5. Mortgages Loans, Construction Loan, Delayed Draw Term Loan and Interest Rate Swaps

*Variable rate loans for which INDUS entered into interest rate swap agreements to effectively fix the interest rates on these loans to the rates reflected above.

INDUS’ weighted average interest rate on its mortgage loans, delayed draw term loan and construction loan, including the effect of its interest rate swap agreements, was 3.79% and 3.76% as of June 30, 2022 and December 31,

2021, respectively. The Company accounts for its interest rate swap agreements as effective cash flow hedges. Amounts in accumulated other comprehensive income (“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 six months ended June 30, 2022 and 2021, INDUS recognized gains, included in other comprehensive income, of $3,362 and $2,963, respectively, on its interest rate swap agreements. As of June 30, 2022, $432 was expected to be reclassified over the next twelve months to AOCI from interest expense. Interest income related to INDUS’ interest rate swap agreements in the six months ended June 30, 2022 was $449 and interest expense related to INDUS’ interest rate swap agreements in the six months ended June 30, 2021 was $994.

On April 21, 2022, INDUS entered into an Amended and Restated Credit Agreement (the “Credit Agreement”) for a $250,000 secured credit facility (the “New Credit Facility”) (see Note 6), amending and restating the $100,000 credit facility executed on August 5, 2021 (the “Existing Credit Facility”) to include the addition of a delayed draw term loan facility (the “DDTL Facility”) of $150,000 for a term of five years, pursuant to which up to three separate draws may be made prior to April 21, 2023 (the first two of which must each be in a minimum amount of $25,000).

The Company made the first of such draws under the DDTL Facility in May 2022 and as of June 30, 2022, INDUS had drawn $60,000 under the DDTL Facility (see Note 6). The Company used these proceeds to repay four of its nonrecourse mortgage loans, that had encumbered ten buildings, in the amount of $61,787, resulting in a loss on early extinguishment of debt of $464. In connection with the repayments, the Company also terminated associated interest rate hedges resulting in a gain of $1,227 recorded against interest expense and recognized an income tax benefit of $585 related to the reclassification of gains included in other comprehensive income for the six months ended June 30, 2022. As of June 30, 2022, the net debt issuance costs related to the DDTL Facility were $1,436.

Subsequent to June 30, 2022, the ten buildings previously encumbered by the nonrecourse mortgage loans that were prepaid (as discussed above) were added to the borrowing base of the Company’s New Credit Facility.

The DDTL Facility bears interest at the Secured Overnight Financing Rate (“SOFR”) plus 1.15%, based on the Company’s ratio of total indebtedness to total assets. Concurrent with the closing on the DDTL Facility, the Company entered into an interest rate swap agreement to fix the interest rate on the DDTL Facility at an effective rate of 4.15%.

The following table summarizes the notional and fair values of our interest rate swaps designated as cash flow hedges at June 30, 2022 and December 31, 2021:


							Fair Value of Interest Rate
			LIBOR	SOFR	Current Notional Value		Derivative Assets/(Liabilities)
Effective	Maturity		Interest	Interest	June 30,	December 31,	June 30,	December 31,
Date	Date		Strike Rate	Strike Rate	2022	2021	2022	2021

July 1, 2022	April 21, 2027		n/a	2.933%	$ 60,000	$ -	($ 1,057)	$ -

March 15, 2017	March 1, 2027	(a)	2.501%	n/a	10,457	10,621	163	(641)
February 1, 2018	February 1, 2028	(a)	2.782%	n/a	6,451	6,524	28	(641)

January 2, 2020	January 1, 2030		1.849%	n/a	6,095	6,182	374	(219)

July 1, 2020	July 1, 2030		0.942%	n/a	4,847	4,914	632	188

September 1, 2013	September 1, 2023	(b)	2.840%	n/a	-	7,204	-	(249)
January 1, 2015	January 1, 2025	(b)	2.260%	n/a	-	9,068	-	(390)
January 1, 2016	January 1, 2025	(b)	1.932%	n/a	-	1,552	-	(40)

September 1, 2015	September 1, 2025	(c)	2.118%	n/a	-	9,608	-	(334)
December 10, 2015	September 1, 2025	(c)	2.015%	n/a	-	2,185	-	(68)
November 17, 2016	November 17, 2026	(c)	2.085%	n/a	-	11,359	-	(518)

May 3, 2016	May 1, 2026		1.910%	n/a	-	12,291	-	(369)

July 14, 2017	August 1, 2027		4.390%	n/a	-	9,476	-	(526)

					$ 87,850	$ 90,984	$ 140	($ 3,807)

(a) (b) and (c) represent multiple interest rate swap agreements against a single mortgage

In July 2017, the Financial Conduct Authority in the United Kingdom, which regulates the London Interbank Offered Rate (“LIBOR”), announced that it intends to stop compelling banks to submit rates for the calculation of LIBOR after June 30, 2023. INDUS currently expects LIBOR-indexed rates to be available through that date, however, it is possible that they will become unavailable prior to that time. The interest rate on INDUS’ floating rate debt under nonrecourse mortgage loans is based on LIBOR, however, INDUS entered into interest rate swap agreements whereby the floating LIBOR rates under all mortgage loans are hedged, effectively fixing the interest rate on those loans. INDUS’ loan documents contain provisions that contemplate alternative methods to determine the base rate applicable to our LIBOR-indexed debt to the extent LIBOR-indexed rates are not available. INDUS will continue to monitor and evaluate the impact, if any, on debt payments and the value of the Company’s floating rate debt.