7. Mortgage Loans

Griffin’s mortgage loans, which are nonrecourse, consist of:

	May 31, 2014		November 30, 2013

6.30%, due May 1, 2014	$	—	$	99
5.73%, due August 1, 2015	18,405		18,615
8.13%, due April 1, 2016	3,422		3,603
7.0%, due October 2, 2017	5,654		5,779
Variable rate mortgage, due October 2, 2017*	6,479		6,563
Variable rate mortgage, due February 1, 2019*	11,021		11,150
Variable rate mortgage, due August 1, 2019*	7,781		7,869
Variable rate mortgage, due January 27, 2020*	3,905		3,961
Variable rate mortgage, due September 1, 2023*	8,972		9,069
Total nonrecourse mortgages	$	65,639	$	66,708

* Griffin entered into interest rate swap agreements effectively to fix the interest rates on these loans (see below).

As of May 31, 2014, Griffin was a party to several interest rate swap agreements related to its variable rate nonrecourse mortgages on certain of its real estate assets. Griffin accounts for its interest rate swap agreements as effective cash flow hedges (see Note 3). No ineffectiveness on the cash flow hedges was recognized as of May 31, 2014 and none is anticipated over the term of the agreements. Amounts in other comprehensive income (loss) will be reclassified into interest expense over the term of the swap agreements to achieve fixed rates on each mortgage. None of the interest rate swap agreements contain any credit risk related contingent features. In the 2014 six month period, Griffin recognized a loss (included in other comprehensive loss) before taxes of $526 on its interest rate swap agreements. In the 2013 six month period, Griffin recognized a gain (included in other comprehensive loss) before taxes of $424 on its interest rate swap agreements.

As of May 31, 2014, $992 was expected to be reclassified over the next twelve months from accumulated other comprehensive loss to interest expense. As of May 31, 2014, the net fair value of Griffin’s interest rate swap agreements was $2,244, with $38 included in other assets and $2,282 included in other liabilities on Griffin’s consolidated balance sheet.

On June 6, 2014, a subsidiary of Griffin, Griffin Center Development I, LLC, completed the refinancing of its nonrecourse mortgage loan (the “GCD Mortgage Loan”) with Farm Bureau Life Insurance Company (“Farm Bureau”) that was due April 1, 2016. The GCD Mortgage Loan is collateralized by a 165,000 square foot flex building in Windsor, Connecticut. At the time of the refinancing, the GCD Mortgage Loan had a balance of $3,391 and had an interest rate of 8.13%. The refinancing increased the loan amount to $7,868, reduced the interest rate to 5.09% and extended the loan term to 15 years from the time of the refinancing, with payments based on a 15 year amortization schedule.

Also on June 6, 2014, a subsidiary of Griffin, Tradeport Development I, LLC, completed the refinancing of its nonrecourse mortgage loan (the “TD Mortgage Loan”) with Farm Bureau that was due October 2, 2017. The TD Mortgage Loan is collateralized by a 100,000 square foot industrial building and a 57,000 square foot industrial building, both located in Windsor, Connecticut. At the time of the refinancing, the TD Mortgage Loan had a balance of $5,632 and had an interest rate of 7.0%. The refinancing increased the loan amount to $6,632, reduced the interest rate to 5.09% and extended the loan term to 15 years from the time of the refinancing, with payments based on a 15 year amortization schedule. $1,000 of the mortgage loan proceeds from the refinancing of the TD Mortgage Loan is being held in escrow. The escrowed funds will be released to Griffin if the 57,000 square foot industrial building is re-leased within one year from August 31, 2014, the date the current full building lease is scheduled to expire. That lease is not expected to be renewed, but may be extended for a short period. If a replacement lease reflecting rental terms agreed upon with Farm Bureau is not obtained, the proceeds being held in escrow are required to be used to make a partial prepayment, without penalty, on the TD Mortgage Loan.

The GCD Mortgage Loan and the TD Mortgage Loan are cross-collateralized and cross-defaulted with each other. The loans may not be voluntarily prepaid for seven years; thereafter, any prepayment would require a prepayment fee and the simultaneous prepayment of both loans.