6. Mortgages Payable

During the first nine months of 2014, we made $77.6 million in principal payments, including the repayment of five mortgages in full for $72.0 million. Additionally, during the first nine months of 2014, we assumed mortgages totaling $166.7 million, excluding net premiums. The mortgages are secured by the properties on which the debt was placed. $152.0 million of mortgages assumed during the first nine months of 2014 are considered non-recourse with limited customary exceptions for items such as solvency, bankruptcy, misrepresentation, fraud, misapplication of payments, environmental liabilities, failure to pay taxes, insurance premiums, liens on the property, violations of the single purpose entity requirements, and uninsured losses. The remaining $14.7 million, representing two mortgages, has partial recourse to Realty Income in the aggregate amount of $3.2 million; the remaining balance of $11.5 million is non-recourse and includes the same customary exceptions described in the preceding sentence. We expect to pay off the mortgages as soon as prepayment penalties make it economically feasible to do so.

During the first nine months of 2014, aggregate net premiums totaling $604,000 were recorded upon assumption of the mortgages for above-market interest rates, as compared to net premiums totaling $28.4 million recorded in the first nine months of 2013. Amortization of these net premiums is recorded as a reduction to interest expense over the remaining term of the respective mortgages, using a method that approximates the effective-interest method.

These mortgages contain customary covenants, such as limiting our ability to further mortgage each applicable property or to discontinue insurance coverage, without the prior consent of the lender. At September 30, 2014, we remain in compliance with these covenants.

We did not incur any deferred financing costs on our mortgages payable assumed in the first nine months of 2014 and incurred $211,000 in the first nine months of 2013. The balance of our deferred financing costs, which are classified as part of other assets, net, on our consolidated balance sheets, was $937,000 at September 30, 2014, and $1.2 million at December 31, 2013, which is being amortized over the remaining term of each mortgage.

The following is a summary of all our mortgages payable as of September 30, 2014 and December 31, 2013, respectively (dollars in thousands):

Weighted

Average

Stated

Effective

Remaining

Unamortized

Mortgage

Number of

Interest

Years Until

Principal

Premium

Payable

As Of

Properties(1)

Rate(2)

Rate(3)

Maturity

Balance

Balance, net

Balance

9/30/14

243

5.0%

4.0%

4.0

$ 843,600

$ 18,612

$ 862,212

12/31/13

227

5.3%

3.9%

4.3

$ 754,508

$ 28,852

$ 783,360

(1) At September 30, 2014, there were 58 mortgages on the 243 properties, while at December 31, 2013, there were 47 mortgages on the 227 properties. The mortgages require monthly payments, with principal payments due at maturity. The mortgages are at fixed interest rates, except for five mortgages on 14 properties totaling $74.4 million at September 30, 2014, including net unamortized discounts. At December 31, 2013, two mortgages totaling $31.1 million, including net unamortized discounts, were at variable interest rates. All of these variable rate mortgages were acquired with arrangements which limit our exposure to interest rate risk.

(2) Stated interest rates ranged from 2.0% to 6.9% at September 30, 2014, while stated interest rates ranged from 2.5% to 6.9% at December 31, 2013.

(3) Effective interest rates range from 2.2% to 9.1% at September 30, 2014, while effective interest rates ranged from 2.4% to 9.2% at December 31, 2013.

The following table summarizes the maturity of mortgages payable, excluding net premiums of $18.6 million, as of September 30, 2014 (dollars in millions):

Year of
Maturity
2014	$	7.6
2015	119.7
2016	248.4
2017	142.5
2018	15.1
Thereafter	310.3
Totals	$	843.6