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Indebtedness

9 Months Ended

Sep. 30, 2011

Indebtedness [Abstract]

Indebtedness

5. Indebtedness

The following table discloses certain information regarding our indebtedness:


		Outstanding Balance at								Interest Rate at				Effective Interest Rate at
		September 30, 2011				December 31, 2010				September 30, 2011				September 30, 2011				Maturity Date
Mortgage and Other Loans Payable, Net*		$	695,337			$	486,055				4.45% - 9.25%				4.45% - 9.25%				January 2012 - October 2021
Unamortized Premiums*			(330	)			(358	)

Mortgage and Other Loans Payable, Gross		$	695,007			$	485,697

Senior Unsecured Notes, Net
2016 Notes		$	159,940			$	159,899				5.750	%			5.91	%			01/15/16
2017 Notes			64,715				87,195				7.500	%			7.52	%			12/01/17
2027 Notes			6,065				13,559				7.150	%			7.11	%			05/15/27
2028 Notes			130,889				189,869				7.600	%			8.13	%			07/15/28
2012 Notes			61,806				61,774				6.875	%			6.85	%			04/15/12
2032 Notes			34,679				34,667				7.750	%			7.87	%			04/15/32
2014 Notes			87,755				86,792				6.420	%			6.54	%			06/01/14
2011 Exchangeable Notes			—				128,137				4.625	%			5.53	%			09/15/11
2017 II Notes			111,670				117,637				5.950	%			6.37	%			05/15/17

Subtotal		$	657,519			$	879,529
Unamortized Discounts			5,065				6,980

Senior Unsecured Notes, Gross		$	662,584			$	886,509

Unsecured Credit Facility		$	161,000			$	376,184				3.341	%			3.341	%			09/28/12

*	Excludes $1,008 of Mortgage Loan Payable on Real Estate Held for Sale, inclusive of $48 of unamortized premium as of December 31, 2010.

On February 10, 2011, we paid off and retired prior to maturity a secured mortgage loan maturing in September 2012 in the amount of $14,520. On March 9, 2011, we paid off and retired prior to maturity a secured mortgage loan maturing in December 2014 in the amount of $18,662. On April 1, 2011, we paid off and retired prior to maturity a secured mortgage loan maturing in October 2014 in the amount of $27,389. In connection with the early payoffs, for the nine months ended September 30, 2011, we recorded a loss on retirement of debt of $2,130 related to prepayment premiums and the write-off of unamortized loan fees.

On May 2, 2011, we obtained eight secured mortgage loans aggregating $178,300. The mortgage loans are cross-collateralized by 32 industrial properties totaling approximately 5.9 million square feet of GLA. The mortgage loans bear interest at a fixed rate of 4.45%, principal payments are amortized over 30 years and the loans mature in June 2018. Prepayments are prohibited for twelve months after loan origination, after which prepayment premiums are calculated at the greater of yield maintenance or 1% of the outstanding loan balance.

On May 26, 2011, we assumed a secured mortgage loan in the amount of $24,417 in conjunction with the acquisition of an industrial property from the 2003 Net Lease Joint Venture. The mortgage loan is collateralized by one industrial property totaling approximately 0.7 million square feet of GLA. The mortgage loan bears interest at a fixed rate of 5.579%, principal payments are amortized over 30 years and the loan matures in February 2016.

On September 20, 2011, we transferred title to a property totaling approximately 0.4 million square feet of GLA and an escrow balance in the amount of $1,845 to a lender in satisfaction of a $5,040 non-recourse mortgage loan. We recognized a $147 loss related to the transaction, which is included in loss on retirement of debt for the three months ended September 30, 2011.

On September 23, 2011, we obtained 11 secured mortgage loans aggregating $77,600. The mortgage loans are cross-collateralized by 24 industrial properties totaling approximately 2.3 million square feet of GLA. The mortgage loans bear interest at a fixed rate of 4.85%, principal payments are amortized over 30 years and the loans mature in October 2021. Prepayments are prohibited for twelve months after loan origination, after which prepayment premiums are calculated at the greater of yield maintenance or 1% of the outstanding loan balance.

