DOCUMENT AND ENTITY INFORMATION
DOCUMENT AND ENTITY INFORMATION - shares | 6 Months Ended | |
Jun. 30, 2019 | Aug. 14, 2019 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | IMH Financial Corp | |
Entity Central Index Key | 0001397403 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2019 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q2 | |
Entity Current Reporting Status | Yes | |
Amendment Flag | false | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 27,134,256 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
ASSETS | ||
Cash and cash equivalents | $ 12,222 | $ 25,452 |
Funds held by lender and restricted cash | 5,147 | 198 |
Mortgage loans, net | 13,270 | 23,234 |
Real estate held for sale | 7,400 | 7,418 |
Operating properties, net | 63,696 | 33,866 |
Other real estate owned | 33,727 | 33,727 |
Goodwill | 15,357 | 15,357 |
Other intangibles, net | 501 | 641 |
Other receivables | 1,233 | 1,320 |
Other assets | 4,125 | 2,033 |
Property and equipment, net | 360 | 393 |
Total assets | 157,038 | 143,639 |
LIABILITIES | ||
Accounts payable and accrued expenses | 12,004 | 8,385 |
Accrued property taxes | 638 | 305 |
Dividends payable | 1,267 | 857 |
Accrued interest | 414 | 653 |
Customer deposits and funds held for others | 2,033 | 552 |
Notes payable, net of deferred financing fees | 49,258 | 36,314 |
Total liabilities | 65,614 | 47,066 |
Commitments and contingencies (Note 13) | ||
STOCKHOLDERS' EQUITY | ||
Common stock, $.01 par value; 200,000,000 shares authorized; 18,764,758 and 18,596,774 shares issued at June 30, 2019 and December 31, 2018, respectively; 16,394,594 and 16,726,610 shares outstanding at June 30, 2019 and December 31, 2018, respectively | 188 | 186 |
Less: Treasury stock, at cost, 2,370,164 and 1,870,164 shares at June 30, 2019 and December 31, 2018, respectively | (7,286) | (6,286) |
Paid-in capital | 704,557 | 708,523 |
Accumulated deficit | (702,400) | (692,876) |
Total IMH Financial Corporation stockholders' equity (deficit) | (4,941) | 9,547 |
Non-controlling interests | 26,965 | 19,616 |
Total stockholders' equity | 22,024 | 29,163 |
Total liabilities and stockholders’ equity | 157,038 | 143,639 |
Series B Redeemable Convertible Preferred Stock | ||
LIABILITIES | ||
Preferred stock, value, issued | 47,624 | 45,663 |
Series A Redeemable Preferred Stock | ||
LIABILITIES | ||
Preferred stock, value, issued | $ 21,776 | $ 21,747 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Common Stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common Stock, shares authorized | 200,000,000 | 200,000,000 |
Common Stock, shares issued | 18,764,758 | 18,596,774 |
Common Stock, shares outstanding | 16,394,594 | 16,726,610 |
Treasury Stock, shares at cost | 2,370,164 | 1,870,164 |
Series B Redeemable Convertible Preferred Stock | ||
Preferred Stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred Stock, shares authorized | 100,000,000 | 100,000,000 |
Preferred Stock, shares outstanding | 10,552,941 | 10,552,941 |
Preferred Stock, liquidation preference | $ 51,170 | $ 51,170 |
Series A Redeemable Preferred Stock | ||
Preferred Stock, shares outstanding | 22,000 | 22,000 |
Preferred Stock, liquidation preference | $ 22,000 | $ 22,000 |
UNAUDITED CONDENSED CONSOLIDATE
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Revenues | ||||
Operating property revenue | $ 1,880,000 | $ 2,105,000 | $ 2,193,000 | $ 3,668,000 |
Mortgage loan income, net | 447,000 | 641,000 | 1,098,000 | 1,266,000 |
Management fees, investment and other income | 208,000 | 255,000 | 276,000 | 292,000 |
Total revenue | 2,535,000 | 3,001,000 | 3,567,000 | 5,226,000 |
Operating Expenses | ||||
Operating property direct expenses (exclusive of interest and depreciation) | 3,657,000 | 2,099,000 | 6,007,000 | 4,334,000 |
Expenses for non-operating real estate owned | 83,000 | 171,000 | 174,000 | 367,000 |
Professional fees | 1,680,000 | 754,000 | 2,486,000 | 1,629,000 |
General and administrative expenses | 1,560,000 | 1,708,000 | 3,465,000 | 3,588,000 |
Interest expense | 300,000 | 800,000 | 791,000 | 1,525,000 |
Depreciation and amortization expense | 321,000 | 303,000 | 591,000 | 644,000 |
Total operating expenses | 7,636,000 | 5,815,000 | 13,514,000 | 12,087,000 |
Recovery of Credit Losses, Impairment, Gain Disposal of Assets, and Other | ||||
Gain on disposal of assets | (20,000) | (142,000) | (20,000) | (395,000) |
Recovery of credit losses | (1,135,000) | (175,000) | (1,135,000) | (175,000) |
Unrealized loss on derivatives | 124,000 | 0 | 291,000 | 0 |
Total Recovery, Impairment Charges, Gain on Disposal of Assets and Other | (1,031,000) | (317,000) | (864,000) | (570,000) |
Total costs and expenses | 6,605,000 | 5,498,000 | 12,650,000 | 11,517,000 |
Loss before provision for income tax | (4,070,000) | (2,497,000) | (9,083,000) | (6,291,000) |
Income tax (provision) benefit | 0 | 0 | 0 | 0 |
Net Loss | (4,070,000) | (2,497,000) | (9,083,000) | (6,291,000) |
Net (income) loss attributable to non-controlling interests | (318,000) | 25,000 | (441,000) | 115,000 |
Cash dividends on Series B redeemable convertible preferred stock | (648,000) | (647,000) | (1,288,000) | (1,239,000) |
Deemed dividend on Series B redeemable convertible preferred stock | (954,000) | (915,000) | (1,889,000) | (1,731,000) |
Cash dividends on Series A redeemable preferred stock | (417,000) | (142,000) | (830,000) | (142,000) |
Net Loss attributable to common shareholders | $ (6,407,000) | $ (4,176,000) | $ (13,531,000) | $ (9,288,000) |
Net Loss per common share | ||||
Basic and Diluted (in dollars per share) | $ (0.39) | $ (0.25) | $ (0.83) | $ (0.56) |
Weighted average common shares outstanding - basic and diluted (in shares) | 16,375,649 | 16,696,684 | 16,383,921 | 16,680,988 |
UNAUDITED CONDENSED CONSOLIDA_2
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands | Total | Common Stock | Treasury Stock | Paid-in Capital | Accumulated deficit | Total IMH Financial Corporation Stockholders' Equity (Deficit) | Non-controlling Interest |
Beginning Balances at Dec. 31, 2017 | $ 35,811 | $ 181 | $ (6,286) | $ 714,889 | $ (679,535) | $ 29,249 | $ 6,562 |
Beginning Balances (in shares) at Dec. 31, 2017 | 18,079,522 | 1,826,096 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net income (loss) | (3,794) | (3,704) | (3,704) | (90) | |||
Contributions from Hotel Fund investors | 3,485 | 3,485 | |||||
Distributions to Hotel Fund investors | (20) | (20) | |||||
Hotel Fund syndication costs | (51) | (51) | (51) | ||||
Stock warrant and equity cost accretion | 688 | 688 | 688 | ||||
Cash dividends on Series B redeemable convertible preferred stock | (592) | (592) | (592) | ||||
Deemed dividend on Series B redeemable convertible preferred stock | (817) | (817) | (817) | ||||
Stock-based compensation | 100 | $ 4 | 96 | 100 | |||
Stock-based compensation (in shares) | 438,161 | ||||||
Ending Balances at Mar. 31, 2018 | 34,810 | $ 185 | $ (6,286) | 714,213 | (683,239) | 24,873 | 9,937 |
Ending Balances (in shares) at Mar. 31, 2018 | 18,517,683 | 1,826,096 | |||||
Beginning Balances at Dec. 31, 2017 | 35,811 | $ 181 | $ (6,286) | 714,889 | (679,535) | 29,249 | 6,562 |
Beginning Balances (in shares) at Dec. 31, 2017 | 18,079,522 | 1,826,096 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net income (loss) | (6,291) | ||||||
Ending Balances at Jun. 30, 2018 | 31,907 | $ 185 | $ (6,286) | 712,552 | (685,711) | 20,740 | 11,167 |
Ending Balances (in shares) at Jun. 30, 2018 | 18,596,774 | 1,870,164 | |||||
Beginning Balances at Mar. 31, 2018 | 34,810 | $ 185 | $ (6,286) | 714,213 | (683,239) | 24,873 | 9,937 |
Beginning Balances (in shares) at Mar. 31, 2018 | 18,517,683 | 1,826,096 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net income (loss) | (2,497) | (2,472) | (2,472) | (25) | |||
Contributions from Hotel Fund investors | 1,335 | 1,335 | |||||
Distributions to Hotel Fund investors | (80) | (80) | |||||
Hotel Fund syndication costs | (35) | (35) | (35) | ||||
Cash dividends on Series B redeemable convertible preferred stock | (647) | (647) | (647) | ||||
Deemed dividend on Series B redeemable convertible preferred stock | (914) | (914) | (914) | ||||
Cash dividends on Series A redeemable preferred stock | (142) | (142) | (142) | ||||
Stock-based compensation | 77 | 77 | 77 | ||||
Stock-based compensation (in shares) | 79,091 | ||||||
Treasury stock repurchase (in shares) | 44,068 | ||||||
Ending Balances at Jun. 30, 2018 | 31,907 | $ 185 | $ (6,286) | 712,552 | (685,711) | 20,740 | 11,167 |
Ending Balances (in shares) at Jun. 30, 2018 | 18,596,774 | 1,870,164 | |||||
Beginning Balances at Dec. 31, 2018 | 29,163 | $ 186 | $ (6,286) | 708,523 | (692,876) | 9,547 | 19,616 |
Beginning Balances (in shares) at Dec. 31, 2018 | 18,596,774 | 1,870,164 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net income (loss) | (5,013) | (5,136) | (5,136) | 123 | |||
Contributions from Hotel Fund investors | 3,520 | 3,520 | |||||
Distributions to Hotel Fund investors | (266) | (266) | |||||
Hotel Fund syndication costs | (12) | (12) | (12) | ||||
Stock warrant and equity cost accretion | (70) | (70) | (70) | ||||
Cash dividends on Series B redeemable convertible preferred stock | (641) | (641) | (641) | ||||
Deemed dividend on Series B redeemable convertible preferred stock | (936) | (936) | (936) | ||||
Cash dividends on Series A redeemable preferred stock | (412) | (412) | (412) | ||||
Stock-based compensation | 117 | $ 1 | 116 | 117 | |||
Stock-based compensation (in shares) | 112,304 | ||||||
Treasury stock repurchase | (1,000) | $ (1,000) | (1,000) | ||||
Treasury stock repurchase (in shares) | 500,000 | ||||||
Ending Balances at Mar. 31, 2019 | 24,450 | $ 187 | $ (7,286) | 706,568 | (698,012) | 1,457 | 22,993 |
Ending Balances (in shares) at Mar. 31, 2019 | 18,709,078 | 2,370,164 | |||||
Beginning Balances at Dec. 31, 2018 | 29,163 | $ 186 | $ (6,286) | 708,523 | (692,876) | 9,547 | 19,616 |
Beginning Balances (in shares) at Dec. 31, 2018 | 18,596,774 | 1,870,164 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net income (loss) | $ (9,083) | ||||||
Stock-based compensation (in shares) | 167,984 | ||||||
Ending Balances at Jun. 30, 2019 | $ 22,024 | $ 188 | $ (7,286) | 704,557 | (702,400) | (4,941) | 26,965 |
Ending Balances (in shares) at Jun. 30, 2019 | 18,764,758 | 2,370,164 | |||||
Beginning Balances at Mar. 31, 2019 | 24,450 | $ 187 | $ (7,286) | 706,568 | (698,012) | 1,457 | 22,993 |
Beginning Balances (in shares) at Mar. 31, 2019 | 18,709,078 | 2,370,164 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net income (loss) | (4,070) | (4,388) | (4,388) | 318 | |||
Contributions from Hotel Fund investors | 3,998 | 3,998 | |||||
Distributions to Hotel Fund investors | (344) | (344) | |||||
Hotel Fund syndication costs | (36) | (36) | (36) | ||||
Stock warrant and equity cost accretion | (31) | (31) | (31) | ||||
Cash dividends on Series B redeemable convertible preferred stock | (648) | (648) | (648) | ||||
Deemed dividend on Series B redeemable convertible preferred stock | (954) | (954) | (954) | ||||
Cash dividends on Series A redeemable preferred stock | (417) | (417) | (417) | ||||
Stock-based compensation | 76 | $ 1 | 75 | 76 | |||
Stock-based compensation (in shares) | 55,680 | ||||||
Ending Balances at Jun. 30, 2019 | $ 22,024 | $ 188 | $ (7,286) | $ 704,557 | $ (702,400) | $ (4,941) | $ 26,965 |
Ending Balances (in shares) at Jun. 30, 2019 | 18,764,758 | 2,370,164 |
UNAUDITED CONDENSED CONSOLIDA_3
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Cash flows from operating activities: | ||
Net loss | $ (9,083,000) | $ (6,291,000) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Stock-based compensation and option amortization | 192,000 | 178,000 |
Gain on disposal of assets | (20,000) | (395,000) |
Amortization of deferred financing costs | 81,000 | 78,000 |
Depreciation and amortization expense | 591,000 | 644,000 |
Accretion of mortgage income | (55,000) | (258,000) |
Accretion of discount on note payable | 259,000 | 446,000 |
Non-cash interest expense funded by loan draw | 752,000 | 541,000 |
Unrealized loss on derivatives | 291,000 | 0 |
Changes in operating assets and liabilities, net of business combination: | ||
Accrued interest receivable | 315,000 | (12,000) |
Other receivables | 87,000 | (68,000) |
Other assets | (2,383,000) | (411,000) |
Accrued property taxes | 333,000 | 37,000 |
Accounts payable and accrued expenses | 1,823,000 | (2,774,000) |
Customer deposits and funds held for others | 1,481,000 | 317,000 |
Accrued interest | (239,000) | 230,000 |
Total adjustments, net | 3,508,000 | (1,447,000) |
Net cash used in operating activities | (5,575,000) | (7,738,000) |
Cash flows from investing activities: | ||
Proceeds from sale of real estate owned and operating properties and other assets | 39,000 | 526,000 |
Purchases of property and equipment | (23,000) | (24,000) |
Mortgage loan payoff | 3,000,000 | 0 |
Mortgage loan investment and fundings | (921,000) | (2,920,000) |
Investment in real estate owned and other operating properties | (9,804,000) | (3,157,000) |
Net cash used in investing activities | (7,709,000) | (5,575,000) |
Cash flows from financing activities: | ||
Proceeds from notes payable | 11,158,000 | 0 |
Debt issuance costs paid | 144,000 | 0 |
Repayments of notes payable | (10,162,000) | 0 |
Dividends paid | (1,709,000) | (1,998,000) |
Purchase of treasury stock | (1,000,000) | 0 |
Proceeds from Issuance of Preferred Equity | 0 | 30,000,000 |
Equity issuance costs paid | 0 | (387,000) |
Purchase of Interest rate cap | 0 | (548,000) |
Contribution of Hotel Fund capital costs | (48,000) | 0 |
Contributions from Hotel Fund investors | 7,518,000 | 4,820,000 |
Distributions to Hotel Fund investors | (610,000) | (100,000) |
Net cash provided by financing activities | 5,003,000 | 31,787,000 |
Net increase (decrease) in cash, cash equivalents, and restricted cash | (8,281,000) | 18,474,000 |
Cash, cash equivalents, and restricted cash, beginning of period | 25,650,000 | 11,932,000 |
Cash, cash equivalents, and restricted cash, end of period | 17,369,000 | 30,406,000 |
Supplemental cash flow information | ||
Cash paid for interest | 681,000 | 204,000 |
Cash paid for taxes | 45,000 | 0 |
Non-cash investing and financing transactions | ||
Foreclosure on investment in mortgage loan | 7,625,000 | 0 |
Acquisition of operating property building and operations through foreclosure | 7,300,000 | 0 |
Assumption of first mortgage, accrued interest and operating liabilities through foreclosure | 15,457,000 | 0 |
Loan from JPM Chase Funding, Inc., (a related party) for purchase first mortgage on operating property | 11,000,000 | |
Lease liability arising from the recognition of right-of-use asset | 1,548,000 | 0 |
Noncash interest cost added to notes payable | 752,000 | 0 |
Noncash interest costs capitalized to operating property | 760,000 | 0 |
Capital expenditures in accounts payable and accrued expenses | $ 3,566,000 | $ 287,000 |
BUSINESS, BASIS OF PRESENTATION
BUSINESS, BASIS OF PRESENTATION AND LIQUIDITY | 6 Months Ended |
Jun. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
BUSINESS, BASIS OF PRESENTATION AND LIQUIDITY | BUSINESS, BASIS OF PRESENTATION AND LIQUIDITY Our Company IMH Financial Corporation (together with its subsidiaries, the “Company”) is a real estate investment and finance company based in the southwestern United States engaged in various and diverse facets of the real estate lending and investment process, including origination, acquisition, underwriting, servicing, enforcement, development, marketing, and disposition. The Company’s focus is to invest in, manage and dispose of commercial real estate mortgage investments, hospitality assets, and other real estate assets, and to perform all functions reasonably related thereto, including developing, managing and either holding for investment or disposing of real property acquired through acquisition, foreclosure or other means. Over the past several years, we acquired certain operating properties through deed-in-lieu of foreclosure which contributed to our operating revenues and expenses prior to their disposal. In the second quarter of 2019, we conducted a UCC foreclosure on the collateral securing $7.6 million mezzanine note receivable that was in default. That collateral was 100% of the membership interests in a limited liability company that owns a commercial real estate building and operations in St. Louis, Missouri. In the fourth quarter of 2017, we purchased a 64 -room operating hotel, spa and restaurant located in Sonoma, California, commonly known as MacArthur Place (“MacArthur Place”), which is presently our sole operating property and is currently undergoing a major renovation. Our History and Structure We were formed from the conversion of our predecessor entity, IMH Secured Loan Fund, LLC (the “Fund”), into a Delaware corporation. The Fund, which was organized in May 2003, commenced operations in August 2003, focusing on investments in senior short-term whole commercial real estate mortgage loans collateralized by first mortgages on real property. The Fund was externally managed by Investors Mortgage Holdings, Inc. (the “Manager”), which was incorporated in Arizona in June 1997 and is licensed as a mortgage banker by the State of Arizona. Through a series of private placements to accredited investors, the Fund raised $875 million of equity capital from May 2003 through December 2008. Due to the cumulative number of investors in the Fund, the Fund registered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), on April 30, 2007 and began filing periodic reports with the Securities and Exchange Commission (“SEC”). On June 18, 2010, the Fund became internally-managed through the acquisition of the Manager, and converted into a Delaware corporation in a series of transactions that we refer to as the “Conversion Transactions”. The Company continues to explore additional alternative management structures in an effort to reduce Company overhead. Basis of Presentation The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The accompanying condensed consolidated financial statements include the accounts of IMH Financial Corporation and the following wholly-owned operating subsidiaries: 11333, Inc. (formerly known as Investors Mortgage Holdings, Inc.), an Arizona corporation; Investors Mortgage Holdings California, Inc., a California corporation; IMH Holdings, LLC, a Delaware limited liability company (“Holdings”); and various other wholly owned subsidiaries established in connection with the acquisition of real estate either through foreclosure or purchase and/or for borrowing purposes and majority owned or controlled real estate entities and interests in variable interest entities (“VIEs”) in which the Company is considered the primary beneficiary. IMH Management Services, LLC, an Arizona limited liability company, provides us and our affiliates with human resources and administrative services, including the supply of employees. Other entities in which we have invested and have the ability to exercise significant influence over operating and financial policies of the investee, but upon over which we do not possess control, are accounted for by the equity method of accounting within the financial statements and they are therefore not consolidated. All significant intercompany accounts and transactions have been eliminated in consolidation. Liquidity We require liquidity and capital resources for our general working capital needs, including maintenance, development costs and capital expenditures for our operating properties and non-operating REO assets, professional fees, general and administrative operating costs, loan enforcement costs, financing costs, debt service payments, and dividends to our preferred shareholders, as well as to acquire our target assets. As of June 30, 2019 , our accumulated deficit aggregated $702.4 million primarily as a result of previous provisions for credit losses recorded relating to the decrease in the fair value of the collateral securing our legacy loan portfolio and impairment charges relating to the value of real estate owned (“REO”) assets acquired primarily through foreclosure, as well as on-going net operating losses resulting from the lack of income-producing assets. The Company has taken a number of steps to maintain an adequate level of on-going liquidity over the years. Our liquidity plan has included obtaining outside financing, selling mortgage loans, and selling the majority of our legacy real estate assets. In 2018, the Company entered into stock subscription agreements with its largest shareholder, JPMorgan Chase Funding Inc., a related party (“Chase Funding”), pursuant to which Chase Funding purchased shares of our Series B-3 Cumulative Convertible Preferred Stock and Series A Senior Redeemable Preferred Stock for a total purchase price of $30.0 million . The Company is using the proceeds from the sale of these shares for general corporate purposes. In the second quarter of 2019, we conducted a UCC foreclosure on the collateral securing a $7.6 million mezzanine note receivable that was in default. That collateral was 100% of the membership interests in an LLC that owns a commercial real estate building and operations in St. Louis, Missouri. In connection with this foreclosure, a subsidiary of the Company purchased the $13.2 million first mortgage note secured by this property. The purchase of the first mortgage note was funded partially with an $11.0 million loan (under a master repurchase agreement) from Chase Funding (related party) and the balance using Company funds. The master repurchase agreement has an initial maturity date of May 22, 2020 with the potential to extend to May 2021 if, among other conditions, certain debt yield and occupancy percentages are achieved. We are working with Chase funding to restructure and extend the maturity date of this facility. In addition, in connection with the acquisition and renovation of MacArthur Place, the Company entered into a building loan agreement and related agreements (the “MacArthur Loan”) in October 2017 with MidFirst Bank in the amount of $32.3 million . As described in Note 9, the MacArthur Loan was modified during the first quarter of 2019 to increase the loan facility to $37.0 million and to establish certain additional reserve accounts in the amount of $2.0 million . The renovation of MacArthur Place is scheduled to be completed in the third quarter of 2019. The modified MacArthur Loan requires the Company to fund minimum equity of $27.7 million , all of which has been funded as of June 30, 2019. The Company has provided a loan repayment guaranty equal to 50% of the original principal amount of the MacArthur Loan along with a guaranty of interest and operating deficits, as well as other customary non-recourse carve-out matters such as bankruptcy and environmental matters. Under the guarantees, the Company is required to maintain a minimum Tangible Net Worth, as defined, of $50.0 million and minimum liquidity of $5.0 million throughout the term of the MacArthur Loan. The Company was in compliance with such financial covenants as of June 30, 2019 . The loan includes a provision requiring substantial completion of the project by June 30, 2019, which the lender agreed to waive and extend to September 1, 2019. In addition, the MacArthur Loan requires MacArthur Place to establish various operating and reserve accounts at MidFirst Bank which are subject to a cash management agreement. In the event of default, MidFirst Bank has the ability to take control of such accounts for the allocation and distribution of proceeds in accordance with the cash management agreement. While the Company initially utilized its own equity