Note 9. Mortgage Loans Payable and Unsecured Credit Facilities

Debt is comprised of the following at December 31, 2015 and 2014:


	December 31, 2015			December 31, 2014
		Interest rates			Interest rates
	Balance	Weighted		Balance	Weighted
Description	outstanding	average	Range	outstanding	average	Range
Fixed-rate mortgages	$ 299,022,000	5.0%	3.1% - 7.5%	$ 393,388,000	5.4%	3.1% - 7.5%
Unsecured credit facilities:
Variable-rate:
Revolving credit facility	78,000,000	1.7%		72,000,000	1.9%
Term loan	50,000,000	1.7%		50,000,000	1.9%
Fixed-rate:
Term loan	75,000,000	2.9%		75,000,000	3.2%
Term loan	50,000,000	2.8%		-	-
Term loan	75,000,000	4.0%		75,000,000	4.1%
Term loan	50,000,000	3.3%		-	-
	$ 677,022,000	3.7%		$ 665,388,000	4.3%

Mortgage Loans Payable

Mortgage loan activity for 2015 and 2014 is summarized as follows:


	Years ended December 31,
	2015	2014
Balance, beginning of year	$ 393,388,000	$ 516,292,000
Mortgages on properties held for sale	-	(15,249,000)
Mortgage loan assumptions	20,462,000	53,439,000
Repayments	(114,828,000)	(161,094,000)
Balance, end of the year	$ 299,022,000	$ 393,388,000

During 2015 and 2014, the Company repaid the following mortgage loans payable:


		Principal Payoff
Property	Repayment Date	Amount
2015
New London Mall	February 1, 2015	$ 27,365,000
Oak Ridge Shopping Center	March 11, 2015	$ 3,155,000
Pine Grove Plaza	June 1, 2015	$ 5,139,000
Quartermaster Plaza	July 1, 2015	$ 41,327,000
Groton Shopping Center	July 1, 2015	$ 10,953,000
Jordan Lane	August 2, 2015	$ 11,682,000
Southington Center	August 2, 2015	$ 5,129,000
Oakland Mills	September 1, 2015	$ 4,385,000


2014
Virginia Little Creek	February 3, 2014	$ 295,000
Upland Square	February 11, 2014	$ 57,839,000
Kings Plaza	April 1, 2014	$ 7,188,000
Coliseum Marketplace	April 1, 2014	$ 11,045,000
Liberty Marketplace	April 1, 2014	$ 8,171,000
Trexler Mall	May 11, 2014	$ 19,479,000
Yorktowne Plaza	June 2, 2014	$ 18,726,000
Quartermaster Plaza	June 5, 2014	$ 11,217,000
Fieldstone Marketplace	July 11, 2014	$ 16,878,000
Mechanicsburg Center	August 1, 2014	$ 8,215,000
Smithfield Plaza	October 21, 2014	$ 6,616,000
Elmhurst Square	December 11, 2014	$ 3,638,000

During 2015 and 2014, in connection with these repayments, the Company incurred charges relating to early extinguishment of mortgage loans payable (prepayment penalties and accelerated amortization of deferred financing costs) of $105,000 and $825,000, respectively, included in continuing operations.

Unsecured Revolving Credit Facility and Term Loans

The Company has a $310 million unsecured credit facility which, as amended on February 5, 2015, consists of (1) a $260 million revolving credit facility, expiring on February 5, 2019, and (2) a $50 million term loan, expiring on February 5, 2020. The revolving credit facility may be extended, at the Company’s option, for an additional one-year period, subject to customary conditions. Under an accordion feature, the facility can be increased to $750 million, subject to customary conditions and lending commitments. Interest on borrowings under the revolving credit facility component can range from LIBOR plus 135 basis points (“bps”) to 195 bps (135 bps at December 31, 2015) and interest on borrowings under the term loan component can range from LIBOR plus 130 to 190 bps (130 bps at December 31, 2015), each based on the Company’s leverage ratio. As of December 31, 2015, the Company had $182.0 million available for additional borrowings under the revolving credit facility.

The Company has $150 million of unsecured term loans comprised of a five-year $75 million term loan, maturing on February 11, 2019, and a seven-year $75 million term loan, maturing on February 11, 2021. Interest on borrowings under the five-year $75 million term loan can range from LIBOR plus 130 bps to 190 bps (130 bps at December 31, 2015) and interest on borrowings under the seven-year $75 million term loan can range from LIBOR plus 170 bps to 230 bps (170 bps at December 31, 2015), each based on the Company’s leverage ratio. Additionally, the Company has entered into forward interest rate swap agreements which convert the LIBOR rates to fixed rates for these term loans through their maturities. Based on the Company’s leverage ratio as of December 31, 2015, the effective fixed interest rates are 2.9% for the five-year $75 million term loan and 4.0% for the seven-year $75 million term loan, respectively.

