MORTGAGES, NOTES AND LOANS PAYABLE, NET

3 Months Ended

Mar. 31, 2020

Mortgages, notes and loans payable, net are summarized as follows:



	March 31,			December 31,
(In thousands)	2020			2019
Fixed-rate debt:
Unsecured 5.375% Senior Notes	$	1,000,000		$	1,000,000
Secured mortgages, notes and loans payable	882,727			884,935
Special Improvement District bonds	23,460			23,725
Variable-rate debt:
Mortgages, notes and loans payable (a)	2,438,879			2,229,958
Unamortized bond issuance costs	(5,030		)	(5,249		)
Unamortized deferred financing costs (b)	(35,446		)	(36,899		)
Total mortgages, notes and loans payable, net	$	4,304,590		$	4,096,470

(a)

As more fully described in Note 9 - Derivative Instruments and Hedging Activities, $706.2 million and $630.1 million of variable‑rate debt has been swapped to a fixed rate for the term of the related debt, $229.9 million and $184.3 million of variable-rate debt was subject to interest rate collars and $75.0 million of variable-rate debt was capped at a maximum interest rate as of March 31, 2020, and December 31, 2019.


(b)	Deferred financing costs are amortized to interest expense over the terms of the respective financing agreements using the effective interest method (or other methods which approximate the effective interest method).

Certain of the Company’s 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. Certain mortgage notes may be prepaid subject to a prepayment penalty equal to a yield maintenance premium, defeasance or percentage of the loan balance. As of March 31, 2020, land, buildings and equipment and developments with a net book value of $6.6 billion have been pledged as collateral for HHC’s Mortgages, notes and loans payable, net. As of March 31, 2020, the Company was in compliance with all of its financial covenants included in the agreements governing its indebtedness.

The Summerlin MPC uses SID bonds to finance certain common infrastructure improvements. These bonds are issued by the municipalities and 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 the Company as infrastructure projects are completed, inspected by the municipalities and approved for reimbursement. Accordingly, the SID bonds have been classified as debt, and the Summerlin MPC pays the debt service on the bonds semi‑annually. As Summerlin sells land, the buyers assume a proportionate share of the bond obligation at closing, and the residential sales contracts provide for the reimbursement of the principal amounts that the Company previously paid with respect to such proportionate share of the bond. In the three months ended March 31, 2020, no new SID bonds were issued and an insignificant amount of obligations were assumed by buyers.

Recent Financing Activity

The Company is currently documenting the terms of an extension for the remaining $280.3 million of the bridge loan for The Woodlands Towers at the Waterway and The Woodlands Warehouse, pursuant to which the Company would receive a six-month extension at LIBOR plus 2.35% and have the option for an additional six-month extension at LIBOR plus 2.90%, extending the final maturity to June 2021.

The Company received a term sheet from the existing Downtown Summerlin lender that contemplates extending the financing by three years at a rate of LIBOR plus 2.50% in exchange for a pay-down of approximately $35.7 million to a total commitment of $221.5 million.

The Company is still in the process of documenting and/or negotiating the foregoing, and there can be no assurances that the Company will enter into such arrangements on the proposed terms or at all.

Financing Activity During the Three Months Ended March 31, 2020

On March 27, 2020, the Company closed on a $356.8 million construction loan for the development of Kō'ula. The loan bears interest at LIBOR plus 3.00% with an initial maturity date of March 27, 2023, and a one-year extension option.

On March 26, 2020, the Company closed on a partial refinance of the bridge loan for The Woodlands Towers at the Waterway and The Woodlands Warehouse for $137.0 million. In conjunction with the partial refinance, the original loan was paid down by $63.5 million and 9950 Woodloch Forest Drive tower was split into a new loan. The new loan bears interest at LIBOR plus 1.95% with a maturity date of March 26, 2025.

On March 13, 2020, the Company paid off the $50.0 million outstanding loan balance relating to 100 Fellowship Drive in conjunction with the sale of the property. The payment was made using the proceeds from the sale of the property.

On March 5, 2020, the Company modified and extended the $61.2 million loan for Three Hughes Landing. The new $61.0 million loan bears interest at one-month LIBOR plus 2.60%, with a maturity of September 5, 2020, at which point the Company anticipates the Three Hughes Landing loan will be extended for an additional 12 months.

On January 7, 2020, the Company closed on a $43.4 million construction loan for the development of Creekside Park Apartments Phase II. The loan bears interest at LIBOR plus 1.75% with an initial maturity date of January 7, 2024, and a one-year extension option.