Note 7 - Mortgage and Other Indebtedness

3 Months Ended

Mar. 31, 2024

Debt Disclosure [Abstract]

Mortgage and Other Indebtedness

Note 7 – Mortgage and Other Indebtedness

The table below details the Company’s debt balance at March 31, 2024 and December 31, 2023:

(dollars in thousands)	Maturity Date	Rate Type	Interest Rate (1)	March 31, 2024				December 31, 2023
Basis Term Loan (net of discount of $0 and $21, respectively)	July 1, 2024	Floating (2)	8.62%	$	8,512		(3)	$	8,491		(3)
Hollinswood Shopping Center Loan	December 1, 2024	SOFR + 2.36% (4)	4.06%		12,354				12,437
Avondale Shops Loan	June 1, 2025	Fixed	4.00%		2,838				2,868
Vista Shops at Golden Mile Loan (net of discount of $101 and $9, respectively) (5)	February 8, 2029	Fixed	6.90%		16,049				11,252
Brookhill Azalea Shopping Center Loan	January 31, 2025	SOFR + 2.75%	8.08%		9,197				9,198
Crestview Shopping Center Loan (net of discount of $48 and $53, respectively)	September 29, 2026	Fixed	7.83%		11,952				11,947
Lamar Station Plaza West Loan (net of discount of $90 and $73, respectively)	December 10, 2027	Fixed	5.67%		18,817				18,927
Highlandtown Village Shopping Center Loan (net of discount of $36 and $38, respectively)	May 10, 2028	SOFR + 2.5% (6)	6.085%		8,714				8,712
Cromwell Field Shopping Center Loan (net of discount of $56 and $60, respectively)	December 22, 2027	Fixed	6.71%		12,320				10,597
Midtown Row Loan (net of discount of $18 and $19, respectively)	December 1, 2027	Fixed	6.48%		75,982				75,981
Midtown Row/Fortress Mezzanine Loan (7)	December 1, 2027	Fixed	13.00% (8)		13,435				16,187
Coral Hills Shopping Center Loan (net of discount of $184 and $189, respectively)	October 31, 2033	Fixed	6.95%		12,517				12,560
West Broad Shopping Center Loan (net of discount of $86 and $88, respectively)	December 21, 2033	Fixed	7.00%		11,671				11,712
The Shops at Greenwood Village (net of discount of $76 and $80, respectively)	October 10, 2028	SOFR + 2.85% (9)	5.85%		22,075				22,218
				$	236,433			$	233,087
Unamortized deferred financing costs, net					(2,161	)			(2,038	)
Total Mortgage and Other Indebtedness				$	234,272			$	231,049

(1)Interest rates are as of March 31, 2024.

(2)The interest rate for the Basis Term Loan was the greater of (i) the Secured Overnight Financing Rate (“SOFR”) plus 3.97% per annum and (ii) 6.125% per annum. On November 23, 2022, the Company entered into an interest rate cap agreement to cap the SOFR interest rate at 4.65% effective January 1, 2023, which replaced the existing interest rate cap agreement that capped the SOFR interest rate at 3.5%.

(3)The outstanding balance includes less than $0.1 million of exit fees at each of March 31, 2024 and December 31, 2023. On April 30, 2024, the Company paid off the outstanding principal balance on the Basis Term Loan with a portion of the proceeds of a new loan secured by the properties that were collateral for the Basis Term Loan.

(4)The Company has entered into an interest rate swap which fixes the interest rate of this loan at 4.06%.

(5)On February 8, 2024, the Company refinanced the Vista Shops at Golden Mile Loan to extend the maturity date to February 8, 2029 and entered into an interest rate swap which fixes the interest rate of the new loan at 6.90%.

(6)The Company has entered into an interest rate swap which fixes the interest rate of this loan at 6.085%.

(7)The outstanding balance reflects the fair value of the debt.

