| Debt, Net |
Debt, Net
Our debt consisted of the following (dollars in thousands):
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Maximum |
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Availability at |
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Carrying Value at |
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Scheduled Maturity |
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September 30,
2015 |
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September 30,
2015 |
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December 31,
2014 |
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Stated Interest Rates as of |
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as of |
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September 30, 2015 |
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September 30, 2015 |
Mortgage and Other Secured Loans: |
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Fixed rate mortgage loans (1) |
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$ |
288,217 |
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$ |
387,139 |
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3.96% - 7.87% (2) |
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2016-2024 |
Variable rate secured loan |
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36,249 |
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36,877 |
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LIBOR + 2.25% (3) |
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November 2015 |
Total mortgage and other secured loans |
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324,466 |
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424,016 |
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Revolving Credit Facility |
$ |
800,000 |
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87,000 |
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83,000 |
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LIBOR + 0.875% to 1.60% (4) |
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May 2019 |
Term Loan Facilities |
(5) |
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520,000 |
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520,000 |
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LIBOR + 0.90% to 2.60% (6) |
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2016-2020 |
Unsecured Senior Notes |
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3.600% Senior Notes (7) |
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347,691 |
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347,496 |
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3.60% |
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May 2023 |
5.250% Senior Notes (8) |
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246,074 |
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245,797 |
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5.25% |
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February 2024 |
3.700% Senior Notes (9) |
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297,830 |
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297,569 |
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3.70% |
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June 2021 |
5.000% Senior Note (10) |
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296,646 |
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— |
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5.00% |
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July 2025 |
Unsecured notes payable |
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1,533 |
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1,607 |
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0% (11) |
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2026 |
4.25% Exchangeable Senior Notes (12) |
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— |
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572 |
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N/A |
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(12) |
Total debt, net |
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$ |
2,121,240 |
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$ |
1,920,057 |
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(1) |
Several of the fixed rate mortgages carry interest rates that were above or below market rates upon assumption 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 $24,000 as of September 30, 2015 and $42,000 as of December 31, 2014. Please refer to Note 4 for disclosure pertaining to the removal of a $150.0 million nonrecourse mortgage loan from our balance sheet on August 28, 2015.
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(2) |
The weighted average interest rate on our fixed rate mortgage loans was 6.07% as of September 30, 2015.
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(3) |
The interest rate on the loan outstanding was 2.45% as of September 30, 2015.
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(4) |
The weighted average interest rate on the Revolving Credit Facility was 1.48% as of September 30, 2015.
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(5) |
We have the ability to borrow an additional $380.0 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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(6) |
The weighted average interest rate on these loans was 1.78% as of September 30, 2015.
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(7) |
The carrying value of these notes included a principal amount of $350.0 million and an unamortized discount totaling $2.3 million as of September 30, 2015 and $2.5 million as of December 31, 2014. The effective interest rate under the notes, including amortization of the issuance costs, was 3.70%.
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(8) |
The carrying value of these notes included a principal amount of $250.0 million and an unamortized discount totaling $3.9 million as of September 30, 2015 and $4.2 million as of December 31, 2014. The effective interest rate under the notes, including amortization of the issuance costs, was 5.49%.
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(9) |
The carrying value of these notes included a principal amount of $300.0 million and an unamortized discount totaling $2.2 million as of September 30, 2015 and $2.4 million as of December 31, 2014. The effective interest rate under the notes, including amortization of the issuance costs, was 3.85%.
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(10) Refer to the paragraph below for disclosure pertaining to these notes.
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(11) |
These notes carry interest rates that were below market rates upon assumption and therefore were recorded at their fair value based on applicable effective interest rates. The carrying value of these notes reflects an unamortized discount totaling $578,000 as of September 30, 2015 and $654,000 as of December 31, 2014.
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(12) On April 20, 2015, we redeemed these notes at 100% of their principal amount.
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 May 6, 2015, we entered into a credit agreement with a group of lenders for which KeyBanc Capital Markets and J.P. Morgan Securities LLC acted as joint lead arrangers and joint book runners, KeyBank National Association acted as administrative agent and JPMorgan Chase Bank, N.A. acted as syndication agent (the “Consolidated Credit Agreement”) to amend, restate and consolidate the terms of our Revolving Credit Facility and one of our term loan facilities. In addition to consolidating the terms of these loan facilities, the Consolidated Credit Agreement included the following provisions:
For the Revolving Credit Facility:
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• |
an extension of the maturity date from July 14, 2017 to May 6, 2019, 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 based on the total availability of the facility for each extension;
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changes to the interest terms of the facility such that the variable interest rate is based on LIBOR (customarily the 30-day rate) plus 0.875% to 1.600%, 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”);
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changes to the quarterly fee carried by the facility. Such fee is based on the average daily amount of the lenders’ aggregate commitment 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; and
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certain changes to the financial covenants of the facility. |
For the term loan facility:
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an increase in the loan amount from $250.0 million to $300.0 million, with a right for us to borrow up to an additional $200.0 million during the term for an aggregate maximum loan of $500.0 million, subject to certain conditions. We used the proceeds from the $50.0 million increase in the facility to repay a portion of another existing unsecured term loan;
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an extension of the maturity date of the loan from February 14, 2017 to May 6, 2020; |
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changes to the interest terms of the facility such that the variable interest rate is based on LIBOR (customarily the 30-day rate) plus 0.900% to 1.850%, as determined by the credit ratings assigned to COPLP by the Ratings Agencies; and
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certain changes to the financial covenants of the facility. |
On June 29, 2015, we issued a $300.0 million aggregate principal amount of 5.00% Senior Notes at an initial offering price of 99.510% of their face value. The proceeds from this issuance, after deducting underwriting discounts, but before other offering expenses, were $296.6 million. The notes mature on July 1, 2025. We may redeem the 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 and (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 45 basis points, plus accrued and unpaid interest thereon to the date of redemption. The notes are unconditionally guaranteed by COPT. However, 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 redemption date. The carrying value of these notes reflects an unamortized discount totaling $3.4 million at September 30, 2015. The effective interest rate under the notes, including amortization of the issuance costs, was 5.15%.
We capitalized interest costs of $1.5 million in the three months ended September 30, 2015, $1.3 million in the three months ended September 30, 2014, $5.6 million in the nine months ended September 30, 2015 and $4.3 million in the nine months ended September 30, 2014.
The following table sets forth information pertaining to the fair value of our debt (in thousands):
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September 30, 2015 |
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December 31, 2014 |
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Carrying |
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Estimated |
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Carrying |
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Estimated |
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Amount |
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Fair Value |
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Amount |
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Fair Value |
Fixed-rate debt |
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Unsecured Senior Notes |
$ |
1,188,241 |
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$ |
1,212,120 |
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$ |
890,862 |
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$ |
901,599 |
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Other fixed-rate debt |
289,750 |
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298,198 |
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389,318 |
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356,377 |
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Variable-rate debt |
643,249 |
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644,243 |
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639,877 |
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642,091 |
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$ |
2,121,240 |
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$ |
2,154,561 |
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$ |
1,920,057 |
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$ |
1,900,067 |
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