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MORTGAGE NOTES AND LOANS PAYABLE
 12 Months Ended
Sep. 30, 2019
Mortgage Notes And Loans Payable  
MORTGAGE NOTES AND LOANS PAYABLE

NOTE 7- MORTGAGE NOTES AND LOANS PAYABLE

 

Mortgage Notes Payable:

 

As of September 30, 2019, we owned 114 properties, of which 59 carried Fixed Rate Mortgage Notes Payable with outstanding principal balances totaling $752.9 million. Interest is payable on these mortgages at fixed rates ranging from 3.45% to 6.875%, 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. As of September 30, 2019, the weighted average loan maturity of the Mortgage Notes Payable was 11.3 years. This compares to a weighted average loan maturity of the Mortgage Notes Payable of 11.7 years as of September 30, 2018.

 

As described in Note 3, during fiscal year ended September 30, 2019, we entered into three mortgages in connection with the acquisitions of properties in Trenton, NJ; Savannah, GA (FDX Ground) and Lafayette, IN. These three mortgages consisted of three 15 year fully-amortizing mortgage loans. These three mortgage loans originally totaled $89.5 million, with an original weighted average mortgage loan maturity of 15.0 years and a weighted average interest rate of 4.21%.

 

During the fiscal year ended September 30, 2019, we fully repaid the mortgage loans for five of our properties located in Tampa, FL; Lebanon, TN; Hanahan, SC; Ft. Mill, SC and Denver, CO, totaling $12.5 million.

 

During the fiscal year ended September 30, 2018, we fully repaid the mortgage loans for five of our properties located in Colorado Springs, CO; Richfield (Cleveland), OH; Tampa, FL; West Chester Twp. (Cincinnati), OH and Orlando, FL, totaling $12.5 million.

 

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

 

 

   9/30/19   9/30/18 
   Amount   Weighted Average Interest Rate (1)   Amount   Weighted Average Interest Rate (1) 
Fixed Rate Mortgage Notes Payable  $752,916    4.03%  $719,768    4.07%
                     
Debt Issuance Costs  $11,733        $11,716      
Accumulated Amortization of Debt Issuance Costs   (3,745)        (3,494)     
Unamortized Debt Issuance Costs  $7,988        $8,222      
                     
Fixed Rate Mortgage Notes Payable, net of Unamortized Debt Issuance Costs  $744,928        $711,546      

 

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

 

 

The following is a summary of our mortgage notes payable by property at September 30, 2019 and 2018 (in thousands):

 

 

 

Property

     

Fixed

Rate

  

Maturity

Date

 

Balance

9/30/19

  

