Mortgage Notes Payable, Net

Mortgage notes payable, net as of March 31, 2019 and December 31, 2018 consisted of the following:



		Encumbered Properties	Outstanding Loan Amount ⁽¹⁾						Effective Interest Rate		Interest Rate
Country	Portfolio	Encumbered Properties	March 31, 2019			December 31, 2018			Effective Interest Rate		Interest Rate	Maturity
			(In thousands)			(In thousands)
Finland:	Finnair ⁽⁹⁾	—	$	—		$	32,501		—%		—	—
	Tokmanni ⁽⁹⁾	—	—			33,159			—%		—	—
	Finland	5	83,018			—			1.7%	⁽²⁾	Fixed/Variable	Feb. 2024

France:	Auchan	1	9,311			9,498			1.7%	⁽³⁾	Fixed	Dec. 2019
	Pole Emploi	1	6,507			6,637			1.7%	⁽³⁾	Fixed	Dec. 2019
	Sagemcom	1	40,275			41,083			1.7%	⁽³⁾	Fixed	Dec. 2019
	Worldline	1	5,609			5,722			1.9%	⁽³⁾	Fixed	Jul. 2020
	DCNS	1	10,658			10,872			1.5%	⁽³⁾	Fixed	Dec. 2020
	ID Logistics II	2	11,779			12,016			1.3%		Fixed	Jun. 2021

Germany	Rheinmetall⁽¹⁰⁾	—	—			12,130			—%		—	—
	OBI DIY ⁽¹⁰⁾	—	—			5,150			—%		—	—
	RWE AG	3	70,116			71,524			1.6%	⁽³⁾	Fixed	Oct. 2019
	Rexam	1	5,761			5,876			1.8%	⁽³⁾	Fixed	Aug. 2019
	Metro Tonic	1	29,729			30,326			1.7%	⁽³⁾	Fixed	Dec. 2019
	ID Logistics I	1	4,487			4,578			1.0%		Fixed	Oct. 2021

Luxembourg:	DB Luxembourg	1	40,387			41,198			1.4%	⁽³⁾	Fixed	May 2020
The Netherlands:	ING Amsterdam	1	49,362			50,353			1.7%	⁽³⁾	Fixed	Jun. 2020
	Total EUR denominated	20	366,999			372,623

United Kingdom:	UK Multi-Property Cross Collateralized Loan	43	299,739			292,890			3.2%	⁽⁴⁾	Fixed/Variable	Aug. 2023
	Total GBP denominated	43	299,739			292,890

United States:	Quest Diagnostics	1	52,800			52,800			4.5%	⁽⁵⁾	Variable	Sep. 2019
	AT&T Services	1	33,550			33,550			2.0%	⁽⁶⁾	Variable	Dec. 2020
	Penske Logistics ⁽⁷⁾	1	70,000			70,000			4.7%		Fixed	Nov. 2028
	Multi-Tenant Mortgage Loan I ⁽⁷⁾	12	187,000			187,000			4.4%		Fixed	Nov. 2027
	Multi-Tenant Mortgage Loan II	8	32,750			32,750			4.4%		Fixed	Feb. 2028
	Multi-Tenant Mortgage Loan III	7	98,500			98,500			4.9%		Fixed	Dec. 2028
	Total USD denominated	30	474,600			474,600
	Gross mortgage notes payable	93	1,141,338			1,140,113			3.2%
	Mortgage discount		(458		)	(569		)
	Deferred financing costs, net of accumulated amortization ⁽⁸⁾		(9,808		)	(9,737		)
	Mortgage notes payable, net	93	$	1,131,072		$	1,129,807		3.2%

_______________________________


⁽¹⁾	Amounts borrowed in local currency and translated at the spot rate in effect at the applicable reporting date.


⁽²⁾	80% fixed as a result of a "pay-fixed" interest rate swap agreement and 20% variable. Variable portion is approximately 1.4% plus 3-month Euribor. Euribor rate in effect as of March 31, 2019.


⁽³⁾	Fixed as a result of a "pay-fixed" interest rate swap agreement.