As of September 30, 2011, Mortgage and Other Loans Payable are collateralized by, and in some instances cross-collateralized by, industrial properties with a net carrying value of $898,264 and one letter of credit in the amount of $889.

During the nine months ended September 30, 2011, we repurchased and retired the following senior unsecured notes prior to maturity:


		Principal Amount Repurchased				Purchase Price
2017 Notes		$	22,500			$	22,387
2017 II Notes			6,000				5,550
2027 Notes			7,500				7,500
2028 Notes			59,025				58,341

		$	95,025			$	93,778

In connection with these repurchases prior to maturity, we recognized $2,327 as loss on retirement of debt for the nine months ended September 30, 2011, which is the difference between the repurchase price of $93,778 and the principal amount retired of $95,025, net of the pro rata write off of the unamortized debt issue discount, the unamortized loan fees and the unamortized settlement amount of the interest rate protection agreements related to the repurchases of $69, $616 and $2,889, respectively.

On September 15, 2011, we paid off and retired our 2011 Exchangeable Notes, at maturity, in the amount of $128,900.

During June 2011, we made a permanent repayment of $100,000 on the term loan of our Unsecured Credit Facility.

The following is a schedule of the stated maturities and scheduled principal payments as of September 30, 2011 of our indebtedness, exclusive of premiums and discounts, for the next five years ending December 31, and thereafter:


		Amount
Remainder of 2011		$	2,969
2012			237,605
2013			13,164
2014			157,207
2015			62,088
Thereafter			1,045,558

Total		$	1,518,591

The Unsecured Credit Facility and the indentures under which our senior unsecured indebtedness is, or may be, issued contain certain financial covenants, including, among other things, coverage ratios and limitations on our ability to incur total indebtedness and secured and unsecured indebtedness. Consistent with our prior practice, we will, in the future, continue to interpret and certify our performance under these covenants in a good faith manner that we deem reasonable and appropriate. However, these financial covenants are complex and there can be no assurance that these provisions would not be interpreted by our noteholders or lenders in a manner that could impose and cause us to incur material costs. Any violation of these covenants would subject us to higher finance costs and fees, or accelerated maturities. We believe that we were in compliance with these financial covenants as of September 30, 2011, and we anticipate that we will be able to operate in compliance with these financial covenants throughout 2011. In addition, our credit facilities and senior debt securities contain certain cross-default provisions, which are triggered in the event that our other material indebtedness is in default. Under the Unsecured Credit Facility, an event of default can also occur if the lenders, in their good faith judgment, determine that a material adverse change has occurred which could prevent timely repayment or materially impair our ability to perform our obligations under the loan agreement.

Fair Value

At September 30, 2011 and December 31, 2010, the fair values of our indebtedness were as follows:


		September 30, 2011								December 31, 2010
		Carrying Amount				Fair Value				Carrying Amount				Fair Value
Mortgage and Other Loans Payable, including mortgages Held for Sale		$	695,337			$	743,627			$	487,063			$	548,696
Senior Unsecured Notes			657,519				640,889				879,529				851,771
Unsecured Credit Facility			161,000				162,288				376,184				376,184

Total		$	1,513,856			$	1,546,804			$	1,742,776			$	1,776,651

The fair values of our mortgage and other loans payable were determined by discounting the future cash flows using the current rates at which similar loans would be made based upon similar leverage levels and similar remaining maturities. The current market rates we utilized were internally estimated; therefore, we have concluded that our determination of fair value for our mortgage and other loans payable was primarily based upon Level 3 inputs. The fair value of the senior unsecured notes was determined by quoted market prices (Level 1) or, for certain senior unsecured notes that are thinly traded, were based upon reported transactions for notes with comparable maturities (Level 2). The fair value of the Unsecured Credit Facility was determined by discounting the future cash flows using current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining term, assuming no repayment until maturity. The current market rate utilized for our Unsecured Credit Facility was internally estimated; therefore, we have concluded that our determination of fair value was primarily based upon Level 3 inputs.