Quarterly report pursuant to Section 13 or 15(d)

Debt, Net

v3.24.3
Debt, Net
 9 Months Ended
Sep. 30, 2024
Debt Disclosure [Abstract]  
Debt, Net Debt, Net
 
Our debt consisted of the following (dollars in thousands):
  Carrying Value (1) as of September 30, 2024
September 30,
2024		 December 31,
2023
  Stated Interest Rates Scheduled Maturity
Mortgage and Other Secured Debt:        
Fixed-rate mortgage debt $ 37,391  $ 66,314 
3.82%
 June 2026
Variable-rate secured debt 32,577  32,894 
SOFR + 0.10%
+ 1.45% to 1.55% (2)
 2025-2026 (3)
Total mortgage and other secured debt 69,968  99,208     
Revolving Credit Facility 75,000  75,000 
SOFR + 0.10%
+ 0.725% to 1.400% (4)
 October 2026 (5)
Term Loan Facility 124,547  124,291 
SOFR + 0.10%
+ 0.850% to 1.700% (6)
 January 2026 (7)
Unsecured Senior Notes
2.25%, $400,000 aggregate principal
 398,425  397,608 
2.25% (8)
 March 2026
5.25%, $345,000 aggregate principal (9)
 337,132  335,802 
5.25% (10)
  September 2028
2.00%, $400,000 aggregate principal
 397,838  397,471 
2.00% (11)
 January 2029
2.75%, $600,000 aggregate principal
 592,048  591,212 
2.75% (12)
 April 2031
2.90%, $400,000 aggregate principal
 395,584  395,265 
2.90% (13)
 December 2033
Unsecured note payable 297  430 
0% (14)
 May 2026
Total debt, net $ 2,390,839  $ 2,416,287     
(1)The carrying values of our debt other than the Revolving Credit Facility reflect net deferred financing costs of $4.3 million as of September 30, 2024 and $5.3 million as of December 31, 2023.
(2)Including the effect of interest rate swaps that hedge the risk of interest rate changes, the weighted average interest rate on our variable-rate secured debt as of September 30, 2024 was 2.44%; excluding the effect of these swaps, the weighted average interest rate on this debt as of September 30, 2024 was 6.87%.
(3)Most of this debt matures in 2025, with the ability for us to extend such maturity by two 12-month periods at our option, provided that there is no default on the debt and we pay an extension fee of 0.10% of the debt balance for each extension period.
(4)The weighted average interest rate on the Revolving Credit Facility was 6.35% as of September 30, 2024, excluding the effect of interest rate swaps that hedge the risk of interest rate changes (see Note 9).
(5)The facility matures in October 2026, with the ability for us to 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 0.0625% of the total availability under the facility for each extension period.
(6)The interest rate on this loan was 6.60% as of September 30, 2024, excluding the effect of interest rate swaps that hedge the risk of interest rate changes (see Note 9).
(7)This facility matures in January 2026, with the ability for us to extend such maturity by two 12-month periods at our option, provided that there is no default under the facility and we pay an extension fee of 0.125% of the outstanding loan balance for each extension period.
(8)The carrying value of these notes reflects unamortized discounts and commissions totaling $1.3 million as of September 30, 2024 and $1.9 million as of December 31, 2023. The effective interest rate under the notes, including amortization of such costs, was 2.48%.
(9)As described further in our 2023 Annual Report on Form 10-K, these notes have an exchange settlement feature under which the notes may, under certain circumstances, be exchangeable at the option of the holders. Upon exchange, the principal amount of notes is payable in cash, with the remainder of the exchange obligation, if any, as determined based on the exchange price per common share at the time of settlement, payable in cash, common shares or a combination thereof at our election. As of September 30, 2024, the exchange rate of the notes equaled 33.3882 of our common shares per $1,000 principal amount of notes (equivalent to an exchange price of approximately $29.95 per common share).
(10)The carrying value of these notes reflects unamortized commissions totaling $7.0 million as of September 30, 2024 and $8.1 million as of December 31, 2023. The effective interest rate under the notes, including amortization of such costs, was 5.83%.
(11)The carrying value of these notes reflects unamortized discounts and commissions totaling $1.5 million as of September 30, 2024 and $1.8 million as of December 31, 2023. The effective interest rate under the notes, including amortization of such costs, was 2.09%.
(12)The carrying value of these notes reflects unamortized discounts and commissions totaling $6.9 million as of September 30, 2024 and $7.6 million as of December 31, 2023. The effective interest rate under the notes, including amortization of such costs, was 2.94%.
(13)The carrying value of these notes reflects unamortized discounts and commissions totaling $3.6 million as of September 30, 2024 and $3.9 million as of December 31, 2023. The effective interest rate under the notes, including amortization of such costs, was 3.01%.
(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 $14,000 as of September 30, 2024 and $32,000 as of December 31, 2023.
 
All debt is owed by the Operating Partnership. While COPT Defense is not directly obligated by any debt, it has guaranteed CDPLP’s Revolving Credit Facility, Term Loan Facility and Unsecured Senior Notes. All of our mortgage and other secured debt as of September 30, 2024 was for consolidated real estate joint ventures (see Note 6).
The table below sets forth interest expense recognized on the 5.25% Exchangeable Senior Notes due 2028 (the “5.25% Notes”) for the three and nine months ended September 30, 2024 and 2023 (in thousands):
For the Three Months Ended September 30, For the Nine Months Ended September 30,
2024 2023 2024 2023
Interest expense at stated interest rate $ 4,528  $ 956  $ 13,584  $ 956 
Interest expense associated with amortization of debt discount and issuance costs 393  124  1,162  124 
Total $ 4,921  $ 1,080  $ 14,746  $ 1,080 

Certain of our debt instruments require that we comply with a number of restrictive financial covenants.  As of September 30, 2024, we were compliant with these financial covenants.

Our debt matures on the following schedule (in thousands):
Year Ending December 31, September 30, 2024
2024 (1)
 $ 455 
2025 23,717 
2026 646,300 
2027 — 
2028 345,000 
Thereafter 1,400,000 
Total $ 2,415,472  (2)
(1)Represents the three months ending December 31, 2024.
(2)Represents scheduled principal amortization and maturities only and therefore excludes net discounts and deferred financing costs of $24.6 million.

We capitalized interest costs of $712,000 in the three months ended September 30, 2024, $1.5 million in the three months ended September 30, 2023, $1.9 million in the nine months ended September 30, 2024 and $3.5 million in the nine months ended September 30, 2023.

The following table sets forth information pertaining to the fair value of our debt (in thousands): 
  September 30, 2024 December 31, 2023
  Carrying Amount Estimated Fair Value Carrying Amount Estimated Fair Value
Fixed-rate debt        
Unsecured Senior Notes $ 2,121,027  $ 1,968,894  $ 2,117,358  $ 1,876,611 
Other fixed-rate debt 37,688  35,959  66,744  63,692 
Variable-rate debt 232,124  233,373  232,185  232,270 
  $ 2,390,839  $ 2,238,226  $ 2,416,287  $ 2,172,573