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Mortgage Notes Payable | 12 Months Ended
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Dec. 31, 2016
Loans Payable [Abstract] |
Mortgage Notes Payable | 6. Mortgage Notes Payable The Company had outstanding mortgage notes payable totaling approximately $2.1 billion and $3.4 billion as of December 31, 2016 and 2015, respectively, each collateralized by one or more buildings and related land included in real estate assets. The mortgage notes payable are generally due in monthly installments and mature at various dates through April 10, 2022. Fixed rate mortgage notes payable totaled approximately $2.1 billion and $3.4 billion at December 31, 2016 and 2015, respectively, with contractual interest rates ranging from 4.75% to 7.69% per annum at December 31, 2016 and 2015 (with a weighted-average interest rate of 5.59% and 5.69% per annum (excluding the mezzanine notes payable) at December 31, 2016 and 2015, respectively). There were no variable rate mortgage loans at December 31, 2016 and 2015. As of December 31, 2016 and 2015, the LIBOR rate was 0.77% and 0.43%, respectively. On April 11, 2016, the Company used available cash to repay the mortgage loan collateralized by its Fountain Square property located in Reston, Virginia totaling approximately $211.3 million. The mortgage loan bore interest at a fixed rate of 5.71% per annum and was scheduled to mature on October 11, 2016. There was no prepayment penalty. On September 1, 2016, the Company used a portion of the net proceeds from Boston Properties Limited Partnership’s August 2016 offering of senior unsecured notes (See Note 8) and available cash to repay the mortgage loan collateralized by its 599 Lexington Avenue property located in New York City totaling $750.0 million. The mortgage loan bore interest at a fixed rate of 5.57% per annum (5.41% per annum including the impact of financing costs and interest rate hedges) and was scheduled to mature on March 1, 2017. There was no prepayment penalty. The Company recognized a gain from early extinguishment of debt totaling approximately $0.4 million consisting of the acceleration of the remaining balance related to the effective portion of a previous interest rate hedging program included within accumulated other comprehensive loss, offset by the write-off of unamortized deferred financing costs. On September 1, 2016, the Company used a portion of the net proceeds from Boston Properties Limited Partnership’s August 2016 offering of senior unsecured notes (See Note 8) and available cash to repay the mortgage loan collateralized by its Embarcadero Center Four property located in San Francisco, California totaling approximately $344.8 million. The mortgage loan bore interest at a fixed rate of 6.10% per annum (7.02% per annum including the impact of financing costs and interest rate hedges) and was scheduled to mature on December 1, 2016. There was no prepayment penalty. The Company recognized a loss from early extinguishment of debt totaling approximately $0.7 million consisting of the write-off of unamortized deferred financing costs and the acceleration of the remaining balance related to the effective portion of a previous interest rate hedging program included within accumulated other comprehensive loss. One mortgage loan totaling approximately $1.3 billion at December 31, 2016 and two mortgage loans totaling approximately $1.5 billion at December 31, 2015 have been accounted for at their fair values on the dates the mortgage loans were assumed in connection with the acquisition or consolidation of real estate. The impact of recording the mortgage loans at fair value resulted in a decrease to interest expense of approximately $46.4 million, $55.0 million and $52.5 million for the years ended December 31, 2016, 2015 and 2014, respectively. The cumulative liability related to the fair value adjustments was $33.8 million and $80.2 million at December 31, 2016 and 2015, respectively, and is included in mortgage notes payable, net in the Consolidated Balance Sheets. Contractual aggregate principal payments of mortgage notes payable at December 31, 2016 are as follows:
| Principal Payments
| (in thousands)
2017 | $ | 1,317,654 |
2018 | 18,633 |
2019 | 19,670 |
2020 | 20,766 |
2021 | 40,182 |
Thereafter | 614,710 |
Total aggregate principal payments | 2,031,615 |
Unamortized balance of historical fair value adjustment | 33,830 |
Deferred financing costs, net | (2,358 | )
Total carrying value of mortgage notes payable, net | $ | 2,063,087 |
The mortgage debt maturities through the end of 2017 include the indebtedness of the consolidated entity in which the Company has a 60% interest and which is collateralized by 767 Fifth Avenue (the General Motors Building) in New York City totaling $1.3 billion. In addition, the consolidated entity has outstanding mezzanine indebtedness totaling $306.0 million. These loans have a weighted-average fixed interest rate of approximately 5.96% per annum and mature in October 2017 and may be prepaid without penalty beginning in June 2017. The Company anticipates approaching the debt markets for the refinancing in the first half of 2017. Based on management’s historical experience in the mortgage debt market, the building’s current cash flow is sufficient to support a refinancing of the current outstanding indebtedness while maintaining a reasonable loan-to-value ratio, although there can be no assurance that the refinancing will occur on the terms currently contemplated or at all.

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