Balance

9/30/18

 
Tampa, FL (FDX Ground)   (1)    6.00%  03/01/19  $0   $5,144 
Lebanon, TN (Nashville)   (1)    7.60%  07/10/19   0    7,217 
Ft. Mill, SC (Charlotte, NC)   (1)    7.00%  10/10/19   0    725 
Denver, CO   (1)    6.07%  11/01/19   0    414 
Hanahan, SC (Charleston)(Amazon)   (1)    5.54%  01/21/20   0    466 
Augusta, GA (FDX Ground)        5.54%  02/01/20   102    339 
Huntsville, AL        5.50%  03/01/20   140    371 
Topeka, KS        6.50%  08/10/21   584    860 
Streetsboro, OH (Cleveland)        5.50%  11/01/21   8,680    9,300 
Kansas City, MO        5.18%  12/01/21   6,457    6,633 
Olive Branch, MS (Memphis, TN)(Anda Pharmaceuticals, Inc.)        4.80%  04/01/22   6,927    7,564 
Waco, TX        4.75%  08/01/22   3,931    4,235 
Houston, TX        6.88%  09/10/22   1,643    2,148 
Tolleson, AZ (Phoenix)        3.95%  11/01/22   2,882    3,720 
Edwardsville, KS (Kansas City)(International Paper)        3.45%  11/01/23   8,421    9,189 
Spring, TX (Houston)        4.01%  12/01/23   7,287    7,925 
Memphis, TN        4.50%  01/01/24   4,202    5,061 
Oklahoma City, OK (FDX Ground)        4.35%  07/01/24   2,890    3,416 
Indianapolis, IN        4.00%  09/01/24   9,454    10,437 
Frankfort, KY (Lexington)        4.84%  12/15/24   15,672    16,639 
Carrollton, TX (Dallas)        6.75%  02/01/25   5,623    6,456 
Altoona, PA   (2)    4.00%  10/01/25   2,848    3,253 
Green Bay, WI   (2)    4.00%  10/01/25   2,311    2,640 
Stewartville, MN (Rochester)   (2)    4.00%  10/01/25   1,852    2,116 
Carlstadt, NJ (New York, NY)        5.25%  05/15/26   1,408    1,580 
Roanoke, VA (FDX Ground)        3.84%  07/01/26   3,905    4,395 
Livonia, MI (Detroit)        4.45%  12/01/26   5,649    6,295 
Oklahoma City, OK (Amazon)        3.64%  12/01/27   18,206    19,014 
Olive Branch, MS (Memphis, TN)(Milwaukee Tool)        3.76%  10/01/28   19,917    21,723 
Tulsa, OK        4.58%  11/01/28   1,552    1,685 
Oklahoma City, OK (Bunzl)        4.13%  07/01/29   5,124    5,538 
Lindale, TX (Tyler)        4.57%  11/01/29   5,242    5,638 
Sauget, IL (St. Louis, MO)        4.40%  11/01/29   7,956    8,564 
Jacksonville, FL (FDX Ground)        3.93%  12/01/29   15,072    16,244 
Imperial, PA (Pittsburgh)        3.63%  04/01/30   10,407    11,200 
Monroe, OH (Cincinnati)   (3)    3.77%  04/01/30   6,626    7,126 
Monroe, OH (Cincinnati)   (3)    3.85%  04/01/30   7,000    0 
Greenwood, IN (Indianapolis)        3.91%  06/01/30   18,780    20,159 
Ft. Worth, TX (Dallas)        3.56%  09/01/30   19,342    20,754 
Concord, NC (Charlotte)        3.87%  12/01/30   16,654    17,813 
Covington, LA (New Orleans)        4.08%  01/01/31   10,425    11,134 
Burlington, WA (Seattle/Everett)        3.67%  05/01/31   16,635    17,757 
Louisville, KY        3.74%  07/01/31   6,121    6,525 
Colorado Springs, CO        3.90%  07/01/31   15,632    16,652 
Davenport, FL (Orlando)        3.89%  09/01/31   22,274    23,703 
Olathe, KS (Kansas City)        3.96%  09/01/31   18,759    19,957 
Hamburg, NY (Buffalo)        4.03%  11/01/31   20,075    21,329 
Ft. Myers, FL (FDX Ground)        3.97%  01/01/32   12,510    13,281 
Savannah, GA        3.53%  02/01/32   30,304    32,216 
Walker, MI (Grand Rapids)        3.86%  05/01/32   18,365    19,469 
Mesquite, TX (Dallas)        3.60%  07/01/32   29,171    30,928 

 

  

 

Property

 

Fixed

Rate

  

Maturity

Date

 

Balance

9/30/19

  

Balance

9/30/18

 
Aiken, SC (Augusta, GA)   4.20%  07/01/32  $13,683   $14,471 
Homestead, FL (Miami)   3.60%  07/01/32   21,989    23,314 
Mobile, AL   4.14%  07/01/32   17,802    18,832 
Concord, NC (Charlotte)   3.80%  09/01/32   23,492    24,863 
Kenton, OH   4.45%  10/01/32   10,874    11,473 
Stow, OH   4.17%  10/01/32   11,484    12,130 
Charleston, SC (FDX)   4.23%  12/01/32   12,968    13,683 
Daytona Beach, FL   4.25%  05/31/33   18,224    19,188 
Charleston, SC (FDX Ground)   3.82%  09/01/33   28,356    29,860 
Braselton, GA (Atlanta)   4.02%  10/01/33   37,898    39,700 
Buckner, KY (Louisville)   4.17%  11/01/33   14,566    15,307 
Trenton, NJ   4.13%  11/01/33   52,759    0 
Savannah, GA (FDX Ground)   4.40%  12/01/33   16,872    0 
Lafayette, IN   4.25%  08/01/34   16,932    0 
Total Mortgage Notes Payable          $752,916   $719,768 

 

(1)Loan was paid in full during fiscal 2019.
(2)One self-amortizing loan is secured by Altoona, PA, Green Bay, WI and Stewartville (Rochester), MN.
(3)Two self-amortizing loans secured by same property.

 

Principal on the foregoing debt at September 30, 2019 is scheduled to be paid as follows (in thousands):

 

 

       
Year Ending September 30, 2020  $53,394 
  2021   55,360 
  2022   77,516 
  2023   56,240 
  2024   69,293 
  Thereafter   441,113 
  Total  $752,916 

 

The above table does not include an 18 year, fully-amortizing mortgage loan of $52.5 million at a fixed interest rate of 4.27%, which was obtained subsequent to the 2019 fiscal yearend in connection with the purchase of a property for $81.5 million.

