XML 24 R12.htm IDEA: XBRL DOCUMENT
v3.7.0.1

Mortgage Notes Payable and Credit Facility | 3 Months Ended
--- | ---
Mar. 31, 2017
Debt Disclosure [Abstract] |
Mortgage Notes Payable and Credit Facility | Mortgage Notes Payable and Credit Facility Our mortgage notes payable and Credit Facility as of March 31, 2017 and December 31, 2016 are summarized below (dollars in thousands):
|  | Encumbered properties at |  |  |  | Carrying Value at |  | Stated Interest Rates at |  | Scheduled Maturity Dates at
|  | March 31, 2017 |  |  |  | March 31, 2017 |  | December 31, 2016 |  | March 31, 2017 |  | March 31, 2017
Mortgage and other secured loans: |  |  |  |  |  |  |  |  |  |  |  |
Fixed rate mortgage loans |  | 46 |  |  |  |  | $ | 348,983 |  |  | $ | 378,477 |  |  | (1) |  | (2)
Variable rate mortgage loans |  | 17 |  |  |  |  | 63,138 |  |  | 71,707 |  |  | (3) |  | (2)
Premiums and discounts, net |  | - |  |  |  |  | 187 |  |  | 217 |  |  | N/A |  | N/A
Deferred financing costs, mortgage loans, net |  | - |  |  |  |  | (4,734 | ) |  | (5,123 | ) |  | N/A |  | N/A
Total mortgage notes payable, net |  | 63 |  |  |  |  | $ | 407,574 |  |  | $ | 445,278 |  |  | (4) |  |
Variable rate revolving credit facility |  | 28 |  |  | (6) |  | $ | 64,200 |  |  | $ | 39,700 |  |  | LIBOR + 2.25% |  | 8/7/2018
Deferred financing costs, revolving credit facility |  | - |  |  |  |  | (403 | ) |  | (475 | ) |  | N/A |  | N/A
Total revolver, net |  | 28 |  |  |  |  | $ | 63,797 |  |  | $ | 39,225 |  |  |  |  |
Variable rate term loan facility |  | - |  |  |  |  | $ | 25,000 |  |  | $ | 25,000 |  |  | LIBOR + 2.20% |  | 10/5/2020
Deferred financing costs, term loan facility |  | - |  |  |  |  | (103 | ) |  | (108 | ) |  | N/A |  | N/A
Total term loan, net |  | N/A |  |  |  |  | $ | 24,897 |  |  | $ | 24,892 |  |  |  |  |
Total mortgage notes payable and credit facility |  | 91 |  |  |  |  | $ | 496,268 |  |  | $ | 509,395 |  |  | (5) |  |
(1) | Interest rates on our fixed rate mortgage notes payable vary from 3.75% to 6.63%.
(2) | We have 42 mortgage notes payable with maturity dates ranging from 11/8/2017 through 7/1/2045.
(3) | Interest rates on our variable rate mortgage notes payable vary from one month LIBOR + 2.15% to one month LIBOR + 2.75%. At March 31, 2017, one month LIBOR was approximately 0.98%.
(4) | The weighted average interest rate on the mortgage notes outstanding at March 31, 2017 was approximately 4.66%.
(5) | The weighted average interest rate on all debt outstanding at March 31, 2017 was approximately 4.40%.
(6) | The amount we may draw under our Revolver and Term Loan is based on a percentage of the fair value of a combined pool of 28 unencumbered properties as of March 31, 2017.