and proceeds from the MacArthur Loan to fund the purchase of MacArthur Place, the Company sponsored and commenced an offering in November 2017 of up to $25.0 million of preferred limited liability company interests (the “Preferred Interests”) of the L’Auberge de Sonoma Resort Fund, LLC (the “Hotel Fund”). The net proceeds of this offering are being used primarily to (i) reimburse the Company’s for its initial $17.8 million common investment in the Hotel Fund and (ii) fund certain renovations and operating losses at the hotel. As of June 30, 2019 , the Hotel Fund had sold Preferred Interests in the aggregate amount of $22.5 million . Since the Company is deemed the primary beneficiary of and controls the Hotel Fund, we have consolidated this entity. As of June 30, 2019 , we had cash and cash equivalents of $12.2 million , REO assets held for sale with a carrying value of $7.4 million and other REO assets with a carrying value of $33.7 million that we seek to dispose of within the next 12 months. We continue to evaluate potential disposition strategies for our remaining REO assets and to seek additional sources of debt and equity for investment and working capital purposes. During the second quarter of 2019, a court-ordered stay was issued which prevents the sale of certain assets, pending the outcome of a related hearing in September 2019. At any time after July 24, 2020, each holder of our Series B-1 and B-2 Preferred Stock may require the Company to redeem, out of legally available funds, the shares held by such holder at a price (the “Redemption Price”) equal to the greater of (i) 150% of the sum of the original price per share plus all accrued and unpaid dividends or (ii) the sum of the tangible book value of the Company per share of voting Common Stock and all accrued and unpaid dividends as of the date of redemption. At any time after February 9, 2023, the holder of our Series B-3 Preferred Stock may require the Company to redeem, out of legally available funds, at a Redemption Price equal to the greater of (i) 145% of the sum of the original price per share plus all accrued and unpaid dividends or (ii) the sum of the tangible book value of the Company per share of voting Common Stock and all accrued and unpaid dividends as of the date of redemption. While the Preferred Shareholders have indicated their willingness to potentially extend the redemption period beyond July 24, 2020, a cash payment in the aggregate amount of $2.6 million is due and payable to the holders of the Series B-1 and B-2 Preferred Stock on July 24, 2020 whether or not a redemption is requested. The current holders of our Series B Preferred Stock are collectively referred to herein as the “Series B Investors”. As described in Note 9, the Company’s unsecured exchange offering notes (“EO Notes”) with a face value of $10.2 million matured on April 29, 2019 and were repaid in full. We expect our primary sources of liquidity over the next twelve months to consist of our proceeds from the disposition of our existing REO assets held for sale (assuming that the court-order stay is lifted within that time frame), proceeds from borrowings and equity issuances, current cash, mezzanine and mortgage loan interest income, and revenues from ownership or management of MacArthur Place. If we are able to resolve these matters favorably, we believe that our cash and cash equivalents coupled with our operating and investing revenues, as well as proceeds that we anticipate receiving from the disposition of our real estate held for sale and debt and equity financing efforts will be sufficient to allow us to fund our operations for a period of one year from the date these condensed consolidated financial statements are issued. We have been successful thus far in securing financing through June 30, 2019 to provide adequate funding and funding commitments for working capital purposes, which has been supplemented by proceeds from the sale of certain REO assets, receipts of principal and interest on mortgage and related investments. Moreover, we are continuing to negotiate potential extensions or restructuring of our Series B Preferred Stock and/or our outstanding debt obligations. However, there is no assurance that we will be successful in such negotiations, or in selling our remaining REO assets in a timely manner or in obtaining additional or replacement financing, if needed, to sufficiently fund future operations, repay existing debt, or to implement our investment strategy. Our failure to generate sustainable earning assets and to successfully liquidate a sufficient number of our REO assets may have a material adverse effect on our business, results of operations and financial position. In the absence of favorably resolving the matters described above, the collective nature of these uncertainties create substantial doubt about our ability to continue as a going concern for a period beyond one year from the date of issuance of these condensed consolidated financial statements. |
SIGNIFICANT ACCOUNTING POLICIES
SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended |
Jun. 30, 2019 | |
Accounting Policies [Abstract] | |
SIGNIFICANT ACCOUNTING POLICIES | SIGNIFICANT ACCOUNTING POLICIES Our significant accounting policies are detailed in “Note 2 - Summary of Significant Accounting Policies" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2018. Operating Properties Acquired Through Foreclosure Operating properties acquired through foreclosure consist of certain operating assets acquired through foreclosure that the Company has elected to hold for on-going operations and are recorded at fair value at the time of foreclosure. Leases Lessee Accounting As further discussed below, the Company adopted the provisions of Accounting Standards Update 2016-02, Leases , effective January 1, 2019. We determine if an arrangement is a lease at inception. Operating lease right-of-use (“ROU”) assets are recorded in other assets and operating lease liabilities are recorded in accounts payable and other accrued expenses in the accompanying condensed consolidated balance sheet. Finance leases, none of which existed as of the adoption of Accounting Standards Codification (“ASC”) 842 or as of June 30, 2019 , would be reflected in property and equipment and other liabilities in our condensed consolidated balance sheets. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. We use the implicit rate when readily determinable. The operating lease ROU asset also includes any lease payments made and excludes lease incentives. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term. Under the available practical expedient, we account for the lease and non-lease components as a single lease component for all classes of underlying assets. Further, we elected a short-term lease exception policy on all classes of underlying assets, permitting us to not apply the recognition requirements of this standard to short-term leases (i.e. leases with terms of 12 months or less). Lessor Accounting On May 29, 2019, the Company acquired a commercial real estate building through a foreclosure action known as Broadway Tower located in St. Louis, Missouri which leases office space to various tenants. The assumed leases were previously accounted for according to ASC 840 and were classified as operating leases. Upon transitioning these leases from being accounted for according to ASC 840 to being accounted for under ASC 842, the Company did not reassess the lease classification as allowed under the practical expedient package elected by the Company. New lessor leases are subject to the following policies for lease classification. Pursuant to ASC 842 – 30, the Company will classify a lease as a sales – type lease if: (i) the lease transfers ownership of the underlying asset to the lessee by the end of the lease term, (ii) the lease grants the lessee an option to purchase the underlying asset that the lessee is reasonably certain to exercise, (iii) the lease term is for the major part of the remaining economic life of the underlying asset, (iv) the present value of the sum of the lease payments and any residual value guaranteed by the lessee that is not already reflected in the lease payments equals or exceeds substantially all (90% or more) of the fair value of the underlying asset, or (v) the underlying asset is of such a specialized nature that it is expected to have no alternative use to the lessor at the end of the lease term. As of June 30, 2019 , none of our leases, as a lessor, met the above criteria to be classified as a sale – type lease. Pursuant to ASC 842 – 30, when none of the sales-type lease classification criteria are met, a lessor would classify the lease as a direct financing lease when both of the following criteria are met: (i) the present value of the sum of the lease payments and any residual value guaranteed by the lessee that is not already reflected in the lease payments and/or any other third party unrelated to the lessor equals or exceeds substantially all (90% or more) of the fair value of the underlying asset and (ii) it is probable that the lessor will collect the lease payments plus any amount necessary to satisfy a residual value guarantee. As of June 30, 2019 , none of our leases, as a lessor, met the above criteria to be classified as a financing lease. Pursuant to ASC 842 – 30, a lessor would classify a lease as an operating lease when none of the sales-type or direct financing lease classification criteria are met. As of June 30, 2019 , all leases of the Company’s rental properties were classified as operating leases. The Company has lease agreements with lease and non-lease components. The Company has elected to not separate non-lease components from lease components for all classes of underlying assets (primarily real estate assets) and will account for the combined components as commercial real estate rental revenue. Non-lease components included in commercial real estate rental revenue include certain tenant reimbursements for maintenance services, (including common-area maintenance services or “CAM”). Variable consideration for costs that are not contract components (e.g., real estate taxes, utilities) are excluded from total consideration and would be recorded as incurred by the lessee and earned by the lessor. As a lessor, the Company has further determined that this policy will be effective only on a lease that has been classified as an operating lease and the revenue recognition pattern and timing is the same for both types of components. Therefore, Accounting Standards Codification Topic 842, Leases (“ASC 842”), has been applied to these lease contracts for both types of components. The Company has elected to present sales tax and other tax collections in the condensed consolidated statements of operations on a net basis and, accordingly, such taxes are excluded from reported revenues. Commercial Real Estate Rental Revenue The Company derives revenues from our commercial real estate building in St. Louis, Missouri, known as Broadway Tower, which, as more fully described in Notes 4 and 5, was acquired in a foreclosure action by the Company in May 2019. Rental revenue, which is reflected as operating property revenue in the consolidated statements of operations and is presented in Mortgage and REO Legacy portfolio and other operations segment, represents revenue from the leasing of commercial office space to tenants, common area maintenance charges and parking space rental. Leases with tenants are classified as operating leases and revenue is recognized on a straight line basis over the term of the respective leases. The Company regularly reviews receivables related to rent and unbilled rent receivables and determines collectability by taking into consideration the tenant’s payment history, the financial condition of the tenant, business conditions in the industry in which the tenant operates and economic conditions in the area in which the property is located. Upon adoption of ASU 2016-02, effective January 1, 2019 , the Company recognizes all changes in the collectability assessment for an operating lease as an adjustment to rental income and does not record an allowance for uncollectible accounts. The Company recognizes the rental income on a straight-line basis over the terms of the leases. The cumulative differences between rental income recognized in the Company’s condensed unaudited consolidated statements of operations and contractual payment terms have been recorded as deferred rental income and presented on the accompanying condensed consolidated balance sheets. Funds Held by Lender and Restricted Cash Funds held by lender and restricted cash includes amounts maintained in escrow or other restricted accounts deposited into reserve accounts held by lenders for contractually specified purposes, which includes property taxes and insurance. The following table provides a reconciliation of cash, cash equivalents, and funds held by lender and restricted cash reported within the condensed consolidated balance sheets that sum to the total of the same such amounts shown in the consolidated statement of cash flows as of June 30, 2019 and December 31, 2018 (in thousands): June 30, December 31, 2019 2018 Cash and cash equivalents $ 12,222 $ 25,452 Funds held by lender and restricted cash 5,147 198 Total cash, cash equivalents, and restricted cash $ 17,369 $ 25,650 This balance includes property tax, insurance and construction related reserves for the MacArthur Loan totaling $2.3 million and $0.2 million at June 30, 2019 and December 31, 2018 , respectively. During the six months ended June 30, 2019, we acquired restricted cash reserves totaling $2.8 million in connection with our foreclosure and acquisition of a commercial office building in St. Louis, Missouri which is included in the balance above as of June 30, 2019 . Mortgage Investment Revenue Recognition See Note 3 for the Company’s accounting policy for Mortgage Investment Revenue Recognition. Recent Accounting Pronouncements Changes to GAAP are established by the Financial Accounting Standards Board (“FASB”) in the form of accounting standards updates (“ASUs”) to the FASB’s ASC. The Company considers the applicability and impact of all ASUs. Adopted Accounting Standards In February 2016, the FASB issued ASU 2016-02, Leases (“ASU 2016-02”). This new standard establishes a ROU model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. In July 2018, the FASB issued ASU No. 2018-11 which provides an alternative transition method that allows entities to apply the new leases standard at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. The Company has adopted the requirements of ASU 2016-02 on January 1, 2019, the first day of fiscal year 2019, and using the optional transition method. The Company elected the practical expedient package outlined in ASU No. 2016-02 under which we did not have to reassess whether an arrangement contains a lease, we carried forward our previous classification of leases as operating, and we did not have to reassess previously recorded initial direct costs. There was an increase in assets of $1.6 million and liabilities of $1.7 million due to the recognition of the required ROU asset and corresponding liability for all lease obligations that are currently classified as operating leases with the difference of $0.1 million related to existing deferred rent that reduced the ROU asset recorded. The standard did not have an impact in our condensed consolidated statements of operations. In August 2018, the SEC adopted the final rule under SEC Release No. 33-10532, Disclosure Update and Simplification , amending certain disclosure requirements that were redundant, duplicative, overlapping, outdated or superseded. In addition, the amendments expanded the requirements on the analysis of stockholders' equity for interim financial statements. Under the amendments, an analysis of changes in each caption of stockholders' equity presented in the balance sheet must be provided in a note or separate statement. The analysis should present a reconciliation of the beginning balance to the ending balance of each period for which a statement of comprehensive income is required to be filed. The Company has adopted the requirements of this accounting pronouncement in fiscal 2019. Accounting Standards Not Yet Adopted In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (“ASU 2016-13”). The ASU requires an organization to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Financial institutions and other organizations will now use forward-looking information to better inform their credit loss estimates. Many of the loss estimation techniques applied today will still be permitted, although the inputs to those techniques will change to reflect the full amount of expected credit losses. Organizations will continue to use judgment to determine which loss estimation method is appropriate for their circumstances. Additionally, the ASU amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. For public companies, this update will be effective for interim and annual periods beginning after December 15, 2019. The Company is currently evaluating the impact of the adoption of this guidance on its financial statements and related disclosures. In January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment (“ASU 2017-04”), which simplifies the current two-step goodwill impairment test by eliminating Step 2 of the test. The guidance requires a one-step impairment test in which an entity compares the fair value of a reporting unit with its carrying amount and recognizes an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value, if any. This guidance is effective for fiscal years beginning after December 15, 2019 and interim periods within those fiscal years, and should be applied on a prospective basis. Early adoption is permitted for the interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company is currently evaluating the impact of the adoption of this guidance on its financial statements and related disclosures. |
REVENUE
REVENUE | 6 Months Ended |
Jun. 30, 2019 | |
Revenue from Contract with Customer [Abstract] | |
REVENUE | REVENUE Following is a breakdown of revenue by source (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2019 2018 2019 2018 Operating property revenue Commercial real estate rental revenue $ 398 $ — $ 398 $ — Hotel revenues Rooms 766 1,205 957 1,897 Food and beverage 536 523 539 1,008 Banquet 26 96 30 276 Spa and fitness center 118 188 212 328 Other 36 93 57 159 Total operating property revenue 1,880 2,105 2,193 3,668 Mortgage loan income, net 447 641 1,098 1,266 Management fees, investment and other income 208 255 276 292 Total revenue $ 2,535 $ 3,001 $ 3,567 $ 5,226 Operating Property Revenue Commercial Real Estate Rental Revenue The Company derives revenues from our commercial real estate building in St. Louis, Missouri, known as Broadway Tower, which, as more fully described in Notes 4 and 5, was acquired in a foreclosure action by the Company in May 2019. Rental revenue, which is reflected as operating property revenue in the consolidated statements of operations and is presented in Mortgage and REO Legacy portfolio and other operations segment, which represents revenue from the leasing of commercial office space to tenants, common area maintenance charges and parking space rental. Leases with tenants are classified as operating leases and revenue is recognized on a straight line basis over the term of the respective leases. Hotel Revenues The Company derives hotel revenues from our hotel in Sonoma, California, which is reflected as operating property revenue in the consolidated statements of operations. Rooms revenue represents revenue from the occupancy of our hotel rooms and is driven by the occupancy and daily rate charged. Rooms revenue includes revenue for guest no-shows, day use, and early/late departure fees. The contracts for room stays with customers are generally short in duration and revenues are recognized as services are provided over the course of the hotel stay. Food & Beverage (“F&B”) revenue consists of revenue from the restaurants and lounges at our hotel, in-room dining and mini-bar revenue, and banquet/catering revenue from group and social functions. Other F&B revenue may include revenue from audio-visual equipment/services, rental of function rooms, and other F&B related revenue. Revenue is recognized as the services or products are provided. Our hotel property may employ third parties to provide certain services at the property, for example, audio visual services. We evaluate each of these contracts to determine if the hotel is the principal or the agent in the transaction, and record the revenue as appropriate (i.e., gross vs. net). Other revenue consists of ancillary revenue at the property, including attrition and cancellation fees, resort fees, spa and other guest services. Attrition and cancellation fees are recognized for non-cancellable deposits when the customer provides notification of cancellation within established management policy time frames. Taxes collected from customers and submitted to taxing authorities are not recorded in revenue. Mortgage Investment Revenue Recognition Interest on mortgage loans is recognized as revenue when earned using the interest method based on a 360 or 365 day year, in accordance with the related mortgage loan terms. We do not recognize interest income on loans once they are deemed to be impaired and placed in non-accrual status. Generally, a loan is placed in non-accrual status when (i) it is past its scheduled maturity by more than 90 days; (ii) it becomes delinquent as to interest due by more than 90 days; or (iii) the related fair value of the collateral is less than the total principal, accrued interest and related costs. We may determine that a loan, while delinquent in payment status, should not be placed in non-accrual status in instances where the fair value of the loan collateral significantly exceeds the principal and the accrued interest, as we expect that income recognized in such cases is probable of collection. Unless and until we have determined that the value of underlying collateral is insufficient to recover the total contractual amounts due under the loan term, generally our policy is to continue to accrue interest until the loan is more than 90 days delinquent with respect to accrued, uncollected interest or more than 90 days past scheduled maturity, whichever comes first. We defer fees for loan originations, processing and modifications, net of direct origination costs, at origination and amortize such fees as an adjustment to interest income using the effective interest method. Revenue for non-refundable commitment fees is recognized over the remaining life of the loan as an adjustment to the interest income yield. We defer premiums or discounts arising from acquired loans at acquisition and amortize such premiums or discounts as an adjustment to interest income over the contractual term of the related loan using the effective interest method. We include the unamortized portion of the premium or discount as a part of the net carrying value of the loan in the condensed consolidated balance sheets. Costs not directly paid to the seller of the loan are expensed as incurred and not amortized, except for any fees paid directly to the seller. |
MORTGAGE LOANS, NET
MORTGAGE LOANS, NET | 6 Months Ended |
Jun. 30, 2019 | |
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Abstract] | |
