Note 7—Mortgage Notes, Lines of Credit and Bonds Payable

As of March 31, 2020 and December 31, 2019, the Company had the following indebtedness outstanding:


									Book
			Annual						Value of
($ in thousands)			Interest	Principal					Collateral
			Rate as of	Outstanding as of					as of
			March 31,	March 31,		December 31,		Maturity	March 31,
Loan	Payment Terms	Interest Rate Terms	2020	2020		2019		Date	2020
Farmer Mac Bond #6	Semi-annual interest only	3.69%	3.69%	$	13,827	$	13,827	April 2025	$	21,441
Farmer Mac Bond #7	Semi-annual interest only	3.68%	3.68%		11,160		11,160	April 2025		18,570
Farmer Mac Bond #8A (1)	Semi-annual interest only	3.20%	3.20%		41,700		41,700	June 2020		74,310
Farmer Mac Bond #9 (1)	Semi-annual interest only	3.35%	3.35%		6,600		6,600	July 2020		7,940
MetLife Term Loan #1 (2)	Semi-annual interest only	3.48% adjusted every three years	3.48%		87,942		87,942	March 2026		195,657
MetLife Term Loan #2	Semi-annual interest only	4.27% adjusted every three years	4.27%		16,000		16,000	March 2026		32,199
MetLife Term Loan #3	Semi-annual interest only	4.27% adjusted every three years	4.27%		21,000		21,000	March 2026		27,816
MetLife Term Loan #4 (2)	Semi-annual interest only	3.48% adjusted every three years	3.48%		15,685		15,685	June 2026		31,266
MetLife Term Loan #5	Semi-annual interest only	3.50% adjusted every three years	3.50%		8,379		8,379	January 2027		14,281
MetLife Term Loan #6	Semi-annual interest only	3.45% adjusted every three years	3.45%		27,158		27,158	February 2027		58,087
MetLife Term Loan #7	Semi-annual interest only	3.45% adjusted every three years	3.45%		17,153		17,153	June 2027		39,126
MetLife Term Loan #8	Semi-annual interest only	4.12% fixed until 2027	4.12%		44,000		44,000	December 2042		110,042
MetLife Term Loan #9	Semi-annual interest only	4.19% adjusted every three years	4.19%		21,000		21,000	May 2028		41,223
Farm Credit of Central Florida	(3)	LIBOR + 2.6875% adjusted monthly	4.06%		4,847		4,890	September 2023		14,745
Rabobank	Semi-annual interest only	LIBOR + 1.70% adjustable every three years	3.06%		64,358		64,358	March 2028		135,432
Rutledge Note Payable #1	Quarterly interest only	3 month LIBOR + 1.3% adjusted quarterly	3.21%		17,000		17,000	January 2022		29,820
Rutledge Note Payable #2	Quarterly interest only	3 month LIBOR + 1.3% adjusted quarterly	3.21%		25,000		25,000	January 2022		39,468
Rutledge Note Payable #3	Quarterly interest only	3 month LIBOR + 1.3% adjusted quarterly	3.21%		25,000		25,000	January 2022		45,764
Rutledge Note Payable #4	Quarterly interest only	3 month LIBOR + 1.3% adjusted quarterly	3.21%		15,000		15,000	January 2022		29,170
Rutledge Note Payable #5	Quarterly interest only	3 month LIBOR + 1.3% adjusted quarterly	3.21%		30,000		30,000	January 2022		85,287
Total outstanding principal					512,809		512,852		$	1,051,644
Debt issuance costs					(1,526)		(1,449)
Unamortized premium					—		—
Total mortgage notes and bonds payable, net				$	511,283	$	511,403

(1)

Subsequent to the quarter's end, the maturity of Farmer Mac Bond #8A and Farmer Mac Bond #9 was extended to October 31, 2020.

(2)

During the year ended December 31, 2017, the Company converted the interest rate on Metlife Term Loans 1 and 4 from variable to fixed rates for a term of three years. Once the term expires, the new rate will be determined based on the loan agreements.

(3)

Loan is an amortizing loan with quarterly interest payments that commenced on January 1, 2017 and quarterly principal payments that commence on October 1, 2018, with all remaining principal and outstanding interest due at maturity.

