Note 4 — Mortgage Notes Payable

The following table reflects the Company's mortgage notes payable as of March 31, 2018 and December 31, 2017:



		Outstanding Loan Amount as of						Effective Interest Rate as of
Portfolio	Encumbered Properties ⁽¹⁾	March 31, 2018			December 31, 2017			March 31, 2018			Interest Rate		Maturity
		(In thousands)			(In thousands)
Countryside Medical Arts - Safety Harbor, FL	1	$	5,752		$	5,773		4.98	%		Variable		Apr. 2019
St. Andrews Medical Park - Venice, FL	3	6,357			6,381			4.98	%		Variable		Apr. 2019
Palm Valley Medical Plaza - Goodyear, AZ	1	3,301			3,327			4.15	%		Fixed		Jun. 2023
Medical Center V - Peoria, AZ	1	3,044			3,066			4.75	%		Fixed		Sep. 2023
Courtyard Fountains - Gresham, OR	1	24,254			24,372			3.87	%		Fixed		Jan. 2020
Fox Ridge Bryant - Bryant, AR	1	7,531			7,565			3.98	%		Fixed		May 2047
Fox Ridge Chenal - Little Rock, AR	1	17,200			17,270			3.98	%		Fixed		May 2049
Fox Ridge North Little Rock - North Little Rock, AR	1	10,672			10,716			3.98	%		Fixed		May 2049
Philip Professional Center - Lawrenceville, GA	2	4,871			4,895			4.00	%		Fixed		Oct. 2019
MOB Loan	32	250,000			250,000			4.44	%		Fixed	⁽³⁾	June 2022
Bridge Loan	16	20,271			82,000			4.13	%		Variable		Dec. 2018
Gross mortgage notes payable	60	353,253			415,365			4.35	%	⁽²⁾
Deferred financing costs, net of accumulated amortization		(6,861		)	(7,625		)
Mortgage premiums and discounts, net		(1,179		)	(1,110		)
Mortgage notes payable, net		$	345,213		$	406,630

_______________

⁽¹⁾

Does not include real estate assets mortgaged to secure advances under the Fannie Mae Master Credit Facilities (as defined below) or eligible unencumbered real estate assets comprising the borrowing base of the Revolving Credit Facility. The equity interests and related rights in the Company's wholly owned subsidiaries that directly own or lease these real estate assets have been pledged for the benefit of the lenders thereunder. See Note 5 — Credit Facilities for further details.


⁽²⁾	Calculated on a weighted average basis for all mortgages outstanding as of March 31, 2018.


⁽³⁾	Variable rate loan which is fixed as a result of entering into interest rate swap agreements. Note 7 — Derivatives and Hedging Activities.

As of March 31, 2018, the Company had pledged $805.4 million in total real estate investments, at cost, as collateral for its $353.3 million of mortgage notes payable. This real estate is not available to satisfy other debts and obligations unless first satisfying the mortgage notes payable secured by these properties. The Company makes payments of principal and interest, or interest only, depending upon the specific requirements of each mortgage note, on a monthly basis.

Some of the Company's mortgage note agreements (including the MOB Loan) require compliance with certain property-level financial covenants, including debt service coverage ratios. As of March 31, 2018, the Company was in compliance with these financial covenants.

MOB Loan

On June 30, 2017, Capital One, National Association ("Capital One"), as administrative agent and lender, and certain other lenders, made a loan in the aggregate amount of $250.0 million (the “MOB Loan”) to certain subsidiaries of the OP. As of March 31, 2018, there was $250.0 million outstanding under the MOB Loan.

Bridge Loan

On December 28, 2017, 23 wholly owned subsidiaries (the “Borrowers”) of the OP entered into a loan agreement (the “Bridge Loan Agreement”) with Capital One, as administrative agent and lender.

The Bridge Loan Agreement provides for a $82.0 million loan (the “Bridge Loan”) with a floating interest rate equal to one-month LIBOR plus 2.5% per annum and a maturity date of December 28, 2019. Subject to meeting certain conditions, including a minimum debt yield and debt service coverage ratio, the Borrowers have the right to extend the maturity date for one year.

The Bridge Loan may be prepaid at any time in whole or in part, subject to certain conditions and limitations. Upon repayment of all or any part of the principal of the Bridge Loan, whether as a prepayment or as a repayment at maturity, the Borrowers are obligated to pay to an exit fee of: (i) 2.0% of the principal amount with respect to the aggregate of approximately $63.0 million principal amount allocated under the Bridge Loan to the seven mortgaged properties that have been identified for refinancing through Fannie Mae or Freddie Mac, and (ii) 1.0% of the principal amount with respect to the aggregate of approximately $19.0 million principal amount allocated under the Bridge Loan to the other sixteen mortgaged properties. No exit fee will be due or payable: (i) with respect to any portion of the Bridge Loan refinanced through Fannie Mae’s Multifamily MBS program with Capital One or one of its affiliates acting as agent, originator or seller, (ii) with respect to any portion of the Bridge Loan that is not refinanced through Fannie Mae’s Multifamily MBS program due to the program no longer being available under applicable law or because the applicable mortgaged property being refinanced does not qualify for financing through the program, or (iii) with respect to any prepayment in connection with a casualty or a condemnation.

On March 2, 2018, the Company used $64.2 million of advances under a Fannie Mae Master Credit Facility with Capital One to prepay a portion of the Bridge Loan (see Note 5 — Credit Facilities for more information). Concurrent with this prepayment the seven mortgaged properties that were identified for refinancing at the time the Bridge Loan was entered, were added to the collateral pool securing the Fannie Mae Master Credit Facility with Capital One.

Future Principal Payments

The following table summarizes the scheduled aggregate principal payments on mortgage notes payable for the five years subsequent to March 31, 2018 and thereafter:



(In thousands)	Future Principal Payments
April 1, 2018 - December 31, 2018	$	21,422
2019	18,078
2020	24,279
2021	892
2022	250,928
Thereafter	37,654
Total	$	353,253