MORTGAGE LOANS, NET | MORTGAGE LOANS, NET Lending Activities As of June 30, 2019 , the Company held four portfolio loans with a balance of $13.3 million , net of valuation allowances, two of which were performing loans bearing a weighted-average interest rate of 9.7% as of June 30, 2019 . As of December 31, 2018 , the Company held six portfolio loans with a balance of $23.2 million , net of valuation allowances, three of which were performing loans bearing a weighted-average interest rate of 9.4% . As of June 30, 2019 and December 31, 2018 , the Company held two and three non-performing portfolio loans, respectively, two of which have been fully reserved and have a zero carrying value as of June 30, 2019 . During the three months ended June 30, 2019 , one performing loan with a principal balance of $3.0 million was repaid in full. In addition, during the three months ended June 30, 2019 , we foreclosed on one of the Company’s mezzanine loan investments that had a carrying value of $8.2 million as of the date of foreclosure, which had been in default since September 2018. In May 2019, we foreclosed on the loan collateral consisting of 100% of the membership interests in the limited liability company owning the underlying property. We recorded the acquired assets and assumed liabilities at fair value and consolidated the operations commencing on the foreclosure date. See additional discussion in Notes 5 and 8. During the three months ended June 30, 2019 , and 2018 , we recorded mortgage interest income of $0.4 million and $0.6 million , respectively. During the six months ended June 30, 2019 and 2018 , we recorded mortgage interest income of $1.1 million and $1.3 million , respectively. The valuation allowance was $12.7 million as of June 30, 2019 and $13.1 million as of December 31, 2018 . The Company did not invest in any new loans during the three or six months ended June 30, 2019 . During the three and six months ended June 30, 2018 , the Company originated one new construction loan in the principal amount of $13.1 million , of which we funded $0.9 million of construction loan draws during the six months ended June 30, 2019 . |
OPERATING PROPERTIES, REAL ESTA
OPERATING PROPERTIES, REAL ESTATE HELD FOR SALE AND OTHER REAL ESTATE OWNED | 6 Months Ended |
Jun. 30, 2019 | |
Real Estate [Abstract] | |
OPERATING PROPERTIES, REAL ESTATE HELD FOR SALE AND OTHER REAL ESTATE OWNED | OPERATING PROPERTIES, REAL ESTATE HELD FOR SALE AND OTHER REAL ESTATE OWNED As of June 30, 2019 , we held total REO assets of $104.8 million , of which $7.4 million were held for sale, $63.7 million were held as operating properties, and $33.7 million were classified as other real estate owned. As of December 31, 2018 , we held total REO assets of $75.0 million , of which $7.4 million were held for sale, $33.9 million were held as operating properties and $33.7 million were classified as other real estate owned. As described in Note 4, on May 29, 2019, we foreclosed on the membership interests of a limited liability company that was pledged as collateral on a defaulted mezzanine note receivable. The entity owns and operates a commercial office building known as Broadway Tower, located in St. Louis, Missouri. Upon foreclosure, we acquired the membership interests in the limited liability company that owns the office building and related assets, and assumed related liabilities of Broadway Tower, all of which were recorded at fair value in accordance with GAAP. The acquired assets consist of a building, land, furniture and fixtures, operating and reserve cash, and tenant receivables totaling approximately $26.0 million . Liabilities assumed consist of trade accounts payable and accrued liabilities, and accrued interest and principal on the first mortgage loan totaling approximately $16.0 million . In accordance with ASC 842, we recorded a right of use asset and related lease liability of $0.6 million , see Note 14. As described in Note 9, we purchased the Broadway Tower first mortgage note and accrued interest. During the three and six months ended June 30, 2019 , the Company sold one REO asset for $39.0 thousand resulting in a gain on sale of $20.0 thousand . During the three and six months ended June 30, 2018 , the Company sold REO assets (or portions thereof) for $0.2 million and $0.5 million (net of transaction costs) resulting in a total net gain on sale of $0.1 million and $0.4 million , respectively. REO Planned Development and Operations Costs and expenses related to operating, holding and maintaining our operating properties and REO assets are expensed as incurred and included in operating property direct expenses and as expenses for non-operating real estate owned in the accompanying condensed consolidated statements of operations. For the three months ended June 30, 2019 and 2018 , these costs and expenses were $3.7 million and $2.3 million , respectively. For the six months ended June 30, 2019 and 2018 , these costs and expenses were $6.2 million and $4.7 million , respectively. Costs related to the development, renovation or improvements of the Company’s real estate assets are generally capitalized, and costs relating to holding the assets are generally charged to expense. Cash outlays for capitalized renovation costs totaled $9.8 million and $3.2 million during the six months ended June 30, 2019 and 2018 , respectively. |
VARIABLE INTEREST ENTITIES
VARIABLE INTEREST ENTITIES | 6 Months Ended |
Jun. 30, 2019 | |
Equity Method Investments and Joint Ventures [Abstract] | |
VARIABLE INTEREST ENTITIES | VARIABLE INTEREST ENTITIES As of June 30, 2019 and December 31, 2018 , we consolidated multiple variable interest entities (“VIE’s”) relating to two projects: one is comprised of real estate holdings and the Hotel Fund that owns an operating hotel, restaurant and spa. We are deemed to be the primary beneficiaries of these consolidated VIE’s as we have the power to direct the activities that most significantly affect their economic performance and we have the obligation to absorb their losses and the right to receive benefits that could be significant to them. The assets of our consolidated VIE’s are only available to settle the obligations of the respective entities. The following table summarizes the carrying amounts of the above referenced entities’ assets and liabilities included in the Company’s condensed consolidated balance sheets at June 30, 2019 and December 31, 2018 , net of intercompany eliminations (in thousands): June 30, 2019 December 31, 2018 Total assets $ 97,730 $ 85,240 Total liabilities 57,640 37,770 The following table summarizes the results of operations for the three and six months ended June 30, 2019 and 2018 , net of intercompany eliminations (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2019 2018 2019 2018 Net loss $ (2,890 ) $ (833 ) $ (6,040 ) $ (2,333 ) The Company’s maximum exposure to loss consists of its combined equity in those entities which totaled $25.1 million as of June 30, 2019 . The Hotel Fund made a preferred distribution, payable monthly, accruing at a rate of 7.0% per annum on invested capital, cumulative and non-compounding (the “Preferred Distribution”) of $0.3 million and $0.6 million and during the three and six months ended June 30, 2019 , and $0.1 million during the three and six months ended June 30, 2018 . |
DERIVATIVE INSTRUMENTS AND HEDG
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | 6 Months Ended |
Jun. 30, 2019 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES Interest Rate Derivative We are exposed to risks arising from rising interest rates on our variable rate debt instruments. To manage these risks, we periodically use interest rate derivatives, which currently consists of an interest rate cap. To mitigate nonperformance risk, we routinely use a third party’s analysis of the creditworthiness of the counterparties, which supports our belief that the counterparties’ nonperformance risk is limited. All derivatives are recorded at fair value. During 2018 , we entered into an interest rate cap with a notional amount of $36.0 million and a rate cap of 2.2% . The interest rate cap had an effective date of March 21, 2018 and terminates on March 1, 2021. This instrument was not designated as a cash flow hedge. |
FAIR VALUE
FAIR VALUE | 6 Months Ended |
Jun. 30, 2019 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE | FAIR VALUE Valuation Allowance and Fair Value Measurement of Loans, Real Estate Held for Sale, Other REO, and Derivative Instruments Our valuation analysis process and procedures are disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2018. We perform a valuation analysis of our loans, REO held for sale, other REO, and derivative instruments on a quarterly basis. We consider all relevant, material circumstances to determine if, and the extent to which, a valuation allowance is required. Impairment for collateral dependent loans is measured at the balance sheet date based on the then fair value of the collateral in relation to contractual amounts due under the terms of the applicable loan if foreclosure is probable. Substantially all of our loans in default are deemed to be collateral dependent. REO assets that are classified as held for sale and other REO are measured at the lower of carrying amount or fair value, less estimated cost to sell. If an asset is considered impaired, an impairment loss is recognized for the difference between the asset’s carrying amount and its fair value, less estimated cost to sell. If we elect to change the disposition strategy for our other REO, and such assets were deemed to be held for sale, we may record additional impairment charges, and the amounts could be significant. Selection of Single Best Estimate of Value The results of our valuation efforts generally provide a range of values for the collateral valued or REO assets rather than a single value. The selection of a value from within a range of values depends upon general overall market conditions as well as specific market conditions for each property valued and its stage of entitlement or development. In selecting the single best estimate of value, we consider the information in any relevant valuation reports, credible purchase offers received and agreements executed, as well as multiple observable and unobservable inputs. Fair Value Measurements of Operating Properties Acquired Through Foreclosure As described in Note 4, on May 29, 2019, we foreclosed on the membership interests of a limited liability company that was pledged as collateral on a defaulted mezzanine note receivable. The limited liability company owns and operates a commercial office building known as Broadway Tower, located in St. Louis, Missouri. Upon foreclosure, we acquired the membership interests in the limited liability company that owns the office building and related assets, and assumed related liabilities of Broadway Tower, all of which were recorded at fair value in accordance with GAAP. The valuation methodology used to conclude our position on the fair value was based on the income approach using a discounted cash flow methodology. Fair Value Measurements of Derivative Instrument The Company acquired an interest rate cap in 2018 to mitigate its risk on certain variable debt against rising interest rates. In order to estimate the fair value of this derivative instrument, we use valuation reports from the third party broker who issued the derivative instrument. The report calculates fair value by using inputs, including market-observable data such as U.S dollar and foreign-denominated interest rate curves, foreign exchange rates, volatilities, and information derived from or corroborated by market-observable data which are classified as Level 2 inputs in the fair value hierarchy. The fair value method does not contemplate credit valuation adjustments (“CVA”) which would be a Level 3 input as the CVA uses credit spreads which are generally unobservable to the market. The fair value used in our financial statements approximate fair value without the CVA. As of June 30, 2019 , the fair value of the interest rate cap approximated $39 thousand and we recorded an unrealized loss on derivative instruments of $0.1 million and $0.3 million during the three and six months ended June 30, 2019 , respectively, and none during the three and six months ended June 30, 2018. Valuation Conclusions Based on the results of our evaluation and analysis, we did not record any non-cash provision for credit losses on our loan portfolio or impairment of REO during the six months ended June 30, 2019 and 2018 , respectively. We recorded other net recoveries of investment and credit losses totaling $1.1 million during the three and six months ended June 30, 2019 , and $0.2 million for the three and six months ended June 30, 2018 , resulting from the collection of cash and/or other assets recovered from certain guarantors on certain legacy loans and insurance recoveries received during the period. As of June 30, 2019 , the valuation allowance on our mortgage loans totaled $12.7 million , representing 49.9% of the total outstanding loan principal and accrued interest balances. As of December 31, 2018 , the valuation allowance on our mortgage loans totaled $13.1 million , representing 37.1% of total outstanding loan principal and accrued interest balances. With the existing valuation allowance recorded as of June 30, 2019 , we believe that, as of that date, the fair value of our loans, REO assets held for sale, and other REO is adequate in relation to the net carrying value of the related assets and that no additional valuation allowance or impairment is considered necessary. While the above results reflect management’s assessment of fair value as of June 30, 2019 based on currently available data, we will continue to evaluate our loans and REO assets to determine the appropriateness of the carrying value of such assets. Depending on market conditions, such updates may yield materially different values and potentially increase or decrease the valuation allowance for loans or impairment charges for REO assets. |
NOTES PAYABLE AND SPECIAL ASSES
NOTES PAYABLE AND SPECIAL ASSESSMENT OBLIGATIONS | 6 Months Ended |
Jun. 30, 2019 | |
Debt Disclosure [Abstract] | |
NOTES PAYABLE AND SPECIAL ASSESSMENT OBLIGATIONS | NOTES PAYABLE AND SPECIAL ASSESSMENT OBLIGATIONS As of June 30, 2019 and December 31, 2018 , our notes payable and special assessment obligations consisted of the following (in thousands): June 30, December 31, 2019 2018 $37.0 million note payable, as amended, to MidFirst Bank secured by a first lien on an operating hotel property, interest-only payments due monthly at the 30-day Libor (2.40% and 2.50% at June 30, 2019 and December 31, 2018, respectively) plus 3.54% to 3.75% depending on compensating balances and meeting certain financial thresholds and terms (5.94% and 5.84% effective rate at June 30, 2019 and December 31, 2018, respectively), matures October 1, 2020 with two one-year extension options, with construction completion and repayment guarantees provided by the Company. $ 32,589 $ 20,669 $11.0 million note payable to JPMorgan Chase Funding Inc. (a related party), is secured by the $13.2 million first mortgage note on the property known as Broadway Tower, bears interest at one month LIBOR plus 3.81%, requires interest only payments and a balloon payment of unpaid principal and interest upon maturity. The initial maturity date is May 22, 2020 with the potential to extend to May 2021 if, among other conditions, certain debt yield and occupancy percentages are achieved. 11,000 — $5.9 million note payable secured by real estate in New Mexico, annual interest only payments based on annual interest rates of prime plus 3.0% through maturity date of December 31, 2019. 8.5% and 8.25% as of June 30, 2019 and December 31, 2018, respectively. 5,940 5,940 Unsecured note payable under class action settlement, face amount of $10.2 million, net of discount of $30 thousand and $0.3 million at June 30, 2019 and December 31, 2018, respectively, 4% annual coupon interest rate (14.6% effective yield), interest payable quarterly, matured and paid in full on April 28, 2019. — 9,899 Special assessment bonds dated between 2002 and 2007, secured by the residential land located in Dakota County, Minnesota, annual interest rate ranging from 6%-7.5%, maturing various dates through 2022 (classified as held for sale as of March 31, 2018). 75 90 Total notes payable 49,604 36,598 Less: deferred financing costs of notes payable (346 ) (284 ) Total notes payable $ 49,258 $ 36,314 Interest expense for the three months ended June 30, 2019 and 2018 was $0.3 million and $0.8 million , respectively. Interest expense for the six months ended June 30, 2019 and 2018 was $0.8 million and $1.5 million , respectively. The Company capitalized interest relating to the MacArthur Loan in the amount of $0.3 million and $0.8 million for the three and six months ended June 30, 2019 . There was no capitalized interest during 2018. Senior Indebtedness MacArthur Place In October 2017, we closed on a $32.3 million acquisition and construction loan from MidFirst Bank in connection with our purchase of MacArthur Place (the “MacArthur Loan”), of which (i) $19.4 million was utilized for the purchase of MacArthur Place, (ii) approximately $10.0 million was set aside to fund planned hotel improvements, and (iii) the balance to fund interest reserves and operating capital. During the six months ended June 30, 2019 , the MacArthur Loan was modified to, among other things, increase the total loan facility to $37.0 million , thereby increase the Company’s equity commitment to $27.7 million due to projected increased renovation costs, and to establish certain additional reserve accounts in the amount of $2.0 million for the completion of certain aspects of the renovation project. The principal balance of the loan was $32.6 million and $20.7 million at June 30, 2019 and December 31, 2018 , respectively. The loan bears floating interest equal to the 30-day LIBOR rate ( 2.40% at June 30, 2019 ) plus 3.54% , which may be reduced by up to 0.50% if certain conditions are met, which were met as of June 30, 2019 . The loan has an initial term of three years subject to the right of the Company to extend the maturity date for two one -year periods, provided that the loan is in good standing and upon satisfaction of certain other conditions, including payment of an extension fee equal to 0.35% of outstanding principal per extension. The Company is required to make interest-only payments during the initial three year term. During the six months ended June 30, 2019 , the Company made loan draws totaling $11.9 million , of which $11.2 million represented renovation cost and operating draws and $0.8 million represented draws against the interest reserve on the loan. The Company incurred deferred financing fees of $0.5 million which are being amortized over the term of the loan using the effective interest method. The MacArthur Loan is secured by a deed of trust on all MacArthur Place real property and improvements, and a security interest in all furniture, fixtures and equipment, licenses and permits, and MacArthur Place related revenues. The Company agreed to provide a construction completion guaranty which shall be released upon payment of all project costs and receipt of a certificate of occupancy. In addition, the Company provided a loan repayment guaranty equal to 50% of the loan principal along with a guaranty of interest and operating deficits, as well as other customary carve-out matters such as bankruptcy and environmental matters. Under the guarantees, the Company is required to maintain a minimum tangible net worth of $50.0 million and minimum liquidity of $5.0 million throughout the term of the loan. The Company was in compliance with these covenants and guarantees at June 30, 2019 . The loan includes a provision requiring substantial completion of the project by June 30, 2019 which the lender agreed to waive and extend to September 1, 2019. In addition, the Company is required to establish various operating and reserve accounts at MidFirst Bank which are subject to a cash management agreement. In the event of default, MidFirst Bank has the ability to take control of such accounts for the allocation and distribution of proceeds in accordance with the cash management agreement. Exchange Notes In April 2014, we completed an offering of a five -year, 4% , unsecured notes to certain of our shareholders in exchange for common stock held by such shareholders at an exchange price of $8.02 per share (“Exchange Offering”). Upon completion of the Exchange Offering, we issued Exchange Offering notes (“EO Notes”) with a face value of $10.2 million . which were recorded by the Company at fair value of $6.4 million based on the fair value and the imputed effective yield of such notes of 14.6% (as compared to the note rate of 4% ) resulting in an initial debt discount on the EO Notes of $3.8 million which was amortized using the effective interest method over the term of the EO Notes. The amortized discount added to the principal balance of the EO Notes during the six months ended June 30, 2019 totaled $0.3 million . The EO Notes matured and all outstanding principal and interest were paid on April 29, 2019. JPMorgan Chase Funding Inc. Master Repurchase Agreement (related party) In the second quarter of 2019, we conducted a UCC foreclosure on the collateral securing a defaulted mezzanine note receivable That collateral was 100% of the membership interests in a limited liability company that owns a commercial real estate building and operations in St. Louis, Missouri, known as Broadway Tower, thereby assuming its assets and liabilities, including $13.2 million mortgage note payable secured by Broadway Tower. In a related transaction, a subsidiary of the Company purchased the $13.2 million first mortgage note secured by Broadway Tower. Since we own both the entity that owns the first mortgage note, as well as the entity that owes this obligation, the first mortgage loan and related interest has been eliminated in consolidation. The purchase of the first mortgage note was funded partially with an $11.0 million loan (under a master repurchase agreement) from Chase Funding and the balance using Company funds. The Chase Funding master repurchase agreement is secured by the $13.2 million first mortgage note and bears interest at one month LIBOR plus 3.81% , requires interest only payments and a balloon payment of unpaid principal and interest upon maturity. The initial maturity date is May 22, 2020 with the potential to extend to May 2021 if, among other conditions, certain debt yield and occupancy percentages are achieved. The master purchase agreement is subject to a third party loan servicing agreement. Our notes payable and special assessment obligations have the following scheduled maturities as of June 30, 2019 (in thousands): Year Amount 2019 $ 16,954 2020 32,616 2021 26 2022 8 Less: deferred financing costs of notes payable (346 ) Total $ 49,258 |
SEGMENT INFORMATION
SEGMENT INFORMATION | 6 Months Ended |
Jun. 30, 2019 | |
Segment Reporting [Abstract] | |
