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Notes Payable
12 Months Ended
Dec. 31, 2018
Debt Disclosure [Abstract]  
NOTES PAYABLE
NOTES PAYABLE
The following table summarizes the terms of notes payable outstanding at December 31, 2018 and 2017 (in thousands):
Description
 
Interest Rate
 
Maturity *
 
2018
 
2017
Term Loan, unsecured
 
3.70%
 
2021
 
$
250,000

 
$
250,000

Senior Notes, unsecured
 
3.91%
 
2025
 
250,000

 
250,000

Fifth Third Center
 
3.37%
 
2026
 
143,497

 
146,557

Colorado Tower
 
3.45%
 
2026
 
119,427

 
120,000

Senior Notes, unsecured
 
4.09%
 
2027
 
100,000

 
100,000

Promenade
 
4.27%
 
2022
 
99,238

 
102,355

816 Congress
 
3.75%
 
2024
 
81,676

 
83,304

Meridian Mark Plaza
 
6.00%
 
2020
 
23,524

 
24,038

Credit Facility, unsecured
 
3.55%
 
2023
 

 

The Pointe
 
4.01%
 
2019
 

 
22,510

 
 
 
 
 
 
$
1,067,362

 
$
1,098,764

Unamortized premium, net
 
 
 
 
 

 
219

Unamortized loan costs
 
 
 
 
 
(4,792
)
 
(5,755
)
Total Notes Payable
 
 
 
 
 
$
1,062,570

 
$
1,093,228



*Weighted average maturity of notes payable outstanding at December 31, 2018 was 5.7 years.
Credit Facility
Through January 2, 2018, 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.
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, among other things, increasing the size from $500 million to $1 billion; extending the maturity date from May 28, 2019 to January 3, 2023; providing for the expansion of the New Facility by an additional $500 million, subject to receipt of additional commitments from lenders and other customary conditions; and decreasing the Consolidated Unencumbered Interest Coverage ratio from 2.0 to 1.75.
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 a spread of between 1.05% and 1.45%, 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% or 0.45%, based on leverage.
At December 31, 2018, the New Credit Facility's spread over LIBOR was 1.05%. At December 31, 2018, the Company had no amounts drawn under the New Credit Facility and had the ability to borrow $998 million of the $1 billion available, with $2 million utilized by an outstanding letter of credit.
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 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, 2018, 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 million 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.
Mortgage Loan Information
In 2018, the Company repaid in full, without penalty, the $22.2 million The Pointe mortgage note.
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.
As of December 31, 2018, the Company had $467.3 million outstanding on five non-recourse mortgage notes. Assets with depreciated carrying values of $505.3 million were pledged as security on these mortgage notes payable.
Other Debt Information
At December 31, 2018 and 2017, the estimated fair value of the Company’s notes payable was $1.1 billion, calculated by discounting the debt's remaining contractual cash flows at estimated rates at which similar loans could have been obtained at December 31, 2018 and 2017. 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, 2018, 2017, and 2016, interest was recorded as follows (in thousands):
 
2018
 
2017
 
2016
Total interest incurred
$
44,332

 
$
42,767

 
$
31,347

Interest capitalized
(4,902
)
 
(9,243
)
 
(4,697
)
Total interest expense
$
39,430

 
$
33,524

 
$
26,650



Debt Maturities
Future principal payments due (including scheduled amortization payments and payments due upon maturity) on the Company's notes payable at December 31, 2018 are as follows (in thousands): 
2019
$
10,997

2020
33,825

2021
261,258

2022
97,042

2023
8,274

Thereafter
655,966

 
$
1,067,362