DEBT OBLIGATIONS

12 Months Ended

Sep. 30, 2012

DEBT OBLIGATIONS

DEBT OBLIGATIONS

NOTE 10—DEBT OBLIGATIONS

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

	Year ended September 30,
	2012		2011
Line of credit		—		—
Junior subordinated notes	$	37,400	$	37,400
Mortgages payable		169,284		14,417
Total debt obligations	$	206,684	$	51,817

Line of credit

        On June 22, 2011, the Trust, through a wholly owned subsidiary, entered into a senior secured revolving credit facility with Capital One, National Association. The maximum amount that may be borrowed under the facility is the lesser of $25 million and the borrowing base. The borrowing base is generally equal to 40% to 65% (depending, among other things, on the type of property secured by the eligible mortgage receivables pledged to the lender and the operating income of the related property) of eligible mortgage receivables. Interest accrues on the outstanding balance at the greater of (i) 4% plus LIBOR and (ii) 5.50%. The facility matures June 21, 2014 and, subject to the satisfaction of specified conditions, the outstanding balance may be converted at the Trust's option into an 18 month term loan. The Trust has guaranteed the payment and performance of its subsidiary's obligations under the facility.

        On April 17, 2012, the facility was amended to allow the subsidiary to borrow for up to 90 days on an unsecured basis, a maximum of $10,000,000.

        The facility requires the Trust and the subsidiary to maintain or comply with, among other things, net worth and liquidity covenants, debt service and collateral coverage ratios and limits, with specified exceptions, the ability to incur debt.

        For the years ended September 30, 2012 and 2011 interest expense, which includes fee amortization with respect to the facility, was $182,000 and $37,000, respectively.

        At September 30, 2012 and 2011 there was no outstanding balance on the facility.

Junior Subordinated Notes

        At September 30, 2012 and 2011 the Trust's junior subordinated notes had an outstanding principal balance of $37,400,000. The interest rates on the outstanding notes is set forth in the table below:

Interest period	Interest Rate
March 15, 2011 through July 31, 2012		3.00	%
August 1, 2012 through April 29, 2016		4.90	%
April 30, 2016 through April 30, 2036		LIBOR + 2.00	%

        On March 15, 2011, the Trust restructured its existing junior subordinated notes resulting in a repayment of $5,000,000 and a reduction in the interest rate for the remaining term. The Trust accounted for the restructuring of this debt as an extinguishment of debt. For the year ended September 30, 2011, the Trust recognized a loss on the extinguishment of the debt of $2,138,000, which represented the unamortized principal of $1,308,000 and unamortized costs of $830,000. The Trust also incurred third party costs of $512,000 which were deferred and will be amortized over the remaining life of the notes.

        Interest expense, which includes amortization of deferred costs relating to the junior subordinated notes for the years ended September 30, 2012, 2011 and 2010, was $1,260,000, $1,590,000 and $2,098,000, respectively.

Mortgages Payable

        The Trust had the following obligations outstanding as of the dates indicated all of which are secured by the underlying real property (dollars in thousands):

	September 30,
Property	2012		2011		Rate			Maturity
Yonkers, NY(1)	$	1,954	$	2,041		5.25	%	April 2022
Palm Beach Gardens, FL		45,200		—		3.78	%	April 2019
Melboune, FL		7,680		—		3.98	%	April 2019
Marietta, GA		6,462		—		6.50	%	February 2015
Lawrenceville, GA		4,687		—		4.49	%	March 2022
Collierville, TN		25,680		—		3.91	%	July 2022
65 Market St—Newark, NJ		900		900		7.00	%	January 2015
69 Market St—Newark, NJ		—		1,200		7.00	%	N/A
909 Broad St—Newark, NJ		6,132		6,314		6.00	%	August 2030
Teachers Village—Newark, NJ(2)		2,738		3,962		17	%	March 2013
Teachers Village—Newark, NJ(3)		22,748		—		5.50	%	December 2030
Teachers Village—Newark, NJ		4,250		—		3.46	%	February 2032
Teachers Village—Newark, NJ		988		—		2.00	%	February 2022
Teachers Village—Newark, NJ		1,380		—		2.50	%	February 2014
Teachers Village—Newark, NJ		1,832		—			(4)	February 2034
Teachers Village—Newark, NJ		15,700		—		Libor +3.00	%	August 2019
Teachers Village—Newark, NJ		5,250		—		3.28	%	September 2042
Teachers Village—Newark, NJ		13,491		—		8.65	%	December 2023
Teachers Village—Newark, NJ		2,212		—			(5)	August 2034
	$	169,284	$	14,417

(1)

On March 29, 2012, the consolidated joint venture which owns a property in Yonkers, NY, refinanced an existing mortgage in the amount of $ 1,990,000 with the current lender. The new mortgage bears interest at one-month LIBOR plus 3.15%. In connection with the transaction, the venture entered into an interest rate swap agreement which effectively fixes the interest rate at 5.25%.

(2)

As of September 30, 2012 and 2011, respectively, the Trust had guaranteed $685,000 and $991,000 of this mortgage obligation.

(3)

TD Bank has the right, in 2018, to require subsidiaries of the Newark Joint Venture to repurchase such debt. If such right is exercised, such subsidiaries will be required to refinance such debt. The stated interest rate is 5.5% per year; however, the United States Treasury Department is reimbursing the interest at the rate of 4.99% per year under the Qualified School Construction Bond program and accordingly, the effective rate of interest thereon until 2018 is 0.51% per year.

(4)

The debt is to be serviced in full by annual payment-in-lieu of taxes ("PILOT") of $256,000 in 2013 increasing to approximately $281,000 at maturity. This obligation is not secured by real property.

(5)

The debt is to be serviced in full by PILOT payments of $311,000 in 2013 increasing to approximately $344,000 at maturity.

        Scheduled principal repayments on these debt obligations are as follows (dollars in thousands):

Years Ending September 30,	Amount
2013	$	4,287
2014		1,656
2015		10,389
2016		3,651
2017		3,663
Thereafter		145,638
	$	169,284