NOTE 4.

COMMERCIAL LOAN INVESTMENTS

On January 31, 2014, the Company acquired a mezzanine loan secured by the borrower’s equity interest in an upper upscale hotel in Atlanta, Georgia, that was previously subject to the Company’s first commercial loan investment. The Company purchased the $5.0 million performing loan at par. The loan matures in February 2019, bears a fixed interest rate of 12.00% per annum, and requires payments of interest only prior to maturity. Interest revenue recognized during the year ended December 31, 2014 was approximately $558,000.

On May 16, 2014, the Company funded approximately $3.1 million of a $6.3 million first mortgage commitment for the redevelopment of an existing vacant retail property into a Container Store located in Glendale, Arizona, which opened on February 7, 2015. During the year ended December 31, 2014, approximately $5.3 million in draws were funded by the Company, leaving a remaining commitment of approximately $1.0 million, which may be drawn by the borrower as construction costs are incurred. Construction was substantially complete as of December 31, 2014 and the Company expects to fund the remaining commitment in the first quarter of 2015. The loan matures in November 2015, includes one nine-month extension option, bears a fixed interest rate of 6.00% per annum prior to the commencement of rent on the Container Store lease, and requires payments of interest only prior to maturity. At closing, a loan origination fee of approximately $79,000 was received by the Company and is being accreted ratably into income through the contractual maturity date in November 2015. Total interest revenue recognized during the year ended December 31, 2014 was approximately $161,000. Subsequent to the commencement of rent, the interest rate on our loan will be the 30-day London Interbank Offer Rate (“LIBOR”) plus 800 basis points. Rent commenced on February 7, 2015.

On May 20, 2014, the Company acquired an approximate $9.0 million B-Note secured by a retail shopping center located in Sarasota, Florida. The loan matures in June 2015, includes three one-year extension options, bears a floating interest rate of 30-day LIBOR plus 725 basis points, and requires payments of interest only prior to maturity. The loan is subordinate to an approximately $48.0 million A-Note collateralized by the same property, for a total debt balance of $57.0 million. Interest revenue recognized during the year ended December 31, 2014 was approximately $416,000.

On September 30, 2014, the Company acquired a mezzanine loan secured by the borrower’s equity interest in an upper upscale hotel in Dallas, Texas. The Company purchased the $10.0 million performing loan at par. The loan matures in September 2016, bears a floating interest rate of 30-day LIBOR plus 725 basis points, and requires payments of interest only prior to maturity. The loan is subordinate to a $64.0 million first mortgage on the hotel in Dallas, Texas. Interest revenue recognized during the year ended December 31, 2014 was approximately $191,000.

On November 14, 2014, the Company acquired a $1.0 million first mortgage loan secured by real estate in Ormond Beach, Florida. The loan matures in November 2015, includes a one-year extension option, bears a floating interest rate of 30-day LIBOR plus 725 basis points, and requires payments of interest only prior to maturity. At closing, a loan origination fee of approximately $10,000 was received by the Company and recognized as income. Interest revenue recognized during the year ended December 31, 2014 was approximately $10,000.

The Company’s commercial loan investment portfolio was comprised of the following at December 31, 2014:


Description	Date of Investment	Maturity Date	Original Face Amount		Current Face Amount		Carrying Value		Coupon Rate
Mezz – Hotel – Atlanta, GA	January 2014	February 2019	$	5,000,000	$	5,000,000	$	5,000,000	12.00%
Construction – Container Store – Glendale, AZ	May 2014	November 2015	$	6,300,000	$	5,306,031	$	5,247,607	6.00%
B-Note – Retail Shopping Center – Sarasota, FL	May 2014	June 2015	$	8,960,467	$	8,960,467	$	8,960,467	30-day LIBOR plus 7.25 %
Mezz – Hotel – Dallas, TX	September 2014	September 2016	$	10,000,000	$	10,000,000	$	10,000,000	30-day LIBOR plus 7.25 %
Development - Real Estate – Ormond Beach, FL	November 2014	November 2015	$	1,000,000	$	1,000,000	$	1,000,000	30-day LIBOR plus 7.25 %

Total			$	31,260,467	$	30,266,498	$	30,208,074

The carrying value of the commercial loan investment as of December 31, 2014 consisted of the following:


	Total
Current Face Amount	$	30,266,498
Unaccreted Origination Fees		(58,424	)

Total Commercial Loan Investments	$	30,208,074

On August 7, 2013, the Company acquired a $19.6 million first mortgage loan secured by an upper upscale hotel in Atlanta, Georgia, for approximately $17.5 million, a discount of approximately $2.05 million. The discount was being accreted into income ratably through the contractual maturity date in March 2014, which is included in Interest Income from Commercial Loan Investments in the consolidated financial statements. On January 6, 2014, the remaining commercial mortgage loan principal of $19.5 million was paid in full. The total revenue recognized during the year ended December 31, 2014, which was recognized entirely during the quarter ended March 31, 2014, was approximately $844,000 including the remaining accretion of the purchase discount of approximately $650,000, interest income of approximately $36,000, and an exit fee of approximately $195,000, offset by the remaining amortization of fees of approximately $37,000. The total revenue recognized during the year ended December 31, 2013, was approximately $1,713,000 including accretion of the purchase discount of approximately $1.4 million and interest income of approximately $370,000, offset by approximately $61,000 of amortization of loan origination fees.

The Company’s commercial loan investment portfolio was comprised of the following at December 31, 2013:


Description	Date of Investment	Maturity Date	Original Face Amount		Current Face Amount		Carrying Value		Coupon
Hotel – Atlanta, GA	August 2013	March 2014	$	19,560,000	$	19,465,000	$	18,845,053	30-day LIBOR plus 4.50%

Total			$	19,560,000	$	19,465,000	$	18,845,053

The carrying value of the commercial loan investment as of December 31, 2013 consisted of the following:


	Total
Current Face Amount	$	19,465,000
Unamortized Fees		29,711
Unaccreted Purchase Discount		(649,658	)

Total Commercial Loan Investments	$	18,845,053