| Debt, Net |
Debt, Net
Our debt consisted of the following (dollars in thousands):
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Carrying Value (1) as of |
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September 30,
2018 |
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December 31,
2017 |
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Stated Interest Rates as of |
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Scheduled Maturity as of |
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September 30, 2018 |
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September 30, 2018 |
Mortgage and Other Secured Debt: |
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Fixed rate mortgage debt (2) |
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$ |
148,054 |
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$ |
150,723 |
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3.82% - 7.87% (3) |
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2019-2026 |
Variable rate secured debt (4) |
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20,890 |
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13,115 |
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LIBOR + 1.85% to 2.35% (5) |
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2020-2022 |
Total mortgage and other secured debt |
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168,944 |
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163,838 |
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Revolving Credit Facility (6) |
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99,000 |
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126,000 |
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LIBOR + 0.875% to 1.60% (7) |
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May 2019 (6) |
Term Loan Facilities (8) |
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348,298 |
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347,959 |
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LIBOR + 0.90% to 1.85% (9) |
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2020-2022 |
Unsecured Senior Notes |
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3.600%, $350,000 aggregate principal |
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347,876 |
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347,551 |
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3.60% (10) |
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May 2023 |
5.250%, $250,000 aggregate principal |
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247,011 |
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246,645 |
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5.25% (11) |
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February 2024 |
3.700%, $300,000 aggregate principal |
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298,690 |
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298,322 |
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3.70% (12) |
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June 2021 |
5.000%, $300,000 aggregate principal |
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297,013 |
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296,731 |
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5.00% (13) |
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July 2025 |
Unsecured note payable |
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1,198 |
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1,287 |
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0% (14) |
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May 2026 |
Total debt, net |
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$ |
1,808,030 |
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$ |
1,828,333 |
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(1) |
The carrying values of our debt other than the Revolving Credit Facility reflect net deferred financing costs of $7.6 million as of September 30, 2018 and $5.0 million as of December 31, 2017.
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(2) |
Certain of the fixed rate mortgages carry interest rates that, upon assumption, were above or below market rates and therefore were recorded at their fair value based on applicable effective interest rates. The carrying values of these loans reflect net unamortized premiums totaling $298,000 as of September 30, 2018 and $349,000 as of December 31, 2017.
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(3) |
The weighted average interest rate on our fixed rate mortgage debt was 4.18% as of September 30, 2018.
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(4) |
Includes a construction loan with $100.7 million in remaining borrowing capacity as of September 30, 2018.
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(5) |
The weighted average interest rate on our variable rate secured debt was 4.20% as of September 30, 2018.
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(6) |
As discussed further below, we entered into a credit agreement on October 10, 2018 to replace our existing revolving credit facility with a new facility. |
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(7) |
The weighted average interest rate on the Revolving Credit Facility was 3.37% as of September 30, 2018.
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(8) |
As of September 30, 2018, we have the ability to borrow an additional $350.0 million in the aggregate under these term loan facilities, provided that there is no default under the facilities and subject to the approval of the lenders.
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(9) |
The weighted average interest rate on these loans was 3.47% as of September 30, 2018.
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(10) |
The carrying value of these notes reflects an unamortized discount totaling $1.5 million as of September 30, 2018 and $1.7 million as of December 31, 2017. The effective interest rate under the notes, including amortization of the issuance costs, was 3.70%.
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(11) |
The carrying value of these notes reflects an unamortized discount totaling $2.7 million as of September 30, 2018 and $3.0 million as of December 31, 2017. The effective interest rate under the notes, including amortization of the issuance costs, was 5.49%.
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(12) |
The carrying value of these notes reflects an unamortized discount totaling $1.0 million as of September 30, 2018 and $1.3 million as of December 31, 2017. The effective interest rate under the notes, including amortization of the issuance costs, was 3.85%.
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(13) The carrying value of these notes reflects an unamortized discount totaling $2.5 million as of September 30, 2018 and $2.7 million as of December 31, 2017. The effective interest rate under the notes, including amortization of the issuance costs, was 5.15%.
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(14) |
This note carries an interest rate that, upon assumption, was below market rates and it therefore was recorded at its fair value based on applicable effective interest rates. The carrying value of this note reflects an unamortized discount totaling $313,000 as of September 30, 2018 and $373,000 as of December 31, 2017.
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All debt is owed by the Operating Partnership. While COPT is not directly obligated by any debt, it has guaranteed the Operating Partnership’s Revolving Credit Facility, Term Loan Facilities and Unsecured Senior Notes.
On October 10, 2018, we entered into a credit agreement with a group of lenders to replace our existing unsecured revolving credit facility with a new facility (the prior facility and new facility are referred to collectively herein as our “Revolving Credit Facility”). The lenders’ aggregate commitment under the new facility is $800.0 million, with the ability for us to increase the lenders’ aggregate commitment to $1.25 billion, provided that there is no default under the facility and subject to the approval of the lenders. The new facility matures on March 10, 2023, with the ability for us to further extend such maturity by two six-month periods at our option, provided that there is no default under the facility and we pay an extension fee of 0.075% of the total availability under the facility for each extension period. The interest rate on the new facility is based on LIBOR plus 0.775% to 1.450%, as determined by the credit ratings assigned to COPLP by Standard & Poor’s Ratings Services, Moody’s Investors Service, Inc. or Fitch Ratings Ltd. (collectively, the “Ratings Agencies”). The new facility also carries a quarterly fee that is based on the lenders’ aggregate commitment under the facility multiplied by a per annum rate of 0.125% to 0.300%, as determined by the credit ratings assigned to COPLP by the Ratings Agencies.
Certain of our debt instruments require that we comply with a number of restrictive financial covenants. As of September 30, 2018, we were within the compliance requirements of these financial covenants.
We capitalized interest costs of $1.4 million in the three months ended September 30, 2018, $1.1 million in the three months ended September 30, 2017, $4.2 million in the nine months ended September 30, 2018 and $4.2 million in the nine months ended September 30, 2017.
The following table sets forth information pertaining to the fair value of our debt (in thousands):
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September 30, 2018 |
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December 31, 2017 |
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Carrying |
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Fair |
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Carrying |
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Fair |
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Amount |
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Value |
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Amount |
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Value |
Fixed-rate debt |
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Unsecured Senior Notes |
$ |
1,190,590 |
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$ |
1,218,314 |
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$ |
1,189,249 |
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$ |
1,229,398 |
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Other fixed-rate debt |
149,252 |
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145,341 |
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152,010 |
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152,485 |
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Variable-rate debt |
468,188 |
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467,556 |
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487,074 |
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485,694 |
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$ |
1,808,030 |
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$ |
1,831,211 |
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$ |
1,828,333 |
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$ |
1,867,577 |
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