Quarterly report pursuant to Section 13 or 15(d)

Unsecured Line of Credit and Term Notes

v3.10.0.1
Unsecured Line of Credit and Term Notes
9 Months Ended
Sep. 30, 2018
Debt Disclosure [Abstract]  
Unsecured Line of Credit and Term Notes

6. UNSECURED LINE OF CREDIT AND TERM NOTES

Borrowings outstanding on our unsecured line of credit and term notes are as follows:

 

(Dollars in thousands)

 

September 30,

2018

 

 

December 31,

2017

 

Revolving line of credit borrowings

 

$

128,000

 

 

$

105,000

 

 

 

 

 

 

 

 

 

 

Term note due June 4, 2020

 

 

100,000

 

 

 

100,000

 

Term note due August 5, 2021

 

 

100,000

 

 

 

100,000

 

Term note due April 8, 2024

 

 

175,000

 

 

 

175,000

 

Senior term note due July 1, 2026

 

 

600,000

 

 

 

600,000

 

Senior term note due December 15, 2027

 

 

450,000

 

 

 

450,000

 

Term note due July 21, 2028

 

 

200,000

 

 

 

200,000

 

Total term note principal balance outstanding

 

$

1,625,000

 

 

$

1,625,000

 

Less: unamortized debt issuance costs

 

 

(9,913

)

 

 

(10,962

)

Less: unamortized senior term note discount

 

 

(4,539

)

 

 

(4,949

)

Term notes payable

 

$

1,610,548

 

 

$

1,609,089

 

 

As of September 30, 2018, the Company’s unsecured credit agreement included a $500 million revolving credit facility with a maturity date of December 10, 2019 and a term note in the principal amount of $100 million with a maturity date of June 4, 2020. The term note was initially in the amount of $325 million. In 2017, the Company repaid $225 million under this term note. Such credit agreement provided for interest on the revolving credit facility at a variable annual rate equal to LIBOR plus a margin based on the Company’s credit rating (at September 30, 2018 the margin is 1.10%), interest on the term note at a variable annual rate equal to LIBOR plus a margin based on the Company’s credit rating (at September 30, 2018 the margin is 1.15%), and required an annual 0.15% facility fee on the revolving credit facility. The interest rate on the Company’s line of credit at September 30, 2018 was approximately 3.28% (2.63% at December 31, 2017) and the interest rate on the term note at September 30, 2018 was approximately 3.25% (2.53% at December 31, 2017). At September 30, 2018, there was $371.2 million available on the unsecured revolving line of credit.

 

On October 30, 2018, the Company entered into an amended and restated credit facility which replaced the credit facility discussed above. Under the amended credit facility, the Company’s revolving credit facility remains at $500 million and the maturity date of such facility is extended to March 10, 2023. The new revolving credit facility bears interest at a variable annual rate equal to LIBOR plus a margin based on the Company’s credit rating (at October 30, 2018 the margin is 0.95%) and requires an annual facility fee which varies based upon the Company’s credit rating (at October 30, 2018 the facility fee is 0.15%). Also, under the amended credit facility, the $100 million term note previously existing was replaced with a new $100 million term note, with the maturity date remaining June 4, 2020. The new $100 million term note bears interest at a variable annual rate equal to LIBOR plus a margin based on the Company’s credit rating (at October 30, 2018 the margin is 1.00%). The Company has the option under the new credit facility to increase the total aggregate principal amount of the facilities to $900 million.

On December 7, 2017, the Operating Partnership issued $450 million in aggregate principal amount of 3.875% unsecured senior notes due December 15, 2027 (the “2027 Senior Notes”).  The 2027 Senior Notes were issued at a 0.477% discount to par value.  Interest on the 2027 Senior Notes is payable semi-annually on each June 15 and December 15, beginning on June 15, 2018.  The 2027 Senior Notes are fully and unconditionally guaranteed by the Parent Company.  Proceeds received upon issuance, net of discount to par of $2.1 million and underwriting discount and other offering expenses of $4.0 million, totaled $443.9 million.

On June 20, 2016, the Operating Partnership issued $600 million in aggregate principal amount of 3.50% unsecured senior notes due July 1, 2026 (the “2026 Senior Notes”). The 2026 Senior Notes were issued at a 0.553% discount to par value. Interest on the 2026 Senior Notes is payable semi-annually in arrears on each January 1 and July 1. The 2026 Senior Notes are fully and unconditionally guaranteed by the Parent Company. Proceeds received upon issuance, net of discount to par of $3.3 million and underwriting discount and other offering expenses of $5.5 million, totaled $591.2 million.

The indenture under which the 2027 Senior Notes and the 2026 Senior Notes were issued restricts the ability of the Company and its subsidiaries to incur debt unless the Company and its consolidated subsidiaries comply with a leverage ratio not to exceed 60% and an interest coverage ratio of more than 1.5:1 on all outstanding debt, after giving effect to the incurrence of the debt. The indenture also restricts the ability of the Company and its subsidiaries to incur secured debt unless the Company and its consolidated subsidiaries comply with a secured debt leverage ratio not to exceed 40% after giving effect to the incurrence of the debt. The indenture also contains other financial and customary covenants, including a covenant not to own unencumbered assets with a value less than 150% of the unsecured indebtedness of the Company and its consolidated subsidiaries. At September 30, 2018, the Company was in compliance with such covenants.

On July 21, 2016, the Company entered into a $200 million term note maturing July 21, 2028 bearing interest at a fixed rate of 3.67%.

On April 8, 2014, the Company entered into a $175 million term note maturing April 8, 2024 bearing interest at a fixed rate of 4.533%. The interest rate on the term note increases to 6.283% if the Company is not rated by at least one rating agency or if the Company’s credit rating is downgraded.

In 2011, the Company entered into a $100 million term note maturing August 5, 2021 bearing interest at a fixed rate of 5.54%. The interest rate on the term note increases to 7.29% if the notes are not rated by at least one rating agency, the credit rating on the notes is downgraded or if the Company’s credit rating is downgraded.

The line of credit and term notes require the Company to meet certain financial covenants, measured on a quarterly basis, including prescribed leverage, fixed charge coverage, minimum net worth, limitations on additional indebtedness and limitations on dividend payouts. At September 30, 2018, the Company was in compliance with such covenants.

We believe that if operating results remain consistent with historical levels and levels of other debt and liabilities remain consistent with amounts outstanding at September 30, 2018, the entire availability on the line of credit could be drawn without violating our debt covenants.

The Company’s fixed rate term notes contain a provision that allows for the noteholders to call the debt upon a change of control of the Company at an amount that includes a make whole premium based on rates in effect on the date of the change of control.

Deferred debt issuance costs and the discount on the outstanding term notes are both presented as reductions of term notes in the accompanying consolidated balance sheets at September 30, 2018 and December 31, 2017. Amortization expense related to deferred debt issuance costs was $0.5 million for each of the three months ended September 30, 2018 and 2017, and $1.6 million for each of the nine months ended September 30, 2018 and 2017, and is included in interest expense in the consolidated statements of operations.