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Debt | 3 Months Ended
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Mar. 31, 2022
Debt Disclosure [Abstract] |
Debt | Debt The following table summarizes the Company’s outstanding indebtedness, including borrowings under the Company’s unsecured credit facility, unsecured term loans, unsecured notes, and mortgage notes as of March 31, 2022 and December 31, 2021.
Loan |  | Principal Outstanding as of March 31, 2022 (in thousands) |  | Principal Outstanding as of December 31, 2021 (in thousands) |  | Interest Rate(1)(2) |  | Maturity Date |  | Prepayment Terms(3)
Unsecured credit facility: |  |  |  |  |  |  |  |  |  |
Unsecured Credit Facility(4) |  | $ | 384,000 |  |  | $ | 296,000 |  |  | L + 0.775% |  | October 23, 2026 |  | i
Total unsecured credit facility |  | 384,000 |  |  | 296,000 |  |  |  |  |  |  |
Unsecured term loans: |  |  |  |  |  |  |  |  |  |
Unsecured Term Loan D |  | 150,000 |  |  | 150,000 |  |  | 2.85 | % |  | January 4, 2023 |  | i
Unsecured Term Loan E |  | 175,000 |  |  | 175,000 |  |  | 3.77 | % |  | January 15, 2024 |  | i
Unsecured Term Loan F |  | 200,000 |  |  | 200,000 |  |  | 2.96 | % |  | January 12, 2025 |  | i
Unsecured Term Loan G |  | 300,000 |  |  | 300,000 |  |  | 1.13 | % |  | February 5, 2026 |  | i
Unsecured Term Loan A |  | 150,000 |  |  | 150,000 |  |  | 3.23 | % |  | March 15, 2027 |  | i
Total unsecured term loans |  | 975,000 |  |  | 975,000 |  |  |  |  |  |  |
Total unamortized deferred financing fees and debt issuance costs |  | (4,075) |  |  | (4,423) |  |  |  |  |  |  |
Total carrying value unsecured term loans, net |  | 970,925 |  |  | 970,577 |  |  |  |  |  |  |
Unsecured notes: |  |  |  |  |  |  |  |  |  |
Series F Unsecured Notes |  | 100,000 |  |  | 100,000 |  |  | 3.98 | % |  | January 5, 2023 |  | ii
Series A Unsecured Notes |  | 50,000 |  |  | 50,000 |  |  | 4.98 | % |  | October 1, 2024 |  | ii
Series D Unsecured Notes |  | 100,000 |  |  | 100,000 |  |  | 4.32 | % |  | February 20, 2025 |  | ii
Series G Unsecured Notes |  | 75,000 |  |  | 75,000 |  |  | 4.10 | % |  | June 13, 2025 |  | ii
Series B Unsecured Notes |  | 50,000 |  |  | 50,000 |  |  | 4.98 | % |  | July 1, 2026 |  | ii
Series C Unsecured Notes |  | 80,000 |  |  | 80,000 |  |  | 4.42 | % |  | December 30, 2026 |  | ii
Series E Unsecured Notes |  | 20,000 |  |  | 20,000 |  |  | 4.42 | % |  | February 20, 2027 |  | ii
Series H Unsecured Notes |  | 100,000 |  |  | 100,000 |  |  | 4.27 | % |  | June 13, 2028 |  | ii
Series I Unsecured Notes |  | 275,000 |  |  | 275,000 |  |  | 2.80 | % |  | September 29, 2031 |  | ii
Series J Unsecured Notes |  | 50,000 |  |  | 50,000 |  |  | 2.95 | % |  | September 28, 2033 |  | ii
Total unsecured notes |  | 900,000 |  |  | 900,000 |  |  |  |  |  |  |
Total unamortized deferred financing fees and debt issuance costs |  | (2,942) |  |  | (3,059) |  |  |  |  |  |  |
Total carrying value unsecured notes, net |  | 897,058 |  |  | 896,941 |  |  |  |  |  |  |
Mortgage notes (secured debt): |  |  |  |  |  |  |  |  |  |
Wells Fargo Bank, National Association CMBS Loan |  | 46,106 |  |  | 46,610 |  |  | 4.31 | % |  | December 1, 2022 |  | iii
Thrivent Financial for Lutherans |  | 3,397 |  |  | 3,430 |  |  | 4.78 | % |  | December 15, 2023 |  | iv
United of Omaha Life Insurance Company |  | 4,894 |  |  | 4,943 |  |  | 3.71 | % |  | October 1, 2039 |  | ii
Total mortgage notes |  | 54,397 |  |  | 54,983 |  |  |  |  |  |  |
Net unamortized fair market value discount |  | (136) |  |  | (136) |  |  |  |  |  |  |
Total unamortized deferred financing fees and debt issuance costs |  | (71) |  |  | (103) |  |  |  |  |  |  |
Total carrying value mortgage notes, net |  | 54,190 |  |  | 54,744 |  |  |  |  |  |  |
Total / weighted average interest rate(5) |  | $ | 2,306,173 |  |  | $ | 2,218,262 |  |  | 2.87 | % |  |  |  |
(1)Interest rate as of March 31, 2022. At March 31, 2022, the one-month LIBOR (“L”) was 0.452%. The current interest rate is not adjusted to include the amortization of deferred financing fees or debt issuance costs incurred in obtaining debt or any unamortized fair market value premiums. The spread over the applicable rate for the Company’s unsecured credit facility and unsecured term loans is based on the Company’s debt rating and leverage ratio, as defined in the respective loan agreements. (2)The unsecured term loans have a stated interest rate of one-month LIBOR plus a spread of 0.85%, with the exception of Unsecured Term Loan D which has a stated interest rate of one-month LIBOR plus a spread of 1.0%. As of March 31, 2022, one-month LIBOR for the Unsecured Term Loans A, D, E, F, and G was swapped to a fixed rate of 2.38%, 1.85%, 2.92%, 2.11%, and 0.28%, respectively. One-month LIBOR for the Unsecured Term Loan A will be swapped to a fixed rate of 1.30% effective April 1, 2022. One-month LIBOR for the Unsecured Term Loan G will be swapped to a fixed rate of 