5.Mortgage Loans

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

	May 31, 2015		Nov. 30, 2014

5.73%, due August 1, 2015	$	17,966	$	18,189
Variable rate mortgage, due October 2, 2017*	6,306		6,394
Variable rate mortgage, due February 1, 2019*	10,751		10,888
Variable rate mortgage, due August 1, 2019*	7,598		7,691
Variable rate mortgage, due January 27, 2020*	3,789		3,848
Variable rate mortgage, due September 1, 2023*	—		8,875
Variable rate mortgage, due January 2, 2025*	19,604		—
5.09%, due July 1, 2029	7,570		7,750
5.09%, due July 1, 2029	6,381		6,533

Total nonrecourse mortgages	$	79,965	$	70,168

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

On December 31, 2014, two subsidiaries of Griffin closed on a new nonrecourse mortgage (“the 2025 First Niagara Mortgage”) for $21,600. The 2025 First Niagara Mortgage refinanced an existing mortgage with First Niagara Bank (“First Niagara”) which was due on September 1, 2023 and was collateralized by an approximately 228,000 square foot industrial building (“4275 Fritch Drive”) in Lower Nazareth, Pennsylvania. The 2025 First Niagara Mortgage is collateralized by 4275 Fritch Drive along with an adjacent approximately 303,000 square foot industrial building (“4270 Fritch Drive”). Griffin received net proceeds of $10,891 at closing (before transaction costs), in addition to $8,859 used to refinance the existing mortgage with First Niagara. The remaining $1,850 of loan proceeds will not be advanced until a portion of the remaining vacant space in 4270 Fritch Drive is leased. The 2025 First Niagara Mortgage has a ten-year term with monthly payments based on a twenty-five year amortization schedule. The interest rate for the 2025 First Niagara Mortgage is a floating rate of the one month LIBOR rate plus 1.95%. At the time the 2025 First Niagara Mortgage closed, Griffin entered into an interest rate swap agreement with First Niagara that, combined with an existing interest rate swap agreement with First Niagara, effectively fixes the rate of the 2025 First Niagara Mortgage at 4.43% over the mortgage loan’s ten-year term.

As of May 31, 2015, 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, 2015 and none is anticipated over the term of the agreements. Amounts in accumulated 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 2015 and 2014 six month periods, Griffin recognized losses (included in other comprehensive loss) before taxes of $727 and $526, respectively, on its interest rate swap agreements.

As of May 31, 2015, $1,115 was expected to be reclassified over the next twelve months from accumulated other comprehensive loss to interest expense. As of May 31, 2015, the net fair value of Griffin’s interest rate swap agreements was $2,465 and is included in other liabilities on Griffin’s consolidated balance sheet.

Griffin’s 5.73% nonrecourse mortgage loan on three industrial buildings in Tradeport with an aggregate of approximately 392,000 square feet matures on August 1, 2015 with a payment of $17,891 due on that date. On June 9, 2015, a subsidiary of Griffin agreed to terms with 40|86 Mortgage Capital, Inc. (“40|86 Mortgage Capital”) on a nonrecourse mortgage loan of up to $18,000 (subject to certain limitations based on the loan to value percentage). As per the terms of the proposed mortgage loan, $2,500 of the mortgage proceeds would be deposited into an escrow account that would become available to Griffin when a lease of approximately 88,000 square feet, currently on a month-to-month basis in one of the buildings that collateralizes the mortgage loan, is extended. The proposed mortgage loan would have an interest rate of 4.33% and a fifteen year term with payments based on a thirty year amortization schedule. The mortgage proceeds would be used to refinance the mortgage loan on the three industrial buildings in Tradeport that matures on August 1, 2015. Closing on this proposed mortgage loan is subject to completion of a definitive mortgage agreement. There is no guarantee that the proposed mortgage loan with 40|86 Mortgage Capital will be completed on its current terms, or at all.

On June 3, 2015, a subsidiary of Griffin and Webster Bank agreed to terms on a nonrecourse mortgage loan of up to $14,100 (subject to certain limitations based on the loan to value percentage) on an approximately 280,000 square foot industrial building under construction in the Lehigh Valley (“5220 Jaindl Boulevard”) that is expected to be completed and placed in service in the 2015 third quarter. The proposed mortgage loan with Webster Bank would have a floating interest rate of the one month LIBOR rate plus 1.65%, but Griffin would enter into an interest rate swap agreement with Webster Bank at closing to fix the rate for the entire loan term. The proposed mortgage loan with Webster Bank would have an initial funding of $11,500, with an additional $2,600 funded when the tenant that has leased approximately 196,000 square feet in 5220 Jaindl Boulevard exercises its option to lease the balance of the building or when another tenant leases the currently unleased space. The proposed mortgage loan with Webster Bank would have a ten year term with payments based on a twenty-five year amortization schedule and is expected to close in the fiscal 2015 third quarter. Closing on this proposed mortgage loan is subject to completion of a definitive mortgage agreement. There is no guarantee that the proposed mortgage loan with Webster Bank will be completed on its current terms, or at all.