v3.21.2
Unsecured Credit Agreements
 9 Months Ended
Sep. 30, 2021
Debt Disclosure [Abstract]  
Unsecured Credit Agreements

9. Unsecured Credit Agreements

The following table summarizes the Company’s unsecured credit agreements:

 

 

 

Outstanding Balance

 

 

 

 

 

(in thousands, except interest rates)

 

September 30,
2021

 

 

December 31,
2020

 

 

Interest
Rate(b) (c)

 

Maturity
Date

Unsecured revolving credit facility(a)

 

$

—

 

 

$

—

 

 

(d) (e)

 

Sep. 2023

Unsecured term loans(a):

 

 

 

 

 

 

 

 

 

 

2022 Unsecured Term Loan

 

 

60,000

 

 

 

60,000

 

 

one-month LIBOR
+ 1.00% (f)

 

Feb. 2022

2023 Unsecured Term Loan

 

 

—

 

 

 

265,000

 

 

one-month LIBOR
+ 1.10% (g)

 

Jan. 2023

2024 Unsecured Term Loan

 

 

190,000

 

 

 

190,000

 

 

one-month LIBOR
+ 1.00% (f)

 

Jun. 2024

2026 Unsecured Term Loan

 

 

400,000

 

 

 

450,000

 

 

one-month LIBOR
+ 1.00% (h)

 

Feb. 2026

Total unsecured term loans

 

 

650,000

 

 

 

965,000

 

 

 

 

 

Unamortized debt issuance costs, net

 

 

(3,542

)

 

 

(3,670

)

 

 

 

 

Total unsecured term loans, net

 

 

646,458

 

 

 

961,330

 

 

 

 

 

Senior unsecured notes(a):

 

 

 

 

 

 

 

 

 

 

2027 Senior Unsecured Notes - Series A

 

 

150,000

 

 

 

150,000

 

 

4.84%

 

Apr. 2027

2028 Senior Unsecured Notes - Series B

 

 

225,000

 

 

 

225,000

 

 

5.09%

 

Jul. 2028

2030 Senior Unsecured Notes - Series C

 

 

100,000

 

 

 

100,000

 

 

5.19%

 

Jul. 2030

2031 Senior Unsecured Public Notes

 

 

375,000

 

 

 

—

 

 

2.60%

 

Sep. 2031

Total senior unsecured notes

 

 

850,000

 

 

 

475,000

 

 

 

 

 

Unamortized debt issuance costs and
   original issuance discount, net

 

 

(6,335

)

 

 

(2,534

)

 

 

 

 

Total senior unsecured notes, net

 

 

843,665

 

 

 

472,466

 

 

 

 

 

Total unsecured debt, net

 

$

1,490,123

 

 

$

1,433,796

 

 

 

 

 
(a)
The Company believes it was in compliance with all financial covenants for all periods presented.
(b)
At September 30, 2021 and December 31, 2020, one-month LIBOR was 0.08% and 0.14%, respectively. At September 30, 2021 daily LIBOR was 0.07%.
(c)
In January 2021, the Company received a credit rating of BBB, changing the applicable margin on variable rate unsecured debt effective February 1, 2021.
(d)
At September 30, 2021, borrowings on the revolving credit facility were subject to interest at one-month LIBOR plus 1.00% or daily LIBOR rates plus 1.00%.
(e)
At December 31, 2020, interest rate was one-month LIBOR plus 1.20%.
(f)
At December 31, 2020, interest rate was one-month LIBOR plus 1.25%.
(g)
At December 31, 2020, interest rate was one-month LIBOR plus 1.35%.
(h)
At December 31, 2020, interest rate was one-month LIBOR plus 1.85%.

At September 30, 2021, the weighted average interest rate on all outstanding borrowings was 2.71%, exclusive of interest rate swap agreements.

