Mortgage Notes Payable

ESS does not have any indebtedness as all debt is incurred by the Operating Partnership. Mortgage notes payable consist of the following as of December 31, 2014 and 2013 ($ in thousands):



	2014			2013
Fixed rate mortgage notes payable	$	2,056,742		$	1,236,479
Variable rate mortgage notes payable (1)	189,202			167,601
Total mortgage notes payable (2)	$	2,245,944		$	1,404,080
Number of properties securing mortgage notes	67			49
Remaining terms	1-26 years			1-26 years
Weighted average interest rate	4.6		%	5.6		%

The aggregate scheduled principal payments of mortgage notes payable at December 31, 2014 are as follows ($ in thousands):



2015	$	94,580
2016	41,481
2017	198,683
2018	320,080
2019	565,801
Thereafter	941,526
	$	2,162,151

(1)

Variable rate mortgage notes payable consists of multifamily housing mortgage revenue bonds secured by deeds of trust on rental properties and guaranteed by collateral pledge agreements, payable monthly at a variable rate as defined in the Loan Agreement (approximately 1.8% at December 2014 and 1.6% at December 2013) plus credit enhancement and underwriting fees ranging from approximately 1.2% to 1.9%. Among the terms imposed on the properties, which are security for the bonds, is a requirement that 20% of the units are subject to tenant income criteria. Principal balances are due in full at various maturity dates from February 2015 through April 2040. Of these bonds $153.2 million are subject to various interest rate cap agreements, which limit the maximum interest rate to such bonds.


(2)	Includes total unamortized premium of $83.8 million and $11.5 million as of December 31, 2014 and December 31, 2013, respectively.

For the Company’s mortgage notes payable as of December 31, 2014, monthly interest expense and principal amortization, excluding balloon payments, totaled approximately $9.4 million and $3.3 million, respectively. Second deeds of trust accounted for $58.2 million of the $2.2 billion in mortgage notes payable as of December 31, 2014. Repayment of debt before the scheduled maturity date could result in prepayment penalties. The prepayment penalty on the majority of the Company’s mortgage notes payable are computed by the greater of (a) 1% of the amount of the principal being prepaid or (b) the present value of the mortgage note payable which is calculated by multiplying the principal being prepaid by the difference between the interest rate of the mortgage note and the stated yield rate on a specified U.S. treasury security as defined in the mortgage note agreement.