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Debt | 9 Months Ended
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Sep. 30, 2016
Debt Disclosure [Abstract] |
Debt | Debt The following table presents the Company’s debt as of September 30, 2016, and December 31, 2015 (in thousands):
|  |  |  |  | Outstanding Principal Balance
| Interest Rate (1) |  | Maturity Date |  | September 30, 2016 |  | December 31, 2015
AH4R 2014-SFR1 securitization (2) | 2.07 | % |  | June 9, 2019 |  | $ | 457,979 |  |  | $ | 473,755 |
AH4R 2014-SFR2 securitization | 4.42 | % |  | October 9, 2024 |  | 503,093 |  |  | 507,305 |
AH4R 2014-SFR3 securitization | 4.40 | % |  | December 9, 2024 |  | 519,148 |  |  | 523,109 |
AH4R 2015-SFR1 securitization (3) | 4.14 | % |  | April 9, 2045 |  | 544,861 |  |  | 549,121 |
AH4R 2015-SFR2 securitization (4) | 4.36 | % |  | October 9, 2045 |  | 473,237 |  |  | 476,920 |
Total asset-backed securitizations |  |  |  |  |  | 2,498,318 |  |  | 2,530,210 |
Exchangeable senior notes | 3.25 | % |  | November 15, 2018 |  | 115,000 |  |  | — |
Secured note payable | 4.06 | % |  | July 1, 2019 |  | 50,065 |  |  | 50,752 |
Revolving credit facilities (5) | 2.38 | % |  | August 16, 2020 |  | 75,000 |  |  | — |
Term loan facility (6) | 2.33 | % |  | August 16, 2021 |  | 250,000 |  |  | — |
Total debt (7) |  |  |  |  |  | 2,988,383 |  |  | 2,580,962 |
Unamortized discount on exchangeable senior notes |  |  |  |  | (2,134 | ) |  | — |
Equity component of exchangeable senior notes |  |  |  |  | (5,583 | ) |  | — |
Deferred financing costs, net (8) |  |  |  |  | (53,845 | ) |  | (56,567 | )
Total debt per balance sheet |  |  |  |  | $ | 2,926,821 |  |  | $ | 2,524,395 |
(1) | Interest rates are as of September 30, 2016. Unless otherwise stated, interest rates are fixed percentages.
(2) | The AH4R 2014-SFR1 securitization bears interest at a duration-weighted blended interest rate of 1-month LIBOR plus 1.54%, subject to a LIBOR floor of 0.25%. The maturity date of June 9, 2019, reflects the fully extended maturity date based on an initial two-year loan term and three, 12-month extension options, at the Company’s election, provided there is no event of default and compliance with certain other terms.
(3) | The AH4R 2015-SFR1 securitization has a maturity date of April 9, 2045, with an anticipated repayment date of April 9, 2025.
(4) | The AH4R 2015-SFR2 securitization has a maturity date of October 9, 2045, with an anticipated repayment date of October 9, 2025.
(5) | The revolving credit facility that was entered into in August 2016 provides for a borrowing capacity of up to $650.0 million, with a fully extended maturity date of August 2020, and bears interest at a LIBOR rate plus a margin ranging from 1.75% to 2.30% or a base rate (generally determined according to a prime rate or federal funds rate) plus a margin ranging from 0.75% to 1.30%. The interest rate stated represents the applicable spread for LIBOR based borrowings as of September 30, 2016, plus 1-month LIBOR.
(6) | The term loan facility provides for a borrowing capacity of up to $350.0 million, with a fully extended maturity date of August 2021, and bears interest at a LIBOR rate plus a margin ranging from 1.70% to 2.30% or a base rate (generally determined according to a prime rate or federal funds rate) plus a margin ranging from 0.70% to 1.30%. The interest rate stated represents the applicable spread for LIBOR based borrowings as of September 30, 2016, plus 1-month LIBOR.
(7) | The Company was in compliance with all debt covenants associated with its asset-backed securitizations, exchangeable senior notes, secured note payable, credit facilities and term loan facility as of September 30, 2016, and December 31, 2015.
(8) | Deferred financing costs relate to our asset-backed securitizations and our term loan facility. Amortization of deferred financing costs was $2.2 million and $1.8 million for the three months ended September 30, 2016 and 2015, respectively, and $6.3 million and $5.0 million for the nine months ended September 30, 2016 and 2015, respectively, which has been included in gross interest, prior to interest capitalization.
