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LONG-TERM DEBT

9 Months Ended

Sep. 30, 2023

NOTE 11. LONG-TERM DEBT

As of September 30, 2023, the Company’s outstanding indebtedness, at face value, was as follows (in thousands):


	Face Value Debt		Stated Interest Rate	Maturity Date
Credit Facility⁽¹⁾	$	50,000	SOFR + 0.10% + [1.25% - 2.20%]	January 2027
2026 Term Loan⁽²⁾		100,000	SOFR + 0.10% + [1.35% - 1.95%]	May 2026
2027 Term Loan⁽³⁾		100,000	SOFR + 0.10% + [1.25% - 1.90%]	January 2027
Total Debt/Weighted-Average Rate	$	250,000	3.36%

(1)

As of September 30, 2023, the Company has utilized an interest rate swap to fix SOFR and achieve a fixed interest rate of 3.21% plus 0.10% and the applicable spread on $50 million of the outstanding balance on the Credit Facility (hereinafter defined). See Note 12, “Interest Rate Swaps” for further disclosure related to the Company’s interest rate swap.

(2)

As of September 30, 2023, the Company has utilized interest rate swaps to fix SOFR and achieve a weighted average fixed interest rate of 2.05% plus 0.10% and the applicable spread on the $100 million 2026 Term Loan (hereinafter defined) balance. See Note 12, “Interest Rate Swaps” for further disclosure related to the Company’s interest rate swaps.

(3)

As of September 30, 2023, the Company has utilized interest rate swaps to fix SOFR and achieve a weighted average fixed interest rate of 1.18% plus 0.10% and the applicable spread on the $100 million 2027 Term Loan (hereinafter defined) balance. See Note 12, “Interest Rate Swaps” for further disclosure related to the Company’s interest rate swaps.

Credit Facility. On September 30, 2022, the Company and the Operating Partnership entered into a credit agreement (the “2022 Amended and Restated Credit Agreement” or “Credit Facility”) with KeyBank National Association, as administrative agent, and certain other lenders named therein, which amended and restated the 2027 Term Loan Credit Agreement (hereinafter defined) to include, among other things:

●

the origination of a new senior unsecured revolving credit facility in the amount of $250 million which matures on January 31, 2027, with the option to extend for one year;

●

an accordion option that allows the Company to request additional revolving loan commitments and additional term loan commitments, provided the aggregate amount of revolving loan commitments and term loan commitments shall not exceed $750 million;

●

the amendment of certain financial covenants; and

●

the addition of a sustainability-linked pricing component pursuant to which the Company will receive interest rate reductions up to 0.025% based on performance against sustainability performance targets.

Pursuant to the 2022 Amended and Restated Credit Agreement, the indebtedness outstanding under the Credit Facility accrues at a rate ranging from SOFR plus 0.10% plus 125 basis points to SOFR plus 0.10% plus 220 basis points, based on the total balance outstanding under the Credit Facility as a percentage of the total asset value of the Company, as defined in the 2022 Amended and Restated Credit Agreement. The Company may utilize daily simple SOFR or term SOFR, at its election. The Credit Facility also accrues a fee of 15 or 25 basis points for any unused portion of the borrowing capacity based on whether the unused portion is greater or less than 50% of the total borrowing capacity.

The Company is subject to customary restrictive covenants under the 2022 Amended and Restated Credit Agreement and the 2026 Term Loan Credit Agreement (hereinafter defined), as amended, collectively referred to herein as the “Credit Agreements”, including, but not limited to, limitations on the Company’s ability to: (a) incur indebtedness; (b) make certain investments; (c) incur certain liens; (d) engage in certain affiliate transactions; and (e) engage in certain major transactions such as mergers. The Credit Agreements also contain financial covenants covering the Company, including but not limited to, tangible net worth and fixed charge coverage ratios.

At September 30, 2023, the commitment level under the Credit Facility was $250.0 million and the Company had an outstanding balance of $50.0 million.

