10. MORTGAGE NOTES PAYABLE

At January 31, 2015 and 2014, the Trust had mortgage notes payable outstanding with respect to each of the Hotels except the Albuquerque property. The mortgage notes payable have various repayment terms and have scheduled maturity dates ranging from April 2015 to November 2029. Weighted average interest rates on the mortgage notes payable for the fiscal years ended January 31, 2015 and 2014 were 4.34% and 4.89%, respectively.

The following table summarizes the Trust’s mortgage notes payable as of January 31:

	2015		2014
Albuquerque property mortgage note payable paid in full at January 31, 2015.	$	-	$	1,126,983

Mortgage note payable, due in monthly installments of $36,835, including interest at 4.75% per year, through August 22, 2024, plus a balloon payment of $3,585,591 in August 2024, secured by the Ontario property with a carrying value of $5.6 million at January 31, 2015.		5,580,410		5,983,480

Mortgage note payable, due in monthly installments of $26,312, including interest at 4.19% per year, through November 18, 2029, secured by the Tucson Oracle property with a carrying value of $6.5 million at January 31, 2015.		3,462,188		1,241,111

Mortgage note payable, due in variable monthly installments ($29,776 as of January 31, 2015) including interest at the prime rate (3.25% per year as of January 31, 2015), through April 28, 2015, plus a balloon payment of $4,812,244 in April 2015, secured by the Tucson St. Mary's property with a carrying value of $7.3 million at January 31, 2015.		4,861,936		5,039,946

Mortgage note payable, due in monthly installments of $32,419, including interest at the prime rate plus one percentage point over the index, with a floor of 5.0% per year (5% per year as of January 31, 2015), through August 1, 2022 plus a balloon payment of $4,112,498 in September 2022, secured by the Yuma property with a carrying value of $5.1 million at January 31, 2015.		5,217,202		5,355,051

Totals:	$	19,121,736	$	18,746,571

The mortgage note payable secured by the Tucson St. Mary’s hotel property contains recourse provisions to the Partnership and Trust as full guarantors. The mortgage note payable secured by the Yuma hotel property is recourse to the Trust as a full guarantor. None of the other mortgage notes are recourse to the Partnership or the Trust.

On June 2, 2014, the Trust paid off the Albuquerque Suite Hospitality, LLC property mortgage, which had an outstanding balance of $1,099,299 at such time.

On August 22, 2014, the Ontario entity, a subsidiary of the Trust, entered into a $5,700,000 mortgage loan with Arizona Bank & Trust (the “AZB&T Agreement”) to refinance the then existing term debt. The AZB&T Agreement calls for a 10 year maturity date and an interest rate of 4.75% fixed for the first five years and then variable at Wall Street Journal Prime + 1.50% with a 4.75% floor for the remaining 5 years of the term. Prepayment fees exist for refinancing this debt with another lender in the first three years. As of January 31, 2015, the mortgage loan balance was approximately $5,580,000, net of a discount of approximately $48,000.

On November 24, 2014, the Tucson Oracle entity, entered into a $3,500,000 mortgage loan with Kansas State Bank of Manhattan to acquire the land associated with this property, re-finance the existing Tucson hotel loan first deed of trust and pay off other existing debt. This new loan lowered the interest rate for this property’s mortgage from 8.0% to 4.19%. The $3,500,000 commercial real estate loan has a 15 year term with 4.19% fixed interest rate for five years, and adjusts annually based upon the Weekly Average Yield of the US Treasury Securities, with a 4.19% floor. The loan closed simultaneous to the land purchase. Rare Earth, the Partnership, the Trust, the Wirth Family Trust dated July 14, 2006, James and Gail Wirth are joint guarantors. As of January 31, 2015, the mortgage loan balance was approximately $3,462,000, net of a discount of approximately $8,000. Prior to the purchase of the land associated with the Tucson Oracle property, the Tucson Oracle entity was a party to a ground lease that was set to expire in 2050, and incurred approximately $154,000 and $188,000 of land lease expense for the fiscal years ended January 31, 2015 and 2014, respectively.

On February 26, 2015, the Trust through one of its subsidiaries, Tucson Saint Mary’s Suite Hospitality, LLC obtained a loan extension on its first trustee mortgage to April 28, 2015. All other terms of the agreement remain the same. Management anticipates refinancing this note on or about April 28, 2015.

See Note 14 – “Minimum Debt Payments” for scheduled minimum payments on the mortgage notes payable.