Convertible Notes Payable - Related Parties

6 Months Ended

Jun. 30, 2017

Convertible Notes Payable - Related Parties

DEBT

Mortgages and other notes payable consist of the following (in thousands):



Description	June 30, 2017			December 31, 2016
Fixed rate notes
$37.0 million 3.76% Note, due December 1, 2020	$	33,662		$	34,166
$16.5 million 4.97% Note, due September 26, 2023	16,178			16,298
Floating rate notes
Related party Note, LIBOR plus 1.40% to 1.95%, due December 8, 2018	15,473			15,473
Total notes payable principal	65,313			65,937
Less deferred financing costs, net of accumulated amortization	(413		)	(463		)
Total notes payable	$	64,900		$	65,474

Our mortgage debt was collateralized by 10 operating properties as of June 30, 2017 with a combined net book value of $62.8 million. Our loans contain restrictions that would require the payment of prepayment penalties for the acceleration of outstanding debt and are secured by deeds of trust on certain of our properties and the assignment of certain rents and leases associated with those properties. Certain other of our loans are subject to customary covenants. As of June 30, 2017, we were in compliance with all loan covenants.

Annual maturities of notes payable as of June 30, 2017 are due during the following years:



Year	Amount Due (in thousands)
2017	$	655
2018	16,795
2019	1,376
2020	31,286
2021	308
Thereafter	14,893
Total	$	65,313

CONVERTIBLE NOTES PAYABLE - RELATED PARTIES

On November 20, 2015, five trustees on our board of trustees loaned $197,780 to the Company in exchange for convertible notes payable. The convertible notes payable accrue interest at 10% per annum and mature on November 20, 2018. The convertible notes payable can be converted by the noteholders into Common Shares at the rate of $1.331 per Common Share at any time. After six months, the Company can convert the notes payable into Common Shares. At maturity or when the Company chooses to convert the convertible notes payable into Common Shares, the noteholders have the option to receive cash plus accrued interest or convert the convertible notes payable into Common Shares.