Comfort Inn 2013 Annual Report Download - page 82
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Table of Contents
the Company assesses the property’s operating performance, the subordinated equity available to the Company, the borrower’s compliance with the terms of
loan and franchise agreements, and the related personal guarantees that have been provided by the borrower.
The Company considers loans to be past due and in default when payments are not made when due. Although the Company considers loans to be in
default if payments are not received on the due date, the Company does not suspend the accrual of interest until those payments are more than 30 days past
due. The Company applies payments received for loans on non-accrual status first to interest and then principal. The Company does not resume interest
accrual until all delinquent payments are received.
The Company determined that approximately $12.5 million and $13.3 million of its mezzanine and other notes receivable were impaired at December
31, 2013 and 2012, respectively. The Company recorded an allowance for credit losses on these impaired loans at both December 31, 2013 and 2012 totaling
$8.3 million resulting in a carrying value of impaired loans of $4.2 million and $5.0 million, respectively. The Company recognized approximately $0.4
million and $0.1 million of interest income on impaired loans during the years ended December 31, 2013 and 2012, respectively, on the cash basis. The
Company provided loan reserves on non-impaired loans totaling $1.6 million and $0.6 million at December 31, 2013 and 2012, respectively
Past due balances of mezzanine and other notes receivable by credit quality indicators are as follows:
Senior $ —
$ —
$ —
$18,052
$18,052
Subordinated —
9,629
9,629
4,523
14,152
Unsecured —
47
47
3,358
3,405
$ —
$9,676
$9,676
$25,933
$35,609
Senior $ —
$ —
$ —
$27,549
$27,549
Subordinated 619
9,629
10,248
4,771
15,019
Unsecured —
47
47
1,218
1,265
$619
$9,676
$10,295
$33,538
$43,833
Loans Acquired with Deteriorated Credit Quality
On December 2, 2011, the Company acquired an $11.5 million first mortgage, held on a franchisee hotel asset, from a financial institution for $7.9
million. At the time of acquisition, the Company determined that it would be unable to collect all contractually required payments under the original mortgage
terms. The contractually required payments receivable, including principal and interest, under the terms of the acquired mortgage totaled $12.0 million. The
Company expects to collect $9.7 million of these contractually required payments. No prepayments were considered in the determination of contractual cash
flows and cash flows expected to be collected. At December 31, 2013 and 2012, the carrying amount of this loan was $7.9 million and there was no allowance
for uncollectable amounts. The Company's accretable yield at acquisition was $1.8 million or 7.36% and a reconciliation of the accretable yield for year ended
December 31, 2013 and 2012 is as follows:
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