On September 15, 2021, the Company completed a public offering of $375,000 in aggregate principal amount of 2.60% senior unsecured notes due 2031 (“2031 Senior Unsecured Public Notes”), issued at 99.816% of the principal amount. The 2031 Senior Unsecured Public Notes require semi-annual interest payments through the maturity date of September 15, 2031, unless earlier redeemed. The 2031 Senior Unsecured Public Notes can be redeemed by the Company at par within three months of their respective maturities, or the Company can call the notes at any time for the principal, accrued interest, and a make-whole amount based upon the applicable government bond yield plus 20 basis points. The proceeds were used to repay in full borrowings on the Unsecured revolving credit facility and the 2023 Unsecured Term Loan, and to fund acquisitions.

On March 12, 2021, the Company amended the 2026 Unsecured Term Loan and made a $50,000 paydown on the loan. Prior to the amendment, the borrowings under the 2026 Unsecured Term Loan were subject to interest at variable rates based on LIBOR plus a margin based on the OP’s current credit rating ranging between 1.45% and 2.40% per annum with the applicable margin being 1.60% immediately prior to the amendment. The amendment reduced the margin to a range between 0.85% and 1.65% per annum and based on the OP’s credit rating of BBB, the applicable margin was 1.0% beginning March 12, 2021. All other terms and conditions of the 2026 Unsecured Term Loan remained materially the same as those in effect prior to this amendment.

For the three and nine months ended September 30, 2021, the Company incurred $4,069 and $5,020, respectively, in debt issuance costs and original issuance discount associated with the 2031 Senior Unsecured Public Notes and the amended 2026 Unsecured Term Loan. For the three and nine months ended September 30, 2020, the Company incurred $5,918 in debt issuance costs associated with the Revolving Credit Facility. For each separate debt instrument, on a lender by lender basis, in accordance with ASC 470-50, Debt Modifications and Extinguishment, the Company performed an assessment of whether the transaction was deemed to be new debt, a modification of existing debt, or an extinguishment of existing debt. Debt issuance costs are either deferred and amortized over the term of the associated debt or expensed as incurred.

Based on the assessment, $3,379 and $4,325 of debt issuance costs incurred during the three and nine months ended September 30, 2021, respectively, were deemed to be related to new debt, and the modification of existing debt, and therefore have been deferred and are being amortized over the term of the associated debt. For the three and nine months ended September 30, 2020, $5,918 of debt issuance costs incurred were related to the issuance of new debt, or the modification of existing debt, and therefore were deferred and are being amortized over the term of the associated debt.

Additionally, during the three and nine months ended September 30, 2021, $214 and $340, respectively, of unamortized debt issuance costs were expensed, and included in Cost of debt extinguishment in the accompanying Condensed Consolidated Statements of Income and Comprehensive Income (Loss). Such amounts totaled $392 during the three and nine months ended September 30, 2020.

Debt issuance costs and original issuance discounts are amortized as a component of Interest expense in the accompanying Condensed Consolidated Statements of Income and Comprehensive Income (Loss). The following table summarizes debt issuance cost and original issuance discount amortization:

 

 

 

For the Three Months Ended
September 30,

 

 

For the Nine Months Ended
September 30,

 

(in thousands)

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Debt issuance costs and original issuance discount amortization

 

$

962

 

 

$

819

 

 

$

2,832

 

 

$

2,528

 

 

The Company is subject to various financial and operational covenants and financial reporting requirements pursuant to its unsecured credit agreements. These covenants require the Company to maintain certain financial ratios, including leverage, fixed charge coverage, debt service coverage, aggregate debt ratio, consolidated income available for debt to annual debt service charge, total unencumbered assets to total unsecured debt, and secured debt ratio, among others. As of September 30, 2021, the Company believes it was in compliance with all of its loan covenants. Failure to comply with the covenants would result in a default which, if the Company were unable to cure or obtain a waiver from the lenders, could accelerate the repayment of the obligations. Further, in the event of default, the Company may be restricted from paying dividends to its stockholders in excess of dividends required to maintain its REIT qualification. Accordingly, an event of default could have a material and adverse impact on the Company.