Farmer Mac Facility

As of March 31, 2020 and December 31, 2019, the Operating Partnership had approximately $73.3 million and approximately $73.3 million outstanding, respectively, under the Farmer Mac facility. The Farmer Mac facility is subject to the Company’s ongoing compliance with a number of customary affirmative and negative covenants, as well as financial covenants, including: a maximum leverage ratio of not more than 60%; a minimum fixed charge coverage ratio of 1.50 to 1.00; and a minimum tangible net worth requirement. The Company was in compliance with all applicable covenants at March 31, 2020.

Subsequent to the quarter's end, the Company secured an extension of the maturity of the Farmer Mac bonds due in June and July 2020, to October 31, 2020, in order to accommodate a delay in the refinancing lender's field due diligence caused by COVID-19-related travel restrictions.

MetLife Term Loans

As of March 31, 2020 and December 31, 2019, the Company and the Operating Partnership had $258.3 million and $258.3 million outstanding, respectively, under the MetLife loans. Each of the MetLife loan agreements contains a number of customary affirmative and negative covenants, including the requirement to maintain a loan to value ratio of no greater than 60%. The MetLife Guaranties also contain a number of customary affirmative and negative covenants. The Company was in compliance with all covenants under the MetLife loans as of March 31, 2020.

Each of the MetLife loan agreements includes certain customary events of default, including a cross-default provision related to other outstanding indebtedness of the borrowers, the Company and the Operating Partnership, the occurrence of which, after any applicable cure period, would permit MetLife, among other things, to accelerate payment of all amounts outstanding under the MetLife loans and to exercise its remedies with respect to the pledged collateral, including foreclosure and sale of the Company’s properties that collateralize the MetLife loans.

Farm Credit of Central Florida Mortgage Note

As of March 31, 2020 and December 31, 2019, approximately $5.1 million had been drawn down under this facility. Proceeds from the Farm Credit Mortgage Note are to be used for the acquisition and development of additional properties.

The Farm Credit Mortgage Note contains a number of customary affirmative and negative covenants, as well as a covenant requiring the Company to maintain a debt service coverage ratio of 1.25 to 1.00 beginning on December 31, 2019. The Company was in compliance with all applicable covenants at March 31, 2020.

Rutledge Credit Facilities

As of March 31, 2020 and December 31, 2019, the Company and the Operating Partnership had $112.0 million outstanding under the Rutledge facility. As of March 31, 2020, $0 remains available under this facility and the Company was in compliance with all covenants under the Rutledge loan agreements.

Rabobank Mortgage Note

As of March 31, 2020 and December 31, 2019, the Company and the Operating Partnership had $64.4 million outstanding under the Rabobank mortgage note. The Company was in compliance with all covenants under the Rabobank mortgage note as of March 31, 2020.

LIBOR

LIBOR is expected to be discontinued after 2021. As of March 31, 2020, the Company had $181.2 million of variable- rate debt outstanding with interest rates tied to LIBOR and maturity dates beyond 2021. There can be no assurances as to what the alternative base rate will be in the event that LIBOR is discontinued, and the Company can provide no assurances whether that base rate will be more or less favorable than LIBOR. The Company intends to monitor the developments with respect to the phasing out of LIBOR after 2021 and work with its lenders to ensure that any transition away from LIBOR will have minimal impact on its financial condition, but can provide no assurances regarding the impact of LIBOR discontinuation.

Debt Issuance Costs

Costs incurred by the Company in obtaining debt are deducted from the face amount of mortgage notes and bonds payable. Debt issuance costs are amortized using the straight-line method, which approximates the effective interest method, over the respective terms of the related indebtedness. Any unamortized amounts upon early repayment of mortgage notes payable are written off in the period in which repayment occurs. Fully amortized deferred financing fees are removed from the balance sheet upon maturity or repayment of the underlying debt. Accumulated amortization of deferred financing fees was $1.1 million and $1.0 million as of March 31, 2020 and December 31, 2019, respectively.

Aggregate Maturities

As of March 31, 2020, aggregate maturities of long-term debt for the succeeding years are as follows:


($ in thousands)
Year Ending December 31,	Future Maturities
2020 (remaining nine months)	$	48,532
2021		274
2022		112,274
2023		4,067
2024		2,100
Thereafter		345,562
	$	512,809

Fair Value

The fair value of the mortgage notes payable is valued using Level 3 inputs under the hierarchy established by GAAP and is calculated based on a discounted cash flow analysis, using interest rates based on management’s estimates of market interest rates on long-term debt with comparable terms whenever the interest rates on the mortgage notes payable are deemed not to be at market rates. As of March 31, 2020 and December 31, 2019, the fair value of the mortgage notes payable was $544.7 million and $518.9 million, respectively.