NOTE 5. BORROWINGS

Our borrowings as of September 30, 2015, and December 31, 2014, are summarized below:

 

												As of September 30, 2015												As of December 31, 2014
Issuer		Type of Issuance		Date(s) of Issuance		Initial Commitment				Maturity Date(s)		Principal Outstanding				Stated Interest Rate(1)				Undrawn Commitment				Principal Outstanding				Stated Interest Rate(1)				Undrawn Commitment
MetLife		Mortgage Note Payable		5/9/2014			100,000,000			1/5/2029(2)		$	87,470,194				3.35	%			12,529,806	(3)			66,331,998				3.61	%			33,668,002	(3)
MetLife		Line of Credit		5/9/2014			25,000,000			4/5/2024			5,000,000				2.58	%			20,000,000	(3)			4,000,000				2.75	%			21,000,000	(3)
Farm Credit		Mortgage Notes Payable		9/19/2014–5/8/2015			18,425,880			5/1/2020–8/1/2034			17,800,200				3.38	%(4)			—				12,410,363				3.53	%(4)			—
Farmer Mac		Bonds Payable		12/11/2014			75,000,000			7/30/2018–1/6/2020(5)			29,815,000				2.85	%			45,185,000	(6)			3,675,000				3.25	%			71,325,000	(6)
										Totals:		$	140,085,394							$	77,714,806			$	86,417,361							$	125,993,002

 

(1)	Where applicable, represents the weighted-average, blended rate on the respective borrowing facilities as of each September 30, 2015, and December 31, 2014.

(2)	If facility not fully utilized by December 31, 2017, MetLife has the option to be relieved of its obligations to disburse the additional funds under the loan.

(3)	Based on the properties that were pledged as collateral as of September 30, 2015, and December 31, 2014, approximately $2.0 million and $ 13.8 million, respectively, of the undrawn commitment was available for us to draw.

(4)	Rate is before interest patronage. 2014 interest patronage (as described below) received resulted in a 12.7% reduction to the stated interest rate on such borrowings.

(5)	If facility not fully utilized by December 11, 2016, Farmer Mac has the option to be relieved of its obligations to purchase additional bonds under the facility.

(6)	At each of September 30, 2015, and December 31, 2014, there was no additional availability to draw under this facility, as no additional properties had been pledged as collateral.

The weighted-average interest rate charged on all of our borrowings, excluding the impact of deferred financing costs and before any interest patronage, was 3.4% and 3.5% for the three and nine months ended September 30, 2015, respectively, as compared to 3.6% for both the three and nine months ended September 30, 2014, respectively. 2014 interest patronage, or refunded interest, from our Farm Credit (as defined below) borrowings, which patronage was received during the three months ended June 30, 2015, resulted in a 12.7% reduction to the stated interest rate on such borrowings. We are unable to estimate the amount of patronage to be received, if any, related to interest accrued during 2015 on our Farm Credit borrowings.

MetLife Credit Facility

On May 9, 2014, we closed on a facility with Metropolitan Life Insurance Company (“MetLife”) that consists of a $100.0 million long-term note payable that is scheduled to mature on January 5, 2029 (the “MetLife Note Payable”), and a $25.0 million revolving equity line of credit that is scheduled to mature on April 5, 2024 (the “MetLife Line of Credit” and, together with the MetLife Note Payable, the “MetLife Credit Facility”). Initial advances under the MetLife Note Payable bore interest at a fixed rate of 3.50% per annum, plus an unused line fee of 0.20% on undrawn amounts, and interest rates for subsequent disbursements were based on prevailing market rates at the time of such disbursements. The interest rates on the initial advance and any subsequent disbursements were to be subject to adjustment every three years. If the full commitment amount of $100.0 million was not drawn by December 31, 2016, MetLife had the option to be relieved of its obligation to disburse the additional funds under this loan. Advances under the MetLife Line of Credit initially bore interest at a variable rate equal to the three-month LIBOR plus a spread of 2.50%, with a minimum annualized rate of 2.75%, plus an unused fee of 0.20% on undrawn amounts. The interest rate spread on borrowings under the MetLife Line of Credit was to be subject to adjustment in April 2017.