Asset-Backed Securitization In connection with the Merger with ARPI on February 29, 2016 (see Note 10), the Company assumed a securitization loan (the "ARP 2014-SFR1 securitization”), which involved the issuance and sale of single-family rental pass-through certificates that represent beneficial ownership interests in a loan secured by 2,875 homes held by a special purpose entity, ARP 2014-1 Borrower, LLC (the “Borrower”). The Borrower under the loan was wholly owned by another special purpose entity (the “Equity Owner”) and the Equity Owner was wholly owned by the operating partnership. The loan, at the time of its origination by ARPI in August 2014, had an original principal amount of $342.2 million and an initial term of two years, with three, 12-month extension options, resulting in a fully extended maturity date of September 9, 2019. It was comprised of six floating rate components computed monthly based on 1-month LIBOR for each interest period plus a fixed component spread for each of the six components resulting in an effective weighted-average interest rate of 1-month LIBOR plus 2.11%. Interest on the loan was paid monthly. The 2,875 homes securing the loan were substantially similar to the other properties owned by the Company and were leased to tenants underwritten on substantially the same basis as the tenants in the Company’s other properties. During the duration of the loan, the Borrower’s properties were not generally able to be transferred, sold or otherwise securitized, the Company could have substituted properties only if a property owned by the Borrower became a disqualified property under the terms of the loan, and the Borrower was limited in its ability to incur any additional indebtedness. The loan was also secured by a security interest in all of the Borrower’s personal property and a pledge of all of the assets of the Equity Owner, including a security interest in its membership interest in the Borrower. The Company provided a limited guaranty (i) for certain losses arising out of designated acts of intentional misconduct and (ii) for the principal amount of the loan and all other obligations under the loan agreement in the event of insolvency or bankruptcy proceedings. The loan required that we maintained certain covenants, including but not limited to, a minimum debt yield on the collateral pool of properties. In September 2016, the Company paid off the ARP 2014-SFR1 asset-backed securitization using available cash and borrowings from our credit facilities, which resulted in a $10.7 million loss on early extinguishment of debt related to the write-off of the discount on the securitization. The payoff of the ARP 2014-SFR1 asset-backed securitization resulted in the release of the 2,875 collateralized homes and $10.1 million of restricted cash for lender requirements. Exchangeable Senior Notes, Net In connection with the Merger with ARPI on February 29, 2016 (see Note 10), the Company assumed 3.25% exchangeable senior notes due 2018 that have a $115.0 million aggregate principal amount and a fair value at assumption of $112.3 million. The exchangeable senior notes are senior unsecured obligations of the operating partnership and rank equally in right of payment with all other existing and future senior unsecured indebtedness of the operating partnership. Interest is payable in arrears on May 15 and November 15 of each year, beginning May 15, 2016, until the maturity date of November 15, 2018. The operating partnership’s obligations under the exchangeable senior notes are fully and unconditionally guaranteed by the Company. The exchangeable senior notes bear interest at a rate of 3.25% per annum and contain an exchange settlement feature, which provides that the exchangeable senior notes may, under certain circumstances, be exchangeable for cash, shares of our common stock or a combination of cash and shares of our common stock, at the option of the operating partnership, based on an initial exchange rate of 46.9423 shares of ARPI's common stock per $1,000 principal amount of the notes. The adjusted initial exchange rate would be 53.2795 shares of our common stock per $1,000 principal amount of the notes, based on the 1.135 exchange ratio of ARPI shares to our shares resulting from our merger with ARPI. The current exchange rate as of September 30, 2016, was 54.6381 shares of our common stock per $1,000 principal amount of the notes. The exchange rate changes over time based on our common share price and distributions to common shareholders. Prior to the close of business on the business day immediately preceding August 15, 2018, the notes will be exchangeable at the option of the holders only under the following circumstances: (1) during any calendar quarter beginning after December 31, 2013 (and only during such quarter) if the closing sale price per share of our common stock is more than 130% of the then-current exchange price for at least 20 trading days (whether or not consecutive) in the period of 30 consecutive trading days ending on the last trading day of the preceding calendar quarter; (2) during the five consecutive business-day period following any five consecutive trading-day period in which the trading price per $1,000 principal amount of notes was less than 98% of the product of the closing sale price per share of our common stock multiplied by the then-current exchange rate; or (3) upon the occurrence of specified corporate transactions described in the indenture. On or after August 15, 2018, the notes will be exchangeable at any time prior to the close of business on the second business day immediately preceding the maturity date. Subject to its election to satisfy its exchange obligations entirely in shares of our common stock, upon exchange, the operating partnership will pay or deliver, as the case