Indebtedness

All debt is issued directly or indirectly by the Partnership. The General Partner does not have any indebtedness, but does guarantee some of the unsecured debt of the Partnership.

Indebtedness at December 31, 2018 and 2017 consists of the following (in thousands):



	Maturity Date	Weighted Average Interest Rate		Weighted Average Interest Rate
	Maturity Date	2018		2017		2018		2017
Fixed rate secured debt	2019 to 2027	6.91	%	7.43	%	$	77,601	$	309,463
Variable rate secured debt	2025	1.72	%	1.85	%	2,200		2,500
Unsecured debt	2021 to 2028	3.92	%	3.89	%	2,575,000		2,132,042
Unsecured line of credit	2022	3.39	%	N/A		30,000		—
						$	2,684,801	$	2,444,005
Less: Deferred financing costs						26,300		21,114
Total indebtedness as reported on consolidated balance sheets						$	2,658,501	$	2,422,891

Secured Debt

At December 31, 2018, our secured debt was collateralized by rental properties with a carrying value of $220.1 million and by a letter of credit in the amount of $2.2 million.

The fair value of our fixed rate secured debt at December 31, 2018 was $80.2 million. Because our fixed rate secured debt is not actively traded in any marketplace, we utilized a discounted cash flow methodology to determine its fair value. Accordingly, we calculated fair value by applying an estimate of the current market rate to discount the debt's remaining contractual cash flows. Our estimate of a current market rate, which is the most significant input in the discounted cash flow calculation, is intended to replicate debt of similar maturity and loan-to-value relationship. The estimated market rates for all of our current fixed rate secured debt is 4.00%, based on the attributes of the specific loans. The current market rates we utilized were internally estimated; therefore, we have concluded that our determination of fair value for our fixed rate secured debt was primarily based upon Level 3 inputs.

During 2018, we repaid three fixed rate secured loans, totaling $227.1 million, which had a weighted average stated interest rate of 7.62%.

During 2017, we repaid eight loans, totaling $66.5 million, which had a weighted average stated rate of 5.85%.

Unsecured Debt

At December 31, 2018, all of our unsecured debt bore interest at fixed rates and primarily consisted of unsecured notes that are publicly traded. We utilized broker estimates in estimating the fair value of our fixed rate unsecured debt. Our unsecured notes are thinly traded and, in certain cases, the broker estimates were not based upon comparable transactions. The broker estimates took into account any recent trades within the same series of our fixed rate unsecured debt, comparisons to recent trades of other series of our fixed rate unsecured debt, trades of fixed rate unsecured debt from companies with profiles similar to ours, as well as overall economic conditions. We reviewed these broker estimates for reasonableness and accuracy, considering whether the estimates were based upon market participant assumptions within the principal and most advantageous market and whether any other observable inputs would be more accurate indicators of fair value than the broker estimates. We concluded that the broker estimates were representative of fair value. We have determined that our estimation of the fair value of our fixed rate unsecured debt was primarily based upon Level 3 inputs. The estimated trading values of our fixed rate unsecured debt, depending on the maturity and coupon rates, ranged from 95.00% to 118.00% of face value.

The indentures (and related supplemental indentures) governing our outstanding series of notes also require us to comply with financial ratios and other covenants regarding our operations. We were in compliance with all such financial covenants at December 31, 2018.

We took the following actions during 2018 and 2017 as it pertains to our unsecured indebtedness:


•	In September 2018, we issued $450.0 million of senior unsecured notes that bear interest at a stated interest rate of 4.00%, have an effective interest of 4.13%, and mature on September 15, 2028. A portion of these proceeds were used to repay two of the secured loans noted above, totaling $223.9 million with a weighted average stated interest rate of 7.63% and a maturity date of March 10, 2019.


•	In June 2017, we repaid our $250.0 million variable rate term loan, which had a scheduled maturity date of January 2019 and bore interest at LIBOR plus 1.00%, and recognized a loss of $523,000 from the write-off of unamortized deferred financing costs.


•	In June 2017, we also repaid $285.6 million of senior unsecured notes that had a stated interest rate of 6.50% and an effective interest rate of 6.08%, with a scheduled maturity date of January 2018. We recognized a loss of $9.0 million including a repayment premium and the write-off of unamortized deferred financing costs.


