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Mortgage Notes Payable, Net | 9 Months Ended
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Sep. 30, 2019
Debt Disclosure [Abstract] |
Mortgage Notes Payable, Net | Mortgage Notes Payable, Net Mortgage notes payable, net as of September 30, 2019 and December 31, 2018 consisted of the following:
|  |  |  | Encumbered Properties |  | Outstanding Loan Amount (1) |  | Effective Interest Rate |  | Interest Rate |  |
Country |  | Portfolio |  |  | September 30, 2019 |  | December 31, 2018 |  |  |  | Maturity
|  |  |  |  |  | (In thousands) |  | (In thousands) |  |  |  |  |  |
Finland: |  | Finnair (8) |  | — |  | $ | — |  |  | $ | 32,501 |  |  | —% |  | — |  |  | — |
|  | Tokmanni (8) |  | — |  | — |  |  | 33,159 |  |  | —% |  | — |  |  | — |
|  | Finland |  | 5 |  | 80,785 |  |  | — |  |  | 1.7% | (2) | Fixed/Variable |  | Feb. 2024
France: |  | Auchan |  | 1 |  | 9,061 |  |  | 9,498 |  |  | 1.7% | (3) | Fixed |  | Dec. 2019
|  | Pole Emploi |  | 1 |  | 6,332 |  |  | 6,637 |  |  | 1.7% | (3) | Fixed |  | Dec. 2019
|  | Sagemcom |  | 1 |  | 39,192 |  |  | 41,083 |  |  | 1.7% | (3) | Fixed |  | Dec. 2019
|  | Worldline |  | 1 |  | 5,458 |  |  | 5,722 |  |  | 1.9% | (3) | Fixed |  | Jul. 2020
|  | DCNS |  | 1 |  | 10,371 |  |  | 10,872 |  |  | 1.5% | (3) | Fixed |  | Dec. 2020
|  | ID Logistics II |  | 2 |  | 11,463 |  |  | 12,016 |  |  | 1.3% |  | Fixed |  | Jun. 2021
Germany |  | Rheinmetall (9)(10) |  | — |  | — |  |  | 12,130 |  |  | —% |  | — |  |  | — |
|  | OBI DIY (9)(10) |  | — |  | — |  |  | 5,150 |  |  | —% |  | — |  |  | — |
|  | RWE AG |  | 3 |  | 68,231 |  |  | 71,524 |  |  | 1.6% | (3) | Fixed |  | Oct. 2019 (14)
|  | Rexam (11) |  | — |  | — |  |  | 5,876 |  |  | —% |  | — |  |  | — |
|  | Metro Tonic (11) |  | — |  | — |  |  | 30,326 |  |  | —% |  | — |  |  | — |
|  | ID Logistics I (11) |  | — |  | — |  |  | 4,578 |  |  | —% |  | — |  |  | — |
|  | Germany |  | 5 |  | 56,222 |  |  | — |  |  | 2.0% | (13) | Fixed/Variable |  | Jun. 2023
Luxembourg: |  | DB Luxembourg (12) |  | — |  | — |  |  | 41,198 |  |  | —% |  | — |  |  | — |
The Netherlands: |  | ING Amsterdam (12) |  | — |  | — |  |  | 50,353 |  |  | —% |  | — |  |  | — |
Luxembourg/ The Netherlands |  | Benelux |  | 3 |  | 131,004 |  |  | — |  |  | 1.4% |  | Fixed |  | Jun. 2024
|  | Total EUR denominated |  | 23 |  | 418,119 |  |  | 372,623 |  |  |  |  |  |  |
United Kingdom: |  | UK Multi-Property Cross Collateralized Loan |  | 42 |  | 274,512 |  |  | 292,890 |  |  | 3.2% | (4) | Fixed/Variable |  | Aug. 2023
|  | Total GBP denominated |  | 42 |  | 274,512 |  |  | 292,890 |  |  |  |  |  |  |
United States: |  | Quest Diagnostics (5) |  | — |  | — |  |  | 52,800 |  |  | —% |  | — |  |  | — |
|  | AT&T Services (5) |  | — |  | — |  |  | 33,550 |  |  | —% |  | — |  |  | — |
|  | Penske Logistics (6) |  | 1 |  | 70,000 |  |  | 70,000 |  |  | 4.7% |  | Fixed |  | Nov. 2028
|  | Multi-Tenant Mortgage Loan I (6) |  | 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
|  | Multi-Tenant Mortgage Loan IV |  | 16 |  | 97,500 |  |  | — |  |  | 4.6% |  | Fixed |  | May 2029
|  | Multi-Tenant Mortgage Loan V |  | 12 |  | 204,000 |  |  | — |  |  | 3.7% |  | Fixed |  | Oct. 2029
|  | Total USD denominated |  | 56 |  | 689,750 |  |  | 474,600 |  |  |  |  |  |  |
|  | Gross mortgage notes payable |  | 121 |  | 1,382,381 |  |  | 1,140,113 |  |  | 3.3% |  |  |  |
|  | Mortgage discount |  |  |  | (53 | ) |  | (569 | ) |  |  |  |  |  |
|  | Deferred financing costs, net of accumulated amortization (7) |  |  |  | (15,510 | ) |  | (9,737 | ) |  |  |  |  |  |
|  | Mortgage notes payable, net |  | 121 |  | $ | 1,366,818 |  |  | $ | 1,129,807 |  |  | 3.3% |  |  |  |
_______________________________
(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 September 30, 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 September 30, 2019.
