Mortgage Loans Payable and Unsecured Credit Facility

3 Months Ended

Mar. 31, 2022

Debt Disclosure [Abstract]

Mortgage Loans Payable and Unsecured Credit Facility

Note 5. Mortgage Loans Payable and Unsecured Credit Facility

Debt and finance lease obligations are composed of the following at March 31, 2022:

		March 31, 2022
					Contractual
	Maturity	Balance			interest rates
Description	dates	outstanding			weighted-average
Fixed-rate mortgage
Franklin Village	Jun 2026	$	44,296,000		3.9%
Shops at Suffolk Downs (a)	Jun 2031		15,600,000		3.5%
Trexlertown Plaza (a)	Jun 2031		36,100,000		3.5%
The Point (a)	Jun 2031		29,700,000		3.5%
Christina Crossing (a)	Jun 2031		17,000,000		3.5%
Lawndale Plaza (a)	Jun 2031		15,600,000		3.5%
Senator Square finance lease obligation	Sep 2050		5,587,000		5.3%
			163,883,000		3.6%
Unsecured credit facilities:
Variable-rate:
Revolving credit facility (b)	Aug 2024		70,000,000		2.0%
Fixed-rate (c):
Term loan	Apr 2023		100,000,000		3.3%
Term loan	Sep 2024		75,000,000		3.8%
Term loan	Jul 2025		75,000,000		4.7%
Term loan	Aug 2026		50,000,000		3.3%
			533,883,000		3.5%
Unamortized issuance costs			(2,979,000	)
		$	530,904,000

(a) The mortgages for these properties are cross-collateralized.

(b) The revolving credit facility is subject to two one-year extensions at the Company’s option.

(c) The interest rates on these term loans consist of the London Interbank Offered Rate (“LIBOR”) plus a credit spread based on the Company’s leverage ratio, for which the Company has interest rate swap agreements which convert the LIBOR rates to fixed rates. Accordingly, these term loans are presented as fixed-rate debt. 

Unsecured Revolving Credit Facility and Term Loans

On August 30, 2021, the Company amended its existing $300 million unsecured credit facility and $50 million term loan. After the amendment, the new unsecured revolving credit facility is $185 million with an expiration in August 2024. The new unsecured revolving credit facility may be extended, at the Company’s option for two additional one-year periods, subject to customary conditions. Interest on the borrowings under the new unsecured revolving credit facility component can range from LIBOR plus 135 bps to 195 bps (150 bps at March 31, 2022), based on the Company’s leverage ratio. The Company extended its $50 million term loan four years with an expiration in August 2026.

The Company’s unsecured credit facility and term loans contain financial covenants including, but not limited to, maximum debt leverage, maximum secured debt, minimum fixed charge coverage, and minimum net worth. In addition, the facility contains restrictions including, but not limited to, limits on indebtedness, certain investments and distributions. The Company’s failure to comply with the covenants or the occurrence of an event of default under the facilities could result in the acceleration of the related debt and exercise of other lender remedies. Although the credit facility is unsecured, borrowing availability is based on unencumbered property adjusted net operating income for the trailing twelve months, as defined in the agreements. As of March 31, 2022, the Company had $70.0 million outstanding and $110.1 million available for additional borrowings under its revolving credit facility, and was in compliance with all financial covenants.    

Mortgage Loans Payable

On May 5, 2021, the Company closed a non-recourse mortgage for $114.0 million. The mortgage matures June 1, 2031, bears interest at a fixed-rate of 3.49% and requires payment of interest only for the first five years followed by payments of principal and interest based on thirty-year amortization for the remainder of the term. The loan is secured by five shopping centers consisting of Lawndale Plaza, The Shops at Suffolk Downs, Christina Crossing, Trexlertown Plaza, and The Point.  These properties had no pre-

existing debt and the proceeds from this new loan were used to reduce amounts outstanding under the Company’s revolving credit facility.

In the absence of waivers or consents from holders of the Company’s indebtedness, the consummation of the Transactions described in Note 1 will result in a “change of control” under the terms of such indebtedness and would be expected to result in a default or similar event under substantially all of the Company’s outstanding indebtedness, permitting the holders of such indebtedness to accelerate such indebtedness and demand immediate repayment at par, together with the applicable “make-whole” premium, if any.

Derivative Financial Instruments

The fair values of the interest rate swaps applicable to the unsecured term loans discussed above are included in accounts payable and accrued liabilities on the consolidated balance sheet at March 31, 2022. Charges and/or credits relating to the changes in the fair value of the interest rate swaps are made to accumulated other comprehensive income (loss), limited partners’ interest, or operations (included in interest expense), as applicable. Over time, the unrealized gains and losses recorded in accumulated other comprehensive loss will be reclassified into earnings as an increase or reduction to interest expense in the same periods in which the hedged interest payments affect earnings. The Company estimates that approximately $1.7 million of accumulated other comprehensive loss will be reclassified as a charge to earnings within the next twelve months.

The following is a summary of the derivative financial instruments held by the Company at March 31, 2022 and December 31, 2021:

March 31, 2022
Designation/				Fair		Maturity	Balance sheet
Cash flow	Derivative	Count		value		dates	location
Qualifying	Interest rate swaps		2	$	1,161,000	2023-2025	Other assets and deferred charges, net
Qualifying	Interest rate swaps		3	$	1,128,000	2023-2025	Accounts payable and accrued liabilities
December 31, 2021
Designation/				Fair		Maturity	Balance sheet
Cash flow	Derivative	Count		value		dates	location
Qualifying	Interest rate swaps		5	$	8,232,000	2023-2025	Accounts payable and accrued liabilities

The notional values of the interest rate swaps held by the Company at March 31, 2022 and December 31, 2021 were $300.0 million in each period.

The following presents the effect of the Company’s derivative financial instruments on the consolidated statements of operations and the consolidated statements of equity for the three months ended March 31, 2022 and 2021, respectively:

		Gain recognized in other
		comprehensive (loss) income
		(effective portion)
Designation/		Three months ended March 31,
Cash flow	Derivative	2022			2021
Qualifying	Interest rate swaps	$	6,976,000		$	2,394,000
		(Loss) recognized in other
		comprehensive (loss) income
		reclassified into earnings (effective portion)
		Three months ended March 31,
	Classification	2022			2021
	Continuing Operations	$	(1,362,000	)	$	(1,803,000	)

As of March 31, 2022 the Company believes it has no significant risk associated with non-performance of the financial institutions which are the counterparties to its derivative contracts.