| Mortgages Payable |
Note 11 – Mortgages Payable The following table summarizes certain information at March 31, 2026 and December 31, 2025 with respect to the Company’s senior mortgage indebtedness (amounts in thousands): | | | | | | | | | | | | | | | Outstanding Principal | | As of March 31, 2026 | | | March 31, | | December 31, | | | | Interest-only | | | Property | | 2026 | | 2025 | | Interest Rate | | through date | | Maturity Date | Fixed Rate: | | | | | | | | | | | | | Allure at Southpark | | $ | 55,166 | | $ | 55,166 | | 5.58 | % | Interest-only | | January 1, 2030 | Amira at Westly | | | 56,650 | | | 56,650 | | 4.81 | % | Interest-only | | November 1, 2034 | Avenue at Timberlin Park | | | 23,660 | | | 23,660 | | 5.47 | % | August 2027 | | August 1, 2029 | District at Parkview | | | 38,625 | | | 38,625 | | 5.18 | % | Interest-only | | January 1, 2036 | ILE (1) | | | 17,995 | | | 23,096 | | 4.30 | % | (2) | | (1) | Skytop Apartments | | | 57,525 | | | 57,525 | | 4.98 | % | Interest-only | | October 1, 2035 | Southern Pines Reserve | | | 30,739 | | | 30,739 | | 5.13 | % | Interest-only | | May 1, 2035 | Villas at Huffmeister | | | 26,713 | | | 26,846 | | 3.56 | % | (2) | | October 1, 2029 | Yauger Park Villas (3) | | | 13,634 | | | 13,720 | | 4.86 | % | (2) | | April 1, 2026 | Total Fixed Rate | | $ | 320,707 | | $ | 326,027 | | | | | | | | | | | | | | | | | | | | Floating Rate: | | | | | | | | | | | | | DB Loan (4) | | $ | 55,000 | | $ | 60,000 | | 5.45 | % | Interest-only | | October 4, 2027 | Harmony at Clear Creek (5) | | | 1 | | | 1 | | 6.83 | % | Interest-only | | September 30, 2028 | ILE (6) | | | 19,838 | | | 21,782 | | 6.52 | % | Interest-only | | October 1, 2027 | Wayford at Concord (7) | | | 32,973 | | | 32,973 | | 4.73 | % | May 2027 | | May 1, 2029 | Total Floating Rate | | $ | 107,812 | | $ | 114,756 | | | | | | | Total | | $ | 428,519 | | $ | 440,783 | | | | | | | Fair value adjustments | | | (1,994) | | | (2,075) | | | | | | | Deferred financing costs, net | | | (9,715) | | | (10,316) | | | | | | | Total mortgages payable | | $ | 416,810 | | $ | 428,392 | | | | | | |
(1) | ILE’s fixed rate debt represents the aggregate debt outstanding across two separate credit agreements. Of the outstanding balance, one credit agreement (“CA1”) has a balance of $13.6 million at a fixed rate of 3.75%, and the second credit agreement (“CA2”) has a balance of $4.4 million at a fixed rate of 6.00%. CA2 bears interest at a floating rate that is subject to an interest rate swap to effectuate a fixed rate; refer to Note 13 for further information. CA1 matures in 2026; CA2 matures in 2028. The ILE credit agreements contain certain financial and operating covenants, including minimum liquidity and minimum debt service coverage. |
(2) | The loan requires monthly payments of principal and interest. |
(3) | The principal balance includes a $9.4 million senior loan at a fixed rate of 4.81% and a $4.2 million supplemental loan at a fixed rate of 4.96%. On April 1, 2026, the Company entered into a new floating rate loan and paid off the previous fixed rate senior and supplemental loans. |
(4) | The Deutsche Bank loan (“DB Loan”) bears interest at one-month Term SOFR plus 2.95%. In March 2026, the one-month Term SOFR was 3.67%. The Term SOFR rate is subject to a 2.50% rate cap through April 2026; refer to Note 13 for further information. The DB Loan contains certain financial and operating covenants, including maximum leverage, minimum debt yield and minimum debt service coverage. |
(5) | Represents a construction loan with a maximum commitment of $46.5 million. At March 31, 2026, a negligible amount was drawn on the loan. |
(6) | The ILE loan bears interest at one-month Term SOFR plus 2.85%, subject to a 6.50% rate floor, and contains a minimum debt service coverage covenant. In March 2026, the one-month Term SOFR was 3.67%. |
(7) | The Wayford at Concord loan bears interest at the 30-day average SOFR plus 2.23%. In March 2026, the 30-day average SOFR was 3.67%. SOFR rate is subject to a 2.50% rate cap through April 2027; refer to Note 13 for further information. |
Deferred financing costs Costs incurred in obtaining long-term financing are amortized on a straight-line basis to interest expense over the terms of the related financing agreements, as applicable, which approximates the effective interest method. Amortization of deferred financing costs, including amounts related to the revolving credit facility (refer to Note 10 for further information), for the three months ended March 31, 2026 and 2025 was $0.7 million and $0.7 million, respectively. Fair value adjustments of debt The Company records a fair value adjustment based upon the fair value of the loans on the date they were assumed in conjunction with acquisitions. The fair value adjustments are being amortized to interest expense over the remaining life of the loans. Amortization of fair value adjustments for the three months ended March 31, 2026 and 2025 was $0.1 million and $0.1 million, respectively. Loss on Extinguishment of Debt and Debt Modification Costs Upon repayment of or in conjunction with a material change (i.e., a 10% or greater difference in the cash flows between instruments) in the terms of an underlying debt agreement, the Company writes-off any unamortized deferred financing costs and fair market value adjustments related to the original debt that was extinguished. Prepayment penalties incurred on the early repayment of debt and costs incurred in a debt modification that are not capitalized would also be included within loss on extinguishment of debt and debt modification costs on the consolidated statements of operations and comprehensive income (loss). The Company had a negligible amount of loss on extinguishment of debt and no debt modification costs during the three months ended March 31, 2026 and 2025. Debt maturities The following table summarizes the Company’s contractual principal payments of its borrowings at March 31, 2026 for the five subsequent years and thereafter (amounts in thousands): | | | | Year | | Total | 2026 (April 1 – December 31) | | $ | 27,716 | 2027 | | | 75,945 | 2028 | | | 5,703 | 2029 | | | 80,450 | 2030 | | | 55,166 | Thereafter | | | 183,539 | | | $ | 428,519 | Add: Unamortized fair value debt adjustment | | | (1,994) | Subtract: Deferred financing costs, net | | | (9,715) | Total | | $ | 416,810 |
The net book value of real estate assets providing collateral for these above borrowings was $770.1 million at March 31, 2026. The mortgage loans encumbering the Company’s properties are nonrecourse, subject to certain exceptions for which the Company would be liable for any resulting losses incurred by the lender. These exceptions generally include fraud or a material misrepresentation, misstatement or omission by the borrower, intentional or grossly negligent conduct by the borrower that harms the property or results in a loss to the lender, filing of a bankruptcy petition by the borrower, either directly or indirectly, and certain environmental liabilities. In addition, upon the occurrence of certain events, such as fraud or filing of a bankruptcy petition by the borrower, the Company or our joint ventures would be liable for the entire outstanding balance of the loan, all interest accrued thereon and certain other costs, including penalties and expenses. The mortgage loans have a period where a prepayment fee or yield maintenance would be required.
|