NOTE 11. Debt

Bank Line of Credit and Term Loans

The Company’s $2.0 billion unsecured revolving line of credit facility (the “Facility”) matures on March 31, 2018 and contains a one-year extension option. Borrowings under the Facility accrue interest at LIBOR plus a margin that depends upon the Company’s credit ratings. The Company pays a facility fee on the entire revolving commitment that depends on its credit ratings. Based on the Company’s credit ratings at December 31, 2016, the margin on the Facility was 1.05%, and the facility fee was 0.20%. The Facility also includes a feature that allows the Company to increase the borrowing capacity by an aggregate amount of up to $500 million, subject to securing additional commitments from existing lenders or new lending institutions. At December 31, 2016, the Company had $900 million, including £372 million ($460 million), outstanding under the Facility with a weighted average effective interest rate of 1.82%.

On July 30, 2012, the Company entered into a credit agreement with a syndicate of banks for a £137 million ($169 million at December 31, 2016) four-year unsecured term loan (the “2012 Term Loan”). In July 2016, the Company exercised a one-year extension option on the 2012 Term Loan. Based on the Company’s credit ratings at December 31, 2016, the 2012 Term Loan accrues interest at a rate of GBP LIBOR plus 1.40%.

On January 12, 2015, the Company entered into a credit agreement with a syndicate of banks for a £220 million ($272 million at December 31, 2016) four-year unsecured term loan (the “2015 Term Loan”) that accrues interest at a rate of GBP LIBOR plus 1.15%, subject to adjustments based on the Company’s credit ratings (the 2012 and 2015 Term Loans are collectively, the “Term Loans”). Concurrently, the Company entered into a three-year interest rate swap contract that fixes the interest rate of the 2015 Term Loan (1.97% at December 31, 2016). Proceeds from the 2015 Term Loan were used to repay £220 million that partially funded the November 2014 HC-One Facility (see Note 7). The 2015 Term Loan contains a one-year committed extension option.

The Facility and Term Loans contain certain financial restrictions and other customary requirements, including cross-default provisions to other indebtedness. Among other things, these covenants, using terms defined in the agreements, (i) limit the ratio of Consolidated Total Indebtedness to Consolidated Total Asset Value to 60%, (ii) limit the ratio of Secured Debt to Consolidated Total Asset Value to 30%, (iii) limit the ratio of Unsecured Debt to Consolidated Unencumbered Asset Value to 60% and (iv) require a minimum Fixed Charge Coverage ratio of 1.5 times. The Facility and Term Loans also require a Minimum Consolidated Tangible Net Worth of $6.5 billion at December 31, 2016, which requirement was reduced, via an amendment to the Facility, effective upon the completion of the Spin-Off of QCP on October 31, 2016. At December 31, 2016, the Company was in compliance with each of these restrictions and requirements of the Facility and Term Loans.

Senior Unsecured Notes

At December 31, 2016, the Company had senior unsecured notes outstanding with an aggregate principal balance of $7.2 billion. The senior unsecured notes contain certain covenants including limitations on debt, maintenance of unencumbered assets, cross-acceleration provisions and other customary terms. The Company believes it was in compliance with these covenants at December 31, 2016.

The following table summarizes the Company’s senior unsecured notes issuances for the periods presented (dollars in thousands):


	Issuance
Period	Amount		Coupon Rate			Maturity Date		Net Proceeds
Year ended December 31, 2015:
January 21, 2015	$	600,000		3.400	%		2025	$	591,000
May 20, 2015	$	750,000		4.000	%		2025	$	739,000
December 1, 2015	$	600,000		4.000	%		2022	$	594,000

The following table summarizes the Company’s senior unsecured notes payoffs for the periods presented (dollars in thousands):


Period	Amount		Coupon Rate
Year ended December 31, 2016:
February 1, 2016	$	500,000		3.750	%
September 15, 2016	$	400,000		6.300	%
November 30, 2016	$	500,000		6.000	%
November 30, 2016	$	600,000		6.700	%
Year ended December 31, 2015:
March 1, 2015	$	200,000		6.000	%
June 8, 2015	$	200,000		7.072	%

Mortgage Debt

At December 31, 2016, the Company had $619 million in aggregate principal of mortgage debt outstanding, which is secured by 36 healthcare facilities (including redevelopment properties) with a carrying value of $899 million.

Mortgage debt generally requires monthly principal and interest payments, is collateralized by real estate assets and is generally non-recourse. Mortgage debt typically restricts transfer of the encumbered assets, prohibits additional liens, restricts prepayment, requires payment of real estate taxes, requires maintenance of the assets in good condition, requires maintenance of insurance on the assets and includes conditions to obtain lender consent to enter into or terminate material leases. Some of the mortgage debt is also cross-collateralized by multiple assets and may require tenants or operators to maintain compliance with the applicable leases or operating agreements of such real estate assets.

Debt Maturities

The following table summarizes the Company’s stated debt maturities and scheduled principal repayments at December 31, 2016 (dollars in thousands):


					Senior Unsecured Notes(3)				Mortgage Debt(4)
	Line of						Interest				Interest
Year	Credit(1)		Term Loans(2)		Amount		Rate		Amount		Rate		Total(5)
2017	$	—	$	169,305	$	250,000	5.72	%	$	479,795	3.14	%	$	899,100
2018		899,718		—		—	—	%		3,641	—	%		903,359
2019		—		271,876		450,000	3.95	%		3,839	—	%		725,715
2020		—		—		800,000	2.81	%		3,907	5.11	%		803,907
2021		—		—		1,200,000	5.54	%		11,277	5.38	%		1,211,277
Thereafter		—		—		4,500,000	4.27	%		116,481	4.13	%		4,616,481
		899,718		441,181		7,200,000	4.34	%		618,940	3.40	%		9,159,839
Discounts and debt costs, net		—		(1,119)		(66,462)				4,852				(62,729)
	$	899,718	$	440,062	$	7,133,538			$	623,792			$	9,097,110

(1)

Includes £372 million translated into USD.

(2)

Represents £357 million translated into USD.

(3)

Interest rates on the notes ranged from 2.79% to 6.88% with a weighted average effective rate of 4.34% and a weighted average maturity of six years.

(4)

Interest rates on the mortgage debt ranged from 3.02% to 7.50% with a weighted average effective interest rate of 3.40% and a weighted average maturity of six years.

(5)

Excludes $92 million of other debt that represents Life Care Bonds and Demand Notes that have no scheduled maturities.

Other Debt

At December 31, 2016, the Company had $64 million of non-interest bearing life care bonds at two of its continuing care retirement communities and non-interest bearing occupancy fee deposits at three of its senior housing facilities, all of which are payable to certain residents of the facilities (collectively, “Life Care Bonds”). The Life Care Bonds are generally refundable to the residents upon the termination of the contract or upon the successful resale of the unit.

At December 31, 2016, the Company had $28 million of on-demand notes (“Demand Notes”) from the CCRC JV. The Demand Notes bear interest at a rate of 4.5%.

Subsequent Events

In January 2017, the Company repaid $440 million on the Facility primarily using proceeds from the RIDEA II joint venture disposition.