Note 4 – Debt

As of December 31, 2015, we had total indebtedness of $319,584,368, including (i) $101,584,368 of mortgage notes payable; (ii) $100,000,000 of unsecured term loans; (iii) $100,000,000 of senior unsecured notes; and (iv) $18,000,000 of borrowings under our Credit Facility.

Mortgage Notes Payable

As of December 31, 2015, we had total mortgage indebtedness of $101,584,368 with a weighted average maturity of 4.2 years. These mortgages are collateralized by related real estate with an aggregate net book value of $135,974,635.

Including mortgages that have been swapped to a fixed interest rate, our weighted average interest rate on mortgage debt was 4.17% as of December 31, 2015 and 4.27% as of December 31, 2014.

Mortgages payable consisted of the following:

	December 31, 2015		December 31, 2014

Note payable in monthly installments of interest only at 6.56% annum, with a balloon payment in the amount of $8,580,000 due June 11, 2016; collateralized by related real estate and tenants’ leases	$	8,580,000	$	8,580,000

Note payable in monthly installments of $99,598 including interest at 6.63% per annum, with prepayment paid in January 2015; collateralized by related real estate and tenants’ leases		-		2,405,976

Note payable in monthly principal installments of $56,380 plus interest at 170 basis points over LIBOR, swapped to a fixed rate of 3.62% as of December 31, 2015. A final balloon payment in the amount of $19,744,758 is due on May 14, 2017 unless extended for a two year period at the option of the Company, subject to certain conditions, collateralized by related real estate and tenants’ leases		20,740,838		21,398,078

Note payable in monthly installments of interest only at LIBOR plus 160 basis points, swapped to a fixed rate of 2.49% with balloon payment due April 4, 2018; collateralized by related real estate and tenants’ leases		25,000,000		25,000,000

Note payable in monthly installments of $153,838 including interest at 6.90% per annum, with the final monthly payment due January 2020; collateralized by related real estate and tenants’ leases		6,552,907		7,896,078

Note payable in monthly installments of $23,004 including interest at 6.24% per annum, with a balloon payment of $2,766,628 due February 2020; collateralized by related real estate and tenant lease		3,128,803		3,204,294

Note payable in monthly installments of interest only at 3.60% per annum, with a balloon payment due January 1, 2023; collateralized by related real estate and tenants’ leases		23,640,000		23,640,000

Note payable in monthly installments of $35,673 including interest at 5.01% per annum, with a balloon payment of $4,034,627 due September 2023; collateralized by related real estate and tenant lease		5,448,058		5,595,327

Note payable in monthly installments of $91,675 including interest at 6.27% per annum, with a final monthly payment due July 2026; collateralized by related real estate and tenants’ leases		8,493,762		9,042,485

Total	$	101,584,368	$	106,762,238

The following table presents scheduled principal payments related to our debt as of December 31, 2015:

	Scheduled		Balloon
	Principal		Payment		Total
For the Year Ending December 31,
2016	$	2,954,035	$	8,580,000	$	11,534,035
2017 (1)		2,710,697		19,744,758		22,455,455
2018 (2)		2,575,654		43,000,000		45,575,654
2019		2,750,823		-		2,750,823
2020		1,100,218		37,766,951		38,867,169
Thereafter		5,744,873		192,656,359		198,401,232
Total	$	17,836,300	$	301,748,068	$	319,584,368

(1)

The balloon payment is related to a mortgage note that matures on May 14, 2017 and may be extended, at the Company’s election, for a two-year term to May 2019, subject to certain conditions.

(2)

The balloon payment balance includes the balance outstanding under the Credit Facility as of December 31, 2015. The Credit Facility matures on July 21, 2018 and may be extended for one year at the Company’s election, subject to certain conditions.

