Loans and Mortgages Payable

12 Months Ended

Dec. 31, 2017

Debt Disclosure [Abstract]

Loans and Mortgages Payable

NOTE 5 – LOANS AND MORTGAGES PAYABLE

Loans Payable

The Company may purchase securities on margin. The interest rates charged on the margin loans at December 31, 2017 and 2016 was 2.0%. These margin loans are due on demand. At December 31, 2017 and 2016, the margin loans amounted to $37,157,467 and $22,727,458, respectively, and are collateralized by the Company’s securities portfolio. The Company must maintain a coverage ratio of approximately 2 times.

The Company has revolving credit agreements totaling $28,500,000 with 21^st Mortgage Corporation (“21^st Mortgage”), Customers Bank and Northpoint Commercial Finance to finance inventory purchases. Interest rates on these agreements range from prime with a minimum of 6% to Prime plus 2% with a minimum of 8% after 18 months. As of December 31, 2017 and 2016, the total amount outstanding on these lines was $2,239,315 and $6,314,352, respectively, with a weighted average interest rate of 6.74% and 5.9%, respectively.

nk (“OceanFirst Line”), secured by the Company’s eligible notes receivable. The maximum availability on the OceanFirst Line is $10 million. Interest was reduced from prime plus 50 basis points to prime plus 25 basis points. The new maturity date is June 1, 2020. As of December 31, 2017 and 2016, the amount outstanding on this revolving line of credit was $4 million, and the interest rate was 4.75% and 4.25%, respectively.

The Company has an agreement with 21^st Mortgage to finance the Company’s purchase of rental units. These loans are at an interest rate of 6.99%, with an origination fee of 2% on new units and 3% on existing units. These loans will have a 10 year term from the date of the borrowing. The amount outstanding on this loan was $421,930 and $467,101, as of December 31, 2017 and 2016, respectively.

The Company has a $4,000,000 loan from Two River Community Bank, secured by 1,000,000 shares of Monmouth Real Estate Investment Corporation common stock. This loan is at an interest rate of 4.625%, with interest only payments through October 2017, and matures on October 30, 2019. The amount outstanding on this loan was $3,969,329 and $4,000,000 as of December 31, 2017 and 2016, respectively. The Company also has $1,977,783 in automotive loans with a weighted average interest rate of 4.05%.

Unsecured Lines of Credit

On March 28, 2017, the Company entered into an amended and restated credit agreement to renew and expand its existing unsecured revolving credit facility. The new unsecured revolving credit facility (the “Facility”) was syndicated with BMO Capital Markets (“BMO”), as sole lead arranger and sole book runner, with Bank of Montreal as administrative agent. The Facility provides for an increase from $35 million in available borrowings to $50 million in available borrowings with a $75 million accordion feature, bringing the total potential availability up to $125 million, subject to certain conditions. The maturity date of the Facility is March 27, 2020, with a one year extension option. Borrowings will bear interest at the Company’s option of LIBOR plus 1.75% to 2.50% or BMO’s prime lending rate plus 0.75% to 1.50%, based on the Company’s overall leverage. Based on the Company’s current leverage ratio, borrowings under the Facility will bear interest at LIBOR plus 2% or at BMO’s prime lending rate plus 1%. The amount outstanding under this Facility was $35 million at December 31, 2017.

The aggregate principal payments of all loans payable, including the Credit Facility, are scheduled as follows:

Year Ended December 31,
2018	$	2,776,329
2019		4,506,895
2020		39,526,583
2021		420,131
2022		236,217
Thereafter		37,299,669
Total Loans Payable		84,765,824
Unamortized Debt Issuance Costs		(61,337	)
Total Loans Payable, net of Unamortized Debt Issuance Costs	$	84,704,487

Mortgages Payable

Mortgages Payable represents the principal amounts outstanding as of December 31, 2017, net of unamortized debt issuance costs. Interest is payable on these mortgages at fixed rates ranging from 3.71% to 6.5% and a variable rate of prime plus 1.0%. The weighted average interest rate as of December 31, 2017 was 4.3%, compared to 4.4% as of December 31, 2016, including the effect of unamortized debt issuance costs. The weighted average interest rate as of December 31, 2017 was 4.2%, compared to 4.3% as of December 31, 2016, not including the effect of unamortized debt issuance costs. The weighted average loan maturity of the Mortgage Notes Payable was 6.9 years at December 31, 2017 and 2016.

