Mortgage Notes Payable

12 Months Ended

Dec. 31, 2019

Essex 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, 2019 and 2018 ($ in thousands):



	2019			2018
Fixed rate mortgage notes payable	$	736,490		$	1,538,488
Variable rate mortgage notes payable ⁽¹⁾	254,177			268,138
Total mortgage notes payable ⁽²⁾	$	990,667		$	1,806,626
Number of properties securing mortgage notes	24			50
Remaining terms	1-27 years			1-28 years
Weighted average interest rate	4.1		%	4.3		%

The aggregate scheduled principal payments of mortgage notes payable at December 31, 2019 are as follows ($ in thousands):



2020	$	288,057
2021	31,653
2022	43,188
2023	2,945
2024	3,109
Thereafter	618,383
	$	987,335


⁽¹⁾	Variable rate mortgage notes payable, including $255.4 million in bonds that have been converted to variable rate through total return swap contracts, 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 2.3% at December 2019 and 2.5% at December 2018) including credit enhancement and underwriting fees. Among the terms imposed on the properties, which are security for the bonds, is a requirement that 20% of the apartment homes are subject to tenant income criteria. Once the bonds have been repaid, the properties may no longer be obligated to comply with such tenant income criteria. Principal balances are due in full at various maturity dates from December 2027 through December 2046. The Company had no interest rate cap agreements as of December 31, 2019. As of December 31, 2018, $9.9 million of these bonds was subject to various interest rate cap agreements that limit the maximum interest rate to such bonds. The interest rate cap agreements matured in December 2019.


⁽²⁾	Includes total unamortized premium, net of discounts, of $5.9 million and $14.9 million and reduced by unamortized debt issuance costs of $2.6 million and $4.2 million as of December 31, 2019 and 2018, respectively.

For the Company’s mortgage notes payable as of December 31, 2019, monthly interest expense and principal amortization, excluding balloon payments, totaled approximately $5.5 million and $1.4 million, respectively. Second deeds of trust accounted for none of the mortgage notes payable balance as of both December 31, 2019 and 2018. 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 principal being prepaid multiplied by the difference between the interest rate of the mortgage note and the stated yield rate on a U.S. treasury security which generally has an equivalent remaining term as the mortgage note.