NOTES PAYABLE

The following table details the terms and amounts of the Company’s outstanding notes payable at June 30, 2017 and December 31, 2016 ($ in thousands):



Description	Interest Rate		Maturity	June 30, 2017			December 31, 2016
Term Loan, unsecured	2.42	%	2021	$	250,000		$	250,000
Fifth Third Center	3.37	%	2026	148,049			149,516
Colorado Tower	3.45	%	2026	120,000			120,000
Promenade	4.27	%	2022	103,864			105,342
Senior Note, unsecured	4.09	%	2027	100,000			—
Credit Facility, unsecured	2.32	%	2019	94,000			134,000
816 Congress	3.75	%	2024	84,095			84,872
3344 Peachtree	4.75	%	2017	77,928			78,971
Meridian Mark Plaza	6.00	%	2020	24,284			24,522
The Pointe	4.01	%	2019	22,730			22,945
One Eleven Congress	6.08	%	2017	—			128,000
The ACS Center	6.45	%	2017	—			127,508
San Jacinto Center	6.05	%	2017	—			101,000
Two Buckhead Plaza	6.43	%	2017	—			52,000
				1,024,950			1,378,676
Unamortized premium, net				750			6,792
Unamortized loan costs				(6,081		)	(4,548		)
Total Notes Payable				$	1,019,619		$	1,380,920

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 June 30, 2017, 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 $405 million at June 30, 2017.

Term Loan

The Company has a $250 million senior 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 June 30, 2017, the Term Loan's spread over LIBOR was 1.2%.

Unsecured Senior Notes

In April 2017, the Company closed a $350 million private placement of senior unsecured notes, which were issued in two tranches. The first tranche of $100 million was issued in April 2017, has a 10-year maturity, and has a fixed annual interest rate of 4.09%. The second tranche of $250 million was issued in July 2017, has an 8-year maturity, and has a fixed annual interest rate of 3.91%.

The senior unsecured notes contain 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 $1.9 billion, plus a portion of the net cash proceeds from certain equity issuances. The senior notes also contain customary representations and warranties and affirmative and negative covenants, as well as customary events of default. The amounts outstanding under the senior notes may be accelerated upon the occurrence of any events of default.

Fair Value

At June 30, 2017 and December 31, 2016, the aggregate estimated fair values of the Company's notes payable were $1.0 billion and $1.4 billion, 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 six months ended June 30, 2017 and 2016, interest expense was as follows (in thousands):



	Three Months Ended June 30, 2017						Six Months Ended June 30,
	2017			2016			2017			2016
Total interest incurred	$	10,741		$	8,350		$	22,072		$	16,506
Less interest - discontinued operations	—			(1,965		)	—			(3,940		)
Interest capitalized	(2,218		)	(1,016		)	(3,808		)	(1,758		)
Total interest expense	$	8,523		$	5,369		$	18,264		$	10,808

In April 2017, the Company repaid in full, without penalty, the $128.0 million One Eleven Congress mortgage note and the $101.0 million San Jacinto Center mortgage note. In May 2017, the Company repaid in full, without penalty, the $52.0 million Two Buckhead Plaza mortgage note. In connection with these repayments, the Company recorded gains on extinguishment of debt of $2.2 million which represented the unamortized premium recorded on the notes at the time of the Merger.

In June 2017, The Company sold the ACS Center. A portion of the proceeds from the sale were used to repay the $127.0 million mortgage note on the associated property, and the Company recorded a loss on extinguishment of debt of $376,000 which represented the remaining unamortized loan costs and other costs associated with repaying the debt.

Subsequent to quarter end, in July 2017, the Company repaid in full, without penalty, the $77.9 million 3344 Peachtree mortgage note. In connection with the repayment, the Company expects to record a gain on extinguishment of debt of $429,000 which represents the unamortized premium recorded on the note at the time of the Merger.