Debt Obligations

9 Months Ended

Jun. 30, 2011

Debt Obligations

Debt Obligations

Note 9 — Debt Obligations

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

	June 30, 2011		September 30, 2010
Line of credit	—		—
Junior subordinated notes	$	37,400	$	40,815
Mortgages payable	13,616		12,557
Total debt obligations	$	51,016	$	53,372

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 on, among other things, the type of property secured by the eligible mortgage receivables pledged to the lender and the operating income of the related property) of such 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.

The loan documents, among other things, require (A) the Trust (i)  to maintain on a quarterly basis and on a consolidated basis, net worth of not less than $100 million and liquidity of not less than $7.5 million, and (ii) prohibits the Trust from incurring debt, with specified exceptions, in excess of five percent of its net worth and (B) the subsidiary (i) to maintain  a debt service coverage ratio and a collateral coverage ratio of not less than 1.5 to 1.0, and (iii) prohibits the subsidiary, with specified exceptions, from incurring debt.

We have paid, and in each of June 2012 and 2013 will pay, an $82,500 fee in connection with this facility.

At June 30, 2011 there was no outstanding balance on the facility as the Trust had not pledged any receivables with respect to the borrowing base.

Junior Subordinated Notes

On March 15, 2011, the Trust restructured its existing junior subordinated notes resulting in the repayment of $5,000,000 of the outstanding notes at par and the reduction of the interest rates on the remaining outstanding notes as set forth in the table below:

Interest period	Prior Interest Rate	New Interest Rate
March 15, 2011 through July 31, 2012	3.50%	3.00%
August 1, 2012 through April 29, 2016	8.37%	4.90%
April 30, 2016 through April 30, 2036	LIBOR + 2.95%	LIBOR + 2.00%

The Trust accounted for the restructuring of this debt as an extinguishment of debt.  For the nine months ended June 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 relating to the junior subordinated notes for the three and nine months ended June 30, 2011 was $280,000 and $1,284,000, respectively.  For the three and nine months ended June 30, 2010, interest expense was $518,000 and $1,547,000 respectively.  Amortization of the deferred costs was $6,000 and $21,000 for the three and nine months ended June 30, 2011, respectively.  For the three and nine months ended June 30, 2010, amortization of these costs was $8,000 and $25,000, respectively.

Mortgages Payable

The Trust has five first mortgages and one second mortgage outstanding with an aggregate principal balance at June 30, 2011 of $13,616,000.  One of these mortgages, with an outstanding balance at June 30, 2011 of $2,066,000, is secured by a long term leasehold position on a shopping center owned by a consolidated joint venture.  The remaining five mortgages, with outstanding balances at June 30, 2011 of $11,550,000, are secured by individual parcels of two land assemblages in Newark, NJ owned by another consolidated joint venture. The Trust has guaranteed $775,000 of one of the mortgage obligations at June 30, 2011, based on the current outstanding balance.  The guarantee will increase to $2,154,000 if the full amount of the $8,600,000 loan is drawn and outstanding.

Interest expense relating to the mortgages payable including amortized mortgage costs for the three and nine months ended June 30, 2011 was $331,000 and $908,000 respectively.  For the three and nine months ended June 30, 2010, interest expense was $202,000 and $595,000, respectively.

During the three and nine months ended June 30, 2011, the Trust capitalized interest expense of $165,000 and $562,000, respectively.  This interest is being capitalized in connection with the development of a portion of our Newark Joint Venture’s properties.