Mortgage Notes and Credit Facility

6 Months Ended

Jun. 30, 2024

Debt Disclosure [Abstract]

Mortgage Notes and Credit Facility

8. Mortgage Notes and Credit Facility

Mortgage notes

The following is a summary of the mortgage notes secured by the Company’s properties ($ in thousands):

					Principal Balance Outstanding
Indebtedness	Interest Rate			Maturity Date	June 30, 2024			December 31, 2023
Caroline West Gray		5.44	%	12/1/2029	$	45,911		$	45,911
Caroline Post Oak		5.44	%	12/1/2029		40,528			40,528
Coda on Centre		4.28	%	5/1/2029		28,654			28,907
6200 Bristol(1)	SOFR + 2.05%			4/1/2029		10,000			—
Total loans secured by real estate						125,093			115,346
Deferred financing costs, net						(1,265	)		(1,030	)
Mortgage discount, net						(671	)		(739	)
Mortgage notes, net					$	123,157		$	113,577

(1) The Company entered into a non-hedge interest rate swap on April 2, 2024, which fixed the rate at 6.26%.

On April 2, 2024, a wholly-owned subsidiary of the Company closed on a five year, $10.0 million loan secured by 6200 Bristol. The loan carries an interest rate of SOFR plus 2.05%. In conjunction with the loan transaction, the Company entered into an interest rate swap which fixed the interest rate at 6.26%.

Credit Facility

During the year ended December 31, 2022, the Company, as initial guarantor, and the Operating Partnership, as initial borrower, entered into a credit agreement (“Credit Agreement”) with U.S. Bank National Association (“U.S. Bank”). The Credit Agreement provided for aggregate commitments of up to $65 million for secured revolving loans and letter of credit issuances, with an accordion feature pursuant to which the Operating Partnership may increase the aggregate commitments up to $150 million, subject to the satisfaction of certain conditions (the "Credit Facility").

Loans outstanding under the Credit Facility bear interest and line of credit fees, at the Operating Partnership's option, at either a relevant SOFR plus an applicable margin or a "base rate" equal to the higher of (i) zero and (ii) the sum of the Federal Funds Effective Rate plus 0.5% per annum, plus the applicable margin. The applicable margin ranges from 1.55% to 1.65% for borrowings at a relevant SOFR rate determined under the terms of the Credit Facility, 1.55% to 1.65% for borrowings at a relevant "base rate" determined under the terms of the Credit Facility, or 1.55% to 1.65% for lines of credit, in each case, based on the borrowing as defined in the Credit Facility. Loans under the Credit Facility will mature on the earliest of (i) August 31, 2023, (ii) the date an earlier termination pursuant to an event of default specified in the Credit Agreement occurs or (iii) the date of occurrence of other maturity date events specified in the Credit Agreement, unless extended pursuant to the terms of the Credit Agreement. Borrowings under the Credit Facility are secured by the unfunded commitments under the Initial Capitalization.

The Company may extend the maturity date to a business day that is not later than 12 months after the then-effective stated maturity date, no more than twice, upon: (a) delivery by the Company of an extension request at least 30 days, but no more than 60 days, prior to the stated maturity date then in effect; (b) payment of a facility extension fee equal to 0.15% on the then-existing maximum commitment; (c) confirmation that the right to make capital calls of the unfunded commitments under the Initial Capitalization to pay the Credit Facility through and immediately following the extended stated maturity date is in full force and effect; and (d) payment by the Company of all reasonable and documented fees and out-of-pocket expenses to the extent then due.

On August 25, 2023, the Credit Agreement was amended to (i) extend the maturity date to August 29, 2024, (ii) decrease the aggregate commitments from up to $65 million to up to $8 million and (iii) increase the applicable margin to 2.45%. All other material terms of the Credit Agreement remain the same.

Effective March 12, 2024, the Company executed and delivered a Facility Reduction Request (the "Facility Reduction Request") requesting a decrease in the maximum commitments of the Credit Facility to $0.0 million. The delivery of the Facility Reduction

Request permanently reduced the aggregate commitments available under the Credit Facility. As of December 31, 2023, there was no outstanding balance under the Credit Facility.

The following table details the future principal payments due under the Company’s mortgage notes as of June 30, 2024 ($ in thousands):

Year	Mortgage Notes
2024 (remainder)	$	258
2025		536
2026		560
2027		585
2028		635
Thereafter		122,519
Total future principal payments	$	125,093

The Company is subject to various financial and operational covenants under certain of its mortgage notes. These covenants require the Company to maintain certain financial ratios, which may include leverage, debt yield, and debt service coverage, among others. As of June 30, 2024, the Company was in compliance with all of its loan covenants that could result in a default under such agreements.