Notes Receivable, Net

12 Months Ended

Dec. 31, 2017

Accounts and Notes Receivable, Net [Abstract]

Notes Receivable, Net

Notes Receivable, Net

The Company’s notes receivable, net were collateralized either by the underlying properties or the borrower’s ownership interest in the entities that own the properties, and were as follows (dollars in thousands):

	December 31,		December 31,		December 31, 2017
Description	2017		2016		Number	Maturity Date	Interest Rate
Core Portfolio	$	101,695	$	216,400	3	June 2018 - April 2019	6.0% - 8.1%
Fund II	31,778		31,007		1	May 2020	2.5%
Fund III	5,106		4,506		1	July 2020	18.0%
Fund IV	15,250		24,250		1	February 2021	15.3%
	$	153,829	$	276,163	6

During the year endedDecember 31, 2017, the Company:

• recovered the full value of a $12.0 million Core note receivable, which was previously in default, plus accrued interest and fees aggregating $16.8 million as further described below;

• exchanged $92.7 million of Core notes receivable plus accrued interest thereon of $1.8 million for additional undivided interests in the Market Square and Town Center properties (Note 4);

• funded an additional $10.0 million on an existing Core note receivable, which had a total commitment of $20.0 million, and was subsequently repaid in full during the fourth quarter;

• entered into an agreement to extend the maturity of a $15.0 million Core note receivable to June 1, 2018;

• increased the balance of a Fund II note receivable by the interest accrued of $0.8 million;

• advanced an additional $0.6 million on a Fund III note receivable; and

• exchanged a $9.0 million Fund IV note receivable plus accrued interest of $0.1 million thereon for an investment in a shopping center in Windham, Maine (Note 2).

During the year ended December 31, 2016, the Company:

• issued one Core note receivable and three Fund IV notes receivable aggregating $47.5 million with a weighted-average effective interest rate of 9.8%, which were collateralized by four mixed-use real estate properties;

• received total collections of $42.8 million, including full repayment of five notes issued in prior periods aggregating $29.6 million; and

• restructured a $30.9 million Core mezzanine loan, which bore interest at 15.0%, and replaced it with a new $153.4 million loan collateralized by a first mortgage in the borrower’s tenancy-in-common interest. The loan bears interest at 8.1% (Note 4).

At December 31, 2016, one of the Core notes receivable in the amount of $12.0 million was in default. As discussed above, the Company recovered its full carrying value of principal and interest and recognized additional interest income and expense reimbursements of $2.2 million in the first quarter of 2017 and $1.4 million in the second quarter of 2017 upon settlement of this transaction.

The Company monitors the credit quality of its notes receivable on an ongoing basis and considers indicators of credit quality such as loan payment activity, the estimated fair value of the underlying collateral, the seniority of the Company’s loan in relation to other debt secured by the collateral and the prospects of the borrower.

Earnings from these notes and mortgages receivable are reported within the Company’s Structured Financing segment (Note 12).