Notes Payable, Net

Notes payable, net at December 31, 2016 and 2015 consist of the following:



	2016				2015				Stated Interest Rate		Maturity Date		Number of One Year Extension Options	Facility Amount
Cherry Creek Shopping Center	$	550,000		⁽¹⁾					3.85%		06/01/28
Cherry Creek Shopping Center					$	280,000			5.24%
City Creek Center	80,269			⁽²⁾	81,756			⁽²⁾	4.37%		08/01/23
The Gardens on El Paseo					81,920			⁽³⁾	6.10%
Great Lakes Crossing Outlets	208,303				212,863				3.60%		01/06/23
The Mall at Green Hills	150,000				150,000				LIBOR+1.60%		12/01/18		1
International Market Place	257,052				92,169				LIBOR + 1.75%		08/14/18		2	$	330,890
The Mall of San Juan	302,357				258,250				LIBOR + 2.00%		04/02/17		2	320,000
The Mall at Short Hills	1,000,000				1,000,000				3.48%		10/01/27
U.S. Headquarters Building	12,000				12,000				LIBOR + 1.40% Swapped to 3.49%		03/01/24
$65M Revolving Credit Facility	24,700								LIBOR + 1.40%		04/29/17			65,000		⁽⁴⁾
$1.1B Revolving Credit Facility	210,000			⁽⁵⁾				⁽⁵⁾	LIBOR + 1.30%	⁽⁵⁾	02/28/19	⁽⁵⁾	1	1,100,000		⁽⁵⁾
$475M Unsecured Term Loan	475,000			⁽⁶⁾	475,000			⁽⁶⁾	LIBOR + 1.45%	⁽⁶⁾	02/28/19
Deferred Financing Costs, Net	(14,169		)		(16,870		)
	$	3,255,512			$	2,627,088


(1)	Cherry Creek Shopping Center was refinanced in May 2016. The proceeds were used to repay the existing loan, with the remaining net proceeds distributed to the joint venture partners based on the partnership agreement ownership percentages.


(2)	The Operating Partnership has provided a limited guarantee of the repayment of the City Creek Center loan, which could be triggered only upon a decline in center occupancy to a level that the Company believes is remote.


(3)	Balance includes purchase accounting premium adjustment of $0.4 million in 2015 for an above market interest rate upon acquisition of the center in December 2011. In April 2016, the Company paid off the mortgage note payable on The Gardens on El Paseo.


(4)	The unused borrowing capacity at December 31, 2016 was $34.0 million, after considering $6.3 million of letters of credit outstanding on the facility.


(5)	TRG is the borrower under the $1.1 billion unsecured revolving credit facility. As of December 31, 2016 the interest rate on the facility was a range of LIBOR plus 1.15% to LIBOR plus 1.70% and a facility fee of 0.20% to 0.30% based on the Company's total leverage ratio. The unused borrowing capacity at December 31, 2016 was $890.0 million. In January 2017, the facility was refinanced (Note 22).

(6)

TRG is the borrower under the $475 million unsecured term loan with an accordion feature to increase the borrowing capacity to $600 million, subject to certain conditions including having the borrowing capacity based on the unencumbered asset pool EBITDA and obtaining lender commitments. As of December 31, 2016, the Company cannot fully utilize the accordion feature unless additional assets are added to the unencumbered asset pool. The loan bears interest at a range of LIBOR plus 1.35% to LIBOR plus 1.90% based on the Company's total leverage ratio. The LIBOR rate is swapped to a fixed interest rate of 1.65%, resulting in an effective interest rate in the range of 3.00% to 3.55% (Note 10).

Notes payable are collateralized by properties with a net book value of $2.0 billion at December 31, 2016.

The following table presents scheduled principal payments on notes payable as of December 31, 2016:



2017	$	333,373		₍₁₎
2018	413,615			₍₂₎
2019	691,820			₍₃₎
2020	7,058
2021	7,363
Thereafter	1,816,452
Total principal maturities	$	3,269,681
Net unamortized deferred financing costs	(14,169		)
Total notes payable, net	$	3,255,512


(1)	Includes $302.4 million with two, one-year extension options.


(2)	Includes $257.1 million with two, one-year extension options and $150.0 million with a one-year extension option.


(3)	Includes $210.0 million with a one-year extension option.

2017 Maturities and Financings

The construction facility for The Mall of San Juan matures in April 2017. As of December 31, 2016, the outstanding balance of this construction facility was $302.4 million. The Company is currently evaluating options related to refinancing or paying off this construction facility.

The $65.0 million secured secondary revolving credit facility matures in April 2017. The Company expects to extend this facility for one year at maturity.

In February 2017, the Company completed a $300 million unsecured term loan that matures in February 2022. Also in February 2017, the Company amended its $1.1 billion unsecured revolving line of credit (Note 22).

