NOTES PAYABLE

12 Months Ended

Dec. 31, 2022

Debt Disclosure [Abstract]

NOTES PAYABLE

NOTES PAYABLE

Wells Fargo Line of Credit

On February 27, 2018, the Company, as guarantor, and certain of the wholly owned subsidiaries of the Operating Partnership, as co-borrowers, entered into an amended and restated secured revolving credit facility (the “Wells Fargo Line of Credit”) with Wells Fargo Bank, National Association, as administrative agent, and other lending institutions that may become parties to the credit agreement. The Wells Fargo Line of Credit was scheduled to mature on February 27, 2023. The interest rate under the Wells Fargo Line of Credit was based on the 1-month, 2-month or 3-month LIBOR (at the Company's discretion) with a spread of 160 to 180 basis points depending on the debt yield as defined in the credit agreement. As of December 31, 2022, the outstanding balance was $84,800 and

the weighted average interest rate was 5.96%. As of December 31, 2021, the outstanding balance was $82,300 and the weighted average interest rate was 1.71%.

On January 27, 2023, the Wells Fargo Line of Credit was further amended and restated, thereby changing certain terms and provisions, including extending the maturity date to February 28, 2025 (the “Revised Wells Fargo Line of Credit”).The Revised Wells Fargo Line of Credit has a maximum capacity of $100,000 and is expandable by the Company up to a maximum capacity of $250,000 upon satisfaction of specified conditions. Each requested expansion must be for at least $25,000 and may result in the Revised Wells Fargo Line of Credit being syndicated. The interest rate under the Revised Wells Fargo Line of Credit is based on the 30-day average of the secured overnight financing rate ("SOFR") with a spread of 200 or 225 basis points depending on the debt yield as defined in the agreement. As of the closing date, the outstanding balance was $87,800 and the weighted average interest rate was 6.31%.

At any time, the borrowing capacity under the Revised Wells Fargo Line of Credit is based on the lesser of (1) an amount equal to 65% of the aggregate value of the properties in the collateral pool as determined by lender appraisals, (2) an amount that results in a minimum debt yield of 10% based on the in-place net operating income of the collateral pool as defined, or (3) the maximum capacity of the Revised Wells Fargo Line of Credit. Proceeds from the Revised Wells Fargo Line of Credit can be used to fund acquisitions, redeem shares pursuant to the Company's redemption plan and for any other corporate purpose. As of the closing of the Revised Wells Fargo Line of Credit, the Company's maximum borrowing capacity was $95,847.

The Revised Wells Fargo Line of Credit agreement contains customary representations, warranties, borrowing conditions and affirmative, negative and financial covenants, including that there must be six properties in the collateral pool at all times, and that the collateral pool also meet specified concentration provisions, unless waived by the lender. In addition, the Company, as guarantor, must meet tangible net worth hurdles. The Company was in compliance with all financial covenants as of December 31, 2022 and as of the closing of the Revised Wells Fargo Line of Credit.

The following is a reconciliation of the carrying amount of the Wells Fargo Line of Credit at December 31, 2022 and 2021:

	Balance at
Lender	December 31, 2022		December 31, 2021
Wells Fargo	$	84,800	$	82,300
Deduct: Deferred financing costs, less accumulated amortization	(20)		(148)
Line of credit, net	$	84,780	$	82,152

Mortgage Loans

Certain wholly owned subsidiaries of the Company are obligors on various mortgage loans. Such mortgage loans contain fixed interest rates, allow for a one-time transfer to another borrower subject to lender discretion and payment of applicable fees, and allow for full prepayment at certain times with payment of applicable penalties, if any. The following is a reconciliation of the carrying amount of the mortgage loans payable at December 31, 2022 and 2021.

		Balance at
Lender	Encumbered Property	December 31, 2022		December 31, 2021		Interest Rate		Maturity Date
Talcott Resolution Life Insurance Company	Commerce Corner	$	11,933	$	12,213	3.41	%	December 1, 2023
Nationwide Life Insurance Company	Flats at Carrs Hill	14,500		14,500		3.63		March 1, 2026
State Farm Life Insurance Company	Elston Plaza	17,149		17,470		3.89		July 1, 2026
Massachusetts Mutual Life Insurance Company	The Glenn	66,000		66,000		3.02		December 1, 2028
Transamerica Life Insurance Company	Wallingford Plaza	6,733		6,849		4.56		January 1, 2029
Nationwide Life Insurance Company	Providence Square	29,700		29,700		3.67		October 5, 2029
JPMorgan Chase Bank	Seattle East Industrial	45,140		45,140		3.87		January 1, 2030
		$	191,155	$	191,872
Deduct: Deferred financing costs, less accumulated amortization		(722)		(871)
Mortgage loans payable, net		$	190,433	$	191,001

Aggregate future principal payments due on the Wells Fargo Line of Credit and mortgage loans payable as of December 31, 2022 are as follows:

Year	Amount
2023*	$	97,188
2024	474
2025	493
2026	30,746
2027	145
Thereafter	146,909
Total	$	275,955
*On January 27, 2023, $84,800 of this amount was extended to mature in 2025.