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(c) Letter of Credit
In fiscal year 2008, the Foundation entered into an agreement with
one of its health insurance carriers whereby the Foundation is
required to pay the carrier, in advance, for claims incurred but not
reported in the event of plan termination. The carrier has allowed
the Foundation to retain this payment, which totals $3,076,491
and is included as a component of accounts payable and accrued
expenses on the accompanying consolidated balance sheet as of
June 30, 2011, provided that the funds are secured by an irrevo-
cable letter of credit. The Foundation issued a letter of credit for
$2,888,491 to the carrier, which expires on December 30, 2011.
(7) Rental Property
Rental property (87% occupied as of June 30, 2011) consists of
the following at June 30, 2011 and 2010:
2011
2010
Land
$ 9,037,040
9,037,040
Building
36,149,160
36,149,160
Building improvements
6,079,743
5,587,182
Tenant improvements
12,734,877
12,580,842
Total
64,000,820
63,354,224
Accumulated depreciation
(12,487,067)
(10,315,627)
Rental property, net
$ 51,513,753
53,038,597
(8) Mortgage Loan Payable
On July 11, 2004, the LLC entered into a mortgage loan (the
Loan) with a principal amount of $62 million, which matures on
August 11, 2014. The Loan bears interest at a rate of 6.19% and is
payable in monthly installments of interest only through August
2006; thereafter, principal and interest payments are due in equal
monthly installments of $379,328. A balloon payment is due at
maturity consisting of unpaid principal of $55,184,007 and any
accrued and unpaid interest.
Under the terms of the Loan, the LLC is required to deposit
monthly payments of $24,500 into escrow accounts maintained
by the LLC consisting of escrow accounts for building capital
expenditures and tenant improvements, leasing commissions,
lease cancellation fees, and other leasing costs. Included in
restricted cash in the accompanying consolidated balance sheet
are balances in escrow accounts, including interest earned, of
$2,697,539 as of June 30, 2011. In addition, under the terms of
the mortgage, the LLC is required to deposit monthly payments
to escrow accounts maintained by the LLC for real estate taxes
and insurance.
At June 30, 2011, future minimum principal payments are
approximated as follows:
2012
$ 909,000
2013
978,000
2014
1,041,000
2015
55,363,000
$58,291,000
The Loan is secured by the Property (230 West 41st Street)
and assignment of rents and other payments from the tenants.
The Loan is subject to certain restrictive financial covenants,
including limitations on the incurrence of additional indebtedness.
Management believes the LLC is in compliance with all covenants
at June 30, 2011. The Loan is subject to certain prepayment pen-
alties if it is repaid prior to its maturity date.
Also included in restricted cash are amounts to be funded for
replacements and repairs, and leasing commissions as required
by the loan agreement.
(9) Related-Party Transactions
The Foundation entered into an agreement with CUNY, an affiliate
and a tenant in the building, to sublease 66,867 of CUNY’s 170,081
square feet of space. The CUNY lease agreement, which expires in
June 2017, is at a rate of $33 per square foot with 2.5% increases
effective annually. The Foundation’s sublease agreement has the
same rate and terms. For the years ended June 30, 2011 and 2010,
annual rental revenues earned from CUNY were $3,717,346 and
$3,921,135, respectively, net of sublease expense of $2,896,212
and $2,535,373, respectively.
At June 30, 2011 and 2010, deposits held in custody for tenant
(CUNY) of $215,609 and $298,025, respectively, are noninterest
bearing and consist of amounts funded by CUNY to be used for
their leasehold improvements.
In fiscal years 2011 and 2010, the Foundation approved grants
to CUNY for central research initiatives of $2,300,000 annually.
GrantsPlus provides administrative services with respect to
grants and contracts received by several not-for-profit organiza-
tions. Those grants and contracts administered by GrantsPlus, as
agent for the not-for-profit organizations, in fiscal years 2011 and
2010 approximated $1,089,486 and $1,603,000, respectively.
The Research Foundation of the City University of New York
The Research Foundation of The City University of New York