SEGMENT INFORMATION | SEGMENT INFORMATION Operating segments are defined as components of an enterprise that engage in business activity from which revenues are earned and expenses incurred for which discrete financial information is available that is evaluated regularly by our chief operating decision makers in deciding how to allocate resources and in assessing performance. The information presented in our reportable segments tables that follow are based in part on internal allocations which involve management judgment. Substantially all revenues recorded are from external customers. There is no material intersegment activity. Our operating segments reflect the distinct business activities from which revenues are earned and expenses incurred that are evaluated regularly by our executive management team in assessing performance and in deciding how to allocate resources. As of and for the three and six months ended June 30, 2019 and 2018 , the Company’s reportable segments consisted of the following: Hospitality and Entertainment Operations — Consists of revenues less direct operating expenses, depreciation and amortization relating to our hotel, spa, and food & beverage operations. This segment also reflects the carrying value of such assets and the related financing and operating obligations. Mortgage and REO - Legacy Portfolio and Other Operations — Consists of the collection, workout and sale of new and legacy loans and REO assets, including financing of such asset sales, as well as the operating expenses (if any), carrying costs and other related expenses of such assets. This segment also includes operating properties that do not represent a strategic operating objective of the Company, such as Broadway Tower, and their rental revenue and tenant recoveries less direct property operating expenses (maintenance and repairs, real estate taxes, management fees, and other operating expenses), depreciation and amortization from commercial real estate leasing operations, and the carrying value of such assets and the related financing and operating obligations. Corporate and Other — Consists of our centralized general and administrative and corporate treasury activities. This segment also includes reclassifications and eliminations between the reportable operating segments and reflects the carrying value of corporate fixed assets and the related financing and operating obligations. Condensed consolidated financial information for our reportable operating segments as of June 30, 2019 and December 31, 2018 and for the three and six months ended June 30, 2019 and 2018 is summarized as follows (in thousands): June 30, December 31, Balance Sheet Items 2019 2018 Total Assets Mortgage and REO Legacy portfolio and other operations $ 81,744 $ 67,658 Hospitality and entertainment operations 64,075 52,753 Corporate and other 11,219 23,228 Consolidated total $ 157,038 $ 143,639 Six Months Ended June 30, Cash Flow Items 2019 2018 Expenditures for additions to long-lived assets Mortgage and REO Legacy portfolio and other operations $ — $ 1,421 Hospitality and entertainment operations 9,804 1,736 Corporate and other 23 24 Consolidated total $ 9,827 $ 3,181 Three Months Ended June 30, 2019 Income Statement Items Mortgage and REO Legacy Portfolio and Other Operations Hospitality and Entertainment Operations Corporate and Other Consolidated Revenues Operating property revenue $ 398 $ 1,482 $ — $ 1,880 Mortgage loan income 447 — — 447 Management fees, investment and other income 3 — 205 208 Total revenue 848 1,482 205 2,535 Total operating expenses 1,134 4,355 2,147 7,636 Other (income) expense Gain on disposal of assets (20 ) — — (20 ) Recovery of credit losses (1,135 ) — — (1,135 ) Unrealized loss on derivatives — 124 — 124 Total other (income) expense (1,155 ) 124 — (1,031 ) Total costs and expense, net (21 ) 4,479 2,147 6,605 Income (loss) before income taxes 869 (2,997 ) (1,942 ) (4,070 ) (Provision for) benefit from income taxes — — — — Net income (loss) $ 869 $ (2,997 ) $ (1,942 ) $ (4,070 ) Three Months Ended June 30, 2018 Income Statement Items Mortgage and REO Legacy Portfolio and Other Operations Hospitality and Entertainment Operations Corporate and Other Consolidated Revenues Operating property revenue $ — $ 2,105 $ — $ 2,105 Mortgage loan income 641 — — 641 Management fees, investment and other income — 242 13 255 Total revenue 641 2,347 13 3,001 Total operating expenses 556 3,019 2,240 5,815 Other (income) expense Gain on disposal of assets, net (142 ) — — (142 ) Recovery of credit losses (175 ) — — (175 ) Total other income (317 ) — — (317 ) Total costs and expense, net 239 3,019 2,240 5,498 Income (loss) from continuing operations, before income taxes 402 (672 ) (2,227 ) (2,497 ) (Provision for) benefit from income taxes — — — — Net income (loss) $ 402 $ (672 ) $ (2,227 ) $ (2,497 ) Six Months Ended June 30, 2019 Income Statement Items Mortgage and REO Legacy Portfolio and Other Operations Hospitality and Entertainment Operations Corporate and Other Consolidated Revenues Operating property revenue $ 398 $ 1,795 $ — $ 2,193 Mortgage loan income 1,098 — — 1,098 Management fees, investment and other income 5 — 271 276 Total revenue 1,501 1,795 271 3,567 Total operating expenses 1,625 7,404 4,485 13,514 Other (income) expense Gain on Disposal of Assets, Net (20 ) — — (20 ) Recovery of credit losses (1,135 ) — — (1,135 ) Unrealized loss on derivatives — 291 — 291 Total other (income) expense (1,155 ) 291 — (864 ) Total costs and expense, net 470 7,695 4,485 12,650 Income (loss) before income taxes 1,031 (5,900 ) (4,214 ) (9,083 ) (Provision for) benefit from income taxes — — — — Net income (loss) $ 1,031 $ (5,900 ) $ (4,214 ) $ (9,083 ) Six Months Ended June 30, 2018 Income Statement Items Mortgage and REO Legacy Portfolio and Other Operations Hospitality and Entertainment Operations Corporate and Other Consolidated Revenues Operating property revenue $ — $ 3,668 $ — $ 3,668 Mortgage loan income 1,266 — — 1,266 Management fees, investment and other income — 243 49 292 Total revenue 1,266 3,911 49 5,226 Total operating expenses 1,412 6,212 4,463 12,087 Other (income) expense Gain on disposal of assets, net (395 ) — — (395 ) Recovery of credit losses (175 ) — — (175 ) Total other income (570 ) — — (570 ) Total costs and expense, net 842 6,212 4,463 11,517 Income (loss) from continuing operations, before income taxes 424 (2,301 ) (4,414 ) (6,291 ) (Provision for) benefit from income taxes — — — — Net income (loss) $ 424 $ (2,301 ) $ (4,414 ) $ (6,291 ) |
STOCKHOLDERS' EQUITY AND EARNIN
STOCKHOLDERS' EQUITY AND EARNINGS PER SHARE | 6 Months Ended |
Jun. 30, 2019 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
STOCKHOLDERS' EQUITY AND EARNINGS PER SHARE | STOCKHOLDERS’ EQUITY AND EARNINGS PER SHARE Common Stock Shares of Common Stock, Class B Common Stock, Class C Common Stock, and Class D Common Stock share proportionately in our earnings and losses attributable to common shareholders. There are no shares of Class D Common Stock outstanding as of June 30, 2019 or December 31, 2018 . Preferred Stock In July 2014, the Company issued a total of 8.2 million shares of the Company’s Series B-1 and B-2 Cumulative Convertible Preferred Stock to certain investor groups in exchange for $26.4 million . Except for certain voting and transfer rights, the rights and obligations of the Series B-1 Preferred Stock and Series B-2 Preferred Stock are substantially the same. On April 11, 2017, Chase Funding, an affiliate of JPMorgan Chase & Co., purchased all of the Company’s outstanding Series B-2 Preferred Shares directly from the initial purchaser of such shares. On February 9, 2018, Chase Funding purchased 2,352,941 shares of the Company’s Series B-3 Cumulative Convertible Preferred Stock (“Series B-3 Preferred Stock,” and collectively with the Series B-1 Preferred Stock and Series B-2 Preferred Stock, the “Series B Preferred Stock”), for a total purchase price of $8.0 million . The Series B-3 Preferred Stock contains redemption features similar in all material respects to those of all Series B-1 and B-2 Cumulative Convertible Preferred, which are disclosed in IMH’s annual 10-K for the year ended December 31, 2018. On July 23, 2019 with an effective date of April 1, 2019, we entered into a Deferral and Consent agreement with the holders of our Series B Preferred Stock pursuant to which they agreed to extend the redemption date for one (1) year. A cash payment in the aggregate amount of $2.6 million is due and payable to the holders of the Series B-1 and B-2 Preferred Stock on July 24, 2020 whether or not a redemption is requested. Concurrent with Chase Funding’s purchase of our Series B-3 Cumulative Convertible Preferred Stock, the Company issued to Chase Funding a warrant to acquire up to 600,000 shares of the Company’s common stock (the “JPM Warrant”). The JPM Warrant is exercisable at any time on or after February 9, 2021 for a two ( 2 ) year period, and has an exercise price of $2.25 per share. The JPM Warrant provides for certain adjustments that may be made to the exercise price and the number of shares issuable upon exercise due to customary anti-dilution provisions based on future corporate events. The JPM Warrant is exercisable in cash, and subject to certain conditions may also be exercised on a cashless basis. The warrant is classified in stockholders’ equity under the applicable guidance and were recorded at relative fair value at issuance. Series A Redeemable Preferred Stock Issuance On May 31, 2018, Chase Funding purchased 22,000 shares of the Company’s Series A Senior Redeemable Preferred Stock (the “Series A Preferred Stock”) at a purchase price of $1,000 per share, for a total purchase price of $22.0 million . The Series A Preferred Stock ranks senior with respect to dividend and redemption rights and rights upon liquidation, dissolution or winding up of the Company to all other classes or series of shares of the Company’s preferred and common stock and to all other equity securities issued by the Company from time to time. The Series A Preferred Stock is non-voting stock. Holders of the Series A Preferred Stock are entitled to receive a liquidation preference equal to the sum of the initial purchase price of the Series A Preferred Stock plus all accrued and unpaid dividends. Dividends on the Series A Preferred Stock are cumulative and accrue from the issue date at the rate of 7.5% of the issue price per year, payable quarterly in arrears on or before the last day of each calendar quarter. The Company has certain call rights with respect to the Series A Preferred Stock and the holders of Series A Preferred Stock have certain put rights which includes an acceleration of the put right if the Company is required to redeem any shares of junior securities in the event of certain non-compliance events as described in the Company’s Series B Preferred Certificate of Designation. Our Series B Preferred Stock and Series A Preferred Stock are classified as mezzanine equity in the accompanying condensed consolidated balance sheets. Treasury Stock On January 11, 2019, the Company concluded a tender offer to purchase up to 477,170 shares of Class B Common Stock and 22,830 shares of Class C common stock for $2.00 per share. The tender offer was over-subscribed and the 500,000 shares were purchased on a pro rata basis among the participating shareholders. The repurchase of these shares was treated as a treasury stock repurchase as reflected in the condensed consolidated balance sheet. Share-Based Compensation During the six months ended June 30, 2019 , the Company issued 167,984 shares of common stock pursuant to previous restricted stock awards. The Company did not grant shares of restricted stock or stock options during the three and six months ended June 30, 2019 , nor were any stock options or warrants exercised or forfeited during that period. As of June 30, 2019 , there were (i) 1,102,627 stock options outstanding, of which 983,429 shares were fully vested, (ii) 2,600,000 fully-vested stock warrants outstanding; and (iii) 172,800 shares of unvested restricted stock grants outstanding. Vested restricted stock grants have been issued and are included in outstanding common stock. Net stock-based compensation expense relating to the stock-based awards was $0.1 million for each of the three months ended June 30, 2019 and 2018, and $0.2 million for each of the six months ended June 30, 2019 and 2018 . We did not receive any cash from option or warrant exercises during the three or six months ended June 30, 2019 or 2018 . As of June 30, 2019 , there was $0.4 million of unrecognized compensation cost related to the time-based restricted stock that is expected to be recognized as a charge to earnings over a weighted-average vesting period of 1.63 years. Net Income (Loss) Per Share The Company has adopted the two-class computation method, and thus includes all participating securities in the computation of basic shares for the periods in which the Company has net income available to common shareholders. A participating security is defined as an unvested share-based payment award containing non-forfeitable rights to dividends regardless of whether or not the awards ultimately vest or expire. Net losses are not allocated to participating securities unless the holder has a contractual obligation to share in the losses. The following table presents a reconciliation of net loss to net loss attributable to common shareholders used in the basic and diluted earnings per share calculations for the three and six months ended June 30, 2019 and 2018 (amounts in thousands, except for per share data): Three Months Ended June 30, Six Months Ended June 30, 2019 2018 2019 2018 Earnings allocable to common shares: Numerator - Loss Attributable to Common Shareholders: Net loss $ (4,070 ) $ (2,497 ) $ (9,083 ) $ (6,291 ) Net (income) loss attributable to non-controlling interest (318 ) 25 (441 ) 115 Preferred dividends (2,019 ) (1,704 ) (4,007 ) (3,112 ) Net loss attributable to common shareholders $ (6,407 ) $ (4,176 ) $ (13,531 ) $ (9,288 ) Denominator - Weighted average shares: Weighted average common shares outstanding for basic and diluted earnings per common share 16,375,649 16,696,684 16,383,921 16,680,988 Basic and diluted earnings per common share: Net loss per common share $ (0.27 ) $ (0.15 ) $ (0.58 ) $ (0.37 ) Preferred dividends per share (0.12 ) (0.10 ) (0.24 ) (0.19 ) Net loss attributable to common shareholder per share $ (0.39 ) $ (0.25 ) $ (0.83 ) $ (0.56 ) The following securities were not included in the computation of diluted net loss per share as their effect would have been anti-dilutive (presented on a weighted average balance): Three Months Ended June 30, Six Months Ended June 30, 2019 2018 2019 2018 Options to purchase common stock 1,085,497 1,062,807 1,085,497 1,066,465 Restricted stock 249,486 372,815 230,134 382,638 Warrants to purchase common stock 2,600,000 2,600,000 2,600,000 2,470,718 Convertible preferred stock 10,552,941 10,552,941 10,552,941 10,045,954 Total 14,487,924 14,588,563 14,468,572 13,965,775 |
INTANGIBLE ASSETS AND GOODWILL
INTANGIBLE ASSETS AND GOODWILL | 6 Months Ended |
Jun. 30, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
INTANGIBLE ASSETS AND GOODWILL | INTANGIBLE ASSETS AND GOODWILL In connection with the purchase of MacArthur Place, we allocated a portion of the total purchase price to certain intangible assets and goodwill. Of the total $16.3 million allocated to purchased intangibles, $0.1 million , $0.8 million , and $15.4 million were allocated to trade name and other, customer relationships, and goodwill, respectively. The changes in the carrying amount of intangibles and goodwill allocated to our Hospitality and Entertainment Operations segment for the six months ended June 30, 2019 is as follows (in thousands): Goodwill Other intangibles, net Balance at December 31, 2018 $ 15,357 $ 641 Reductions: Amortization expense — (140 ) Balance at June 30, 2019 $ 15,357 $ 501 A summary of our intangible assets and goodwill as of June 30, 2019 and December 31, 2018 is as follows (in thousands): Gross Carrying Amount Accumulated Amortization Net Carrying Amount June 30, December 31, June 30, December 31, June 30, December 31, 2019 2018 2019 2018 2019 2018 Amortizing intangible assets: Trade name and other $ 90 $ 90 $ (22 ) $ (16 ) $ 68 $ 74 Customer relationships 800 800 (467 ) (333 ) 333 467 Non-amortizing intangible assets: Liquor license 100 100 — — 100 100 Goodwill 15,357 15,357 — — 15,357 15,357 $ 16,347 $ 16,347 $ (489 ) $ (349 ) $ 15,858 $ 15,998 Trade name and other, and customer relationships have weighted-average useful lives from the date of purchase of 7.0 years and 3.0 years , respectively. Goodwill and our liquor license are not subject to amortization due to the indeterminable life of such assets. Amortization expense relating to our purchased intangible assets was $0.1 million for each of the three and six months ended June 30, 2019 . Amortization expense relating to our purchased intangible assets was $0.1 million and $0.2 million for the three and six months ended June 30, 2018 , respectively. We performed an impairment assessment on goodwill and intangible assets annually in the fourth quarter of each year. As of June 30, 2019 , expected amortization expense for our purchased amortizing intangible assets for each of the next five years and thereafter is as follows (in thousands): Year Amount 2019 $ 140 2020 213 2021 13 2022 13 2023 13 Thereafter 9 Total $ 401 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 6 Months Ended |
Jun. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Construction and Related Guarantees As described in Note 9, the Company agreed to provide MidFirst Bank with a loan repayment guaranty equal to 50% of the outstanding principal and accrued, unpaid interest on the MacArthur Loan, plus a 50% guaranty of hotel operating expenses, and a construction completion guaranty with respect to the planned renovations of MacArthur Place. The construction completion guaranty will be released upon payment of all project costs and receipt of a certificate of occupancy. The MidFirst Bank loan documents also require that the loan remain “in balance” throughout its term such that the sum of all remaining undisbursed loan funds and the amounts expended by the Company will be sufficient to meet the approved construction budget and pay the loan interest. If the loan becomes “out of balance”, the Company must fund the difference. Management expects that any excess costs not funded by loan funds will be funded using offering proceeds from the Hotel Fund in excess of the reimbursement of our initial investment, and to the extent necessary, Company funds. Guarantor Recovery We have pursued and periodically receive favorable judgments against guarantors in connection with their personal guarantees of certain legacy loans on which we previously foreclosed. Similarly, we have filed claims against certain insurance providers and other parties for reimbursement of amounts we believe are due to the Company under such policies. Due to the uncertainty of the nature and extent of the available assets of these guarantors to pay the judgment amounts or amounts collectible under insurance claims, we do not record recoveries for any amounts due under such judgments or claims, except to the extent we have received assets without contingencies. We continue to pursue, investigate and evaluate the assets available of guarantors to collect all amounts due under judgments received in our favor. However, to the extent that such amounts are not determinable, they have not been recognized as recovery income in the accompanying consolidated statements of operations. Further recoveries under this and other judgments received in our favor will be recognized when realization of the recovery is deemed probable and when all contingencies relating to recovery have been resolved. We recorded recoveries during the three and six months ended June 30, 2019 of $1.1 million relating to cash collected on a guarantor claim. We recorded recoveries during the three and six months ended June 30, 2018 of $0.2 million . Employee Benefit Plan The Company, through its human resource provider, participates in a 401(k) retirement savings plan that allows for eligible participants to defer compensation, subject to certain limitations imposed by the Code. The Company may provide a discretionary matching contribution of up to 4% of each participant’s eligible compensation. During each of the three months ended June 30, 2019 and 2018 , the Company’s matching contribution was $0.1 million , which is included in general and administrative expenses in the accompanying consolidated statement of operations. Legal Matters We may be a party to litigation as the plaintiff or defendant in the ordinary course of business. While various asserted and unasserted claims may exist, resolution of these matters cannot be predicted with certainty. We establish reserves for legal claims when payments associated with the claims become probable and the payments can be reasonably estimated. Given the uncertainty of predicting the outcome of litigation and regulatory matters, it is generally difficult to predict what the eventual outcome will be, and when the matter will be resolved. The actual costs of resolving legal claims may be materially higher or lower than any amounts reserved for the claims. Partnership Claims In August 2016, a limited liability company member of Carinos Properties, LLC (“Carinos”) and Unit 6 Partners, LLC (“UP6”), filed a complaint in the United States District Court for the District of Arizona (“Federal Court”) generally alleging the Company breached its fiduciary duty to plaintiff under ERISA with respect to certain property we own in New Mexico. In April 2018, the court denied the Company’s motion for summary judgment in the case, but stayed any further action in the case pending the results of related litigation before the state trial court (“State Court”) described below. Damages were not specified in the Federal Court. A settlement in this matter was reached in July 2019. Terms of the settlement include the dismissal of the Federal Court litigation. The Company is seeking necessary court approvals for the approval of this settlement and the dismissal of the lawsuit. No loss was incurred by the Company as a result of the settlement. In the first fiscal quarter of 2017, Recorp-New Mexico Limited Partnership (“RNMA I”) conducted a capital call pursuant to its organizational documents. As a result of the capital call, certain limited partnership interests in RNMA I were transferred to one or more subsidiaries of the Company. One of the limited partners in RNMA I whose limited partnership interests were transferred challenged the effectiveness of the transfer and forfeiture of his limited partnership interests in State Court. On January 4, 2019, the State Court issued a minute entry, finding, among other things, that the limited partner’s limited partnership interest in RNMA I was not forfeited. On January 22, 2019, the subsidiary of the Company filed a motion for reconsideration of the minute entry finding. On March 21, 2019, the State Court issued an order staying the court’s January 4, 2019 minute entry ruling. An evidentiary hearing was held in early August 2019 in Arizona state trial court on certain factual questions and the court has requested a post trial briefing in September 2019. Based on the advice of counsel, management believes (a) the State Court’s January 4, 2019 minute entry finding was incorrect as to matters of both fact and law, and (b) the transfer of the limited partnership interests by the then-acting general partner was done in accordance with the rights granted to the general partner under the relevant organizational documents, and we believe that it is probable that the court in the above referenced September 2019 post trial briefing will ultimately agree with those conclusions. However, if the State Court were to rule that the limited partner interest transfers were ineffective, this could result in the recording of non-controlling interests in that partnership of approximately $3.1 million as of December 31, 2018. Management does not believe that loss is probable and, accordingly, no amounts have been accrued for this matter in the accompanying condensed consolidated financial statements. In September 2017, the State