Annual report pursuant to Section 13 and 15(d)

Debt, Net

v3.22.0.1
Debt, Net
 12 Months Ended
Dec. 31, 2021
Debt Disclosure [Abstract]  
Debt, Net Debt, Net
 
Debt Summary

Our debt consisted of the following (dollars in thousands):
  Carrying Value (1) as of December 31, December 31, 2021
  2021 2020 Stated Interest Rates Scheduled Maturity
Mortgage and Other Secured Debt:        
Fixed rate mortgage debt (2) $ 86,960  $ 139,991 
3.82% - 4.62% (3)
 2023-2026
Variable rate secured debt 33,667  115,119 
LIBOR + 1.45% to 1.55% (4)
 2025-2026
Total mortgage and other secured debt 120,627  255,110     
Revolving Credit Facility 76,000  143,000 
LIBOR + 0.775% to 1.45% (5)
 March 2023
Term Loan Facility 299,420  398,447 
LIBOR + 1.00% to 1.65% (6)
 December 2022
Unsecured Senior Notes
2.25%, $400,000 aggregate principal
 395,491  394,464 
2.25% (7)
 March 2026
2.00%, $400,000 aggregate principal
 396,512  — 
2.00% (8)
 January 2029
2.75%, $600,000 aggregate principal
 589,060  — 
2.75% (9)
 April 2031
2.90%, $400,000 aggregate principal
 394,441  — 
2.90% (10)
 December 2033
3.60%, $350,000 aggregate principal
 —  348,888 
3.60% (11)
 N/A
5.25%, $250,000 aggregate principal
 —  248,194 
5.25% (12)
 N/A
5.00%, $300,000 aggregate principal
 —  297,915 
5.00% (13)
 N/A
Unsecured note payable 753  900 
0% (14)
 May 2026
Total debt, net $ 2,272,304  $ 2,086,918     

(1)The carrying values of our debt other than the Revolving Credit Facility reflect net deferred financing costs of $5.8 million as of December 31, 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 $155,000 as of December 31, 2020.
(3)The weighted average interest rate on our fixed rate mortgage debt was 4.07% as of December 31, 2021.
(4)The weighted average interest rate on our variable rate secured debt was 1.62% as of December 31, 2021.
(5)The weighted average interest rate on the Revolving Credit Facility was 1.20% as of December 31, 2021.
(6)The interest rate on this loan was 1.10% as of December 31, 2021.
(7)The carrying value of these notes reflects an unamortized discount totaling $3.6 million as of December 31, 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%.
(8)The carrying value of these notes reflects an unamortized discount totaling $2.5 million as of December 31, 2021. The effective interest rate under the notes, including amortization of the issuance costs, was 2.09%. Refer to paragraph below for further disclosure.
(9)The carrying value of these notes reflects an unamortized discount totaling $9.5 million as of December 31, 2021. The effective interest rate under the notes, including amortization of the issuance costs, was 2.94%. Refer to paragraph below for further disclosure.
(10)The carrying value of these notes reflects an unamortized discount totaling $4.5 million as of December 31, 2021. The effective interest rate under the notes, including amortization of the issuance costs, was 3.01%. 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)The carrying value of these notes reflects an unamortized discount totaling $1.8 million as of December 31, 2020.  The effective interest rate under the notes, including amortization of the issuance costs, was 5.15%. Refer to paragraph below for further disclosure.
(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 $108,000 as of December 31, 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.

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 ratio, 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, 2021, we were compliant with these financial covenants.
Our debt matures on the following schedule (in thousands):
Year Ending December 31, December 31, 2021
2022 $ 303,333 
2023 94,953 
2024 29,983 
2025 23,717 
2026 446,300 
Thereafter 1,400,000 
Total $ 2,298,286  (1)
(1)Represents scheduled principal amortization and maturities only and therefore excludes net discounts and deferred financing costs of $26.0 million.

We capitalized interest costs of $6.5 million in 2021, $12.1 million in 2020 and $10.8 million in 2019.

The following table sets forth information pertaining to the fair value of our debt (in thousands):
  December 31, 2021 December 31, 2020
  Carrying
Amount		 Estimated
Fair Value		 Carrying
Amount		 Estimated
Fair Value
Fixed-rate debt        
Unsecured Senior Notes $ 1,775,504  $ 1,809,950  $ 1,289,461  $ 1,334,342 
Other fixed-rate debt 87,713  87,339  140,891  142,838 
Variable-rate debt 409,087  409,639  656,566  654,102 
  $ 2,272,304  $ 2,306,928  $ 2,086,918  $ 2,131,282 

Revolving Credit Facility

We have an unsecured revolving credit facility (referred to herein as the “Revolving Credit Facility”) with an aggregate lender commitment of $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 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 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 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, 2021, the maximum borrowing capacity under this facility totaled $800.0 million, of which $724.0 million was available.

Weighted average borrowings under our Revolving Credit Facility totaled $135.8 million in 2021 and $204.9 million in 2020. The weighted average interest rate on our Revolving Credit Facility was 1.18% in 2021 and 1.55% in 2020.

Term Loan Facilities

As of December 31, 2021, we had an unsecured term loan facility that carries a variable interest rate based on the LIBOR rate (customarily the 30-day rate) plus 1.00% to 1.65%, as determined by: a ratio of our debt to our assets; and the credit ratings assigned to COPLP by the Ratings Agencies. We amended this loan in 2020 to increase the loan amount by $150.0 million and change the interest terms, and repaid $100.0 million of the loan in 2021.

In connection with our 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

During 2020 and 2021, we issued the following unsecured senior notes:

•$400.0 million of 2.25% Senior Notes due 2026 (the “2.25% Notes”) at an initial offering price of 99.42% of their face value on September 17, 2020, resulting in proceeds, after deducting underwriting discounts, but before other offering expenses, of $395.3 million. The notes mature on March 15, 2026;
•$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;
•$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; and
•$400.0 million of 2.90% Senior Notes due 2033 (the “2.90% Notes”) at an initial offering price of 99.53% of their face value on November 17, 2021, resulting in proceeds, after deducting underwriting discounts, but before other offering expenses, of $395.4 million. The notes mature on December 1, 2033.

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 (35 basis points for the 2.25% Notes, 25 basis points for the 2.75% Notes, 20 basis points for the 2.00% Notes and 25 basis points for the 2.90% 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 a defined date (February 15, 2026 for the 2.25% Notes, January 15, 2031 for the 2.75% Notes, November 15, 2028 for the 2.00% Notes and September 1, 2033 for the 2.90% 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 applicable redemption date. These notes are unconditionally guaranteed by COPT.

During 2020 and 2021, we purchased or redeemed the following unsecured senior notes:

•purchased pursuant to a tender offer $122.9 million of our 3.70% Senior Notes due 2021 (the “3.70% Notes”) on September 17, 2020 for $126.0 million, plus accrued interest; and redeemed the remaining $177.1 million of the 3.70% Notes on October 19, 2020 for $180.9 million plus accrued interest. In connection with this purchase and redemption, we recognized a loss on early extinguishment of debt of $7.3 million in 2020;
•purchased pursuant to tender offers $184.4 million of 3.60% Senior Notes due 2023 (the “3.60% Notes”) for $196.7 million and $145.6 million of 5.25% Senior Notes due 2024 (the “5.25% Notes”) for $164.7 million, plus accrued interest effective March 11, 2021; 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 2021; and
•redeemed $300.0 million of 5.00% Senior Notes due 2025 on November 18, 2021 for $336.4 million plus accrued interest. We recognized a loss on early extinguishment of debt of $38.2 million for this redemption in 2021.