Quarterly report [Sections 13 or 15(d)]

Mortgage Notes Payable, Credit Facility, and Senior Unsecured Notes

v3.26.1
Mortgage Notes Payable, Credit Facility, and Senior Unsecured Notes
 3 Months Ended
Mar. 31, 2026
Debt Disclosure [Abstract]  
Mortgage Notes Payable, Credit Facility, and Senior Unsecured Notes Mortgage Notes Payable, Credit Facility, and Senior Unsecured Notes
Our $200.0 million unsecured revolving credit facility (“Revolver”), $125.0 million term loan facility (“Term Loan A”), $143.3 million term loan facility (“Term Loan B”), and $131.7 million term loan facility (“Term Loan C”), are collectively referred to herein as the “Credit Facility”.

Our mortgage notes payable, Credit Facility, and senior unsecured notes as of March 31, 2026 and December 31, 2025 are summarized below (dollars in thousands):

Encumbered properties at Carrying Value at Stated Interest Rates at Scheduled Maturity Dates at
March 31, 2026 March 31, 2026 December 31, 2025 March 31, 2026 March 31, 2026
Mortgage and other secured loans:
Fixed rate mortgage loans 42  $ 247,220  $ 251,578  (1) (2)
Premiums and discounts, net —  29  19  N/A N/A
Deferred financing costs, mortgage loans, net —  (1,258) (1,404) N/A N/A
Total mortgage notes payable, net 42  $ 245,991  $ 250,193  (4)
Variable rate revolving credit facility —  (6) $ 34,270  $ 37,370 
SOFR + 1.60%
 (3) 10/10/2029
Total revolver —  $ 34,270  $ 37,370 
Variable rate term loan facility A —  (6) $ 125,000  $ 125,000 
SOFR + 1.55%
 (3) 10/10/2029
Variable rate term loan facility B —  (6) 143,333  143,333 
SOFR + 1.55%
 (3) 2/15/2030
Variable rate term loan facility C —  (6) 131,667  131,667 
SOFR + 1.55%
 (3) 2/18/2028
Deferred financing costs, term loan facility —  (2,126) (2,298) N/A N/A
Total term loan, net N/A $ 397,874  $ 397,702 
Senior unsecured notes 2029 —  $ 75,000  $ 75,000  6.47% 12/18/2029
Senior unsecured notes 2030 —  85,000  85,000  5.99% 12/15/2030
Deferred financing costs, senior unsecured notes —  (1,750) (1,799) N/A N/A
Total senior unsecured notes, net N/A $ 158,250  $ 158,201 
Total mortgage notes payable, credit facility, and senior unsecured notes 42  $ 836,385  $ 843,466  (5)

(1)As of March 31, 2026, interest rates on our fixed rate mortgage notes payable varied from 2.80% to 6.10%.
(2)As of March 31, 2026, we had 36 mortgage notes payable with maturity dates ranging from October 5, 2026 through August 1, 2037.
(3)As of March 31, 2026, the Secured Overnight Financing Rate (“SOFR”) was approximately 3.68%.
(4)The weighted average interest rate on the mortgage notes outstanding as of March 31, 2026 was approximately 4.20%.
(5)The weighted average interest rate on all debt outstanding as of March 31, 2026 was approximately 5.12%.
(6)The amount we may draw under our Credit Facility is based on a percentage of the fair value of a combined pool of 108 unencumbered properties as of March 31, 2026.
N/A - Not Applicable
Mortgage Notes Payable

As of March 31, 2026, we had 36 mortgage notes payable, collateralized by a total of 42 properties with a net book value of $410.9 million. We have limited recourse liabilities that could result from any one or more of the following circumstances: a borrower voluntarily filing for bankruptcy, improper conveyance of a property, fraud or material misrepresentation, misapplication or misappropriation of rents, security deposits, insurance proceeds or condemnation proceeds, or physical waste or damage to the property resulting from a borrower’s gross negligence or willful misconduct. As of March 31, 2026, we did not have any mortgages subject to recourse. From time to time, we also indemnify lenders against claims resulting from the presence of hazardous substances or activity involving hazardous substances in violation of environmental laws on a property. 

During the three months ended March 31, 2026, we repaid two mortgages, collateralized by two properties, which is summarized in the table below (dollars in thousands):

Aggregate Fixed Rate Debt Repaid Weighted Average Interest Rate on Fixed Rate Debt Repaid
$ 1,512  6.58%

We made payments of $0.1 million for deferred financing costs during the three months ended March 31, 2026. We made payments of $0.01 million for deferred financing costs during the three months ended March 31, 2025.

