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Debt

9 Months Ended

Sep. 30, 2012

Note 6. Debt.

The Company has a $100.0 million revolving credit facility. On June 15, 2012, the Company entered into a Third Amendment to its Amended and Restated Senior Revolving Credit Agreement (the “Facility”) with KeyBank National Association, as administrative agent and as a lender, and PNC Bank, National Association, and Union Bank, N.A., as lenders, to increase the Facility from $80.0 million to $100.0 million by exercising the accordion feature under the Facility. The amount available under the Facility may be increased up to $150.0 million, subject to the approval of the administrative agent and the identification of lenders willing to make available additional amounts. The maturity date of the Facility is January 19, 2015, with one 12-month extension option exercisable by the Company, subject to, among other things, there being an absence of an event of default under the Facility and to the payment of an extension fee. The Facility provides that outstanding borrowings are limited to the lesser of $100.0 million and 60.0% of the value of the borrowing base properties. The Facility is secured by a pledge of the equity interests in the subsidiaries that hold each of the borrowing base properties. Interest on the Facility is generally to 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 2.50% to 3.50%, depending on the ratio of the Company’s outstanding consolidated indebtedness to the value of the Company’s consolidated gross asset value. As of September 30, 2012, the applicable LIBOR margin was 2.50%. The Facility requires quarterly payments of an annual unused facility fee in an amount equal to 0.25% or 0.35% depending on the unused portion of the Facility. The unused facility fee was $52,000 and $84,000, respectively, for the three months ended September 30, 2012 and 2011 and $175,000 and $285,000, respectively, for the nine months ended September 30, 2012 and 2011. The Company guarantees the obligations of the borrower (a wholly-owned subsidiary) under the Facility. The Facility includes a series of financial and other covenants that the Company must comply with in order to borrow under the Facility. As of September 30, 2012, there were $51.4 million of borrowings outstanding under the Facility and 13 properties were in the borrowing base. As of December 31, 2011, there were $41.0 million of borrowings outstanding under the Facility. The Company was in compliance with the financial covenants under the Facility at September 30, 2012 and December 31, 2011.

In August 2012, the Company repaid its $10.1 million senior secured term loan that was scheduled to mature on February 22, 2013 (the “Term Loan”) with proceeds from the Facility. As of December 31, 2011, the outstanding balance of the Term Loan was approximately $20.1 million.

During the three months ended September 30, 2012, the Company assumed two mortgage loans totaling approximately $9.8 million that bear interest at a weighted average fixed rate of 5.85%. Each of the mortgage loans payable is secured by separate property and requires monthly interest and principal payments until maturity and is generally non-recourse. The mortgage loans mature in 2014.

On January 30, 2012 the Company entered into a $20.1 million non-recourse mortgage loan at a fixed annual interest rate of 3.79% that matures on February 5, 2019. The mortgage loan is secured by five of the Company’s properties. A portion of the loan proceeds was used to pay down the Term Loan. The remaining loan proceeds were used to invest in industrial properties and for general business purposes.

On June 26, 2012 the Company entered into a $39.8 million non-recourse mortgage loan at a fixed annual interest rate of 3.65% that matures on March 5, 2020. The mortgage loan is secured by three of the Company’s properties. A portion of the loan proceeds was used to pay down the Facility. The remaining loan proceeds were used to invest in industrial properties and for general business purposes.

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 2014 and 2021. As of September 30, 2012, the Company had eight mortgage loans payable totaling approximately $106.9 million, which bear interest at a weighted average fixed annual rate of 4.5%. As of December 31, 2011 the Company had four mortgage loans payable totaling approximately $38.3 million, which bore interest at a weighted average fixed annual interest rate of 5.4%. As of September 30, 2012 and December 31, 2011, the total net investment book value of the properties securing the debt was $211.4 million and $84.2 million, respectively.

The scheduled principal payments of the Company’s debt as of September 30, 2012 were as follows (dollars in thousands):


	Credit Facility			Mortgage Loans Payable			Total Debt
2012 (3 months)	$	—		$	641		$	641
2013		—			2,704			2,704
2014		—			12,004			12,004
2015		51,429			21,711			73,140
2016		—			2,076			2,076
Thereafter		—			66,979			66,979

Subtotal		51,429			106,115			157,544
Unamortized net premiums		—			782			782

Total	$	51,429		$	106,897		$	158,326

Weighted Average Interest Rate		2.7	%		4.5	%		3.9	%