N/A - Not Applicable Mortgage Notes Payable As of March 31, 2017, we had 42 mortgage notes payable, collateralized by a total of 63 properties with a net book value of $610.0 million. Gladstone Commercial Corporation has limited recourse liabilities that could result from any one or more of the following circumstances: a borrower voluntarily filing for bankruptcy, improper conveyance of a property, fraud or material misrepresentation, misapplication or misappropriation of rents, security deposits, insurance proceeds or condemnation proceeds, or physical waste or damage to the property resulting from a borrower’s gross negligence or willful misconduct. Gladstone Commercial Corporation has full recourse for $8.9 million of the mortgages notes payable outstanding, or 2.2% of the outstanding balance. We will also indemnify lenders against claims resulting from the presence of hazardous substances or activity involving hazardous substances in violation of environmental laws on a property. During the three months ended March 31, 2017, we repaid 3 mortgages, collateralized by 7 properties, which is aggregated below (dollars in thousands):
Aggregate Fixed Rate Debt Repaid |  | Weighted Average Interest Rate on Fixed Rate Debt Repaid
$ | 27,188 |  |  | 6.05%
Aggregate Variable Rate Debt Repaid |  | Weighted Average Interest Rate on Variable Rate Debt Repaid
$ | 8,163 |  |  | LIBOR + | 2.50%
We made payments of $0.0 million and $0.4 million for deferred financing costs during the three months ended March 31, 2017 and 2016, respectively. Scheduled principal payments of mortgage notes payable for the remainder of 2017, and each of the five succeeding fiscal years and thereafter are as follows (dollars in thousands):
Year |  | Scheduled Principal Payments |
Nine Months Ending December 31, 2017 |  | $ | 27,259 |  |
2018 |  | 46,462 |  |
2019 |  | 46,094 |  |
2020 |  | 12,573 |  |
2021 |  | 31,583 |  |
2022 |  | 95,963 |  |
Thereafter |  | 152,187 |  |
Total |  | $ | 412,121 |  | (1)
(1) This figure does not include $0.2 million of premiums and (discounts), net and $4.7 million of deferred financing costs, which are reflected in mortgage notes payable on the condensed consolidated balance sheet. Interest Rate Cap Agreements We have entered into interest rate cap agreements that cap the interest rate on certain of our variable-rate debt. We have adopted the fair value measurement provisions for our financial instruments recorded at fair value. The fair value guidance establishes a three-tier value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions. Generally, we will estimate the fair value of our interest rate caps, in the absence of observable market data, using estimates of value including estimated remaining life, counterparty credit risk, current market yield and interest rate spreads of similar securities as of the measurement date. At March 31, 2017 and December 31, 2016, our interest rate cap agreements were valued using Level 2 inputs. The fair value of the interest rate cap agreements is recorded in other assets on our accompanying condensed consolidated balance sheets. We record changes in the fair value of the interest rate cap agreements quarterly based on the current market valuations at quarter end as interest expense on our accompanying condensed consolidated statements of operations. The following table summarizes the interest rate caps at March 31, 2017 and December 31, 2016 (dollars in thousands):
|  | March 31, 2017 |  | December 31, 2016
Aggregate Cost |  | Aggregate Notional Amount |  | Aggregate Fair Value |  | Aggregate Notional Amount |  | Aggregate Fair Value
$ | 455 |  | (1) | $ | 88,144 |  |  | $ | 131 |  |  | $ | 71,721 |  |  | $ | 101 |
(1) We have entered into various interest rate cap agreements on variable rate debt with LIBOR caps ranging from 2.50% to 3.00%. The fair value of all mortgage notes payable outstanding as of March 31, 2017 was $412.2 million, as compared to the carrying value stated above of $412.1 million. The fair value is calculated based on a discounted cash flow analysis, using management’s estimate of market interest rates on long-term debt with comparable terms and loan to value ratios. The fair value was calculated using Level 3 inputs of the hierarchy established by ASC 820, “Fair Value Measurements and Disclosures.” Credit Facility In August 2013, we procured a senior unsecured revolving credit facility, or the Revolver, with KeyBank National Association ("KeyBank") (serving as a revolving lender, a letter of credit issuer and an administrative agent). On October 5, 2015, we expanded our Revolver to $85.0 million, extended the maturity date one year through August 2018, with a one-year extension option through August 2019. We also added a $25.0 million term loan facility, or the Term Loan, which matures in October 2020. The Revolver and the Term Loan are referred to collectively herein as the Credit Facility. The interest rate on the Revolver was also reduced by 25 basis points at each of the leverage tiers and the total maximum commitment under the Credit Facility was increased from $100.0 million to $150.0 million. We also added 3 new lenders to the bank syndicate, which is now comprised of KeyBank, Comerica Bank, Fifth Third Bank, US Bank and Huntington Bank. The Term Loan is subject to the same leverage tiers as the Revolver; however the interest rate at each leverage tier is five basis points lower. We have the option to repay the Term Loan in full, or in part, at any time without penalty or premium prior to the maturity date. As of March 31, 2017, there was $89.2 million outstanding under our Credit Facility at a weighted average interest rate of approximately 3.22% and $1.0 million outstanding under letters of credit at a weighted average interest rate of 2.25%. As of March 31, 2017, the maximum additional amount we could draw under the Revolver was $19.8 million. We were in compliance with all covenants under the Revolver and Term Loan as of March 31, 2017. The amount outstanding under the Line of Credit and Term Loan Facility approximates fair value as of March 31, 2017, as the debt is variable rate.

X
- References No definition available. + Details
Name: | us-gaap_DebtDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21475-112644 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.19,20,22) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 + Details
Name: | us-gaap_DebtDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration