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Interest Rate Risk
−Removed: We are exposed to the effects of interest rate changes primarily as a result of long-term debt used to acquire properties and make loans and other permitted investments.
+Added: We are exposed to the effects of interest rate changes primarily as a result of long-term debt used to acquire properties and other permitted investments.
Our interest rate risk is monitored using a variety of techniques.
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We have entered into and may continue to enter into derivative financial instruments such as interest rate swaps in order to mitigate our interest rate risk on a related financial instrument.
−Removed: We do not apply hedge accounting treatment to these derivatives, therefore changes in the fair value of interest rate derivative financial instruments are recorded as a component of interest expense in gain or loss in fair value of derivative financial instruments in our accompanying consolidated statements of operations.
−Removed: As of December 31, 2019 , our interest rate swap liabilities are recorded in our accompanying consolidated balance
−Removed: sheets at their aggregate fair value of $4,385,000 .
+Added: We do not apply hedge accounting treatment to these derivatives;
+Added: therefore, changes in the fair value of interest rate derivative financial instruments are recorded as a component of interest expense in gain or loss in fair value of derivative financial instruments in our accompanying consolidated statements of operations.
+Added: As of December 31, 2020, our interest rate swap liabilities are recorded in our accompanying consolidated balance sheets at their aggregate fair value of $5,255,000.
We will not enter into derivatives or interest rate transactions for speculative purposes.
+Added: In July 2017, the Financial Conduct Authority, or FCA, that regulates the London Inter-bank Offered Rate, or LIBOR, announced its intention to stop compelling banks to submit rates for the calculation of LIBOR after 2021.
+Added: As a result, the Federal Reserve Board and the Federal Reserve Bank of New York organized the Alternative Reference Rates Committee, which identified the Secured Overnight Financing Rate, or SOFR, as its preferred alternative to United States dollar LIBOR in derivatives and other financial contracts.
+Added: We are not able to predict when LIBOR will cease to be available or when there will be sufficient liquidity in the SOFR markets.
+Added: Any changes adopted by the FCA or other governing bodies in the method used for determining LIBOR may result in a sudden or prolonged increase or decrease in reported LIBOR.
+Added: If that were to occur, our interest payments could change.
+Added: In addition, uncertainty about the extent and manner of future changes may result in interest rates and/or payments that are higher or lower than if LIBOR were to remain available in its current form.
+Added: We have variable rate debt outstanding under our credit facilities and derivative financial instruments maturing on November 19, 2021 that are indexed to LIBOR.
+Added: As such, we are monitoring and evaluating the related risks of the discontinuation of LIBOR, which include possible changes to the interest on loans or amounts received and paid on derivative instruments.
+Added: These risks arise in connection with transitioning contracts to a new alternative rate, including any resulting value transfer that may occur.
+Added: The value of loans or derivative instruments tied to LIBOR could also be impacted if LIBOR is limited or discontinued.
+Added: For some instruments, the method of transitioning to an alternative rate may be challenging, as they may require negotiation with the respective counterparty.
+Added: If a contract is not transitioned to an alternative rate and LIBOR is discontinued, the impact on our contracts is likely to vary.
+Added: If LIBOR is discontinued or if the methods of calculating LIBOR change from their current form, interest rates on our current or future indebtedness may be adversely affected.
+Added: While we expect LIBOR to be available in substantially its current form until the end of 2021, it is possible that LIBOR will become unavailable
+Added: prior to that point.
+Added: This could result, for example, if a sufficient number of banks decline to make submissions to the LIBOR administrator.
+Added: In that case, the risks associated with the transition to an alternative reference rate will be accelerated and magnified.
As of December 31, 2020, the table below presents the principal amounts and weighted average interest rates by year of expected maturity to evaluate the expected cash flows and sensitivity to interest rate changes.
Expected Maturity Date
+Added: 2021 2022 2023 2024 2025 Thereafter Total Fair Value
Fixed-rate debt — principal payments $ 607,000 $ 651,000 $ 680,000 $ 711,000 $ 5,878,000 $ 10,239,000 $ 18,766,000 $ 22,052,000
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Mortgage loans payable was $18,766,000 ($17,827,000, net of discount/premium and deferred financing costs) as of December 31, 2020.
−Removed: As of December 31, 2019, we had four fixed-rate mortgage loans payable with interest rates ranging from 3.67% to 5.25% per annum.
+Added: As of December 31, 2020, we had three fixed-rate mortgage loans payable with interest rates ranging from 3.67% to 5.25% per annum.
In addition, as of December 31, 2020, we had $476,900,000 outstanding under our line of credit and term loans at a weighted-average interest rate of 2.12% per annum.
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Other Market Risk
−Removed: In addition to changes in interest rates, the value of our future investments is subject to fluctuations based on changes in local and regional economic conditions and changes in the creditworthiness of tenants, which may affect our ability to refinance our debt if necessary.
+Added: In addition to changes in interest rates, the value of our investments is subject to fluctuations based on changes in local and regional economic conditions and changes in the creditworthiness of tenants, which may affect our ability to refinance our debt if necessary.
Financial Statements and Supplementary Data.
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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.