Scheduled principal payments of mortgage notes payable for the nine months ending December 31, 2026, and each of the five succeeding fiscal years and thereafter, are as follows (dollars in thousands):
 
Year Scheduled Principal Payments
Nine Months Ending December 31, 2026 $ 23,658 
2027 102,710 
2028 37,415 
2029 34,920 
2030 33,528 
2031 4,573 
Thereafter 10,416 
Total $ 247,220  (1)

(1)This figure does not include $29,048 of premiums and (discounts), net, and $1.3 million of deferred financing costs, which are reflected in mortgage notes payable, net on the condensed consolidated balance sheets.

We believe we will be able to address all mortgage notes payable maturing over the next 12 months through a combination of refinancing our existing indebtedness, cash from operations, proceeds from one or more equity offerings and availability on our Credit Facility.

The fair value of all mortgage notes payable outstanding as of March 31, 2026 was $236.6 million, as compared to the carrying value stated above of $246.0 million. The fair value is calculated based on a discounted cash flow analysis, using management’s estimate of market interest rates on long-term debt with comparable terms and loan to value ratios. The fair value was calculated using Level 3 inputs of the hierarchy established by ASC 820, “Fair Value Measurements and Disclosures.”

Interest Rate Cap and Interest Rate Swap Agreements

We have entered into interest rate swap agreements in which we hedged our exposure to variable interest rates by agreeing to pay fixed interest rates to our respective counterparty. We have adopted the fair value measurement provisions for our financial instruments recorded at fair value. The fair value guidance establishes a three-tier value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions. Generally, we will estimate the fair value of our interest rate swaps, in the absence of observable market data, using estimates of value including estimated remaining life, counterparty credit risk, current market yield and interest rate
spreads of similar securities as of the measurement date. At March 31, 2026 and December 31, 2025, our interest rate swaps were valued using Level 2 inputs.

We previously entered into interest rate cap agreements that capped the interest rate on certain variable-rate debt. All rate caps matured by March 2025. We recorded changes in the fair value of the interest rate cap agreements quarterly based on the current market valuations at quarter end. If the interest rate cap qualified for hedge accounting, then the change in the estimated fair value was recorded to accumulated other comprehensive income to the extent that it is effective, with any ineffective portion recorded to interest expense in our condensed consolidated statements of operations and comprehensive income. If the interest rate cap did not qualify for hedge accounting, or if it is determined the hedge was ineffective, then any change in the fair value was recognized in interest expense in our condensed consolidated statements of operations and comprehensive income.

We have entered into interest rate swap agreements in connection with certain of our mortgage financings and Credit Facility, whereby we will pay our counterparty a fixed interest rate on a monthly basis and receive payments from our counterparty equivalent to the stipulated floating rate. The fair value of our interest rate swap agreements is recorded in other assets or other liabilities on our accompanying condensed consolidated balance sheets. We have designated our interest rate swaps as cash flow hedges, and we record changes in the fair value of the interest rate swap agreement to accumulated other comprehensive income on the condensed consolidated balance sheets. We have designated our interest rate swaps as cash flow hedges, and we record changes in the fair value of the respective interest rate swap agreement to accumulated other comprehensive income on the consolidated balance sheets. We record changes in fair value on a quarterly basis, using current market valuations at quarter end. During the next 12 months, we estimate that an additional $0.7 million will be reclassified out of accumulated other comprehensive income into interest expense in our condensed consolidated statements of operations and comprehensive income, as a reduction to interest expense. The following table summarizes our interest rate swaps at March 31, 2026 and December 31, 2025 (dollars in thousands):

March 31, 2026 December 31, 2025
Aggregate Notional Amount Aggregate Fair Value Asset Aggregate Fair Value Liability Aggregate Notional Amount Aggregate Fair Value Asset Aggregate Fair Value Liability
$ 626,226  $ 4,581  $ (314) $ 627,097  $ 3,130  $ (1,532)

The following table presents the impact of our derivative instruments in the condensed consolidated financial statements (dollars in thousands):

Amount of loss, net, recognized in Comprehensive Income
Three Months Ended March 31,
2026 2025
Derivatives in cash flow hedging relationships
Interest rate swaps $ 2,727  $ (4,016)
Total $ 2,727  $ (4,016)

The following table presents the reclassifications of our derivative instruments out of accumulated other comprehensive income into interest expense in the condensed consolidated financial statements (dollars in thousands):

Amount reclassified out of Accumulated Other Comprehensive Income
Three Months Ended March 31,
2026 2025
Interest rate caps $ (13) $ 15 
Total $ (13) $ 15 
The following table sets forth certain information regarding our derivative instruments (dollars in thousands):

Asset (Liability) Derivatives Fair Value at
Derivatives Designated as Hedging Instruments Balance Sheet Location March 31, 2026 December 31, 2025
Interest rate swaps Other assets $ 4,581  $ 3,130 
Interest rate swaps Other liabilities (314) (1,532)
Total derivative liabilities, net $ 4,267  $ 1,598 

