8. Indebtedness and Derivative Financial Instruments

Our mortgages and unsecured indebtedness, excluding the impact of derivative instruments, consist of the following as of December 31:


	2017		2016
Fixed-Rate Debt:
Mortgage notes, including $16,869 and $21,916 of net premiums and $16,106 and $15,965 of debt issuance costs, respectively. Weighted average interest and maturity of 4.04% and 6.4 years at December 31, 2017.	$	6,020,552	$	5,876,831
Unsecured notes, including $51,657 and $46,426 of net discounts and $68,535 and $65,801 of debt issuance costs, respectively. Weighted average interest and maturity of 3.16% and 7.8 years at December 31, 2017.		16,375,713		15,252,834
Commercial Paper (see below)		978,467		953,665
Total Fixed-Rate Debt		23,374,732		22,083,330
Variable-Rate Debt:
Mortgages notes, including $8,988 and $690 of debt issuance costs, respectively. Weighted average interest and maturity of 2.49% and 3.9 years at December 31, 2017.		883,781		592,655
Credit Facility (see below), including $17,106 and $15,380 of debt issuance costs, respectively, at December 31, 2017.		305,530		301,119
Total Variable-Rate Debt		1,189,311		893,774
Other Debt Obligations		68,420		—
Total Mortgages and Unsecured Indebtedness	$	24,632,463	$	22,977,104

General. Our unsecured debt agreements contain financial covenants and other non‑financial covenants. If we were to fail to comply with these covenants, after the expiration of the applicable cure periods, the debt maturity could be accelerated or other remedies could be sought by the lender, including adjustments to the applicable interest rate. As of December 31, 2017, we were in compliance with all covenants of our unsecured debt.

At December 31, 2017, we or our subsidiaries were the borrowers under 47 non‑recourse mortgage notes secured by mortgages on 50 properties, including two separate pools of cross‑defaulted and cross‑collateralized mortgages encumbering a total of five properties. Under these cross‑default provisions, a default under any mortgage included in the cross‑defaulted pool may constitute a default under all mortgages within that pool and may lead to acceleration of the indebtedness due on each property within the pool. Certain of our secured debt instruments contain financial and other non‑financial covenants which are specific to the properties that serve as collateral for that debt. If the applicable borrower under these non-recourse mortgage notes were to fail to comply with these covenants, the lender could accelerate the debt and enforce its rights against their collateral. At December 31, 2017, the applicable borrowers under these non‑recourse mortgage notes were in compliance with all covenants where non‑compliance could individually or in the aggregate, giving effect to applicable cross‑default provisions, have a material adverse effect on our financial condition, liquidity or results of operations.

Unsecured Debt

At December 31, 2017, our unsecured debt consisted of $16.5 billion of senior unsecured notes of the Operating Partnership, $322.6 million outstanding under the Operating Partnership’s $3.5 billion supplemental unsecured revolving credit facility, or Supplemental Facility, and $978.5 million outstanding under the Operating Partnership’s global unsecured commercial paper program, or Commercial Paper program. The December 31, 2017 balance on the Supplemental Facility included $197.6 million (U.S. dollar equivalent) of Yen-denominated borrowings. Foreign currency denominated borrowings under the Supplemental Facility are designated as net investment hedges of a portion of our international investments.

On December 31, 2017, we had an aggregate available borrowing capacity of $6.2 billion under the Supplemental Facility and the Operating Partnership’s $4.0 billion unsecured revolving credit facility, or Credit Facility, and together with the Supplemental Facility, the Credit Facilities. The maximum aggregate outstanding balance under the Credit Facilities during the year ended December 31, 2017 was $960.9 million and the weighted average outstanding balance was $455.5 million. Letters of credit of $20.9 million were outstanding under the Credit Facilities as of December 31, 2017.

On March 17, 2017, the Operating Partnership amended and extended the Credit Facility. The initial borrowing capacity of $4.0 billion may be increased to $5.0 billion during its term and provides for borrowings denominated in U.S. dollars, Euro, Yen, Sterling, Canadian dollars and Australian dollars. Borrowings in currencies other than the U.S. dollar are limited to 95% of the maximum revolving credit amount, as defined. The initial maturity date of the Credit Facility was extended to June 30, 2021 and can be extended for an additional year to June 30, 2022 at our sole option, subject to our continued compliance with the terms thereof. The base interest rate on the Credit Facility was reduced to LIBOR plus 77.5 basis points from LIBOR plus 80 basis points, with a facility fee of 10 basis points.

