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REVOLVING CREDIT FACILITY AND UNSECURED TERM LOANS | 12 Months Ended
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Dec. 31, 2014
REVOLVING CREDIT FACILITY AND UNSECURED TERM LOANS |
REVOLVING CREDIT FACILITY AND UNSECURED TERM LOANS | 7. REVOLVING CREDIT FACILITY AND UNSECURED TERM LOANS On June 20, 2011, the Company entered into an unsecured term loan agreement (the “Term Loan Facility”) which consisted of a $100 million term loan with a five-year maturity (“Term Loan A”) and a $100 million term loan with a seven-year maturity (“Term Loan B”). On December 9, 2011, the Company entered into a credit facility (the “Credit Facility”) comprised of a $100 million unsecured term loan maturing in December 2014 (“Term Loan C”); a $200 million unsecured term loan maturing in March 2017 (“Term Loan D”); and a $300 million unsecured revolving facility maturing in December 2015 (“Revolver”). On June 18, 2013, the Company amended both the Term Loan Facility and Credit Facility. With respect to the Term Loan Facility, among other things, the amendment extended the maturity and decreased the pricing of Term Loan A, while Term Loan B remained unchanged by the amendment. On August 5, 2014, the Company further amended the Term Loan Facility (collectively with the amendment on June 18, 2013, the “Amendments”) to extend the maturity and decrease the pricing of Term Loan B. On December 17, 2013, the Company repaid the $100 million balance under Term Loan C that was scheduled to mature in December 2014. Pricing on the Term Loan Facility depends on the Company’s unsecured debt credit ratings. On September 25, 2014, the Company’s unsecured debt credit rating was upgraded to Baa2 from Baa3 by Moody’s Investors Service with a stable outlook. As a result, the LIBOR spreads applicable to our borrowings under the Term Loan Facility were reduced, effective October 1, 2014. In addition, on November 3, 2014, the Company’s unsecured bonds and issuer ratings were upgraded to BBB from BBB- by Standard and Poor’s Ratings Services with a stable outlook. At the Company’s current Baa2/BBB level, amounts drawn under Term Loan A are priced at 1.30% over LIBOR, with no LIBOR floor, while amounts drawn under Term Loan B are priced at 1.15% over LIBOR, with no LIBOR floor.
|  |  |  | Term Loan Facility Prior to Amendments |  | Term Loan Facility As Amended |
|  |  |  |  |  | LIBOR Spread |  |  |  | LIBOR Spread |
|  | Amount |  | Maturity Date |  | Baa3/BBB- |  | Baa2/BBB |  | Maturity Date |  | Baa3/BBB- |  | Baa2/BBB |
Term Loan A |  | $ | 100 million |  | June 2016 |  | 1.85 | % | 1.65 | % | June 2018 |  | 1.50 | % | 1.30 | %
Term Loan B |  | $ | 100 million |  | June 2018 |  | 2.00 | % | 1.80 | % | January 2020 |  | 1.40 | % | 1.15 | %
With respect to the Credit Facility, among other things, the Amendments extended the maturities of the Revolver and Term Loan D and decreased the pricing of the Revolver, Term Loan C and Term Loan D. Pricing on the Credit Facility depends on the Company’s unsecured debt credit ratings. At the Company’s current Baa2/BBB level, amounts drawn under the Revolver are priced at 1.30% over LIBOR, inclusive of a facility fee of 0.20%, with no LIBOR floor, while amounts drawn under Term Loan C and Term Loan D are priced at 1.30% over LIBOR, with no LIBOR floor.
|  |  |  | Credit Facility Prior to Amendments |  | Credit Facility As Amended |
|  |  |  |  |  | LIBOR Spread |  |  |  | LIBOR Spread |
|  | Amount |  | Maturity Date |  | Baa3/BBB- |  | Baa2/BBB |  | Maturity Date |  | Baa3/BBB- |  | Baa2/BBB |
Revolver |  | $ | 300 million |  | December 2015 |  | 1.80 | % | 1.50 | % | June 2017 |  | 1.60 | % | 1.30 | %
Term Loan C (1) |  | $ | 100 million |  | December 2014 |  | 1.75 | % | 1.45 | % | December 2014 |  | 1.50 | % | 1.30 | %
Term Loan D |  | $ | 200 million |  | March 2017 |  | 1.75 | % | 1.45 | % | January 2019 |  | 1.50 | % | 1.30 | %
| (1) |  | On December 17, 2013, the Company repaid the $100 million balance under Term Loan C that was scheduled to mature in December 2014.
The Company incurred costs of $2.1 million in 2013 and $0.2 million in 2014 in connection with the Amendments and capitalized such costs as a component of loan procurement costs, net of amortization on the consolidated balance sheets. Unamortized costs, along with costs incurred in connection with the amendments, are amortized as an adjustment to interest expense over the remaining term of the modified facilities. In connection with the repayment of Term Loan C, the Company recognized $0.4 million related to the write-off of unamortized loan procurement costs associated with that term loan. As of December 31, 2014, $200 million of unsecured term loan borrowings were outstanding under the Term Loan Facility, $200 million of unsecured term loan borrowings were outstanding under the Credit Facility, $78.0 million of unsecured revolving credit facility borrowings were outstanding under the Credit Facility and $222.0 million was available for borrowing on the unsecured revolving portion of the Credit Facility. The available balance under the unsecured revolving portion of the Credit Facility is reduced by an outstanding letter of credit of $30 thousand. In connection with a portion of the unsecured borrowings, the Company had interest rate swaps as of December 31, 2014 that fix 30-day LIBOR (see note 10). As of December 31, 2014, borrowings under the Credit Facility and Term Loan Facility, as amended and after giving effect to the interest rate swaps, had an effective weighted average interest rate of 2.95%. The Term Loan Facility and the term loan under the Credit Facility were fully drawn at December 31, 2014 and no further borrowings may be made under the term loans. The Company’s ability to borrow under the revolving portion of the Credit Facility is subject to ongoing compliance with certain financial covenants which include: Maximum total indebtedness to total asset value of 60.0% at any time; Minimum fixed charge coverage ratio of 1.50:1.00; and Minimum tangible net worth of $821,211,200 plus 75% of net proceeds from equity issuances after June 30, 2010. Further, under the Credit Facility and Term Loan Facility, the Company is restricted from paying distributions on the Parent Company’s common shares in excess of the greater of (i) 95% of funds from operations, and (ii) such amount as may be necessary to maintain the Parent Company’s REIT status. As of and for the year ended December 31, 2014, the Company was in compliance with all of its financial covenants and anticipates being in compliance with all of its financial covenants through the terms of the Credit Facility and Term Loan Facility.

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