Mortgage Notes Payable

The Company’s mortgage notes payable consist of the following as of March 31, 2014 and December 31, 2013 (dollar amounts in thousands):



	Encumbered Properties	Outstanding Loan Amount		Weighted Average Effective Interest Rate ⁽¹⁾		Weighted Average Maturity ⁽²⁾
March 31, 2014	697	$	4,128,384	4.83	%	6.23
December 31, 2013	177	$	1,258,661	3.42	%	3.41

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(1)	Mortgage notes payable primarily have fixed rates or are fixed by way of interest rate swap arrangements. Effective interest rates range from 2.41% to 7.20% at March 31, 2014 and 1.83% to 6.28% at December 31, 2013.


(2)	Weighted average remaining years until maturity as of March 31, 2014 and December 31, 2013, respectively.

In conjunction with the various mergers and portfolio acquisitions, as described in Note 2 — Mergers and Acquisitions, aggregate net premiums totaling $137.4 million were recorded upon the assumption of the mortgages for above-market interest rates. Amortization of these net premiums is recorded as a reduction to interest expense over the remaining term of the respective mortgages using a method that approximates the effective-interest method. As of March 31, 2014, there was $106.3 million in unamortized net premiums included in mortgage notes payable, net on the consolidated balance sheets.

The following table summarizes the scheduled aggregate principal repayments subsequent to March 31, 2014 (in thousands):



Year	Total
April 1, 2014 - December 31, 2014	$	134,152
2015	202,578
2016	242,769
2017	567,950
2018	252,923
Thereafter	2,728,012
Total	$	4,128,384

The Company’s mortgage loan agreements generally require restrictions on corporate guarantees and the maintenance of financial covenants including maintenance of certain financial ratios (such as specified debt to equity and debt service coverage ratios). As of March 31, 2014, the Company was in compliance with the debt covenants under the mortgage loan agreements.

During the three months ended March 31, 2014, the Company defeased $721.7 million of mortgage notes payable, including notes that were subject to interest rate swap agreements. In connection with the debt defeasances, the Company paid prepayment fees totaling $29.8 million. In addition, the Company paid $9.9 million for the settlement of interest rate swaps that were associated with certain of the mortgage notes, which approximated the fair value of the interest rate swaps. In addition, the Company wrote off the deferred financing costs and premiums and discounts associated with these mortgages, which resulted in a reduction to interest expense of $22.0 million. The recently paid off mortgages had a weighted average remaining interest rate of 5.16% and a weighted average remaining term of 2.2 years.