DEBT

9 Months Ended

Jun. 30, 2019

Debt Disclosure [Abstract]

DEBT

NOTE 5 – DEBT

For the three months ended June 30, 2019 and 2018, amortization of financing costs included in interest expense were $319,000 and $315,000, respectively. For the nine months ended June 30, 2019 and 2018, amortization of financing costs included in interest expense were $956,000 and $911,000, respectively.

As of June 30, 2019, we owned 113 properties, of which 60 carried Fixed Rate Mortgage Notes Payable with outstanding principal balances totaling $742.1 million.

The following is a summary of our Fixed Rate Mortgage Notes Payable as of June 30, 2019 and September 30, 2018 (in thousands):

	6/30/2019						9/30/2018
	Amount			Weighted Average Interest Rate (1)			Amount			Weighted Average Interest Rate (1)
Fixed Rate Mortgage Notes Payable	$	742,087			4.03	%	$	719,768			4.07	%
Debt Issuance Costs	$	11,636					$	11,716
Accumulated Amortization of Debt Issuance Costs		(3,644	)					(3,494	)
Unamortized Debt Issuance Costs	$	7,992					$	8,222
Fixed Rate Mortgage Notes Payable, net of Unamortized Debt Issuance Costs	$	734,095					$	711,546

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

As of June 30, 2019, interest payable on these mortgages were at fixed rates ranging from 3.45% to 7.00%, with a weighted average interest rate of 4.03%. This compares to a weighted average interest rate of 4.07% as of September 30, 2018 and 4.11% as of June 30, 2018. As of June 30, 2019, 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 11.7 years as of September 30, 2018 and 11.5 years as of June 30, 2018.

In connection with the two properties acquired during the nine months ended June 30, 2019, which are located in Trenton, NJ and Savannah, GA (as described in Note 3), we obtained two 15 year fully-amortizing mortgage loans. The two mortgage loans originally totaled $72.5 million with a weighted average interest rate of 4.20%.

During the nine months ended June 30, 2019, we fully repaid a 6.0% mortgage loan for one of our properties located in Tampa, FL for $4.8 million and we fully repaid a 7.60% mortgage loan for our property located in Lebanon, TN for $7.1 million. In addition, during June 2019 we prepaid a 5.54% mortgage loan for one of our properties located in Hanahan (Charleston), SC for $224,000 that was originally set to mature in January 2020. Subsequent to the quarter end, we prepaid a 7.00% mortgage loan for one of our properties located in Fort Mill, SC for $229,000 that was originally set to mature in October 2019 and we prepaid a 6.07% mortgage loan for one of our properties located in Denver, Co for $121,000 that was originally set to mature in November 2019.

As of June 30, 2019, Loans Payable represented the amount drawn down on our $200.0 million unsecured line of credit facility (the Facility) in the amount of $110.0 million and the amount drawn down on our margin loan of $16.2 million.

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 nine months ended June 30, 2019, we paid down our Facility by $50.0 million. 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 properties. Effective March 22, 2018, the capitalization rate applied to our NOI generated by our unencumbered properties was lowered from 7.0% to 6.5%, thus increasing the value of the borrowing base properties under the terms of the agreement. 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 June 30, 2019, based on our leverage ratio, bear interest at LIBOR plus 170 basis points, which represented an interest rate of 4.10%. In addition, we have a $100.0 million accordion feature, bringing the total potential availability under the Facility up to $300.0 million (subject to various conditions as specified in the loan agreement).

We also invest in equity securities of other REITs which provide 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 $171.0 million as of June 30, 2019. As of June 30, 2019, we had $16.2 million drawn against the margin at an interest rate of 3.0%.