(8)A portion of the interest on this loan is paid in cash (the “Current Interest”) and a portion of the interest is capitalized and added to the principal amount of the loan each month (the “Capitalized Interest” and, together with the Current Interest, the “Mezzanine Loan Interest”). The initial Mezzanine Loan Interest rate was 12% per annum, comprised of a 5% Current Interest rate and a 7% Capitalized Interest rate. The Capitalized Interest rate increases each year by 1%.

(9)On May 1, 2023, the Company terminated this loan’s prior interest rate swap and entered into a new interest rate swap agreement to fix the interest rate at 5.85%.

Basis Term Loan

In December 2019, six of the Company’s subsidiaries, as borrowers (collectively, the “Borrowers”), and Big Real Estate Finance I, LLC, a subsidiary of a real estate fund managed by Basis Management Group, LLC (“Basis”), as lender (the “Basis Lender”), entered into a loan agreement (the “Basis Loan Agreement”) pursuant to which the Basis Lender made a senior secured term loan of up to $66.9 million (the “Basis Term Loan”) to the Borrowers. Pursuant to the Basis Loan Agreement, the Basis Term Loan was originally secured by mortgages on the following properties: Coral Hills, Crestview, Dekalb, Midtown Colonial, Midtown Lamonticello and West Broad. As of March 31, 2024, the Basis Term Loan was secured by Midtown Colonial and Midtown Lamonticello. The Basis Term Loan initial maturity was January 1, 2023, subject to two one-year extension options, subject to certain conditions. On November 22, 2022, the Company exercised one of the one-year extension options and the maturity date was extended to January 1, 2024. On December 6, 2023, the Company exercised the remaining extension option and the maturity date was extended to July 1, 2024.

The Basis Loan Agreement was amended and restated on June 29, 2022 to replace LIBOR with SOFR. The Basis Term Loan bore interest at a rate equal to the greater of (i) SOFR plus 3.97% per annum and (ii) 6.125% per annum. The Borrowers entered into an interest rate cap agreement that effectively capped the prior-LIBOR rate at 3.50% per annum. On August 1, 2022, the interest rate cap agreement was modified to cap the SOFR rate at 3.50% per annum. The interest rate cap expired on January 1, 2023. On November 23, 2022, the Company entered into an interest rate cap agreement, effective January 1, 2023, to cap the SOFR interest rate at 4.65%.

As of March 31, 2024, the interest rate of the Basis Term Loan was 8.62% and the outstanding principal balance was $8.5 million. On April 30, 2024, the Company received a loan secured by Midtown Colonial and Midtown Lamonticello and paid off the Basis Term Loan in full with a portion of the proceeds from the new mortgage loan.

The Company was in compliance with the Basis Loan Agreement's debt service coverage calculation for the twelve months ended March 31, 2024.

Mortgage Indebtedness

In addition to the indebtedness described above, as of March 31, 2024 and December 31, 2023, the Company had approximately $214.5 million and $208.4 million, respectively, of outstanding mortgage indebtedness secured by individual properties.

On May 1, 2023, the Company terminated the prior interest rate swap for the loan secured by The Shops at Greenwood Village and entered into a new interest rate swap agreement to fix the interest rate at 5.85%.

On June 28, 2023, the loan agreement for the Company’s mortgage loan secured by the Vista Shops at Golden Mile was amended to change the interest rate to 7.73% per annum and extend the maturity date to June 24, 2024. On February 8, 2024, the Company refinanced the mortgage loan. The new loan has a principal balance of $16.2 million, bears interest at SOFR plus a spread of 2.75% per annum and matures on February 8, 2029. The Company entered into an interest rate swap which fixes the interest rate of the loan at 6.90%.

On April 30, 2024, the Company received a $19.2 million loan secured by Midtown Colonial and Midtown Lamonticello, which bears interest at a rate of 7.92% per annum and matures on May 1, 2027. The Company used a portion of the proceeds from the new mortgage loan to pay off the Basis Term Loan.