(5) | This loan was refinanced in September 2019 as part of the Multi-Tenant Mortgage Loan V.
(6) | 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.
(7) | 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.
(8) | These loans were refinanced in February 2019 as part of the Finland Refinancing (see below for further details).
(9) | These loans were repaid in full upon maturity in January 2019.
(10) | These loans were refinanced in May 2019 as part of the German Refinancing (see below for further details).
(11) | These loans were refinanced in May 2019 as part of the German Refinancing (see below for further details).
(12) | These loans were refinanced in June 2019 as part of the Benelux Refinancing (see below for further details).
(13) | The loan initially bore interest at a rate of 3-month Euribor plus 1.80% per annum, but, following the replacement of an easement on one property, the loan will bear interest going forward at a rate of Euribor plus 1.55% per annum beginning on October 1, 2019. 80% fixed as a result of a “pay-fixed” interest rate swap agreement and 20% variable.
(14) | The Company was under contract to sell these three properties in Germany as of September 30, 2019. This mortgage loan was originally scheduled to mature in October 2019. However, during October 2019 the Company negotiated an extension of the maturity date to December 2019, to coincide with the expected closing date of the three mortgaged properties.
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 September 30, 2019:
(In thousands) |  | Future Principal Payments (1)
2019 (remainder) |  | $ | 122,816 |
2020 |  | 18,342 |
2021 |  | 23,762 |
2022 |  | 19,046 |
2023 |  | 296,877 |
2024 |  | 211,789 |
Thereafter |  | 689,749 |
Total |  | $ | 1,382,381 |
_________________________
(1) | Assumes exchange rates of £1.00 to $1.23 for GBP and €1.00 to $1.09 for EUR as of September 30, 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 September 30, 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 September 30, 2019 was $1.1 billion, of which approximately $1.0 billion 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. Multi-Tenant Mortgage Loan V On September 12, 2019, the Company, through certain wholly owned subsidiaries, borrowed $204.0 million from KeyBank National Association (“KeyBank”) secured by a first mortgage on 12 of the Company’s single tenant net leased office and industrial properties located in ten states. Approximately $86.5 million of the net proceeds from the loan was used to repay outstanding mortgage indebtedness related to the mortgaged properties. Of the remaining net proceeds, approximately $0.3 million was used to fund deposits required to be made at closing into reserve accounts and approximately $126.5 million was available for working capital and general corporate purposes.The loan bears interest at a fixed rate of 3.65% and matures on October 1, 2029. The loan is interest-only, with the principal balance due on the maturity date. From and after November 2, 2021, the loan may be prepaid at any time, in whole but not in part, subject to certain conditions and limitations, including payment of a prepayment premium for any prepayments made prior to July 1, 2029. Partial prepayments are also permitted under certain circumstances, subject to certain conditions and limitations. Benelux Refinancing On June 12, 2019, the Company, through certain wholly owned subsidiaries, borrowed €120.0 million from Landesbank Hessen-Thüringen Girozentrale, secured by three of the Company’s properties located in the Netherlands and Luxembourg. The loan bears interest at a fixed rate of 1.383% and matures on June 11, 2024. The loan is interest-only, with the principal due at maturity. At the closing of the loan, approximately €80.3 million of the net proceeds was used to repay all outstanding indebtedness encumbering two of the properties. German Refinancing On May 10, 2019, the Company, through certain wholly owned subsidiaries, borrowed €51.5 million from Landesbank Hessen-Thüringen Girozentrale, secured by five of the Company’s properties located in Germany. The loan is interest-only with the principal due at maturity, which is June 30, 2023. The maturity date may be extended at the Company’s option to February 29, 2024 subject to conditions. The loan initially bore interest at a rate of 3-month Euribor plus 1.80% per annum, but, following the replacement of an easement on one property, the loan will bear interest going forward at a rate of Euribor plus 1.55% per annum beginning on October 1, 2019. The Company also entered into a swap to fix the interest rate for 80% of the principal amount. The net proceeds from the loan were used to repay all €35.6 million outstanding in mortgage indebtedness that previously encumbered three of the properties that secure the loan. Multi-Tenant Mortgage Loan IV On April 12, 2019, the Company, through certain wholly owned subsidiaries, borrowed $97.5 million from 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. At closing, approximately $90.0 million was used to repay outstanding indebtedness under the Revolving Credit Facility, with the remaining proceeds, after costs and fees related to the loan, available for working capital and general corporate purposes. The loan bears interest at a fixed rate of 4.489% and has a maturity date of May 6, 2029. The loan is interest-only, with the principal balance due on the maturity date. The Company may prepay the loan in whole or in part at any time, subject to certain fees and any unpaid interest depending on the timing and other circumstances of the prepayment. Finland Refinancing On February 6, 2019, the Company, through certain wholly owned subsidiaries, borrowed an aggregate of €74.0 million ($84.2 million based on the prevailing exchange rate on that date) secured by mortgages on the Company’s five properties located 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, through certain wholly owned subsidiaries, borrowed $32.8 million. The loan bears interest at a fixed interest rate of 4.32% per annum and matures in February 2028. The 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 primarily used to repay approximately $30.0 million of outstanding indebtedness under the Revolving Credit Facility.

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