Notes Payable

12 Months Ended

Dec. 31, 2019

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



Description	Interest Rate	Maturity	2019			2018
2019 Senior Notes, Unsecured	3.95%	2029	$	275,000		$	—
Credit Facility, Unsecured	2.81%	2023	251,500			—
Term Loan, Unsecured	2.96%	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	140,332			143,497
2019 Senior Notes, Unsecured	3.78%	2027	125,000			—
Terminus 100	5.25%	2023	118,146			—
Colorado Tower	3.45%	2026	117,085			119,427
2017 Senior Notes, Unsecured	4.09%	2027	100,000			100,000
Promenade	4.27%	2022	95,986			99,238
816 Congress	3.75%	2024	79,987			81,676
Terminus 200	3.79%	2023	76,079			—
Legacy Union One	4.24%	2023	66,000			—
Meridian Mark Plaza	6.00%	2020	22,978			23,524
			$	2,218,093		$	1,067,362
Unamortized premium			11,239			—
Unamortized loan costs			(6,357		)	(4,792		)
Total Notes Payable			$	2,222,975		$	1,062,570

Weighted average maturity of notes payable outstanding at December 31, 2019 was 5.5 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 December 31, 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 $748.5 million at December 31, 2019.

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 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 December 31, 2019, the Term Loan's spread over LIBOR was 1.20%.

Unsecured Senior Notes

In June 2019, the Company closed a $650 million private placement of unsecured senior notes, which were issued in three tranches. The first tranche of $125 million has an 8-year maturity and a fixed annual interest rate of 3.78%. The second tranche of $250 million has a 9-year maturity and a fixed annual interest rate of 3.86%. The third tranche of $275 million has a 10-year maturity and a fixed annual interest rate of 3.95%.

The Company has two existing tranches of unsecured senior notes, totaling $350 million, that were funded in two 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 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.

Mortgage Loan Information

In connection with the purchase of its partner's interest in TOH, the Company consolidated TOH and recorded the assets and liabilities as fair value, including the venture's mortgage notes. Terminus 100 has a $118.1 million mortgage note, which is due in 2023 and has a 5.25% fixed rate. Terminus 200 has a $76.1 million mortgage note, which is due in 2023 and has a 3.79% fixed rate.

In 2018, the Company repaid in full the $22.2 million The Pointe mortgage note, without penalty.

As of December 31, 2019, the Company had $716.6 million outstanding on eight non-recourse mortgage notes. Assets with depreciated carrying values of $1.1 billion were pledged as security on these mortgage notes payable.

In February 2020, the Company prepaid in full the $23.0 million Meridian Mark Plaza mortgage note, without penalty.

Debt Associated with the Merger

In connection with the Merger, the Company assumed and immediately repaid $679.0 million in unsecured variable rate debt of TIER with proceeds from its Credit Facility. The Company also assumed the Legacy Union One mortgage loan with a $66.0 million principal balance and a fixed interest rate of 4.24%. Subsequent to the Merger, the Company repaid the majority of the Credit Facility borrowings related to the Merger with proceeds from the $650 million private placement of unsecured senior notes discussed above.

Other Debt Information

At December 31, 2019 and 2018, the estimated fair value of the Company’s notes payable was $2.3 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 December 31, 2019 and 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 years ended December 31, 2019, 2018, and 2017, interest was recorded as follows (in thousands):



	2019			2018			2017
Total interest incurred	$	65,182		$	44,332		$	42,767
Interest capitalized	(11,219		)	(4,902		)	(9,243		)
Total interest expense	$	53,963		$	39,430		$	33,524

Debt Maturities

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



2020	$	38,699
2021	266,369
2022	102,401
2023	504,655
2024	79,087
Thereafter	1,226,882
	$	2,218,093