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.