•	In July 2017, we repaid $128.7 million of senior unsecured notes that had both a stated and an effective interest rate of 6.75% with a scheduled maturity date of March 2020. We recognized a loss of $16.6 million including a repayment premium and the write-off of unamortized deferred financing costs.


•	In December 2017, we issued $300.0 million senior unsecured notes that bear interest at a stated interest rate of 3.38%, have an effective interest rate of 3.39% and mature on December 15, 2027.

Unsecured Line of Credit

Our unsecured line of credit at December 31, 2018 is described as follows (in thousands):



				Outstanding Balance at
Description	Borrowing Capacity		Maturity Date	December 31, 2018
Unsecured Line of Credit – Partnership	$	1,200,000	January 30, 2022	$	30,000

The Partnership's unsecured line of credit has an interest rate on borrowings of LIBOR plus 0.875% (equal to 3.39% for outstanding borrowings at December 31, 2018) and a maturity date of January 30, 2022, with options to extend until January 30, 2023. Subject to certain conditions, the terms also include an option to increase the facility by up to an additional $800.0 million, for a total of up to $2.00 billion. This line of credit provides us with an option to obtain borrowings from financial institutions that participate in the line at rates that may be lower than the stated interest rate, subject to certain restrictions.

This line of credit contains financial covenants that require us to meet certain financial ratios and defined levels of performance, including those related to fixed charge coverage, unsecured interest expense coverage and debt-to-asset value (with asset value being defined in the Partnership's unsecured line of credit agreement). At December 31, 2018, we were in compliance with all financial covenants under this line of credit.

To the extent there are outstanding borrowings, we utilize a discounted cash flow methodology in order to estimate the fair value of outstanding borrowings on our unsecured line of credit. To the extent that credit spreads have changed since the origination of the line of credit, the net present value of the difference between future contractual interest payments and future interest payments based on our estimate of a current market rate would represent the difference between the book value and the fair value. Our estimate of a current market rate is based upon the rate, considering current market conditions and our specific credit profile, at which we estimate we could obtain similar borrowings. As our credit spreads have not changed appreciably, we believe that the contractual interest rate and the current market rate on the line of credit are the same. The current market rate is internally estimated and therefore is primarily based upon a Level 3 input.

Changes in Fair Value

As all of our fair value debt disclosures relied primarily on Level 3 inputs, the following table summarizes the book value and changes in the fair value of our debt for the year ended December 31, 2018 (in thousands):



	Book Value at 12/31/2017		Book Value at 12/31/2018		Fair Value at 12/31/2017		Issuances and Assumptions		Payments/Payoffs			Adjustments to Fair Value			Fair Value at 12/31/2018
Fixed rate secured debt	$	309,463	$	77,601	$	325,753	$	—	$	(231,783	)	$	(13,732	)	$	80,238
Variable rate secured debt	2,500		2,200		2,500		—		(300		)	—			2,200
Unsecured debt	2,132,042		2,575,000		2,190,548		450,000		(7,042		)	(83,543		)	2,549,963
Unsecured line of credit	—		30,000		—		30,000		—			—			30,000
Total	$	2,444,005	$	2,684,801	$	2,518,801	$	480,000	$	(239,125	)	$	(97,275	)	$	2,662,401
Less: Deferred financing costs	21,114		26,300
Total indebtedness as reported on the consolidated balance sheets	$	2,422,891	$	2,658,501

Scheduled Maturities and Interest Paid

At December 31, 2018, the scheduled amortization and maturities of all indebtedness, excluding fair value adjustment, for the next five years and thereafter were as follows (in thousands):



Year	Amount
2019	$	45,515
2020	3,883
2021	262,463
2022	603,611
2023	283,817
Thereafter	1,485,361
	$	2,684,650

The Partnership’s unsecured line of credit is reflected in the table above as maturing in January 2023, based on the ability to exercise the two six-month extension options from its stated maturity date of January 2022. The amount of interest paid in 2018, 2017 and 2016 was $108.2 million, $121.0 million and $163.4 million, respectively. The amount of interest capitalized in 2018, 2017 and 2016 was $27.2 million, $18.9 million and $16.1 million, respectively.