Debt Obligations

9 Months Ended

Sep. 30, 2021

Debt Disclosure [Abstract]

Debt Obligations

Debt Obligations

Debt obligations consist of the following (dollars in thousands):

	September 30, 2021		December 31, 2020
Mortgages payable	$	134,678	$	130,997
Junior subordinated notes	37,400		37,400
Deferred financing costs	(787)		(880)
Total debt obligations, net of deferred costs	$	171,291	$	167,517

Mortgages Payable

At September 30, 2021, the weighted average interest rate on the Company's mortgage payables was 3.79% and the weighted average remaining term to maturity is 11.01 years. For the three months ended September 30, 2021 and 2020, interest expense, which includes amortization of deferred financing costs, was $1,305,000 and $1,475,000, respectively. For the nine months ended September 30, 2021 and 2020, interest expense, which includes amortization of deferred financing costs, was $4,113,000 and $4,418,000, respectively.

During the three and nine months ended September 30, 2021, the Company paid off mortgage debt of $31,879,000 pertaining to three first mortgage loans on three properties and three supplemental loans on two properties. In connection with the payoff, the Company recognized a loss on the extinguishment of debt of $902,000. Such debt was scheduled to mature in 2022 and bore a weighted average interest rate of 4.53%.

On September 18, 2021, in connection with the buyout of its partners' interests in Bells Bluff - West Nashville, TN, the $47,043,000 construction loan on the property was refinanced with a 20-year fixed rate (i.e., 3.48% and interest only for 10 years), mortgage in the principal amount of $52,000,000.

Credit Facility

The Company's credit facility with an affiliate of Valley National Bank, as amended and modified from time-to-time, allows the Company to borrow, subject to compliance with borrowing base requirements and other conditions, up to $15,000,000 to facilitate the acquisition of multi-family properties and for working capital (including dividend payments) and operating expenses. The facility is secured by the cash available in certain cash accounts maintained by the Company at Valley National Bank, matures April 2023 and bears an adjustable interest rate of 50 basis points over the prime rate, with a floor of 4.25%. The interest rate in effect as of September 30, 2021 is 4.25%. There is an unused facility fee of 0.25% per annum on the difference between the outstanding loan balance and maximum amount then available under the facility. For the three months ended September 30, 2021 and 2020, interest expense, which includes amortization of deferred financing costs and unused fees, was $18,000 and $17,000. For the nine months ended September 30, 2021 and 2020, interest expense, which includes amortization of deferred financing costs and unused fees, was $54,000 and $79,000. Deferred financing costs of $20,000 and $12,000, are recorded in other assets on the Consolidated balance sheets at September 30, 2021 and December 31, 2020, respectively. At September 30, 2021, the Company is in compliance in all material respects with its obligation under the facility. At September 30, 2021 and November 1, 2021, there was no outstanding balance on the facility.

Junior Subordinated Notes

At September 30, 2021 and December 31, 2020, the outstanding principal balance of the Company's junior subordinated notes was $37,400,000, before deferred financing costs of $302,000 and $317,000, respectively. The interest rate on the outstanding balance resets quarterly and is based on three months LIBOR + 2.00%. The rate in effect at September 30, 2021 and 2020 was 2.13% and 2.27%, respectively. The notes mature April 30, 2036.

The junior subordinated notes require interest only payments through the maturity date of April 30, 2036, at which time repayment of the outstanding principal and unpaid interest become due. Interest expense for the three months ended September 30, 2021 and 2020, which includes amortization of deferred financing costs, was $210,000 and $240,000, respectively. Interest expense for the nine months ended September 30, 2021 and 2020, which includes amortization of deferred financing costs, was $636,000 and $903,000, respectively.