The following is a summary of mortgages payable at December 31, 2017 and 2016:

	At December 31, 2017				Balance at December 31,
Property	Due Date	Interest Rate			2017			2016
Allentown	10/01/25		4.06	%	$	13,390,559		$	13,637,719
Brookview Village	04/01/25		3.92	%		2,778,698			2,832,889
Candlewick Court	09/01/25		4.10	%		4,468,826			4,551,134
Catalina	08/19/25		4.20	%		5,533,771			5,739,657
Cedarcrest	04/01/25		3.71	%		12,024,840			12,268,266
Clinton Mobile Home Resort	10/01/25		4.06	%		3,514,421			3,579,289
Cranberry Village	04/01/25		3.92	%		7,620,974			7,769,600
D & R Village	03/01/25		3.85	%		7,685,346			7,837,828
Fairview Manor	11/01/26		3.85	%		16,010,749			16,299,292
Forest Park Village	09/01/25		4.10	%		8,332,848			8,486,324
Hayden Heights	04/01/25		3.92	%		2,094,009			2,134,846
Heather Highlands	08/28/18		Prime + 1.0	%		16,606			354,529
Highland Estates	06/01/27		4.12	%		16,640,165			9,035,246
Holiday Village	09/01/25		4.10	%		7,929,646			8,075,696
Holiday Village- IN	11/01/25		3.96	%		8,514,837			8,674,151
Holly Acres Estates	10/05/21		6.50	%		2,194,312			2,228,629
Kinnebrook Village	04/01/25		3.92	%		4,048,226			4,127,176
Lake Sherman Village	09/01/25		4.10	%		5,510,432			5,611,924
Olmsted Falls	04/01/25		3.98	%		2,093,269			2,133,656
Oxford Village	01/01/20		5.94	%		6,751,511			6,963,586
Shady Hills	04/01/25		3.92	%		4,992,527			5,089,892
Somerset Estates and Whispering Pines	02/26/19		4.89	%		217,770			395,886
Springfield Meadows	10/06/25		4.83	%		3,141,199			3,191,381
Suburban Estates	10/01/25		4.06	%		5,583,084			5,686,136
Sunny Acres	10/01/25		4.06	%		6,214,642			6,329,351
Southwind Village	01/01/20		5.94	%		5,392,911			5,562,311
Trailmont	04/01/25		3.92	%		3,328,351			3,393,262
Twin Oaks	12/01/19		5.75	%		2,415,894			2,494,084
Valley Hills	06/01/26		4.32	%		3,408,438			3,466,014
Waterfalls	06/01/26		4.38	%		4,639,515			4,716,994
Weatherly Estates	04/01/25		3.92	%		8,121,177			8,279,558
Wellington Estates	01/01/23		6.35	%		2,414,621			-0-
Woods Edge	01/07/26		4.30	%		6,728,792			6,969,958
Worthington Arms	09/01/25		4.10	%		9,342,775			9,514,851
Various (2 properties)	02/01/27		4.56	%		14,049,088			-0-
Various (4 properties)	07/01/23		4.975	%		8,079,960			8,226,015
Various (5 properties)	01/01/22		4.25	%		13,749,838			14,072,987
Various (5 properties)	12/06/22		4.75	%		7,154,380			7,294,460
Various (5 properties)	02/01/18		6.83	%		-0-			8,818,862
Various (6 properties)	08/01/27		4.18	%		13,296,207			-0-
Various (11 properties)	08/01/17		LIBOR + 3.0	%		-0-			10,625,352
Various (13 properties)	03/01/23		4.065	%		49,035,572			50,095,192
Total Mortgages Payable						308,460,786			296,563,983
Unamortized Debt Issuance Costs						(3,565,669	)		(3,538,391	)
Total Mortgages Payable, net of Unamortized Debt Issuance Costs					$	304,895,117		$	293,025,592

At December 31, 2017 and 2016, mortgages were collateralized by real property with a carrying value of $538,249,737 and $488,623,061, respectively, before accumulated depreciation and amortization. Interest costs amounting to $500,859, $359,906 and $277,944 were capitalized during 2017, 2016 and 2015, respectively, in connection with the Company’s expansion program.

