| Mortgage Notes Payable, Unsecured Notes and Credit Facility |
Mortgage Notes Payable, Unsecured Notes and Credit Facility
The Company's mortgage notes payable, unsecured notes, variable rate unsecured term loans (the “Term Loans”) and Credit Facility, as defined below, as of December 31, 2017 and 2016 are summarized below. The following amounts and discussion do not include the mortgage notes related to the communities classified as held for sale, if any, as of December 31, 2017 and 2016, as shown on the Consolidated Balance Sheets (dollars in thousands) (see Note 6, “Real Estate Disposition Activities”).
| | | | | | | | | | 12/31/17 | | 12/31/16 | Fixed rate unsecured notes (1) | $ | 5,350,000 |
| | $ | 4,200,000 |
| Variable rate unsecured notes (1) | 300,000 |
| | — |
| Term Loans (1) | 250,000 |
| | 300,000 |
| Fixed rate mortgage notes payable—conventional and tax-exempt (2) | 593,987 |
| | 1,668,496 |
| Variable rate mortgage notes payable—conventional and tax-exempt (2) | 910,326 |
| | 908,262 |
| Total mortgage notes payable and unsecured notes and Term Loans | 7,404,313 |
| | 7,076,758 |
| Credit Facility | — |
| | — |
| Total mortgage notes payable, unsecured notes, Term Loans and Credit Facility | $ | 7,404,313 |
| | $ | 7,076,758 |
|
_________________________________ | | (1) | Balances at December 31, 2017 and 2016 exclude $10,850 and $8,930, respectively, of debt discount, and $36,386 and $27,768, respectively, of deferred financing costs, as reflected in unsecured notes, net on the accompanying Consolidated Balance Sheets. |
| | (2) | Balances at December 31, 2017 and 2016 exclude $16,351 of debt discount and $1,866 of debt premium, respectively, and $11,256 and $11,046, respectively, of deferred financing costs, as reflected in mortgage notes payable, net on the accompanying Consolidated Balance Sheets. |
The following debt activity occurred during the year ended December 31, 2017:
| | • | In February 2017, the Company repaid $17,300,000 of variable rate debt secured by Avalon Mountain View at par at its scheduled maturity date. |
| | • | In February 2017, the Company entered into a $250,000,000 variable rate unsecured term loan (the "$250 million Term Loan"), of which $100,000,000 matures in February 2022 with stated pricing of LIBOR plus 0.90%, and $150,000,000 matures in February 2024 with stated pricing of LIBOR plus 1.50%. In April 2017, the Company borrowed the $250,000,000 available under the $250 million Term Loan. |
| | • | In May 2017, the Company repaid $670,590,000 aggregate principal amount of 6.26% fixed rate secured notes secured by 11 communities, representing the majority of the Fannie Mae pool 2 secured indebtedness assumed as part of the Archstone Acquisition, which had a contractual maturity date of November 2017 but opened for prepayment at par on April 30, 2017. In conjunction with the repayment, the Company recognized a gain of $10,839,000, primarily composed of the write-off of unamortized premium. The Company refinanced the secured borrowings for three of these communities for an aggregate principal amount of $185,100,000, with a contractual fixed interest rate of 3.61% and maturity dates of June 2027. |
| | • | In May 2017, the Company issued $400,000,000 principal amount of unsecured notes in a public offering under its existing shelf registration statement for net proceeds of approximately $396,016,000. The notes mature in May 2027 and were issued at a 3.35% interest rate. |
| | • | In June 2017, the Company issued $300,000,000 principal amount of unsecured notes in a public offering under its existing shelf registration statement for net proceeds of approximately $297,372,000. The notes mature in July 2047 and were issued at a 4.15% interest rate. |
| | • | In June 2017, the Company repaid $556,313,000 aggregate principal amount of 5.86% fixed rate secured notes secured by 12 wholly-owned operating communities, representing the remaining debt in the Company's Freddie Mac cross-collateralized pool financing originated in 2009, in advance of their May 2019 maturity date. In conjunction with the repayment, the Company recognized a charge of $34,965,000, consisting of prepayment penalties of $33,515,000 and the non-cash write-off of deferred financing costs of $1,450,000. |
| | • | In October 2017, the Company refinanced the secured borrowing for Archstone Lexington for a principal balance of $21,700,000, with a variable interest rate of LIBOR plus 1.35% and maturity date of October 2020. |
| | • | In November 2017, the Company issued $300,000,000 principal amount of floating rate unsecured notes in a public offering under its existing shelf registration statement for net proceeds of approximately $298,800,000. The notes mature in January 2021 and were issued at three month LIBOR plus 0.43%. |
| | • | In November 2017, the Company issued $450,000,000 principal amount of unsecured notes in a public offering under its existing shelf registration statement for net proceeds of approximately $445,271,000. The notes mature in January 2028 and were issued at a 3.20% coupon. |
| | • | In November 2017, the Company repaid its $300,000,000 variable rate unsecured term loan (the "$300 million Term Loan") entered into in March 2014. In conjunction with the repayment, the Company recognized a charge of $1,367,000 for the non-cash write-off of deferred financing costs. |
At December 31, 2017, the Company has a $1,500,000,000 revolving variable rate unsecured credit facility with a syndicate of banks (the "Credit Facility") which matures in April 2020. The Company may extend the maturity for up to nine months, provided the Company is not in default and upon payment of a $1,500,000 extension fee. The Credit Facility bears interest at varying levels based on the London Interbank Offered Rate (“LIBOR”), rating levels achieved on the Company's unsecured notes and on a maturity schedule selected by the Company. The current stated pricing is LIBOR plus 0.825% per annum (2.39% at December 31, 2017), assuming a one month borrowing rate. The annual facility fee is 0.125% (or approximately $1,875,000 annually based on the $1,500,000,000 facility size and based on the Company's current credit rating).