Court ordered the termination of the receivership over Stockholder, LLC, a wholly-owned subsidiary of the Company (“Stockholder”). Stockholder is the owner of all of the shares of stock in certain corporations that act as the general partner / limited liability company manager of several entities that own land and/or certain water interests in New Mexico. In December 2017, the State Court entered an interim “stay” order in the Company’s case against judgment debtor David P. Maniatis and his affiliates (“Maniatis”) enjoining the Company from taking any further collection action against Maniatis, pending an accounting of all previous debt collection activities and a trial on certain limited issues involving the calculation of interest and penalties on the original defaulted debt guaranteed by Maniatis. The stay order also temporarily inhibited the Company from effecting the sale or transfer of all or any part of the property previously acquired by the Company through litigation involving Maniatis, including approximately 7,000 acres of land and related water interests in New Mexico, and 111 acres of land in Texas. Subsequent to March 31, 2019, the State Court lifted the stay on all property previously acquired by the Company through litigation involving Maniatis except for the ownership interests in, and property held by, RNMA I. The ownership interests in, and property of, RNMA I remain subject to the stay until the date that is 30 days after the resolution of the above-described RNMA I dispute. Management does not believe that loss is probable and, accordingly, no amounts have been accrued for this matter in the accompanying condensed consolidated financial statements. In April 2019, the New Mexico state trial court amended an order enjoining certain individuals from taking any action with regard to certain real property in the Rio West/Albuquerque project. The amendment expanded the injunction to include Recorp/IMH from transferring any partnership ownership interests (or assets owned by these partnerships) until further order of the court. A hearing to dismiss that injunction and the underlying case is set for September 4, 2019. Intercreditor Agreement Claim The Company and certain of our subsidiaries are defendants in a case that is in the Arizona federal district court. The case arose from claims by a creditor of the Justin 123 receivership alleging breach of contract and other related claims stemming from a Partial Settlement and Intercreditor Agreement entered into among the major creditors, including the claimant and certain of our subsidiaries the a receiving proceeding. The suit seeks damages of $0.3 million , plus attorney fees and punitive damages. The Company believes that the claims are without merit and intends to vigorously defend its position. Management does not believe that loss is probable and the Company believes that any liability it may ultimately incur would not have a material adverse effect on its financial condition or its result of operations. Hotel Fund Obligations If the Hotel Fund has insufficient operating cash flow to pay the Preferred Distribution in a given month, the Company is obligated to provide the funds necessary to pay the Preferred Distribution for such month. Such payment will be treated as an additional capital contribution to the Hotel Fund by the Company. During the six months ended June 30, 2019 , the Company funded $0.6 million of Preferred Distributions. The Company also has agreed to fund, in the form of common capital contributions, up to 6.0% of the Hotel Fund offering’s gross proceeds as selling commissions and up to 1.0% of the gross proceeds raised in the offering as nonaccountable expense reimbursements to broker-dealers based on the capital raised by them for the Hotel Fund. During the six months ended June 30, 2019 , the Company paid $0.1 million to the Hotel Fund pursuant to these obligations. Other We are subject to oversight by various state and federal regulatory authorities, including, but not limited to, the Arizona Corporation Commission, the Arizona Department of Financial Institutions (Banking), and the SEC. Our income tax returns have not been examined by taxing authorities and all statutorily open years remain subject to examination. |
LEASES
LEASES | 6 Months Ended |
Jun. 30, 2019 | |
Leases [Abstract] | |
LEASES | LEASES Lessor On May 29, 2019, we foreclosed on the loan collateral consisting of 100% of the membership interests in the limited liability company owning the underlying property of Hertz Broadway Tower, LLC, a private company, in full satisfaction of the outstanding defaulted loan. As a result, we acquired the Broadway Tower, LLC’s building, related assets and business operations and assumed related liabilities. The Company assumed 51 commercial office leases where the Company is the lessor in lease arrangements for the building’s floor space and parking spaces. (See Note 4 for further discussion of this transaction). Prior to the foreclosure transaction, Hertz Broadway Tower, LLC accounted for the leases under ASC 840 - Leases. Upon our acquisition on May 29, 2019, the Company adopted the requirements of ASU 2016-02 for such leases. The lessor accounting model under ASU 2016-02 is similar to existing guidance, however, it limits the capitalization of initial direct leasing costs, such as internally generated costs. The adoption of ASU 2016-02 for this lease did not have an impact in our consolidated financial statements. The Company elected the practical expedient package outlined in ASU No. 2016-02 under which we were not required to reassess whether the arrangements contain a lease, and we carried forward the previous classification of the leases as operating, and we did not have to reassess previously recorded initial direct costs. These lease arrangements have been recorded in revenue for approximately one month during the three months ended June 30, 2019 . The Company’s operating leases have non-cancelable lease terms of 0.9 years to 10.1 years as of June 30, 2019 . Certain leases with tenants include options to extend or terminate the lease agreements. The Company believes the residual value risk is not a primary risk because of the long-lived nature of the asset. The following table presents minimum lease revenues and variable lease revenue for the three and six months ended June 30, 2019 (in thousands). Three and Six Months Ended June 30, 2019 2018 Lease revenue Fixed rent - Minimum lease revenue $ 377 $ — Variable lease revenue 21 — Total lease revenue $ 398 $ — Variable rent includes costs reimbursed related to property operating expenses, common area maintenance, insurance and property taxes. The following table presents future minimum operating lease payments due to the Company over the next five years and thereafter (in thousands). Years ending Amount Remainder of 2019 $ 1,808 2020 3,748 2021 3,800 2022 3,420 2023 2,311 Thereafter 3,643 Total $ 18,730 Lessee We have operating leases for corporate headquarters office space and certain equipment. Our leases have remaining lease terms of one year to four , one of which includes an option to extend the lease for up to five years. The option to extend the lease relates to our corporate office lease and is not included in the calculation of the ROU assets and lease liabilities because the Company is not reasonably certain that it will exercise the option. Lease expense was $0.1 million and for the three months ended June 30, 2019 and 2018 , respectively, and $0.2 million for the six months ended June 30, 2019 and 2018 , respectively, which is included in general and administrative expenses in the accompanying condensed consolidated statement of operations. Variable lease payments are not included in the calculation of the right-of-use asset and lease liability due to uncertainty of the payment amount and were $0.1 million and $0.1 million for the three months ended June 30, 2019 and 2018 , respectively, and $0.1 million and $0.1 million for the six months ended June 30, 2019 and 2018 , respectively. Supplemental cash flow information related to leases for the six months ended June 30, 2019 (in thousands): Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating lease $ 181 Non-cash investing and financing activities: Right-of-use assets and lease liabilities recorded upon adoption of ASC 842 Right-of-use assets $ 1,574 Lease liabilities $ 1,693 Supplemental balance sheet information related to leases as of June 30, 2019 was as follows (thousands, except lease term and discount rate): Operating leases Operating lease right-of-use assets in other assets $ 1,440 Operating lease liabilities in accounts payable and other accrued expenses $ 1,548 Weighted average remaining lease term 3.0 years Operating leases - Weighted average discount rate 7.1% The following represents future payments on operating leases as of June 30, 2019 (in thousands): Years ending Amount Remainder of 2019 $ 287 2020 575 2021 577 2022 304 Total lease payments 1,743 Less imputed interest (195 ) Total $ 1,548 As of December 31, 2018, future minimum lease payments required under these various lease agreements are as follows (in thousands): Years ending Amount 2019 $ 305 2020 307 2021 308 2022 233 Total $ 1,153 |
LEASES | LEASES Lessor On May 29, 2019, we foreclosed on the loan collateral consisting of 100% of the membership interests in the limited liability company owning the underlying property of Hertz Broadway Tower, LLC, a private company, in full satisfaction of the outstanding defaulted loan. As a result, we acquired the Broadway Tower, LLC’s building, related assets and business operations and assumed related liabilities. The Company assumed 51 commercial office leases where the Company is the lessor in lease arrangements for the building’s floor space and parking spaces. (See Note 4 for further discussion of this transaction). Prior to the foreclosure transaction, Hertz Broadway Tower, LLC accounted for the leases under ASC 840 - Leases. Upon our acquisition on May 29, 2019, the Company adopted the requirements of ASU 2016-02 for such leases. The lessor accounting model under ASU 2016-02 is similar to existing guidance, however, it limits the capitalization of initial direct leasing costs, such as internally generated costs. The adoption of ASU 2016-02 for this lease did not have an impact in our consolidated financial statements. The Company elected the practical expedient package outlined in ASU No. 2016-02 under which we were not required to reassess whether the arrangements contain a lease, and we carried forward the previous classification of the leases as operating, and we did not have to reassess previously recorded initial direct costs. These lease arrangements have been recorded in revenue for approximately one month during the three months ended June 30, 2019 . The Company’s operating leases have non-cancelable lease terms of 0.9 years to 10.1 years as of June 30, 2019 . Certain leases with tenants include options to extend or terminate the lease agreements. The Company believes the residual value risk is not a primary risk because of the long-lived nature of the asset. The following table presents minimum lease revenues and variable lease revenue for the three and six months ended June 30, 2019 (in thousands). Three and Six Months Ended June 30, 2019 2018 Lease revenue Fixed rent - Minimum lease revenue $ 377 $ — Variable lease revenue 21 — Total lease revenue $ 398 $ — Variable rent includes costs reimbursed related to property operating expenses, common area maintenance, insurance and property taxes. The following table presents future minimum operating lease payments due to the Company over the next five years and thereafter (in thousands). Years ending Amount Remainder of 2019 $ 1,808 2020 3,748 2021 3,800 2022 3,420 2023 2,311 Thereafter 3,643 Total $ 18,730 Lessee We have operating leases for corporate headquarters office space and certain equipment. Our leases have remaining lease terms of one year to four , one of which includes an option to extend the lease for up to five years. The option to extend the lease relates to our corporate office lease and is not included in the calculation of the ROU assets and lease liabilities because the Company is not reasonably certain that it will exercise the option. Lease expense was $0.1 million and for the three months ended June 30, 2019 and 2018 , respectively, and $0.2 million for the six months ended June 30, 2019 and 2018 , respectively, which is included in general and administrative expenses in the accompanying condensed consolidated statement of operations. Variable lease payments are not included in the calculation of the right-of-use asset and lease liability due to uncertainty of the payment amount and were $0.1 million and $0.1 million for the three months ended June 30, 2019 and 2018 , respectively, and $0.1 million and $0.1 million for the six months ended June 30, 2019 and 2018 , respectively. Supplemental cash flow information related to leases for the six months ended June 30, 2019 (in thousands): Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating lease $ 181 Non-cash investing and financing activities: Right-of-use assets and lease liabilities recorded upon adoption of ASC 842 Right-of-use assets $ 1,574 Lease liabilities $ 1,693 Supplemental balance sheet information related to leases as of June 30, 2019 was as follows (thousands, except lease term and discount rate): Operating leases Operating lease right-of-use assets in other assets $ 1,440 Operating lease liabilities in accounts payable and other accrued expenses $ 1,548 Weighted average remaining lease term 3.0 years Operating leases - Weighted average discount rate 7.1% The following represents future payments on operating leases as of June 30, 2019 (in thousands): Years ending Amount Remainder of 2019 $ 287 2020 575 2021 577 2022 304 Total lease payments 1,743 Less imputed interest (195 ) Total $ 1,548 As of December 31, 2018, future minimum lease payments required under these various lease agreements are as follows (in thousands): Years ending Amount 2019 $ 305 2020 307 2021 308 2022 233 Total $ 1,153 |
RELATED PARTY TRANSACTIONS AND
RELATED PARTY TRANSACTIONS AND COMMITMENTS | 6 Months Ended |
Jun. 30, 2019 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS AND COMMITMENTS | RELATED PARTY TRANSACTIONS AND COMMITMENTS Contractual Agreements CEO Legacy Fees Under the terms of his employment agreement that expired on July 24, 2019, our CEO is entitled to, among other things, legacy fee payments derived from the value of the disposition of certain legacy assets held by the Company as of December 31, 2010, if such assets are sold at values in excess of 110% of their carrying value as of December 31, 2010. Our CEO earned legacy fees of $0.1 million during the three and six months ended June 30, 2019 , and $34.6 thousand during the three and six months ended June 30, 2018 (see Note 16). Juniper Capital Partners, LLC and Related Entities In July 2014, the Company and JCP Realty entered into a consulting services agreement (the “Consulting Agreement”) pursuant to which JCP Realty agreed to perform various services for the Company, including, but not limited to, (a) advising the Company with respect to identifying, structuring, and analyzing investment opportunities, and (b) assisting the Company in managing and liquidating assets, including non-performing assets. Our director, Jay Wolf, is the Managing Member of Juniper Capital Partners, the parent company of JCP Realty. The initial term of the Consulting Agreement was three years and was automatically renewable for an additional two years unless notice of termination was provided by either party. The Company and JCP entered into an amendment of the Consulting Agreement dated October 17, 2017 pursuant to which: (i) the term was extended for two years that ended on July 24, 2019; (ii) the annual base consulting fee was reduced from $0.6 million to $0.5 million (subject to possible upward adjustment based on an annual review by our board of directors); and (iii) JCP is entitled to receive an origination fee of up to 1.25% on any loans or investments in real estate, preferred equity or mezzanine securities that are originated or identified by JCP (subject to a reduced fee based on the increasing size of the loan or investment). JCP is also entitled to legacy fee payments derived from the disposition of certain assets held by the Company as of December 31, 2010 to persons or opportunities arising through the efforts of JCP equal to 5.5% of the positive difference derived by subtracting (i) 110% of our December 31, 2010 valuation mark of that asset from (ii) the gross sales proceeds (on a legacy asset by asset basis without any offset for losses realized on any individual asset sales). The consulting services agreement terminated on July 24, 2019 (see Note 16). During each of the six months ended June 30, 2019 and 2018 , we incurred base consulting fees to JCP of $0.2 million . JCP earned legacy fees of $0.1 million during the three and six months ended June 30, 2019 and $0.1 million during the three and six months ended June 30, 2018 . Notes Receivable from Certain Partnerships A subsidiary of the Company has entered into a lending facility with certain consolidated partnerships to lend up to a maximum of $5.0 million to cover the partnerships’ anticipated operating and capital expenditures. As of June 30, 2019 , the total principal advanced was $5.0 million . The loans earn interest at rates ranging from the JP Morgan Chase Prime rate plus 2.0% ( 7.50% at June 30, 2019 ) to 8.0% and have maturity dates which are the earliest to occur of: (1) the date of transfer of the partnership’s real estate assets; (2) the date on which the current general partner resigns, withdraws or is removed as general partner; or (3) July 31, 2018. The promissory notes received under this lending facility are presently in default and the Company is exploring its enforcement options. The promissory notes are cross collateralized and secured by real estate and other assets owned by such partnerships. These promissory notes and the related accrued interest receivable have been eliminated in consolidation. JPMorgan Chase Funding Inc. Master Repurchase Agreement As described in Note 9, a subsidiary of the Company purchased the $13.2 million first mortgage note secured by Broadway Tower. The purchase of the first mortgage note was funded partially with an $11.0 million loan (under a master repurchase agreement) from Chase Funding and the balance using Company funds. The Chase Funding master repurchase agreement is secured by the $13.2 million first mortgage note and bears interest at one month LIBOR plus 3.81% , requires interest only payments and a balloon payment of unpaid principal and interest upon maturity. The initial maturity date is May 22, 2020 with the potential to extend to May 2021 if, among other conditions, certain debt yield and occupancy percentages are achieved. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 6 Months Ended |
Jun. 30, 2019 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | SUBSEQUENT EVENTS CEO Termination Agreement The Employment Agreement between the Company and Mr. Bain, the Company’s Chairman of the Board and Chief Executive Officer, expired on July 24, 2019 (the “Expiration Date”). The Company and Mr. Bain have mutually agreed not to renew or extend Mr. Bain’s employment agreement. Accordingly, on April 11, 2019, the Company entered into a Termination of Employment Agreement, Release and Additional Compensation Agreement with Mr. Bain (the “Bain Termination Agreement”), and subsequent to June 30, 2019, the Company entered into certain consulting agreements with Mr. Bain. The material terms of these agreements are summarized below. 1) The Company and Mr. Bain agree that, effective on the Expiration Date, Mr. Bain’s employment with the Company will terminate and he will resign as an officer and director of the Company. On July 30, 2019, the Company entered into a Consulting Services Agreement (the “ Interim-CEO Consulting Services Agreement ”) with ITH Partners, LLC, a Nevada limited liability company (“ITH”), pursuant to which ITH agreed to provide certain consulting services to the Company for a ninety (90) day period commencing effective as of July 25, 2019, subject to automatic thirty (30) day renewals unless earlier terminated by the parties as provided therein. Mr. Bain is the Managing Director of ITH. Mr. Bain had served as the Company’s Chairman of the Board and Chief Executive Officer from July 24, 2014 until July 24, 2019, at which time his employment terminated. Pursuant to the Interim-CEO Consulting Services Agreement, Mr. Bain has been appointed to fill a vacancy on the Board of Directors of the Company (created when Mr. Bain’s employment terminated and he stepped down from the Board of Directors) and will serve as interim Co-Chairman and Chief Executive Officer of the Company until his service as such is terminated by the Board of Directors of the Company for any or no reason. During such period, Mr. Bain will report to the Board of Directors of the Company. Mr. Bain also will serve as the interim chairman of the Investment Committee of the Board of Directors during this period. The Interim-CEO Consulting Services Agreement imposes certain limitations on the authority of Mr. Bain to act on behalf of the Company. In exchange for ITH’s services under this agreement, the Company has agreed to pay ITH a monthly consulting fee of $30,000 commencing August 1, 2019. The agreement also contains various representations, protective covenants, termination provisions and other obligations and terms that are commonly contained in an agreement of this nature; 2) Since Mr. Bain remained employed by the Company through the Expiration Date, he is entitled to receive a cash bonus of $0.6 million for his 2018 services (which have been recorded in the accompanying consolidated financial statements and was paid during the six months ended June 30, 2019) and $0.35 million for his 2019 services, to be paid no later than April 30, 2019 and March 31, 2020, respectively; 3) The Company has agreed to pay Mr. Bain two payments of $0.25 million each by no later than January 31, 2020 and January 31, 2021, respectively; 4) Mr. Bain will be entitled to receive a Legacy Asset Performance Fee (“LAPF”), as calculated in accordance with his current employment agreement, in connection with the disposition of the Company’s interests in the assets of the New Mexico Partnerships (the “New Mexico Assets”) provided that such disposition occurs prior to December 31, 2022. The parties agree that these are the only assets as to which Mr. Bain may be entitled to receive a LAPF following the Expiration Date; 5) On July 30, 2019, the Company and ITH also entered into a Consulting Services Agreement (the “ New Mexico Asset Consulting Agreement ”) pursuant to which ITH agreed to provide certain consulting services to the Company with respect to certain real property located in Sandoval County, New Mexico (the “ New Mexico Asset ”) for a period expiring on the earlier to occur of (a) consummation of the sale of all or substantially all of the New Mexico Asset and (b) December 31, 2022, unless such agreement is earlier terminated by the parties as provided therein. This agreement was entered into pursuant to the Termination of Employment Agreement, Release and Additional Compensation Agreement between Mr. Bain and the Company, dated as of April 11, 2019. During the term of the New Mexico Asset Consulting Agreement, Mr. Bain is obligated to report to the Company’s Board of Directors and will serve as president of various corporations that serve as general partner of those entities that own the New Mexico Asset. The agreement also imposes certain limitations on the authority of Mr. Bain to act on behalf of the Company. In exchange for ITH’s services under this agreement, the Company has agreed to pay ITH a base monthly consulting fee of $5,000 commencing August 1, 2019, and an incentive bonus in the event that the Net Cash received from the sale of the New Mexico Asset exceeds certain minimum thresholds, after the payment of various reimbursements and expenses. The agreement also contains various representations, protective covenants, termination provisions and other obligations and terms that are commonly contained in an agreement of this nature; 6) All unvested equity awards and deferred compensation benefits granted to Mr. Bain were vested on the Expiration Date; and 7) Mr. Bain has agreed to certain noncompetition and nonsolicitation covenants, cooperation covenants and certain other requirements. Asset Management Agreement On August 14, 2019, the Company entered into a non-discretionary investment advisory agreement (the “Advisory Agreement”) with Juniper Investment Advisors, LLC, a Delaware limited liability company (“JIA”), with an effective commencement date of August 1, 2019, pursuant to which JIA will manage certain assets of the Company, including the Company’s loan portfolio and certain of its legacy real-estate owned properties. Under the terms of the Advisory Agreement, the Company will pay JIA a management fees ranging from 1.0% to 1.5% of the net asset value of certain assets under management, as well as a performance fee equal to 20% of the net profits from those assets upon disposition after the Company has received an annualized 7% return on its investment from those assets and recovery of the Company’s basis in such assets. In connection with the Advisory Agreement, certain employees of the Company have transitioned to become employees of JIA, and JIA will also sublet a portion of the Company’s office space. Jay Wolf and Alejandro Krys together own 50% of JIA. Messrs. Wolf and Krys are also the owners of Juniper Capital Partners, LLC, a Delaware limited liability company, the sole member of Juniper NVM, LLC, a Delaware limited liability company (“JNVM”) and the manager of JCP Realty Partners, LLC, a Delaware limited liability company (“JCP Realty”). JCP Realty and JNVM are the collective holders of all the Series B-1 Cumulative Convertible Preferred Stock in the Company. Mr. Wolf is also a member of the board of directors of the Company and its investment committee. New Loan Investment Subsequent to June 30, 2019, the Company entered into an investment agreement with Juniper New Mexico, LLC (a related party of a preferred shareholder) to participate in a $15 million mezzanine loan to a unrelated hotel owner and operator for the renovation of a 96-key luxury resort located in Sante Fe, New Mexico. The mezzanine loan is secondary to a senior mortgage loan funded by a unrelated party. The Company’s total commitment under this investment is $3.9 million , of which $2.1 million was funded subsequent to June 30, 2019. |
