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LOANS AND MORTGAGES PAYABLE AND OTHER LONG-TERM INDEBTEDNESS
9 Months Ended
Sep. 30, 2023
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 7, 2022, the Company entered into the Second Amended and Restated Credit Agreement (the “Amendment”) to expand and extend its existing unsecured revolving credit facility (the “Facility”). The expanded Facility is syndicated with two banks, BMO and JPMorgan, as joint arrangers and joint book runners, with Bank of Montreal as administrative agent. The Second Amended Credit Agreement provides for an increase from $75 million in available borrowings to $100 million in available borrowings with a $400 million accordion feature, bringing the total potential availability up to $500 million, subject to certain conditions including obtaining commitments from additional lenders. The Second Amended Credit Agreement also extends the maturity date of the Facility from November 29, 2022 to November 7, 2026, with a further one-year extension available at the Company’s option, subject to certain conditions including payment of an extension fee. Availability under the amended 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 value of the Borrowing Base communities is based on a capitalization rate of 6.5% applied to the Net Operating Income (“NOI”) generated by the communities in the Borrowing Base. Interest rates on borrowings are based on the Company’s overall leverage ratio and are equal to the Secured Overnight Financing Rate (“SOFR”) plus 1.50% to 2.20%, or BMO’s prime lending rate plus 0.50% to 1.20%.

 

On February 24, 2023, the Company amended its Facility to expand available borrowings from $100 million to $180 million. As of September 30, 2023, the amount outstanding under the Facility was $100 million and the interest rate was 7.27%.

 

Loans Payable

 

The following is a summary of our loans payable as of September 30, 2023 and December 31, 2022 (in thousands):

 

   9/30/2023   12/31/2022 
   Amount   Rate   Amount   Rate 
                 
Margin Loan  $0    N/A   $0    N/A 
Unsecured line of credit   100,000    7.27%   75,000    5.88%
Floorplan inventory financing   1,050    9.01%   64,126    7.70%
FirstBank rental home financing   24,838    6.15%   5,100    6.50%
OceanFirst notes receivable financing   20,000    8.50%   10,000    7.50%
Total Loans Payable   145,888    7.26%   154,226    6.76%
Unamortized debt issuance costs   (1,265)        (695)     
Loans Payable, net of unamortized                    
debt issuance costs  $144,623    7.32%  $153,531    6.79%

 

On March 9, 2023, the Company entered into a $30 million revolving line of credit with Triad Financial Services (“Triad”) secured by rental homes and rental home leases, with an interest rate of prime plus 0.25%, with a minimum of 5%.

 

On May 12, 2023, the Company entered into a $25 million term loan with FirstBank. The term loan has a 5-year term with a fixed interest rate of 6.15%. The term loan is secured by rental homes, and their leases, in various communities throughout our portfolio. Additionally, the Company entered into a new $25 million line of credit secured by rental homes and their leases. This new line of credit also has a 5-year term and has a variable rate tied to Prime.

 

 

On July 19, 2023, the Company expanded its revolving line of credit with OceanFirst Bank from $20 million to $35 million. Interest is at prime with a floor of 4.75%. This line is secured by the Company’s eligible notes receivable. The amendment also extended the maturity date to June 1, 2025.

 

Series A Bonds

 

On February 6, 2022, the Company issued $102.7 million of its new 4.72% Series A Bonds due 2027, or the 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. As of September 30, 2023, the Company is in compliance with these covenants.

 

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. The Company does not currently intend to redeem the 2027 Bonds. 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 effect 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. 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, 2023 and December 31, 2022 (in thousands):

 

   9/30/2023   12/31/2022 
   Amount   Rate   Amount   Rate 
                 
Fixed rate mortgages  $446,280    3.88%  $513,709    3.93%
Unamortized debt issuance costs   (4,116)        (4,771)     
Mortgages Payable, net of                    
unamortized debt issuance costs  $442,164    3.92%  $508,938    3.97%

 

As of September 30, 2023 and December 31, 2022, the weighted average loan maturity of mortgages payable was 5.0 years and 5.1 years, respectively.