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Additionally, we had $44.0 million of borrowings outstanding under a mortgage loan payable that bear interest at an annual rate of LIBOR plus 3.85% with a LIBOR floor of 2.23%, that is collateralized by an office building;
−Removed: and $81.1 million of borrowings outstanding under a repurchase agreement that bear interest at an annual rate of LIBOR plus a spread ranging from 2.25% to 2.50% with LIBOR floor ranging from no floor to 2.49% and collateralized by $114.8 million of first mortgages.
−Removed: A decrease of 100 basis points in LIBOR would decrease our total annual interest expense by approximately $0.2 million and an increase of 100 basis points in LIBOR would increase our annual interest expense by approximately $0.9 million .
−Removed: In July 2017, the U.K.
−Removed: Financial Conduct Authority announced that it would cease to compel banks to participate in setting LIBOR as a benchmark by the end of 2021, or the LIBOR Transition Date.
−Removed: It is unclear whether new methods of calculating LIBOR will be established such that it continues to exist after 2021.
+Added: and $107.6 million of borrowings outstanding under an indenture and credit facility that bear interest at an annual rate of LIBOR plus 4.25% with a LIBOR floor of 1.0% collateralized by $184.2 million of first mortgages.
+Added: A decrease of 100 basis points in LIBOR had no impact on our total annual interest expense because the debts are protected by LIBOR floors and an increase of 100 basis points in LIBOR would increase our annual interest expense by approximately $0.2 million.
+Added: At the end of 2021, banks will no longer be required to report information that is used to determine LIBOR.
+Added: As a result, LIBOR could be discontinued.
The Alternative Reference Rates Committee, a steering committee comprised of large U.S.
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Given that SOFR is a secured rate backed by government securities, it will be a rate that does not take into account bank credit risk (as is the case with LIBOR).
−Removed: SOFR is therefore likely to be lower than LIBOR and is less likely to correlate with
−Removed: the funding costs of financial institutions.
+Added: SOFR is therefore likely to be lower than LIBOR and is less likely to correlate with the funding costs of financial institutions.
Whether or not SOFR attains market traction as a LIBOR replacement tool remains in question.
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In addition, changes or reforms to the determination or supervision of LIBOR may result in a sudden or prolonged increase or decrease in reported LIBOR, which could have an adverse impact on the market for LIBOR-based loans, including the value of the LIBOR-indexed, floating-rate loans in our portfolio, or the cost of our borrowings.
−Removed: The potential effect of the phase-out or replacement of LIBOR on our cost of capital and net investment income cannot yet be determined.
+Added: In the event LIBOR is unavailable, our investment documents provide for a substitute index, on a basis generally consistent with market practice, intended to put us in substantially the same economic position as LIBOR.
We may hedge against interest rate fluctuations by using standard hedging instruments, such as futures, options and forward contracts, subject to the requirements of the 1940 Act.
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and retroactive changes to building or similar codes;
+Added: natural disasters and other acts of god.
In addition, decreases in property values reduce the value of the collateral and the potential proceeds available to a borrower to repay the underlying loans, which could also cause us to suffer losses.
+Added: Market volatility has been particularly heightened due to the COVID-19 global pandemic.
+Added: COVID-19 has disrupted economic activities and could have a continued significant adverse effect on economic and market conditions including limited lending from financial institutions, depressed asset values, and limited market liquidity.
We are subject to varying degrees of credit risk in connection with holding a portfolio of our target assets.
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Our Manager also requires certain borrowers to establish a cash reserve, as a form of additional collateral, for the purpose of providing for future interest or property-related operating payments.
+Added: The COVID-19 pandemic has significantly impacted the commercial real estate markets, causing reduced occupancy, requests from tenants for rent deferral or abatement, and delays in construction and development projects currently planned or underway.
+Added: These negative conditions may persist into the future and impair our borrowers’ ability to pay principal and interest due to us under our loan agreements.
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.