Notes Payable, Interest Expense and Commitments And Contingencies

6 Months Ended

Jun. 30, 2011

Notes Payable, Interest Expense And Commitments And Contingencies [Abstract]

NOTES PAYABLE, INTEREST EXPENSE AND COMMITMENTS AND CONTINGENCIES

2. NOTES PAYABLE, INTEREST EXPENSE AND COMMITMENTS AND CONTINGENCIES

The following table summarizes the terms and amounts of the Company’s notes payable outstanding at June 30, 2011 and December 31, 2010 (in thousands):

		Term/
		Amortization						December 31,
Description	Interest Rate	Period (Years)		Maturity		June 30, 2011		2010
Terminus 100 mortgage note	5.25%		12/30		1/1/23	$	139,190	$	140,000
The American Cancer Society Center mortgage note (interest only until October 1, 2011)	6.45%		10/30		9/1/17		136,000		136,000
Credit Facility, unsecured (see note)	LIBOR + 1.75% to 2.25%		5/N/A		8/29/12		125,400		105,400
Meridian Mark Plaza mortgage note	6.00%		10/30		8/1/20		26,725		26,892
100/200 North Point Center East mortgage note	5.39%		5/30		6/1/12		24,656		24,830
Lakeshore Park Plaza mortgage note (see note)	5.89%		4/25		8/1/12		17,356		17,544
The Points at Waterview mortgage note	5.66%		10/25		1/1/16		16,367		16,592
600 University Park Place mortgage note	7.38%		10/30		8/10/11		12,163		12,292
Callaway Gardens	4.13%		N/A		11/18/13		177		173
333/555 North Point Center East mortgage note (see note)	7.00%		10/25		11/1/11		—		26,412
Handy Road Associates, LLC (see note)	Prime + 1%, but not < 6%		5/N/A		3/30/2011		—		3,374
						$	498,034	$	509,509

The Company’s Credit Facility bears interest at the London Interbank Offered Rate (“LIBOR”) plus a spread, based on the Company’s leverage ratio, as defined in the Credit Facility. At June 30, 2011, the spread over LIBOR under the Credit Facility was 2.0%. 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. Total borrowing capacity under the Credit Facility was $345.4 million at June 30, 2011. In June 2011, the Company notified the bank of its intention to exercise a one-year extension option under the Credit Facility, which will change the maturity date to August 29, 2012.

On June 1, 2011, the Company prepaid, without penalty, the 333/555 North Point Center East mortgage note. On July 1, 2011, the Company prepaid, without penalty, the Lakeshore Park Plaza mortgage note.

The Company was released of its obligation under the Handy Road Associates, LLC (“Handy Road”) mortgage note through foreclosure in May 2011.

Fair Value

At June 30, 2011 and December 31, 2010, the estimated fair values of the Company’s notes payable were approximately $509.5 million and $521.8 million, respectively, calculated by discounting future cash flows at estimated rates at which similar loans could have been obtained at June 30, 2011 and December 31, 2010. This fair value calculation is considered to be a Level 2 calculation under the guidelines as set forth in ASC 820, “Fair Value Measurements and Disclosures,” as the Company utilizes market rates for similar type loans from third party brokers.

Interest Rate Swap Agreements

In 2010, the Company had an interest rate swap agreement to manage its interest rate risk associated with its floating-rate, LIBOR-based borrowings. This swap expired in October 2010. Also during 2010, the Company had an interest rate swap agreement to manage interest rate risk under its former Term Facility, which swap was terminated in July 2010. The changes in fair value of the interest rate swap agreements were recorded in Accumulated Other Comprehensive Loss on the Balance Sheets.

Other Debt Information

The real estate and other assets of The American Cancer Society Center (the “ACS Center”) are restricted under the ACS Center loan agreement in that they are not available to settle debts of the Company. However, provided that the ACS Center loan has not incurred any uncured event of default, as defined in the loan agreement, the cash flows from the ACS Center, after payments of debt service, operating expenses and reserves, are available for distribution to the Company.

At June 30, 2011, the Company had outstanding letters of credit and performance bonds of $6.1 million. As a lessor, the Company has $15.2 million in future obligations under leases to fund tenant improvements and other funding commitments as of June 30, 2011. As a lessee, the Company has future obligations under ground and office leases of approximately $16.4 million at June 30, 2011.

Litigation

The Company is subject to various legal proceedings, claims and administrative proceedings arising in the ordinary course of business, some of which are expected to be covered by liability insurance. Management makes assumptions and estimates concerning the likelihood and amount of any potential loss relating to these matters using the latest information available. The Company records a liability for litigation if an unfavorable outcome is probable and the amount of loss or range of loss can be reasonably estimated. If an unfavorable outcome is probable and a reasonable estimate of the loss is a range, the Company accrues the best estimate within the range. If no amount within the range is a better estimate than any other amount, the Company accrues the minimum amount within the range. If an unfavorable outcome is probable but the amount of the loss cannot be reasonably estimated, the Company discloses the nature of the litigation and indicates that an estimate of the loss or range of loss cannot be made. If an unfavorable outcome is reasonably possible and the estimated loss is material, the Company discloses the nature and estimate of the possible loss of the litigation. The Company does not disclose information with respect to litigation where an unfavorable outcome is considered to be remote. Based on current expectations, such matters, both individually and in the aggregate, are not expected to have a material adverse effect on the liquidity, results of operations, business or financial condition of the Company.