NOTES PAYABLE

The following table summarizes the Company's notes payable balance at September 30, 2016 and December 31, 2015 ($ in thousands):



	September 30, 2016			December 31, 2015
Notes payable	$	792,866		$	721,293
Less: deferred financing costs of mortgage debt, net of accumulated amortization of $1,867 and $2,008 in 2016 and 2015, respectively	(3,488		)	(2,483		)
	$	789,378		$	718,810

The following table details the terms and amounts of the Company’s outstanding notes payable at September 30, 2016 and December 31, 2015 ($ in thousands):



Description	Interest Rate		Maturity	September 30, 2016			December 31, 2015
Post Oak Central mortgage note	4.26	%	2020	$	179,170		$	181,770
Fifth Third Center mortgage note	3.37	%	2026	150,000			—
The American Cancer Society Center mortgage note	6.45	%	2017	127,989			129,342
Colorado Tower mortgage note	3.45	%	2026	120,000			—
Promenade mortgage note	4.27	%	2022	106,068			108,203
191 Peachtree Tower mortgage note	3.35	%	2018	99,188			100,000
816 Congress mortgage note	3.75	%	2024	85,000			85,000
Meridian Mark Plaza mortgage note	6.00	%	2020	24,639			24,978
Credit Facility, unsecured	1.63	%	2019	—			92,000
				892,054			721,293
191 Peachtree Tower mortgage note classified as Held for Sale				(99,188		)	—
				$	792,866		$	721,293

Other Debt Information

In September 2016, the Company entered into a $120.0 million non-recourse mortgage secured by Colorado Tower, a 373,000 square foot office building in Austin, Texas. The mortgage bears interest at a fixed annual rate of 3.45% and matures September 1, 2026. Also in September 2016, the Company entered into a $150.0 million non-recourse mortgage secured by Fifth Third Center, a 698,000 square foot office building in Charlotte, North Carolina. The mortgage bears interest at a fixed annual rate of 3.37% and matures October 1, 2026.

In October 2016, the Company sold 191 Peachtree Tower and repaid the 191 Peachtree Tower mortgage note in full. In connection with the repayment, the Company paid a $3.7 million prepayment penalty.

In connection with the Spin-Off, the Company distributed the Post Oak Central mortgage note to New Parkway on October 7, 2016.

Fair Value

At September 30, 2016 and December 31, 2015, the aggregate estimated fair values of the Company's notes payable were $915.0 million and $738.1 million, respectively, calculated by discounting the debt's remaining contractual cash flows at estimated rates at which similar loans could have been obtained at those respective dates. The estimate of the current market rate, which is the most significant input in the discounted cash flow calculation, is intended to replicate debt of similar maturity and loan-to-value relationship. These fair value calculations are considered to be Level 2 under the guidelines as set forth in ASC 820, "Fair Value Measurement," as the Company utilizes market rates for similar type loans from third-party brokers.

Other Information

For the three and nine months ended September 30, 2016 and 2015, interest expense was as follows (in thousands):



	Three Months Ended September 30,						Nine Months Ended September 30,
	2016			2015			2016			2015
Total interest incurred	$	8,939		$	8,696		$	25,445		$	25,959
Interest capitalized	(1,229		)	(1,023		)	(2,988		)	(2,740		)
Total interest expense	$	7,710		$	7,673		$	22,457		$	23,219

The real estate and other assets of The American Cancer Society Center (the “ACS Center”) are restricted under the ACS Center loan agreement as they are not available to settle debts of the Company. However, provided that the ACS Center loan has not incurred any uncured event of default, as defined in the loan agreement, the cash flows from the ACS Center, after payments of debt service, operating expenses, and reserves, are available for distribution to the Company.