Debt

6 Months Ended

Mar. 31, 2018

Debt Disclosure [Abstract]

Debt

NOTE 5 – DEBT

For the three months ended March 31, 2018 and 2017, amortization of financing costs included in interest expense was $302,556 and $384,984, respectively. For the six months ended March 31, 2018 and 2017, amortization of financing costs included in interest expense was $596,450 and $665,897, respectively.

The following is a summary of our Fixed Rate Mortgage Notes Payable as of March 31, 2018 and September 30, 2017:

	3/31/2018						9/30/2017
	Amount			Weighted Average Interest  Rate (1)			Amount			Weighted Average Interest  Rate (1)
Fixed Rate Mortgage Notes Payable	$	639,836,890			4.11	%	$	598,962,567			4.18	%
Debt Issuance Costs	$	10,987,585					$	10,597,083
Accumulated Amortization of Debt Issuance Costs		(3,201,928	)					(2,998,887	)
Unamortized Debt Issuance Costs	$	7,785,657					$	7,598,196
Fixed Rate Mortgage Notes Payable, net of Unamortized Debt Issuance Costs	$	632,051,233					$	591,364,371

(1) Weighted average interest rate excludes amortization of debt issuance costs.

As of March 31, 2018, interest payable on these mortgages were at fixed rates ranging from 3.45% to 7.60%, with a weighted average interest rate of 4.11%. This compares to a weighted average interest rate of 4.18% as of September 30, 2017 and 4.37% as of March 31, 2017. As of March 31, 2018, the weighted average loan maturity of the Fixed Rate Mortgage Notes Payable was 11.5 years. This compares to a weighted average loan maturity of the Fixed Rate Mortgage Notes Payable of 11.6 years as of September 30, 2017 and 10.7 years as of March 31, 2017.

In connection with the three properties acquired during the six months ended March 31, 2018, which are located in Charleston, SC, Oklahoma City, OK and Savannah, GA (as described in Note 3), we obtained one 15 year fully-amortizing mortgage loan, one 10 year loan amortizing over 18 years and one 14 year fully-amortizing mortgage loan. The three mortgage loans originally totaled $67,100,000 with an original weighted average mortgage loan maturity of 13.0 years and a weighted average interest rate of 3.71%.

Subsequent to quarter end, on April 6, 2018, we purchased a newly constructed 399,440 square foot industrial building, situated on 27.5 acres, located in Daytona Beach, FL. The building is 100% net-leased to B. Braun Medical Inc. for 10 years through April 1, 2028. The purchase price was $30,750,540. We obtained a 15 year fully-amortizing mortgage loan of $19,500,000 at a fixed interest rate of 4.25%. Annual rental revenue over the remaining term of the lease averages approximately $2,128,000.

During the six months ended March 31, 2018, we fully repaid the mortgage loans for two of our properties located in Richfield, OH and Tampa, FL, totaling approximately $6,160,000.

As of March 31, 2018, Loans Payable represented the amount drawn down on our $200,000,000 unsecured line of credit facility (the Facility) in the amount of $110,000,000 and the amount drawn down on our margin loan of $44,341,511.

The Facility matures in September 2020 with a one year extension at our option (subject to various conditions as specified in the loan agreement). During the six months ended March 31, 2018, we had no additional draws under the Facility. Availability under the Facility is limited to 60% of the value of the borrowing base properties. The value of the borrowing base properties is determined by applying a capitalization rate to the NOI generated by our unencumbered, wholly-owned industrial properties. Effective, March 22, 2018, the capitalization rate applied to our NOI generated by our unencumbered, wholly-owned industrial properties was lowered from 7.0% to 6.5%. Borrowings under the Facility, will, at our election, either i) bear interest at LIBOR plus 140 basis points to 220 basis points, depending on our leverage ratio, or ii) bear interest at BMO’s prime lending rate plus 40 basis points to 120 basis points, depending on our leverage ratio. Our borrowings as of March 31, 2018, based on our leverage ratio, bear interest at LIBOR plus 170 basis points, which represented an interest rate of 3.58%. In addition, we have a $100,000,000 accordion feature, bringing the total potential availability under the Facility (subject to various conditions as specified in the loan agreement) up to $300,000,000.

We also invest in equity securities of other REITs which provides us with additional liquidity, diversification and income and serves as a proxy for real estate when more favorable risk adjusted returns are not available. From time to time, we may purchase these securities on margin when the interest and dividend yields exceed the cost of funds. In general, we may borrow up to 50% of the value of the marketable securities, which was $144,630,426 as of March 31, 2018. As of March 31, 2018, we had $44,341,511 drawn against the margin at an interest rate of 2.00%.