Notes Payable

9 Months Ended

Sep. 30, 2019

The following table summarizes the terms of notes payable outstanding at September 30, 2019 and December 31, 2018 (in thousands):



Description	Interest Rate	Maturity (1)	2019			2018
2019 Senior Notes, Unsecured	3.95%	2029	$	275,000		$	—
Term Loan, Unsecured	3.22%	2021	250,000			250,000
2017 Senior Notes, Unsecured	3.91%	2025	250,000			250,000
2019 Senior Notes, Unsecured	3.86%	2028	250,000			—
Fifth Third Center	3.37%	2026	141,131			143,497
2019 Senior Notes, Unsecured	3.78%	2027	125,000			—
Colorado Tower	3.45%	2026	117,677			119,427
2017 Senior Notes, Unsecured	4.09%	2027	100,000			100,000
Promenade	4.27%	2022	96,813			99,238
816 Congress	3.75%	2024	80,415			81,676
Credit Facility, Unsecured	3.07%	2023	80,000			—
Legacy Union One	4.24%	2023	66,000			—
Meridian Mark Plaza	6.00%	2020	23,117			23,524
			$	1,855,153		$	1,067,362
Unamortized premium			2,335			—
Unamortized loan costs			(6,671		)	(4,792		)
Total Notes Payable			$	1,850,817		$	1,062,570

(1) Weighted average maturity of notes payable outstanding at September 30, 2019 was 6.3 years.

Credit Facility

The Company has a $1 billion senior unsecured line of credit (the "Credit Facility") that matures on January 3, 2023. The Credit Facility contains financial covenants that require, among other things, the maintenance of an unencumbered interest coverage ratio of at least 1.75; a fixed charge coverage ratio of at least 1.50; a secured leverage ratio of no more than 40%; and an overall leverage ratio of no more than 60%. 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 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 September 30, 2019, the Credit Facility's spread over LIBOR was 1.05%. 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 $920.0 million at September 30, 2019.

Term Loan

The Company has a $250 million unsecured term loan (the "Term Loan") that matures on December 2, 2021. The Term Loan has 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 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 1.00% (the “Base Rate”), plus a spread of between 0.00% and 0.75%, based on leverage. At September 30, 2019, the Term Loan's spread over LIBOR was 1.20%.

Unsecured Senior Notes

The Company has unsecured senior notes of $1.0 billion that were funded in five tranches. The first tranche of $100 million is due in 2027 and has a fixed annual interest rate of 4.09%. The second tranche of $250 million is due in 2025 and has a fixed annual interest rate of 3.91%. The third tranche of $125 million is due in 2027 and has a fixed annual interest rate of 3.78%. The fourth tranche of $250 million is due in 2028 and has a fixed annual interest rate of 3.86%. The fifth tranche of $275 million is due in 2029 and has a fixed annual interest rate of 3.95%.

The unsecured senior notes contain financial covenants that require, among other things, the maintenance of an unencumbered interest coverage ratio of at least 1.75; a fixed charge coverage ratio of at least 1.50; an overall leverage ratio of no more than 60%; and a secured leverage ratio of no more than 40%. The senior notes also contain customary representations and warranties and affirmative and negative covenants, as well as customary events of default.

Other Debt Information

At September 30, 2019 and December 31, 2018, the estimated fair value of the Company’s notes payable were $1.9 billion and $1.1 billion, respectively, calculated by discounting the debt's remaining contractual cash flows at estimated rates at which similar loans could have been obtained at September 30, 2019 and December 31, 2018. 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 three and nine months ended September 30, 2019 and 2018, interest expense was recorded as follows (in thousands):



	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Total interest incurred	$	18,918		$	11,087		$	43,928		$	33,064
Interest capitalized	(4,218		)	(1,536		)	(6,349		)	(4,021		)
Total interest expense	$	14,700		$	9,551		$	37,579		$	29,043