Mortgages and Notes Payable

Our mortgages and notes payable consist of the following:



	December 31,
	2015		2014
Secured indebtedness: (1)
5.17% (6.43% effective rate) mortgage loan due 2015 (2)	$	—	$	39,324
6.88% mortgage loans due 2016 (3)	—		107,556
7.50% mortgage loan due 2016	43,852		44,501
5.10% (4.22% effective rate) mortgage loan due 2017 (4)	112,230		115,229
6.11% (5.36% effective rate) mortgage loan due 2017 (5)	19,199		—
8.15% (7.65% effective rate) mortgage loan due 2016 (6)	—		6,258
	175,281		312,868
Unsecured indebtedness:
5.85% (5.88% effective rate) notes due 2017 (7)	379,544		379,427
7.50% notes due 2018	200,000		200,000
3.20% (3.363% effective rate) notes due 2021 (8)	297,639		297,207
3.625% (3.752% effective rate) notes due 2023 (9)	248,150		247,887
Variable rate term loan due 2019 (10)	200,000		200,000
Variable rate term loan due 2020 (11)	350,000		225,000
Bridge credit facility due 2016 (12)	350,000		—
Revolving credit facility due 2018 (13)	299,000		209,000
	2,324,333		1,758,521
Total	$	2,499,614	$	2,071,389

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(1)	Our secured mortgage loans were collateralized by real estate assets with an aggregate undepreciated book value of $314.2 million at December 31, 2015. Our fixed rate mortgage loans generally are either locked out to prepayment for all or a portion of their term or are prepayable subject to certain conditions including prepayment penalties.


(2)	Net of unamortized fair market value discount of $0.4 million as of December 31, 2014. This debt was repaid in 2015.


(3)	This debt was repaid in 2015.


(4)	Net of unamortized fair market value premium of $1.7 million and $2.7 million as of December 31, 2015 and 2014, respectively.


(5)	Net of unamortized fair market value premium of $0.2 million as of December 31, 2015.


(6)	Net of unamortized fair market value premium of $0.1 million as of December 31, 2014. This debt was repaid in 2015.


(7)	Net of unamortized original issuance discount of $0.1 million and $0.3 million as of December 31, 2015 and 2014, respectively.


(8)	Net of unamortized original issuance discount of $2.4 million and $2.8 million as of December 31, 2015 and 2014, respectively.


(9)	Net of unamortized original issuance discount of $1.9 million and $2.1 million as of December 31, 2015 and 2014, respectively.


(10)	The interest rate is 1.44% at December 31, 2015.


(11)	As more fully described in Note 7, we entered into floating-to-fixed interest rate swaps that effectively fix LIBOR for the original $225.0 million portion of this loan. Accordingly, the equivalent fixed rate of this amount is 2.78%. The interest rate on the remaining $125.0 million is 1.41% at December 31, 2015.


(12)	The interest rate is 1.49% at December 31, 2015.


(13)	The interest rate is 1.45% at December 31, 2015.

6. Mortgages and Notes Payable - Continued

The following table sets forth scheduled future principal payments, including amortization, due on our mortgages and notes payable at December 31, 2015:



Years Ending December 31,	Principal Amount
2016	$	396,090
2017	507,345
2018	498,305
2019	199,305
2020	349,305
Thereafter	549,264
	$	2,499,614

Our $475.0 million unsecured revolving credit facility is scheduled to mature in January 2018 and includes an accordion feature that allows for an additional $75.0 million of borrowing capacity subject to additional lender commitments. Assuming no defaults have occurred, we have an option to extend the maturity for two additional six-month periods. The interest rate at our current credit ratings is LIBOR plus 110 basis points and the annual facility fee is 20 basis points. There was $299.0 million and $313.7 million outstanding under our revolving credit facility at December 31, 2015 and January 29, 2016, respectively. At both December 31, 2015 and January 29, 2016, we had $0.2 million of outstanding letters of credit, which reduces the availability on our revolving credit facility. As a result, the unused capacity of our revolving credit facility at December 31, 2015 and January 29, 2016 was $175.8 million and $161.1 million, respectively.

During 2015, we prepaid without penalty a secured mortgage loan with a fair market value of $5.9 million with an effective interest rate of 7.65% that was originally scheduled to mature in February 2016, the remaining $106.0 million balance on a secured mortgage loan with an effective interest rate of 6.88% that was originally scheduled to mature in January 2016 and the remaining $39.4 million balance on a secured mortgage loan with an effective interest rate of 6.43% that was originally scheduled to mature in November 2015. We recorded aggregate losses on debt extinguishment of $0.2 million related to these prepayments. Real estate assets having a gross book value of approximately $293 million became unencumbered in connection with the payoff of these secured loans. We also paid down $4.9 million of secured loan balances through principal amortization during 2015.

