Debt

9 Months Ended

Sep. 30, 2023

Debt Disclosure [Abstract]

Debt

. Debt

Mortgage Debt

The following table contains summary information concerning the mortgage debt of the Company as of September 30, 2023 (dollars in thousands):

Operating Properties		Type	Term (months)		Outstanding Principal				Interest Rate (1)	Maturity Date
Arbors on Forest Ridge		Floating		120	$	19,184			6.87%	12/1/2032
Cutter's Point		Floating		120		21,524			6.87%	12/1/2032
The Summit at Sabal Park		Floating		120		30,826			6.87%	12/1/2032
Courtney Cove		Floating		120		36,146			6.87%	12/1/2032
The Preserve at Terrell Mill		Floating		120		71,098			6.87%	12/1/2032
Versailles		Floating		120		40,247			6.87%	12/1/2032
Seasons 704 Apartments		Floating		120		33,132			6.87%	12/1/2032
Madera Point		Floating		120		34,457			6.87%	12/1/2032
Venue at 8651		Floating		120		18,690			6.87%	12/1/2032
The Venue on Camelback		Floating		120		42,788			7.50%	2/1/2033
Sabal Palm at Lake Buena Vista		Floating		84		42,100			6.73%	9/1/2025
Cornerstone		Floating		120		46,804			7.41%	12/1/2032
Parc500		Floating		120		29,416			6.87%	12/1/2032
Rockledge Apartments		Floating		120		93,129			6.87%	12/1/2032
Atera Apartments		Floating		120		46,198			6.87%	12/1/2032
Versailles II		Floating		84		12,061			6.61%	10/1/2025
Brandywine I & II		Floating		84		43,835			6.61%	10/1/2025
Bella Vista		Floating		84		29,040			6.75%	2/1/2026
The Enclave		Floating		84		25,322			6.75%	2/1/2026
The Heritage		Floating		84		24,625			6.75%	2/1/2026
Summers Landing	(2)	Floating		84		10,109			6.61%	10/1/2025
Residences at Glenview Reserve	(3)	Floating		84		25,645			6.87%	10/1/2025
Residences at West Place	(3)	Fixed		120		33,817			4.24%	10/1/2028
Avant at Pembroke Pines		Floating		84		177,100			6.86%	9/1/2026
Arbors of Brentwood		Floating		84		34,237			6.86%	10/1/2026
Torreyana Apartments		Floating		120		50,580			6.87%	12/1/2032
Bloom		Floating		120		59,830			6.87%	12/1/2032
Bella Solara		Floating		120		40,328			6.87%	12/1/2032
Fairways at San Marcos		Floating		120		60,228			6.87%	12/1/2032
The Verandas at Lake Norman		Floating		84		34,925			7.17%	7/1/2028
Creekside at Matthews		Floating		120		29,648			6.87%	12/1/2032
Six Forks Station		Floating		120		41,180			7.03%	10/1/2031
High House at Cary		Floating		84		46,625			7.33%	1/1/2029
The Adair		Floating		84		35,115			7.29%	4/1/2029
Estates on Maryland		Floating		84		43,157			7.29%	4/1/2029
					$	1,463,146
Fair market value adjustment						530		(4)
Deferred financing costs, net of accumulated amortization of $3,351						(10,205	)
					$	1,453,471
Held For Sale Properties
Old Farm		Floating		84		52,886			7.11%	7/1/2024
Stone Creek at Old Farm		Floating		84		15,274			7.11%	7/1/2024
Timber Creek		Floating		84		24,100			6.69%	10/1/2025
Radbourne Lake		Floating		84		20,000			6.72%	10/1/2025
					$	112,260
Deferred financing costs, net of accumulated amortization of $1,005						(234	)
					$	112,026

(1)Interest rate is based on a reference rate plus an applicable margin, except for fixed rate mortgage debt. The reference rate used in our Portfolio is 30-Day Average Secured Overnight Financing Rate (“SOFR”). Loans that transitioned from LIBOR to SOFR include a 0.11448% adjustment to SOFR for the all-in rate ("fallback LIBOR"). As of September 30, 2023, SOFR was 5.32%.

(2)Debt was assumed upon acquisition of this property and recorded at approximated fair value. It can be pre-paid in the first 12 months of the term in certain circumstances at par plus 5.00%. Starting in the 13th month of the term through the 81st month of the term, the loan can be pre-paid at par plus 1.00% of the unpaid principal balance and at par during the last three months of the term.

(3)Debt was assumed upon acquisition of this property and recorded at approximated fair value. The loan can be prepaid at the greater of par plus 1.00% of the unpaid principal balance or the product obtained by multiplying the present value of the principal being prepaid by the excess of the monthly fixed interest rate of the loan over a daily discount rate. The loan is open to pre-payment in the last three months of the term.

(4)The Company reflected a valuation adjustment on its fixed rate debt for Residences at West Place to adjust it to fair market value on their respective dates of acquisition for the difference between the fair value and the assumed principal amount of debt. The difference is amortized into interest expense over the remaining terms of the mortgages.

