NOTES PAYABLE

The following table summarizes the terms of notes payable outstanding at December 31, 2016 and 2015 (in thousands):



Description	Interest Rate	Maturity	2016			2015
Term Loan, unsecured	1.97%	2021	$	250,000		$	—
Fifth Third Center	3.37%	2026	149,516			—
Credit Facility, unsecured	1.87%	2019	134,000			92,000
One Eleven Congress	6.08%	2017	128,000			—
The American Cancer Society Center	6.45%	2017	127,508			129,342
Colorado Tower	3.45%	2026	120,000			—
Promenade	4.27%	2022	105,342			108,203
San Jacinto	6.05%	2017	101,000			—
816 Congress	3.75%	2024	84,872			85,000
3344 Peachtree	4.75%	2017	78,971			—
Two Buckhead Plaza	6.43%	2017	52,000			—
Meridian Mark Plaza	6.00%	2020	24,522			24,978
The Pointe	4.01%	2019	22,945			—
Post Oak Central	4.26%	2020	—			181,770
191 Peachtree Tower	3.35%	2018	—			100,000
			$	1,378,676		$	721,293
Unamortized premium, net			6,792			—
Unamortized loan costs			(4,548		)	(2,483		)
Total Notes Payable			$	1,380,920		$	718,810

Credit Facility

The Company has a $500 million senior unsecured line of credit (the "Credit Facility") that matures on May 28, 2019. The Credit Facility may be expanded to $750 million at the election of the Company, subject to the receipt of additional commitments from the lenders and other customary conditions.

The Credit Facility contains financial covenants that require, among other things, the maintenance of an unencumbered interest coverage ratio of at least 2.00; a fixed charge coverage ratio of at least 1.50; an overall leverage ratio of no more than 60%; and a minimum shareholders' equity in an amount equal to $1.0 billion, plus a portion of the net cash proceeds from certain equity issuances. The Credit Facility also contains customary representations and warranties and affirmative and negative covenants, as well as customary events of default. The amounts outstanding under the Credit Facility may be accelerated upon the occurrence of any events of default.

The interest rate applicable to the Credit Facility varies according to the Company’s leverage ratio, and may, at the election of the Company, be determined based on either (1) the current London Interbank Offered Rate ("LIBOR") plus a spread of between 1.10% and 1.45%, based on leverage or (2) the greater of Bank of America's prime rate, the federal funds rate plus 0.50% or the one-month LIBOR plus 1.0% (the “Base Rate”), plus a spread of between 0.10% and 0.45%, based on leverage. The Company also pays an annual facility fee on the total commitments under the Credit Facility of between 0.15% and 0.30% based on leverage.

At December 31, 2016, the Credit Facility's spread over LIBOR was 1.1%. The amount that the Company may draw under the Credit Facility is a defined calculation based on the Company's unencumbered assets and other factors. The total available borrowing capacity under the Credit Facility was $365.0 million at December 31, 2016.

Term Loan

During 2016, the Company obtained a $250 million unsecured term loan (the "Term Loan") that matures on December 2, 2021. The Term Loan contains financial covenants consistent with those of the Credit Facility. The interest rate applicable to the Term Loan varies according to the Company’s leverage ratio, and may, at the election of the Company, be determined based on either (1) the current London Interbank Offered Rate ("LIBOR") plus a spread of between 1.20% and 1.70%, based on leverage or (2) the greater of Bank of America's prime rate, the federal funds rate plus 0.50% or the one-month LIBOR plus 1.0% (the “Base Rate”), plus a spread of between 0.00% and 0.75%, based on leverage. At December 31, 2016, the Term Loan's spread over LIBOR was 1.2%.

Debt Associated with the Merger and Spin-Off

In connection with the Merger, the Company assumed $635.2 million of mortgage debt (excluding $272.4 million of mortgage debt assumed and distributed in connection with the Spin-Off) at a weighted average stated interest rate of 5.2%. Subsequent to the Merger and before December 31, 2016, the Company repaid $251.9 million of this assumed mortgage debt, which included the legal defeasance of a $20.2 million mortgage loan. In connection with the Spin-Off, the Company distributed the Post Oak Central mortgage note to New Parkway on October 7, 2016.

In the Merger, the Company assumed $550 million in Parkway unsecured term debt, received proceeds from a $350 million senior secured term loan and repaid the $550 million in unsecured term debt. In the Spin-Off, the Company distributed the $350 million senior secured term loan to New Parkway.

Other Mortgage Loan Information

In 2016, the Company had the following mortgage loan activity:


•	Entered into a $120.0 million non-recourse mortgage loan 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.


•	Entered into a $150.0 million non-recourse mortgage loan 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.


•	Repaid the $98.1 million 191 Peachtree Tower mortgage loan in full in connection with a sale of the building and paid a $3.7 million prepayment penalty.

In 2015, the Company prepaid, without penalty, the $14.2 million The Points at Waterview mortgage note. The note was scheduled to mature on January 1, 2016.

Other Debt Information

The real estate and other assets of The American Cancer Society Center (the “ACS Center”) are restricted under the ACS Center loan agreement in that 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.

The majority of the Company’s consolidated debt is fixed-rate long-term non-recourse mortgage notes payable. Assets with depreciated carrying values of $1.4 billion were pledged as security on the $995 million mortgage notes payable. As of December 31, 2016, the weighted average maturity of the Company’s consolidated debt was 4.25 years.

As a result of the Parkway Transactions, the Company assumed four non-recourse mortgage loans with an aggregate principal amount of $360.0 million that mature in 2017. In addition, the Company has one additional non-recourse mortgage loan with a principal balance of $127.5 million that matures in 2017. While the Company does not currently have the liquid funds available to satisfy the obligations, the Company expects to repay these loans when they mature with a combination of sources of capital including, but not limited to, asset sales, unsecured debt, mortgage loans on these or other properties, or issuance of common equity.

At December 31, 2016 and 2015, the estimated fair value of the Company’s notes payable was $1.4 billion 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 December 31, 2016 and 2015. 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 as the Company utilizes market rates for similar type loans from third party brokers.

For the years ended December 31, 2016, 2015, and 2014, interest was recorded as follows (in thousands):



	2016			2015			2014
Total interest incurred	$	31,347		$	26,314		$	23,735
Interest capitalized	(4,697		)	(3,579		)	(2,752		)
Total interest expense	$	26,650		$	22,735		$	20,983

Debt Maturities

Future principal payments due (including scheduled amortization payments and payments due upon maturity) on the Company's notes payable at December 31, 2016 are as follows (in thousands):



2017	$	495,916
2018	9,348
2019	167,047
2020	33,826
2021	261,256
Thereafter	411,283
	$	1,378,676