4. Mortgage and Construction Loans

Griffin’s mortgage and construction loans consist of:


	Feb. 28, 2019		Nov. 30, 2018
3.91%, due January 27, 2020 *	$	3,311	$	3,345
4.72%, due October 3, 2022 *		4,248		4,273
4.39%, due January 2, 2025 *		19,534		19,674
4.17%, due May 1, 2026 *		13,397		13,487
3.79%, November 17, 2026 *		25,229		25,402
4.39%, due August 1, 2027 *		10,222		10,284
3.97%, due September 1, 2027		11,843		11,898
4.57%, due February 1, 2028 *		18,383		18,482
5.09%, due July 1, 2029		6,062		6,172
5.09%, due July 1, 2029		4,247		4,324
4.33%, due August 1, 2030		16,894		16,978
Nonrecourse mortgage loans		133,370		134,319
Debt issuance costs		(1,669)		(1,723)
Nonrecourse mortgage loans, net of debt issuance costs		131,701		132,596

4.51% construction loan		12,983		12,842
Debt issuance costs		(380)		(386)
Construction loan, net of debt issuance costs		12,603		12,456

Mortgage and construction loans, net of debt issuance costs	$	144,304	$	145,052

*Variable rate loans. Griffin has entered into interest rate swap agreements to effectively fix the interest rates on these loans to the rates reflected above.

Griffin’s weighted average interest rate on its mortgage loans, including the effect of its interest rate swap agreements, was 4.31% as of February 28, 2019 and November 30, 2018. As of February 28, 2019, Griffin was a party to several interest rate swap agreements related to its variable rate nonrecourse mortgage loans on certain of its real estate assets. Griffin accounts for its interest rate swap agreements as effective cash flow hedges (see Note 2). No ineffectiveness on the cash flow hedges was recognized as of February 28, 2019 and none is anticipated over the term of the agreements. Amounts in AOCI will be reclassified into interest expense over the term of the swap agreements to achieve fixed interest rates on each variable rate mortgage. None of the interest rate swap agreements contain any credit risk related contingent features. In the 2019 first quarter, Griffin recognized a loss, included in other comprehensive income, before taxes of $1,868 on its interest rate swap agreements. In the 2018 first quarter, Griffin recognized a gain, included in other comprehensive income, before taxes of $2,746 on its interest rate swap agreements. As of February 28, 2019, $194 was expected to be reclassified over the next twelve months to AOCI from interest expense. As of February 28, 2019, the net fair value of Griffin’s interest rate swap agreements was $1,202, with $1,484 included in other assets and $282 included in other liabilities on Griffin’s consolidated balance sheet.

On March 29, 2018, a subsidiary of Griffin closed on a $13,800 construction to permanent mortgage loan (the “State Farm Loan”) with State Farm Life Insurance Company (“State Farm”), that provided a significant portion of the funds for the construction of an approximately 234,000 square foot build-to-suit industrial/warehouse building (“220 Tradeport”) in New England Tradeport (“NE Tradeport”), Griffin’s industrial park located in Windsor and East Granby, Connecticut. In the fiscal 2017 fourth quarter, Griffin entered into a long-term lease with one tenant for the entire building. In the fiscal 2018 fourth quarter, 220 Tradeport was completed and the lease commenced. Subsequent to the 2019 first quarter, rental payments from the tenants began. Griffin intends to convert the State Farm Loan to a fifteen year nonrecourse permanent mortgage loan and draw down the remaining funds available under the State Farm Loan, which is expected to take place in fiscal 2019. Under the terms of the State Farm Loan, the interest rate on the loan is 4.51% during both the construction phase and for the term of the permanent mortgage. Monthly principal payments, which begin after conversion to a nonrecourse permanent mortgage loan, will be based on a twenty-five year amortization schedule. The State Farm Loan may be increased up to $14,288 if certain additional improvements are made to 220 Tradeport.

On January 30, 2018, a subsidiary of Griffin closed on a nonrecourse mortgage loan (the “2018 People’s Mortgage”) with People’s United Bank, N.A. (“People’s Bank”) for $18,781. The 2018 People’s Mortgage refinanced an existing mortgage loan with People’s Bank that was due on March 1, 2027 and was collateralized by two industrial/warehouse buildings in NE Tradeport. The 2018 People’s Mortgage is collateralized by the same two buildings aggregating approximately 275,000 square feet along with 330 Stone Road, an approximately 137,000 square foot industrial/warehouse building in NE Tradeport that was completed and placed in service near the end of fiscal 2017. Griffin received proceeds of $7,000 (before transaction costs), net of $11,781 used to refinance the existing mortgage loan with People’s Bank. The 2018 People’s Mortgage has a ten year term with monthly principal payments based on a twenty-five year amortization schedule. The interest rate for the 2018 People’s Mortgage is a floating rate of the one month LIBOR rate plus 1.95%. At the time the 2018 People’s Mortgage closed, Griffin entered into an interest rate swap agreement with People’s Bank that, combined with an existing interest rate swap agreement with People’s Bank, effectively fixes the interest rate of the 2018 People’s Mortgage at 4.57% over the mortgage loan’s ten year term. Under the terms of the 2018 People’s Mortgage, Griffin entered into a master lease for 759 Rainbow Road (“759 Rainbow”), one of the buildings that collateralizes the 2018 People’s Mortgage. The master lease would only become effective if the full building tenant in 759 Rainbow does not renew its lease when it is scheduled to expire in fiscal 2022. The master lease would be in effect until either the space is re-leased to a new tenant or the maturity date of the 2018 People’s Mortgage.