Mortgages and Notes Payable

Our mortgages and notes payable consist of the following:



	December 31,
	2018			2017
Secured indebtedness: (1)
4.00% mortgage loan due 2029	$	97,179		$	98,981
	97,179			98,981
Unsecured indebtedness:
7.50% notes due 2018 (2)	—			200,000
3.20% (3.363% effective rate) notes due 2021 (3)	298,936			298,504
3.625% (3.752% effective rate) notes due 2023 (4)	248,938			248,675
3.875% (4.038% effective rate) notes due 2027 (5)	296,734			296,334
4.125% (4.271% effective rate) notes due 2028 (6)	346,208			—
Variable rate term loan due 2018 (2)	—			10,000
Variable rate term loan due 2020 (7)	225,000			225,000
Variable rate term loan due 2022 (8)	200,000			200,000
Variable rate term loan due 2022 (9)	200,000			200,000
Revolving credit facility due 2022 (10)	182,000			245,000
	1,997,816			1,923,513
Less-unamortized debt issuance costs	(9,164		)	(8,161		)
Total mortgages and notes payable, net	$	2,085,831		$	2,014,333

__________


(1)	Our secured mortgage loan was collateralized by real estate assets with an undepreciated book value of $147.6 million at December 31, 2018. 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)	This debt was repaid in 2018.


(3)	Net of unamortized original issuance discount of $1.1 million and $1.5 million as of December 31, 2018 and 2017, respectively.


(4)	Net of unamortized original issuance discount of $1.1 million and $1.3 million as of December 31, 2018 and 2017, respectively.


(5)	Net of unamortized original issuance discount of $3.3 million and $3.7 million as of December 31, 2018 and 2017, respectively.


(6)	Net of unamortized original issuance discount of $3.8 million as of December 31, 2018.


(7)	As more fully described in Note 6, we entered into floating-to-fixed interest rate swaps that effectively fixed LIBOR for $225.0 million of this loan through January 11, 2019. Accordingly, the equivalent fixed rate of this amount was 2.78%.


(8)	As more fully described in Note 6, we entered into floating-to-fixed interest rate swaps that effectively fix LIBOR for $50.0 million of this loan through January 2022. Accordingly, the equivalent fixed rate of this amount is 2.79%. The interest rate on the remaining $150.0 million was 3.45% at December 31, 2018.


(9)	The interest rate was 3.61% at December 31, 2018.


(10)	The interest rate was 3.46% at December 31, 2018.

5. 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, 2018:



Years Ending December 31,	Principal Amount
2019	$	367
2020	225,444
2021	300,757
2022	583,038
2023	251,376
Thereafter	734,013
Less-unamortized debt issuance costs	(9,164		)
	$	2,085,831

During 2017, we entered into a new $600.0 million unsecured revolving credit facility, which replaced our previously existing $475.0 million revolving credit facility, and includes an accordion feature that allows for an additional $400.0 million of borrowing capacity subject to additional lender commitments. Our new revolving credit facility is scheduled to mature in January 2022. 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 100 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. We incurred $3.5 million of debt issuance costs, which will be amortized along with certain existing unamortized debt issuance costs over the remaining term of our new revolving credit facility. We recorded $0.1 million of loss on debt extinguishment. There was $182.0 million and $191.0 million outstanding under our new revolving credit facility at December 31, 2018 and January 25, 2019, respectively. At both December 31, 2018 and January 25, 2019, 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, 2018 and January 25, 2019 was $417.8 million and $408.8 million, respectively.

During 2018, we paid off at maturity $200.0 million principal amount of 7.5% unsecured notes. We also paid down $1.8 million of secured loan balances through principal amortization during 2018.

During 2018, the Operating Partnership issued $350.0 million aggregate principal amount of 4.125% notes due 2028, less original issuance discount of $4.1 million. These notes were priced to yield 4.271%. Underwriting fees and other expenses were incurred that aggregated $2.9 million; these costs were deferred and will be amortized over the term of the notes.

During 2017, we prepaid without penalty a secured mortgage loan with a fair market value of $108.2 million with an effective interest rate of 4.22%. We recorded $0.4 million of gain on debt extinguishment related to this prepayment.