SIGNIFICANT ACCOUNTING POLICI_2
SIGNIFICANT ACCOUNTING POLICIES (Policies) | 6 Months Ended |
Jun. 30, 2019 | |
Accounting Policies [Abstract] | |
Operating Properties Acquired Through Foreclosure | Operating Properties Acquired Through Foreclosure Operating properties acquired through foreclosure consist of certain operating assets acquired through foreclosure that the Company has elected to hold for on-going operations and are recorded at fair value at the time of foreclosure. |
Lessee Accounting | Lessee Accounting As further discussed below, the Company adopted the provisions of Accounting Standards Update 2016-02, Leases , effective January 1, 2019. We determine if an arrangement is a lease at inception. Operating lease right-of-use (“ROU”) assets are recorded in other assets and operating lease liabilities are recorded in accounts payable and other accrued expenses in the accompanying condensed consolidated balance sheet. Finance leases, none of which existed as of the adoption of Accounting Standards Codification (“ASC”) 842 or as of June 30, 2019 , would be reflected in property and equipment and other liabilities in our condensed consolidated balance sheets. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. We use the implicit rate when readily determinable. The operating lease ROU asset also includes any lease payments made and excludes lease incentives. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term. Under the available practical expedient, we account for the lease and non-lease components as a single lease component for all classes of underlying assets. Further, we elected a short-term lease exception policy on all classes of underlying assets, permitting us to not apply the recognition requirements of this standard to short-term leases (i.e. leases with terms of 12 months or less). |
Lessor Accounting | Lessor Accounting On May 29, 2019, the Company acquired a commercial real estate building through a foreclosure action known as Broadway Tower located in St. Louis, Missouri which leases office space to various tenants. The assumed leases were previously accounted for according to ASC 840 and were classified as operating leases. Upon transitioning these leases from being accounted for according to ASC 840 to being accounted for under ASC 842, the Company did not reassess the lease classification as allowed under the practical expedient package elected by the Company. New lessor leases are subject to the following policies for lease classification. Pursuant to ASC 842 – 30, the Company will classify a lease as a sales – type lease if: (i) the lease transfers ownership of the underlying asset to the lessee by the end of the lease term, (ii) the lease grants the lessee an option to purchase the underlying asset that the lessee is reasonably certain to exercise, (iii) the lease term is for the major part of the remaining economic life of the underlying asset, (iv) the present value of the sum of the lease payments and any residual value guaranteed by the lessee that is not already reflected in the lease payments equals or exceeds substantially all (90% or more) of the fair value of the underlying asset, or (v) the underlying asset is of such a specialized nature that it is expected to have no alternative use to the lessor at the end of the lease term. As of June 30, 2019 , none of our leases, as a lessor, met the above criteria to be classified as a sale – type lease. Pursuant to ASC 842 – 30, when none of the sales-type lease classification criteria are met, a lessor would classify the lease as a direct financing lease when both of the following criteria are met: (i) the present value of the sum of the lease payments and any residual value guaranteed by the lessee that is not already reflected in the lease payments and/or any other third party unrelated to the lessor equals or exceeds substantially all (90% or more) of the fair value of the underlying asset and (ii) it is probable that the lessor will collect the lease payments plus any amount necessary to satisfy a residual value guarantee. As of June 30, 2019 , none of our leases, as a lessor, met the above criteria to be classified as a financing lease. Pursuant to ASC 842 – 30, a lessor would classify a lease as an operating lease when none of the sales-type or direct financing lease classification criteria are met. As of June 30, 2019 , all leases of the Company’s rental properties were classified as operating leases. The Company has lease agreements with lease and non-lease components. The Company has elected to not separate non-lease components from lease components for all classes of underlying assets (primarily real estate assets) and will account for the combined components as commercial real estate rental revenue. Non-lease components included in commercial real estate rental revenue include certain tenant reimbursements for maintenance services, (including common-area maintenance services or “CAM”). Variable consideration for costs that are not contract components (e.g., real estate taxes, utilities) are excluded from total consideration and would be recorded as incurred by the lessee and earned by the lessor. As a lessor, the Company has further determined that this policy will be effective only on a lease that has been classified as an operating lease and the revenue recognition pattern and timing is the same for both types of components. Therefore, Accounting Standards Codification Topic 842, Leases (“ASC 842”), has been applied to these lease contracts for both types of components. |
Leases, Real Estate Rental Revenue | Commercial Real Estate Rental Revenue The Company derives revenues from our commercial real estate building in St. Louis, Missouri, known as Broadway Tower, which, as more fully described in Notes 4 and 5, was acquired in a foreclosure action by the Company in May 2019. Rental revenue, which is reflected as operating property revenue in the consolidated statements of operations and is presented in Mortgage and REO Legacy portfolio and other operations segment, represents revenue from the leasing of commercial office space to tenants, common area maintenance charges and parking space rental. Leases with tenants are classified as operating leases and revenue is recognized on a straight line basis over the term of the respective leases. The Company regularly reviews receivables related to rent and unbilled rent receivables and determines collectability by taking into consideration the tenant’s payment history, the financial condition of the tenant, business conditions in the industry in which the tenant operates and economic conditions in the area in which the property is located. Upon adoption of ASU 2016-02, effective January 1, 2019 , the Company recognizes all changes in the collectability assessment for an operating lease as an adjustment to rental income and does not record an allowance for uncollectible accounts. The Company recognizes the rental income on a straight-line basis over the terms of the leases. The cumulative differences between rental income recognized in the Company’s condensed unaudited consolidated statements of operations and contractual payment terms have been recorded as deferred rental income and presented on the accompanying condensed consolidated balance sheets. |
Funds Held by Lender and Restricted Cash | Funds Held by Lender and Restricted Cash Funds held by lender and restricted cash includes amounts maintained in escrow or other restricted accounts deposited into reserve accounts held by lenders for contractually specified purposes, which includes property taxes and insurance. The following table provides a reconciliation of cash, cash equivalents, and funds held by lender and restricted cash reported within the condensed consolidated balance sheets that sum to the total of the same such amounts shown in the consolidated statement of cash flows as of June 30, 2019 and December 31, 2018 (in thousands): June 30, December 31, 2019 2018 Cash and cash equivalents $ 12,222 $ 25,452 Funds held by lender and restricted cash 5,147 198 Total cash, cash equivalents, and restricted cash $ 17,369 $ 25,650 This balance includes property tax, insurance and construction related reserves for the MacArthur Loan totaling $2.3 million and $0.2 million at June 30, 2019 and December 31, 2018 , respectively. During the six months ended June 30, 2019, we acquired restricted cash reserves totaling $2.8 million in connection with our foreclosure and acquisition of a commercial office building in St. Louis, Missouri which is included in the balance above as of June 30, 2019 . |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Changes to GAAP are established by the Financial Accounting Standards Board (“FASB”) in the form of accounting standards updates (“ASUs”) to the FASB’s ASC. The Company considers the applicability and impact of all ASUs. Adopted Accounting Standards In February 2016, the FASB issued ASU 2016-02, Leases (“ASU 2016-02”). This new standard establishes a ROU model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. In July 2018, the FASB issued ASU No. 2018-11 which provides an alternative transition method that allows entities to apply the new leases standard at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. The Company has adopted the requirements of ASU 2016-02 on January 1, 2019, the first day of fiscal year 2019, and using the optional transition method. The Company elected the practical expedient package outlined in ASU No. 2016-02 under which we did not have to reassess whether an arrangement contains a lease, we carried forward our previous classification of leases as operating, and we did not have to reassess previously recorded initial direct costs. There was an increase in assets of $1.6 million and liabilities of $1.7 million due to the recognition of the required ROU asset and corresponding liability for all lease obligations that are currently classified as operating leases with the difference of $0.1 million related to existing deferred rent that reduced the ROU asset recorded. The standard did not have an impact in our condensed consolidated statements of operations. In August 2018, the SEC adopted the final rule under SEC Release No. 33-10532, Disclosure Update and Simplification , amending certain disclosure requirements that were redundant, duplicative, overlapping, outdated or superseded. In addition, the amendments expanded the requirements on the analysis of stockholders' equity for interim financial statements. Under the amendments, an analysis of changes in each caption of stockholders' equity presented in the balance sheet must be provided in a note or separate statement. The analysis should present a reconciliation of the beginning balance to the ending balance of each period for which a statement of comprehensive income is required to be filed. The Company has adopted the requirements of this accounting pronouncement in fiscal 2019. Accounting Standards Not Yet Adopted In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (“ASU 2016-13”). The ASU requires an organization to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Financial institutions and other organizations will now use forward-looking information to better inform their credit loss estimates. Many of the loss estimation techniques applied today will still be permitted, although the inputs to those techniques will change to reflect the full amount of expected credit losses. Organizations will continue to use judgment to determine which loss estimation method is appropriate for their circumstances. Additionally, the ASU amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. For public companies, this update will be effective for interim and annual periods beginning after December 15, 2019. The Company is currently evaluating the impact of the adoption of this guidance on its financial statements and related disclosures. In January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment (“ASU 2017-04”), which simplifies the current two-step goodwill impairment test by eliminating Step 2 of the test. The guidance requires a one-step impairment test in which an entity compares the fair value of a reporting unit with its carrying amount and recognizes an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value, if any. This guidance is effective for fiscal years beginning after December 15, 2019 and interim periods within those fiscal years, and should be applied on a prospective basis. Early adoption is permitted for the interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company is currently evaluating the impact of the adoption of this guidance on its financial statements and related disclosures. |
SIGNIFICANT ACCOUNTING POLICI_3
SIGNIFICANT ACCOUNTING POLICIES (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Accounting Policies [Abstract] | |
Schedule of Cash, Cash Equivalents and Restricted Cash | The following table provides a reconciliation of cash, cash equivalents, and funds held by lender and restricted cash reported within the condensed consolidated balance sheets that sum to the total of the same such amounts shown in the consolidated statement of cash flows as of June 30, 2019 and December 31, 2018 (in thousands): June 30, December 31, 2019 2018 Cash and cash equivalents $ 12,222 $ 25,452 Funds held by lender and restricted cash 5,147 198 Total cash, cash equivalents, and restricted cash $ 17,369 $ 25,650 |
REVENUE (Tables)
REVENUE (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of Revenue | Following is a breakdown of revenue by source (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2019 2018 2019 2018 Operating property revenue Commercial real estate rental revenue $ 398 $ — $ 398 $ — Hotel revenues Rooms 766 1,205 957 1,897 Food and beverage 536 523 539 1,008 Banquet 26 96 30 276 Spa and fitness center 118 188 212 328 Other 36 93 57 159 Total operating property revenue 1,880 2,105 2,193 3,668 Mortgage loan income, net 447 641 1,098 1,266 Management fees, investment and other income 208 255 276 292 Total revenue $ 2,535 $ 3,001 $ 3,567 $ 5,226 |
VARIABLE INTEREST ENTITIES (Tab
VARIABLE INTEREST ENTITIES (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Schedule of Equity Method Investments | The following table summarizes the carrying amounts of the above referenced entities’ assets and liabilities included in the Company’s condensed consolidated balance sheets at June 30, 2019 and December 31, 2018 , net of intercompany eliminations (in thousands): June 30, 2019 December 31, 2018 Total assets $ 97,730 $ 85,240 Total liabilities 57,640 37,770 The following table summarizes the results of operations for the three and six months ended June 30, 2019 and 2018 , net of intercompany eliminations (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2019 2018 2019 2018 Net loss $ (2,890 ) $ (833 ) $ (6,040 ) $ (2,333 ) |
NOTES PAYABLE AND SPECIAL ASS_2
NOTES PAYABLE AND SPECIAL ASSESSMENT OBLIGATIONS (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Debt Disclosure [Abstract] | |
Schedule of Debt | As of June 30, 2019 and December 31, 2018 , our notes payable and special assessment obligations consisted of the following (in thousands): June 30, December 31, 2019 2018 $37.0 million note payable, as amended, to MidFirst Bank secured by a first lien on an operating hotel property, interest-only payments due monthly at the 30-day Libor (2.40% and 2.50% at June 30, 2019 and December 31, 2018, respectively) plus 3.54% to 3.75% depending on compensating balances and meeting certain financial thresholds and terms (5.94% and 5.84% effective rate at June 30, 2019 and December 31, 2018, respectively), matures October 1, 2020 with two one-year extension options, with construction completion and repayment guarantees provided by the Company. $ 32,589 $ 20,669 $11.0 million note payable to JPMorgan Chase Funding Inc. (a related party), is secured by the $13.2 million first mortgage note on the property known as Broadway Tower, bears interest at one month LIBOR plus 3.81%, requires interest only payments and a balloon payment of unpaid principal and interest upon maturity. The initial maturity date is May 22, 2020 with the potential to extend to May 2021 if, among other conditions, certain debt yield and occupancy percentages are achieved. 11,000 — $5.9 million note payable secured by real estate in New Mexico, annual interest only payments based on annual interest rates of prime plus 3.0% through maturity date of December 31, 2019. 8.5% and 8.25% as of June 30, 2019 and December 31, 2018, respectively. 5,940 5,940 Unsecured note payable under class action settlement, face amount of $10.2 million, net of discount of $30 thousand and $0.3 million at June 30, 2019 and December 31, 2018, respectively, 4% annual coupon interest rate (14.6% effective yield), interest payable quarterly, matured and paid in full on April 28, 2019. — 9,899 Special assessment bonds dated between 2002 and 2007, secured by the residential land located in Dakota County, Minnesota, annual interest rate ranging from 6%-7.5%, maturing various dates through 2022 (classified as held for sale as of March 31, 2018). 75 90 Total notes payable 49,604 36,598 Less: deferred financing costs of notes payable (346 ) (284 ) Total notes payable $ 49,258 $ 36,314 |
Contractual Obligation Fiscal Year Maturity Schedule | Our notes payable and special assessment obligations have the following scheduled maturities as of June 30, 2019 (in thousands): Year Amount 2019 $ 16,954 2020 32,616 2021 26 2022 8 Less: deferred financing costs of notes payable (346 ) Total $ 49,258 |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Segment Reporting [Abstract] | |
Schedule of Segment Reporting Information, by Segment | Condensed consolidated financial information for our reportable operating segments as of June 30, 2019 and December 31, 2018 and for the three and six months ended June 30, 2019 and 2018 is summarized as follows (in thousands): June 30, December 31, Balance Sheet Items 2019 2018 Total Assets Mortgage and REO Legacy portfolio and other operations $ 81,744 $ 67,658 Hospitality and entertainment operations 64,075 52,753 Corporate and other 11,219 23,228 Consolidated total $ 157,038 $ 143,639 Six Months Ended June 30, Cash Flow Items 2019 2018 Expenditures for additions to long-lived assets Mortgage and REO Legacy portfolio and other operations $ — $ 1,421 Hospitality and entertainment operations 9,804 1,736 Corporate and other 23 24 Consolidated total $ 9,827 $ 3,181 Three Months Ended June 30, 2019 Income Statement Items Mortgage and REO Legacy Portfolio and Other Operations Hospitality and Entertainment Operations Corporate and Other Consolidated Revenues Operating property revenue $ 398 $ 1,482 $ — $ 1,880 Mortgage loan income 447 — — 447 Management fees, investment and other income 3 — 205 208 Total revenue 848 1,482 205 2,535 Total operating expenses 1,134 4,355 2,147 7,636 Other (income) expense Gain on disposal of assets (20 ) — — (20 ) Recovery of credit losses (1,135 ) — — (1,135 ) Unrealized loss on derivatives — 124 — 124 Total other (income) expense (1,155 ) 124 — (1,031 ) Total costs and expense, net (21 ) 4,479 2,147 6,605 Income (loss) before income taxes 869 (2,997 ) (1,942 ) (4,070 ) (Provision for) benefit from income taxes — — — — Net income (loss) $ 869 $ (2,997 ) $ (1,942 ) $ (4,070 ) Three Months Ended June 30, 2018 Income Statement Items Mortgage and REO Legacy Portfolio and Other Operations Hospitality and Entertainment Operations Corporate and Other Consolidated Revenues Operating property revenue $ — $ 2,105 $ — $ 2,105 Mortgage loan income 641 — — 641 Management fees, investment and other income — 242 13 255 Total revenue 641 2,347 13 3,001 Total operating expenses 556 3,019 2,240 5,815 Other (income) expense Gain on disposal of assets, net (142 ) — — (142 ) Recovery of credit losses (175 ) — — (175 ) Total other income (317 ) — — (317 ) Total costs and expense, net 239 3,019 2,240 5,498 Income (loss) from continuing operations, before income taxes 402 (672 ) (2,227 ) (2,497 ) (Provision for) benefit from income taxes — — — — Net income (loss) $ 402 $ (672 ) $ (2,227 ) $ (2,497 ) Six Months Ended June 30, 2019 Income Statement Items Mortgage and REO Legacy Portfolio and Other Operations Hospitality and Entertainment Operations Corporate and Other Consolidated Revenues Operating property revenue $ 398 $ 1,795 $ — $ 2,193 Mortgage loan income 1,098 — — 1,098 Management fees, investment and other income 5 — 271 276 Total revenue 1,501 1,795 271 3,567 Total operating expenses 1,625 7,404 4,485 13,514 Other (income) expense Gain on Disposal of Assets, Net (20 ) — — (20 ) Recovery of credit losses (1,135 ) — — (1,135 ) Unrealized loss on derivatives — 291 — 291 Total other (income) expense (1,155 ) 291 — (864 ) Total costs and expense, net 470 7,695 4,485 12,650 Income (loss) before income taxes 1,031 (5,900 ) (4,214 ) (9,083 ) (Provision for) benefit from income taxes — — — — Net income (loss) $ 1,031 $ (5,900 ) $ (4,214 ) $ (9,083 ) Six Months Ended June 30, 2018 Income Statement Items Mortgage and REO Legacy Portfolio and Other Operations Hospitality and Entertainment Operations Corporate and Other Consolidated Revenues Operating property revenue $ — $ 3,668 $ — $ 3,668 Mortgage loan income 1,266 — — 1,266 Management fees, investment and other income — 243 49 292 Total revenue 1,266 3,911 49 5,226 Total operating expenses 1,412 6,212 4,463 12,087 Other (income) expense Gain on disposal of assets, net (395 ) — — (395 ) Recovery of credit losses (175 ) — — (175 ) Total other income (570 ) — — (570 ) Total costs and expense, net 842 6,212 4,463 11,517 Income (loss) from continuing operations, before income taxes 424 (2,301 ) (4,414 ) (6,291 ) (Provision for) benefit from income taxes — — — — Net income (loss) $ 424 $ (2,301 ) $ (4,414 ) $ (6,291 ) |
