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Notes Payable
 3 Months Ended
Mar. 31, 2023
Debt Disclosure [Abstract]  
NOTES PAYABLE NOTES PAYABLE
The following table summarizes the terms of notes payable outstanding at March 31, 2023 and December 31, 2022 ($ in thousands):
DescriptionInterest Rate (1)Maturity (2)20232022
Unsecured Notes:
Credit Facility5.80%April 2027$172,300 $56,600 
Term Loan5.95%March 2025400,000 400,000 
Term Loan5.38%August 2024350,000 350,000 
Senior Note3.95%July 2029275,000 275,000 
Senior Note3.91%July 2025250,000 250,000 
Senior Note3.86%July 2028250,000 250,000 
Senior Note3.78%July 2027125,000 125,000 
Senior Note4.09%July 2027100,000 100,000 
1,922,300 1,806,600 
Secured Mortgage Notes:
Terminus (3)6.34%January 2031221,000 221,000 
Fifth Third Center 3.37%October 2026129,276 130,168 
Colorado Tower3.45%September 2026108,888 109,552 
Domain 103.75%November 202474,037 74,521 
533,201 535,241 
   $2,455,501 $2,341,841 
Unamortized loan costs(6,559)(7,235)
Total Notes Payable$2,448,942 $2,334,606 

(1) Interest rate as of March 31, 2023.
(2) Weighted average maturity of notes payable outstanding at March 31, 2023 was 3.8 years.
(3) Represents $123.0 million and $98.0 million non-cross-collateralized mortgages secured by the Terminus 100 and Terminus 200 buildings, respectively.
Credit Facility
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 that require, 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 50%; and an overall leverage ratio of no more than 60%.
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 (i) Bank of America's prime rate, (ii) the federal funds rate plus 0.50%, (iii) Term SOFR, plus a SOFR adjustment of 0.10% and 1.00%, or (iv) 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 March 31, 2023, 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 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 $827.7 million at March 31, 2023. The amounts outstanding under the Credit Facility may be accelerated upon the occurrence of any events of default.
The Credit Facility replaced a $1 billion prior facility that was set to expire in January 2023. The rate paid under the prior facility from January 1, 2022 through May 1, 2022 was LIBOR plus 1.05%.
Term Loans
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. Subsequent to quarter end, the Company entered into a floating-to-fixed rate swap with respect to $200 million of the $400 million 2022 Term Loan effective April 19, 2023 through the maturity date of March 3, 2025. This swap fixed the underlying SOFR rate at 4.298%.
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 (i) Bank of America's prime rate, (ii) the federal funds rate plus 0.50%, (iii) Term SOFR, plus a SOFR adjustment of 0.10% and 1.00%, (iv) 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 4.234%. Please see note 7 for more information on this cash flow hedge.
At March 31, 2023, the 2021 and 2022 Term Loan's spread over Adjusted SOFR rate was 1.05%.
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, with the exception of 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.
Secured Mortgage Notes
In December 2022, the Company refinanced mortgages on the Company's two Terminus properties in Atlanta with the existing lender. Under the new mortgages, the maturities were extended from January 2023 to January 2031, the combined principal increased to $221.0 million, and the interest rate is now 6.34%. These mortgages are not cross-collateralized nor cross-defaulted.
In October 2022, the Company paid off, in full, its Legacy Union One and Promenade Tower mortgages.
As of March 31, 2023, the Company had $533.2 million outstanding on five non-recourse mortgage notes. All interest rates on the secured mortgage notes are fixed. Assets with depreciated carrying values of $902.2 million were pledged as security on these mortgage notes payable.
Other Debt Information
The Company is in compliance with all of the covenants related to its unsecured and secured debt.
At March 31, 2023 and December 31, 2022, the estimated fair value of the Company’s notes payable was $2.3 billion and $2.2 billion, respectively, calculated by discounting the debt's remaining contractual cash flows at estimated current market rates at which similar loans could have been obtained at March 31, 2023 and December 31, 2022. The estimate of the current market rates, which is the most significant input in the discounted cash flow calculation, is intended to replicate debt of similar maturity and loan-to-value relationship. These fair value calculations are considered to be Level 2 under the guidelines as set forth in ASC 820, as the Company utilizes market rates for similar type loans from third party brokers.
For the three months ended March 31, 2023 and 2022, interest expense was recorded as follows ($ in thousands):
Three Months Ended March 31,
20232022
Total interest incurred$30,121 $18,976 
Interest capitalized(5,091)(3,451)
Total interest expense$25,030 $15,525