Convertible Notes Payable - Related Parties

9 Months Ended

Sep. 30, 2019

Convertible Notes Payable - Related Parties

DEBT

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



Description	September 30, 2019			December 31, 2018
Fixed rate notes
$37.0 million 3.76% Note, due December 1, 2020	$	25,203		$	25,863
$16.5 million 4.97% Note, due September 26, 2023	15,607			15,805
Floating rate notes
Related party Note, LIBOR plus 1.40% to 1.90%, due December 31, 2019	5,661			5,661
Total notes payable principal	46,471			47,329
Less deferred financing costs, net of accumulated amortization	(190		)	(265		)
Total notes payable	$	46,281		$	47,064

Our mortgage debt was collateralized by seven operating properties as of September 30, 2019 with a combined net book value of $55.4 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 of our other loans are subject to customary covenants. As of September 30, 2019, we were in compliance with all loan covenants.

Scheduled maturities of notes payable as of September 30, 2019 were as follows:



Year	Amount Due (in thousands)
2019	$	5,999
2020	25,272
2021	308
2022	323
2023	14,569
Total	$	46,471

CONVERTIBLE NOTES PAYABLE - RELATED PARTIES

On November 20, 2015, five trustees on our board of trustees at that time loaned $197,780 to the Company in exchange for convertible notes payable. The convertible notes payable accrue interest at 10% per annum and originally matured on November 20, 2018. In 2019, the Pillarstone board of trustees approved an extension of the maturity date to November 20, 2021. 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 and 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.