NOTES PAYABLE

9 Months Ended

Sep. 30, 2020

As of September 30, 2020 and December 31, 2019, the Company’s notes payable consisted of the following (dollars in thousands):


	Book Value as of September 30, 2020		Book Value as of December 31, 2019		Contractual Interest Rate as of September 30, 2020 (1)	Effective Interest Rate at September 30, 2020 (1)	Payment Type	Maturity Date (2)
Commonwealth Building Mortgage Loan (3)	$	45,681	$	45,681	One-month LIBOR + 1.80%	3.74%	Interest Only	02/01/2023
Term Loan (4)	46,150		72,800		One-month LIBOR + 2.00%	4.07%	Interest Only	11/09/2020
Notes payable principal outstanding	$	91,831	$	118,481
Deferred financing costs, net	(348)		(620)
Notes payable, net	$	91,483	$	117,861

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(1) Contractual interest rate represents the interest rate in effect under the loan as of September 30, 2020. Effective interest rate is calculated as the actual interest rate in effect as of September 30, 2020 (consisting of the contractual interest rate and the effect of interest rate swaps, if applicable), using interest rate indices as of September 30, 2020, where applicable.

(2) Represents the maturity date as of September 30, 2020; subject to certain conditions, the maturity dates of the loans may be extended beyond the dates shown.

(3) As of September 30, 2020, there are two one-year extension options remaining on the Commonwealth Building Mortgage Loan. As of September 30, 2020, $45.7 million of the Commonwealth Building Mortgage Loan was outstanding and $5.7 million remained available for future disbursements, subject to certain terms and conditions set forth in the loan documents.

(4) On January 17, 2020, in connection with the disposition of Von Karman Tech Center, pursuant to the terms of the Term Loan, the Company reduced the amount of the term commitment and revolving commitment to $39.4 million and $19.7 million, respectively. As of September 30, 2020, the outstanding balance under the Term Loan consisted of $39.4 million of term commitment and $6.7 million of revolving commitment. As of September 30, 2020, there were two one-year extension options remaining on the Term Loan. The Term Loan is secured by The Offices at Greenhouse Property and the Institute Property. Reductions in property values related to the impact of the COVID-19 pandemic may limit the Company’s ability to draw on the revolving commitment under the Term Loan due to covenants described in the loan agreement. Subsequent to September 30, 2020, the Company exercised its extension option under the Term Loan and extended the maturity date to November 9, 2021.

During the three and nine months ended September 30, 2020, the Company incurred $0.6 million and $4.3 million of interest expense, respectively. During the three and nine months ended September 30, 2019, the Company incurred $1.6 million and $6.1 million of interest expense, respectively. As of September 30, 2020 and December 31, 2019, $0.3 million and $0.4 million of interest expense were payable, respectively. Included in interest expense during the three and nine months ended September 30, 2020 were $0.1 million and $0.2 million of amortization of deferred financing costs, respectively. Included in interest expense during the three and nine months ended September 30, 2019 were $0.1 million and $0.3 million of amortization of deferred financing costs, respectively. Interest expense (including gains and losses) incurred as a result of the Company’s derivative instruments increased interest expense by $19,000 and $2.1 million for the three and nine months ended September 30, 2020, respectively. Interest expense (including gains and losses) incurred as a result of the Company’s derivative instruments increased interest expense by $0.2 million and $1.9 million for the three and nine months ended September 30, 2019, respectively.

The following is a schedule of maturities, including principal amortization payments, for all notes payable outstanding as of September 30, 2020 (in thousands):


October 1, 2020 through December 31, 2020 (1)	$	46,150
2021	—
2022	—
2023	45,681
2024	—
Thereafter	—
	$	91,831

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(1) Subsequent to September 30, 2020, the Company exercised its extension option under the Term Loan and extended the maturity date to November 9, 2021.