LOANS AND MORTGAGES PAYABLE AND OTHER LONG-TERM INDEBTEDNESS

9 Months Ended

Sep. 30, 2022

Debt Disclosure [Abstract]

LOANS AND MORTGAGES PAYABLE AND OTHER LONG-TERM INDEBTEDNESS

NOTE 7 – LOANS AND MORTGAGES PAYABLE AND OTHER LONG-TERM INDEBTEDNESS

Unsecured Line of Credit

On November 29, 2018, the Company entered into a First Amendment to the Amended and Restated Credit Agreement (the “Amendment”) to expand and extend its existing unsecured revolving credit facility (the “Facility”). The Facility is syndicated with two banks, BMO Capital Markets Corp. (“BMO”) and JPMorgan Chase Bank, N.A (“JPMorgan) with Bank of Montreal as administrative agent. The Amendment provided for an increase from $50 million in available borrowings to $75 million in available borrowings with a $50 million accordion feature, bringing the total potential availability up to $125 million, subject to certain conditions including obtaining commitments from additional lenders. The Amendment also extended the maturity date of the Facility from March 27, 2020 to November 29, 2022, with a one-year extension available at the Company’s option, subject to certain conditions including payment of an extension fee. Availability under the Facility is limited to 60% of the value of the unencumbered communities which the Company has placed in the Facility’s unencumbered asset pool (“Borrowing Base”). The Amendment increased the value of the Borrowing Base communities by reducing the capitalization rate applied to the Net Operating Income (“NOI”) generated by the communities in the Borrowing Base from 7.5% to 7.0%. On February 5, 2021, the Company entered into a Second Amendment to the Amended and Restated Credit Agreement with BMO to further reduce the capitalization rate from 7.0% to 6.5%. As of September 30, 2022, the amount outstanding under the Facility was $75 million and the interest rate was 4.16%.

On November 7, 2022, the Company entered into a Second Amended and Restated Credit Agreement (the “Second Amended Credit Agreement”) to expand and extend its existing Facility (See Note 13).

Loans Payable

The following is a summary of our loans payable as of September 30, 2022 and December 31, 2021 (in thousands):

	9/30/2022						12/31/2021
	Amount			Rate			Amount			Rate
Unsecured line of credit	$	75,000			4.16	%	$	25,000			1.60	%
Floorplan inventory financing		37,282			6.27	%		10,945			4.38	%
FirstBank rental home financing		5,100			5.00	%		5,000			3.50	%
OceanFirst notes receivable financing		10,000			6.25	%		6,000			3.25	%
Total Loans Payable		127,382			4.97	%		46,945			2.66	%
Unamortized debt issuance costs		(40	)					(188	)
Loans Payable, net of unamortized debt issuance costs	$	127,342			4.97	%	$	46,757			2.67	%

Series A Bonds

On February 6, 2022, the Company issued $102.7 million of its new 4.72% Series A Bonds due 2027, (“2027 Bonds”), in an offering to investors in Israel. The Company received $98.7 million, net of offering expenses. The 2027 Bonds are unsecured obligations of the Company denominated in Israeli shekels (NIS) and were issued pursuant to a Deed of Trust dated January 31, 2022 between the Company and Reznik Paz Nevo Trusts Ltd., an Israeli trust company, as trustee. The 2027 Bonds pay interest at a rate of 4.72% per year. Interest on the 2027 Bonds is payable semi-annually on August 31, 2022, and on February 28 and August 31 of the years 2023-2026 (inclusive) and on the final maturity date of February 28, 2027. The principal and interest will be linked to the U.S. Dollar. In the event of a future downgrade by two or more notches in the rating of the 2027 Bonds or a failure by the Company to comply with certain covenants in the Deed of Trust, the interest rate on the 2027 Bonds will be subject to increase. However, any such increases, in the aggregate, would not exceed 1.25% per annum.

Under the Deed of Trust, the Company has the right to redeem the 2027 Bonds, in whole or in part, at any time on or after 60 days from February 9, 2022, the date on which the 2027 Bonds were listed for trading on the Tel Aviv Stock Exchange (the “TASE”). Any such voluntary early redemption by the Company will require payment of the applicable early redemption amount calculated in accordance with the Deed of Trust. Upon the occurrence of an event of default or certain other events, including a delisting of the 2027 Bonds by the TASE, the Company may be required to affect an early repayment or redemption of all or a portion of the 2027 Bonds at their par value plus accrued and unpaid interest. The Deed of Trust permits the Company, subject to certain conditions, to issue additional 2027 Bonds without obtaining approval of the holders of the 2027 Bonds.

The 2027 Bonds are general unsecured obligations of the Company and rank equal in right of payment with all of the Company’s existing and future unsecured indebtedness. The Deed of Trust includes certain customary covenants, including financial covenants requiring the Company to maintain certain ratios of debt to net operating income, to shareholders equity and to earnings, and customary events of default. As of September 30, 2022, the Company is in compliance with these covenants. The 2027 Bonds were offered solely to investors outside the United States and were not offered to, or for the account or benefit of, U.S. Persons (as defined in Regulation S under the Securities Act of 1933).

Mortgages Payable

The following is a summary of our mortgages payable as of September 30, 2022 and December 31, 2021 (in thousands):

	9/30/2022						12/31/2021
	Amount			Rate			Amount			Rate
Fixed rate mortgages	$	504,647			3.87	%	$	456,702			3.75	%
Unamortized debt issuance costs		(4,950	)					(4,135	)
Mortgages Payable, net of unamortized debt issuance costs	$	499,697			3.91	%	$	452,567			3.79	%

In August 2020, the Company financed 28 of its previously unencumbered communities, containing approximately 4,100 sites, under a Federal National Mortgage Association (“Fannie Mae”) credit facility through Wells Fargo Bank, N.A. for total proceeds of approximately $106 million. On March 15, 2022, the Company completed the addition of approximately 1,100 homes to this credit facility for total proceeds of approximately $25.6 million. This addition is coterminous with the remaining term of the existing facility, which matures in 2030. Interest is at a fixed rate of 4.25%.

On September 26, 2022, the Company completed the addition of two tranches to its Fannie Mae credit facility through Wells Fargo Bank, N.A., for total proceeds of approximately $34 million. One tranche consists of four communities (the “Community Tranche”) and the other tranche consists of approximately 250 homes located in those communities (the “Home Tranche”). Both tranches have a loan term of 10 years with the Community Tranche amortizing over 30 years and the Home Tranche amortizing over 17 years. Interest is at a fixed rate of 5.24%.

As of September 30, 2022 and December 31, 2021, the weighted average loan maturity of mortgages payable was 5.1 and 5.2 years, respectively.