2026 Term Loan. On May 21, 2021, the Operating Partnership, the Company and certain subsidiaries of the Company entered into a credit agreement (the “2026 Term Loan Credit Agreement”) with Truist Bank, N.A. as administrative agent, and certain other lenders named therein, for a term loan (the “2026 Term Loan”) in an aggregate principal amount of $60.0

million with a maturity of five years. On April 14, 2022, the Company entered into the Amendment, Increase and Joinder to the 2026 Term Loan Credit Agreement (the “2026 Term Loan Amendment”), which increased the term loan commitment under the 2026 Term Loan by $40 million to an aggregate of $100 million. The 2026 Term Loan Amendment also effectuated the transition of the underlying variable interest rate from LIBOR to SOFR.

On October 5, 2022, the Company entered into an amendment which, among other things, amended certain financial covenants and added a sustainability-linked pricing component consistent with what is contained in the 2022 Amended and Restated Credit Agreement (the “2026 Term Loan Second Amendment”), effective September 30, 2022.

2027 Term Loan. On September 30, 2021, the Operating Partnership, the Company and certain subsidiaries of the Company entered into a credit agreement (the “2027 Term Loan Credit Agreement”) with KeyBank National Association as administrative agent, and certain other lenders named therein, for a term loan (the “2027 Term Loan”) in an aggregate principal amount of $80.0 million (the “Term Commitment”) maturing in January 2027. On April 14, 2022, the Company entered into the Amendment, Increase and Joinder to the 2027 Term Loan Credit Agreement (the “2027 Term Loan Amendment”), which increased the Term Commitment by $20 million to an aggregate of $100 million. The 2027 Term Loan Amendment also effectuated the transition of the underlying variable interest rate from LIBOR to SOFR.

On September 30, 2022, the Company entered into the 2022 Amended and Restated Credit Agreement which amended and restated the 2027 Term Loan Credit Agreement to include the origination of a new revolving credit facility in the amount of $250.0 million as previously described. The 2022 Amended and Restated Credit Agreement includes an accordion option that allows the Company to request additional revolving loan commitments and additional term loan commitments not to exceed $750.0 million in the aggregate.

Long-term debt as of September 30, 2023 and December 31, 2022 consisted of the following (in thousands):


	September 30, 2023				December 31, 2022
	Total		Due Within One Year		Total		Due Within One Year
Credit Facility	$	50,000	$	—	$	68,250	$	—
2026 Term Loan		100,000		—		100,000		—
2027 Term Loan		100,000		—		100,000		—
Financing Costs, net of Accumulated Amortization		(901)		—		(1,134)		—
Total Long-Term Debt	$	249,099	$	—	$	267,116	$	—

Payments applicable to reduction of principal amounts as of September 30, 2023 will be required as follows (in thousands):


Year Ending December 31,	Amount
Remainder of 2023	$	—
2024		—
2025		—
2026		100,000
2027		150,000
2028		—
2029 and Thereafter		—
Total Long-Term Debt - Face Value	$	250,000

The carrying value of long-term debt as of September 30, 2023 consisted of the following (in thousands):


	Total
Current Face Amount	$	250,000
Financing Costs, net of Accumulated Amortization		(901)
Total Long-Term Debt	$	249,099

In addition to the $0.9 million of financing costs, net of accumulated amortization included in the table above, as of September 30, 2023, the Company also had financing costs, net of accumulated amortization related to the Credit Facility of $1.3 million which is included in other assets on the consolidated balance sheets. These costs are amortized on a straight-line basis over the term of the Credit Facility and are included in interest expense in the consolidated statements of operations.

The following table reflects a summary of interest expense incurred and paid during the three and nine months ended September 30, 2023 and 2022 (in thousands):


	Three Months Ended				Nine Months Ended
	September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022
Interest Expense	$	2,264	$	2,394	$	6,964	$	5,940
Amortization of Deferred Financing Costs to Interest Expense		179		150		530		407
Total Interest Expense	$	2,443	$	2,544	$	7,494	$	6,347

Total Interest Paid	$	2,243	$	2,454	$	6,924	$	5,806

The Company was in compliance with all of its debt covenants as of September 30, 2023.