7.	Loan Receivable

Loan receivable at December 31, 2017 and 2016 are as follows (in thousands):


			Stated Interest Rate at December 31, 2016 (1)			Carrying Amount (2)				Contratual Maturity Date
Description	Loan Position		Stated Interest Rate at December 31, 2016 (1)			December 31, 2017		December 31, 2016		Contratual Maturity Date
Jacksonville (3)		Whole Loan		LIBOR + 5	%	$	8,400	$	8,400		07/01/19

						$	8,400	$	8,400

(1)

The one-month LIBOR rate at December 31, 2017 was 1.56425%. The one-month LIBOR rate at December 31, 2016 was 0.77167%.

(2)

The carrying amount represents the estimated amount expected to be collected on disposition of the loan plus contractual interest receivable.

(3)

The loan has an interest rate floor of 6% and an interest rate ceiling of 8%.

The carrying amount of the loan receivable at December 31, 2017 and 2016 represents the estimated amount expected to be collected on disposition of the loan. There was no accrued interest at December 31, 2017 and 2016.

The weighted average coupon as calculated on the par value of the loan receivable was 6.00% and 7.97% at December 31, 2017 and 2016, respectively, and the weighted average yield to maturity as calculated on the carrying value of the loan receivable was 6.00% and 13.54% at December 31, 2017 and 2016, respectively.

Loan Receivable Activity

Activity related to loans receivable is as follows (in thousands):


	Year Ended December 31, 2017		Year Ended December 31, 2016
Balance at beginning of year	$	8,400	$	5,280
Purchase and advances		—		9,035
Interest received, net		—		(28	)
Repayments/sale proceeds		—		(5,987	)
Change in liquidation value		—		100

Balance at end of year	$	8,400	$	8,400

Credit Quality of Loan Receivable

Under liquidation accounting, the Liquidating Trust carries its loan receivable at the estimated amount of principal payments it expects to receive over the holding period of the loan. The Liquidating Trust utilizes a grading system to assess the collectability of its loan portfolio. Grading categories included debt yield, debt service coverage ratio, length of loan, property type, loan type, and other more subjective variables that included property or collateral location, market conditions, industry conditions, and sponsor’s financial stability. Management reviewed each category and assigned an overall numeric grade to determine the loan’s risk of loss and to provide a determination as to whether the loan required an adjustment to the recorded liquidation value.

All loans with a positive score did not require a loan loss allowance. Any loan graded with a neutral score or “zero” was subject to further review of the collectability of the interest and principal based on current conditions and qualitative factors. Any change in the credit quality of the loan receivable that changes the Liquidating Trust’s estimate of the amount it expects to collect will be recorded as a change to the liquidation value of its loan receivable.

The table below summarizes the Liquidating Trust’s loan receivable by internal credit rating at December 31, 2017 and 2016 (in thousands, except for number of loans):


	December 31, 2017				December 31, 2016
Internal Credit Quality	Number of Loans		Liquidation Value of Loans Receivable		Number of Loans		Liquidation Value of Loans Receivable
Greater than zero		1	$	8,400		1	$	8,400
Equal to zero		—		—		—		—
Less than zero		—		—		—		—

		1	$	8,400		1	$	8,400

Secured Financing Receivable

In August 2013 Winthrop closed on an agreement to acquire its venture partner’s (“Elad”) 50% interest in the mezzanine lender with respect to the Sullivan Center, Chicago, Illinois property (“Lender LP”) for $30,000,000. In connection with the transaction, Winthrop entered into an option agreement with Elad granting Elad the right, but not obligation, to repurchase the interest in the venture. The option agreement provided Elad, as the transferor, the option to unilaterally cause the return of the asset at the earlier of two years from and after August 21, 2013 or an event of default on Lender LP’s mezzanine debt. As such, Elad was able to retain control of its interest in Lender LP for financial reporting purposes as the exercise of the option was unconditional other than for the passage of time. As a result, for financial reporting purposes, the transfer of the financial asset was accounted for as a secured financing rather than an acquisition. The $30,000,000 acquisition price was recorded as a secured financing receivable. On April 27, 2016 Winthrop sold its interest in the secured financing receivable. See Note 6 – “Investment and Disposition Activities” for further details on the sale.