NOTES PAYABLE

The following table summarizes the terms of notes payable outstanding at December 31, 2017 and 2016 (in thousands):



Description	Interest Rate	Maturity *	2017			2016
Term Loan, unsecured	2.76%	2021	$	250,000		$	250,000
Senior Notes, unsecured	3.91%	2025	250,000			—
Fifth Third Center	3.37%	2026	146,557			149,516
Colorado Tower	3.45%	2026	120,000			120,000
Promenade	4.27%	2022	102,355			105,342
Senior Notes, unsecured	4.09%	2027	100,000			—
816 Congress	3.75%	2024	83,304			84,872
Meridian Mark Plaza	6.00%	2020	24,038			24,522
The Pointe	4.01%	2019	22,510			22,945
Credit Facility, unsecured	2.66%	2019	—			134,000
One Eleven Congress	6.08%	2017	—			128,000
The American Cancer Society Center	6.45%	2017	—			127,508
San Jacinto	6.05%	2017	—			101,000
3344 Peachtree	4.75%	2017	—			78,971
Two Buckhead Plaza	6.43%	2017	—			52,000
			$	1,098,764		$	1,378,676
Unamortized premium, net			219			6,792
Unamortized loan costs			(5,755		)	(4,548		)
Total Notes Payable			$	1,093,228		$	1,380,920

*Weighted average maturity of notes payable outstanding at December 31, 2017 was 6.7 years.

Credit Facility

As of December 31, 2017, the Company had a $500 million senior unsecured line of credit (the "Credit Facility") that was scheduled to mature on May 28, 2019. The Credit Facility contained financial covenants that required, 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 contained customary representations and warranties and affirmative and negative covenants, as well as customary events of default.

The interest rate applicable to the Credit Facility varied according to the Company’s leverage ratio, and was, at the election of the Company, 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 paid 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, 2017, the Credit Facility's spread over LIBOR was 1.1%. The amount that the Company had available to be drawn under the Credit Facility was a defined calculation based on the Company's unencumbered assets and other factors. The total available borrowing capacity under the Credit Facility was $499.0 million at December 31, 2017.

New Credit Facility

On January 3, 2018, the Company entered into a Fourth Amended and Restated Credit Agreement (the "New Credit Facility") under which the Company may borrow up to $1 billion if certain conditions are satisfied.

The New Credit Facility recasts the Credit Facility by:


•	Increasing the size from $500 million to $1 billion;


•	Extending the maturity date from May 28, 2019 to January 3, 2023;


•	Reducing certain per annum variable interest rate spreads and other fees;


•	Providing for the expansion of the New Facility by an additional $500 million for total availability of $1.5 billion, subject to receipt of additional commitments from lenders and other customary conditions;


•	Decreasing the minimum spread over LIBOR 1.10% to 1.05%;


•	Removing the $90 million investment entity cap;


•	Removing the Unsecured Debt Limit and replacing it with an unsecured leverage ratio limit;


•	Removing the Minimum Shareholder's Equity requirement;


•	Decreasing the Consolidated Unencumbered Interest Coverage ratio from 2.0 to 1.75; and


•	Removing the Consolidated Secured Recourse Debt Limitation and replacing it with maintaining a Secured Leverage Ratio of 40% or less.

The New Credit Facility did not change the other financial covenants from those of the Credit Facility.

The interest rate applicable to the New 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 LIBOR plus the applicable spread detailed below, 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 the applicable spread detailed below. Fees on letters of credit issued under the New Credit Facility are payable at an annual rate equal to the spread applicable to loans bearing interest based on LIBOR. The Company also pays an annual facility fee on the total commitments under the New Credit Facility. The pricing spreads and the facility fee under the New Credit Facility are as follows:



Leverage Ratio	Applicable % Spread for LIBOR Loans	Applicable % Spread for Base Rate Loans	Annual Facility Fee %
≤ 35%	1.05%	0.10%	0.15%
> 35% but ≤ 40%	1.10%	0.15%	0.20%
> 40% but ≤ 45%	1.20%	0.20%	0.20%
> 45% but ≤ 50%	1.20%	0.20%	0.25%
> 50%	1.45%	0.45%	0.30%

The New Credit Facility also provides for alternative pricing spreads and facility fees which would be available to the Company on any date after it obtains an investment grade credit rating.

Term Loan

The Company has a $250 million unsecured term loan (the "Term Loan") that matures on December 2, 2021. Through January 21, 2018, the Term Loan contained financial covenants substantially consistent with those of the Credit Facility. On January 22, 2018, the Term Loan was amended to make the financial covenants consistent with those of the New 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, 2017, the Term Loan's spread over LIBOR was 1.2%.

Unsecured Senior Notes

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

Mortgage Loan Information

In 2017, the Company repaid in full, without penalty, the $128.0 million One Eleven Congress mortgage note, the $101.0 million San Jacinto Center mortgage note, the $52.0 million Two Buckhead Plaza mortgage note, and the $77.9 million 3344 Peachtree mortgage note. In connection with these repayments, the Company recorded gains on extinguishment of debt of $2.6 million, which represented the unamortized premium recorded on the notes at the time of the Merger.

In 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.

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.

As of December 31, 2017, the Company had $498.8 million outstanding on six non-recourse mortgage notes. Assets with depreciated carrying values of $585.7 million were pledged as security on these mortgage notes payable.

Other Debt Information

At December 31, 2017 and 2016, the estimated fair value of the Company’s notes payable was $1.1 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 December 31, 2017 and 2016. 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, 2017, 2016, and 2015, interest was recorded as follows (in thousands):



	2017			2016			2015
Total interest incurred	$	42,767		$	31,347		$	26,314
Interest capitalized	(9,243		)	(4,697		)	(3,579		)
Total interest expense	$	33,524		$	26,650		$	22,735

Debt Maturities

Future principal payments due (including scheduled amortization payments and payments due upon maturity) on the Company's notes payable at December 31, 2017 are as follows (in thousands):



2018	$	9,347
2019	33,052
2020	33,824
2021	261,258
2022	97,042
Thereafter	664,241
	$	1,098,764