NOTE 8 MORTGAGES, NOTES AND LOANS PAYABLE

The following table presents our mortgages, notes, and loans payable by property:

								December 31,

			Interest Rate			Maximum Facility Amount		December 31,
	Maturity (a)		Interest Rate			Maximum Facility Amount		2012		2011
								(In thousands)
110 N. Wacker (b)		October 2019		5.21	%			$	29,000	$	29,000
70 Columbia Corporate Center		August 2017		4.25	%				16,037		—
Other Financing Arrangements		July 2015		—					612		—
Bridgeland
Land Loan (c)		June 2022		5.50	%				18,066		—
Development Loan (d)		June 2015		5.00	%	$	30,000		—		—
Various mortgage notes (e)		—		—					—		20,604

Bridgeland Total									18,066		20,604

Special Improvement District bonds
Summerlin South – S108		December 2016		5.95	%				1,067		1,302
Summerlin South – S124		December 2019		5.95	%				324		378
Summerlin South – S128		December 2020		7.30	%				787		862
Summerlin South – S128C		December 2030		6.05	%				5,739		5,956
Summerlin South – S132		December 2020		6.00	%				4,822		5,378
Summerlin South – S151		June 2025		6.00	%				10,501		12,293
Summerlin West – S808		April 2021		5.71	%				—		682
Summerlin West – S809		April 2023		6.65	%				—		1,000
Summerlin West – S810		April 2031		7.13	%				22,185		22,770
The Shops at Summerlin Centre – S128		December 2030		6.05	%				3,701		3,829
The Shops at Summerlin Centre – S108		December 2016		5.95	%				586		713
SID Payable to Nevada Cancer Institute		December 2019		5.95	%				—		50

Special Improvement District bonds Total									49,712		55,213

The Woodlands
Master Credit Facility (f)		March 2015		5.00	%	$	270,000		176,704		183,000
Resort and Conference Center (g)		October 2013		6.00	%				36,100		36,100
2201 Lake Woodlands Drive		November 2016		5.25	%				—		4,803
Weiner Tract		January 2013		6.25	%				—		1,479
Land in Montgomery Co.		December 2012		6.00	%				—		649
Land in Harris Co.		January 2013		6.00	%				—		381
Capital lease obligation		—		2.84	%				41		147
CVS		upon sale		3.25	%				—		101
4 Waterway Square		December 2023		4.88	%				40,140		41,000
9303 New Trails		December 2023		4.88	%				13,706		14,000
3 Waterway Square (h)		January 2017		2.86	%	$	43,295		9,150		—
Hughes Landing (h)		November 2017		2.86	%	$	38,000		10		—
20/25 Waterway		May 2022		4.79	%				14,450		—
Millennium Waterway Apartments (i)		June 2022		3.75	%				55,584		—

The Woodlands Total									345,885		281,660

Ward Centers (j)		September 2016		3.39	%	$	250,000		229,000		220,000

								$	688,312	$	606,477

(a): Maturity date includes any extension option periods which are within our control.
(b): Loan has a stated interest rate of one-month LIBOR + 2.25%. The $29.0 million outstanding principal balance is swapped to a 5.21% fixed rate through maturity.
(c): Loan is for ten year term. First five years interest is fixed at 5.50% and for second five years interest rate is floating based on three-month LIBOR +2.75%.
(d): Revolving development loan provides for a maximum of $30.0 million outstanding balance at any time with all draws not to exceed $140.0 million. The loan bears interest at three-month LIBOR + 3.25% and has a 5.00% minimum rate.
(e): The loan was refinanced during the second quarter of 2012.
(f): Loan bears interest at one-month LIBOR + 4.00% and has a 5.00% minimum rate.
(g): The loan was fully repaid on February 8, 2013 from the proceeds of a $95.0 million non-recourse construction financing to redevelop the property.
(h): Loan bears interest at one-month LIBOR + 2.65%.
(i): Loan payments are interest only until June 2017, then monthly principal and interest payment of $257,418 with unpaid balance due at maturity.
(j): Loan has a stated interest rate of one-month LIBOR + 2.50%. $143.0 million of the outstanding principal balance is swapped to a 3.80% fixed rate through maturity.

The weighted average interest rate on our mortgages, notes and loans payable excluding interest rate hedges was 4.49% and 4.68% as of December 31, 2012 and 2011, respectively.

Mortgages, notes and loans payable are summarized as follows:

	December 31,

	2012		2011
	(In thousands)
Fixed-rate debt:
Collateralized mortgages, notes and loans payable	$	158,636	$	83,164
Special Improvement District bonds		49,712		55,213
Variable-rate debt:
Collateralized mortgages, notes and loans payable		479,964		468,100

Total mortgages, notes and loans payable	$	688,312	$	606,477

The following table summarizes the contractual obligations relating to our mortgages, notes and loans payable as of December 31, 2012:

	Mortgages, notes and loans payable principal payments

	(In thousands)
2013	$	28,722	(a)
2014		34,976
2015		129,170
2016		238,244
2017		35,054
Subsequent/Other		222,146

Total	$	688,312

(a): Reclassified $36.1 million of The Woodlands Resort and Conference Center debt due in 2013 that was refinanced on February 8, 2013 with a new maturity date of 2016.

Collateralized Mortgages, Notes and Loans Payable

As of December 31, 2012, we had $688.3 million of collateralized mortgages, notes and loans payable. Approximately $345.9 million of the debt included in the table above is related to The Woodlands, which was consolidated on July 1, 2011. All of the debt is non-recourse and is secured by the individual properties as listed in the table above, except for The Woodlands Master Credit Facility and Resort and Conference Center Loan which is recourse to the partnerships that directly own The Woodlands operations, and a $7.0 million corporate recourse guarantee associated with the 110 N. Wacker mortgage, which is more fully discussed below. In addition, certain of our loans contain provisions which grant the lender a security interest in the operating cash flow of the property that represents the collateral for the loan. Such provisions are not expected to impact our operations in 2013. Certain mortgage notes may be prepaid, but may be subject to a prepayment penalty equal to a yield-maintenance premium, defeasance or a percentage of the loan balance.

The Woodlands Master Credit Facility is a $270.0 million facility consisting of a $170.0 million term loan and a $100.0 million revolving credit line (together, the "TWL Facility"). As of December 31, 2012, the TWL Facility had an outstanding balance of $176.7 million. The TWL Facility bears interest at one-month LIBOR plus 4.00% with a 1.00% LIBOR floor, has a March 29, 2014 initial maturity date and a one-year extension at borrower's option. The TWL Facility also contains certain restrictions or covenants that, among other things, require the maintenance of specified financial ratios, restrict the incurrence of additional indebtedness at The Woodlands, and limit distributions from The Woodlands to us. Until The Woodlands leverage, as defined by the credit agreement, is less than a 40.0% loan to value ratio, we must amortize the debt on a dollar for dollar basis for any distributions that we make from The Woodlands. We have not distributed and do not currently intend to distribute cash from The Woodlands; therefore, this distribution provision has had no impact on us. As of December 31, 2012, such leverage was approximately 28.3%. There was $7.3 million of undrawn and available borrowing capacity under the TWL Facility based on the collateral underlying the facility and covenants as of December 31, 2012. The TWL Facility also requires mandatory principal amortization payments during its initial term and during the extension period, if exercised. Repayments of $25.0 million and $30.0 million are required on March 29, 2013 and, if extended, 2014, respectively. Furthermore, $10.0 million is due on each of June 29, September 29 and December 29, 2014 during the extension period.

The Woodlands Resort and Conference Center loan has a $36.1 million outstanding balance as of December 31, 2012. On February 8, 2013, we secured non-recourse construction financing of $95.0 million which refinanced the existing $36.1 million mortgage and provides funding for the redevelopment of The Woodlands Resort and Conference Center. The loan bears interest at LIBOR plus 3.50% and has an initial maturity of February 7, 2016, with three one-year extensions at our option. The loan is secured by a 440-room and 40-acre conference center and resort located within The Woodlands, and requires the maintenance of specified financial ratios.

On November 14, 2012, we secured $38.0 million in non-recourse financing for the construction of One Hughes Landing, the first office building to be constructed at Hughes Landing, a 66-acre, mixed-use development situated on 200-acre Lake Woodlands. The loan bears interest at LIBOR plus 2.65%, has a November 15, 2015 original maturity date and two, one-year extensions options.

On August 15, 2012, we assumed a $16.0 million loan as part of the acquisition of 70 CCC. The non-recourse, interest only promissory note matures on August 31, 2017, has a fixed rate of 4.25% and is secured by the property. Please refer to Note 4 – Acquisitions and Dispositions for a description of the acquisition.

On June 29, 2012, we refinanced $18.1 million of existing debt related to our Bridgeland master planned community with a ten-year term loan facility at a fixed interest rate of 5.50% for the first five years and three-month LIBOR plus 2.75% for the remaining term and maturing on June 29, 2022. Beginning on June 29, 2014, annual principal payments are required in the amount of 5.00% of the then outstanding principal balance. In addition, we simultaneously entered into a three-year revolving credit facility with aggregate borrowing capacity of $140.0 million and which has a $30.0 million maximum outstanding loan amount at any time. The revolving loan bears interest at the greater of 5.00% or LIBOR plus 3.25% and matures on June 29, 2015. This loan is intended to provide working capital at Bridgeland in order to accelerate development efforts to meet the demand of homebuilders for finished lots in the community. The Bridgeland loans are cross-collateralized and cross-defaulted and the Bridgeland Master Planned Community serves as collateral for the loans. The loans also require that Bridgeland maintain a minimum $3.0 million cash balance and a minimum net worth of $250.0 million. Additionally, we are restricted from making cash distributions from Bridgeland unless the revolver has no outstanding balance and one year of real estate taxes and debt service on the term loan have been escrowed with the lender.

On May 31, 2012, as part of the acquisition of our partner's interest in Millennium Waterway Apartments, we consolidated a $55.6 million non-recourse first mortgage loan. The proceeds from the mortgage were used to refinance the joint venture's existing debt and to fund our acquisition of the partner's interest in the property. The loan matures on June 1, 2022 and has a fixed interest rate of 3.75%. Payments are interest only until June 2017, then monthly principal and interest payments of $257,418 with the unpaid principal balance due at maturity.

On April 26, 2012, we closed on a 10-year, fixed rate loan with interest at 4.79% secured by 20/25 Waterway Avenue. The proceeds from the loan were $13.6 million.

On February 2, 2012, we secured non-recourse financing totaling $43.3 million for the construction of 3 Waterway Square, an eleven-story, approximate 232,000 square foot office building in The Woodlands. The loan matures on January 31, 2015 and has two, one-year extension options. The loan bears interest at LIBOR plus 2.65%.

On December 5, 2011, we secured a $41.0 million loan for 4 Waterway Square and a $14.0 million loan for 9303 New Trails. The non-recourse mortgages mature on December 11, 2023 and have fixed interest rates of 4.88%.

On September 30, 2011, we closed on a $250.0 million non-recourse first mortgage financing secured by Ward Centers in Honolulu, Hawaii, that bears interest at LIBOR plus 2.50%. The loan matures on September 29, 2016, and $143.0 million of the principal balance was swapped to a 3.80% fixed rate for the term of the loan. The loan had a weighted-average interest rate of 3.39% as of December 31, 2012. The initial loan proceeds of $212.5 million were used to repay approximately $208.7 million of mortgage debt and to fund closing costs. The loan may be drawn to a maximum $250.0 million to fund capital expenditures at the property, provided that the outstanding principal balance cannot exceed 65% of the property's appraised value and the borrowers are required to have a minimum 10.0% debt yield in order to draw additional loan proceeds under the facility. The loan also permits partial repayment during its term in connection with property releases for development. The repayment of three mortgages previously secured by Ward Centers resulted in an $11.3 million pre-tax loss on early repayment of debt. The mortgages had been recorded at discounts to their outstanding principal balances because they were recorded at their fair values as part of the reorganization transactions in 2010. The loan had a $220.0 million outstanding balance as of December 31, 2011. On September 17, 2012, we drew an additional $9.0 million on the loan. As a result, the unused portion of this mortgage is $21.0 million as of December 31, 2012.

On May 10, 2011, we closed a $29.0 million first mortgage financing secured by our office building located at 110 N. Wacker Drive in Chicago, Illinois and bearing interest at LIBOR plus 2.25%. At closing, the interest rate on the loan was swapped to a 5.21% fixed rate for the term of the loan. The loan matures on October 31, 2019 and its term is coterminous with the expiration of the first term of the existing tenant's lease. The loan has an interest-only period through April 2015 and, thereafter, amortizes ratably to $12.0 million through maturity. The proceeds from the financing were used to repay the existing $28.2 million mortgage and to pay closing costs and other expenses. We provided a $7.0 million repayment guarantee for the loan, which is reduced on a dollar for dollar basis during the amortization period.

As of December 31, 2012, $1.5 billion of land, buildings and equipment and developments (before accumulated depreciation) have been pledged as collateral for our mortgages, notes and loans payable of which $7.0 million is recourse.

Special Improvement Districts Bonds

The Summerlin Master Planned Community uses Special Improvement District bonds to finance certain common infrastructure improvements. These bonds are issued by the municipalities and, although unrated, are secured by the assessments on the land. The majority of proceeds from each bond issued is held in a construction escrow and disbursed to us as infrastructure projects are completed, inspected by the municipalities and approved for reimbursement. Accordingly, the Special Improvement District bonds have been classified as debt. The Summerlin Master Planned Community pays the debt service on the bonds semi-annually. However, our residential land sales contracts provide for the reimbursement of the principal amounts included in these debt service payments. In addition, as Summerlin sells land, the purchasers assume a proportionate share of the bond obligation.

As of December 31, 2012, we were in compliance with all of the financial covenants related to our debt agreements.