During 2015, we obtained a $350.0 million, six-month unsecured bridge facility. The bridge facility is originally scheduled to mature on March 28, 2016. Assuming no defaults have occurred, we have an option to extend the maturity for an additional six-month period. The interest rate on the bridge facility at our current credit ratings is LIBOR plus 110 basis points. There was $350.0 million outstanding under our bridge facility at December 31, 2015. We intend to repay this facility in the first quarter of 2016.

During 2015, we amended our $225.0 million, seven-year unsecured bank term loan, which was scheduled to mature in January 2019. We increased the borrowed amount to $350.0 million. The amended term loan is now scheduled to mature in June 2020 and the interest rate, based on our current credit ratings, was reduced from LIBOR plus 175 basis points to LIBOR plus 110 basis points. We incurred $1.3 million of deferred financing fees in connection with this amendment, which will be amortized along with existing unamortized deferred loan fees over the remaining term of the new loan.

6. Mortgages and Notes Payable - Continued

During 2015, we acquired our joint venture partner’s 77.2% interest in a building in Orlando, FL. Simultaneously with this acquisition, the joint venture's previously existing mortgage note was restructured into a new $18.0 million first mortgage note and a $10.2 million subordinated note, both of which are scheduled to mature in July 2017. The first mortgage note is interest only with an effective interest rate of 5.36%, payable monthly. The subordinated note has an effective interest rate of 8.6%. Additionally, we deposited $3.0 million into escrow to fund tenant improvements, leasing commissions and building improvements. The first mortgage note and subordinated note can be prepaid at any time commencing October 2016 upon a sale or refinancing of the property. In such event, the subordinated note and any and all accrued interest thereon would be deemed fully satisfied upon payment of a "waterfall payment," if any. Such "waterfall payment" would be a cash payment equal to 50.0% of the amount, if any, by which the net sale proceeds or appraised value in the event of a refinancing exceeds (1) the outstanding principal of the first mortgage note, (2) the funds deposited by us into escrow to fund tenant improvements, leasing commissions and building improvements and (3) a 10.0% return on such funds deposited by us into escrow. The fair value of the first mortgage note was $18.3 million and the fair value of the subordinated note equaled the projected waterfall payment of $1.0 million.

During 2014, the Operating Partnership issued $300 million aggregate principal amount of 3.20% Notes due June 15, 2021, less original issue discount of $3.1 million. These notes were priced at 98.983% for an effective yield of 3.363%. Underwriting fees and other expenses were incurred that aggregated $2.4 million; these costs were deferred and will be amortized over the term of the notes.

During 2014, we prepaid the remaining $36.9 million balance on a secured mortgage loan with an effective interest rate of 3.34% that was originally scheduled to mature in April 2015. We recorded $0.3 million of loss on debt extinguishment related to this prepayment. We also prepaid without penalty the remaining $123.7 million balance on a secured mortgage loan with an effective interest rate of 3.11% that was originally scheduled to mature in July 2014 and the remaining $7.2 million balance on a secured mortgage loan with an effective interest rate of 3.32% that was originally scheduled to mature in August 2014. We recorded less than $0.1 million of gain on debt extinguishment related to this last prepayment.

During 2013, we prepaid without penalty a secured mortgage loan with a fair market value of $67.5 million bearing an effective interest rate of 5.12% that was originally scheduled to mature in January 2014. We also prepaid without penalty the remaining $114.7 million balance on two secured mortgage loans bearing interest at a weighted average rate of 5.75% that were originally scheduled to mature in December 2013. We recorded less than $0.1 million of loss on debt extinguishment related to these prepayments. During 2013, one of our consolidated affiliates also prepaid without penalty the remaining $32.3 million balance on four secured mortgage loans bearing interest at a weighted average rate of 5.79% that were originally scheduled to mature in January 2014.

During 2013, we prepaid the remaining $35.0 million balance on a $200.0 million unsecured bank term loan that was originally scheduled to mature in February 2016. We recorded $0.2 million of loss on debt extinguishment related to this prepayment.

We are currently in compliance with financial covenants and other requirements with respect to our consolidated debt.

Our revolving credit facility, bridge facility and bank term loans require us to comply with customary operating covenants and various financial requirements. Upon an event of default on the revolving credit facility, the lenders having at least 51.0% of the total commitments under the revolving credit facility can accelerate all borrowings then outstanding, and we could be prohibited from borrowing any further amounts under our revolving credit facility, which would adversely affect our ability to fund our operations.

The Operating Partnership has $379.5 million carrying amount of 2017 bonds outstanding, $200.0 million carrying amount of 2018 bonds outstanding, $297.6 million carrying amount of 2021 bonds outstanding and $248.2 million carrying amount of 2023 bonds outstanding. The indenture that governs these outstanding notes requires us to comply with customary operating covenants and various financial ratios. The trustee or the holders of at least 25.0% in principal amount of either series of bonds can accelerate the principal amount of such series upon written notice of a default that remains uncured after 60 days.

Capitalized Interest

Total interest capitalized to development and significant building and tenant improvement projects was $6.9 million, $5.3 million and $2.7 million for the years ended December 31, 2015, 2014 and 2013, respectively.