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DEBT
 9 Months Ended
Sep. 30, 2024
Debt Disclosure [Abstract]  
DEBT DEBT
The breakdown of debt as of September 30, 2024 and December 31, 2023 is as follows:
September 30,
2024		December 31,
2023
Mortgage notes payable, net$30,863,014 $31,030,241 
Credit facility:
Term loan, net (1)
248,876,279 248,508,515 
Total$279,739,293 $279,538,756 
(1)The increase in the net balance of the term loan reflects ongoing amortization of deferred financing costs over the remaining term of the loan at the rate of approximately $122,588 per quarter. Deferred financing costs for the revolver are included in other assets in accordance with GAAP and are being amortized at the rate of $91,673 per quarter.
Mortgage Notes Payable, Net
As of September 30, 2024 and December 31, 2023, the Company’s outstanding mortgage notes payable consisted of the following:
Collateral2024 Principal
Amount		2023 Principal
Amount
Interest Rate (1)
Loan
Maturity
Costco property$18,661,068 $18,850,000 4.85%01/01/2030
Taylor Fresh Foods property12,350,000 12,350,000 3.85%11/01/2029
Total mortgage notes payable31,011,068 31,200,000 
Less unamortized deferred financing costs(148,054)(169,759)
Mortgage notes payable, net$30,863,014 $31,030,241 
(1)Represents the contractual interest rate in effect under the respective mortgage note payable as of September 30, 2024.
The following summarizes the face value, carrying amount and fair value of the Company’s mortgage notes payable which is a Level 3 fair value measurement, reflecting unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities, as of September 30, 2024 and December 31, 2023:
September 30, 2024December 31, 2023
Face ValueCarrying
Value		Fair ValueFace valueCarrying
Value		Fair Value
Mortgage notes payable$31,011,068 $30,863,014 $28,868,211 $31,200,000 $31,030,241 $27,999,621 
Disclosures of the fair values of financial instruments are based on pertinent information available to the Company as of the period end and require a significant amount of judgment. The actual value could be materially different from the Company’s estimate of value.
Credit Facility, Net
The Company's Operating Partnership entered into an agreement for a line of credit (the “Credit Agreement”) on January 18, 2022, which was amended on October 21, 2022, primarily to increase the line of credit. The Credit Agreement currently provides a $400,000,000 line of credit comprised of a $150,000,000 four-year revolving line of credit, which may be extended by up to 12 months subject to certain conditions (the “Revolver”) and a $250,000,000 five-year term loan (the “Term Loan” and together with the Revolver, the “Credit Facility”) with KeyBank and the other lending institutions party thereto (collectively, the “Lenders”), including KeyBank as Agent for the Lenders (in such capacity, the “Agent”). The Credit Facility is available for general corporate purposes, including, but not limited to, acquisitions, repayment of existing indebtedness, and capital expenditures.
The Credit Facility includes an accordion option that allows the Company to request additional Revolver and Term Loan lender commitments up to a total of $750,000,000 subject to customary conditions, including the receipt of new commitments from the Lenders. The Company's Revolver and Term Loan’s maturity is in January 2026 and in January 2027, respectively, with options to extend the Revolver for a total of 12 months.
On December 20, 2022, the Credit Agreement was amended to allow the Company to draw on the additional $100,000,000 Term Loan commitment up to five times by April 19, 2023, in exchange for a quarterly unused fee. The $100,000,000 Term Loan commitment was fully drawn by April 19, 2023 and unused fees amounted to zero and $101,181 during the three and nine months ended September 30, 2023, respectively.
The Credit Facility is priced on a leverage-based grid that fluctuates based on the Company's actual leverage ratio at the end of the prior quarter. With the Company's leverage ratio at 47% as of June 30, 2024, the spread over the secured overnight financing rate (“SOFR”), including a 10-basis point credit adjustment, is 185 basis points and the interest rate on the Revolver was 6.725% on September 30, 2024; however, there was no outstanding balance on the Revolver. The Company also pays an annual unused fee of up to 25 basis points on the Revolver, depending on the daily amount of the unused commitment, and incurred total unused fees of $95,833 and $94,525 for the three months ended September 30, 2024 and 2023, respectively, and $285,416 and $282,983 for the nine months ended September 30, 2024 and 2023, respectively.
On May 10, 2022, the Company entered into a swap agreement, effective from May 31, 2022 to January 17, 2027, subject to the Company counterparty’s one-time cancellation option on December 31, 2024, to fix SOFR at 2.258% with respect to its original $150,000,000 Term Loan. The swap agreement resulted in a fixed interest rate of 4.058% on the Term Loan based on the Company's leverage ratio of 48% as of September 30, 2024.
