Note 8 - Mortgage and Other Indebtedness

12 Months Ended

Dec. 31, 2024

Debt Disclosure [Abstract]

Mortgage and Other Indebtedness

Note 8 – Mortgage and Other Indebtedness

The table below details the Company’s debt balance as of December 31, 2024 and 2023, as well as the effective interest rates as of December 31, 2024:

(dollars in thousands)	Maturity Date	Rate Type	Interest Rate		December 31, 2024				December 31, 2023
Basis Term Loan (net of discount of $0 and $21, respectively)	July 1, 2024	Floating (1)	N/A		$	—			$	8,491		(2)
Hollinswood Shopping Center Loan (3)	March 1, 2025	SOFR + 2.36%	6.69%			12,104				12,437
Avondale Shops Loan	June 1, 2025	Fixed	4.00%			2,745				2,868
Vista Shops at Golden Mile Loan (net of discount of $82 and $9, respectively) (4)	February 8, 2029	Fixed	6.90%			15,985				11,252
Brookhill Azalea Shopping Center Loan	January 31, 2025 (5)	SOFR + 2.75%	7.08%			9,198				9,198
Crestview Shopping Center Loan (net of discount of $33 and $53, respectively)	September 29, 2026	Fixed	7.83%			11,856				11,947
Lamar Station Plaza West Loan (net of discount of $54 and $73, respectively)	December 10, 2027	Fixed	5.67%			18,585				18,927
Highlandtown Village Shopping Center Loan (net of discount of $29 and $38, respectively)	May 10, 2028	SOFR + 2.5% (6)	6.09%			8,721				8,712
Midtown Colonial and Midtown Lamonticello Shopping Center Loan (net of discount of $168 and $0, respectively) (7)	May 1, 2027	Fixed	7.92%			18,992				—
Midtown Row Loan (net of discount of $14 and $19, respectively)	December 1, 2027	Fixed	6.48%			75,986				75,981
Midtown Row/Fortress Mezzanine Loan (8)	December 1, 2027	Fixed	14.00%	(9)		16,911				16,187
Cromwell Field Shopping Center Loan (net of discount of $45 and $60, respectively)	December 22, 2027	Fixed	6.71%			12,508		(10)		10,597		(10)
Coral Hills Shopping Center Loan (net of discount of $169 and $189, respectively)	October 31, 2033	Fixed	6.95%			12,385				12,560
West Broad Shopping Center Loan (net of discount of $79 and $88, respectively)	December 21, 2033	Fixed	7.00%			11,545				11,712
The Shops at Greenwood Village Loan (net of discount of $63 and $80, respectively)	October 10, 2028	SOFR + 2.85% (11)	5.85%			21,643				22,218
					$	249,164			$	233,087
Unamortized deferred financing costs, net						(2,114	)			(2,038	)
Total Mortgage and Other Indebtedness					$	247,050			$	231,049

(1)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%.

(2)The outstanding balance includes less than $0.1 million of exit fees at 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.

(3)The Company entered into an interest rate swap which fixed the interest rate of the loan at 4.06% until December 1, 2024. On October 28, 2024, the Company entered into an agreement to extend the maturity date of this loan to March 1, 2025. On March 27, 2025, the Company entered into another agreement to further extend the maturity date of this loan to June 1, 2025.

(4)On February 8, 2024, the Company refinanced the Vista Shops at Golden Mile Loan. The maturity date of the new loan is February 8, 2029. The Company entered into an interest rate swap which fixes the interest rate of the new loan at 6.90% for the term of the loan.

(5)On January 31, 2025, the Company entered into an agreement to extend the maturity date of this loan to April 30, 2025.

(6)The Company has entered into an interest rate swap which fixes the interest rate of this loan at 6.09%.

(7)This loan was originated on April 30, 2024.

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

(9)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% and, as of December 31, 2024, was 9%.

(10)At December 31, 2024 and 2023, there was additional borrowing capacity of $2.4 million and $4.3 million, respectively, available to us to fund leasing costs and for the performance earnout.

(11)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. The Basis Term Loan initial maturity was January 1, 2023, subject to two one-year extension options, subject to certain conditions. On November 2, 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%.

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.

Mortgage Indebtedness

As of December 31, 2024 and 2023, the Company had approximately $232.3 million and $208.4 million, respectively, of outstanding mortgage indebtedness secured by individual properties. The Hollinswood mortgage, Vista Shops mortgage, Brookhill mortgage, Crestview mortgage, Highlandtown mortgage, Cromwell mortgage, Lamar Station Plaza West mortgage, Midtown Row mortgage, Coral Hills mortgage, West Broad mortgage and Greenwood Village mortgage require the Company to maintain a minimum debt service coverage ratio (as such terms are defined in the respective loan agreements) as follows in the table below.

	Minimum Debt Service Coverage
Hollinswood Shopping Center	1.40 to 1.00
Vista Shops at Golden Mile	1.25 to 1.00
Brookhill Azalea Shopping Center	1.30 to 1.00
Crestview Shopping Center	1.25 to 1.00
Highlandtown Village Shopping Center	1.25 to 1.00
Cromwell Field Shopping Center (1)	1.20 to 1.00
Lamar Station Plaza West	1.30 to 1.00
Midtown Row	1.15 to 1.00
Coral Hills Shopping Center	1.20 to 1.00
West Broad Shopping Center	1.25 to 1.00
The Shops at Greenwood Village	1.40 to 1.00

(1)The debt service coverage ratio testing commenced December 31, 2023 with the following requirements: (i) 1.20 to 1.00 as of December 31, 2023; (ii) 1.20 to 1.00 as of December 31, 2024 and (iii) 1.35 to 1.00 as of December 31, 2025 and for the remaining term of the loan.

