cypress, Texas. The note requires monthly interest payments and matures the earlier of the date of substantial completion or October 19, 2018.

(7) The Company’s mortgage loan agreements with SVVI, LLC (SVVI) are secured by one waterpark and adjacent land in Kansas City, Kansas as well as two other waterparks located in New Braunfels and South Padre Island, Texas. The mortgage notes have cross-default and cross-collateral provisions. Pursuant to the mortgage on the Texas properties, only a seasonal line of credit secured by the Texas parks totaling not more than $9.0 million at any time ranks superior to the Company’s collateral position. The note accrues monthly interest payments and SVVI is required to fund a debt service reserve for off-season interest payments (those due from September to May). The reserve is to be funded by equal monthly installments during the months of June, July and August. Monthly interest payments are transferred to the Company from this debt service reserve. The mortgage loan agreements also contain certain participating interest and note pay-down provisions. During the years ended December 31, 2016, 2015 and 2014, the Company recognized $0.8 million, $1.5 million and $1.4 million of participating interest income, respectively. SVVI is a VIE, but it was determined that the Company was not the primary beneficiary of this VIE. The Company’s maximum exposure to loss associated with SVVI is limited to the Company’s outstanding mortgage note and related accrued interest receivable. On October 13, 2015, the Company received a partial pay-down of $45.0 million.

(8) The Company's first mortgage loan agreement with Imagine Schools Non-Profit, Inc. and affiliates (Imagine) is secured by 11 charter school properties located in Georgia, Indiana, Ohio, South Carolina, and Pennsylvania. This note requires monthly principal and interest payments of $608 thousand and additional principal pay downs if certain events occur including property sales. See Note 6 for further discussion.

(9) The Company's first mortgage loan agreement with Genesis Health Clubs of Omaha, Sports West LLC, is secured by a health club facility located in Omaha, Nebraska. This note requires monthly interest payments.

(10) The Company's first mortgage loan agreement with Montparnasse 56 USA is secured by the observation deck of the John Hancock building in Chicago, Illinois. This note requires monthly interest payments. On December 22, 2016, the Company entered into an amendment to the loan agreement with the borrower which eliminated the full prepayment option with penalty in 2017 per the original agreement and replaced it with partial prepayment options in 2017 and 2027 with penalty. The amended note bears interest at 9.25% beginning July 1, 2017.

(11) The Company's first mortgage loan agreement with LBE Investments, Ltd. is secured by a charter school property located in Queen Creek, Arizona. The note is fully amortizing and requires monthly principal and interest payments of $52 thousand.

(12) The Company's first mortgage loan agreements with LBE Investments, Ltd. are secured by three charter school properties located in Gilbert and Queen Creek, Arizona. The notes bear interest beginning at 9.50% with increases of 0.50% every five years. The notes are fully amortizing and require monthly payments of principal and interest. The notes have an effective interest rate of approximately 9.50%, which is net of a 2% servicer fee to HighMark.

(13) The Company's first mortgage loan agreement with UME Preparatory Academy is secured by approximately 28 acres of land and a public charter school property located in Dallas, Texas. The note bears interest beginning at 10.25% with increases of 0.50% every five years and requires monthly interest payments. The note has an effective interest rate of approximately 9.90%, which is net of a 2% servicer fee to HighMark.

(14) The Company's first mortgage loan agreement with Topgolf USA Austin is secured by a golf entertainment complex located in Austin, Texas. The note is fully amortizing and requires monthly principal and interest payments of $141 thousand.

(15) The Company's first mortgage loan agreement with 169 Jenks is secured by a public charter school property located in St. Paul, Minnesota. The note bears interest beginning at 8.50% which increases annually based on a formula of the rate multiplied by 1.025%. At December 31, 2016, the rate was 8.71%. The note requires monthly interest payments.

(16) The Company's first mortgage loan agreement with Beloved Community Charter School, Inc. is secured by a charter school property located in Jersey City, New Jersey. The note bears interest beginning at 9.50% with increases of 0.50% every five years and requires monthly interest payments. The note has an effective interest rate of approximately 9.50%, which is net of a 2% servicer fee to HighMark.

