NOTE 12.

LONG-TERM DEBT

Credit Facility. The Company has a revolving credit facility, as amended on August 1, 2014 (the “Credit Facility”) which matures on August 1, 2018 with the ability to extend the term for 1 year. The Credit Facility has borrowing capacity of $75.0 million with the ability to increase that capacity up to $125.0 million during the term. The indebtedness outstanding under the Credit Facility accrues interest at a rate ranging from the 30-day LIBOR plus 135 basis points to the 30-day LIBOR plus 200 basis points based on the total balance outstanding under the Credit Facility as a percentage of the total asset value of the Company, as defined in the Credit Facility. The Credit Facility also accrues a fee of 20 to 25 basis points for any unused portion of the borrowing capacity based on whether the unused portion is greater or less than 50% of the total borrowing capacity. The Credit Facility is unsecured and is guaranteed by certain wholly-owned subsidiaries of the Company. The Credit Facility bank group is led by Bank of Montreal (“BMO”) and also includes Wells Fargo Bank, N.A. and Branch Banking & Trust Company.

The Credit Facility is subject to customary restrictive covenants, including, but not limited to, limitations on the Company’s ability to: (a) incur indebtedness; (b) make certain investments; (c) incur certain liens; (d) engage in certain affiliate transactions; and (e) engage in certain major transactions such as mergers. In addition, the Company is subject to various financial maintenance covenants, including, but not limited to, a maximum indebtedness ratio, a maximum secured indebtedness ratio, and a minimum fixed charge coverage ratio. The Agreement also contains affirmative covenants and events of default, including, but not limited to, a cross default to the Company’s other indebtedness and upon the occurrence of a change of control. The Company’s failure to comply with these covenants or the occurrence of an event of default could result in acceleration of the Company’s debt and other financial obligations under the Agreement.

Mortgage Notes Payable. On February 22, 2013, the Company closed on a $7.3 million mortgage loan originated with UBS Real Estate Securities Inc., secured by its interest in the two-building office complex leased to Hilton Resorts Corporation, which was acquired on January 31, 2013. The mortgage loan matures in February 2018, carries a fixed rate of interest of 3.655% per annum, and requires payments of interest only prior to maturity.

On March 8, 2013, the Company closed on a $23.1 million mortgage loan originated with Bank of America, N.A., secured by its interest in fourteen income properties. The mortgage loan matures in April 2023, carries a fixed rate of 3.67% per annum, and requires payments of interest only prior to maturity.

On September 30, 2014, the Company closed on a $30.0 million mortgage loan originated with Wells Fargo Bank, N.A., secured by its interest in six income properties. The mortgage loan matures in October 2034, and carries a fixed rate of 4.33% per annum during the first ten years of the term, and requires payments of interest only during the first ten years of the loan. After the tenth anniversary of the effective date of the loan the cash flows generated by the underlying six income properties must be used to pay down the principal balance of the loan until paid off or until the loan matures. The loan is fully pre-payable after the tenth anniversary date of the effective date of the loan. Long-term debt consisted of the following:


	December 31, 2014
	Total		Due Within One Year
Credit Facility	$	43,540,011	$	—
Mortgage Note Payable (originated with UBS)		7,300,000		—
Mortgage Note Payable (originated with BOA)		23,100,000		—
Mortgage Note Payable (originated with Wells Fargo)		30,000,000		—

Total Long-Term Debt	$	103,940,011	$	—

Payments applicable to reduction of principal amounts will be required as follows:


Year Ending December 31,	Amount
2015	$	—
2016		—
2017		—
2018		50,840,011
2019		—
Thereafter		53,100,000

Total Long-Term Debt	$	103,940,011

At December 31, 2014, there was approximately $31.5 million of available borrowing capacity under the Credit Facility, which has a current total commitment level of $75.0 million, with approximately $13.1 million of available borrowing capacity based on the borrowing base of income properties.

In conjunction with required road improvements related to sale of land for development of a distribution center, the Company obtained a $940,000 letter of credit with BMO. The letter of credit decreases the available borrowing capacity on the Credit Facility. As of December 31, 2014, the letter of credit was unused.

For the year ended December 31, 2014, interest expense was approximately $2.2 million with approximately $2.1 million paid during the period. For the year ended December 31, 2013, interest expense was approximately $1.6 million with approximately $1.6 million paid during the period. For year ended December 31, 2012, interest expense was approximately $536,000 with approximately $491,000 paid during the period. No interest was capitalized during the year ended December 31, 2012, while approximately $11,000 and $8,000 of interest was capitalized during the years ended December 31, 2014 and 2013, respectively.

The amortization of loan costs incurred in connection with the Company’s long-term debt is included in interest expense in the consolidated financial statements. These loan costs are being amortized over the term of the respective loan agreements using the straight-line method, which approximates the effective interest method. For the years ended December 31, 2014, 2013 and 2012, the amortization of loan costs totaled approximately $256,000, $203,000 and $113,000, respectively.

The Company was in compliance with all of its debt covenants as of December 31, 2014 and 2013.