Debt Obligations

6 Months Ended

Jun. 30, 2011

Debt Obligations

Debt Obligations

5. Debt Obligations

Bank Borrowings. During the three months ended June 30, 2011, we entered into a new $210,000,000 Unsecured Credit Agreement which provides for the opportunity to increase the credit amount up to a total of $250,000,000.   The new Unsecured Credit Agreement provides a revolving line of credit with no scheduled maturities other than the maturity date of April 18, 2015, and allows us to borrow at the same interest rates applicable to borrowings under our prior agreement, 150 basis points over LIBOR based on current leverage ratios.  Financial covenants contained in the new Unsecured Credit Agreement, which are measured quarterly, require us to maintain, among other things:

(i) a ratio of total indebtedness to total asset value not greater than 0.5 to 1.0;

(ii) a ratio of secured debt to total asset value not greater than 0.35 to 1.0;

(iii) a ratio of unsecured debt to the value of the unencumbered asset pool not greater than 0.6 to 1.0; and

(iv) a ratio of EBITDA, as calculated in the new Unsecured Credit Agreement, to fixed charges not less than 1.50 to 1.0.

During the six months ended June 30, 2011, we borrowed $119,000,000 and repaid $86,700,000 under our old and new Unsecured Credit Agreement.  At June 30, 2011, we had $70,000,000 outstanding under our new Unsecured Credit Agreement with $140,000,000 available for borrowing and we were in compliance with all our covenants. Subsequent to June 30, 2011, we borrowed $5,000,000 and repaid $50,000,000 under our new Unsecured Credit Agreement.  As a result, we had $25,000,000 outstanding under our new Unsecured Credit Agreement with $185,000,000 available for borrowing.

Senior Unsecured Notes.  Subsequent to June 30, 2011, we sold to affiliates and managed accounts of Prudential Investment Management, Inc. (individually and collectively “Prudential”) $50,000,000 aggregate principal amount of 4.8% senior unsecured term notes fully amortizing to maturity on July 20, 2021. The proceeds were used to pay down amounts outstanding under our Unsecured Credit Agreement. During 2010, we sold to Prudential $25,000,000 aggregate principal amount of 5.26% senior unsecured term notes due July 14, 2015 and $25,000,000 aggregate principal amount of 5.74% senior unsecured term notes fully amortizing to maturity on January 14, 2019.

Mortgage Loans Payable.  At June 30, 2011 and December 31, 2010, we had no mortgage loans payable outstanding.  During the six months ended June 30, 2010, we paid $7,685,000 in principal payments.

Bonds Payable.  At June 30, 2011 and December 31, 2010, we had outstanding principal of $3,200,000 and $3,730,000 respectively, on multifamily tax-exempt revenue bonds that are secured by five assisted living properties in Washington.  These bonds bear interest at a variable rate that is reset weekly and mature during 2015.  For the six months ended June 30, 2011, the weighted average interest rate, including letter of credit fees, on the outstanding bonds was 2.2%.  During the six months ended June 30, 2011 and 2010, we paid $530,000 and $495,000, respectively, in regularly scheduled principal payments.  As of June 30, 2011 and December 31, 2010, the aggregate carrying value of real estate properties securing our bonds payable was $7,046,000 and $7,179,000, respectively.