9. Long-Term Debt

Long-term debt includes:

	August 31, 2013			December 1, 2012
Nonrecourse mortgages:
6.30%, due May 1, 2014	$	148		$	289
5.73%, due August 1, 2015	18,718			19,018
8.13%, due April 1, 2016	3,690			3,943
7.0%, due October 2, 2017	5,840			6,016
Variable rate mortgage, due October 2, 2017*	6,604			6,726
Variable rate mortgage, due February 1, 2019*	11,213			11,396
Variable rate mortgage, due August 1, 2019*	7,911			8,034
Variable rate mortgage, due January 27, 2020*	3,989			4,067
Variable rate mortgage, due September 1, 2023*	9,100			—
Total nonrecourse mortgages	67,213			59,489
Revolving line of credit	—			—
Capital leases	94			72
Total	67,307			59,561
Less: current portion	(2,104		)	(1,869		)
Total long-term debt	$	65,203		$	57,692

* Griffin entered into interest rate swap agreements effectively to fix the interest rates on these loans (see below).

As of August 31, 2013, Griffin was a party to several interest rate swap agreements related to its variable rate nonrecourse mortgages on certain of its real estate assets. Griffin accounts for its interest rate swap agreements as effective cash flow hedges (see Note 4). No ineffectiveness on the cash flow hedges was recognized as of August 31, 2013 and none is anticipated over the term of the agreements. Amounts in other comprehensive income (loss) will be reclassified into interest expense over the term of the swap agreements to achieve fixed rates on each mortgage. None of the interest rate swap agreements contain any credit risk related contingent features. In the 2013 nine month period, Griffin recognized a gain (included in other comprehensive income) before taxes of $990 on its interest rate swap agreements. In the 2012 nine month period, Griffin recognized a loss (included in other comprehensive income) before taxes of $1,276 on its interest rate swap agreements.

As of August 31, 2013, $965 is expected to be reclassified over the next twelve months from accumulated other comprehensive loss to interest expense. As of August 31, 2013, the liability for Griffin’s interest rate swap agreements was $1,642 and is included in other noncurrent liabilities on Griffin’s consolidated balance sheet.

On April 1, 2013, a subsidiary of Griffin entered into a modification agreement for its 5.25% nonrecourse mortgage loan with First Niagara Bank due January 27, 2020 (the “2020 First Niagara Mortgage”). The modification agreement changed the interest rate of the 2020 First Niagara Mortgage from a fixed rate of 5.25% to a variable rate of the one month LIBOR rate plus 2.5%. The loan modification did not change the loan’s collateral or maturity date. Griffin Land paid $70 to First Niagara Bank for the loan modification, plus transaction costs. Because the difference between the present values of the future payments under the existing loan and the modified loan is greater than 10%, the loan modification was accounted for as a debt extinguishment. As such, all deferred costs related to the 2020 First Niagara Mortgage ($216) and the fee paid to First Niagara Bank for the modification agreement are reflected as a loss on debt extinguishment on Griffin’s consolidated statement of operations. Concurrent with the completion of the loan modification agreement, Griffin Land entered into an interest rate swap agreement with First Niagara Bank to fix the interest rate on the 2020 First Niagara Mortgage at 3.91% for the duration of the loan.

On April 24, 2013, Griffin closed on a new $12.5 million revolving credit line with Webster Bank (the “Webster Credit Line”). The Webster Credit Line is for two years with an option for Griffin to extend the credit line for a third year. The Webster Credit Line replaced Griffin’s $12.5 million credit line with Doral Bank (the “Doral Credit Line”) that was scheduled to expire on May 1, 2013. Interest on the outstanding borrowings under the Webster Credit Line will be at the one month LIBOR rate plus 2.75%. Interest on outstanding borrowings under the Doral Credit Line was the higher of the prime rate plus 1.5% or 5.875%. The Webster Credit Line is collateralized by Griffin Land’s properties in Griffin Center South, aggregating approximately 235,000 square feet and an approximately 48,000 square foot single-story office building in Griffin Center. These are the same properties that collateralized the Doral Credit Line. There were no borrowings under the Doral Credit Line in fiscal 2012 or in the 2013 nine month period and there were no borrowings under the Webster Credit Line as of the date of this Quarterly Report on Form 10-Q.

On August 28, 2013, a subsidiary of Griffin closed on a $9.1 million nonrecourse mortgage loan with First Niagara Bank (the “2023 First Niagara Mortgage”), collateralized by a 228,000 square foot industrial building in Lower Nazareth, Pennsylvania that was constructed in fiscal 2012. Although this mortgage is nonrecourse, Griffin and its subsidiary entered into a master lease that is coterminous with the 2023 First Niagara Mortgage which would become effective if the full building tenant in that building does not renew its five-year lease when it is scheduled to expire in fiscal 2018. The 2023 First Niagara Mortgage has a ten-year term with monthly payments of principal and interest starting on October 1, 2013, based on a twenty-five year amortization schedule. The interest rate for the 2023 First Niagara Mortgage is a floating rate of the one month LIBOR rate plus 1.95%. At the time Griffin closed on the 2023 First Niagara Mortgage, Griffin also entered into an interest rate swap agreement with First Niagara Bank for a notional principal amount of $9.1 million at inception to fix the interest rate of the 2023 First Niagara Mortgage at 4.79%. Payments under the swap agreement commence on October 1, 2013 and will continue monthly until September 1, 2023, which is also the termination date of the 2023 First Niagara Mortgage.