Mortgage Notes Payable

12 Months Ended

Dec. 31, 2014

6. MORTGAGE NOTES PAYABLE

Mortgage notes payable consisted of the following at December 31, 2014 and 2013:
			Principal as of December 31,		Loan	Interest
Mortgage note property		Notes	2014	2013	Type	Rate (1)	Maturity

Havana Parker property			$2,500,000	$3,098,780	Fixed	6.51%	7/1/16
Garden Gateway Plaza			6,963,381	7,119,544	Fixed	5.00%	4/5/20
Waterman property			3,368,146	3,457,973	Fixed	6.50%	9/1/15
Sparky’s Thousand Palms		(2)	4,092,100	4,215,349	Variable	5.50%	3/1/34
Sparky's Hesperia East		(3)	830,883	890,774	Variable	4.75%	12/18/22
Sparky's Rialto		(4)	2,119,037	2,166,791	Fixed (reset)	4.75%	5/3/18
Genesis Plaza			4,491,588	4,618,147	Fixed	4.65%	9/1/15
Executive Office Park		(5)	4,379,854	4,447,699	Fixed (reset)	5.80%	7/1/25
Dakota Bank Building			10,993,386	5,417,950	Fixed	4.74%	7/6/24
Yucca Valley Retail Center			2,982,411	3,095,974	Fixed	5.62%	4/11/15
Rangewood Medical Office Building			1,092,778	1,155,305	Fixed	4.95%	1/1/19
Regatta Square property			1,214,799	1,244,615	Fixed	4.95%	1/1/19
Port of San Diego Complex			10,368,228	10,608,385	Fixed	4.75%	3/5/20
Morena Office Center		(6)	2,351,805	2,411,282	Fixed (reset)	4.50%	1/1/21
Pacific Oaks Plaza		(6)	1,599,204	1,639,658	Fixed (reset)	4.50%	6/1/21
Shoreline Medical Office Building		(6)	3,846,697	3,959,914	Fixed (reset)	5.10%	6/1/22
Sparky's Palm, Joshua and Sunrise			7,986,522	8,116,028	Fixed	4.70%	12/6/22
The Presidio			6,000,000	5,492,375	Fixed	4.54%	12/1/24
Sparky's Lancaster			1,903,982	1,965,504	Fixed	5.00%	6/1/20
Fontana Medical Plaza			-	1,990,880	Fixed	4.75%	8/28/19
Bismarck Office Building			3,321,198	-	Fixed	6.12%	10/1/16
Union Terrace Building			6,600,000	-	Fixed	4.50%	9/5/24
Centennial Tech Center			10,250,000	-	Fixed	4.34%	12/5/24
Arapahoe Service Center			8,500,000	-	Fixed	4.34%	1/5/25
Union Town Center			8,440,000	-	Fixed	4.28%	1/5/25

Subtotal, NetREIT, Inc. properties			116,195,999	77,112,927
Model Home mortgage notes		(7)	7,703,299	12,438,797	Fixed	(7)	2015-19
Mortgage Notes Payable, total			$123,899,298	$89,551,724

(1)	Interest rates as of December 31, 2014
(2)	Interest at variable rate ranging from 5.50%-10.50%.
(3)	Interest at a variable rate indexed to the 5 year interest rate swap .
(4)	Interest subject to reset; thereafter, monthly payments of $11,982, including interest at rate indexed to 5-year Treasury Rate + 3%
(5)	Interest rate is subject to reset on July 1, 2018.
(6)	Interest rate subject to resetting on the 3r^dand 6^th loan anniversary.
(7)	Each Model Home has a standalone mortgage note at interest rates ranging from 4.9% to 5.8% (at December 31, 2014).

The Company is in compliance with all conditions and covenants of its mortgage notes payable.

Scheduled principal payments of mortgage notes payable are as follows:


				Model Home
		NetREIT, Inc.		Properties		Scheduled
		Principal		Principal		Principal
Years Ending December 31:		Payments		Payments		Payments
2015	$	12,383,176		410,603		12,793,779
2016		7,085,079		1,122,737		8,207,816
2017		1,501,774		2,210,768		3,712,542
2018		5,641,001		1,546,748		7,187,749
2019		2,413,466		2,412,442		4,825,908
Thereafter		87,171,504		-		87,171,504
Total	$	116,196,000	$	7,703,298	$	123,899,298

In December 2014, the Company and the lender for the Havana Parker Complex entered into to a loan modification agreement pursuant to which the lender agreed to reduce the outstanding loan balance on the property by $537,000 (from $3,037,000 to $2,500,000) and also agreed to defer a portion of the monthly interest on the loan until loan maturity. Under the modified agreement, interest only payments (at 2.5%) are due through in July 1, 2016, at which time all principal and the deferred interest are due. The Company has the option to defer maturity for one additional year in exchange for making a one-time payment of $100,000 (which will be applied to outstanding principal).