6. Mortgages Payable

During 2011, we assumed mortgages totaling $67.4 million, payable to third-party lenders. These mortgages are secured by the properties on which the debt was placed and are non-recourse. We expect to pay off the mortgages as soon as prepayment penalties and costs make it economically feasible to do so. We intend to continue our policy of primarily identifying property acquisitions that are free from mortgage indebtedness. In March 2012, we repaid one mortgage in full for $10.7 million.

In aggregate, net premiums totaling $820,000 were recorded in 2011 upon assumption of the mortgages for above-market interest rates. Amortization of these net premiums is recorded as a reduction to interest expense over the remaining term of the respective notes, using a method that approximates the effective-interest method. These mortgages contain customary covenants, such as limiting our ability to further mortgage each applicable property or to discontinue insurance coverage, without the prior consent of the lender. At March 31, 2012, we remain in compliance with these covenants.

As a result of assuming these mortgages payable in 2011, we incurred deferred financing costs of $917,000 that were classified as part of other assets on our consolidated balance sheet. The balance of these deferred financing costs was $669,000 at March 31, 2012 and $751,000 at December 31, 2011, which is being amortized over the remaining term of each mortgage.

The following is a summary of our mortgages payable at March 31, 2012 and December 31, 2011 (principal balance, unamortized premiums (discounts) and mortgage payable balances in thousands):

At March 31, 2012

Maturity Date(1)	Stated Interest Rate(2)			Effective Interest Rate			Remaining Principal Balance(1)		Amortized Premium (Discount) Balance			Mortgage Payable Balance
12/1/13(3)		6.25	%		4.62	%		12,307		285			12,592
9/1/14(3)		6.25	%		5.10	%		11,632		312			11,944
6/10/15		4.75	%		4.85	%		23,625		(63	)		23,562
12/28/13(4)(5)		8.26	%		8.26	%		4,510		--			4,510
12/28/13(4)(5)		8.26	%		8.26	%		4,270		--			4,270
							$	56,344	$	534		$	56,878

At December 31, 2011

Maturity Date(1)	Stated Interest Rate(2)			Effective Interest Rate			Remaining Principal Balance(1)		Amortized Premium (Discount) Balance			Mortgage Payable Balance
5/6/12		5.89	%		5.19	%	$	10,664	$	26		$	10,690
12/1/13(3)		6.25	%		4.63	%		12,410		314			12,724
9/1/14(3)		6.25	%		5.09	%		11,671		359			12,030
6/10/15		4.73	%		4.84	%		23,625		(68	)		23,557
12/28/13(4)(5)		8.26	%		8.26	%		4,510		--			4,510
12/28/13(4)(5)		8.26	%		8.26	%		4,270		--			4,270
							$	67,150	$	631		$	67,781

(1) The mortgages require monthly payments, with a principal payment due at maturity.

(2) The mortgages are at fixed interest rates, with the exception of the mortgage maturing on June 10, 2015 that is at a floating variable interest rate calculated as the sum of the current 1 month LIBOR plus 4.50%, not to exceed an all-in interest rate of 5.5%.

(3) These are mortgages associated with one property occupied by the applicable tenant.

(4) These are mortgages associated with one property occupied by the applicable tenant.

(5) As part of the assumption of these mortgages payable related to our 2011 acquisitions, we also assumed an $8.8 million note receivable, upon which we will receive interest income at a stated rate of 8.14% through December 28, 2013.