NOTE 7. DEBT

The following is a summary of our total secured notes payable outstanding as of March 31, 2013 and December 31, 2012 (in thousands):


	Principal Balance as of						Stated Interest Rate as of March 31, 2013			Stated Maturity Date
Description of Debt	March 31, 2013			December 31, 2012			Stated Interest Rate as of March 31, 2013			Stated Maturity Date
Alamo Quarry Market ⁽¹⁾⁽²⁾	$	93,379		$	93,942			5.67	%		January 8, 2014
Waikele Center ⁽³⁾		140,700			140,700			5.15	%		November 1, 2014
The Shops at Kalakaua ⁽³⁾		19,000			19,000			5.45	%		May 1, 2015
The Landmark at One Market ⁽²⁾⁽³⁾		133,000			133,000			5.61	%		July 5, 2015
Del Monte Center ⁽³⁾		82,300			82,300			4.93	%		July 8, 2015
First & Main ⁽³⁾		84,500			84,500			3.97	%		July 1, 2016
Imperial Beach Gardens ⁽³⁾		20,000			20,000			6.16	%		September 1, 2016
Mariner’s Point ⁽³⁾		7,700			7,700			6.09	%		September 1, 2016
South Bay Marketplace ⁽³⁾		23,000			23,000			5.48	%		February 10, 2017
Waikiki Beach Walk—Retail ⁽³⁾		130,310			130,310			5.39	%		July 1, 2017
Solana Beach Corporate Centre III-IV ⁽⁴⁾		37,098			37,204			6.39	%		August 1, 2017
Loma Palisades ⁽³⁾		73,744			73,744			6.09	%		July 1, 2018
One Beach Street ⁽³⁾		21,900			21,900			3.94	%		April 1, 2019
Torrey Reserve—North Court ⁽¹⁾		21,591			21,659			7.22	%		June 1, 2019
Torrey Reserve—VCI, VCII, VCIII ⁽¹⁾		7,269			7,294			6.36	%		June 1, 2020
Solana Beach Corporate Centre I-II ⁽¹⁾		11,595			11,637			5.91	%		June 1, 2020
Solana Beach Towne Centre ⁽¹⁾		38,650			38,790			5.91	%		June 1, 2020
City Center Bellevue ⁽³⁾		111,000			111,000			3.98	%		November 1, 2022

		1,056,736			1,057,680

Unamortized fair value adjustment		(12,269	)		(12,998	)

Total Secured Notes Payable Outstanding	$	1,044,467		$	1,044,682

(1)	Principal payments based on a 30-year amortization schedule.

(2)	Maturity Date is the earlier of the loan maturity date under the loan agreement, or the “Anticipated Repayment Date” as specifically defined in the loan agreement, which is the date after which substantial economic penalties apply if the loan has not been paid off.

(3)	Interest only.

(4)	Loan was interest only through August 2012. Beginning in September 2012, principal payments are based on a 30-year amortization schedule.

Certain loans require us to comply with various financial covenants. As of March 31, 2013, we were in compliance with these financial covenants.

Credit Facility

On January 19, 2011, we entered into a credit facility pursuant to which a group of lenders provided commitments for a revolving credit facility allowing borrowings of up to $250.0 million. At March 31, 2013, our maximum allowable borrowing amount was $226.2 million. The credit facility has an accordion feature that may allow us to increase the availability thereunder up to a maximum of $400.0 million, subject to meeting specified requirements and obtaining additional commitments from lenders. The credit facility bears interest at the rate of either the applicable LIBOR or a base rate, in each case plus a margin that will vary depending on our leverage ratio. The amount available for us to borrow under the credit facility is subject to the net operating income of our properties that form the borrowing base of the facility and a minimum implied debt yield of such properties.

On March 7, 2011, the credit facility was amended to allow us or our Operating Partnership to purchase GNMA securities with maturities of up to 30 years. On January 10, 2012, the credit facility was amended a second time to (1) extend the maturity date to January 10, 2016 (with a one-year extension option), (2) decrease the applicable interest rates and (3) modify certain financial covenants contained therein. On September 7, 2012, the credit facility was amended a third time to allow the Company’s consolidated total secured indebtedness to be up to 55% of our secured total asset value for the period commencing upon the date that a material acquisition (generally, greater than $100 million) is consummated through and including the last day of the third fiscal quarter that follows such date.

The credit facility includes a number of customary financial covenants, including:

•

a maximum leverage ratio (defined as total indebtedness net of certain unrestricted cash and cash equivalents to total asset value) of 60%,

•

a minimum fixed charge coverage ratio (defined as consolidated earnings before interest, taxes, depreciation and amortization to consolidated fixed charges) of 1.50x,

•

a maximum secured leverage ratio (defined as total secured indebtedness to secured total asset value) of up to 55% in certain circumstances,

•

a minimum tangible net worth equal to at least 75% of our tangible net worth at January 19, 2011, plus 85% of the net proceeds of any additional equity issuances (other than additional equity issuances in connection with any dividend reinvestment program), and

•

a $35.0 million limit on the maximum principal amount of recourse indebtedness we may have outstanding at any time, other than under the credit facility.

The credit facility provides that our annual distributions may not exceed the greater of (1) 95.0% of our funds from operations or (2) the amount required for us to (a) qualify and maintain our REIT status and (b) avoid the payment of federal or state income or excise tax. If certain events of default exist or would result from a distribution, we may be precluded from making distributions other than those necessary to qualify and maintain our status as a REIT.

We and certain of our subsidiaries guarantee the obligations under the credit facility, and certain of our subsidiaries pledged specified equity interests in our subsidiaries as collateral for our obligations under the credit facility.

As of March 31, 2013, we were in compliance with the credit facility financial covenants.