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Notes Payable
 9 Months Ended
Sep. 30, 2022
Debt Disclosure [Abstract]  
Notes Payable Notes Payable
Notes payable consists of the following (in thousands):
Maturity DatesSeptember 30,
2022		December 31,
2021
Fixed rate mortgage notes payable2024 to 2045$506,137 $561,006 
Fannie Mae mortgage notes payable (1)
202231,991 31,991 
Variable rate mortgage notes payable (2)
2026 to 2029129,727 88,711 
Notes payable - insurance20231,395 3,483 
Notes payable - other20232,121 2,121 
Total notes payable$671,371 $687,312 
Less: deferred financing costs, net(5,436)(4,201)
Total notes payable, net$665,935 $683,111 
Less: current portion(46,137)(69,769)
Total long-term notes payable, net$619,798 $613,342 

The following schedule summarizing our notes payable as of September 30, 2022 (in thousands):
Principal payments due in:
2022 (1)
$35,813 
202315,054 
2024152,155 
2025114,285 
2026155,919 
Thereafter198,145 
Total notes payable, excluding deferred financing costs$671,371 
__________
(1) See “Transactions Involving Certain Fannie Mae Loans” disclosure below.
(2) See Note 12 for interest rate cap agreements on variable rate mortgage notes payable.

As of September 30, 2022, our fixed rate mortgage notes bear interest rates ranging from 3.6% to 6.3%. Our variable rate mortgage notes are based on either one-month LIBOR or the Secured Overnight Financing Rate (“SOFR”) plus an applicable margin. As of September 30, 2022, one-month LIBOR and one-month SOFR were 3.2% and 3.0%, respectively, and the applicable margins were 2.14% and 3.50%, respectively.

As of September 30, 2022, we had property and equipment with a net carrying value of $599.2 million that is secured by outstanding notes payable.

2022 Mortgage Refinance
In March 2022, the Company completed the refinancing of certain existing mortgage debt (“Refinance Facility”) for ten of its communities. The Refinance Facility includes an initial term loan of $80 million. In addition, $10 million is available as delayed loans that can be borrowed upon achieving and maintaining certain financial covenant requirements and up to an additional uncommitted $40 million may be available to fund future growth initiatives. In addition, the Company provided a limited payment guaranty (“Limited Payment Guaranty”) of 33%, that reduces to 25% and then to 10%, of the then outstanding balance of the Refinance Facility based upon achieving certain financial covenants and then maintained over the life of the loan. As defined and required in the Limited Payment Guaranty, the Company is required to maintain certain covenants including maintaining a Tangible Net Worth of $150 million and Liquid Assets of at least $13 million which is inclusive of a $1.5 million debt service reserve provided by the Company at the closing of the Refinance Facility. The debt service reserve may be released upon terms described in the “Loan Agreement” and is included in restricted cash.
The Refinance Facility also requires the financial performance of the ten communities to meet certain financial covenants, including a minimum debt service coverage ratio and a minimum debt yield (as defined in the Loan Agreement) with a first
measurement date as of June 30, 2022 and quarterly measurement dates thereafter. As of September 30, 2022, we were in compliance with the financial covenants. We can provide no assurance that any financial covenants will be met in the future.
The Refinancing Facility requires that the Company purchase and maintain an interest rate cap facility during the term of the Refinancing Facility. The Company is in process of obtaining the interest rate cap facility in compliance with the lender’s requirements.
In conjunction with the Refinancing Facility, the Company incurred costs of $2.2 million in March 2022. These costs, net of amortization of $0.3 million, are included in deferred financing costs at September 30, 2022.
The financing transaction generated a loss on refinancing of notes payable of $0.6 million which is included in loss on extinguishment of debt for the nine months ended September 30, 2022.

Transactions Involving Certain Fannie Mae Loans

The Coronavirus Aid, Relief and Economic Security (“CARES”) Act, among other things, permitted borrowers with mortgages from Government Sponsored Enterprises who experienced a financial hardship related to the COVID-19 pandemic to obtain forbearance of their loans for up to 90 days. During 2020, the Company entered into several loan forbearance agreements with the Federal National Mortgage Association (“Fannie Mae”). In July 2020, the Company elected not to pay $3.8 million on the loans for 18 properties as of that date as it initiated a process intended to transfer the operations and ownership of such properties to Fannie Mae.  Therefore, the Company was in default on such loans. 

As a result of the events of default and receivership order obtained by Fannie Mae, the Company discontinued recognizing revenues and expenses related to the 18 properties effective August 1, 2020, which was the date of default.  In addition, the Company concluded that it was no longer entitled to receive any existing accounts receivable or revenue related to the properties, that all amounts held in escrow by Fannie Mae were forfeited, and that the Company no longer had control of the properties in accordance with GAAP. Accordingly, the Company derecognized the net carrying value of the properties and related assets from the financial statements and recorded a loss from the forbearance. The Company continues to recognize the related debt and liabilities until the debts are formally released. When these debts are formally released, the net carrying value of the debts is derecognized and a gain on extinguishment of debt is recognized. During the three and nine months ended September 30, 2021, Fannie Mae completed the transition of legal ownership of five and fourteen, cumulatively, of the Company's properties, respectively, and the Company recorded a gain on extinguishment of this debt for such periods of $54.1 million and $168.3 million, respectively.

As of September 30, 2022, two properties remain for which the legal ownership has not been transferred back to Fannie Mae. At both September 30, 2022 and December 31, 2021, the Company included $31.8 million in outstanding debt in current portion of notes payable, net of deferred financing costs of $0.2 million. As September 30, 2022 and December 31, 2021, accrued interest related to the remaining two properties was $3.7 million and $2.7 million, respectively. As of September 30, 2022 and December 31, 2021, the Company did not manage these properties (or any properties) on behalf of Fannie Mae. Except for the non-compliance with Fannie Mae mortgages for the two remaining properties expected to transition back to Fannie Mae, as noted above, the Company was in compliance with all other aspects of its outstanding indebtedness at September 30, 2022.