The Company had no borrowings outstanding under the Credit Facility and had $47,315,000 and $46,711,000 outstanding in letters of credit that reduced the borrowing capacity as of December 31, 2017 and 2016, respectively.
In the aggregate, secured notes payable mature at various dates from April 2018 through July 2066, and are secured by certain apartment communities (with a net carrying value of $2,293,583,000, excluding communities classified as held for sale, as of December 31, 2017).
As of December 31, 2017, the Company has guaranteed a $100,000,000 secured note payable held by a wholly-owned subsidiary; such secured note payable is consolidated for financial reporting purposes. The weighted average interest rate of the Company's fixed rate secured notes payable (conventional and tax-exempt) was 4.0% and 4.4% at December 31, 2017 and 2016, respectively. The weighted average interest rate of the Company's variable rate secured notes payable (conventional and tax exempt), the Term Loans and its Credit Facility, including the effect of certain financing related fees, was 3.0% and 2.3% at December 31, 2017 and 2016, respectively.
Scheduled payments and maturities of mortgage notes payable and unsecured notes outstanding at December 31, 2017 are as follows (dollars in thousands):
| | | | | | | | | | | | | | | | Year | Secured notes payments | | Secured notes maturities | | Unsecured notes maturities | | Stated interest rate of unsecured notes | 2018 | 7,258 |
| | 76,663 |
| | — |
| | N/A |
| 2019 | 4,696 |
| | 114,721 |
| | — |
| | N/A |
| 2020 | 3,624 |
| | 140,429 |
| | 250,000 |
| | 6.100 | % | | | | | | 400,000 |
| | 3.625 | % | 2021 | 3,551 |
| | 27,844 |
| | 250,000 |
| | 3.950 | % | | | | | | 300,000 |
| | LIBOR + 0.43% |
| 2022 | 3,795 |
| | — |
| | 450,000 |
| | 2.950 | % | | | | | | 100,000 |
| | LIBOR + .90% |
| 2023 | 4,040 |
| | — |
| | 350,000 |
| | 4.200 | % | | | | | | 250,000 |
| | 2.850 | % | 2024 | 4,310 |
| | — |
| | 300,000 |
| | 3.500 | % | | | | | | 150,000 |
| | LIBOR + 1.50% |
| 2025 | 4,585 |
| | 84,835 |
| | 525,000 |
| | 3.450 | % | | | | | | 300,000 |
| | 3.500 | % | 2026 | 4,894 |
| | — |
| | 475,000 |
| | 2.950 | % | | | | | | 300,000 |
| | 2.900 | % | 2027 | 3,083 |
| | 185,100 |
| | 400,000 |
| | 3.350 | % | Thereafter | 148,468 |
| | 682,417 |
| | 350,000 |
| | 3.900 | % | | | | | | 300,000 |
| | 4.150 | % | | | | | | 450,000 |
| | 3.200 | % | | $ | 192,304 |
| | $ | 1,312,009 |
| | $ | 5,900,000 |
| | |
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The Company's unsecured notes are redeemable at the Company's option, in whole or in part, generally at a redemption price equal to the greater of (i) 100% of their principal amount or (ii) the sum of the present value of the remaining scheduled payments of principal and interest discounted at a rate equal to the yield on U.S. Treasury securities with a comparable maturity plus a spread between 20 and 45 basis points depending on the specific series of unsecured notes, plus accrued and unpaid interest to the redemption date. The indenture under which the Company's unsecured notes were issued, the Company's Credit Facility agreement and the Company's Term Loan agreement contain limitations on the amount of debt the Company can incur or the amount of assets that can be used to secure other financing transactions, and other customary financial and other covenants, with which the Company was in compliance at December 31, 2017. |