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Note 7 - Mortgage Notes Payable

3 Months Ended

Mar. 31, 2024

Mortgage Notes Payable Disclosure [Text Block]

7. MORTGAGE NOTES PAYABLE

Mortgage notes payable consist of the following:

	*Principal as of*
	*March 31,*			*December 31,*			*Loan*	*Interest*
Mortgage note property	*2024*			*2023*			*Type*	*Rate (1)*			*Maturity*
Dakota Center (2) (6)	$	9,133,793		$	9,197,346		Fixed		4.74	%	7/6/2024
Research Parkway (6)		1,573,499			1,588,742		Fixed		3.94	%	1/5/2025
Arapahoe Service Center (6)		7,380,609			7,426,088		Fixed		4.34	%	1/5/2025
Union Town Center (6)		7,830,479			7,870,468		Fixed		4.28	%	1/5/2025
One Park Centre		6,012,959			6,043,882		Fixed		4.77	%	9/5/2025
Genesis Plaza		5,906,568			5,937,251		Fixed		4.71	%	9/6/2025
Shea Center II (6)		16,878,736			16,951,095		Fixed		4.92	%	1/5/2026
West Fargo Industrial (3)		3,902,517			3,922,829		Fixed		6.70	%	8/5/2029
Grand Pacific Center (4)		6,258,676			5,470,305		Fixed		6.35	%	5/5/2033
Baltimore		5,670,000			5,670,000		Fixed		4.67	%	4/6/2032
Mandolin		3,557,127			3,573,201		Fixed		4.35	%	4/20/2029
Subtotal, Presidio Property Trust, Inc. Properties	$	74,104,963		$	73,651,207
Model Home mortgage notes (5)		28,869,418			34,815,699		Fixed					2024 - 2029
Mortgage Notes Payable	$	102,974,381		$	108,466,906
Unamortized loan costs		(681,684	)		(753,633	)
Mortgage Notes Payable, net	$	102,292,697		$	107,713,273

(1)	Interest rates as of March 31, 2024.
(2)	The loan on the Dakota Center matures in July 2024 and management has reached out to the lender seeking a two year extension and additional provision to change the terms, such as interest only payments and use of reserves to pay for future capital expenditures and leasing costs. The special servicer of the loan has indicated it will begin negotiations with the Company. If we are unsuccessful in refinancing the property or changing the terms of the original loan, management would consider selling the property and paying the loan in full or surrendering the property to the current lender.
(3)	On August 5, 2023, the lender increased the interest rate to 6.70%. The loan agreement states that the lender may, upon not less than sixty (60) days prior, give written notice to the Company to increase the interest rate effective on August 5, 2023, and August 5, 2026, to the rate then being quoted by the lender for new three-year commercial mortgage loans of similar size and quality with like terms and security (provided that in no event shall the new rate be less than the initial rate).
(4)	On May 5, 2023, the Company, through its subsidiary, refinanced the mortgage loan on our Grand Pacific Center property and entered into a construction loan related to the tenant improvement associated with the KLJ Engineering LLC lease to occupy 33,296 square feet of the building. The refinanced loan is for approximately $3.8 million, a term of 10 years, with an interest rate of 6.35%, for the first 60 months. The interest rate is subject to reset in year five. The construction loan is for approximately $2.7 million, a term of 10 years, and will begin amortizing in year three, with an interest rate of 6.35%, for the first 60 months. The interest rate is subject to reset in year five. As of March 31, 2024, we had drawn down approximately $2.5 million on the construction loan.
(5)	As of March 31, 2024, there were 11 model homes included as real estate assets held for sale. Our model homes have stand-alone mortgage notes at interest rates ranging from 2.68% to 7.12% per annum as of March 31, 2024.
(6)	These mortgage loans mature within the next twelve months and management is reviewing various options for the loan maturity, including but not limited to refinancing, restructuring and or selling these properties. As we get closer to the loan maturity date the Company will finalize our plans.

The loan agreement between NetREIT Model, Homes, Inc. (“NRMH”) and its Lender has a covenant for a Fixed Charge Coverage Ratio (“FCCR”) as defined for NRMH as of any date that equals (a) the sum of (i) EBITDA for the period ended as of such date minus (ii) distributions for the period ended as of such date divided by (b) the sum of (i) principal payments paid for the period ended as of such date plus (ii) interest expense for period ended as of such date. The FCCR is to be no less than 1.10 to 1.00, tested at the end of each fiscal quarter. As of December 31, 2023, NRMH was in compliance with this covenant. The Company and standalone subsidiaries have other various quarterly and annual reporting requirements to the individual property lenders and the Company is in compliance with all material conditions and covenants on those mortgage notes payable as of March 31, 2024.

Scheduled principal payments of mortgage notes payable were as follows as of March 31, 2024:

	*Presidio Property*		*Model*
	*Trust, Inc.*		*Homes*		*Total Principal*
Years ending December 31:	*Notes Payable*		*Notes Payable*		*Payments*
2024	$	10,038,091	$	7,004,803	$	17,042,894
2025		28,772,939		9,762,814		38,535,753
2026		16,651,295		873,594		17,524,889
2027		294,780		387,354		682,134
2028		310,560		9,568,713		9,879,273
Thereafter		18,037,298		1,272,140		19,309,438
Total	$	74,104,963	$	28,869,418	$	102,974,381