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.

On October 28, 2024, the loan agreement and guaranty agreement for the Company’s mortgage loan secured by the Hollinswood property was amended to extend the maturity date to March 1, 2025. On March 27, 2025, the maturity date was further extended to June 1, 2025.

On January 31, 2025, the promissory note for the Company's mortgage loan secured by the Brookhill property was amended to extend the maturity date to April 30, 2025.

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. Pursuant to the mezzanine loan agreement, a portion of the interest on the Fortress Mezzanine Loan is paid in cash (the “Current Interest”) and a portion of the interest is capitalized and added to the principal amount of the Fortress Mezzanine 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%. As of December 31, 2024, the Mezzanine Loan Interest rate was 14% per annum, comprised of a 5% Current Interest rate and a 9% Capitalized Interest rate. The Fortress Mezzanine Loan (including a prepayment penalty) will be due and payable in connection with an underwritten public offering by the Company meeting certain conditions (a “Qualified Public Offering”). However, in connection with a Qualified Public Offering, the lender for the Fortress Mezzanine Loan has the right to convert all or a portion of the principal of the Fortress Mezzanine Loan and any prepayment penalty into shares of common stock at a price of $2.00 per share, subject to certain adjustments. The mezzanine loan agreement provides for cross-default in the event of a Trigger Event under the Eagles Sub-OP Operating Agreement or an event of default under the loan agreement for the Midtown Row mortgage. The Company elected to measure the Fortress Mezzanine Loan at fair value in accordance with the fair value option. The fair value at December 31, 2024 and 2023 was $16.9 million and $16.2 million, respectively. For each of the years ended December 31, 2024 and 2023, the Company recognized a net gain of $2.3 million in net gain on fair value change on debt held under the fair value option in the consolidated statements of operations and a net loss of $1.7 million and a net gain of $0.5 million, respectively, in change in fair value due to credit risk on debt held under the fair value option in the consolidated statements of comprehensive loss. For the years ended December 31, 2024 and 2023, the Company recognized $2.2 million and $1.9 million, respectively, of interest expense in the consolidated statements of operations, which includes $1.4 million and $1.1 million, respectively, of Capitalized Interest recorded in the consolidated balance sheets.

On January 31, 2025, the Company entered into a Note Sale and Assignment Agreement, as amended, with CF Flyer Mezz Holdings LLC, the lender under the Fortress Mezzanine Loan (“CF Flyer Mezz”), and FMC BRST Mezzanine LLC (“FMC BRST Mezzanine”) pursuant to which FMC BRST Mezzanine will purchase, and CF Flyer Mezz will sell, CF Flyer Mezz’s right, title and interests in and to the Fortress Mezzanine Loan and other certain instruments, agreements and other documents securing, guaranteeing or otherwise executed and delivered in connection therewith (the “Note Purchase”). The closing of the Note Purchase, which is subject to certain conditions, is scheduled for March 31, 2025, which may be extended to April 30, 2025.

Deferred Financing Costs and Debt Discounts

The total amount of deferred financing costs associated with the Company’s debt as of December 31, 2024 and 2023 was $3.6 million, gross ($2.1 million, net) and $3.4 million, gross ($2.0 million, net), respectively. Debt discounts associated with the Company’s debt as of December 31, 2024 and 2023 was $1.2 million, gross ($0.6 million, net) and $1.3 million, gross ($0.6 million, net), respectively. Deferred financing costs and debt discounts are netted against the debt balance outstanding on the Company’s consolidated balance sheets and will be amortized to interest expense through the maturity date of the related debt.

The Company recognized amortization expense of deferred financing costs and debt discounts, included in interest expense in the consolidated statements of operations, of approximately $0.9 million and $0.8 million for the years ended December 31, 2024 and 2023, respectively.

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 December 31, 2024:

Year ending December 31,	(in thousands)
2025	$	26,401
2026		14,817
2027		143,109
2028		28,880
2029		15,439
Thereafter		21,977
		250,623
Unamortized debt discounts and deferred financing costs, net and fair value option adjustment		(3,573	)
Total	$	247,050

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 December 31, 2023 the effective interest rate of the Basis Term Loan was 8.62%. The interest rate cap agreement expired on January 1, 2024.

The Company had also entered into two interest rate swap agreements on the Hollinswood Loan to fix the interest rate at 4.06%. The swap agreements were 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. The interest rate swap agreements expired on December 1, 2024.

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%.

On February 8, 2024, the Company entered into an interest rate swap agreement on the Vista Shops at Golden Mile mortgage loan to fix the interest rate at 6.90%.

The Company recognizes all derivative instruments as assets or liabilities at their fair value in the 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 each of the years ended December 31, 2024 and 2023, the Company recognized a net loss of approximately $0.1 million and $1.2 million, respectively, as a component of “Derivative fair value adjustment” on the consolidated statements of operations.

The fair value of the Company’s derivative financial instruments as of December 31, 2024 and 2023 was an interest rate swap asset of approximately $0.7 million and $0.8 million, respectively, and an interest rate swap liability of less than $0.1 million at December 31, 2024. The interest rate swap assets are included in Other assets, net on the consolidated balance sheets.

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 December 31, 2024, the Company was in compliance with all covenants under its debt agreements.