NOTE 5. BORROWINGS

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

 

												As of June 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)		$	66,331,998				3.61	%			33,668,002	(3)			66,331,998				3.61	%			33,668,002	(3)
MetLife		Line of Credit		5/9/2014			25,000,000			4/5/2024			2,800,000				2.77	%			22,200,000	(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			18,116,168				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)			23,213,000				2.99	%			51,787,000	(6)			3,675,000				3.25	%			71,325,000	(6)
Totals:												$	110,461,166							$	107,655,002			$	86,417,361							$	125,993,002

 

(1)	Represents the weighted-average, blended rate on the respective borrowing facilities as of June 30, 2015, and December 31, 2014.

(2)	If facility not fully utilized by December 31, 2016, 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 June 30, 2015, and December 31, 2014, approximately $16.5 million and $13.8 million, respectively, of the undrawn commitment was available for us to draw.

(4)	Rate is before interest repatriation. 2014 interest patronage received resulted in a reduction to the stated interest rate of 12.7%.

(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 June 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 effective interest rate charged on all of our borrowings, excluding the impact of deferred financing costs and before any interest repatriation, was 3.6% for both the three and six months ended June 30, 2015, respectively, as compared to 3.7% and 3.6% for the three and six months ended June 30, 2014, respectively. 2014 interest patronage from our Farm Credit (as defined below) borrowings, which patronage was received during the three months ended June 30, 2015, resulted in a reduction to our effective interest rate of 12.7%.

MetLife Credit Facility

On May 9, 2014, we closed on a facility with 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 bear 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 are based on prevailing market rates at the time of such disbursements. The interest rates on the initial advance and any subsequent disbursements will be subject to adjustment every three years. If we have not drawn the full commitment amount of $100.0 million by December 31, 2016, MetLife has the option to be relieved of its obligation to disburse the additional funds under this loan. As of June 30, 2015, there is approximately $66.3 million outstanding under the MetLife Note Payable that bears interest at a blended rate of 3.61% per annum. Advances under the MetLife Line of Credit initially bear 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 will be subject to adjustment in April 2017. As of June 30, 2015, there is $2.8 million outstanding under the MetLife Line of Credit that bears interest at a rate of 2.77% per annum. While approximately $55.9 million of the full commitment amount remains undrawn, based on the current level of collateral pledged, as of June 30, 2015, we have approximately $16.5 million of aggregate availability under the MetLife Credit 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 (before interest repatriation) at a fixed rate 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 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 our line of credit with MetLife. As of June 30, 2015, aggregate borrowings from Farm Credit were approximately $18.1 million, and we were in compliance with all 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. In addition, on June 25, 2015, we issued a $9.4 million, three-year, interest-only bond with a fixed rate of 2.60%.

Proceeds from bonds issued under the Farmer Mac Facility were invested into the acquisition of new farms. As of June, 30, 2015, the aggregate amount of bonds issued under the Farmer Mac Facility was approximately $23.2 million, and we were in compliance with all covenants.

Fair Value

As of June 30, 2015, the aggregate fair value of our mortgage notes and bonds payable was approximately $107.4 million, as compared to an aggregate carrying value of $107.7 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 our line of credit with MetLife and the lack of changes in market credit spreads, its fair value as of June 30, 2015, is deemed to approximate its carrying value of $2.8 million.