The Supplemental Facility’s borrowing capacity of $3.50 billion may be increased to $4.25 billion during its term. The initial maturity date of the Supplemental Facility is June 30, 2019, which can be extended for an additional year to June 30, 2020 at our sole option, subject to our continued compliance with the terms thereof. The base interest rate on the Supplemental Facility is LIBOR plus 80 basis points, with an additional facility fee of 10 basis points. The Supplemental Facility provides for borrowings denominated in U.S. dollars, Euro, Yen, Sterling, Canadian dollars and Australian dollars.

On February 15, 2018, the Operating Partnership amended and extended the Supplemental Facility. The Supplemental Facility’s initial borrowing capacity of $3.5 billion may be increased to $4.5 billion during its term. The initial maturity date of the Supplemental Facility was extended to June 30, 2022 and can be extended for an additional year to June 30, 2023 at our sole option, subject to our continued compliance with the terms thereof. The base interest rate on the Supplemental Facility was reduced to LIBOR plus 77.5 basis points from LIBOR plus 80 basis points, with a facility fee of 10 basis points.

The Operating Partnership also has available a Commercial Paper program of $1.0 billion, or the non-U.S. dollar equivalent thereof. The Operating Partnership may issue unsecured commercial paper notes, denominated in U.S. dollars, Euro and other currencies. Notes issued in non-U.S. currencies may be issued by one or more subsidiaries of the Operating Partnership and are guaranteed by the Operating Partnership. Notes will be sold under customary terms in the U.S. and Euro commercial paper note markets and rank (either by themselves or as a result of the guarantee described above) pari passu with the Operating Partnership's other unsecured senior indebtedness. The Commercial Paper program is supported by the Credit Facilities and if necessary or appropriate, we may make one or more draws under either of the Credit Facilities to pay amounts outstanding from time to time on the Commercial Paper program. On December 31, 2017, we had $978.5 million outstanding under the Commercial Paper program, fully comprised of U.S. dollar denominated notes with a weighted average interest rate of 1.40%. These borrowings mature on various dates through March 15, 2018 and reduce amounts otherwise available under the Credit Facilities.

On June 1, 2017, the Operating Partnership completed the issuance of $600.0 million of senior unsecured notes at a fixed interest rate of 2.63% with a maturity date of June 15, 2022 and $750.0 million of senior unsecured notes at a fixed interest rate of 3.38% with a maturity date of June 15, 2027. Proceeds from the unsecured notes offering were used to fund the early redemption of senior unsecured notes in June 2017, as discussed below, and to pay down the Credit Facility.

On December 11, 2017, the Operating Partnership completed the issuance of $600.0 million of senior unsecured notes at a fixed interest rate of 2.75% with a maturity date of June 1, 2023 and $750.0 million of senior unsecured notes at a fixed interest rate of 3.38% with a maturity date of December 1, 2027. Proceeds from the unsecured notes offering were used to redeem at par $750 million of senior unsecured notes with a fixed interest rate of 1.50% on January 3, 2018 and for general business purposes.

During 2017, the Operating Partnership redeemed at par $600.0 million of senior unsecured notes with a fixed interest rate of 2.15% and completed the early redemption of a series of senior unsecured notes comprising $1.25 billion with a fixed interest rate of 5.65%. We recorded a $128.6 million loss on extinguishment of debt in the second quarter of 2017 as a result of the early redemption.

Mortgage Debt

Total mortgage indebtedness was $6.9 billion and $6.5 billion at December 31, 2017 and 2016, respectively.

On April 21, 2017, as discussed in Note 7, through our European investee, we acquired a controlling interest in Rosada Designer Outlet in Roosendaal, Netherlands, subject to an existing EURIBOR-based variable rate mortgage loan of $40.1 million (U.S. dollar equivalent).