Fortress Mezzanine Loan

In connection with the acquisition of Midtown Row, the Company entered into a $15.0 million mezzanine loan (the “Fortress Mezzanine Loan”) secured by 100% of the membership interests in the entity that owns Midtown Row. The mezzanine loan matures on December 1, 2027. The Company elected to measure the Fortress Mezzanine Loan at fair value in accordance with the fair value option. The fair value at March 31, 2024 and December 31, 2023 was $13.4 million and $16.2 million, respectively. For the three months ended March 31, 2024 and 2023, the Company recognized a net gain of $2.3 million and $3.2 million, respectively, on fair value change of debt held under the fair value option in the condensed consolidated statements of operations and a net gain of $0.7 million and $1.7 million, respectively, in change in fair value due to credit risk on debt held under the fair value option in the condensed consolidated

statements of comprehensive loss. For each of the three months ended March 31, 2024 and 2023, the Company recognized $0.5 million of interest expense in the condensed consolidated statements of operations, which includes $0.3 million of Capitalized Interest recorded in the condensed consolidated balance sheets.

Debt Maturities

The following table details the Company’s scheduled principal repayments and maturities during each of the next five years and thereafter as of March 31, 2024:

(dollars in thousands)	Amount Due
Remainder of 2024 (1)	$	22,311
2025		14,115
2026		14,840
2027		122,705
2028		28,878
2029		15,424
Thereafter		21,994
		240,267
Unamortized debt discounts and deferred financing costs, net and fair value option adjustment		(5,995	)
Total	$	234,272

(1)Includes $8.5 million of debt that was repaid on April 30, 2024. The Company paid off the outstanding principal balance on the Basis Term Loan with a portion of the proceeds of a new loan secured by the properties that were collateral for the Basis Term Loan.

Interest Rate Cap and Interest Rate Swap Agreements

To mitigate exposure to interest rate risk, the Company entered into an interest rate cap agreement, effective December 27, 2019, on the full $66.9 million Basis Term Loan. The Basis Term Loan bore interest at a rate equal to the greater of (i) SOFR plus 3.97% per annum and (ii) 6.125% per annum. On November 23, 2022, the Company entered into an interest rate cap agreement, effective January 1, 2023, on the full $66.9 million Basis Term Loan to cap the SOFR interest rate at 4.65%. As of March 31, 2024 and December 31, 2023, the effective interest rate of the Basis Term Loan was 8.62%.

The Company also entered into two interest rate swap agreements on the Hollinswood Loan to fix the interest rate at 4.06%. The swap agreements are effective as of December 27, 2019 on the outstanding balance of $10.2 million and on July 1, 2021 for the additional availability of $3.0 million under the Hollinswood Loan. On May 3, 2023, the Hollinswood loan agreement was amended to replace LIBOR with SOFR, effective July 1, 2023.

On May 1, 2023, the Company terminated the prior interest rate swap agreement for the loan secured by The Shops at Greenwood Village and entered into a new interest rate swap agreement to fix the interest rate for the loan at 5.85%. The Company also received $2.2 million upon the termination of the prior interest rate swap agreement.

On May 5, 2023, the Company entered into an interest rate swap agreement on the Highlandtown Village Shopping Center mortgage loan to fix the interest rate at 6.085%.

The Company recognizes all derivative instruments as assets or liabilities at their fair value in the condensed consolidated balance sheets. Changes in the fair value of the Company’s derivatives that are not designated as hedges or do not meet the criteria of hedge accounting are recognized in earnings. For the three months ended March 31, 2024 and 2023, the Company recognized gains (losses) of approximately $0.4 million and $(0.6) million, respectively, as a component of “Derivative fair value adjustment” on the condensed consolidated statements of operations.

The fair value of the Company’s derivative financial instruments as of March 31, 2024 and December 31, 2023 was an interest rate swap asset of approximately $1.2 million and $0.8 million, respectively. The interest rate swap asset is included in Derivative assets.

Covenants

The Company’s loan agreements contain customary financial and operating covenants including debt service coverage ratios and aggregate minimum unencumbered cash covenants. As of March 31, 2024, the Company was in compliance with all covenants under its debt agreements.