Credit Facility

On August 18, 2022, we amended, extended and upsized our Credit Facility, increasing our Revolver from $100.0 million to $120.0 million (and extending its term to August 2026), adding the new $140.0 million Term Loan C, decreasing the principal balance of Term Loan B to $60.0 million and extending the maturity date of Term Loan A to August 2027. Term Loan C has a maturity date of February 18, 2028 and a SOFR spread ranging from 125 to 195 basis points, depending on our leverage. On September 27, 2022, we further increased the Revolver to $125.0 million and Term Loan C to $150.0 million, as permitted under the terms of the Credit Facility. We entered into multiple interest rate swap agreements on Term Loan C, which swap the interest rate to fixed rates from 3.15% to 3.75%. We incurred fees of approximately $4.2 million in connection with amending, extending, and upsizing our Credit Facility. The net proceeds of the transaction were used to repay the then-outstanding borrowings on the Revolver, pay off mortgage debt, and fund acquisitions. The Credit Facility’s bank syndicate was then comprised of KeyBank, Fifth Third Bank, The Huntington National Bank, Bank of America, Synovus Bank, United Bank, First Financial Bank, and S&T Bank.

On September 18, 2025, we amended our Credit Facility, increasing our Revolver from $125.0 million to $155.0 million. We incurred fees of approximately $0.5 million in connection with the increase to our Credit Facility. The increased credit availability was used, in part, to fund a nine-property portfolio acquisition that closed on September 30, 2025.

On October 10, 2025, we amended, extended, and upsized our Credit Facility, increasing our Revolver from $155.0 million to $200.0 million (and its term to October 2029), decreasing the principal balance of Term Loan A from $160.0 million to $125.0 million (and extending its term to October 2029), increasing the principal balance of Term Loan B from $60.0 million to $143.3 million (and its term to February 2030), decreasing the principal balance of Term Loan C from $150.0 million to $131.7 million, and repaying the full principal balance of our unsecured term loan (“Term Loan D”). The SOFR spread increased by 10 basis points, ranging from 140 to 210 basis points for the Revolver and 135 to 205 basis points for the Term Loans, depending on our leverage. We incurred fees of approximately $4.2 million in connection with amending, extending, and upsizing our Credit Facility. The Credit Facility’s new (and current) bank syndicate is comprised of KeyBank, Fifth Third Bank, The Huntington National Bank, Bank of America, Synovus Bank, PNC Bank, National Association (“PNC Bank”), Webster Bank, National Association (“Webster Bank”), and S&T Bank.

As of March 31, 2026, there was $434.3 million outstanding under our Credit Facility, at a weighted average interest rate of approximately 5.23%, and $4.2 million outstanding letters of credit, at a weighted average interest rate of 1.60%. As of March 31, 2026, the maximum additional amount we could draw under the Credit Facility was $75.3 million. We were in compliance with all covenants under the Credit Facility as of March 31, 2026.

The amount outstanding under the Credit Facility approximates fair value as of March 31, 2026.

Unsecured Term Loan D

On May 30, 2025, the Operating Partnership entered into a Term Loan Agreement with KeyBank in connection with the $20.0 million Term Loan D. Term Loan D was unsecured and had a maturity date of May 30, 2027 and a SOFR spread ranging from 155 to 200 basis points throughout the life of the loan. The proceeds from Term Loan D were used to pay down the Revolver. We repaid the full principal balance of Term Loan D in connection with the Credit Facility amendment that occurred on October 10, 2025.

Senior Unsecured Notes

On December 18, 2024, we and the Operating Partnership entered into a Note Purchase Agreement with the institutional investors named therein, to issue an aggregate $75.0 million in senior unsecured notes in a private placement, at a fixed interest
rate of 6.47% and a maturity date of December 18, 2029 (the “2029 Notes”). The proceeds were used to pay down Term Loan B by $20.0 million and the Revolver by $55.0 million.

On December 15, 2025, we and the Operating Partnership entered into a Note Purchase Agreement with the institutional investors named therein, to issue an aggregate $85.0 million in senior unsecured notes in a private placement, at a fixed interest rate of 5.99% and a maturity date of December 15, 2030 (the “2030 Notes”). The proceeds were used to repay the Revolver by $80.3 million.

The fair value of the 2029 Notes outstanding as of March 31, 2026 was $77.1 million, as compared to the carrying value stated above of $74.2 million. The fair value of the 2030 Notes outstanding as of March 31, 2026 was $84.6 million, as compared to the carrying value stated above of $84.1 million. The fair value is calculated based on a discounted cash flow analysis, using management’s estimate of market interest rates on long-term debt with comparable terms and loan to value ratios. The fair value was calculated using Level 3 inputs of the hierarchy established by ASC 820, “Fair Value Measurements and Disclosures.”