Note 4 – Debt

In April 2015, FASB issued ASU 2015-03, which requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the gross carrying amount of that debt liability, consistent with debt discounts. We adopted ASU 2015-03 effective March 31, 2016 and appropriately retrospectively applied the guidance to our Mortgage Notes Payable, Unsecured Term Loans and Senior Unsecured Notes for all periods presented. Unamortized debt issuance costs of approximately $2.5 million and $2.7 million are now included as of June 30, 2016 and December 31, 2015, respectively (previously included in Unamortized Deferred Expenses on our Consolidated Balance Sheets).

As of June 30, 2016, the Company had total gross indebtedness of $389.6 million including (i) $91.6 million of mortgage notes payable; (ii) $100.0 million of unsecured term loans; (iii) $100.0 million of senior unsecured notes; and (iv) $98.0 million of borrowings under its Credit Facility.

Mortgage Notes Payable

As of June 30, 2016, the Company had total gross mortgage indebtedness of $91.6 million which was collateralized by related real estate with an aggregate net book value of $117.6 million. Including mortgages that have been swapped to a fixed interest rate, the weighted average interest rate on the Company’s mortgage notes payable was 4.83%.

In March 2016, the Company prepaid a mortgage note payable with an outstanding balance of $8.6 million. The fully-amortizing loan carried a 6.56% interest rate and the final monthly payment was due in June 2016.

Mortgages payable consisted of the following:

	June 30, 2016		December 31, 2015

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

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		20,402,558		20,740,838

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		5,845,863		6,552,907

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		3,089,513		3,128,803

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		5,371,966		5,448,058

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		8,206,261		8,493,762

Total Principal		91,556,161		101,584,368
Unamortized debt issuance costs		(1,091,805)		(1,193,399)
Total	$	90,464,356	$	100,390,969

Debt Maturities

The following table presents scheduled principal payments related to our debt as of June 30, 2016:

	Scheduled		Balloon
	Principal		Payment		Total
Remainder of 2016	$	1,505,827	$	-	$	1,505,827
2017 (1)		2,710,697		19,744,758		22,455,455
2018 (2)		2,575,654		123,000,000		125,575,654
2019		2,750,823		-		2,750,823
2020		1,100,218		37,766,951		38,867,169
Thereafter		9,761,232		188,640,000		198,401,232
Total	$	20,404,451	$	369,151,709	$	389,556,160

(1)

The balloon payment is related to a mortgage note that matures in May 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 June 30, 2016. The Credit Facility matures in July 2018 and may be extended for one year at the Company’s election, subject to certain conditions.

Senior Unsecured Notes

The following table presents the Senior Unsecured Notes balance net of unamortized debt issuance costs as of June 30, 2016 and 2015:

	June 30, 2016		December 31, 2015

2025 Senior Unsecured Note	$	50,000,000	$	50,000,000
2027 Senior Unsecured Note		50,000,000		50,000,000
Total Principal		100,000,000		100,000,000

Unamortized debt issuance costs		(802,991)		(838,999)
Total	$	99,197,009	$	99,161,001

On May 28, 2015, the Company completed a private placement of $100.0 million principal amount of senior unsecured notes (the “Senior Unsecured Notes”). The Senior Unsecured Notes were sold in two series, including $50 million of 4.16% notes due May 30, 2025 and $50.0 million 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

The following table presents the Unsecured Term Loans balance net of unamortized debt issuance costs as of June 30, 2016 and 2015:

	June 30, 2016		December 31, 2015

2020 Term Loan	$	35,000,000	$	35,000,000
2021 Term Loan		65,000,000		65,000,000
Total Principal		100,000,000		100,000,000

Unamortized debt issuance costs		(582,145)		(610,380)
Total	$	99,417,855	$	99,389,620

The Company has in place a $250.0 million senior unsecured revolving credit and term loan facility (the “Revolving Credit and Term Loan Facility”) consisting of (i) a $150.0 million revolving credit facility (the “Credit Facility”); (ii) a $65.0 million seven-year unsecured term loan facility (the “2021 Term Loan”); and (iii) a $35.0 million unsecured term loan facility due 2020 (the “2020 Term Loan”).

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. As of June 30, 2016, $98.0 million was outstanding under the Credit Facility bearing a weighted average interest rate of approximately 1.85% and $52.0 million 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, and the Company entered into interest rate swaps to fix LIBOR at 2.09% until maturity. As of June 30, 2016, $65.0 million was outstanding under the 2021 Term Loan bearing an all-in interest rate of 3.74%.

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, and the Company entered into interest rate swaps to fix LIBOR at 2.20% until maturity. As of June 30, 2016, $35.0 million was outstanding under the 2020 Term Loan bearing an all-in interest rate of 3.85%.

The Revolving Credit and Term Loan Facility contain 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 June 30, 2016.