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Notes Payable
 9 Months Ended
Sep. 30, 2022
Debt Disclosure [Abstract]  
NOTES PAYABLE NOTES PAYABLE
The following table summarizes the terms of notes payable outstanding at September 30, 2022 and December 31, 2021 ($ in thousands):
DescriptionInterest Rate (1)Maturity (2)20222021
Unsecured Notes:
Term Loan5.38%2024$350,000 $350,000 
Credit Facility3.98%2027301,200 228,500 
Senior Note3.95%2029275,000 275,000 
Senior Note3.91%2025250,000 250,000 
Senior Note3.86%2028250,000 250,000 
Senior Note3.78%2027125,000 125,000 
Senior Note4.09%2027100,000 100,000 
1,651,200 1,578,500 
Secured Mortgage Notes:
Fifth Third Center 3.37%2026131,055 133,672 
Colorado Tower3.45%2026110,210 112,150 
Terminus 1005.25%2023109,073 111,678 
Promenade Tower4.27%202286,295 89,052 
Domain 103.75%202475,000 76,412 
Terminus 2003.79%202371,172 72,561 
Legacy Union One4.24%202366,000 66,000 
648,805 661,525 
   $2,300,005 $2,240,025 
Unamortized premium998 3,910 
Unamortized loan costs(5,014)(6,426)
Total Notes Payable$2,295,989 $2,237,509 

(1) Interest rate as of September 30, 2022.
(2) Weighted average maturity of notes payable outstanding at September 30, 2022 was 3.6 years.
Credit Facility
Through May 2, 2022, the Company had a $1 billion senior unsecured line of credit (the "Prior Facility") that was scheduled to mature on January 3, 2023. The Prior Facility contained financial covenants that required, among other things, the maintenance of unencumbered interest coverage ratio of at least 1.75x; a fixed charge coverage ratio of at least 1.50x; a secured leverage ratio of no more than 40%; and an overall leverage ratio of no more than 60%. The Prior 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 Prior Facility varied according to the Company's leverage ratio and was, at the election of the Company, determined based on either (1) 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% and 0.45%, based on leverage.
On May 2, 2022, the Company entered into a Fifth Amended and Restated Credit Agreement (the "Credit Facility") under which the Company may borrow up to $1 billion if certain conditions are satisfied. The Credit Facility recasts the Prior Facility by, among other things, extending the maturity date from January 3, 2023, to April 30, 2027, and reducing certain per annum variable interest rate spreads and other fees. The Credit Facility contains financial covenants consistent with those of the Prior Facility, with the exception of an increase in the secured leverage ratio to no more than 50%.
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 Daily SOFR or Term SOFR, plus a SOFR adjustment of 0.10% ("Adjusted SOFR") and a spread of between 0.90% and 1.40%, or (2) the greater of Bank of America's prime rate, the federal funds rate plus 0.50%, Term SOFR, plus a SOFR adjustment of 0.10% and 1.00%, or 1.00%, plus a spread of between 0.00% and 0.40%, based on leverage. In addition to the interest rate, the Credit Facility is also subject to a facility fee of 0.15% to 0.30%, depending on leverage, on the entire $1 billion capacity.
At September 30, 2022, the Credit Facility's interest rate spread over Adjusted SOFR was 0.90% and the facility fee spread was 0.15%. The amount that the Company may draw under the New 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 $698.8 million at September 30, 2022. The amounts outstanding under the Credit Facility may be accelerated upon the occurrence of any events of default.
2021 Term Loan
On June 28, 2021, the Company entered into an Amended and Restated Term Loan Agreement (the "2021 Term Loan") that amended the former term loan agreement. Under the 2021 Term Loan, the Company has borrowed $350 million that matures on August 30, 2024 with four consecutive options to extend the maturity date for an additional 180 days. On September 19, 2022, the Company entered into the First Amendment to the 2021 Term Loan. This amendment aligns covenants and available interest rates, including the addition of SOFR, to that of the Credit Facility. Under the terms of this First Amendment the interest rate applicable to the 2021 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 Daily SOFR or Term SOFR, plus a SOFR adjustment of 0.10% ("Adjusted SOFR") and a spread of between 1.05% and 1.65%, or (2) the greater of Bank of America's prime rate, the federal funds rate plus 0.50%, Term SOFR, plus a SOFR adjustment of 0.10% and 1.00%, or 1.00%, plus a spread of between 0.05% and 0.65%, based on leverage. On September 19, 2022, the Company provided notice of our election of the Daily SOFR Rate Loan provisions.
On September 27, 2022, the Company entered into a floating-to-fixed interest rate swap with respect to the $350 million 2021 Term Loan through the maturity date of August 30, 2024. This swap effectively fixed the underlying SOFR rate at 4.23%. Please see Note 8 for more information on this cash flow hedge.
At September 30, 2022, the 2021 Term Loan's spread over the Adjusted SOFR rate was 1.05%.
2022 Term Loan
Subsequent to quarter end, on October 3, 2022, the Company entered into a Delayed Draw Term Loan Agreement (the "2022 Term Loan") and borrowed the full $400 million available under the loan. The loan matures on March 3, 2025 with four consecutive options to extend the maturity date for an additional six months. The interest rate provisions are the same as the 2021 Term Loan, and the covenants are the same as the Credit Facility.
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 are consistent with those of our Credit Facility. The senior notes also contain customary representations and warranties and affirmative and negative covenants, as well as customary events of default.
Secured Mortgage Notes
As of September 30, 2022, the Company had $648.8 million outstanding on seven non-recourse mortgage notes. All interest rates on the secured mortgage notes are fixed. Assets with depreciated carrying values of $1.2 billion were pledged as security, respectively, on these mortgage notes payable.
Subsequent to quarter end, the Company paid off in full its Legacy Union One and Promenade Tower mortgages, without penalty.
Subsequent to quarter end, the Company completed the application process, including paying a deposit to the lender, to extend the existing mortgages on the Company's two Terminus properties in Atlanta with the current lender. The maturities will be extended from January 2023 to January 2031, the combined principal will increase to $221.0 million, and the interest rate is 6.34%. This extension is expected to close before December 31, 2022.
Other Debt Information
The Company is in compliance with all of the covenants related to its unsecured and secured debt.
At September 30, 2022 and December 31, 2021, the estimated fair value of the Company’s notes payable was $2.2 billion and $2.3 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, 2022 and December 31, 2021. 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, 2022 and 2021, interest expense was recorded as follows (in thousands):
Three Months Ended September 30,Nine Months Ended September 30,
2022202120222021
Total interest incurred$22,406 $18,181 $61,522 $54,775 
Interest capitalized(4,026)(1,472)(11,068)(4,202)
Total interest expense$18,380 $16,709 $50,454 $50,573