On February 5, 2015, the Company closed $100 million of new unsecured term loans comprised of a five-year $50 million term loan maturing February 5, 2020 (all of which was borrowed at closing), and a seven-year $50 million term loan maturing February 5, 2022 (all of which was borrowed on June 26, 2015). Interest on borrowings under the five-year $50 million term loan can range from LIBOR plus 130 to 190 bps (130 bps at December 31, 2015) and interest on borrowings under the seven-year $50 million term loan can range from LIBOR plus 155 bps to 215 bps (155 bps at December 31, 2015), each based on the Company’s leverage ratio. Additionally, the Company entered into forward interest rate swap agreements which convert the LIBOR rates to fixed rates for these term loans beginning on July 1, 2015 through their maturities. Based on the Company’s leverage ratio as of December 31, 2015, the effective fixed interest rates are 2.8% for the five-year $50 million term loan and 3.3% for the seven-year $50 million term loan.

The Company’s unsecured credit facility and term loans contain financial covenants including, but not limited to, maximum debt leverage, maximum secured debt, minimum fixed charge coverage, and minimum net worth. In addition, the facility contains restrictions including, but not limited to, limits on indebtedness, certain investments and distributions. Although the credit facility is unsecured, borrowing availability is based on unencumbered property adjusted net operating income, as defined in the agreements. The Company’s failure to comply with the covenants or the occurrence of an event of default under the facilities could result in the acceleration of the related debt. As of December 31, 2015 the Company is in compliance with all financial covenants.

Scheduled Principal Payments

Scheduled principal payments on mortgage loans payable, unsecured term loans, and the unsecured credit facility at December 31, 2015, due on various dates from 2016 to 2029, are as follows:


2016	$ 129,284,000
2017	63,560,000
2018	20,821,000
2019	155,725,000	(a)
2020	111,545,000
Thereafter	196,087,000
	$ 677,022,000

(a) Includes $78.0 million applicable to the unsecured revolving credit facility, subject to a one-year extension option.

Derivative Financial Instruments

At December 31, 2015, the Company had $3,945,000 included in accounts payable and accrued liabilities on the consolidated balance sheet relating to the fair value of the interest rate swaps applicable to the unsecured term loans discussed above. Charges and/or credits relating to the changes in the fair value of the interest rate swaps are made to accumulated other comprehensive income (loss), noncontrolling interests (minority interests in consolidated joint ventures and limited partners’ interest), or operations (included in interest expense), as applicable. Over time, the unrealized gains and losses recorded in accumulated other comprehensive loss will be reclassified into earnings as an increase or reduction to interest expense in the same periods in which the hedged interest payments affect earnings. The Company estimates that approximately $3.2 million of accumulated other comprehensive loss will be reclassified as a charge to earnings within the next twelve months.

The following is a summary of the derivative financial instruments held by the Company at December 31, 2015 and December 31, 2014:

December 31, 2015

Designation/

Notional

Fair

Maturity

Balance sheet

Cash flow

Derivative

Count

value

dates

location

Qualifying

Interest rate swaps

$ 250,000,000

$ 3,945,000

2019 - 2022

Accounts payable and accrued liabilities

December 31, 2014

Designation/

Notional

Fair

Maturity

Balance sheet

Cash flow

Derivative

Count

value

dates

location

Qualifying

Interest rate swaps

$ 150,000,000

$ 2,777,000

2019 and 2021

Accounts payable and accrued liabilities

The following presents the effect of the Company’s derivative financial instruments on the consolidated statements of operations and the consolidated statements of equity 2015, 2014 and 2013, respectively:


		(Loss) gain recognized in other
		comprehensive income
		(effective portion)
Designation/		Years ended December 31,
Cash flow	Derivative	2015	2014	2013
Qualifying	Interest rate swaps	$ (4,539,000)	$ (3,650,000)	$ 202,000

		(Gain) loss recognized in other
		comprehensive income
		reclassified into earnings (effective portion)
		Years ended December 31,
	Classification	2015	2014	2013
	Continuing Operations	$ 3,621,000	$ 1,663,000	$ 749,000
	Discontinued Operations	$ -	$ 129,000	$ 309,000

As of December 31, 2015, the Company believes it has no significant risk associated with non-performance of the financial institutions which are the counterparties to its derivative contracts. Additionally, based on the rates in effect as of December 31, 2015, if a counterparty were to default, the Company would receive a net interest benefit.