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Debt.

12 Months Ended

Dec. 31, 2011

Note 5. Debt.

As of December 31, 2011 and 2010, the Company had an $80.0 million senior revolving credit facility that matures on March 22, 2013 (the “Facility”) (see Note 11). The amount available under the Facility may be increased up to $150.0 million, subject to certain conditions and the identification of lenders willing to make available additional amounts. Interest on the Facility will generally be paid based upon, at the Company’s option, either (i) LIBOR plus the applicable LIBOR margin or (ii) the applicable base rate which is the greater of the administrative agent’s prime rate plus 1.00%, 0.50% above the federal funds effective rate, or thirty-day LIBOR plus the applicable LIBOR margin for LIBOR rate loans under the Facility. The applicable LIBOR margin will range from 3.00% to 4.25% (3.00% as of December 31, 2011), depending on the ratio of the Company’s outstanding consolidated indebtedness to the value of the Company’s consolidated gross asset value. The Facility requires payment of an annual unused facility fee in an amount equal to 0.35% or 0.50% depending on the unused portion of the Facility. The unused facility fee was $359,000 and $197,000, respectively, for the year ended December 31, 2011 and for the period from February 16, 2010 (commencement of operations) to December 31, 2010. The Facility includes a series of financial and other covenants that the Company must comply with in order to borrow under the Facility. The Company has agreed to guarantee the obligations of the borrower (a wholly-owned subsidiary) under the Facility. As of December 31, 2011, there were $41.0 million of borrowings outstanding under the Facility and ten properties were in the borrowing base. The Company was in compliance with its financial covenants at December 31, 2011 and 2010.

On August 23, 2011, the Company entered into a $10.1 million senior secured term loan agreement that matures on February 22, 2013 (the “Term Loan”), subject to one six-month extension exercisable by the Company subject to the satisfaction of certain conditions. On December 29, 2011 the Company increased the borrowings on the Term Loan to $20.1 million. Interest on the Term Loan will generally be based upon, at the Company’s option, either (i) LIBOR plus the applicable LIBOR margin or (ii) the applicable base rate which is the greater of the administrative agent’s prime rate plus 1.00%, 0.50% above the federal funds effective rate, or thirty-day LIBOR plus the applicable LIBOR margin for LIBOR rate loans under the Term Loan. As of December 31, 2011 the applicable LIBOR margin is 3.50%. The Term Loan includes a series of financial and other covenants that are similar to the covenants in the Facility. The Company has agreed to guarantee the obligations of the borrower (a wholly-owned subsidiary) under the Term Loan. The Company was in compliance with its financial covenants at December 31, 2011.

During the year ended December 31, 2011, the Company assumed two mortgage loans totaling approximately $21.6 million that bear interest at a weighted average fixed rate of approximately 5.51%. The mortgage loans payable are collateralized by certain of the properties and require monthly interest and principal payments until maturity and are generally non-recourse. The mortgage loans mature between 2015 and 2021. As of December 31, 2010 the Company had two mortgage loans payable totaling approximately $17.7 million, which bore interest at a weighted average fixed annual interest rate of 5.19%.

The scheduled principal payments of the Company’s debt as of December 31, 2011 were as follows (dollars in thousands):


	Credit Facility			Term Loan Payable			Mortgage Loans Payable			Total Debt
2012	$	—		$	—		$	1,128		$	1,128
2013		41,000			20,050			1,195			62,245
2014		—			—			1,265			1,265
2015		—			—			20,346			20,346
2016		—			—			682			682
Thereafter		—			—			13,038			13,038

Subtotal		41,000			20,050			37,654			98,704
Unamortized net premiums		—			—			611			611

Total	$	41,000		$	20,050		$	38,265		$	99,315

Weighted Average Interest Rate		3.3	%		3.8	%		5.4	%		4.2	%