The mortgage loans encumbering our properties are generally non-recourse, subject to certain exceptions for which we would be liable for any resulting losses incurred by the lender. These exceptions vary from loan to loan, but generally include fraud or a material misrepresentation, misstatement or omission by the borrower, intentional or grossly negligent conduct by the borrower that harms the property or results in a loss to the lender, filing of a bankruptcy petition by the borrower, either directly or indirectly, and certain environmental liabilities. At December 31, 2015, the mortgage loan of approximately $20,741,000 is partially recourse to us and is secured by a limited guaranty of payment and performance for approximately 50% of the loan amount.

We have entered into mortgage loans which are secured by multiple properties and contain cross-default and cross-collateralization provisions. Cross-collateralization provisions allow a lender to foreclose on multiple properties in the event that we default under the loan. Cross-default provisions allow a lender to foreclose on the related property in the event a default is declared under another loan.

The Company was in compliance with covenant terms for all mortgages payable at December 31, 2015.

Senior Unsecured Notes

On May 28, 2015, the Company completed a private placement of $100,000,000 principal amount of senior unsecured notes (the “Senior Unsecure Notes”). The Senior Unsecured Notes were sold in two series, including $50,000,000 of 4.16% notes due May 30, 2025 and $50,000,000 of 4.26% notes due May 30, 2027. The weighted average term of the Senior Unsecured Notes is 11 years and the weighted average interest rate is 4.21%. Proceeds from the issuance were used to repay borrowings under the Company’s Credit Facility and for general corporate purposes.

Revolving Credit and Term Loan Facility

In July 2014, the Company entered into a $250,000,000 senior unsecured revolving credit and term loan agreement consisting of (i) a new $150,000,000 revolving credit facility (the “Credit Facility”); (ii) a new $65,000,000 seven-year unsecured term loan facility (the “2021 Term Loan”); and (iii) our existing $35,000,000 unsecured term loan facility due 2020 (the “2020 Term Loan”). The Credit Facility, 2021 Term Loan and 2020 Term Loan, together, are referred to as our “Revolving Credit and Term Loan Facility.”

The Credit Facility is due July 21, 2018, with an additional one-year extension at the Company’s option, subject to customary conditions. Borrowings under the Credit Facility are priced at LIBOR plus 135 to 200 basis points, depending on the Company’s leverage. The Credit Facility replaced the Company’s previous $85,000,000 revolving credit facility, which was extinguished concurrent with the closing of the Credit Facility, and may be increased to an aggregate of $250,000,000 at the Company’s election, subject to certain terms and conditions. As of December 31, 2015, $18,000,000 was outstanding under the Credit Facility bearing a weighted average interest rate of approximately 1.7% and $132,000,000 was available for borrowing.

The 2021 Term Loan matures on July 21, 2021. Borrowings under the 2021 Term Loan are priced at LIBOR plus 165 to 225 basis points, depending on the Company’s leverage. The Company entered into interest rate swaps to fix LIBOR at 2.09% until maturity, implying an all-in interest rate of 3.74% at closing. Proceeds from the 2021 Term Loan were used to repay borrowings under our previous revolving credit facility, which were used primarily to fund property acquisitions. The 2021 Term Loan may be increased to an aggregate of $75,000,000 at the Company’s election, subject to certain terms and conditions. As of December 31, 2015, $65,000,000 was outstanding under the 2021 Term Loan.

The 2020 Term Loan matures on September 29, 2020. Borrowings under the 2020 Term Loan are priced at LIBOR plus 165 to 225 basis points, depending on the Company’s leverage. The Company entered into interest rate swaps to fix LIBOR at 2.20% until maturity, implying an all-in interest rate of 3.85% at closing. Proceeds from the 2020 Term Loan were used to repay borrowings under our previous revolving credit facility, which were used primarily to fund property acquisitions. The 2020 Term Loan may be increased to an aggregate of $70,000,000 at the Company’s election, subject to certain terms and conditions. As of December 31, 2015, $35,000,000 was outstanding under the 2020 Term Loan.

The Revolving Credit and Term Loan Facility contains customary covenants, including, among others, financial covenants regarding debt levels, total liabilities, tangible net worth, fixed charge coverage, unencumbered borrowing base properties, and permitted investments. The Company was in compliance with the covenant terms at December 31, 2015.