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Notes Receivable

6 Months Ended

Jun. 30, 2023

4.	Notes Receivable

Notes receivable consist of a mezzanine loan and working capital loans. The following table sets forth information regarding our investment in notes receivable at June 30, 2023 (dollar amounts in thousands):


Interest			Type of	Gross				Type of
Rate	IRR	Maturity	Loan	Investment			# of loans	Property
5.0%	—	2023	Working capital	$	370		1	ALF
5.0%	—	2024	Working capital		1,050		1	ALF
4.0%	—	2024	Working capital		13,531		1	SNF
5.0%	—	2025	Working capital		831		1	ALF
7.5%	—	2027	Working capital		550		1	ALF
8.0%	11.0%	2027	Mezzanine		25,000		1	ALF
6.5%	—	2030	Working capital		138		1	SNF
7.1%	—	2030	Working capital		500		1	ALF
7.3%	—	2030	Working capital		1,107		1	ALF
7.0%	—	2031	Working capital		2,693		1	ALF
8.3%	—	2032	Working capital		642		1	SNF
				$	46,412	^{(1) (2)}	11

(1)	Excludes the impact of credit loss reserve.

(2)	Subsequent to June 30, 2023, we originated a $17,000 mezzanine loan for recapitalization of an existing 130-unit ILF/ALF/MC in Georgia as well as the construction of 89 additional units. The loan term is five years at an initial yield of 8.75% and an IRR of 12%.

The following table is a summary of our notes receivable components as of June 30, 2023 and December 31, 2022 (in thousands):


	June 30, 2023		December 31, 2022
Mezzanine loans	$	25,000	$	36,815
Other loans		21,412		22,157
Notes receivable credit loss reserve		(463)		(589)
Total	$	45,949	$	58,383

The following table summarizes our notes receivable activity for the six months ended June 30, 2023 and 2022 (in thousands):


	Six Months Ended June 30,
		2023			2022
Advances under notes receivable	$	866		$	36,788	⁽²⁾
Principal payments received under notes receivable		(13,426)	⁽¹⁾		(6,618)
Provision (recovery) for credit losses		126			(301)
Net (decrease) increase in notes receivable	$	(12,434)		$	29,869

(1)

During 2023, we received $4,545, which includes a prepayment fee and the exit IRR totaling $190 from a mezzanine loan prepayment. The mezzanine loan was on a 136-unit ILF in Oregon. Additionally, another $7,461 mezzanine loan was effectively prepaid through converting it as part of our $51,111 investment in a participating interest in an existing mortgage loan that is secured by a 203-unit ALF, ILF and MC located in Georgia. We recorded $1,380 of interest income in connection with the effective prepayment of the mezzanine loan.

(2)

During 2022, we originated a $25,000 mezzanine loan for the recapitalization of a five-property seniors housing portfolio. The mezzanine loan has a term of approximately five years, with two one-year extension options and bears interest at 8% with an IRR of 11%. The five communities are located in Oregon and Montana, have a total of 621 units, and include independent living, assisted living and memory care.