| Debt, Net |
Debt, Net
Debt Summary
Our debt consisted of the following (dollars in thousands):
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Carrying Value (1) as of |
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December 31,
2018 |
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December 31,
2017 |
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December 31, 2018 |
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Stated Interest Rates |
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Scheduled Maturity |
Mortgage and Other Secured Debt: |
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Fixed rate mortgage debt (2) |
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$ |
147,141 |
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$ |
150,723 |
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3.82% - 7.87% (3) |
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2019-2026 |
Variable rate secured loans (4) |
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23,282 |
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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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170,423 |
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163,838 |
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Revolving Credit Facility (6) |
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213,000 |
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126,000 |
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LIBOR + 0.775% to 1.45% (7) |
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March 2023 (6) |
Term Loan Facilities (8) |
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248,273 |
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347,959 |
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LIBOR + 0.85% to 1.65% (9) |
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2022 |
Unsecured Senior Notes (10) |
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3.600%, $350,000 aggregate principal |
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347,986 |
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347,551 |
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3.60% (11) |
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May 2023 |
5.250%, $250,000 aggregate principal |
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247,136 |
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246,645 |
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5.25% (12) |
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February 2024 |
3.700%, $300,000 aggregate principal |
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298,815 |
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298,322 |
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3.70% (13) |
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June 2021 |
5.000%, $300,000 aggregate principal |
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297,109 |
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296,731 |
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5.00% (14) |
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July 2025 |
Unsecured note payable |
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1,167 |
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1,287 |
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0% (15) |
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May 2026 |
Total debt, net |
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$ |
1,823,909 |
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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 $7.2 million as of December 31, 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 $281,000 as of December 31, 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 4.17% as of December 31, 2018.
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(4) |
Includes a construction loan with $98.4 million in remaining borrowing capacity as of December 31, 2018.
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(5) |
The weighted average interest rate on our variable rate secured debt was 4.47% as of December 31, 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 3.49% as of December 31, 2018.
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(8) |
As discussed below, we have the ability to borrow an additional $150.0 million in the aggregate under the remaining term loan facility, provided that there is no default under the facilities and subject to the approval of the lenders.
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(9) |
The interest rate on the remaining term loan facility was 3.60% as of December 31, 2018.
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(10) |
Refer to the paragraphs below for further disclosure. |
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(11) |
The carrying value of these notes reflects an unamortized discount totaling $1.4 million as of December 31, 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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(12) |
The carrying value of these notes reflects an unamortized discount totaling $2.6 million as of December 31, 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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(13) |
The carrying value of these notes reflects an unamortized discount totaling $943,000 as of December 31, 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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(14) |
The carrying value of these notes reflects an unamortized discount totaling $2.4 million as of December 31, 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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(15) |
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 $294,000 as of December 31, 2018 and $373,000 as of December 31, 2017.
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All debt is owed by COPLP. While COPT is not directly obligated by any debt, it has guaranteed COPLP’s Revolving Credit Facility, Term Loan Facilities and Unsecured Senior Notes.
Certain of our debt instruments require that we comply with a number of restrictive financial covenants, including maximum leverage ratio, unencumbered leverage ratio, minimum fixed charge coverage, minimum unencumbered interest coverage ratio, minimum debt service and maximum secured indebtedness ratio. In addition, the terms of some of COPLP’s debt may limit its ability to make certain types of payments and other distributions to COPT in the event of default or when such payments or distributions may prompt failure of debt covenants. As of December 31, 2018, we were within the compliance requirements of these financial covenants.
Our debt matures on the following schedule (in thousands):
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2019 |
$ |
4,387 |
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2020 |
16,156 |
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2021 |
303,875 |
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2022 |
267,611 |
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2023 |
629,590 |
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Thereafter |
616,885 |
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Total |
$ |
1,838,504 |
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(1) |
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(1) |
Represents scheduled principal amortization and maturities only and therefore excludes net discounts and deferred financing costs of $14.6 million.
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We capitalized interest costs of $5.9 million in 2018, $5.2 million in 2017 and $5.7 million in 2016.
The following table sets forth information pertaining to the fair value of our debt (in thousands):
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December 31, 2018 |
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December 31, 2017 |
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Carrying
Amount
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Estimated
Fair Value
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Carrying
Amount
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Estimated
Fair Value
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Fixed-rate debt |
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Unsecured Senior Notes |
$ |
1,191,046 |
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$ |
1,219,603 |
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$ |
1,189,249 |
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$ |
1,229,398 |
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Other fixed-rate debt |
148,308 |
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147,106 |
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152,010 |
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152,485 |
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Variable-rate debt |
484,555 |
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486,497 |
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487,074 |
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485,694 |
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$ |
1,823,909 |
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$ |
1,853,206 |
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$ |
1,828,333 |
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$ |
1,867,577 |
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Revolving Credit Facility
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. As of December 31, 2018, the maximum borrowing capacity under this facility totaled $800.0 million, of which $587.0 million was available.
Weighted average borrowings under our Revolving Credit Facility totaled $188.1 million in 2018 and $97.8 million in 2017. The weighted average interest rate on our Revolving Credit Facility was 3.08% in 2018 and 2.44% in 2017.
Term Loan Facilities
Effective December 17, 2015, we entered into an unsecured term loan agreement with an initial commitment of $250.0 million; we borrowed $100.0 million under this loan on December 17, 2015 and $150.0 million on December 28, 2016. We also have the ability to borrow $150.0 million above the initial commitment, provided that there is no default under the loan and subject to the approval of the lenders. The term loan matures on December 17, 2022, and carries a variable interest rate based on the LIBOR rate (customarily the 30-day rate) plus 0.85% to 1.65%, as determined by the credit ratings assigned to COPLP by the Ratings Agencies.
In addition to the term loan discussed above, we also had the following term loans that were repaid prior to December 31, 2018:
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for a term loan originating in 2012, we repaid $200.0 million in May 2017 and the remaining balance of $100.0 million in November 2018; and
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for a term loan originating in 2012, we repaid the remaining balance of $120.0 million in 2016.
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In connection with our new Revolving Credit Facility discussed above, we have the ability to borrow up to $500.0 million under new term loans from the facility’s lender group provided that there is no default under the facility and subject to the approval of the lenders.
Unsecured Senior Notes
We may redeem our unsecured senior notes, in whole at any time or in part from time to time, at our option, at a redemption price equal to the greater of (1) the aggregate principal amount of the notes being redeemed or (2) the sum of the present values of the remaining scheduled payments of principal and interest thereon (not including any portion of such payments of interest accrued as of the date of redemption) discounted to its present value, on a semi-annual basis at an adjusted treasury rate plus a spread (30 basis points for the 3.600% Senior Notes, 40 basis points for the 5.250% Senior Notes, 25 basis points for the 3.700% Senior Notes and 45 basis points for the 5.000% Senior Notes), plus, in each case, accrued and unpaid interest thereon to the date of redemption. However, in each case, if this redemption occurs on or after three months prior to the maturity date, the redemption price will be equal to 100% of the principal amount of the notes being redeemed, plus accrued and unpaid interest thereon to, but not including, the applicable redemption date. These notes are unconditionally guaranteed by COPT.
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