Mortgages Payable (Mortgages Payable)

3 Months Ended

Mar. 31, 2015

Mortgages Payable

6. Mortgages Payable

During the first three months of 2015, we made $51.3 million in principal payments, including the repayment of three mortgages in full for $49.4 million. No mortgages were assumed during the first three months of 2015.

During the first three months of 2014, we made $1.8 million in principal payments and assumed mortgages totaling $45.9 million, excluding net discounts. The mortgages are secured by the properties on which the debt was placed. We expect to pay off the mortgages as soon as prepayment penalties make it economically feasible to do so.

During the first three months of 2014, aggregate net discounts totaling $2.8 million were recorded upon assumption of mortgages with below-market interest rates. Amortization of our net premiums is recorded as a reduction to interest expense over the remaining term of the respective mortgages, using a method that approximates the effective-interest method.

These mortgages contain customary covenants, such as limiting our ability to further mortgage each applicable property or to discontinue insurance coverage without the prior consent of the lender. At March 31, 2015, we remain in compliance with these covenants.

We did not incur any deferred financing costs on our mortgages assumed in 2014. The balance of our deferred financing costs, which are classified as part of other assets, net, on our consolidated balance sheets, was $750,000 at March 31, 2015 and $827,000 at December 31, 2014. These costs are being amortized over the remaining term of each mortgage.

The following is a summary of all our mortgages payable as of March 31, 2015 and December 31, 2014, respectively (dollars in thousands):

Weighted

Average

Stated

Effective

Remaining

Unamortized

Mortgage

Number of

Interest

Years Until

Principal

Premium

Payable

As Of

Properties(1)

Rate(2)

Rate(3)

Maturity

Balance

Balance, net

Balance

3/31/15

238

5.0%

4.0%

3.7

$ 784,715

$ 14,603

$ 799,318

12/31/14

241

5.0%

4.0%

3.7

$ 836,011

$ 16,564

$ 852,575

(1)

At March 31, 2015, there were 54 mortgages on the 238 properties, while at December 31, 2014, there were 57 mortgages on the 241 properties. The mortgages require monthly payments, with principal payments due at maturity. The mortgages are at fixed interest rates, except for four mortgages on 13 properties totaling $50.9 million at March 31, 2015, including net unamortized discounts. At December 31, 2014, five mortgages on 14 properties totaling $74.5 million, including net unamortized discounts, were at variable interest rates. All of these variable rate mortgages were acquired with arrangements which limit our exposure to interest rate risk.

(2)

Stated interest rates ranged from 2.0% to 6.9% at March 31, 2015 and December 31, 2014.

(3)

Effective interest rates ranged from 2.2% to 9.0% at March 31, 2015 and December 31, 2014.

The following table summarizes the maturity of mortgages payable, excluding net premiums of $14.6 million, as of March 31, 2015 (dollars in millions):

Year of
Maturity
2015	$	68.4
2016	248.4
2017	142.5
2018	15.1
2019	26.0
Thereafter	284.3
Totals	$	784.7

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

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