 

Loans Payable:

 

BMO Capital Markets

 

As of September 30, 2019, Loans Payable represented $95.0 million drawn down on our $200.0 million unsecured line of credit facility (the “Old Facility”). As further described below, subsequent to the fiscal yearend 2019, the Old Facility was replaced by a new facility (the “New Facility”) consisting of a $225.0 million unsecured line of credit facility (the “New Revolver”) and a new $75.0 million unsecured term loan (the “Term Loan”), resulting in the total potential availability under both the New Revolver and the Term Loan of $300.0 million. In addition, the New Revolver includes an accordion feature that will allow the total potential availability under the New Facility to further increase to $400.0 million, under certain conditions. The Old Facility was originally set to mature in September 2020 with a one-year extension at our option (subject to various conditions as specified in the loan agreement). During the fiscal year ended September 30, 2019, we had net paydowns of $65.0 million under the Old Facility. Availability under the Old Facility was limited to 60% of the value of the borrowing base properties. The value of the borrowing base properties was determined by applying a capitalization rate to the NOI generated by our unencumbered, wholly-owned industrial properties. Effective in March 2018, the capitalization rate applied to our NOI generated by our unencumbered, wholly-owned industrial properties was lowered from 7.0% to 6.5%, thus increasing the value of the borrowing base properties under the terms of the Old Facility. Borrowings under the Old Facility, at our election, either i) bore interest at LIBOR plus 140 basis points to 220 basis points, depending on our leverage ratio, or ii) bore interest at Bank of Montreal’s (BMO’s) prime lending rate plus 40 basis points to 120 basis points, depending on our leverage ratio. Our borrowings as of September 30, 2019, based on our leverage ratio as of September 30, 2019, bore interest at LIBOR plus 170 basis points, which was at an interest rate of 3.74% as of September 30, 2019. In addition, we had a $100.0 million accordion feature, bringing the total potential availability under the Old Facility (subject to various conditions as specified in the loan agreement) up to $300.0 million.

 

 

The New Facility was arranged by BMO Capital Markets Corp, J.P. Morgan Chase Bank, N.A. (“JPMorgan”), and RBC Capital Markets (“RBC”), who served as joint lead arrangers and joint book runners. Bank of Montreal served as administrative agent and JPMorgan and RBC acted as co-syndication agents. The $225.0 million New Revolver matures in January 2024, with two options to extend for additional six-month periods, at our option and has a $100.0 million accordion feature, bringing the total potential availability under the New Revolver (subject to various conditions as specified in the loan agreement) up to $325.0 million. Availability under the New 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. Under the New Facility the capitalization rate applied to our NOI generated by our unencumbered, wholly-owned industrial properties was lowered from 6.5% under the Old Facility to 6.25% under the New Facility, thus increasing the value of the borrowing base properties under the terms of the New Facility. In addition, the interest rate for borrowings under the New Revolver was lowered and will, at our election, either i) bear interest at LIBOR plus 135 basis points to 205 basis points, depending on our leverage ratio, or ii) bear interest at BMO’s prime lending rate plus 35 basis points to 105 basis points, depending on our leverage ratio. Currently, our borrowings bear interest under the New Revolver at LIBOR plus 145 basis points, which results in an interest rate of 3.21%. The $75.0 million Term Loan matures January 2025. The interest rate for borrowings under the Term Loan, at our election, either i) bear interest at LIBOR plus 130 basis points to 200 basis points, depending on our leverage ratio, or ii) bear interest at BMO’s prime lending rate plus 30 basis points to 100 basis points, depending on our leverage ratio. To reduce floating interest rate exposure under the Term Loan, we also entered into an interest rate swap agreement to fix LIBOR on the entire $75.0 million for the full duration of the Term Loan resulting in an all-in rate of 2.92%. We currently have $10.0 million drawn down under the New Revolver and $75.0 million outstanding under the Term Loan.

 

Margin Loans

 

From time to time we use a margin loan for purchasing securities, for temporary funding of acquisitions, and for working capital purposes. This loan is due on demand and is collateralized by our securities portfolio. We must maintain a coverage ratio of approximately 50%. The interest rate charged on the margin loan is the bank’s margin rate and was 2.50% and 2.75% as of September 30, 2019 and 2018, respectively, and is currently at 2.25%. At September 30, 2019 there were no amounts drawn down under the margin loan and as of September 30, 2018 there was $26.6 million drawn down under the margin loan.

 

For the three fiscal years ended September 30, 2019, 2018 and 2017, amortization of financing costs included in interest expense was $1.3 million, $1.2 million and $1.2 million, respectively.