Mortgages and Notes Payable

Our mortgages and notes payable consist of the following:



	December 31,
	2013		2012
Secured indebtedness: (1)
5.68% mortgage loan due 2013	$	—	$	107,289
5.45% (5.12% effective rate) mortgage loan due 2014 (2)	—		67,604
5.21% (3.11% effective rate) mortgage loan due 2014 (3)	125,247		—
5.17% (6.43% effective rate) mortgage loan due 2015 (4)	39,609		39,805
3.50% (3.34% effective rate) mortgage loan due 2015 (5)	37,340		—
6.88% mortgage loans due 2016	109,167		110,671
7.50% mortgage loan due 2016	45,103		45,662
5.10% (4.22% effective rate) mortgage loan due 2017 (6)	118,126		120,924
5.74% to 9.00% mortgage loans due between 2012 and 2016 (7) (8)	14,072		57,652
	488,664		549,607
Unsecured indebtedness:
5.85% (5.88% effective rate) notes due 2017 (9)	379,311		379,194
7.50% notes due 2018	200,000		200,000
3.625% (3.752% effective rate) notes due 2023 (10)	247,624		247,361
Variable rate term loan due 2016	—		35,000
Variable rate term loan due 2019 (11)	200,000		200,000
Variable rate term loan due 2019 (12)	225,000		225,000
Revolving credit facility due 2018 (13)	215,700		23,000
	1,467,635		1,309,555
Total	$	1,956,299	$	1,859,162

__________


(1)	The secured mortgage loans payable are collateralized by real estate assets with an aggregate undepreciated book value of $801.7 million at December 31, 2013. 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 premium of $0.2 million as of December 31, 2012. This debt was repaid in 2013.


(3)	Net of unamortized fair market value premium of $0.7 million as of December 31, 2013.


(4)	Net of unamortized fair market value discount of $0.8 million and $1.2 million as of December 31, 2013 and 2012, respectively.


(5)	Net of unamortized fair market value premium of $0.1 million as of December 31, 2013.


(6)	Net of unamortized fair market premium of $3.6 million and $4.6 million as of December 31, 2013 and 2012, respectively.


(7)	Included mortgage debt related to Markel of $33.1 million at December 31, 2012. This debt was repaid in 2013.


(8)	Net of unamortized fair market value premium of $0.3 million and $0.5 million at December 31, 2013 and 2012, respectively.


(9)	Net of unamortized original issuance discount of $0.4 million and $0.5 million at December 31, 2013 and 2012, respectively.


(10)	Net of unamortized original issuance discount of $2.4 million and $2.6 million at December 31, 2013 and 2012, respectively.


(11)	The interest rate is 1.37% at December 31, 2013.


(12)	As more fully described in Note 7, we entered into floating-to-fixed interest rate swaps that effectively fix LIBOR for the full amount and duration of this loan. Accordingly, the equivalent fixed rate of this loan is 3.43%.


(13)	The interest rate is 1.27% at December 31, 2013.

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, 2013:



Years Ending December 31,	Principal Amount
2014	$	138,763
2015	81,232
2016	158,218
2017	488,711
2018	415,437
Thereafter	673,938
	$	1,956,299

During 2013, we entered into an amended and restated $475.0 million unsecured revolving credit facility, which replaced our previously existing revolving credit facility, and includes an accordion feature that allows for an additional $75.0 million of borrowing capacity subject to additional lender commitments. Our new revolving credit facility is scheduled to mature in January 2018. Assuming no defaults have occurred, we have an option to extend the maturity for two additional six-month periods. The interest rate on the new facility at our current credit ratings is LIBOR plus 110 basis points and the annual facility fee is 20 basis points. The interest rate and facility fee are based on the higher of the publicly announced ratings from Moody's Investors Service or Standard & Poor's Ratings Services. The financial and other covenants under the new facility are similar to our previous credit facility. There was $215.7 million and $223.0 million outstanding under our revolving credit facility at December 31, 2013 and January 31, 2014, respectively. At both December 31, 2013 and January 31, 2014, we had $0.1 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, 2013 and January 31, 2014 was $259.2 million and $251.9 million, respectively. We simultaneously amended and restated our $200.0 million, five-year unsecured bank term loan which, from a previous modification, was scheduled to mature in January 2018. The loan is now scheduled to mature in January 2019 and the interest rate, based on our current credit ratings, was reduced to LIBOR plus 120 basis points. We incurred $0.4 million of deferred financing fees in connection with the recent modification, which will be amortized along with existing unamortized deferred loan fees over the remaining term of the new loan.

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. Real estate assets having a gross book value of approximately $147 million became unencumbered in connection with the payoff of these secured loans. We also paid down $11.7 million of secured loan balances through principal amortization during 2013.

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.

During 2012, we repaid the remaining balances of $52.1 million of our variable rate, secured construction loan bearing interest of 1.07% and a $123.0 million secured mortgage loan bearing interest of 6.03% that was scheduled to mature in March 2013. One of our consolidated affiliates also repaid a $20.8 million secured loan that bore interest at 6.06% and matured in October 2012. We incurred no penalties related to these repayments.

6. Mortgages and Notes Payable - Continued

During 2012, the Operating Partnership issued $250.0 million aggregate principal amount of 3.625% Notes due January 15, 2023, less original issue discount of $2.7 million. These notes were priced at 98.94% for an effective yield of 3.752%. Underwriting fees and other expenses were incurred that aggregated $2.1 million; these costs were deferred and will be amortized over the term of the notes.

During 2012, we modified our $200.0 million, five-year unsecured bank term loan, as discussed above, whereby the original maturity date of February 2016 was extended to January 2018 and the original interest rate was reduced from LIBOR plus 220 basis points to LIBOR plus 165 basis points. We incurred $0.9 million of deferred financing fees in connection with this previous modification, which was amortized along with existing unamortized deferred loan fees over the remaining term of the loan. Proceeds from two new participants, aggregating $35.0 million, were used to reduce amounts outstanding under our revolving credit facility. Two of the original participants, which held an aggregate $35.0 million of the principal balance under the original term loan, were fully paid off in February 2013.

During 2012, we repurchased $12.1 million principal amount of unsecured notes due March 2017 bearing interest of 5.85% for a purchase price of 107.5% of par value. We recorded $1.0 million of loss on debt extinguishment related to this repurchase.

During 2012, we obtained a $225.0 million, seven-year unsecured bank term loan bearing interest of LIBOR plus 190 basis points. The underlying LIBOR rate has been effectively fixed for the entire seven-year term through floating-to-fixed interest rate swaps discussed in Note 7. The counterparties under the swaps are the same financial institutions that participated in the term loan.

During 2011, we repaid the remaining balance of $184.2 million of a secured mortgage loan bearing interest of 7.05% that was scheduled to mature in January 2012 and the remaining $10.0 million of a three-year unsecured term loan bearing interest of 3.90% that was scheduled to mature in February 2012. We incurred no penalties related to these early repayments. We also obtained a $200.0 million, five-year unsecured bank term loan bearing interest of LIBOR plus 220 basis points; this loan has been modified as described above.

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

Our revolving credit 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 $379.3 million carrying amount of 2017 bonds outstanding, $200.0 million carrying amount of 2018 bonds outstanding and $247.6 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 $2.7 million, $1.0 million and $0.6 million for the years ended December 31, 2013, 2012 and 2011, respectively.