STOCKHOLDERS' EQUITY AND EARN_2
STOCKHOLDERS' EQUITY AND EARNINGS PER SHARE (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted | The following table presents a reconciliation of net loss to net loss attributable to common shareholders used in the basic and diluted earnings per share calculations for the three and six months ended June 30, 2019 and 2018 (amounts in thousands, except for per share data): Three Months Ended June 30, Six Months Ended June 30, 2019 2018 2019 2018 Earnings allocable to common shares: Numerator - Loss Attributable to Common Shareholders: Net loss $ (4,070 ) $ (2,497 ) $ (9,083 ) $ (6,291 ) Net (income) loss attributable to non-controlling interest (318 ) 25 (441 ) 115 Preferred dividends (2,019 ) (1,704 ) (4,007 ) (3,112 ) Net loss attributable to common shareholders $ (6,407 ) $ (4,176 ) $ (13,531 ) $ (9,288 ) Denominator - Weighted average shares: Weighted average common shares outstanding for basic and diluted earnings per common share 16,375,649 16,696,684 16,383,921 16,680,988 Basic and diluted earnings per common share: Net loss per common share $ (0.27 ) $ (0.15 ) $ (0.58 ) $ (0.37 ) Preferred dividends per share (0.12 ) (0.10 ) (0.24 ) (0.19 ) Net loss attributable to common shareholder per share $ (0.39 ) $ (0.25 ) $ (0.83 ) $ (0.56 ) |
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | The following securities were not included in the computation of diluted net loss per share as their effect would have been anti-dilutive (presented on a weighted average balance): Three Months Ended June 30, Six Months Ended June 30, 2019 2018 2019 2018 Options to purchase common stock 1,085,497 1,062,807 1,085,497 1,066,465 Restricted stock 249,486 372,815 230,134 382,638 Warrants to purchase common stock 2,600,000 2,600,000 2,600,000 2,470,718 Convertible preferred stock 10,552,941 10,552,941 10,552,941 10,045,954 Total 14,487,924 14,588,563 14,468,572 13,965,775 |
INTANGIBLE ASSETS AND GOODWILL
INTANGIBLE ASSETS AND GOODWILL (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Finite-Lived and Indefinite-Lived Intangible Assets Acquired as Part of Business Combination | The changes in the carrying amount of intangibles and goodwill allocated to our Hospitality and Entertainment Operations segment for the six months ended June 30, 2019 is as follows (in thousands): Goodwill Other intangibles, net Balance at December 31, 2018 $ 15,357 $ 641 Reductions: Amortization expense — (140 ) Balance at June 30, 2019 $ 15,357 $ 501 A summary of our intangible assets and goodwill as of June 30, 2019 and December 31, 2018 is as follows (in thousands): Gross Carrying Amount Accumulated Amortization Net Carrying Amount June 30, December 31, June 30, December 31, June 30, December 31, 2019 2018 2019 2018 2019 2018 Amortizing intangible assets: Trade name and other $ 90 $ 90 $ (22 ) $ (16 ) $ 68 $ 74 Customer relationships 800 800 (467 ) (333 ) 333 467 Non-amortizing intangible assets: Liquor license 100 100 — — 100 100 Goodwill 15,357 15,357 — — 15,357 15,357 $ 16,347 $ 16,347 $ (489 ) $ (349 ) $ 15,858 $ 15,998 |
Finite-lived Intangible Assets Amortization Expense | As of June 30, 2019 , expected amortization expense for our purchased amortizing intangible assets for each of the next five years and thereafter is as follows (in thousands): Year Amount 2019 $ 140 2020 213 2021 13 2022 13 2023 13 Thereafter 9 Total $ 401 |
LEASES (Tables)
LEASES (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Leases [Abstract] | |
Lessor, Operating Lease Disclosure | The following table presents minimum lease revenues and variable lease revenue for the three and six months ended June 30, 2019 (in thousands). Three and Six Months Ended June 30, 2019 2018 Lease revenue Fixed rent - Minimum lease revenue $ 377 $ — Variable lease revenue 21 — Total lease revenue $ 398 $ — |
Lessor, Future Lease Payments | The following table presents future minimum operating lease payments due to the Company over the next five years and thereafter (in thousands). Years ending Amount Remainder of 2019 $ 1,808 2020 3,748 2021 3,800 2022 3,420 2023 2,311 Thereafter 3,643 Total $ 18,730 |
Components of Lease Expense | Supplemental cash flow information related to leases for the six months ended June 30, 2019 (in thousands): Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating lease $ 181 Non-cash investing and financing activities: Right-of-use assets and lease liabilities recorded upon adoption of ASC 842 Right-of-use assets $ 1,574 Lease liabilities $ 1,693 Supplemental balance sheet information related to leases as of June 30, 2019 was as follows (thousands, except lease term and discount rate): Operating leases Operating lease right-of-use assets in other assets $ 1,440 Operating lease liabilities in accounts payable and other accrued expenses $ 1,548 Weighted average remaining lease term 3.0 years Operating leases - Weighted average discount rate 7.1% |
Lessee, Future Lease Payments | The following represents future payments on operating leases as of June 30, 2019 (in thousands): Years ending Amount Remainder of 2019 $ 287 2020 575 2021 577 2022 304 Total lease payments 1,743 Less imputed interest (195 ) Total $ 1,548 |
Lessee, Future Minimum Lease Payments | As of December 31, 2018, future minimum lease payments required under these various lease agreements are as follows (in thousands): Years ending Amount 2019 $ 305 2020 307 2021 308 2022 233 Total $ 1,153 |
BUSINESS, BASIS OF PRESENTATI_2
BUSINESS, BASIS OF PRESENTATION AND LIQUIDITY (Details Textual) $ in Thousands | May 31, 2018USD ($) | Oct. 02, 2017 | Nov. 30, 2017USD ($) | Oct. 31, 2017USD ($) | Jun. 30, 2019USD ($)hotel_room | Jun. 30, 2019USD ($) | Jun. 30, 2018USD ($) | Dec. 31, 2018USD ($) | Dec. 31, 2008USD ($) | Apr. 30, 2014USD ($) |
Business, Basis of Presentation and Liquidity [Line Items] | ||||||||||
Amount of fund equity capital raised | $ 875,000 | |||||||||
Accumulated deficit | $ 702,400 | $ 702,400 | $ 692,876 | |||||||
Proceeds from Issuance of Preferred Equity | 0 | $ 30,000 | ||||||||
Debt | 49,258 | 49,258 | ||||||||
Cash and cash equivalents | 12,222 | 12,222 | 25,452 | |||||||
REO assets acquired through foreclosure | 104,800 | 104,800 | 75,000 | |||||||
Mortgages | ||||||||||
Business, Basis of Presentation and Liquidity [Line Items] | ||||||||||
Debt | 13,200 | 13,200 | ||||||||
Debt amount | 11,000 | 11,000 | ||||||||
Held For Sale | ||||||||||
Business, Basis of Presentation and Liquidity [Line Items] | ||||||||||
REO assets acquired through foreclosure | 7,400 | 7,400 | 7,400 | |||||||
Other Real Estate Owned | ||||||||||
Business, Basis of Presentation and Liquidity [Line Items] | ||||||||||
REO assets acquired through foreclosure | 33,700 | 33,700 | 33,700 | |||||||
MacArthur Loan | ||||||||||
Business, Basis of Presentation and Liquidity [Line Items] | ||||||||||
Proceeds from issuance of debt | $ 32,300 | $ 11,900 | ||||||||
Exchange Offering Notes | ||||||||||
Business, Basis of Presentation and Liquidity [Line Items] | ||||||||||
Debt amount | $ 10,200 | |||||||||
Hotel | MacArthur Loan | ||||||||||
Business, Basis of Presentation and Liquidity [Line Items] | ||||||||||
Debt amount | $ 37,000 | 37,000 | ||||||||
Hotel | MacArthur Place | MacArthur Loan | ||||||||||
Business, Basis of Presentation and Liquidity [Line Items] | ||||||||||
Number of hotel rooms | hotel_room | 64 | |||||||||
Proceeds from issuance of debt | 19,400 | |||||||||
Required minimum liquidity | $ 5,000 | $ 37,000 | 37,000 | |||||||
Covenant compliance, reserve accounts | 2,000 | 2,000 | ||||||||
Repayment guaranty | 50.00% | 50.00% | ||||||||
Required minimum net worth | $ 50,000 | |||||||||
Preferred Interests | L’Auberge Fund Manager, LLC | ||||||||||
Business, Basis of Presentation and Liquidity [Line Items] | ||||||||||
Proceeds from private offering | $ 25,000 | 22,500 | ||||||||
Private offering acquired | $ 17,800 | |||||||||
JPMorgan Chase Funding Inc. | ||||||||||
Business, Basis of Presentation and Liquidity [Line Items] | ||||||||||
Loan from JPM Chase Funding, Inc., (a related party) for purchase first mortgage on operating property | 11,000 | |||||||||
Series B-3 Cumulative Convertible Preferred Stock and Series A Senior Redeemable Preferred Stock | JPMorgan Chase Funding Inc. | ||||||||||
Business, Basis of Presentation and Liquidity [Line Items] | ||||||||||
Proceeds from Issuance of Preferred Equity | $ 30,000 | |||||||||
Series B Preferred Stock | ||||||||||
Business, Basis of Presentation and Liquidity [Line Items] | ||||||||||
Preferred stock redemption price | 150.00% | |||||||||
Preferred stock, accrued and unpaid dividends, percentage | 145.00% | |||||||||
Commitment To Fund Equity | Hotel | MacArthur Loan | ||||||||||
Business, Basis of Presentation and Liquidity [Line Items] | ||||||||||
Commitment to provide funds | $ 27,700 | 27,700 | $ 27,700 | |||||||
Mortgage Receivable | Mezzanine Loan One | ||||||||||
Business, Basis of Presentation and Liquidity [Line Items] | ||||||||||
Securities received as collateral | $ 7,600 | |||||||||
Pledged equity interest, collateral percent | 100.00% | 100.00% |
SIGNIFICANT ACCOUNTING POLICI_4
SIGNIFICANT ACCOUNTING POLICIES (Details Textual) - USD ($) $ in Thousands | Jun. 30, 2019 | Jan. 01, 2019 | Dec. 31, 2018 | Jun. 30, 2018 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Operating lease right of use assets | $ 1,440 | |||
Lease liability arising from the recognition of right-of-use asset | $ 1,548 | $ 0 | ||
ASU 2016-02 | ||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Operating lease right of use assets | $ 1,600 | |||
Lease liability arising from the recognition of right-of-use asset | $ 1,700 | |||
Deferred rent | $ 100 |
SIGNIFICANT ACCOUNTING POLICI_5
SIGNIFICANT ACCOUNTING POLICIES (Details 1) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 | Jun. 30, 2018 | Dec. 31, 2017 |
Cash and Cash Equivalents [Line Items] | ||||
Cash and cash equivalents | $ 12,222 | $ 25,452 | ||
Funds held by lender and restricted cash | 5,147 | 198 | ||
Total cash, cash equivalents, and restricted cash | 17,369 | 25,650 | $ 30,406 | $ 11,932 |
Restricted cash and cash equivalents | 5,147 | 198 | ||
MacArthur Loan | ||||
Cash and Cash Equivalents [Line Items] | ||||
Restricted cash and cash equivalents | 2,300 | $ 200 | ||
Broadway Tower | ||||
Cash and Cash Equivalents [Line Items] | ||||
Restricted cash acquired through foreclosure | $ 2,800 |
REVENUE (Details)
REVENUE (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Disaggregation of Revenue [Line Items] | ||||
Revenue | $ 2,535 | $ 3,001 | $ 3,567 | $ 5,226 |
Commercial real estate rental revenue | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 398 | 0 | 398 | 0 |
Rooms | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 766 | 1,205 | 957 | 1,897 |
Food and beverage | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 536 | 523 | 539 | 1,008 |
Banquet | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 26 | 96 | 30 | 276 |
Spa and fitness center | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 118 | 188 | 212 | 328 |
Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 36 | 93 | 57 | 159 |
Total operating property revenue | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 1,880 | 2,105 | 2,193 | 3,668 |
Mortgage loan income, net | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 447 | 641 | 1,098 | 1,266 |
Management fees, investment and other income | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | $ 208 | $ 255 | $ 276 | $ 292 |
MORTGAGE LOANS, NET (Details)
MORTGAGE LOANS, NET (Details) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2019USD ($)Loan | Jun. 30, 2018USD ($) | Jun. 30, 2019USD ($)Loan | Jun. 30, 2018USD ($)Loan | Dec. 31, 2018USD ($)Loan | |
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items] | |||||
Mortgage loan income, net | $ 447,000 | $ 641,000 | $ 1,098,000 | $ 1,266,000 | |
Mortgage Receivable | |||||
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items] | |||||
Number of loans | Loan | 4 | 6 | |||
Mortgage loans, net | $ 13,300,000 | $ 13,300,000 | $ 23,200,000 | ||
Nonperforming Financing Receivable | |||||
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items] | |||||
Mortgage loans on real estate number of loans, outstanding principal balance (in loans) | Loan | 2 | 2 | 3 | ||
Mortgage loans on real estate, outstanding principal amount | $ (12,700,000) | $ (12,700,000) | $ (13,100,000) | ||
Performing Financing Receivable | |||||
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items] | |||||
Mortgage loans on real estate number of loans, outstanding principal balance (in loans) | Loan | 3 | ||||
Performing Financing Receivable | Mortgage Receivable | |||||
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items] | |||||
Number of loans | Loan | 1 | 2 | |||
Mortgage loans weighted average interest rate (in percentage) | 9.70% | 9.70% | 9.40% | ||
Loan principal amount | $ 3,000,000 | $ 3,000,000 | |||
Mezzanine Loan One | Mortgage Receivable | |||||
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items] | |||||
Number of loans | Loan | 1 | ||||
Mortgage loans, net | $ 8,200,000 | ||||
Pledged equity interest, collateral percent | 100.00% | 100.00% | |||
Fully Reserved Loan | Nonperforming Financing Receivable | Mortgage Receivable | |||||
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items] | |||||
Mortgage loans, net | $ 0 | ||||
Mortgage loans on real estate number of loans, outstanding principal balance (in loans) | Loan | 2 | ||||
Originated Construction Loan | |||||
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items] | |||||
Number of new loan originations | Loan | 1 | ||||
Originated Construction Loan | Mortgage Receivable | |||||
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items] | |||||
Loan principal amount | $ 13,100,000 | $ 13,100,000 | |||
Construction loan funded | $ 900,000 | $ 900,000 |
OPERATING PROPERTIES, REAL ES_2
OPERATING PROPERTIES, REAL ESTATE HELD FOR SALE AND OTHER REAL ESTATE OWNED (Details) | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2019USD ($)Property | Jun. 30, 2018USD ($) | Jun. 30, 2019USD ($) | Jun. 30, 2018USD ($) | May 29, 2019USD ($) | Dec. 31, 2018USD ($) | |
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items] | ||||||
REO assets acquired through foreclosure | $ 104,800,000 | $ 104,800,000 | $ 75,000,000 | |||
Assets | 157,038,000 | 157,038,000 | 143,639,000 | |||
Liabilities | 65,614,000 | 65,614,000 | 47,066,000 | |||
Operating lease right of use assets | 1,440,000 | 1,440,000 | ||||
Operating lease liabilities in accounts payable and other accrued expenses | 1,548,000 | $ 0 | 1,548,000 | $ 0 | ||
Gain on disposal of assets | 20,000 | 142,000 | 20,000 | 395,000 | ||
Proceeds from sale of REO | 39,000 | 526,000 | ||||
Real estate operating costs and expenses | $ 3,700,000 | 2,300,000 | 6,200,000 | 4,700,000 | ||
Cash outlays for capitalized development costs | 9,804,000 | 3,157,000 | ||||
Broadway Tower | ||||||
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items] | ||||||
Assets | $ 26,000,000 | |||||
Liabilities | 16,000,000 | |||||
Operating lease right of use assets | 600,000 | |||||
Operating lease liabilities in accounts payable and other accrued expenses | $ 600,000 | |||||
Number of real estate properties sold (in properties) | Property | 1 | |||||
Gain on disposal of assets | $ 20,000 | 100,000 | 400,000 | |||
Proceeds from sale of REO | 39,000 | $ 200,000 | $ 500,000 | |||
Held For Sale | ||||||
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items] | ||||||
REO assets acquired through foreclosure | 7,400,000 | 7,400,000 | 7,400,000 | |||
Operating Properties | ||||||
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items] | ||||||
REO assets acquired through foreclosure | 63,700,000 | 63,700,000 | 33,900,000 | |||
Other Real Estate Owned | ||||||
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items] | ||||||
REO assets acquired through foreclosure | $ 33,700,000 | $ 33,700,000 | $ 33,700,000 |
VARIABLE INTEREST ENTITIES (Det
VARIABLE INTEREST ENTITIES (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2019USD ($) | Jun. 30, 2018USD ($) | Jun. 30, 2019USD ($)Project | Jun. 30, 2018USD ($) | Dec. 31, 2018USD ($)Project | |
Schedule of Equity Method Investments [Line Items] | |||||
Number of projects | Project | 2 | 2 | |||
Profit distribution to related party, monthly accruing rate | 7.00% | 7.00% | |||
Profit distribution to related party | $ 300 | $ 100 | $ 610 | $ 100 | |
L’Auberge Fund Manager, LLC | |||||
Schedule of Equity Method Investments [Line Items] | |||||
Combined equity | 25,100 | 25,100 | |||
Cash and Cash Equivalents | |||||
Schedule of Equity Method Investments [Line Items] | |||||
Total assets | 97,730 | 97,730 | $ 85,240 | ||
Real Estate and Related Assets | |||||
Schedule of Equity Method Investments [Line Items] | |||||
Total liabilities | 57,640 | 57,640 | $ 37,770 | ||
Other Assets | |||||
Schedule of Equity Method Investments [Line Items] | |||||
Net loss | $ (2,890) | $ (833) | $ (6,040) | $ (2,333) |
DERIVATIVE INSTRUMENTS AND HE_2
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Details) - Interest Rate Cap - Designated as Hedging Instrument - Cash Flow Hedging $ in Millions | Dec. 31, 2018USD ($) |
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |
Notional amount | $ 36 |
Cap interest rate | 2.20% |
FAIR VALUE (Details)
FAIR VALUE (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Unrealized loss on derivatives | $ 124,000 | $ 0 | $ 291,000 | $ 0 | |
Recovery of credit losses | (1,135,000) | $ (175,000) | (1,135,000) | $ (175,000) | |
Designated as Hedging Instrument | Cash Flow Hedging | Interest Rate Cap | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Fair value of derivative | 39,000 | 39,000 | |||
Mortgage Receivable | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Allowance for loan and lease losses, real estate | $ 12,700,000 | $ 12,700,000 | $ 13,100,000 | ||
Percentage of valuation allowance on loans receivable | 49.90% | 37.10% | 49.90% | 37.10% |
NOTES PAYABLE AND SPECIAL ASS_3
NOTES PAYABLE AND SPECIAL ASSESSMENT OBLIGATIONS (Details 1) $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2019USD ($)renewal_option | Dec. 31, 2018USD ($) | |
Debt Instrument [Line Items] | ||
Debt | $ 49,258 | |
Unamortized discount | 346 | |
Secured Debt | $37.0 Million Note Payable | ||
Debt Instrument [Line Items] | ||
Debt amount | $ 37,000 | |
Stated interest rate | 5.94% | 5.84% |
Maturity term | 1 year | |
Number of extensions available for loans acquired | renewal_option | 2 | |
Secured Debt | 5.9 Million Note Payable | ||
Debt Instrument [Line Items] | ||
Debt amount | $ 5,900 | |
Stated interest rate | 8.50% | 8.25% |
Unsecured Debt | Legal Settlement | ||
Debt Instrument [Line Items] | ||
Debt amount | $ 10,200 | |
Stated interest rate | 4.00% | |
Effective rate (percentage) | 14.60% | |
Unamortized discount | $ 30 | $ 300 |
LIBOR | $37.0 Million Note Payable | ||
Debt Instrument [Line Items] | ||
Annual interest rate | 2.40% | 2.50% |
LIBOR | Secured Debt | $37.0 Million Note Payable | ||
Debt Instrument [Line Items] | ||
Variable rate | 3.54% | 3.75% |
LIBOR | Secured Debt | $11.0 Million Note Payable | ||
Debt Instrument [Line Items] | ||
Variable rate | 3.81% | |
Prime Rate | Secured Debt | 5.9 Million Note Payable | ||
Debt Instrument [Line Items] | ||
Variable rate | 3.00% | |
Minimum | Special Assessment Bonds | ||
Debt Instrument [Line Items] | ||
Stated interest rate | 6.00% | |
Maximum | Special Assessment Bonds | ||
Debt Instrument [Line Items] | ||
Stated interest rate | 7.50% | |
Continuing Operations | ||
Debt Instrument [Line Items] | ||
Debt | $ 49,604 | $ 36,598 |
Less: deferred financing costs of notes payable | (346) | (284) |
Total notes payable | 49,258 | 36,314 |
Continuing Operations | Special Assessment Bonds | ||
Debt Instrument [Line Items] | ||
Special assessment bond | 75 | 90 |
Continuing Operations | Secured Debt | $37.0 Million Note Payable | ||
Debt Instrument [Line Items] | ||
Debt | 32,589 | 20,669 |
Continuing Operations | Secured Debt | $11.0 Million Note Payable | ||
Debt Instrument [Line Items] | ||
Debt | 11,000 | 0 |
Continuing Operations | Secured Debt | 5.9 Million Note Payable | ||
Debt Instrument [Line Items] | ||
Debt | 5,940 | 5,940 |
Continuing Operations | Unsecured Debt | Legal Settlement | ||
Debt Instrument [Line Items] | ||
Debt | $ 0 | $ 9,899 |
JPMorgan Chase Funding Inc. | ||
Debt Instrument [Line Items] | ||
Variable rate | 3.81% | |
Mortgage loans in process of foreclosure, notes purchased | $ 13,200 | |
JPMorgan Chase Funding Inc. | Secured Debt | ||
Debt Instrument [Line Items] | ||
Debt | 13,200 | |
Debt amount | 11,000 | |
JPMorgan Chase Funding Inc. | Secured Debt | $11.0 Million Note Payable | ||
Debt Instrument [Line Items] | ||
Debt | 11,000 | |
Mortgage loans in process of foreclosure, notes purchased | $ 13,200 | |
JPMorgan Chase Funding Inc. | LIBOR | Secured Debt | ||
Debt Instrument [Line Items] | ||
Variable rate | 3.81% |
NOTES PAYABLE AND SPECIAL ASS_4
NOTES PAYABLE AND SPECIAL ASSESSMENT OBLIGATIONS (Details Textual) - USD ($) $ / shares in Units, $ in Thousands | Oct. 02, 2017 | Oct. 31, 2017 | Apr. 30, 2014 | Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 |
Debt Instrument [Line Items] | ||||||||
Interest expense | $ 300 | $ 800 | $ 791 | $ 1,525 | ||||
Noncash interest costs capitalized to operating property | 760 | 0 | ||||||
Debt | 49,258 | 49,258 | ||||||
Unamortized discount | 346 | 346 | ||||||
Debt discount amortization | 259 | $ 446 | ||||||
Exchange Offering | ||||||||
Debt Instrument [Line Items] | ||||||||
Maturity term | 5 years | |||||||
Stated interest rate | 4.00% | |||||||
Debt offered In exchange for common stock shares exchange price per share | $ 8.02 | |||||||
Exchange Offering Notes | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt amount | $ 10,200 | |||||||
Stated interest rate | 4.00% | |||||||
Effective rate (percentage) | 14.60% | |||||||
Notes payable, fair value disclosure | $ 6,400 | |||||||
Unamortized discount | $ 3,800 | |||||||
Debt discount amortization | 300 | |||||||
MacArthur Loan | ||||||||
Debt Instrument [Line Items] | ||||||||
Noncash interest costs capitalized to operating property | 300 | $ 800 | ||||||
Proceeds from issuance of debt | $ 32,300 | $ 11,900 | ||||||
Interest rate reduction, other conditions | 0.50% | |||||||
Debt instrument, term | 3 years | |||||||