⁽⁴⁾	80% fixed as a result of a "pay-fixed" interest rate swap agreement and 20% variable. Variable portion is approximately 2.0% plus 3-month GBP LIBOR. LIBOR rate in effect as of March 31, 2019.


⁽⁵⁾	The interest rate is 2.0% plus 1-month LIBOR. LIBOR rate in effect is as of March 31, 2019.


⁽⁶⁾	The interest rate is 2.0% plus 1-month Adjusted LIBOR as defined in the mortgage agreement. LIBOR rate in effect is as of March 31, 2019.


⁽⁷⁾	The borrower's (wholly owned subsidiaries of the Company) financial statements are included within the Company's consolidated financial statements, however, the borrowers' assets and credit are only available to pay the debts of the borrowers and their liabilities constitute obligations of the borrowers.

⁽⁸⁾

Deferred financing costs represent commitment fees, legal fees, and other costs associated with obtaining commitments for financing. These costs are amortized over the terms of the respective financing agreements using the effective interest method. Unamortized deferred financing costs are expensed when the associated debt is refinanced or paid down before maturity. Costs incurred in seeking financial transactions that do not close are expensed in the period in which it is determined that the financing will not close.


⁽⁹⁾	These loans were refinanced in February 2019 as part of the Finland Properties Refinancing (see below for further details).


⁽¹⁰⁾	These loans were repaid in full upon maturity in January 2019.

The following table presents future scheduled aggregate principal payments on the Company's gross mortgage notes payable over the next five calendar years and thereafter as of March 31, 2019:



(In thousands)	Future Principal Payments ⁽¹⁾
2019 (remainder)	$	214,499
2020	142,144
2021	28,890
2022	19,548
2023	258,140
2024	83,017
Thereafter	395,100
Total	$	1,141,338

_________________________


⁽¹⁾	Assumes exchange rates of £1.00 to $1.30 for GBP and €1.00 to $1.12 for EUR as of March 31, 2019 for illustrative purposes, as applicable.

The Company's mortgage notes payable agreements require compliance with certain property-level financial covenants including debt service coverage ratios. As of March 31, 2019, the Company was in compliance with all financial covenants under its mortgage notes payable agreements.

The total gross carrying value of unencumbered assets as of March 31, 2019 was $1.4 billion, of which approximately $1.2 billion of this amount was included in the unencumbered asset pool comprising the borrowing base under the Revolving Credit Facility (as defined in Note 5 — Credit Facilities) and therefore is not available to serve as collateral for future borrowings.

In April 2019, the Company, through certain wholly owned subsidiaries, entered into a new loan agreement with Column Financial, Inc. and Société Générale Financial Corporation secured by 16 of the Company’s single tenant net leased office and industrial properties located in 12 states that were simultaneously removed from the borrowing base under the Revolving Credit Facility. For additional information, see Note 14 — Subsequent Events.

Finland Properties Refinancing

On February 6, 2019, the Company borrowed an aggregate of €74.0 million ($84.2 million based on the prevailing exchange rate on that date) secured by mortgages of its five properties in Finland. The maturity date of this loan is February 1, 2024, and it bears interest at a rate of 3-month Euribor plus 1.4% per year, with the interest rate for approximately €59.2 million ($67.4 million based on the prevailing exchange rate on that date) fixed by an interest rate swap agreement. The amount fixed by swap agreement represents 80% of the principal amount of the loan and is fixed at 1.8% per year. The loan is interest-only with the principal due at maturity. At the closing of the loan, €57.4 million ($65.3 million based on the prevailing exchange rate on that date) was used to repay all outstanding indebtedness encumbering the five properties, with the remaining proceeds, after costs and fees related to the loan, available for working capital and general corporate purposes.

Multi-Tenant Mortgage Loan II

On January 26, 2018, the Company entered into a multi-tenant mortgage loan, yielding gross proceeds of $32.8 million with a fixed interest rate of 4.32% per year and a 10-year maturity in February 2028. The multi-tenant mortgage loan is interest only with the principal due at maturity and is secured by eight properties in six states, totaling approximately 627,500 square feet. Proceeds were used to pay down approximately $30.0 million of outstanding indebtedness under the Revolving Credit Facility and for general corporate purposes and future acquisitions.