Notes Payable |
Notes Payable
Senior Unsecured Revolving Credit Facility
On August 3, 2012, we replaced our $200.0 million secured revolving credit facility with a $250.0 million unsecured revolving credit facility with a group of lenders for which Wells Fargo Bank, N.A. acts as administrative agent and its affiliate acts as joint lead arranger, Bank of America, N.A. acts as joint lead arranger and, together with Barclays Capital, acts as joint syndication agent, and Keybank, N.A., acts as documentation agent. Our Operating Partnership is the borrower under our new unsecured revolving credit facility. The facility is required to be guaranteed by us and all of our subsidiaries that own unencumbered properties. The facility includes an accordion feature that allows us to increase the availability by $150.0 million, to $400.0 million, under specified circumstances and subject to receiving commitments from lenders.
Our facility bears interest at a rate per annum equal to LIBOR plus 155 basis points to 220 basis points, depending on our leverage ratio. If the Company obtains a credit rating for its senior unsecured long-term indebtedness, it may make an irrevocable election to change the interest rate for the facility to a rate per annum equal to LIBOR plus 100 basis points to 185 basis points, depending on the credit rating. Our facility is subject to a facility fee in an amount equal to our unused commitments multiplied by a rate per annum equal to 25 basis points to 35 basis points, depending on our usage of the facility, or, if we make the credit rating election, in an amount equal to the aggregate amount of our commitments multiplied by a rate per annum equal to 15 basis points to 45 basis points, depending upon the credit rating. The amount available for us to borrow under the facility is subject to compliance with certain covenants, including the following financial covenants:
| | • | a maximum leverage ratio (defined as consolidated total indebtedness plus our pro rata share of indebtedness of unconsolidated affiliates to total asset value) of 0.60:1.00; |
| | • | a minimum fixed charge coverage ratio (defined as consolidated earnings before interest, taxes, depreciation and amortization (“EBITDA”) plus our pro rata share of EBITDA of unconsolidated affiliates to fixed charges) of 1.50:1.00; |
| | • | a maximum secured indebtedness leverage ratio (defined as consolidated secured indebtedness plus our pro rata share of secured indebtedness of unconsolidated affiliates to total asset value) of 0.60:1:00 through and including August 3, 2014 and 0.55:1:00 thereafter; |
| | • | a maximum unencumbered leverage ratio (defined as consolidated unsecured indebtedness plus our pro rata share of unsecured indebtedness of unconsolidated affiliates to total unencumbered asset value) of 0.60:1:00; |
| | • | a minimum unsecured interest coverage ratio (defined as consolidated net operating income from unencumbered properties plus our pro rata share of net operating income from unencumbered properties to unsecured interest expense) of 1.60:1.00; and |
| | • | a maximum recourse debt ratio (defined as recourse indebtedness other than indebtedness under the revolving credit facility but including unsecured lines of credit to total asset value) of 0.15:1.00. |
In addition to these covenants, the facility also includes certain limitations on dividend payouts and distributions, limits on certain types of investments outside of our primary business, and other customary affirmative and negative covenants. Our ability to borrow under the facility is subject to continued compliance with these covenants.
As of June 30, 2014, we were in compliance with our facility’s financial covenants. As of June 30, 2014, we had $250.0 million of total capacity under our unsecured revolving credit facility, of which $80.0 million had been drawn.
The following table sets forth information as of June 30, 2014 with respect to our outstanding indebtedness. | | | | | | | | | | | | | | Outstanding | | | | | Debt | June 30, 2014 | | December 31, 2013 | | Interest Rate(1) | | Maturity Date | Unsecured Revolving Credit Facility | $ | 80,000 |
| | $ | 155,000 |
| | LIBOR+1.55% to 2.20% | | 8/3/2016 | Mortgage loan secured by 3401 Exposition Boulevard(2) | — |
| | 13,233 |
| | LIBOR+3.80% | | 6/9/2014 | Mortgage loan secured by 6922 Hollywood Boulevard(3) | 39,915 |
| | 40,396 |
| | 5.58% | | 1/1/2015 | Mortgage loan secured by 275 Brannan | 15,000 |
| | 15,000 |
| | LIBOR+2.00% | | 10/5/2015 | Mortgage loan secured by Pinnacle II(4) | 87,982 |
| | 88,540 |
| | 6.313% | | 9/6/2016 | Mortgage loan secured by 901 Market(5) | 49,600 |
| | 49,600 |
| | LIBOR+2.25% | | 10/31/2016 | Mortgage loan secured by Element LA(6) | 13,355 |
| | 566 |
| | LIBOR+1.95% | | 11/1/2017 | Mortgage loan secured by Sunset Gower/Sunset Bronson(7) | 97,000 |
| | 97,000 |
| | LIBOR+2.25% | | 2/11/2018 | Mortgage loan secured by Rincon Center(8) | 105,128 |
| | 105,853 |
| | 5.134% | | 5/1/2018 | Mortgage loan secured by First & King(9) | 95,000 |
