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DEBT AND OTHER LONG-TERM OBLIGATIONS | 9 Months Ended
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May 31, 2023
DEBT AND OTHER LONG-TERM OBLIGATIONS |
DEBT AND OTHER LONG-TERM OBLIGATIONS | NOTE 6 – DEBT AND OTHER LONG-TERM OBLIGATIONS As of May 31, 2023, the outstanding principal and deferred financing costs of the Company’s loans are as follows: ​
​ | ​ | ​ | ​
(In thousands) | ​ | May 31, 2023
Single-Family Rental Home Note Payable | ​ | $ | 987
Lost Creek Note Payable | ​ | ​ | 3,000
Total outstanding principal | ​ | ​ | 3,987
Deferred financing costs | ​ | ​ | (35)
Less current maturities, net of current deferred financing costs | ​ | ​ | (10)
Debt, less current portion | ​ | $ | 3,942
​ As of May 31, 2023, the scheduled maturities (i.e. principal payments) of the Company’s loans are as follows: ​
​ | ​ | ​ | ​
(In thousands) | ​ | Scheduled principal payments
Within 1 year | ​ | $ | 14
Year 2 | ​ | ​ | 14
Year 3 | ​ | ​ | 352
Year 4 | ​ | ​ | 1,329
Year 5 | ​ | ​ | 283
Thereafter | ​ | ​ | 1,995
Total principal payments | ​ | $ | 3,987
​ Single-Family Rental Home Note Payable ​ On November 29, 2021, PCY Holdings, LLC, a wholly owned subsidiary of the Company, entered a Promissory Note (SFR Note) with its primary bank to reimburse amounts expended for the construction of the first three single-family rental units. The SFR Note has the following terms:
| ● | Floating per annum interest rate equal to the Western Edition of the “Wall Street Journal” Prime Rate plus 0.5%, which has a floor of 3.75% and a ceiling of 4.25% (4.25% as of May 31, 2023). In the event of default, the interest rate on the SFR Note would be increased by adding an additional 2.0%
| ● | Maturity date of December 1, 2026
| ● | Six interest only payments from January 1, 2022 through June 1, 2022
| ● | Fifty-three principal and interest payments each month which began July 1, 2022 in the amount of $4,600 each
| ● | Estimated final principal and interest balloon payment of $0.9 million payable on December 1, 2026
| ● | Secured by three single-family rental homes
| ● | Required minimum debt service coverage ratio of 1.10, measured annually based on audited financial statements (which the Company satisfied as of August 31, 2022), calculated as net operating income less distributions divided by required principal and interest payments, with net operating income defined as net income plus interest, depreciation, and amortization.
​ The Company is working on potential financing for the rental units currently under construction. As of May 31, 2023, these loans have not been finalized. ​ Lost Creek Note ​ On June 28, 2022, the Company entered a loan with its primary bank to fund the acquisition of 370 acre-feet of water rights the Company acquired on June 27, 2022, in the Lost Creek Designated Groundwater Basin area of Colorado (Lost Creek Note). The Lost Creek Note has an original principal balance of $3.0 million, a ten-year maturity, monthly interest only payments averaging $12,000 per month for thirty-six months which began on July 28, 2022, twenty-four monthly principal and interest payments of $42,000 beginning on July 28, 2025, fifty-nine monthly principal and interest payments of $32,000 beginning on July 28, 2027, and a balloon payment of less than $0.8 million plus unpaid and accrued interest due on June 28, 2032. The Lost Creek Note has a thirty-year amortization period and a fixed per annum interest rate equal to 4.90%. The Lost Creek Note is secured by the Lost Creek Water rights acquired with the note and any fees derived from the use of the Lost Creek Water rights. The Lost Creek Note does not contain any financial covenants. ​ Working Capital Line of Credit On January 31, 2022, the Company entered a Business Loan Agreement (Working Capital LOC) with its primary bank to provide a $5.0 million operating line of credit. The Working Capital LOC has a two-year maturity, monthly interest only payments if the line is drawn upon with unpaid principal and interest due at maturity, and a floating per annum interest rate equal to the Wall Street Journal Prime Rate plus 0.5% (9.25% as of May 31, 2023), which has a floor of 3.75%. In the event of default, the interest rate on the Working Capital LOC would be increased by an additional 2.0%. As of May 31, 2023, the Company has not drawn on the Working Capital LOC. ​ Letters of Credit At May 31, 2023, the Company has five Irrevocable Letters of Credit (LOCs) outstanding. The LOCs are to guarantee the Company’s performance related to certain construction projects at Sky Ranch. The Company has the full intent and ability to perform on the contracts, after which, the LOC’s will expire at various dates from December 2023 through July 2024. As of May 31, 2023, the LOCs totaled $2.4 million, which are secured by cash balances maintained in restricted cash accounts at the Company’s bank, renew annually at various dates and have a 1% annual fee. ​ Participating Interest in Export Water ​ Refer to Note 6 in the 2022 Annual Report for additional details regarding the “CAA.” The CAA, which was used to acquire the Company’s Rangeview Water Supply, included contractual payments when the Company sells “Export Water.” To reduce the long-term impacts of the CAA, in the past the Company has acquired portions of the obligation from the third-party holders. During the nine months ended May 31, 2023, the Company acquired the remaining $0.9 million of total CAA interests (of which $0.3 million was reflected on the Company’s balance sheet and the remaining was deemed contingent and not reflected on the balance sheet) for $0.1 million in cash. The Company recorded a gain of $0.2 million on the acquisition which is included in other income.

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