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Mortgage Debt
3 Months Ended
Mar. 31, 2013
Debt Disclosure [Abstract]  
Debt Disclosure [Text Block]

4. Mortgage Debt

 

The mortgage debt on the Hato Rey Center in Puerto Rico is being recorded in discontinued operations. At March 31, 2013 and December 31, 2012, the principal balance on the mortgage was $14,009,797.  The loan is nonrecourse to the Company with standard carve outs. The first mortgage loan on the Hato Rey Center property matures on May 11, 2028, but provided that if it was not repaid on or before May 11, 2008, the interest rate on the loan was increased by two percentage points to 9.38% per annum of which 2% per annum would be deferred until maturity.

 

Since April 2011, cashflow at the property was not sufficient to make the required monthly mortgage payments. (See Note 7A). At this time, Berkadia Commercial Mortgage LLC (“Berkadia”) was put in place as the special servicer for the loan and all rental payments for the property were sent to a lock box account controlled by Berkadia. During this period Berkadia has applied $474,341 to the mortgage balance and $1,339,576 to interest accrued on the mortgage.  The Company is accruing an additional 5% per annum as default interest and a 5% late payment fee. At March 31, 2013 and December 31, 2012, interest and other fees payable were $3,559,461 and $3,287,507, respectively, which were offset by escrow accounts maintained by Berkadia. Because of the foreclosure action, the Hato Rey Center property was classified as a discontinued operation.

 

On June 8, 2012, we closed on a mortgage and line of credit for a combined total of $1,000,000 with Country Bank for Savings on the Mapletree Industrial Center. The mortgage is for $500,000 at a 5% interest rate, for a term of 5 years. Thereafter the interest will adjust monthly equal to the bank’s Prime Rate, plus 1% with an interest rate floor of 5%, for a term of 15 years. We received $459,620 of net proceeds. The balance at March 31, 2013 and December 31, 2012 was $481,866 and $488,748, respectively. The line of credit is for $500,000, with an interest rate of 1% over the bank’s Prime Rate. At March 31, 2013, there was $100,000 outstanding on the line of credit. As of May 15, 2013, there was $200,000 outstanding on the line of credit. The line of credit is due on demand. Both the mortgage and the line of credit are secured by the Mapletree Industrial Center in Palmer, Massachusetts.