NOTES AND BOND PAYABLE

As of March 31, 2015 and December 31, 2014, the Company’s notes and bond payable consisted of the following (dollars in thousands):



	Book Value as of March 31, 2015		Book Value as of December 31, 2014		Contractual Interest Rate as of March 31, 2015 ⁽¹⁾	Effective Interest Rate at March 31, 2015 ⁽¹⁾	Payment Type	Maturity Date ⁽²⁾
Richardson Portfolio Mortgage Loan	$	38,000	$	38,000	One-Month LIBOR + 2.10%	2.27%	Interest Only ⁽³⁾	05/01/2017
Bellevue Technology Center Mortgage Loan	49,836		49,836		One-Month LIBOR + 2.25%	2.42%	Interest Only ⁽³⁾	03/01/2017
Portfolio Revolving Loan Facility ⁽⁴⁾	38,353		12,447		One-Month LIBOR + 2.25%	2.42%	Interest Only	05/01/2017
Portfolio Mortgage Loan	95,311		93,751		One-Month LIBOR + 2.50%	2.67%	Interest Only ⁽³⁾	07/01/2017
1635 N. Cahuenga Mortgage Loan ⁽⁵⁾	—		4,650		⁽⁵⁾	⁽⁵⁾	⁽⁵⁾	⁽⁵⁾
Burbank Collection Mortgage Loan	9,098		9,043		One-Month LIBOR + 2.35%	2.54%	Interest Only	09/30/2016
50 Congress Mortgage Loan	27,543		26,935		One-Month LIBOR + 1.90%	2.07%	Interest Only ⁽³⁾	10/01/2017
1180 Raymond Bond Payable	6,910		6,945		6.50%	6.50%	Principal & Interest	09/01/2036
Central Building Mortgage Loan	24,896		24,896		One-Month LIBOR + 1.75%	1.92%	Interest Only	11/13/2018
Maitland Promenade II Mortgage Loan ⁽⁶⁾	20,182		20,182		One-Month LIBOR + 2.90%	3.25%	Interest Only ⁽³⁾	01/01/2017
Westmoor Center Mortgage Loan	56,036		54,880		One-Month LIBOR + 2.25%	2.42%	Interest Only ⁽³⁾	02/01/2018
Plaza Buildings Senior Loan	110,488		109,707		One-Month LIBOR + 1.90%	2.07%	Interest Only ⁽³⁾	01/14/2017
Plaza Buildings Mezzanine Loan ⁽⁷⁾	25,000		25,000		⁽⁷⁾	8.10%	Interest Only	01/14/2017
424 Bedford Mortgage Loan	25,738		25,866		3.91%	3.91%	Principal & Interest	10/01/2022
1180 Raymond Mortgage Loan	28,100		28,100		One-Month LIBOR + 2.25%	2.42%	Interest Only	12/01/2017
Total Notes and Bond Payable principal outstanding	555,491		530,238
Net Premium/Discount on Notes and Bond Payable ⁽⁸⁾	30		25
Total Notes and Bond Payable, net	$	555,521	$	530,263

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⁽¹⁾ Contractual interest rate represents the interest rate in effect under the loan as of March 31, 2015. Effective interest rate is calculated as the actual interest rate in effect as of March 31, 2015 (consisting of the contractual interest rate and contractual floor rates), using interest rate indices at March 31, 2015, where applicable.

⁽²⁾ Represents the initial maturity date or the maturity date as extended as of March 31, 2015; subject to certain conditions, the maturity dates of certain loans may be extended beyond the date shown.

⁽³⁾Represents the payment type required under the loan as of March 31, 2015. Certain future monthly payments due under this loan also include amortizing principal payments. For more information of the Company’s contractual obligations under its notes and bond payable, see five-year maturity table below.

⁽⁴⁾The Portfolio Revolving Loan Facility is secured by the 1800 West Loop Building and the Iron Point Business Park. The Portfolio Revolving Loan Facility is comprised of $59.5 million of revolving debt and $13.0 million of non-revolving debt available to be used for tenant improvements, leasing commissions and capital improvements, subject to certain terms and conditions contained in the loan documents. As of March 31, 2015, $30.0 million of revolving debt and $8.4 million of non-revolving debt had been disbursed to the Company and the remaining $29.5 million of revolving debt and $4.6 million of non-revolving debt is available for future disbursements, subject to certain conditions contained in the loan documents. Monthly payments are initially interest only. Beginning June 1, 2016, and to the extent that there are amounts outstanding under the non-revolving portion of the loan, monthly payments will include interest and principal amortization payments of up to $80,000 per month.

⁽⁵⁾On March 11, 2015, in connection with the disposition of 1635 N. Cahuenga, the joint venture paid off the outstanding principal balance and all other sums due under this loan.

⁽⁶⁾Interest on the Maitland Promenade II Mortgage Loan is calculated at a variable annual rate of 290 basis points over one-month LIBOR, but at no point shall the interest rate be less than 3.25%.

⁽⁷⁾Interest on this loan is calculated as a floating rate of 785 basis points over one-month LIBOR, but at no point shall interest rate be less than 8.10%. On April 1, 2015, the Company paid off the outstanding principal balance and all other sums due under this loan.

⁽⁸⁾Represents the unamortized premium/discount on notes and bond payable due to the above- and below-market interest rates when the debt was assumed. The discount/premium is amortized over the remaining life of the notes and bond payable.

During the three months ended March 31, 2015 and 2014, the Company incurred $3.9 million and $3.4 million of interest expense, respectively. Included in interest expense for the three months ended March 31, 2015 and 2014 was $0.7 million and $0.6 million of amortization of deferred financing costs, respectively. Additionally, during the three months ended March 31, 2015 and 2014 the Company capitalized $0.5 million and $0.5 million of interest to its investments in undeveloped land, respectively. As of March 31, 2015 and December 31, 2014, the Company’s deferred financing costs were $5.5 million and $6.1 million, respectively, net of amortization, and are included in prepaid expenses and other assets on the accompanying consolidated balance sheets. As of March 31, 2015 and December 31, 2014, the Company’s interest payable was $1.2 million and $1.2 million, respectively.

The following is a schedule of maturities, including principal amortization payments, for all notes and bond payable outstanding as of March 31, 2015 (in thousands):



April 1, 2015 through December 31, 2015	$	1,554
2016	14,537
2017	430,982
2018	82,117
2019	7,804
Thereafter	18,497
	$	555,491

The Company’s notes payable contain financial debt covenants. As of March 31, 2015, the Company was in compliance with all of these debt covenants.