Number of extensions available for loans acquired | 2 | |||||||
Maturity term | 1 year | |||||||
Extension fee | 0.35% | |||||||
Deferred financing fees | 500 | |||||||
LIBOR | MacArthur Loan | ||||||||
Debt Instrument [Line Items] | ||||||||
Annual interest rate | 2.40% | |||||||
Variable rate | 3.54% | |||||||
Hotel | MacArthur Loan | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt amount | 37,000 | $ 37,000 | ||||||
Renovation Cost | MacArthur Loan | ||||||||
Debt Instrument [Line Items] | ||||||||
Proceeds from issuance of debt | 11,200 | |||||||
Interest Reserve | MacArthur Loan | ||||||||
Debt Instrument [Line Items] | ||||||||
Proceeds from issuance of debt | 800 | |||||||
MacArthur Place | Hotel | MacArthur Loan | ||||||||
Debt Instrument [Line Items] | ||||||||
Proceeds from issuance of debt | $ 19,400 | |||||||
Covenant compliance, reserve accounts | 2,000 | 2,000 | ||||||
Repayment guaranty | 50.00% | 50.00% | ||||||
Required minimum net worth | $ 50,000 | |||||||
Required minimum liquidity | 5,000 | 37,000 | 37,000 | |||||
MacArthur Place | Hotel Improvements | MacArthur Loan | ||||||||
Debt Instrument [Line Items] | ||||||||
Proceeds from issuance of debt | 10,000 | |||||||
Continuing Operations | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt | 49,604 | 49,604 | 36,598 | |||||
Deferred financing fees | 346 | 346 | 284 | |||||
Continuing Operations | MacArthur Loan | Secured Debt | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt | 32,600 | 32,600 | $ 20,700 | |||||
Commitment To Fund Equity | Hotel | MacArthur Loan | ||||||||
Debt Instrument [Line Items] | ||||||||
Commitment to provide funds | $ 27,700 | $ 27,700 | $ 27,700 | |||||
Mortgage Receivable | Mezzanine Loan One | ||||||||
Debt Instrument [Line Items] | ||||||||
Pledged equity interest, collateral percent | 100.00% | |||||||
JPMorgan Chase Funding Inc. | ||||||||
Debt Instrument [Line Items] | ||||||||
Variable rate | 3.81% | |||||||
Mortgage loans in process of foreclosure, notes purchased | $ 13,200 | $ 13,200 | ||||||
Loan from JPM Chase Funding, Inc., (a related party) for purchase first mortgage on operating property | 11,000 | |||||||
JPMorgan Chase Funding Inc. | Secured Debt | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt amount | 11,000 | 11,000 | ||||||
Debt | $ 13,200 | $ 13,200 | ||||||
JPMorgan Chase Funding Inc. | LIBOR | Secured Debt | ||||||||
Debt Instrument [Line Items] | ||||||||
Variable rate | 3.81% |
NOTES PAYABLE AND SPECIAL ASS_5
NOTES PAYABLE AND SPECIAL ASSESSMENT OBLIGATIONS (Details 2) $ in Thousands | Jun. 30, 2019USD ($) |
Year | |
2019 | $ 16,954 |
2020 | 32,616 |
2021 | 26 |
2022 | 8 |
Less: deferred financing costs of notes payable | (346) |
Total | $ 49,258 |
SEGMENT INFORMATION (Details)
SEGMENT INFORMATION (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||||
Jun. 30, 2019 | Mar. 31, 2019 | Jun. 30, 2018 | Mar. 31, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 | |
Balance Sheet Items | |||||||
Total Assets | $ 157,038,000 | $ 157,038,000 | $ 143,639,000 | ||||
Expenditures for additions to long-lived assets | 9,827,000 | $ 3,181,000 | |||||
Revenues [Abstract] | |||||||
Operating property revenue | 1,880,000 | $ 2,105,000 | 2,193,000 | 3,668,000 | |||
Mortgage loan income, net | 447,000 | 641,000 | 1,098,000 | 1,266,000 | |||
Management fees, investment and other income | 208,000 | 255,000 | 276,000 | 292,000 | |||
Total revenue | 2,535,000 | 3,001,000 | 3,567,000 | 5,226,000 | |||
Expenses [Abstract] | |||||||
Total operating expenses | 7,636,000 | 5,815,000 | 13,514,000 | 12,087,000 | |||
Other (income) expense | |||||||
Gain on disposal of assets, net | (20,000) | (142,000) | (20,000) | (395,000) | |||
Recovery of credit losses | (1,135,000) | (175,000) | (1,135,000) | (175,000) | |||
Unrealized loss on derivatives | 124,000 | 0 | 291,000 | 0 | |||
Total Recovery, Impairment Charges, Gain on Disposal of Assets and Other | (1,031,000) | (317,000) | (864,000) | (570,000) | |||
Total costs and expense, net | 6,605,000 | 5,498,000 | 12,650,000 | 11,517,000 | |||
Loss before provision for income tax | (4,070,000) | (2,497,000) | (9,083,000) | (6,291,000) | |||
Income tax (provision) benefit | 0 | 0 | 0 | 0 | |||
Net Loss | (4,070,000) | $ (5,013,000) | (2,497,000) | $ (3,794,000) | (9,083,000) | (6,291,000) | |
Mortgage and REO Legacy Portfolio and Other Operations | |||||||
Balance Sheet Items | |||||||
Total Assets | 81,744,000 | 81,744,000 | 67,658,000 | ||||
Expenditures for additions to long-lived assets | 0 | 1,421,000 | |||||
Revenues [Abstract] | |||||||
Operating property revenue | 398,000 | 0 | 398,000 | 0 | |||
Mortgage loan income, net | 447,000 | 641,000 | 1,098,000 | 1,266,000 | |||
Management fees, investment and other income | 3,000 | 0 | 5,000 | 0 | |||
Total revenue | 848,000 | 641,000 | 1,501,000 | 1,266,000 | |||
Expenses [Abstract] | |||||||
Total operating expenses | 1,134,000 | 556,000 | 1,625,000 | 1,412,000 | |||
Other (income) expense | |||||||
Gain on disposal of assets, net | (20,000) | (142,000) | (20,000) | (395,000) | |||
Recovery of credit losses | (1,135,000) | (175,000) | (1,135,000) | (175,000) | |||
Unrealized loss on derivatives | 0 | 0 | |||||
Total Recovery, Impairment Charges, Gain on Disposal of Assets and Other | (1,155,000) | (317,000) | (1,155,000) | (570,000) | |||
Total costs and expense, net | (21,000) | 239,000 | 470,000 | 842,000 | |||
Loss before provision for income tax | 869,000 | 402,000 | 1,031,000 | 424,000 | |||
Income tax (provision) benefit | 0 | 0 | 0 | 0 | |||
Net Loss | 869,000 | 402,000 | 1,031,000 | 424,000 | |||
Hospitality and Entertainment Operations | |||||||
Balance Sheet Items | |||||||
Total Assets | 64,075,000 | 64,075,000 | 52,753,000 | ||||
Expenditures for additions to long-lived assets | 9,804,000 | 1,736,000 | |||||
Revenues [Abstract] | |||||||
Operating property revenue | 1,482,000 | 2,105,000 | 1,795,000 | 3,668,000 | |||
Mortgage loan income, net | 0 | 0 | 0 | 0 | |||
Management fees, investment and other income | 0 | 242,000 | 0 | 243,000 | |||
Total revenue | 1,482,000 | 2,347,000 | 1,795,000 | 3,911,000 | |||
Expenses [Abstract] | |||||||
Total operating expenses | 4,355,000 | 3,019,000 | 7,404,000 | 6,212,000 | |||
Other (income) expense | |||||||
Gain on disposal of assets, net | 0 | 0 | 0 | 0 | |||
Recovery of credit losses | 0 | 0 | 0 | 0 | |||
Unrealized loss on derivatives | 124,000 | 291,000 | |||||
Total Recovery, Impairment Charges, Gain on Disposal of Assets and Other | 124,000 | 0 | 291,000 | 0 | |||
Total costs and expense, net | 4,479,000 | 3,019,000 | 7,695,000 | 6,212,000 | |||
Loss before provision for income tax | (2,997,000) | (672,000) | (5,900,000) | (2,301,000) | |||
Income tax (provision) benefit | 0 | 0 | 0 | 0 | |||
Net Loss | (2,997,000) | (672,000) | (5,900,000) | (2,301,000) | |||
Corporate and Other | |||||||
Balance Sheet Items | |||||||
Total Assets | 11,219,000 | 11,219,000 | $ 23,228,000 | ||||
Expenditures for additions to long-lived assets | 23,000 | 24,000 | |||||
Revenues [Abstract] | |||||||
Operating property revenue | 0 | 0 | 0 | 0 | |||
Mortgage loan income, net | 0 | 0 | 0 | 0 | |||
Management fees, investment and other income | 205,000 | 13,000 | 271,000 | 49,000 | |||
Total revenue | 205,000 | 13,000 | 271,000 | 49,000 | |||
Expenses [Abstract] | |||||||
Total operating expenses | 2,147,000 | 2,240,000 | 4,485,000 | 4,463,000 | |||
Other (income) expense | |||||||
Gain on disposal of assets, net | 0 | 0 | 0 | 0 | |||
Recovery of credit losses | 0 | 0 | 0 | 0 | |||
Unrealized loss on derivatives | 0 | 0 | |||||
Total Recovery, Impairment Charges, Gain on Disposal of Assets and Other | 0 | 0 | 0 | 0 | |||
Total costs and expense, net | 2,147,000 | 2,240,000 | 4,485,000 | 4,463,000 | |||
Loss before provision for income tax | (1,942,000) | (2,227,000) | (4,214,000) | (4,414,000) | |||
Income tax (provision) benefit | 0 | 0 | 0 | 0 | |||
Net Loss | $ (1,942,000) | $ (2,227,000) | $ (4,214,000) | $ (4,414,000) |
STOCKHOLDERS' EQUITY AND EARN_3
STOCKHOLDERS' EQUITY AND EARNINGS PER SHARE (Details Textual) - USD ($) $ / shares in Units, $ in Thousands | Jul. 23, 2019 | Jan. 11, 2019 | Feb. 09, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2014 | May 31, 2018 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Treasury stock repurchase (in shares) | 500,000 | ||||||||
Stock Issued During Period, Shares, Share-based Compensation, Gross | 167,984 | ||||||||
Treasury stock acquired, average cost per share | $ 2 | ||||||||
Shares outstanding | 1,102,627 | 1,102,627 | |||||||
Shares vested | 983,429 | ||||||||
Warrant or right, outstanding | 2,600,000 | 2,600,000 | |||||||
Stock-based compensation expense | $ 100 | $ 100 | $ 200 | $ 200 | |||||
Stock Incentive Plan 2010 | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Unrecognized compensation | $ 400 | $ 400 | |||||||
Period of recognition | 1 year 7 months 18 days | ||||||||
JPMorgan Chase Funding Inc. | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Warrant, authorized issuance | 600,000 | ||||||||
Warrant, period | 2 years | ||||||||
Warrant, exercise price per share (in USD per share) | $ 2.25 | ||||||||
Series B-1 and B-2 Cumulative Convertible Preferred Stock [Member] | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Preferred Stock, shares issued | 8,200,000 | ||||||||
Deemed dividend on redeemable convertible preferred stock | $ 26,400 | ||||||||
Series B Preferred Stock | JPMorgan Chase Funding Inc. | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Preferred Stock, shares issued | 2,352,941 | ||||||||
Preferred stock, purchase price, value | $ 8,000 | ||||||||
Series A Preferred Stock | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Preferred distribution rate | 7.50% | ||||||||
Series A Preferred Stock | JPMorgan Chase Funding Inc. | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Preferred Stock, shares issued | 22,000 | ||||||||
Preferred stock, purchase price, value | $ 22,000 | ||||||||
Estimated fair value per share | $ 1,000 | ||||||||
Common Class B | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Treasury stock repurchase (in shares) | 477,170 | ||||||||
Common Class C | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Treasury stock repurchase (in shares) | 22,830 | ||||||||
Restricted Stock | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Unvested restricted stock grants outstanding | 172,800 | 172,800 | |||||||
Subsequent Event | Series B-1 and B-2 Cumulative Convertible Preferred Stock [Member] | JPMorgan Chase Funding Inc. | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Preferred stock, purchase price, value | $ 2,600 | ||||||||
Subsequent Event | Series B Preferred Stock | JPMorgan Chase Funding Inc. | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Redemption period extension | 1 year |
STOCKHOLDERS' EQUITY AND EARN_4
STOCKHOLDERS' EQUITY AND EARNINGS PER SHARE STOCKHOLDERS' EQUITY AND EARNINGS PER SHARE (Details 1) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||
Loss from continuing operations, net of tax | $ (4,070) | $ (2,497) | $ (9,083) | $ (6,291) |
Net (income) loss attributable to non-controlling interest | (318) | 25 | (441) | 115 |
Preferred dividends | (2,019) | (1,704) | (4,007) | (3,112) |
Net Loss attributable to common shareholders | $ (6,407) | $ (4,176) | $ (13,531) | $ (9,288) |
Weighted average common shares outstanding - basic and diluted (in shares) | 16,375,649 | 16,696,684 | 16,383,921 | 16,680,988 |
Basic and diluted earnings per common share: | ||||
Net loss per share (in dollars per share) | $ (0.27) | $ (0.15) | $ (0.58) | $ (0.37) |
Preferred dividends per share (in dollars per share) | 0.12 | 0.10 | 0.24 | 0.19 |
Basic and diluted, continuing operations (in dollars per share) | $ (0.39) | $ (0.25) | $ (0.83) | $ (0.56) |
STOCKHOLDERS' EQUITY AND EARN_5
STOCKHOLDERS' EQUITY AND EARNINGS PER SHARE STOCKHOLDERS' EQUITY AND EARNINGS PER SHARE (Details 2) - shares | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Antidilutive securities excluded from earnings per share | 14,487,924 | 14,588,563 | 14,468,572 | 13,965,775 |
Options | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Antidilutive securities excluded from earnings per share | 1,085,497 | 1,062,807 | 1,085,497 | 1,066,465 |
Restricted Stock | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Antidilutive securities excluded from earnings per share | 249,486 | 372,815 | 230,134 | 382,638 |
Warrant | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Antidilutive securities excluded from earnings per share | 2,600,000 | 2,600,000 | 2,600,000 | 2,470,718 |
Convertible Preferred Stock | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Antidilutive securities excluded from earnings per share | 10,552,941 | 10,552,941 | 10,552,941 | 10,045,954 |
INTANGIBLE ASSETS AND GOODWIL_2
INTANGIBLE ASSETS AND GOODWILL INTANGIBLE ASSETS AND GOODWILL (Details Textual) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 | |
Finite-Lived Intangible Assets [Line Items] | |||||
Intangible assets and goodwill, gross | $ 16,347 | $ 16,347 | $ 16,347 | ||
Goodwill | 15,357 | 15,357 | 15,357 | ||
Amortization expense | 139 | $ 89 | 140 | $ 216 | |
Trade name and other | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Amortizing intangible assets, gross | 90 | $ 90 | 90 | ||
Amortizing intangible assets, weighted-average useful life | 7 years | ||||
Customer relationships | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Amortizing intangible assets, gross | $ 800 | $ 800 | $ 800 | ||
Amortizing intangible assets, weighted-average useful life | 3 years |
INTANGIBLE ASSETS AND GOODWIL_3
INTANGIBLE ASSETS AND GOODWILL (Details 1) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Goodwill [Roll Forward] | ||||
Goodwill, at beginning | $ 15,357 | |||
Goodwill, at end | $ 15,357 | 15,357 | ||
Intangible Assets [Roll Forward] | ||||
Other intangibles, at beginning | 641 | |||
Amortization expense | (139) | $ (89) | (140) | $ (216) |
Other intangibles, at end | $ 501 | $ 501 |
INTANGIBLE ASSETS AND GOODWIL_4
INTANGIBLE ASSETS AND GOODWILL (Details 2) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Goodwill | $ 15,357 | $ 15,357 |
Intangible assets and goodwill, gross | 16,347 | 16,347 |
Amortizing intangible assets, accumulated amortization | (489) | (349) |
Total | 401 | |
Intangible assets and goodwill, net | 15,858 | 15,998 |
Trade name and other | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Amortizing intangible assets, gross | 90 | 90 |
Amortizing intangible assets, accumulated amortization | (22) | (16) |
Total | 68 | 74 |
Customer relationships | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Amortizing intangible assets, gross | 800 | 800 |
Amortizing intangible assets, accumulated amortization | (467) | (333) |
Total | 333 | 467 |
Liquor license | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Non-amortizing intangible assets | $ 100 | $ 100 |
INTANGIBLE ASSETS AND GOODWIL_5
INTANGIBLE ASSETS AND GOODWILL (Details 3) $ in Thousands | Jun. 30, 2019USD ($) |
Goodwill and Intangible Assets Disclosure [Abstract] | |
2019 | $ 140 |
2020 | 213 |
2021 | 13 |
2022 | 13 |
2023 | 13 |
Thereafter | 9 |
Total | $ 401 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details Textual) $ in Thousands | Oct. 02, 2017 | Oct. 31, 2017 | Jun. 30, 2019USD ($) | Jun. 30, 2018USD ($) | Jun. 30, 2019USD ($) | Jun. 30, 2018USD ($) | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($)a |
Commitments and Contingencies [Line Items] | ||||||||
Recovery of credit losses | $ (1,135) | $ (175) | $ (1,135) | $ (175) | ||||
Employer match percentage | 4.00% | |||||||
Employer contribution in period | $ 100 | $ 100 | ||||||
Fund expense reimbursements | $ (600) | |||||||
Intercreditor Agreement Claim | ||||||||
Commitments and Contingencies [Line Items] | ||||||||
Amount sought by third party | $ 300 | |||||||
Pending Litigation | RNMA I | ||||||||
Commitments and Contingencies [Line Items] | ||||||||
Amount sought by third party | $ 3,100 | |||||||
New Mexico | Pending Litigation | Maniatis | ||||||||
Commitments and Contingencies [Line Items] | ||||||||
Area of land (in acres) | a | 7,000 | |||||||
Texas | Pending Litigation | ||||||||
Commitments and Contingencies [Line Items] | ||||||||
Area of land (in acres) | a | 111 | |||||||
Hotel | ||||||||
Commitments and Contingencies [Line Items] | ||||||||
Fund expense reimbursements | $ (100) | |||||||
Hotel | MacArthur Loan | MacArthur Place | ||||||||
Commitments and Contingencies [Line Items] | ||||||||
Repayment guaranty | 50.00% | 50.00% | ||||||
L’Auberge Fund Manager, LLC | Preferred Interests | ||||||||
Commitments and Contingencies [Line Items] | ||||||||
Selling commissions as % of gross proceeds | 6.00% | |||||||
Nonaccountable expense reimbursements broker-dealers as percent of gross proceeds | 1.00% |
LEASES (Details Textual)
LEASES (Details Textual) $ in Millions | May 29, 2019Loan | Jun. 30, 2019USD ($) | Jun. 30, 2018USD ($) | Jun. 30, 2019USD ($)renewal_option | Jun. 30, 2018USD ($) |
Operating Leased Assets [Line Items] | |||||
Lessee, number of renewal options | renewal_option | 1 | ||||
Lessee, renewal term (in years) | 5 years | 5 years | |||
Operating lease expense | $ 0.1 | $ 0.1 | $ 0.2 | $ 0.2 | |
Variable lease payment | $ 0.1 | $ 0.1 | $ 0.1 | $ 0.1 | |
Broadway Tower | |||||
Operating Leased Assets [Line Items] | |||||
Pledged equity interest, collateral percent | 100.00% | ||||
Number of loans | Loan | 51 | ||||
Minimum | |||||
Operating Leased Assets [Line Items] | |||||
Non-cancelable lease term (in years) | 10 months 24 days | 10 months 24 days | |||
Lesse, remaining lease term (in years) | 1 year | ||||
Maximum | |||||
Operating Leased Assets [Line Items] | |||||
Non-cancelable lease term (in years) | 10 years 1 month 6 days | 10 years 1 month 6 days | |||
Lesse, remaining lease term (in years) | 4 years |
LEASES (Details 1)
LEASES (Details 1) - USD ($) $ in Thousands | 3 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Leases [Abstract] | ||
Fixed rent - Minimum lease revenue | $ 377 | $ 0 |
Variable lease revenue | 21 | 0 |
Total lease revenue | $ 398 | $ 0 |
LEASES (Details 2)
LEASES (Details 2) $ in Thousands | Jun. 30, 2019USD ($) |
Leases [Abstract] | |
Remainder of 2019 | $ 1,808 |
2020 | 3,748 |
2021 | 3,800 |
2022 | 3,420 |
2023 | 2,311 |
Thereafter | 3,643 |
Total | $ 18,730 |
LEASES (Details 3)
LEASES (Details 3) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Leases [Abstract] | ||
Operating cash flows from operating lease | $ 181 | |
Right-of-use assets | 1,574 | |
Lease liabilities | 1,693 | |
Operating lease right-of-use assets in other assets | 1,440 | |
Operating lease liabilities in accounts payable and other accrued expenses | $ 1,548 | $ 0 |
Weighted average remaining lease term | 3 years | |
Operating leases - Weighted average discount rate | 7.10% |
LEASES (Details 4)
LEASES (Details 4) - USD ($) $ in Thousands | Jun. 30, 2019 | Jun. 30, 2018 |
Leases [Abstract] | ||
Remainder of 2019 | $ 287 | |
2020 | 575 | |
2021 | 577 | |
2022 | 304 | |
Total lease payments | 1,743 | |
Less imputed interest | (195) | |
Operating lease liabilities in accounts payable and other accrued expenses | $ 1,548 | $ 0 |
LEASES (Details 5)
LEASES (Details 5) $ in Thousands | Jun. 30, 2019USD ($) |
Leases [Abstract] | |
2019 | $ 305 |
2020 | 307 |
2021 | 308 |
2022 | 233 |
Total | $ 1,153 |
RELATED PARTY TRANSACTIONS AN_2
RELATED PARTY TRANSACTIONS AND COMMITMENTS (Details) - USD ($) | Jul. 24, 2014 | Jul. 22, 2014 | Dec. 31, 2010 | Jun. 30, 2011 | Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 | Jul. 01, 2017 |
Related Party Transaction [Line Items] | ||||||||||
Debt | $ 49,258,000 | $ 49,258,000 | ||||||||
CEO Legacy Fees | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Legacy fees | 100,000 | $ 34,600 | ||||||||
CEO Legacy Fees | CEO | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Percentage of carrying value used to calculate legacy assets performance fee | 110.00% | |||||||||
Legacy fees | 100,000 | $ 34,600 | ||||||||
Juniper Capital Partners Llc | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Consulting agreement initial period | 3 years | |||||||||
Consulting agreement renewable terms | P2Y | |||||||||
JCP Realty Advisors, LLC | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Annual consulting fees | $ 500,000 | $ 600,000 | ||||||||
Origination fee | 1.25% | |||||||||
Percentage of legacy assets performance fee | 5.50% | |||||||||
Percentage of carrying value used to calculate legacy assets performance fee | 110.00% | |||||||||
Consulting fees | 200,000 | 200,000 | ||||||||
Legacy fees | $ 100,000 | $ 100,000 | $ 100,000 | $ 100,000 | ||||||
Unconsolidated Partnerships | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Maximum borrowing capacity | $ 5,000,000 | |||||||||
Notes receivable | $ 5,000,000 | |||||||||
Effective rate (percentage) | 7.50% | 7.50% | ||||||||
JPMorgan Chase Funding Inc. | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Variable rate | 3.81% | |||||||||
Prime Rate | Minimum | Unconsolidated Partnerships | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Variable rate | 2.00% | |||||||||
Prime Rate | Maximum | Unconsolidated Partnerships | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Variable rate | 8.00% | |||||||||
Secured Debt | JPMorgan Chase Funding Inc. | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Debt | $ 13,200,000 | $ 13,200,000 | ||||||||
Debt amount | $ 11,000,000 | $ 11,000,000 | ||||||||
Secured Debt | LIBOR | JPMorgan Chase Funding Inc. | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Variable rate | 3.81% |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) | Aug. 14, 2019USD ($) | Jul. 30, 2019USD ($) | Apr. 11, 2019USD ($)payment | Jun. 30, 2019USD ($) | Jun. 30, 2018USD ($) | Jul. 24, 2019USD ($) | Dec. 31, 2018USD ($) |
Subsequent Event [Line Items] | |||||||
Number of future payments | payment | 2 | ||||||
Amount of future payment one | $ 250,000 | ||||||
Amount of future payment two | 250,000 | ||||||
Debt amount | $ 921,000 | $ 2,920,000 | |||||
Board of Directors Chairman and CEO | |||||||
Subsequent Event [Line Items] | |||||||
Bonus payment for 2018 upon continued employment through Expiration Date | $ 600,000 | ||||||
ITH Partners | Mr. Bain | |||||||
Subsequent Event [Line Items] | |||||||
Fixed monthly fee for ITH Consulting for selling New Mexico Assets | $ 30,000 | ||||||
Subsequent Event | |||||||
Subsequent Event [Line Items] | |||||||
Investment return percent | 7.00% | ||||||
Subsequent Event | Board of Directors Chairman and CEO | |||||||
Subsequent Event [Line Items] | |||||||
Bonus payment for 2018 upon continued employment through Expiration Date | $ 350,000 | ||||||
Subsequent Event | Juniper New Mexico, LLC | Real Estate Loan | |||||||
Subsequent Event [Line Items] | |||||||
Debt | $ 15,000,000 | ||||||
Debt amount | $ 2,100,000 | ||||||
Subsequent Event | ITH Partners | Mr. Bain | |||||||
Subsequent Event [Line Items] | |||||||
Fixed monthly fee for ITH Consulting for selling New Mexico Assets | $ 5,000 | ||||||
Subsequent Event | JIA | |||||||
Subsequent Event [Line Items] | |||||||
Performance fee percent | 20.00% | ||||||
Subsequent Event | JIA | Wolf and Krys | |||||||
Subsequent Event [Line Items] | |||||||
Ownership interest, percent | 50.00% | ||||||
Minimum | Subsequent Event | JIA | |||||||
Subsequent Event [Line Items] | |||||||
Management fee percent | 1.00% | ||||||
Maximum | Subsequent Event | Juniper New Mexico, LLC | Real Estate Loan | |||||||
Subsequent Event [Line Items] | |||||||
Total commitment | $ 3,900,000 | ||||||
Maximum | Subsequent Event | JIA | |||||||
Subsequent Event [Line Items] | |||||||
Management fee percent | 1.50% |