0.94% effective April 18, 2023. (3)Prepayment terms consist of (i) pre-payable with no penalty; (ii) pre-payable with penalty; (iii) pre-payable without penalty three months prior to the maturity date, subject to defeasance; and (iv) pre-payable without penalty three months prior to the maturity date. (4)The capacity of the unsecured credit facility is $750.0 million. Deferred financing fees and debt issuance costs, net of accumulated amortization related to the unsecured credit facility of approximately $4.9 million and $5.2 million are included in prepaid expenses and other assets on the accompanying Consolidated Balance Sheets as of March 31, 2022 and December 31, 2021, respectively. The initial maturity date is October 24, 2025, or such later date which may be extended pursuant to two six-month extension options exercisable by the Company in its discretion upon advance written notice. Exercise of each six-month option is subject to the following conditions: (i) absence of a default immediately before the extension and immediately after giving effect to the extension; (ii) accuracy of representations and warranties as of the extension date (both immediately before and after the extension), as if made on the extension date; and (iii) payment of a fee. Neither extension option is subject to lender consent, assuming proper notice and satisfaction of the conditions. (5)The weighted average interest rate was calculated using the fixed interest rate swapped on the notional amount of $975.0 million of debt, and is not adjusted to include the amortization of deferred financing fees or debt issuance costs incurred in obtaining debt or any unamortized fair market value premiums or discounts. The aggregate undrawn nominal commitment on the unsecured credit facility as of March 31, 2022 was approximately $362.3 million, including issued letters of credit. The Company’s actual borrowing capacity at any given point in time may be less or restricted to a maximum amount based on the Company’s debt covenant compliance. Total accrued interest for the Company’s indebtedness was approximately $8.2 million and $8.6 million as of March 31, 2022 and December 31, 2021, respectively, and is included in accounts payable, accrued expenses and other liabilities on the accompanying Consolidated Balance Sheets. The following table summarizes the costs included in interest expense related to the Company’s debt arrangements on the accompanying Consolidated Statement of Operations for the three months ended March 31, 2022 and 2021.
|  | Three months ended March 31, |  |
Costs Included in Interest Expense (in thousands) |  | 2022 |  | 2021 |  |  |  |
Amortization of deferred financing fees and debt issuance costs and fair market value premiums/discounts |  | $ | 864 |  |  | $ | 487 |  |  |  |  |
Facility, unused, and other fees |  | $ | 341 |  |  | $ | 386 |  |  |  |  |
Financial Covenant Considerations The Company was in compliance with all financial and other covenants as of March 31, 2022 and December 31, 2021 related to its unsecured credit facility, unsecured term loans, unsecured notes, and mortgage notes. The real estate net book value of the properties that are collateral for the Company’s debt arrangements was approximately $87.8 million and $88.5 million at March 31, 2022 and December 31, 2021, respectively, and is limited to senior, property-level secured debt financing arrangements. Fair Value of Debt The following table summarizes the aggregate principal amount outstanding under the Company’s debt arrangements and the corresponding estimate of fair value as of March 31, 2022 and December 31, 2021.
|  | March 31, 2022 |  | December 31, 2021
Indebtedness (in thousands) |  | Principal Outstanding |  | Fair Value |  | Principal Outstanding |  | Fair Value
Unsecured credit facility |  | $ | 384,000 |  |  | $ | 383,927 |  |  | $ | 296,000 |  |  | $ | 296,000 |
Unsecured term loans |  | 975,000 |  |  | 975,015 |  |  | 975,000 |  |  | 975,224 |
Unsecured notes |  | 900,000 |  |  | 880,674 |  |  | 900,000 |  |  | 937,183 |
Mortgage notes |  | 54,397 |  |  | 54,628 |  |  | 54,983 |  |  | 56,323 |
Total principal amount |  | 2,313,397 |  |  | $ | 2,294,244 |  |  | 2,225,983 |  |  | $ | 2,264,730 |
Net unamortized fair market value discount |  | (136) |  |  |  |  | (136) |  |  |
Total unamortized deferred financing fees and debt issuance costs |  | (7,088) |  |  |  |  | (7,585) |  |  |
Total carrying value |  | $ | 2,306,173 |  |  |  |  | $ | 2,218,262 |  |  |
The applicable fair value guidance establishes a three tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions. The fair value of the Company’s debt is based on Level 3 inputs.

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- Definition The entire disclosure for long-term debt. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -URI https://asc.fasb.org/topic&trid=2208564 + Details
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