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EXCEL - IDEA: XBRL DOCUMENT - Cole Credit Property Trust IncFinancial_Report.xls
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v2.4.0.6
Notes Payable and Lines of Credit
9 Months Ended
Sep. 30, 2012
Debt Disclosure [Abstract]  
NOTES PAYABLE AND LINES OF CREDIT
NOTES PAYABLE AND LINES OF CREDIT
As of September 30, 2012, the Company had $80.5 million outstanding in mortgage notes payable, with fixed interest rates ranging from 5.27% to 6.96% and a weighted average interest rate of 6.54%. These borrowings mature on various dates from March 2013 through September 2017, and have a weighted average remaining term of 2.8 years. In addition, as of September 30, 2012, the Company had no amounts outstanding on its two lines of credit with affiliates of Cole Advisors, which had total available borrowings of $2.9 million. Each of the lines of credit matures on March 31, 2013 and bears a fixed rate of 5.75%. During the nine months ended September 30, 2012, the Company repaid $8.1 million of mortgage notes payable, including monthly payments, and $1.9 million of lines of credit with affiliates. In addition, the mortgage notes payable secured by the 2012 Property Dispositions, totaling $14.9 million, were assumed by the respective buyers.
Each of the mortgage notes payable and lines of credit are secured by the respective properties and their related leases on which the debt was placed. The mortgage notes and lines of credit are generally non-recourse to the Company and Cole OP I, but both are liable for customary non-recourse carve-outs. The mortgage notes payable and lines of credit contain customary default provisions. Generally, upon the occurrence of an event of default, interest on the mortgage notes will accrue at an annual default interest rate equal to the lesser of (1) the maximum rate permitted by applicable law, or (2) the then-current interest rate plus a percentage specified in the respective loan agreement. Certain mortgage notes payable contain customary affirmative, negative and financial covenants, such as requirements for minimum net worth, debt service coverage ratios, limitations on leverage ratios and variable rate debt. Based on the Company’s analysis and review of its results and related requirements, the Company believes it was in compliance with the covenants of such mortgage notes payable as of September 30, 2012.
During 2011, the Company elected to extend the maturity date of one mortgage note from June 2011 to June 2031, in accordance with the hyper-amortization provisions of the mortgage note. The Company repaid in full, without premium or penalty, the remaining $4.3 million outstanding balance of this mortgage note during the three months ended September 30, 2012. During the hyper-amortization period, the lender applied 100% of the rents collected from the property collateralizing the note to the following items in the order indicated: (1) payment of accrued interest at the original fixed interest rate, (2) all payments for escrow or reserve accounts, (3) any operating expenses of the property pursuant to an approved annual budget and (4) any extraordinary operating or capital expenses. The balance of the rents collected were applied to the following items in such order as the lender may determine: (1) any other amounts due in accordance with the loan document, (2) the reduction of the principal balance of the mortgage note, and (3) interest accrued at the “Revised Interest Rate” but not previously paid. As used herein, the Revised Interest Rate means an interest rate equal to the greater of (i) the initial fixed interest rate as stated in the loan agreement plus 2.0% per annum or (ii) the then current Treasury Constant Maturity Yield Index plus 2.0% per annum. The Revised Interest Rate on the mortgage note discussed above during the extended maturity period was 8.68%. Certain other mortgage notes of the Company allow for the maturity date to be extended by 20 years and have similar hyper-amortization provisions that would apply in the event of an extension of their maturity dates.