4. Mortgage and Construction Loans

Griffin’s mortgage and construction loans consist of:


	Aug. 31, 2019		Nov. 30, 2018
3.91%, due January 27, 2020 *	$	3,241	$	3,345
4.72%, due October 3, 2022 *		4,199		4,273
4.39%, due January 2, 2025 *		19,245		19,674
4.17%, due May 1, 2026 *		13,208		13,487
3.79%, due November 17, 2026 *		24,879		25,402
4.39%, due August 1, 2027 *		10,097		10,284
3.97%, due September 1, 2027		11,730		11,898
4.57%, due February 1, 2028 *		18,173		18,482
5.09%, due July 1, 2029		5,839		6,172
5.09%, due July 1, 2029		4,091		4,324
4.33%, due August 1, 2030		16,721		16,978
4.51%, due April 1, 2034		14,107		—
Nonrecourse mortgage loans		145,530		134,319
Debt issuance costs		(1,959)		(1,723)
Nonrecourse mortgage loans, net of debt issuance costs		143,571		132,596

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

Mortgage and construction loans, net of debt issuance costs	$	143,571	$	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 August 31, 2019 and November 30, 2018. As of August 31, 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 August 31, 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 nine month period, Griffin recognized a loss, included in other comprehensive income, before taxes of $8,800 on its interest rate swap agreements. In the 2018 nine month period, Griffin recognized a gain, included in other comprehensive income, before taxes of $3,236 on its interest rate swap agreements. As of August 31, 2019, $590 was expected to be reclassified over the next twelve months to AOCI from interest expense. As of August 31, 2019, the net fair value of Griffin’s interest rate swap agreements was a net liability of $5,730, with $6 included in other assets and $5,736 included in other liabilities on Griffin’s consolidated balance sheet.

On March 29, 2018, a subsidiary of Griffin closed on a construction to permanent mortgage loan (the “State Farm Loan”) with State Farm Life Insurance Company 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. In the 2019 second quarter, rental payments from the tenant began. On August 1, 2019, Griffin converted the State Farm Loan to a nonrecourse permanent mortgage loan of $14,107 that matures on April 1, 2034. Monthly payments of principal and interest started on September 1, 2019. Principal payments on the State Farm Loan are based on a twenty-five year amortization schedule. Under the terms of the State Farm Loan, the interest rate on the loan remains at 4.51% during the term of the permanent mortgage.

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 a $12,000 nonrecourse 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 in addition to 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 additional 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.