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Notes Payable and Unsecured Credit Facility
 12 Months Ended
Dec. 31, 2023
Debt Disclosure [Abstract]  
Notes Payable and Unsecured Credit Facility
9.
Notes Payable and Unsecured Credit Facility

The Company's outstanding debt, net of unamortized debt premium (discount) and debt issuance costs, consisted of the following as of the dates set forth below:

 

 

 

Maturing
Through

 

Weighted
Average
Contractual
Rate

 

Weighted
Average
Effective
Rate

 

December 31,

 

(in thousands)

 

 

 

 

 

 

 

2023

 

 

2022

 

Notes payable:

 

 

 

 

 

 

 

 

 

 

 

 

Fixed rate mortgage loans

 

6/1/2037

 

3.8%

 

4.2%

 

$

449,615

 

 

 

342,135

 

Variable rate mortgage loans (1)

 

1/31/2032

 

4.2%

 

4.3%

 

 

299,579

 

 

 

136,246

 

Fixed rate unsecured debt

 

3/15/2049

 

3.8%

 

4.0%

 

 

3,252,755

 

 

 

3,248,373

 

Total notes payable

 

 

 

 

 

 

 

 

4,001,949

 

 

 

3,726,754

 

Unsecured credit facilities:

 

 

 

 

 

 

 

 

 

 

 

 

$1.25 Billion Line of Credit (the "Line") (2)

 

3/23/2025

 

6.3%

 

6.6%

 

 

152,000

 

 

 

—

 

Total unsecured credit facilities

 

 

 

 

 

 

 

 

152,000

 

 

 

—

 

Total debt outstanding

 

 

 

 

 

 

 

$

4,153,949

 

 

 

3,726,754

 
(1)
As of December 31, 2023, 15 of these 17 variable rate loans, representing $294.9 million of debt in the aggregate, have interest rate swaps in place to mitigate interest rate fluctuation risk. Based on these swap agreements, the effective fixed rates of the 15 loans range from 2.5% to 6.7%.
(2)
Weighted average effective rate for the Line is calculated based on a fully drawn Line balance using the period end variable rate. In January 2024, the Company amended its Line to, among other items, increase the borrowing capacity to $1.5 billion and to extend the expiration date to March, 2028 with the option to extend the expiration for two additional six-month period.

Notes Payable

Notes payable consist of mortgage loans secured by properties and unsecured public and private debt. Mortgage loans may be repaid before maturity, but could be subject to yield maintenance premiums, and are generally due in monthly installments of principal and interest or interest only. Unsecured public debt may be repaid before maturity subject to accrued and unpaid interest through the proposed redemption date and a make-whole premium. Interest on unsecured public and private debt is payable semi-annually.

The Company is required to comply with certain financial covenants for its unsecured public debt as defined in the indenture agreements such as the following ratios: Consolidated Debt to Consolidated Assets, Consolidated Secured Debt to Consolidated Assets, Consolidated Income for Debt Service to Consolidated Debt Service, and Unencumbered Consolidated Assets to Unsecured Consolidated Debt. As of December 31, 2023, management of the Company believes it is in compliance with all financial covenants for its unsecured public debt.

Unsecured Credit Facilities

The Company has an unsecured line of credit commitment (the "Line") with a syndicate of banks. At December 31, 2023, the Line had a borrowing capacity of $1.25 billion, which is reduced by the balance of outstanding borrowings and commitments from issued letters of credit. The Line bears interest at a variable rate of SOFR plus a 0.10% market adjustment and an applicable margin of 0.865%, and is subject to a commitment fee of 0.15%. Both the applicable margin and the commitment fee are based on the Company's corporate credit rating.

The Company is required to comply with certain financial covenants as defined in the Line credit agreement, such as Ratio of Indebtedness to Total Asset Value ("TAV"), Ratio of Unsecured Indebtedness to Unencumbered Asset Value, Ratio of Adjusted EBITDA to Fixed Charges, Ratio of Secured Indebtedness to TAV, Ratio of Unencumbered Net Operating Income to Unsecured Interest Expense, and other covenants customary with this type of unsecured financing. As of December 31, 2023, the Company is in compliance with all financial covenants for the Line.

