
		Outstanding loan amount
		September 30, 2024						December 31, 2023
Real Estate Financing Project(a)	Maturity Date	Principal		Accrued interest and fees(b)		Total loan amount(c)		Total loan amount(c)		Maximum principal commitment		Interest rate			Interest compounding
Solis Gainesville II	10/3/2026	19,595		5,041		24,636		22,268		19,595		14.0	%	(d)	Annually
Solis Kennesaw	5/25/2027	37,870		6,230		44,100		15,922		37,870		14.0	%	(d)	Annually
Solis Peachtree Corners	10/31/2027	20,533		3,917		24,450		11,092		28,440		15.0	%	(d)	Annually
The Allure at Edinburgh	1/16/2028	9,228		1,639		10,867		9,830		9,228		15.0	%	(e)	None
Solis City Park II(f)	4/23/2028	—		—		—		24,313		—		13.0	%		Annually
Solis North Creek	8/8/2030	2,364		299		2,663		—		26,767		12.0	%	(d)	Annually
Total mezzanine & preferred equity		$	89,590	$	17,126	106,716		83,425		$	121,900
Other notes receivable						12,787		12,219

Allowance for credit losses(g)						(1,706)		(1,472)

Total notes receivable						$	117,797	$	94,172

(a) The Company does not intend to sell the real estate financing investments and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost bases.

(g) The amounts as of September 30, 2024 and December 31, 2023 exclude $0.6 million and $0.7 million, respectively, of Current Expected Credit Losses (“CECL”) allowance that relates to the unfunded commitments, which were recorded as a liability under other liabilities in the consolidated balance sheets.

Interest on the notes receivable is accrued and funded utilizing the interest reserves for each loan and such accrued interest is generally added to the loan receivable balances. The Company recognized interest income for the three and nine months ended September 30, 2024 and 2023 as follows (in thousands):


	Three Months Ended September 30,						Nine Months Ended September 30,
Real Estate Financing Project	2024			2023			2024			2023
Solis Gainesville II	$	794	(a)(b)	$	717	(a)(b)	$	2,366	(a)(b)	$	1,964	(a)(b)
Solis Kennesaw	1,437		(a)(b)	1,164		(a)	3,988		(a)(b)	1,629		(a)
Solis Peachtree Corners	1,067		(a)(b)	617		(a)(b)	2,867		(a)(b)	617		(a)(b)
The Allure at Edinburgh	348			258			1,036			258
Solis City Park II(c)	127		(a)	740		(a)	1,482		(a)	2,142		(a)
Solis North Creek	299		(b)	—			299		(b)	—
The Interlock(d)	—			—			—			3,647		(a)
Total mezzanine & preferred equity	4,072			3,496			12,038			10,257
Other interest income	629			194			1,921			566
Total interest income	$	4,701		$	3,690		$	13,959		$	10,823

On July 10, 2024, the Company's preferred equity investment in Solis City Park II was redeemed in full for total consideration of $25.8 million, including $5.2 million of interest. Interest for the month of June 2024 was waived as part of the note redemption.

On July 10, 2024, the Company signed an amendment to the operating agreement for the entity through which the Company owns its real estate financing investment with respect to Solis Gainesville II to reduce the preference rate on the investment from 14.0% to 6.0% starting on January 1, 2025. The Company also received a call option to purchase a controlling interest in the entity that owns Solis Gainesville II at fair market value during the period from January 1, 2025 to December 31, 2025, which option also gives the Company a right of first refusal to buy the property during the same period.

On July 10, 2024, the Company entered into a $27.0 million preferred equity investment for the development of a multifamily property located in Huntersville, North Carolina ("Solis North Creek"). The preferred equity investment has economic terms consistent with a note receivable, including a mandatory redemption feature effective on August 8, 2030, and is accounted for as a note receivable. The Company's investment bears interest at a rate of 12.0% for the first 24 months. Beginning on July 10, 2026, the investment will bear interest at a rate of 9.0% for 12 months. On July 10, 2027, the investment will again bear interest at 12.0% through maturity. The interest compounds annually. The Company also earns an unused commitment fee of 4.5% on the unfunded portion of the investment's maximum loan commitment, which also compounds annually. The preferred equity investment was initially subject to a minimum interest guarantee of $8.9 million over the life of the investment.

On August 8, 2024, the Company signed an amendment to the operating agreement for the entity through which the Company owns its real estate financing investment with respect to Solis North Creek to reduce the equity funding requirement from $27.0 million to $26.8 million and the minimum interest guarantee from $8.9 million to $8.8 million.

The Company is exposed to credit losses primarily through its real estate financing investments. As of September 30, 2024, the Company had five real estate financing investments, which are financing development projects in various stages of completion or lease-up. Each of these projects is subject to a loan that is senior to the Company’s loan. Interest on these loans is paid in kind and is generally not expected to be paid until a sale of the project after completion of the development.

•Special Mention: loans in this category show signs that the economic performance of the project may suffer as a result of slower-than-expected leasing activity or an extended development or marketing timeline. Loans in this category warrant increased monitoring by management.

•Substandard: loans in this category may not be fully collected by the Company unless remediation actions are taken. Remediation actions may include obtaining additional collateral or assisting the borrower with asset management activities to prepare the project for sale. The Company will also consider placing the loan on non-accrual status if it does not believe that additional interest accruals will ultimately be collected.

The Company updated the risk ratings for each of its notes receivable as of September 30, 2024 and obtained industry loan loss data relative to these risk ratings. Each of the outstanding loans as of September 30, 2024 was "Pass" rated. The Company's analysis resulted in an allowance for loan losses of approximately $2.3 million as of September 30, 2024, of which an allowance related to unfunded commitments of approximately $0.6 million as of September 30, 2024 was recorded as other liabilities on the consolidated balance sheet.

At September 30, 2024, the Company reported $117.8 million of notes receivable, net of allowances of $1.7 million. At December 31, 2023, the Company reported $94.2 million of notes receivable, net of allowances of $1.5 million. Changes in the allowance for the nine months ended September 30, 2024 and 2023 were as follows (in thousands):


	Nine Months Ended September 30, 2024						Nine Months Ended September 30, 2023
	Funded		Unfunded		Total		Funded		Unfunded		Total
Beginning balance	$	1,472	$	732	$	2,204	$	1,292	$	338	$	1,630

Unrealized credit loss provision (release)	294		(181)		113		817		519		1,336
Release due to redemption	(60)		—		(60)		(465)		—		(465)




Ending balance	$	1,706	$	551	$	2,257	$	1,644	$	857	$	2,501

The Company places loans on non-accrual status when the loan balance, together with the balance of any senior loan, approximately equals the estimated realizable value of the underlying development project. As of September 30, 2024, no loans were placed on non-accrual status.