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Note 7 - Mortgage Notes Payable

6 Months Ended

Jun. 30, 2024

Mortgage Notes Payable Disclosure [Text Block]

7. MORTGAGE NOTES PAYABLE

Mortgage notes payable consist of the following:

	*Principal as of*
	*June 30,*			*December 31,*			*Loan*	*Interest*
Mortgage note property	*2024*			*2023*			*Type*	*Rate (1)*			*Maturity*
Dakota Center (2) (6)	$	9,091,395		$	9,197,346		Fixed		4.74	%	7/6/2024
Research Parkway (6)		1,558,105			1,588,742		Fixed		3.94	%	1/5/2025
Arapahoe Service Center (6)		7,335,510			7,426,088		Fixed		4.34	%	1/5/2025
Union Town Center (6)		7,790,979			7,870,468		Fixed		4.28	%	1/5/2025
One Park Centre		5,982,452			6,043,882		Fixed		4.77	%	9/5/2025
Genesis Plaza		5,876,284			5,937,251		Fixed		4.71	%	9/6/2025
Shea Center II (6)		16,807,761			16,951,095		Fixed		4.92	%	1/5/2026
West Fargo Industrial (3)		5,750,000			3,922,829		Fixed		7.14	%	7/6/2029
Grand Pacific Center (4)		6,341,208			5,470,305		Fixed		6.35	%	5/5/2033
Baltimore		5,670,000			5,670,000		Fixed		4.67	%	4/6/2032
Mandolin		3,541,304			3,573,201		Fixed		4.35	%	4/20/2029
Subtotal, Presidio Property Trust, Inc. Properties	$	75,744,998		$	73,651,207
Model Home mortgage notes (5)		26,274,481			34,815,699		Fixed					2024 - 2029
Mortgage Notes Payable	$	102,019,479		$	108,466,906
Unamortized loan costs		(894,093	)		(753,633	)
Mortgage Notes Payable, net	$	101,125,386		$	107,713,273

(1)	Interest rates as of June 30, 2024.
(2)	The loan on the Dakota Center matured on July 6, 2024. Management has been in negotiations with the special servicer of the loan in modifying and/or extending the loan or possibly selling the building. As of August 12, 2024, the Company and the lender have not yet agreed to the final outcome. The lender is expected to visit the property at the end of August.
(3)	On June 20, 2024, the Company, through its subsidiary, refinanced the mortgage loan on our West Fargo Industrial properties, and entered into a loan agreement for approximately $5.75 million, a term of five years, with an interest rate of 7.14%. The loan agreement has a Debt Service Coverage Ratio ("DSCR") minimum of 1.20 to 1.00 as calculated by Lender, in which: (a) the numerator is the Underwritten Net Cash Flow, and (b) the denominator is the annual Debt Service, tested at the end of each fiscal quarter.
(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 June 30, 2024, we had drawn down approximately $2.6 million on the construction loan.
(5)	As of June 30, 2024, there were five model homes included as real estate assets held for sale. Our model homes have stand-alone mortgage notes at interest rates ranging from 4.51% to 8.0% per annum as of June 30, 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 June 30, 2024.

Scheduled principal payments of mortgage notes payable were as follows as of June 30, 2024:

	*Presidio Property*		*Model*
	*Trust, Inc.*		*Homes*		*Total Principal*
Years ending December 31:	*Notes Payable*		*Notes Payable*		*Payments*
2024	$	9,635,272	$	2,898,031	$	12,533,303
2025		28,645,113		9,525,273		38,170,386
2026		16,521,064		932,102		17,453,166
2027		157,739		465,084		622,823
2028		168,907		9,110,909		9,279,816
Thereafter		20,616,903		3,343,082		23,959,985
Total	$	75,744,998	$	26,274,481	$	102,019,479