Effective for the fiscal year ended December 31, 2015, the Company early adopted the provisions of Accounting Standards Update 2015-03 entitled “Simplifying the Presentation of Debt Issuance Costs” (“ASU 2015-03”), which requires retrospective application. The adoption of ASU 2015-03 represents a change in accounting principle. A detail of the impact of adopting ASU 2015-03 on the Company’s Notes Payable Related to Acquisitions, net of unamortized discount balances, as of June 30, 2016 and December 31, 2015, is as follows:

 

		June 30, 2016			December 31, 2015
Notes payable related to acquisitions, gross		$	55,698,783		$	23,788,065
Less: Unamortized debt discount			(1,240,126)			(302,892)
Notes payable related to acquisitions, net		$	54,458,657		$	23,485,173

 

The Company incurred financing costs related to the Cantor, Plano, West Mifflin, Asheville, and Omaha loans that are treated as debt discounts.

 

A rollforward of the unamortized debt discount balance as of June 30, 2016 is as follows:

 

Balance as of January 1, 2016, net		$	302,892
Additions – Plano and Cantor financings			1,090,079
Write-off of Plano financing costs (a)(b)			(53,280)
Debt discount amortization expense(b)			(99,565)
Balance as of June 30, 2016, net		$	1,240,126

  

 

 

 

 

The Cantor Loan has a maturity date of April 6, 2026 and accrues annual interest at 5.22%. The first five years of the term require interest only payments and after that payments will include interest and principal, amortized over a 30-year schedule. Prepayment can only occur within four months prior to the maturity date, except that after the earlier of (a) 2 years after the loan is placed in a securitized mortgage pool, or (ii) May 6, 2020, the Cantor Loan can be fully and partially defeased upon payment of amounts due under the Cantor Loan and payment of a defeasance amount that is sufficient to purchase U.S. government securities equal to the scheduled payments of principal, interest, fees, and any other amounts due related to a full or partial defeasance under the Cantor Loan. 

 

The Company is securing the payment of the Cantor Loan with the assets, including property, facilities, and rents, held by the GMR Loan Subsidiaries and has agreed to guarantee certain customary recourse obligations, including findings of fraud, gross negligence, or breach of environmental covenants by GMR Loan Subsidiaries. The GMR Loan Subsidiaries will be required to maintain a monthly debt service coverage ratio of 1.35:1.00 for all of the collateral properties in the aggregate. 

 

No principal payments were made for the six months ended June 30, 2016. The note balance as of June 30, 2016 was $32,097,400. Interest expense incurred on this note was $423,525 for the six months ended June 30, 2016, all of which was incurred during the three months ended June 30, 2016. No interest expense was incurred on this note for the three and six months ended June 30, 2015, respectively.

As of June 30, 2016, scheduled principal payments due for each fiscal year ended December 31 are listed below as follows:

 

2016		$	-
2017			-
2018			-
2019			-
2020			-
Thereafter			32,097,400
Total		$	32,097,400

 

As of June 30, 2016, scheduled principal payments due for each fiscal year ended December 31 are listed below as follows:

 

2016		$	-
2017			-
2018			22,044
2019			136,007
2020			7,219,449
Total		$	7,377,500

 

 

As of June 30, 2016, scheduled principal payments due for each fiscal year ended December 31 are listed below as follows:

 

2016		$	26,673
2017			1,609,382
Total		$	1,636,055

  

In order to finance a portion of the purchase price for the Omaha facility, on June 5, 2014 the Company entered into a Term Loan and Security Agreement with Capital One, National Association to borrower $15,060,000. The loan bears interest at 4.91% per annum and all unpaid interest and principal is due on June 5, 2017 (the “Maturity Date”). Interest is paid in arrears and payments began on August 1, 2014, and are due on the first day of each calendar month thereafter. Principal payments begin on January 1, 2015 and are due on the first day of each calendar month thereafter based on an amortization schedule with the principal balance due on the Maturity Date. The loan may not be prepaid in whole or in part prior to June 5, 2016, thereafter, the Company, at its option, may prepay the loan at any time, in whole (but not in part) on at least 30 calendar days’, but not more than 60 calendar days’, advance written notice. The prepayment amount will be equal to the outstanding principal balance of the loan, any accrued and unpaid interest and all other fees, expenses and obligations including an early termination fee of $301,200. The Company made principal payments in the amount of $160,636 and $311,536 for the six months ended June 30, 2016 and the twelve months ended December 31, 2015, respectively. The note balance as of June 30, 2016 and December 31, 2015 was $14,587,828 and $14,748,464, respectively. Interest expense on this note was $183,717 and $366,467 for the three and six months ended June 30, 2016 respectively, and $121,945 and $308,573 for the three and six months ended June 30, 2015, respectively.

 

As of June 30, 2016, scheduled principal payments due for each fiscal year ended December 31 are listed below as follows:

 

2016		$	164,687
2017			14,423,141
Total		$	14,587,828

  

As discussed in Note 10 - “Subsequent Events,” this note was paid in full on July 11, 2016 in connection with the closing of the Company’s initial public offering. The total amount repaid was $14,922,428, which included the principal balance outstanding of $14,587,828 and an early termination fee of $334,600.