Notes to the Consolidated Financial Statements Dollar amounts are in thousands of Canadian dollars (except share and per share amounts) 12. Mortgages and Loans Payable (continued) 13. Construction Loan 14. Convertible Debentures 84  Killam ProPerties inc | 2013 Killam’s $57.5 million convertible subordinated debentures are redeemable at the option of Killam after November 30, 2013, and on  or before november 30, 2015 (provided that the current market price of the common shares of the company on the date on which  the notice of redemption is given is not less than 125% of the conversion price). After November 30, 2015, the debentures are  redeemable at face value. Upon maturity or redemption, Killam may elect to repay all or any portion of the debentures outstanding  by issuing the number of common shares obtained by dividing the aggregate of the principal amount of the debentures that have  matured or are being redeemed by 95% of the weighted average market price of the common shares for the preceding 20 days  (ending 5 days preceding the fixed date for redemption or maturing). At the time of issuance, the fair value of Killam’s obligation  to make principal and interest payments was $52.5 million and the fair value of the holders’ conversion option was $5.0 million  (which is reflected in “Other paid‑in capital”). The effective rate of interest on the liability component, which is paid semiannually, is  calculated at 7.3%. At December 31, 2013, the Company had access to a floating rate non‑revolving demand construction loan for the purpose of financing the  development of The Plaza and payments are made monthly on an interest‑only basis. The construction loan has an interest rate of prime  plus 0.75%. The construction loan will be repaid in full and converted into a first mortgage once rental targets have been achieved. As at  December 31, 2013, $14.8 million was drawn at an interest rate of 3.75% (December 31, 2012 ‑ $14.1 million at 3.68%). II. An operating facility which consists of a $1.0 million revolving demand facility for general business purposes, bearing interest at the  lender’s prime rate plus 1%. As at December 31, 2013, the Company had letters of credit totaling $0.5 million outstanding against this  facility (December 31, 2012 ‑ $0.3 million). The agreement includes certain covenants and undertakings of which the Company is in  compliance. I. A credit facility with a major financial institution, which consists of a $2.0 million revolving demand facility that can be used for the  Company’s acquisition program and for general business purposes. The interest rate on the debt is prime plus 125 basis points on prime  rate advances or 225 basis points over Banker’s acceptances (“Bas”). Killam has the right to choose between prime rate advances and  BAs based on available rates and timing requirements. As at December 31, 2013, the Company had assets with a fair value of $1.7 million  pledged as collateral to the line and had a balance outstanding of $Nil (December 31, 2012 ‑ $Nil).  The Company has credit facilities set out as follows: Estimated future principal payments required to meet mortgage obligations as at December 31, 2013 are as follows: Principal repayments by year 2014 $153,589 2015 107,321 2016 111,803 2017 55,214 2018 71,132 subsequent 210,302 709,361 Unamortized deferred financing costs (11,936) Unamortized mark‑to‑market adjustments 1,705 $699,130 Face interest rate  % Effective Interest  rate % conversion  Price Face  amount maturity December 31, 2013 December 31,  2012 5.65% 7.30% $13.40 $57,500 november 30, 2017 $54,395 $53,733 5.45% 6.30% $14.60 $46,000 June 30, 2018 44,576 44,309 98,971 98,042 Less: Deferred financing charges (2,552) (3,118) $96,419 $94,924