Recent Transactions

During the year ended December 31, 2017

On January 20, 2017, the Company obtained a $14,250,000 Federal Home Loan Mortgage Corporation (“Freddie Mac”) mortgage through Wells Fargo Bank, N.A. (“Wells Fargo”) on Boardwalk and Parke Place in connection with the Company’s acquisition of these communities. This mortgage is at a fixed rate of 4.56% and matures on February 1, 2027. Principal repayments are based on a 30-year amortization schedule.

On May 31, 2017, the Company obtained a $16,800,000 Freddie Mac mortgage through Wells Fargo on Highland Estates. This mortgage is at a fixed rate of 4.12% and matures on June 1, 2027. Principal repayments are based on a 30-year amortization schedule. Proceeds from this mortgage was used to repay the existing $9,000,000 mortgage with an interest rate of 6.175%.

On August 28, 2017, the Company obtained a $13,370,000 mortgage loan on six communities from Sun National Bank. This mortgage is at a fixed rate of 4.18% and matures on August 1, 2027. Principal repayments are based on a 30-year amortization schedule. Proceeds from this mortgage was used to repay the existing $10,000,000 mortgage, secured by eleven communities with an interest rate of LIBOR plus 3%, which was fixed at 3.89% with an interest rate swap.

On December 22, 2017, the Company assumed a mortgage loan with a balance of approximately $2,418,000, in conjunction with its acquisition of Wellington Estates. The interest rate on this mortgage is fixed at 6.35%. This mortgage matures on January 1, 2023.

During the year ended December 31, 2016

On January 7, 2016, the Company obtained a $7,200,000 mortgage loan on Woods Edge from OceanFirst Bank. This mortgage is at a fixed rate of 4.3% and matures on January 7, 2026. The interest rate will be reset after five years to the rate the Federal Home Loan Bank of New York charges to its members plus 2.5%.

On May 2, 2016, the Company obtained a $4,760,000 Federal Home Loan Mortgage Corporation (“Freddie Mac”) mortgage through Wells Fargo Bank, N.A. (“Wells Fargo”) on Waterfalls Village with an interest rate that is fixed at 4.38%. The Company also obtained a $3,498,000 Freddie Mac mortgage through Wells Fargo on Valley Hills with an interest rate that is fixed at 4.32%. These mortgages mature on June 1, 2026, with principal repayments based on a 30-year amortization schedule. Proceeds from these mortgages were used to repay existing mortgages on three communities with an average interest rate of 6.66%.

On October 31, 2016, the Company obtained a $16,346,000 Freddie Mac mortgage through Wells Fargo on Fairview Manor. The interest rate on this mortgage is fixed at 3.85%. This mortgage matures November 1, 2026, with principal repayments based on a 30-year amortization schedule. Proceeds from this mortgage were used to repay the existing mortgage with a principal balance of approximately $9,700,000 and an interest rate of 5.785%.

On December 19, 2016, the Company assumed a mortgage loan with a balance of approximately $3,195,000, in conjunction with its acquisition of Springfield Meadows. The interest rate on this mortgage is fixed at 4.83%. This mortgage matures on October 6, 2025.

The aggregate principal payments of all mortgages payable are scheduled as follows:

Year Ended December 31,
2018	$	6,744,175
2019		20,418,685
2020		6,552,999
2021		21,209,912
2022		13,058,727
Thereafter		240,476,288
Total	$	308,460,786