| | 95,000 |
| | LIBOR+1.60% | | 8/31/2018 | Mortgage loan secured by Met Park North(10) | 64,500 |
| | 64,500 |
| | LIBOR+1.55% | | 8/1/2020 | Mortgage loan secured by First Financial(11) | 42,775 |
| | 43,000 |
| | 4.580% | | 2/1/2022 | Mortgage loan secured by 10950 Washington(12) | 29,083 |
| | 29,300 |
| | 5.316% | | 3/11/2022 | Mortgage loan secured by Pinnacle I(13) | 129,000 |
| | 129,000 |
| | 3.954% | | 11/7/2022 | Subtotal | $ | 848,338 |
| | $ | 925,988 |
| | | | | Unamortized loan premium, net(14) | 4,186 |
| | 5,320 |
| | | | | Total | $ | 852,524 |
| | $ | 931,308 |
| | | | |
__________________ | | (1) | Interest rate with respect to indebtedness is calculated on the basis of a 360-day year for the actual days elapsed, excluding the amortization of loan fees and costs. |
| | (2) | This loan was assumed on May 22, 2013 in connection with the closing of our acquisition of the 3401 Exposition Boulevard property. This loan was paid in full in June 2014. |
| | (3) | This loan was assumed on November 22, 2011 in connection with the closing of our acquisition of the 6922 Hollywood Boulevard property. This loan is amortizing based on a 30-year amortization schedule. |
| | (4) | This loan was assumed on June 14, 2013 in connection with the contribution of the Pinnacle II building to the Company’s joint venture with M. David Paul & Associates/Worthe Real Estate Group. This loan bore interest only for the first five years. Beginning with the payment due October 6, 2011, monthly debt service includes annual debt amortization payments based on a 30-year amortization schedule. |
| | (5) | On October 29, 2012, we obtained a loan for our 901 Market property pursuant to which we borrowed $49.6 million upon closing, with the ability to draw up to an additional $11.9 million for budgeted base building, tenant improvements, and other costs associated with the renovation and lease-up of that property. |
| | (6) | We have the ability to draw up to $65.5 million for budgeted site-work, construction of a parking garage, base building, tenant improvement, and leasing commission costs associated with the renovation and lease-up of the property. |
| | (7) | On March 16, 2011, we purchased an interest rate cap in order to cap one-month LIBOR at 3.715% with respect to $50.0 million of the loan through February 11, 2016. On January 11, 2012 we purchased an interest rate cap in order to cap one-month LIBOR at 2.00% with respect to $42.0 million of the loan through February 11, 2016. Effective August 22, 2013, the terms of this loan were amended to increase the outstanding balance from $92.0 million to $97.0 million, reduce the interest rate from LIBOR plus 3.50% to LIBOR plus 2.25%, and extend the maturity date from February 11, 2016 to February 11, 2018. |
| | (8) | This loan is amortizing based on a 30-year amortization schedule. |
| | (9) | This loan bears interest only for the first two years. Beginning with the payment due August 1, 2015, monthly debt service will include annual debt amortization payments of $1.6 million based on a 30-year amortization schedule. |
| | (10) | This loan bears interest only at a rate equal to one-month LIBOR plus 1.55%. The full loan amount is subject to an interest rate contract that swapped one-month LIBOR to a fixed rate of 2.1644% through the loan's maturity on August 1, 2020. |
| | (11) | This loan bears interest only for the first two years. Beginning with the payment due March 1, 2014, monthly debt service will include principal payments based on a 30-year amortization schedule, for total annual debt service of $2.6 million. |
| | (12) | This loan is amortizing based on a 30-year amortization schedule. |
| | (13) | This loan bears interest only for the first five years. Beginning with the payment due December 6, 2017, monthly debt service will include annual debt amortization payments based on a 30-year amortization schedule. |
| | (14) | Represents unamortized amount of the non-cash mark-to-market adjustment on debt associated with 6922 Hollywood Boulevard and Pinnacle II. |
The Company presents its financial statements on a consolidated basis. Notwithstanding such presentation, except to the extent expressly indicated, such as in the case of the project financing for our Sunset Gower and Sunset Bronson properties, our separate property-owning subsidiaries are not obligors of or under the debt of their respective affiliates and each property-owning subsidiary’s separate liabilities do not constitute obligations of its respective affiliates.
The minimum future annual principal payments due on our secured and unsecured notes payable at June 30, 2014, excluding the non-cash loan premium amortization, were as follows (in thousands):
| | | | | 2014 (six months ending December 31, 2014) | $ | 2,457 |
| 2015 | 58,569 |
| 2016 | 218,908 |
| 2017 | 16,808 |
| 2018 | 294,104 |
| 2019 | 3,706 |
| Thereafter | 253,786 |
| Total | $ | 848,338 |
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