Mortgage Notes Payable

6 Months Ended

Jun. 30, 2019

NOTE 8 - MORTGAGE NOTES PAYABLE, NET

The following table presents a summary of the Company's mortgage notes payable, net, at June 30, 2019 and December 31, 2018:

	June 30, 2019							December 31, 2018
Collateral	Outstanding Borrowings		Deferred Financing Costs, net			Carrying Value		Outstanding borrowings		Deferred Financing Costs, net			Carrying Value
Payne Place		1,542,697	$	(29,283	)	$	1,513,414	$	1,560,236	$	(30,220	)	$	1,530,016
Bay Club		21,520,000		(232,127	)		21,287,873		21,520,000		(255,957	)		21,264,043
Tramore Village		32,625,000		(334,217	)		32,290,783		32,625,000		(363,784	)		32,261,216
Matthews Reserve		23,850,000		(291,348	)		23,558,652		23,850,000		(315,236	)		23,534,764
The Park at Kensington		21,760,000		(282,523	)		21,477,477		21,760,000		(305,399	)		21,454,601
Wimbledon Oaks		18,410,000		(254,804	)		18,155,196		—		—			—
Summit		27,580,000		(444,129	)		27,135,871		—		—			—

Total	$	147,287,697	$	(1,868,432	)	$	145,419,265	$	101,315,236	$	(1,270,596	)	$	100,044,640

The following table presents additional information about the Company's mortgage notes payable, net:

Collateral	Maturity Date	Annual Interest Rate				Average Monthly Debt Service		Average Monthly Escrow
Payne Place	1/1/2047		3.11	%	⁽¹⁾⁽⁵⁾	$	6,948	$	2,531
Bay Club	8/1/2024		4.27	%	⁽²⁾⁽⁶⁾		103,482		52,024
Tramore Village	4/1/2025		4.20	%	⁽³⁾⁽⁶⁾		118,929		55,872
Matthews Reserve	9/1/2025		4.47	%	⁽⁴⁾⁽⁶⁾		90,322		20,127
The Park at Kensington	10/1/2025		4.36	%	⁽⁴⁾⁽⁶⁾		80,379		37,346
Wimbledon Oaks	3/1/2026		4.33	%	⁽⁴⁾⁽⁶⁾		67,537		63,822
Summit	8/1/2026		3.84	%	⁽⁴⁾⁽⁶⁾		89,593		42,698

(1)	Fixed rate until January 1, 2020, when the fixed rate of the note changes to variable rate based on six-month LIBOR plus 2.25%, with an all-in interest rate floor of 2.50% and ceiling of 9.50%.

(2)	Variable rate based on one-month LIBOR of 2.40% (at June 30, 2019) plus 1.87%, with a maximum interest rate of 5.75%; see Note 13.

(3)	Variable rate based on one-month LIBOR of 2.40% (at June 30, 2019) plus 1.80%, with a maximum interest rate of 6.25%; see Note 13.

(4)	Fixed rate.

(5)	Through December 18, 2018, RAI co-guaranteed this loan with the Company. See Note 9 for more details.

(6)	Monthly interest-only payment currently required.

All mortgage notes are collateralized by a first mortgage lien on the assets of the respective property named in the table above. The amount outstanding on the mortgages may be prepaid in full during the entire term with a prepayment penalty for a period of the term.

On February 12, 2019, the Company, through a wholly owned subsidiary, entered into a seven-year secured mortgage loan with M&T Realty Capital Corporation, an unaffiliated lender, for borrowings of approximately $18.4 million secured by Wimbledon Oaks (the “Wimbledon Oaks Mortgage Loan”). The Wimbledon Oaks Mortgage Loan matures on March 1, 2026 and bears interest at a fixed rate of 4.33%. Monthly payments are interest only for the first 36 months. Beginning on April 1, 2022, the Company will pay both principal and interest on the Wimbledon Oaks Mortgage Loan based on 30 year amortization. Any remaining principal balance and all accrued and unpaid interest and fees will be due at maturity.

Prepayment in full is permitted on any scheduled payment date, provided a prepayment premium is paid. The prepayment premium will be based on the greater of (i) the yield maintenance prepayment formula and (ii) 1% of the amount of the principal being repaid, for any prepayment made prior to March 1, 2024. The prepayment premium will be 1% of the amount of principal being repaid for any prepayment made from (and including) March 1, 2024 through October 31, 2025. No prepayment premium is required after November 1, 2025. The non-recourse carveouts under the loan documents for the Wimbledon Oaks Mortgage Loan are guaranteed by the Company.

On June 24, 2019, the Company, through a wholly owned subsidiary, entered into a seven-year secured mortgage loan with CBRE Capital Markets, Inc., an unaffiliated lender, for borrowings of approximately $27.6 million secured by Summit (the “Summit Mortgage Loan”). The Summit Mortgage Loan matures on July 1, 2026 and bears interest at a fixed rate of 3.84%. Monthly payments are interest only for the first 36 months. Beginning on August 1, 2022, the Company will pay both principal and interest on the Summit Mortgage Loan based on 30 year amortization. Any remaining principal balance and all accrued and unpaid interest and fees will be due at maturity.

The following table presents the Company's annual principal payments on outstanding borrowings for each of the next five 12-month periods ending June 30, and thereafter:

2020	$	325,789
2021		489,675
2022		1,552,973
2023		2,516,980
2024		2,654,195
Thereafter		139,748,085
	$	147,287,697

Deferred financing costs incurred to obtain financing are amortized over the term of the related debt. During the three months ended June 30, 2019 and 2018, amortization of deferred financing costs of $57,990 and $27,323, respectively, was included in interest expense. During the six months ended June 30, 2019 and 2018, amortization of deferred financing costs of $117,180 and $41,222, respectively, was included in interest expense. Accumulated amortization at June 30, 2019 and December 31, 2018 was $266,350 and $149,170, respectively.

The following table presents the Company's estimated amortization of the existing deferred financing costs for the next five 12-month periods ending June 30, and thereafter:

2020	$	307,996
2021		306,110
2022		303,838
2023		299,116
2024		294,157
Thereafter		357,215
	$	1,868,432