During 2017, we modified our $200.0 million, five-year unsecured bank term loan, which was originally scheduled to mature in January 2019. The modified term loan is now scheduled to mature in November 2022 and the interest rate, based on current credit ratings, was reduced from LIBOR plus 120 basis points to LIBOR plus 110 basis points. We incurred $1.1 million of debt issuance costs, which will be amortized along with certain existing unamortized debt issuance costs over the remaining term of the modified loan. We recorded $0.4 million of loss on debt extinguishment.

During 2017, we obtained a $100.0 million secured mortgage loan from a third party lender with an effective interest rate of 4.0%. This loan is scheduled to mature in May 2029. We incurred $0.8 million of debt issuance costs in connection with this loan, which will be amortized over the term of the loan.

5. Mortgages and Notes Payable - Continued

During 2017, the Operating Partnership issued $300.0 million aggregate principal amount of 3.875% notes due 2027, less original issuance discount of $4.0 million. These notes were priced to yield 4.038%. Underwriting fees and other expenses were incurred that aggregated $2.5 million; these costs were deferred and will be amortized over the term of the notes.

During 2017, we paid off at maturity $379.7 million principal amount of 5.85% unsecured notes.

We previously 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 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 debt issuance costs in connection with this amendment, which will be amortized along with existing unamortized debt issuance costs over the remaining term of the new loan. During 2017, we prepaid without penalty $125.0 million on this $350.0 million unsecured bank term loan. We recorded $0.4 million of loss on debt extinguishment related to this prepayment.

We previously acquired our joint venture partner’s 77.2% interest in a building in Orlando. 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 were scheduled to mature in July 2017. The first mortgage and subordinated notes had effective interest rates of 5.36% and 8.6%, respectively. The subordinated note and accrued interest thereon was satisfied upon payment of a "waterfall payment." During 2017, both notes were retired upon payment of the $18.0 million principal balance on the first mortgage note and a $0.5 million waterfall payment relating to the subordinated note, which resulted in $0.4 million of gain on debt extinguishment.

During 2016, we prepaid without penalty the remaining $43.6 million balance on a secured mortgage loan with an effective interest rate of 7.5% that was originally scheduled to mature in August 2016.

During 2016, we borrowed an aggregate of $150.0 million under an unsecured bank term loan that is originally scheduled to mature in January 2022. The interest rate on the term loan at our current credit ratings is LIBOR plus 110 basis points. During 2017, we amended our $150.0 million unsecured bank term loan by increasing the borrowed amount to $200.0 million. We incurred $0.3 million of debt issuance costs in connection with this amendment, which will be amortized along with existing unamortized debt issuance costs over the remaining term.

We previously obtained a $350.0 million, six-month unsecured bridge facility. The interest rate on the bridge facility at our current credit ratings was LIBOR plus 110 basis points. During 2016, we prepaid without penalty the full balance on this unsecured bridge facility.

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. In addition, certain of our unsecured debt agreements contain cross-default provisions giving the unsecured lenders the right to declare a default if we are in default under more than $30.0 million with respect to other loans in some circumstances.

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

5. Mortgages and Notes Payable - Continued

The Operating Partnership has $298.9 million carrying amount of 2021 notes outstanding, $248.9 million carrying amount of 2023 notes outstanding, $296.7 million carrying amount of 2027 notes outstanding and $346.2 million carrying amount of 2028 notes 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 any series of notes can accelerate the principal amount of such series upon written notice of a default that remains uncured after 60 days.

We have considered our short-term liquidity needs and the adequacy of our estimated cash flows from operating activities and other available financing sources to meet these needs. We intend to meet these short-term liquidity requirements through a combination of the following:


•	available cash and cash equivalents;


•	cash flows from operating activities;


•	issuance of debt securities by the Operating Partnership (some of which debt securities may be hedged to a fixed interest rate pursuant to the forward-starting swaps referred to in Note 6);


•	issuance of secured debt;


•	bank term loans;


•	borrowings under our revolving credit facility;


•	issuance of equity securities by the Company or the Operating Partnership; and


•	the disposition of non-core assets.

Capitalized Interest

Total interest capitalized to development and significant building and tenant improvement projects was $6.7 million, $8.8 million and $8.2 million for the years ended December 31, 2018, 2017 and 2016, respectively.