(17) The Company's first mortgage loan agreement with Peak Resorts, Inc. (Peak) is secured by one ski area located in Vermont. Mount Snow is approximately 588 acres and is located in both West Dover and Wilmington, Vermont. The note requires monthly interest payments and Peak is required to fund a debt service reserve for off-season interest payments (those due from April to December). The reserve is to be funded by equal monthly installments during the months of January, February and March. Monthly interest payments are transferred to the Company from this debt service reserve. Annually, this interest rate increases based on a formula dependent in part on increases in the CPI.

(18) The Company's first mortgage loan agreements with Peak are secured by four ski areas located in Ohio and Pennsylvania with a total of approximately 510 acres. The notes require monthly interest payments and Peak is required to fund a debt service reserve for off-season interest payments (those due from April to December). The reserve is to be funded by equal monthly installments during the months of January, February and March. Monthly interest payments are transferred to the Company from this debt service reserve. Annually, this interest rate increases based on a formula dependent in part on increases in the CPI.

(19) The Company's first mortgage loan agreement with Peak is secured by a ski area located in Chesterland, Ohio with approximately 135 acres. The note requires monthly interest payments and Peak is required to fund a debt service reserve for off-season interest payments (those due from April to December). The reserve is to be funded by equal monthly installments during the months of January, February and March. Monthly interest payments are transferred to the Company from this debt service reserve. Annually, this interest rate increases based on a formula dependent in part on increases in the CPI.

(20) The Company's first mortgage loan agreement with Peak is secured by a ski area located in Hunter, New York with approximately 240 acres. The note requires monthly interest payments and Peak is required to fund a debt service reserve for off-season interest payments (those due from April to December). The reserve is to be funded by equal monthly installments during the months of January, February and March. Monthly interest payments are transferred to the Company from this debt service reserve. Annually, this interest rate increases based on a formula dependent in part on increases in the CPI.

(21) The Company's first mortgage loan agreement with Topgolf USA Midvale, LLC is secured by a golf entertainment complex located in Midvale, Utah. On November 1, 2016, this note was amended and restated to change the maturity date to May 31, 2036. The note requires monthly interest payments.

(22) The Company's first mortgage loan agreement with Topgolf USA West Chester, LLC is secured by a golf entertainment complex located in West Chester, Ohio. The note requires monthly interest payments.

(23) The Company's first mortgage loan agreement with Friends of Millville Public Charter School is secured by a public charter school property located in Millville, New Jersey. The note requires monthly interest payments.

(24) The Company's first mortgage loan agreement with Friends of Vineland Public Charter School is secured by a public charter school property located in Vineland, New Jersey. The note requires monthly interest payments upon completion of construction.

(25) The Company's first mortgage loan agreements with Endeavor Schools are secured by 20 education facilities including both early education and private school properties located California, Florida, Georgia, Minnesota, Nevada, North Carolina, Ohio and Texas. The notes bear interest beginning at 7.25% with increases every three years by a multiple of 1.0625 and require monthly interest payments. The notes contain prepayment provisions which allow the borrower to prepay with a premium based on a multiple of the remaining loan balance. In addition, the notes contain a loan to lease conversion option in which the borrower has the right to put the underlying real estate assets to the Company and become the tenant under a lease structure. Interest income on the notes is being recognized using the effective interest method without the fixed interest rate increases due to these prepayment and conversion options. Subsequent to December 31, 2016, the Company funded an additional $42.9 million for first mortgage loan agreements secured by eight early education and private school properties located in Minnesota and Ohio. These loan agreements have the same terms as the notes funded in 2016.

Principal payments and related accrued interest due on mortgage notes receivable subsequent to December 31, 2016 are as follows (in thousands):



	Amount
Year:
2017	$	5,084
2018	2,546
2019	163,874
2020	1,143
2021	71,569
Thereafter	369,762
Total	$	613,978