Notes Receivable (Tables)

9 Months Ended

Sep. 30, 2023

Notes Receivable.

Summary of investments in notes receivable

Interest				Type of	Gross				Type of
Rate	IRR		Maturity	Loan	Investment			# of loans	Property
5.0%	—		2024	Working capital	$	2,442		1	ALF
4.0%	—		2024	Working capital		13,531		1	SNF
5.0%	—		2025	Working capital		732		1	ALF
7.5%	—		2027	Working capital		550		1	ALF
8.0%	11.0	%	2027	Mezzanine		25,000		1	ALF
8.8%	12.0	%	2028	Mezzanine		17,000	(1)	1	ALF
6.5%	—		2030	Working capital		138		1	SNF
7.3%	—		2030	Working capital		500		1	ALF
7.3%	—		2030	Working capital		1,107		1	ALF
7.0%	—		2031	Working capital		2,693		1	ALF
					$	63,693	(2)	10

(1) During the third quarter of 2023, we originated a mezzanine loan to recapitalize an existing 130-unit ILF/ALF/MC in Georgia and construction of 89 additional units. The loan term is five years at an initial yield of 8.75% and an IRR of 12.0%.

(2) Excludes the impact of credit loss reserve.

Summary of mezzanine loans and other loan arrangements

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

	September 30, 2023		December 31, 2022
Mezzanine loans	$	42,000	$	36,815
Working capital loans		21,693		22,157
Notes receivable credit loss reserve		(637)		(589)
Total	$	63,056	$	58,383

Summary of notes receivable activity

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

	Nine Months Ended September 30,
		2023			2022
Advances under notes receivable	$	19,258	(1)	$	37,008	(3)
Principal payments received under notes receivable		(14,537)	(2)		(6,618)
Provision for credit losses		(48)			(303)
Net increase in notes receivable	$	4,673		$	30,087

(1) During the third quarter of 2023, we originated a mezzanine loan to recapitalize an existing 130-unit ILF/ALF/MC in Georgia and construction of 89 additional units. The loan term is five years at an initial yield of 8.75% and an IRR of 12.0%.

(2) 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.

(3) 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.