Debt Covenants and Guarantees

Certain loan agreements contain various restrictive covenants, including the following corporate covenants on the Company’s unsecured primary revolving line of credit, $475 million unsecured term loan, and the construction facilities on The Mall of San Juan and International Market Place: a minimum net worth requirement, a maximum total leverage ratio, a maximum secured leverage ratio, a minimum fixed charge coverage ratio, a maximum recourse secured debt ratio, and a maximum payout ratio. In addition, the Company’s primary revolving line of credit and $475 million term loan have unencumbered pool covenants, which apply to Beverly Center, Dolphin Mall, and Twelve Oaks Mall on a combined basis as of December 31, 2016. These covenants include a minimum number and minimum value of eligible unencumbered assets, a maximum unencumbered leverage ratio, a minimum unencumbered interest coverage ratio, and a minimum unencumbered asset occupancy ratio. As of December 31, 2016, the corporate total leverage ratio was the most restrictive covenant. The Company was in compliance with all of its covenants and loan obligations as of December 31, 2016. The maximum payout ratio covenant limits the payment of distributions generally to 95% of funds from operations, as defined in the loan agreements, except as required to maintain the Company’s tax status, pay preferred distributions, and for distributions related to the sale of certain assets. In February 2017, The Gardens on El Paseo was added as a guarantor to the $1.1 billion revolving line of credit and $475 million unsecured term loan. See Note 22 - Subsequent Events for further details.

In connection with the financing of the construction facility at International Market Place, the Operating Partnership has provided an unconditional guarantee of the construction loan principal balance and all accrued but unpaid interest during the term of the loan. The Operating Partnership has also provided a guarantee as to the completion of construction of the center. The maximum amount of the construction facility is $330.9 million. The outstanding balance of the International Market Place construction financing facility as of December 31, 2016 was $257.1 million. Accrued but unpaid interest as of December 31, 2016 was $0.5 million. The Company believes the likelihood of a payment under the guarantees to be remote.

In connection with the financing of the construction facility at The Mall of San Juan, the Operating Partnership has provided an unconditional guarantee of the construction loan principal balance and all accrued but unpaid interest during the term of the loan. In addition, the Operating Partnership has provided a guarantee as to the completion of the center. The maximum amount of the construction facility is $320 million. The outstanding balance of The Mall of San Juan construction financing facility as of December 31, 2016 was $302.4 million. Accrued but unpaid interest as of December 31, 2016 was $0.4 million. The Company believes the likelihood of a payment under the guarantees to be remote.

In connection with the $175 million additional financing at International Plaza, which is owned by an Unconsolidated Joint Venture, the Operating Partnership provided an unconditional and several guarantee of 50.1% of all obligations and liabilities related to an interest rate swap that was required on the debt for the term of the loan. As of December 31, 2016, the interest rate swap was in a liability position of $0.4 million and had unpaid interest of $0.2 million. The Company believes the likelihood of a payment under the guarantee to be remote.

Other

The Company is required to escrow cash balances for specific uses stipulated by certain of its lenders and other various agreements. As of December 31, 2016 and 2015, the Company's cash balances restricted for these uses were $0.9 million and $6.4 million, respectively.

Beneficial Interest in Debt and Interest Expense

The Operating Partnership's beneficial interest in the debt, capitalized interest, and interest expense of its consolidated subsidiaries and its Unconsolidated Joint Ventures is summarized in the following table. The Operating Partnership's beneficial interest in the consolidated subsidiaries excludes debt and interest related to the noncontrolling interests in Cherry Creek Shopping Center (50%), International Market Place (6.5%), and The Mall of San Juan (5%).



	At 100%						At Beneficial Interest
	Consolidated Subsidiaries			Unconsolidated Joint Ventures			Consolidated Subsidiaries			Unconsolidated Joint Ventures
Debt as of:
December 31, 2016	$	3,255,512		$	2,777,162		$	2,949,440		$	1,425,511
December 31, 2015 ⁽¹⁾	2,627,088			2,087,552			2,468,451			1,116,395

Capitalized interest:
Year Ended December 31, 2016	$	21,864	⁽²⁾	$	2,589	⁽³⁾	$	21,728	⁽²⁾	$	2,589	⁽³⁾
Year Ended December 31, 2015	31,112		⁽²⁾	792		⁽³⁾	30,130		⁽²⁾	543		⁽³⁾

Interest expense:
Year Ended December 31, 2016	$	86,285		$	103,973		$	75,954		$	54,674
Year Ended December 31, 2015	63,041			85,198			56,076			45,564


(1)	The December 31, 2015 balances have been retrospectively adjusted in connection with the Company's adoption of ASU No. 2015-03 "Imputation of Interest: Simplifying the Presentation of Debt Issuance Costs" (Note 1).

(2)

The Company capitalizes interest costs incurred in funding its equity contributions to development projects accounted for as Unconsolidated Joint Ventures. The capitalized interest cost is included in the Company's basis in its investment in Unconsolidated Joint Ventures. Such capitalized interest reduces interest expense in the Company's Consolidated Statement of Operations and Comprehensive Income and in the table above is included within Consolidated Subsidiaries.


(3)	Capitalized interest on the Asia Unconsolidated Joint Venture construction loans is presented at the Company's beneficial interest in both the Unconsolidated Joint Ventures (at 100%) and Unconsolidated Joint Ventures (at Beneficial Interest) columns.