The weighted average interest rate of the Company’s mortgage indebtedness was 6.87% as of September 30, 2023 and 5.71% as of December 31, 2022. The increase between the periods is primarily related to an increase in 30-Day Average SOFR of approximately 126 basis points to 5.32% as of September 30, 2023 from 4.06% as of December 31, 2022. As of September 30, 2023, the adjusted weighted average interest rate of the Company’s mortgage indebtedness was 3.64% which excludes the effect of interest rate caps. For purposes of calculating the adjusted weighted average interest rate of the outstanding mortgage indebtedness, the Company has included the weighted average fixed rate of 1.0682% for fallback LIBOR on its combined $1.2 billion notional amount of interest rate swap agreements, which effectively fix the interest rate on $1.2 billion of the Company’s floating rate mortgage debt (see Note 5).

Each of the Company’s mortgages is a non-recourse obligation subject to customary provisions. The loan agreements contain customary events of default, including defaults in the payment of principal or interest, defaults in compliance with the covenants contained in the documents evidencing the loan, defaults in payments under any other security instrument covering any part of the property, whether junior or senior to the loan, and bankruptcy or other insolvency events. As of September 30, 2023, the Company believes it is in compliance with all provisions.

Credit Facility

The following table contains summary information concerning the Company’s credit facility as of September 30, 2023 (dollars in thousands):

	Type	Term (months)		Outstanding Principal			Interest Rate (1)	Maturity Date
Corporate Credit Facility	Floating		36	$	41,000		7.57%	6/30/2025
Deferred financing costs, net of accumulated amortization of $1,975					(1,032	)
				$	39,968

(1)Interest rate is based on Term SOFR plus an applicable margin. Term SOFR as of September 30, 2023 was 5.32%.

On October 24, 2022, the Company exercised its option to extend the Corporate Credit Facility with respect to the revolving commitments for a single one-year term resulting in a maturity date of June 30, 2025. As of September 30, 2023, there was $309.0 million available for borrowing under the Corporate Credit Facility. Subject to conditions provided in the Corporate Credit Facility, the commitments under Corporate Credit Facility may be increased up to an additional $150.0 million if the lenders agree to increase their commitments or if the lenders agree for the increase to be funded by any additional lender proposed by the Company, through the OP. The Corporate Credit Facility will mature on June 30, 2025 with respect to the revolving commitments, unless the Company exercises its option to voluntarily and permanently reduce all of the revolving commitments before the maturity date.

Advances under the Corporate Credit Facility accrue interest at a per annum rate equal to, at the Company’s election, either Term SOFR plus a margin of 1.90% to 2.40%, depending on the Company’s total leverage ratio and a benchmark replacement adjustment of 0.1%, or a base rate determined according to the highest of (a) the prime rate, (b) the federal funds rate plus 0.50%, (c) Term SOFR plus 1.0% or (d) 0.0% plus a margin of 0.90% to 1.40%, depending on the Company’s total leverage ratio. An unused commitment fee at a rate of 0.15% or 0.25%, depending on the outstanding aggregate revolving commitments, applies to unutilized borrowing capacity under the Corporate Credit Facility. Amounts owing under the Corporate Credit Facility may be prepaid at any time without premium or penalty. The Corporate Credit Facility is guaranteed by the Company and the obligations under the Corporate Credit Facility are, subject to some exceptions, secured by a continuing security interest in substantially all of the assets of the Company. The Company is in compliance with all of the covenants required in its Corporate Credit Facility.

Deferred Financing Costs

The Company defers costs incurred in obtaining financing and amortizes the costs over the terms of the related loans using the straight-line method, which approximates the effective interest method. Deferred financing costs, net of amortization, are recorded as a reduction from the related debt on the Company’s consolidated balance sheets. Upon repayment of or in conjunction with a material change in the terms of the underlying debt agreement, any unamortized costs are charged to loss on extinguishment of debt and modification costs (see “Loss on Extinguishment of Debt and Modification Costs” below). For the three months ended September 30, 2023 and 2022, amortization of deferred financing costs of approximately $0.7 million and $0.7 million, respectively, is included in interest expense on the consolidated statements of operations and comprehensive income. For the nine months ended September 30, 2023 and 2022, amortization of deferred financing costs of approximately $2.2 million and $2.0 million, respectively, is included in interest expense on the consolidated statements of operations and comprehensive income.

Gain (Loss) on Extinguishment of Debt and Modification Costs

Loss on extinguishment of debt and modification costs includes prepayment penalties and defeasance costs incurred on the early repayment of debt, costs incurred in a debt modification that are not capitalized as deferred financing costs and other costs incurred in a debt extinguishment. During the nine months ended September 30, 2023, the Company completed a refinance of The Venue on Camelback and incurred a loss on extinguishment of debt of approximately $0.3 million from a prepayment penalty and deferred financing cost write-off. The Company recognized a gain of approximately $0.4 million for returned fees related to its refinancing activities from 2022. Additionally, the Company incurred a loss on extinguishment of debt of $2.2 million for prepayment penalties and write-off of deferred financing cost relating to the sale and payoff of Silverbook (see Note 3). During the nine months ended September, 2023 and 2022, the Company recognized a loss on extinguishment of debt of approximately $2.1 million and $0.0 million, respectively.

Schedule of Debt Maturities

The aggregate scheduled maturities, including amortizing principal payments, of total debt for the next five calendar years subsequent to September 30, 2023 are as follows (in thousands):

	Operating Properties		Held For Sale Properties		Credit Facility		Total
2023	$	71	$	—	$	—	$	71
2024		301		68,160		—		68,461
2025		133,378		44,100		41,000		218,478
2026		290,324		—		—		290,324
2027		—		—		—		—
Thereafter		1,039,072		—		—		1,039,072
Total	$	1,463,146	$	112,260	$	41,000	$	1,616,406