On January 8, 2024, the Company priced a public offering of $400 million of senior unsecured debt due in 2034, and were issued at 99.617% of par value with a coupon of 5.250%.

On January 18, 2024, the Company entered into a Sixth Amended and Restated Credit Agreement (the "Credit Agreement"), with the financial institutions party thereto, as Lenders, and Wells Fargo Bank, National Association, as Administrative Agent. The Credit Agreement provides for an unsecured revolving credit facility in the amount of $1.50 billion for a term of four years (plus two six-month extension options) and includes an accordion feature which permits the borrower to request increases in the size of the revolving loan facility by up to an additional $1.50 billion. The interest rate on the revolving credit facility is equal to the Secured Overnight Financing Rate ("SOFR") plus a margin that is determined based on the borrower’s long-term unsecured debt ratings and ratio of indebtedness to total asset value. At the time of the closing, the effective interest rate was SOFR plus a credit spread adjustment of 10 basis points plus a margin of 72.5 basis points. The Credit Agreement also incorporates sustainability-linked adjustments to the interest rate, which provide for upward or downward adjustments to the applicable margin if the Company achieves, or fails to achieve, certain specified targets based on Scope 1 and Scope 2 emission standards as set forth in the Credit Agreement. At the time of the closing, a 1 basis point downward sustainability-linked adjustment to the interest rate was applicable. The maturity date of the Credit Agreement is March 23, 2028 with the option to extend the expiration for two additional six month periods.

Scheduled principal payments and maturities on notes payable and unsecured credit facilities were as follows:

 

(in thousands)

 

December 31, 2023

 

Scheduled Principal Payments and Maturities by Year:

 

Scheduled
Principal
Payments

 

 

Mortgage
Loan
Maturities

 

 

Unsecured
Maturities (1)

 

 

Total

 

2024

 

$

12,398

 

 

 

133,580

 

 

 

250,000

 

 

 

395,978

 

2025

 

 

11,094

 

 

 

52,537

 

 

 

402,000

 

 

 

465,631

 

2026

 

 

11,426

 

 

 

147,847

 

 

 

200,000

 

 

 

359,273

 

2027

 

 

8,612

 

 

 

222,558

 

 

 

525,000

 

 

 

756,170

 

2028

 

 

7,011

 

 

 

36,570

 

 

 

300,000

 

 

 

343,581

 

Beyond 5 Years

 

 

8,070

 

 

 

106,130

 

 

 

1,750,000

 

 

 

1,864,200

 

Unamortized debt premium/(discount) and issuance costs

 

 

—

 

 

 

(8,640

)

 

 

(22,244

)

 

 

(30,884

)

Total

 

$

58,611

 

 

 

690,582

 

 

 

3,404,756

 

 

 

4,153,949

 
(1)
Includes unsecured public and private debt and unsecured credit facilities.

 

In connection with the acquisition of UBP on August 18, 2023, the Company completed the following debt transactions:

•
Assumed fixed rate debt of $130.0 million in the aggregate (including a mark to market debt discount of $13.6 million) that, on a property-by-property basis, encumbers 11 operating properties, and includes one unsecured note. This indebtedness has scheduled maturity dates ranging from August 2024 to June 2037, and accrues interest at rates ranging from 3.5% to 5.6% per annum.
•
Assumed variable rate debt of $154.7 million in the aggregate (including a mark to market debt premium of $1.1 million) that collectively encumbers 9 operating properties. This indebtedness has interest rate swaps in place to mitigate rate fluctuation risk. Based on these swap agreements, the effective fixed rates range from 3.1% to 4.8% per annum. The scheduled maturity dates range from August 2024 to January 2032.

The Company was in compliance as of December 31, 2023, with all financial and other covenants under its unsecured public and private placement debt and unsecured credit facilities.