may be, to exchanging holders in respect of each $1,000 principal amount of notes being exchanged a settlement amount either solely in cash, solely in common shares or in a combination of cash and shares of our common stock. The fair value of the exchangeable senior notes, which was calculated using a binomial lattice model at the time of assumption, was $112.3 million, which represents the $115.0 million face value less a discount of $2.7 million, which will be amortized using the effective interest method over the term of the notes. The amount recorded to exchangeable senior notes, net at the time of assumption was $105.3 million, which represents the fair value of $112.3 million, less the fair value of the exchange settlement feature of the notes of $7.0 million, which was calculated using a straight-debt rate of 6.7% at the time of assumption. The fair value of the exchange settlement feature was recorded in additional paid-in capital and will be amortized using the effective interest method over the term of the notes. As of September 30, 2016, the exchangeable senior notes, net had a balance of $107.3 million in the condensed consolidated balance sheets, which was net of an unamortized discount of $2.1 million and $5.6 million of unamortized fair value of the exchange settlement feature, which was included in additional paid-in capital within the condensed consolidated balance sheets. Credit Facilities In March 2013, the Company entered into a $500.0 million senior secured revolving credit facility with a financial institution, which was subsequently amended in September 2013 to, among other things, expand our borrowing capacity to $800.0 million and extend the repayment period to September 30, 2018. All borrowings under the credit facility accrued interest at 1-month LIBOR plus 2.75% until March 2017, and thereafter at 1-month LIBOR plus 3.125%. The credit facility was secured by our operating partnership’s membership interests in entities that own certain of our single-family properties and required that we maintain certain financial covenants. In July 2016, the Company paid off the $142.0 million of borrowings that had been outstanding on the credit facility as of June 30, 2016, using proceeds from our 6.35% Series E perpetual preferred share offering, and terminated the credit facility in August 2016. The termination of the credit facility resulted in $2.7 million of charges during the quarter ended September 30, 2016, related to deferred financing cost write-offs, that were included in loss on early extinguishment of debt within the condensed consolidated statements of operations. In August 2016, the Company entered into a $1.0 billion credit agreement providing for a revolving credit facility in an aggregate principal amount of $650.0 million and a delayed draw term loan facility in an aggregate principal amount of $350.0 million. The interest rate on the revolving credit facility is, at the Company’s election, a LIBOR rate plus a margin ranging from 1.75% to 2.30% or a base rate (generally determined according to a prime rate or federal funds rate) plus a margin ranging from 0.75% to 1.30%. Loans under the term loan facility accrue interest, at the Company’s election, at either a LIBOR rate plus a margin ranging from 1.70% to 2.30% or a base rate plus a margin ranging from 0.70% to 1.30%. In each case, the actual margin is determined according to a ratio of the Company’s total indebtedness to total asset value in effect from time to time. Based on current credit metrics for LIBOR based borrowings as of September 30, 2016, the revolving credit facility bears interest at 1-month LIBOR plus 1.85%, and the term loan facility bears interest at 1-LIBOR plus 1.80%. The credit agreement includes an accordion feature allowing the revolving credit facility or the term loan facility to be increased to an aggregate amount not to exceed $1.75 billion, subject to certain conditions. The facilities mature on August 16, 2019. No amortization payments are required on the term loan facility prior to the maturity date. The Company has the option to extend the maturity date of the revolving credit facility for up to one year, and has two options to extend the maturity date of the term loan facility for up to one year each, in both cases upon payment of an extension fee. The credit agreement requires that we maintain certain financial covenants. As of September 30, 2016, the Company had $75.0 million of outstanding borrowings against the revolving credit facility, $250.0 million of outstanding borrowings against the term loan facility, net and was in compliance with all loan covenants. Interest Expense The following table displays our total gross interest, which includes unused commitment and other fees on our credit facilities and amortization of deferred financing costs, the discounts on the ARP 2014-SFR1 securitization and exchangeable senior notes and the fair value of the exchange settlement feature of the exchangeable senior notes, and capitalized interest for the three and nine months ended September 30, 2016 and 2015 (in thousands):
| For the Three Months Ended |  | For the Nine Months Ended
| September 30, 2016 |  | September 30, 2015 |  | September 30, 2016 |  | September 30, 2015
Gross interest | $ | 33,433 |  |  | $ | 25,029 |  |  | $ | 100,886 |  |  | $ | 69,181 |
Capitalized interest | (582 | ) |  | (1,163 | ) |  | (1,577 | ) |  | (7,642 | )
Interest expense | $ | 32,851 |  |  | $ | 23,866 |  |  | $ | 99,309 |  |  | $ | 61,539 |

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- Definition The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21475-112644 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.19,20,22) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 + Details
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