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Real Estate Debt Investments
9 Months Ended
Sep. 30, 2017
Mortgage Loans on Real Estate [Abstract]  
Real Estate Debt Investments
Real Estate Debt Investments
The following table presents one debt investment as of September 30, 2017 and December 31, 2016 (dollars in thousands):
 
 
September 30, 2017 (Unaudited)

December 31, 2016
 
 
Asset Type:

Principal
Amount
 
Carrying
Value

Carrying
Value
 
Fixed Rate

Unlevered Current Yield
Mezzanine loan(1)

$
75,000

 
$
74,626

 
$
74,558

 
10.0
%
 
10.3
%
_______________________________________
(1)
Loan has a final maturity date of January 30, 2021.
Credit Quality Monitoring
Certain debt investments are secured by direct senior priority liens on real estate properties or by interests in entities that directly own real estate properties, which serve as the primary source of cash for the payment of principal and interest. The Company evaluates its debt investments at least quarterly and differentiates the relative credit quality principally based on: (i) whether the borrower is currently paying contractual debt service in accordance with its contractual terms; and (ii) whether the Company believes the borrower will be able to perform under its contractual terms in the future, as well as the Company’s expectations as to the ultimate recovery of principal at maturity. The Company categorizes a debt investment for which it expects to receive full payment of contractual principal and interest payments as “performing.” The Company will categorize a weaker credit quality debt investment that is currently performing, but for which it believes future collection of all or some portion of principal and interest is in doubt, into a category called “performing with a loan loss reserve.” The Company will categorize a weaker credit quality debt investment that is not performing, which the Company defines as a loan in maturity default and/or past due at least 90 days on its contractual debt service payments, as a non-performing loan (“NPL”). The Company’s definition of an NPL may differ from that of other companies that track NPLs.
As of September 30, 2017, the Company’s debt investment was not performing in accordance with the contractual terms of its governing documents as a result of non-monetary defaults.  The Company’s debt investment is a mezzanine loan on a portfolio that has several sub-portfolios, two of which have experienced tenant lease defaults and currently have operator transitions in process.  The underlying tenant defaults resulted in defaults under the senior loans with respect to the applicable sub-portfolios, which in turn resulted in defaults under the mezzanine loan.  The Company is actively monitoring the actions of the senior lenders of each sub-portfolio and assessing our rights and remedies.  Subsequent to September 30, 2017, the Company is also actively monitoring other potential operator transitions that would impact the mezzanine loan and continues to assess the collectability of principal and interest. As of September 30, 2017, contractual debt service on the Company’s mezzanine loan has been paid in accordance with contractual terms.  As of September 30, 2017, the Company expects to receive full payment of contractual principal and interest and, accordingly, the debt investment was categorized as a performing loan.
For the nine months ended September 30, 2017, the debt investment contributed 100.0% the Company’s interest income on debt investments as presented on the consolidated statement of operations.