On September 3, 2015, in connection with the acquisition of Bear Mountain, we drew $21.1 million under the MetLife Note Payable and also amended the MetLife Credit Facility. The $21.1 million disbursement will bear interest at a fixed rate of 3.35% per annum for five years, thereafter repricing to then-current market rates. Among other changes, the amendment:

 

•

reduced the blended interest rate on all previously-disbursed amounts under the MetLife Note Payable by 26 basis points, from 3.61% to 3.35%;

 

•

extended the fixed-rate term of the MetLife Note Payable by 44 months, through August 2020;

 

•

extended the interest-only portion of the MetLife Note Payable by an additional six months, to July 2016;

 

•

extended the draw period under the MetLife Note Payable by one year, through December 2017;

 

•

reduced the interest rate spread on the MetLife Line of Credit by 25 basis points, from 2.50% to 2.25%; and

 

•

reduced the minimum interest rate floor on the MetLife Line of Credit by 25 basis points, from 2.75% to 2.50%.

All other material terms of the MetLife Credit Facility remained unchanged.

As of September 30, 2015, there is approximately $87.5 million outstanding under the MetLife Note Payable that bears interest at a fixed rate of 3.35% per annum and $5.0 million outstanding under the MetLife Line of Credit that bears interest at a rate of 2.58% per annum. While approximately $32.5 million of the full commitment amount remains undrawn, based on the current level of collateral pledged, as of September 30, 2015, we have approximately $2.0 million of aggregate availability under the MetLife Credit Facility. As of September 30, 2015, we were in compliance with all covenants under the facility.

Farm Credit Notes Payable

On March 10 and April 9, 2015, we, through certain subsidiaries of our Operating Partnership, closed on two interest-only loans from Farm Credit of Central Florida, FLCA (“Farm Credit”), for an aggregate amount of approximately $3.3 million. These loans bear interest at a fixed rate (before interest patronage) of 3.20% throughout each of their five-year terms. On May 8, 2015, we obtained an additional loan for approximately $2.6 million that matures in May 2030. Through April 30, 2018, this loan will bear interest at a fixed rate (before interest patronage) of 2.90%, thereafter reverting to an amortizing loan bearing interest equal to the one-month LIBOR plus 3.00%.

Proceeds from the Farm Credit Notes Payable were invested into the acquisition of new farms and to repay amounts owed under the MetLife Line of Credit. As of September, 30, 2015, aggregate borrowings from Farm Credit were approximately $17.8 million, and we were in compliance with all applicable covenants.

Farmer Mac Facility

On December 5, 2014, we, through certain subsidiaries of our Operating Partnership, entered into a bond purchase agreement (the “Bond Purchase Agreement”) with Federal Agricultural Mortgage Corporation (“Farmer Mac”) and Farmer Mac Mortgage Securities Corporation (the “Bond Purchaser”), for a secured note purchase facility that provides for bond issuances up to an aggregate principal amount of $75.0 million (the “Farmer Mac Facility”).

On January 5, 2015, we completed an issuance under the Farmer Mac Facility of a $10.2 million, five-year, interest-only bond with a fixed interest rate of 3.25% throughout its term. On June 25, 2015, we issued a $9.4 million, three-year, interest-only bond with a fixed interest rate of 2.60%. In addition, on August 20, 2015, we issued two $3.3 million, three-year, interest-only bonds, each with a fixed interest rate of 2.38%.

Proceeds from bonds issued under the Farmer Mac Facility were invested into the acquisition of new farms. As of September 30, 2015, the aggregate amount of bonds issued under the Farmer Mac Facility was approximately $29.8 million, and we were in compliance with all covenants under the facility.

 

Fair Value

As of September 30, 2015, the aggregate fair value of our mortgage notes and bonds payable was approximately $135.4 million, as compared to an aggregate carrying value of $135.1 million. The fair value of the mortgage notes and bonds payable is valued using Level 3 inputs under the hierarchy established by ASC 820-10, “Fair Value Measurements and Disclosures,” and is calculated based on a discounted cash flow analysis, using discount rates based on management’s estimates of market interest rates on long-term debt with comparable terms. Due to the revolving nature of the MetLife Line of Credit and the lack of changes in market credit spreads, its fair value as of September 30, 2015, is deemed to approximate its carrying value of $5.0 million.