Quarterly report pursuant to Section 13 or 15(d)

Debt, Net

v3.21.2
Debt, Net
 9 Months Ended
Sep. 30, 2021
Debt Disclosure [Abstract]  
Debt, Net Debt, Net
 
Our debt consisted of the following (dollars in thousands):
  Carrying Value (1) as of
  September 30,
2021		 December 31, 2020 September 30, 2021
  Stated Interest Rates Scheduled Maturity
Mortgage and Other Secured Debt:        
Fixed rate mortgage debt (2) $ 137,310  $ 139,991 
3.82% - 4.62% (3)
 2023-2026
Variable rate secured debt 33,698  115,119 
LIBOR + 1.45% to 1.55% (4)
 2025-2026
Total mortgage and other secured debt 171,008  255,110     
Revolving Credit Facility (5) 10,000  143,000 
LIBOR + 0.775% to 1.45% (6)
 March 2023 (5)
Term Loan Facility 299,274  398,447 
LIBOR + 1.00% to 1.65% (7)
 December 2022
Unsecured Senior Notes
5.00%, $300,000 aggregate principal
 298,235  297,915 
5.00% (8)
 July 2025
2.25%, $400,000 aggregate principal
 395,232  394,464 
2.25% (9)
 March 2026
2.00%, $400,000 aggregate principal
 396,394  — 
2.00% (10)
 January 2029
2.75%, $600,000 aggregate principal
 588,798  — 
2.75% (10)
 April 2031
3.60%, $350,000 aggregate principal
 —  348,888 
3.60% (11)
 N/A (11)
5.25%, $250,000 aggregate principal
 —  248,194 
5.25% (12)
 N/A (12)
Unsecured note payable 791  900 
0% (13)
 May 2026
Total debt, net $ 2,159,732  $ 2,086,918     

(1)The carrying values of our debt other than the Revolving Credit Facility reflect net deferred financing costs of $5.4 million as of September 30, 2021 and $5.9 million as of December 31, 2020.
(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 $108,000 as of September 30, 2021 and $155,000 as of December 31, 2020.
(3)The weighted average interest rate on our fixed rate mortgage debt was 4.16% as of September 30, 2021.
(4)The weighted average interest rate on our variable rate secured debt was 1.60% as of September 30, 2021.
(5)The facility matures in March 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. In connection with this facility, we also 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.
(6)The weighted average interest rate on the Revolving Credit Facility was 1.19% as of September 30, 2021.
(7)The interest rate on this loan was 1.09% as of September 30, 2021.
(8)The carrying value of these notes reflects an unamortized discount totaling $1.5 million as of September 30, 2021 and $1.8 million as of December 31, 2020.  The effective interest rate under the notes, including amortization of the issuance costs, was 5.15%.
(9)The carrying value of these notes reflects an unamortized discount totaling $3.9 million as of September 30, 2021 and $4.5 million as of December 31, 2020. The effective interest rate under the notes, including amortization of the issuance costs, was 2.48%.
(10)Refer to paragraph below for further disclosure.
(11)The carrying value of these notes reflects an unamortized discount totaling $781,000 as of December 31, 2020.  The effective interest rate under the notes, including amortization of the issuance costs, was 3.70%. Refer to paragraph below for further disclosure.
(12)The carrying value of these notes reflects an unamortized discount totaling $1.6 million as of December 31, 2020.  The effective interest rate under the notes, including amortization of the issuance costs, was 5.49%. Refer to paragraph below for further disclosure.
(13)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 $120,000 as of September 30, 2021 and $161,000 as of December 31, 2020.
 
All debt is owed by the Operating Partnership. While COPT is not directly obligated by any debt, it has guaranteed COPLP’s Revolving Credit Facility, Term Loan Facility and Unsecured Senior Notes.

We issued the following unsecured senior notes in 2021:

•$600.0 million of 2.75% Senior Notes due 2031 (the “2.75% Notes”) at an initial offering price of 98.95% of their face value on March 11, 2021, resulting in proceeds, after deducting underwriting discounts, but before other offering expenses, of $589.8 million. The notes mature on April 15, 2031. The carrying value of these notes reflects an unamortized discount totaling $9.7 million as of September 30, 2021. The effective interest rate under the notes, including amortization of discount and issuance costs, was 2.94%; and
•$400.0 million of 2.00% Senior Notes due 2029 (the “2.00% Notes”) at an initial offering price of 99.97% of their face value on August 11, 2021, resulting in proceeds, after deducting underwriting discounts, but before other offering
expenses, of $397.4 million. The notes mature on January 15, 2029. The carrying value of these notes reflects an unamortized discount totaling $2.6 million as of September 30, 2021. The effective interest rate under the notes, including amortization of discount and issuance costs, was 2.09%.

We may redeem these 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 (25 basis points for the 2.75% Notes and 20 basis points for the 2.00% Notes), plus accrued and unpaid interest thereon to the date of redemption. However, if this redemption occurs on or after January 15, 2031 for the 2.75% Notes or November 15, 2028 for the 2.00% Notes, 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 redemption date. These notes are unconditionally guaranteed by COPT.

With regard to our 3.60% Senior Notes due 2023 (the “3.60% Notes”) and 5.25% Senior Notes due 2024 (the “5.25% Notes”), we:

•effective March 11, 2021, purchased pursuant to tender offers $184.4 million of 3.60% Notes for $196.7 million and $145.6 million of 5.25% Notes for $164.7 million, plus accrued interest; and
•on April 12, 2021, redeemed the remaining $165.6 million of 3.60% Notes for $176.3 million and $104.4 million of 5.25% Notes for $117.7 million, plus accrued interest.

In connection with these purchases and redemptions, we recognized a loss on early extinguishment of debt of $58.4 million in the nine months ended September 30, 2021.

On August 11, 2021, we repaid $100.0 million of our term loan facility.

Certain of our debt instruments require that we comply with a number of restrictive financial covenants.  As of September 30, 2021, we were compliant with these financial covenants.

We capitalized interest costs of $1.8 million in the three months ended September 30, 2021, $2.9 million in the three months ended September 30, 2020, $5.3 million in the nine months ended September 30, 2021 and $9.4 million in the nine months ended September 30, 2020.

The following table sets forth information pertaining to the fair value of our debt (in thousands): 
  September 30, 2021 December 31, 2020
  Carrying Amount Fair Value Carrying Amount Fair Value
Fixed-rate debt        
Unsecured Senior Notes $ 1,678,659  $ 1,723,267  $ 1,289,461  $ 1,334,342 
Other fixed-rate debt 138,101  136,653  140,891  142,838 
Variable-rate debt 342,972  343,577  656,566  654,102 
  $ 2,159,732  $ 2,203,497  $ 2,086,918  $ 2,131,282