Debt Maturity and Other

Our scheduled principal repayments on indebtedness as of December 31, 2017 are as follows:


2018	$	2,060,959	(1)
2019		741,849
2020		2,465,232
2021		3,157,745
2022		3,521,890
Thereafter		12,761,890
Total principal maturities		24,709,565
Net unamortized debt discount		(34,788)
Debt issuance costs, net		(110,734)
Other Debt Obligations		68,420
Total mortgages and unsecured indebtedness	$	24,632,463

(1)Includes $750.0 million aggregate principal amount of 1.50% senior unsecured notes redeemed at par on January 3, 2018.

Our cash paid for interest in each period, net of any amounts capitalized, was as follows:


	For the Year Ended December 31,
	2017		2016		2015
Cash paid for interest	$	814,729	$	887,118	$	943,683

Derivative Financial Instruments

Our exposure to market risk due to changes in interest rates primarily relates to our long‑term debt obligations. We manage exposure to interest rate market risk through our risk management strategy by a combination of interest rate protection agreements to effectively fix or cap a portion of variable rate debt. We are also exposed to foreign currency risk on financings of certain foreign operations. Our intent is to offset gains and losses that occur on the underlying exposures, with gains and losses on the derivative contracts hedging these exposures. We do not enter into either interest rate protection or foreign currency rate protection agreements for speculative purposes.

We may enter into treasury lock agreements as part of an anticipated debt issuance. Upon completion of the debt issuance, the fair value of these instruments is recorded as part of accumulated other comprehensive income (loss) and is amortized to interest expense over the life of the debt agreement.

The unamortized loss on our treasury locks and terminated hedges recorded in accumulated other comprehensive income (loss) was $10.1 million and $35.4 million as of December 31, 2017 and 2016, respectively. As of December 31, 2016, our outstanding LIBOR based derivative contracts consisted of an interest rate swap agreement with a notional amount of $250.0 million. As of December 31, 2017, we had no outstanding interest rate derivatives.

Within the next year, we expect to reclassify to earnings approximately $7.0 million of losses related to terminated interest rate swaps from the current balance held in accumulated other comprehensive income (loss).

Debt Issuance Costs

Our debt issuance costs consist primarily of financing fees we incurred in order to obtain long-term financing. We record amortization of debt issuance costs on a straight-line basis over the terms of the respective loans or agreements. Details of those debt issuance costs as of December 31 are as follows:


	2017		2016
Debt issuance costs	$	200,646	$	166,041
Accumulated amortization		(89,912)		(68,205)
Debt issuance costs, net	$	110,734	$	97,836

We report amortization of debt issuance costs, amortization of premiums, and accretion of discounts as part of interest expense. We amortize debt premiums and discounts, which are included in mortgages and unsecured indebtedness, over the remaining terms of the related debt instruments. These debt premiums or discounts arise either at the time of the debt issuance or as part of purchase accounting for the fair value of debt assumed in acquisitions. The accompanying consolidated statements of operations and comprehensive income include amortization from continuing operations as follows:


		For the Year Ended December 31,
	2017		2016		2015
Amortization of debt issuance costs	$	21,707	$	21,703	$	19,349
Amortization of debt discounts/(premiums)		1,357		(14,583)		(16,107)

Fair Value of Debt

The carrying value of our variable‑rate mortgages and other loans approximates their fair values. We estimate the fair values of consolidated fixed‑rate mortgages using cash flows discounted at current borrowing rates and other indebtedness using cash flows discounted at current market rates. We estimate the fair values of consolidated fixed‑rate unsecured notes using quoted market prices, or, if no quoted market prices are available, we use quoted market prices for securities with similar terms and maturities. The book value of our consolidated fixed‑rate mortgages and unsecured indebtedness including commercial paper was $23.4 billion and $22.1 billion as of December 31, 2017 and 2016, respectively. The fair values of these financial instruments and the related discount rate assumptions as of December 31 are summarized as follows:



	2017			2016
Fair value of fixed-rate mortgages and unsecured indebtedness	$	24,003		$	22,703
Weighted average discount rates assumed in calculation of fair value for fixed-rate mortgages		4.25	%		4.12	%
Weighted average discount rates assumed in calculation of fair value for unsecured indebtedness		4.10	%		3.83	%