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Loans Held for Investment
 12 Months Ended
Dec. 31, 2014
Receivables [Abstract]  
Loans Held for Investment
Loans Held for Investment
During the year ended December 31, 2014, in connection with the Cole Merger, the Company acquired two mortgage notes receivable, each of which is secured by an office building. The mortgage notes had a fair value of $72.3 million as of the Cole Acquisition Date. During the year ended December 31, 2014, the third party borrower paid off the remaining balance of the two notes receivable acquired in connection with the Cole Merger, in full, for a total payment of $71.8 million, which includes accrued interest and a $0.5 million fee in lieu of a prepayment premium, which is included in other income, net in the accompanying consolidated statement of operations. Upon repayment, the Company wrote off the remaining unamortized premium of $0.4 million, which is included in other income, net in the accompanying consolidated statement of operations. The Company also purchased two additional mortgage loans during the year ended December 31, 2014 for $3.0 million.
In addition, in connection with the RCAP settlement, as discussed in Note 20 – Related Party Transactions and Arrangements, RCAP issued a $15.3 million unsecured note to the OP that bears interest at 8.0% per annum and matures on March 31, 2017 (the “RCAP Promissory Note”). The RCAP Promissory Note requires principal payments of $7.7 million on March 31, 2016 and $3.8 million on September 30, 2016 and the remaining balance is due at maturity. RCAP may elect to prepay the RCAP Promissory Note at par any time prior to maturity.
As of December 31, 2014 and 2013, the Company owned 14 and 12 loans held for investment, respectively. As of December 31, 2014, the loans had a carrying value of $42.1 million and carried interest rates ranging from 5.11% to 7.24%. The fair value adjustment is being amortized to interest expense in the consolidated statements of operations over the term of the loan, using the effective interest method.
The Company’s loan portfolio is comprised primarily of fully amortizing or nearly fully amortizing first mortgage loans on commercial real estate leased to a single tenant. Therefore, the Company’s monitoring of the credit quality of its loans held for investment is focused primarily on an analysis of the tenant, including review of tenant credit ratings (including changes in ratings) and other measures of tenant credit quality, trends in the tenant’s industry and general economic conditions and an analysis of measures of collateral coverage, such as an estimate of the loan’s loan-to-value (“LTV”) ratio (principal amount outstanding divided by estimated value of the property) and its remaining term until maturity. As of December 31, 2014 and 2013, the Company had no reserve for loan loss.