7.	Note and Mortgages Payable

At June 30, 2014, Agree Limited Partnership (the “Operating Partnership”) had in place an $85,000,000 unsecured revolving credit facility (“Credit Facility”), which was guaranteed by the Company. Subject to customary conditions, at the Company’s option, total commitments under the Credit Facility could have been increased up to an aggregate of $135,000,000. Borrowings under the Credit Facility were used for general corporate purposes, including working capital, development and acquisition activities, capital expenditures, repayment of indebtedness or other corporate activities. The Credit Facility was to mature on October 26, 2015, and could have been extended, at the Company’s election, for two one-year terms to October 2017, subject to certain conditions. Borrowings under the Credit Facility bore interest at LIBOR plus a spread of 150 to 215 basis points, or the base rate, depending on the Company’s leverage ratio. As of June 30, 2014, $43,364,000 was outstanding under the Credit Facility bearing a weighted average interest rate of 1.72%, and $41,636,000 was available for borrowing (subject to customary conditions to borrowing).

At June 30, 2014, the Operating Partnership had in place a $35,000,000 seven year unsecured term loan (“Unsecured Term Loan”), which is guaranteed by the Company. The Unsecured Term Loan includes an accordion feature providing the opportunity to borrow up to an additional $35,000,000 under the same loan agreement, subject to customary conditions. The Unsecured Term Loan matures on September 29, 2020. Borrowings under the Unsecured Term Loan bear interest at LIBOR plus a spread of 165 to 225 basis points depending on the Company’s leverage ratio. In conjunction with the closing of the loan, the Company entered into a seven year interest rate swap agreement resulting in a fixed interest rate of 3.85%, based on the current spread.

The Credit Facility and Unsecured Term Loan contained customary covenants, including, among others, financial covenants regarding debt levels, total liabilities, tangible net worth, fixed charge coverage, unencumbered borrowing base properties, and permitted investments. The Company was in compliance with the covenant terms at June 30, 2014.

See Note 13 Subsequent Events regarding changes related to the above financing arrangements.

Mortgages payable consisted of the following:

	June 30, 2014		December 31, 2013

Note payable in monthly installments of interest only at LIBOR plus 160 basis points, swapped to a fixed rate of 2.49% with balloon payment due April 4, 2018; collateralized by related real estate and tenants' leases		25,000,000		25,000,000

Note payable in monthly installments of interest only at 3.60% per annum, with balloon payment due January 1, 2023; collateralized by related real estate and tenants' leases		23,640,000		23,640,000

Note payable in monthly principal installments of $53,160 plus interest at 170 basis points over LIBOR, swapped to a fixed rate of 3.62% as of March 31, 2014. A final balloon payment in the amount of $19,744,758 is due on May 14, 2017 unless extended for a two year period at the option of the Company, subject to certain conditions, collateralized by related real estate and tenants’ leases		21,717,038		22,017,758

Note payable in monthly installments of $153,838 including interest at 6.90% per annum, with the final monthly payment due January 2020; collateralized by related real estate and tenants’ leases		8,533,793		9,149,944

Note payable in monthly installments of $91,675 including interest at 6.27% per annum, with a final monthly payment due July 2026; collateralized by related real estate and tenants’ leases		9,304,242		9,557,942

Note payable in monthly installments of $60,097 including interest at 5.08% per annum, with a final balloon payment in the amount of $9,167,573 paid June 2014; collateralized by related real estate and tenants’ leases		-		9,271,561

Note payable in monthly installments of $99,598 including interest at 6.63% per annum, with the final monthly payment due February 2017; collateralized by related real estate and tenants’ leases		2,913,939		3,405,384

Note payable in monthy interest-only installments of $48,467 at 6.56% annum, with a balloon payment in the amount of $8,580,000 due June 11, 2016; collateralized by related real estate and tenants’ leases		8,580,000		8,580,000

Note payable in monthly installments of $23,004 including interest at 6.24% per annum, with the final balloon payment of $2,766,628 due February 2020; collateralized by related real estate and tenant lease		3,240,010		3,275,170
Total	$	102,929,022	$	113,897,759

The above mortgages payable are collateralized by related real estate with an aggregate net book value of $138,635,000.

The weighted average interest rate for the mortgage notes payable at June 30, 2014 was 4.27%.

The following table presents scheduled principal payments on mortgages and notes payable as of June 30, 2014:

Year Ending June 30,

2015	$	3,573,277
2016 (1)		55,757,468
2017 (2)		23,354,309
2018		2,324,754
2019		27,485,507
Thereafter		68,797,707
Total debt	$	181,293,022

(1)

Scheduled maturities in 2016 include the $43,364,000 outstanding balance under the Credit Facility as of June 30, 2014. The Credit Facility matures on October 26, 2015, and may be extended at the Company’s election, for two one-year terms to October 2017, subject to certain conditions. See Note 13.

(2)

Scheduled maturities in 2017 include $19,744,758 which represents the ending balance of a note payable due in 2017. The note matures May 14, 2017 and may be extended, at the Company’s election, for a two-year term to May 2019, subject to certain conditions.