On October 26, 2022, the Company entered into a second swap agreement, effective from November 30, 2022 to November 30, 2027, subject to the Company counterparty’s one-time cancellation option on December 31, 2024, to fix SOFR at 3.44% with respect to its expanded Term Loan. The swap agreement resulted in a fixed interest rate of 5.240% on the additional $100,000,000 borrowed under the expanded Term Loan based on the Company's leverage ratio of 48% as of September 30, 2024.
The Credit Facility includes customary representations, warranties and covenants. The Credit Facility is secured by a pledge of all of the Operating Partnership’s equity interests in certain of the single-purpose, property-owning entities (the “Subsidiary Guarantors”) that are indirectly owned by the Company, and various cash collateral owned by the Operating Partnership and the Subsidiary Guarantors. In connection with the Credit Facility, the Company and each of the Subsidiary Guarantors entered into an Unconditional Guaranty of Payment and Performance in favor of the Agent, pursuant to which the Company and each of the Subsidiary Guarantors agreed to guarantee the full and prompt payment of the Operating Partnership’s obligations under the Credit Agreement.
Compliance with All Debt Agreements
Pursuant to the terms of mortgage notes payable on certain of the Company’s properties and the Credit Facility, the Company and/or the subsidiary borrowers are subject to certain financial loan covenants. The Company and/or the subsidiary borrowers were in compliance with such financial loan covenants as of September 30, 2024.
Future Principal Payments
The following summarizes the future principal repayments of the Company’s mortgage notes payable and Credit Facility as of September 30, 2024:
Mortgage Notes
Payable
Credit Facility
RevolverTerm LoanTotal
October through December 2024$93,536 $— $— $93,536 
2025557,211 — — 557,211 
2026582,154 — — 582,154 
2027608,230 — 250,000,000 250,608,230 
2028635,488 — — 635,488 
Thereafter28,534,449 — — 28,534,449 
Total principal31,011,068 — 250,000,000 281,011,068 
Less: deferred financing costs, net(148,054)— (1,123,721)(1,271,775)
Net principal$30,863,014 $— $248,876,279 $279,739,293 
Interest Expense, Including Unrealized Gain or Loss on Interest Rate Swaps and Net of Derivative Settlements
The following is a reconciliation of the components of interest expense, net of derivative settlements and unrealized gain on interest rate swaps for the three and nine months ended September 30, 2024 and 2023:
Three Months Ended
September 30,		Nine Months Ended
September 30,
2024202320242023
Mortgage notes payable:
Interest expense$345,424 $411,610 $1,038,855 $1,354,642 
Amortization of deferred financing costs7,235 7,235 21,705 21,705 
Credit facility:
Interest expense4,565,798 4,509,026 13,586,024 10,895,933 
Unused commitment fees95,833 94,525 285,416 384,164 
Amortization of deferred financing costs214,261 214,261 642,783 642,783 
Swap derivatives:
Derivative cash settlements (1)(1,647,754)(1,586,641)(4,953,188)(4,062,442)
Unrealized loss (gain) on interest rate swap valuation for first swap (2)
1,355,228 167,926 2,163,396 (327,824)
Amortization of unrealized gain on interest rate swap valuation (2)
(255,873)(253,092)(762,059)(756,496)
Unrealized loss (gain) on interest rate swap valuation for second swap (3)
1,323,446 (710,258)282,142 (1,697,520)
Other100,070 68,326 209,093 306,834 
Interest expense, net$6,103,668 $2,922,918 $12,514,167 $6,761,779 
(1)    Derivative cash settlements received from two swap instruments entered into by the Company covering (i) its original $150,000,000 Credit Facility Term Loan (first swap) effective May 31, 2022 and (ii) its additional $100,000,000 Term Loan commitment (second swap) effective November 30, 2022, as described above and in Note 8.
(2)    Subsequent to December 31, 2022, the Company's $150,000,000 derivative instrument failed to qualify as a cash flow hedge because it was deemed ineffective, as described in Note 8. The $1,355,228 and $2,163,396 of unrealized losses on the swap valuation for the three and nine months ended September 30, 2024, respectively, and the $167,926 and $(327,824) of unrealized loss (gain) for the three and nine months ended September 30, 2023, respectively, are recognized as an increase (decrease) in interest expense. Furthermore, the unrealized gain on interest rate swap derivative previously recorded in accumulated other comprehensive income and noncontrolling interest in Operating Partnership is being amortized on a straight-line basis as a reduction to interest expense through the maturity date of the loan agreement (see Note 8 for more details).
(3)    The Company's $100,000,000 derivative instrument was not designated as a cash flow hedge and, therefore, the $1,323,446 and $282,142 of unrealized losses on the valuation of this swap for the three and nine months ended September 30, 2024, respectively, are reflected as increases in interest expense. The $710,258 and $1,697,520 of unrealized gains on the valuation of this swap for the three and nine months ended September 30, 2023, respectively, are reflected as decreases in interest expense (see Note 8 for more details).