14. Notes Payable

We have total debt obligations of $52.6 million that will mature between 2016 and 2018. In connection with our notes payable, we incurred and capitalized financing costs totaling $1.3 million and $1.2 million, as of June 30, 2014 and December 31, 2013, respectively. These financing costs have been capitalized and are being amortized over the life of their respective financing agreements. For the three months ended June 30, 2014 and 2013, $47,000 and $41,000, respectively, of deferred financing costs were amortized and included in interest expense in our consolidated statements of operations. For the six months ended June 30, 2014 and 2013, $94,000 and $76,000, respectively, of deferred financing costs were amortized.

Wells Fargo Bank, National Association

This loan was paid off in its entirety in the third quarter of 2013. During the three and six months ended June 30, 2013, we incurred $51,000 and $103,000, respectively, of interest expense.

Transamerica Life Insurance Company

This loan was paid off in its entirety in the third quarter of 2013. During the three and six months ended June 30, 2013, we incurred $94,000 and $188,000, respectively, of interest expense related to this loan.

General Electric Capital Corporation – Western Property

This loan was paid off in its entirety in the first quarter of 2013. During the three and six months ended June 30, 2013, we incurred $0 and $26,000, respectively, of interest expense related to this loan.

General Electric Capital Corporation – Healthcare Properties (“GE Healthcare Loan”)

The GE Healthcare Loan is secured by the Farmington Square, Friendship Haven, Fernhill, Sheridan, and Pacific facilities. As of June 30, 2014, we are in technical default as the facility’s operations have not maintained the required minimum lease coverage and occupancy level as specified by the Friendship Haven facility lease. As of June 30, 2014 and December 31, 2013, we had net borrowings of $28.0 million and $28.3 million under the loan agreement, respectively. During the three months ended June 30, 2014 and 2013, we incurred $0.3 million and $0.4 million, respectively, of interest expense related to this loan agreement. During the six months ended June 30, 2014 and 2013, we incurred $0.7 million and $0.7 million, respectively, of interest expense related to this loan agreement.

The principal payments due on the loan for the period from July 1, 2014 to December 31, 2014, and for each of the three following years ended December 31 are as follows:

Year	Principal Amount
July 1, 2014 to December 31, 2014	$	243,000
2015		523,000
2016		551,000
2017		26,727,000
Subtotal	$	28,044,000

General Electric Capital Corporation – Aledo Property (“Aledo Loan”)

The Aledo Loan is secured by the Brookstone of Aledo (“Aledo”) facility. If certain conditions are met, including the addition of a new facility as collateral to this loan to be cross collateralized with Aledo property, the Company may borrow an additional $0.9 million on the Aledo Loan. As of June 30, 2014 and December 31, 2013, we had net borrowings of $5.9 million under the loan agreement. During the three months ended June 30, 2014 and 2013, we incurred $74,000 and $0 of interest expense related to the Aledo Loan, respectively. During the six months ended June 30, 2014 and 2013, we incurred $147,000 and $0 of interest expense related to the Aledo Loan, respectively.

The principal payments due on the loan for the period from July 1, 2014 to December 31, 2014, and for each of the four following years ended December 31 are as follows:

Year	Principal Amount
July 1, 2014 to December 31, 2014	$	39,000
2015		102,000
2016		107,000
2017		115,000
2018		5,487,000
Subtotal	$	5,850,000

The PrivateBank and Trust Company – Winston-Salem Property (“PB Loan”)

The PB Loan is secured by the Danby House facility. As of June 30, 2014 and December 31, 2013, we had net borrowings of $7.3 million under the loan. During the three months ended June 30, 2014 and 2013, we incurred $90,000 and $92,000, respectively, of interest expense related to the PB Loan. During the six months ended June 30, 2014 and 2013, we incurred $182,000 and $153,000, respectively, of interest expense related to the PB Loan. As of June 30, 2014, we are in technical default as the facility’s operations have not maintained the required minimum lease coverage ratio and we are working with the tenant/operator of the Danby House facility to cure the default.

The principal payments due on the loan for the period from July 1, 2014 to December 31, 2014, and for each of the two following years ended December 31 are as follows:

Year	Principal Amount
July 1, 2014 to December 31, 2014	$	85,000
2015		179,000
2016		7,011,000
Subtotal	$	7,275,000

We intend to refinance the GE Healthcare loan, PB loan, and North Carolina loan with Housing and Urban Development (“HUD”) insured debt. In the fourth quarter of 2013, we filed loan applications with HUD and have paid $0.5 million in fees and expenses associated with the refinancing. Such amounts have been capitalized and are included in deferred financing costs on the accompanying consolidated balance sheets. While there can be no assurances made with respect to the HUD refinancing, we expect these HUD loans to close by the end of 2014.

The PrivateBank and Trust Company – North Carolina Portfolio (“North Carolina Loan”)

The North Carolina Loan is secured by the Carteret House, Hamlet House, and Shelby House properties. As of June 30, 2014 and December 31, 2013, we had net borrowings of $11.4 million under the loan agreement. During the three months ended June 30, 2014 and 2013, we incurred $151,000 and $0, respectively, of interest expense related to the North Carolina Loan. During the six months ended June 30, 2014 and 2013, we incurred $306,000 and $0, respectively , of interest expense related to the North Carolina Loan.

The principal payments due on the loan for the period from July 1, 2014 to December 31, 2014, and for each of the two following years ended December 31 are as follows:

Year	Principal Amount
July 1, 2014 to December 31, 2014	$	118,000
2015		245,000
2016		11,037,000
Subtotal	$	11,400,000