Notes Payable

Senior Unsecured Credit Facility

On September 23, 2014, we amended and restated our $250.0 million unsecured revolving credit facility to increase the unsecured revolving credit facility to $300.0 million, extend the term of that facility to September 23, 2018, and add a five-year, $150.0 million unsecured term loan facility with a group of lenders for which Wells Fargo Bank, N.A. acts as administrative agent, and Wells Fargo Securities, LLC and Merrill Lynch, Pierce, Fenner and Smith Incorporated act as joint lead arrangers, and Bank of America, N.A. and Barclays Bank PLC, act as joint syndication agents, and Keybank, N.A., acts as documentation agent.

The $150.0 million unsecured term loan facility was fully drawn by the Company on the closing date to repay a $95.0 million loan secured by the Company’s 505 First Street and 83 King properties, with the remaining $55.0 million used to repay amounts outstanding under the Company’s prior unsecured revolving facility.

Our Operating Partnership continues to be the borrower under the new facility and the Company and all subsidiaries that own unencumbered properties will continue to provide guaranties unless the Company obtains and maintains a credit rating of at least BBB- from S&P or Baa3 from Moody’s, in which case such guaranties are not required except under limited circumstances. Subject to the satisfaction of certain conditions and lender commitments, the Company may increase the availability of either or both of the revolving credit facility or term loan facility so long as the aggregate commitments under both facilities do not exceed $700.0 million.

Under the revolving credit facility, the Company may elect to pay interest at a rate equal to either LIBOR plus 115 to 155 basis points per annum or a specified base rate plus 15 to 55 basis points per annum, depending on the Company’s leverage ratio. Under the term loan facility, the Company may elect to pay interest at a rate equal to either LIBOR plus 130 to 190 basis points per annum or a specified base rate plus 30 to 90 basis points per annum, again depending on the Company’s leverage ratio. If the Company obtains a credit rating for its senior unsecured long term indebtedness, it may make an irrevocable election to change the interest rate for the revolving credit facility to a rate equal to either LIBOR plus 87.5 to 165 basis points per annum or the specified base rate plus 0 to 65 basis points per annum, and for the term loan facility equal to either LIBOR plus 90 to 190 basis points per annum or the specified base rate plus 0 to 90 basis points per annum, in each case depending on the credit rating.

The revolving credit facility is subject to a facility fee in an amount equal to the Company’s revolving credit commitments (whether or not utilized) multiplied by a rate per annum equal to 20 to 35 basis points, depending on the Company’s leverage ratio, or, if the Company makes the credit rating election, in an amount equal to the aggregate amount of its revolving credit commitments multiplied by a rate per annum equal to 12.5 to 30 basis points, depending upon the credit rating. Unused amounts of the facility are no longer subject to a separate fee.

The Company’s ability to borrow under the facility remains subject to ongoing compliance with a number of customary restrictive covenants. In addition to these covenants, the facility also includes certain limitations on dividend payouts and distributions, limits on certain types of investments outside of the Company’s primary business, and other customary affirmative and negative covenants.

As of September 30, 2014, we were in compliance with our facility’s financial covenants. As of September 30, 2014, we had $300.0 million of total capacity under our unsecured revolving credit facility, of which $95.0 million had been drawn.

The following table sets forth information as of September 30, 2014 with respect to our outstanding indebtedness.



	Outstanding
Debt	September 30, 2014		December 31, 2013		Interest Rate⁽¹⁾	Maturity Date
Unsecured revolving credit facility — new	$	95,000	$	—	LIBOR+ 1.15% to 1.55%	9/23/2018
Unsecured revolving credit facility	—		155,000		LIBOR+1.55% to 2.20%	N/A
Unsecured term loan	150,000		—		LIBOR+ 1.30% to 1.90%	9/23/2019
Mortgage loan secured by 3401 Exposition Blvd.⁽²⁾	—		13,233		LIBOR+3.80%	N/A
Mortgage loan secured by 6922 Hollywood Blvd.⁽³⁾	39,675		40,396		5.580%	1/1/2015
Mortgage loan secured by 275 Brannan	15,000		15,000		LIBOR+2.00%	10/5/2015
Mortgage loan secured by Pinnacle II⁽⁴⁾	87,711		88,540		6.313%	9/6/2016
Mortgage loan secured by 901 Market⁽⁵⁾	49,600		49,600		LIBOR+2.25%	10/31/2016
Mortgage loan secured by Element LA⁽⁶⁾	13,452		566		LIBOR+1.95%	11/1/2017
Mortgage loan secured by Sunset Gower/Sunset Bronson⁽⁷⁾	97,000		97,000		LIBOR+2.25%	2/11/2018
Mortgage loan secured by Rincon Center⁽⁸⁾	104,707		105,853		5.134%	5/1/2018
Mortgage loan secured by First & King⁽⁹⁾	—		95,000		LIBOR+1.60%	N/A
Mortgage loan secured by Met Park North⁽¹⁰⁾	64,500		64,500		LIBOR+1.55%	8/1/2020
Mortgage loan secured by First Financial⁽¹¹⁾	42,616		43,000		4.580%	2/1/2022
Mortgage loan secured by 10950 Washington⁽¹²⁾	28,977		29,300		5.316%	3/11/2022
Mortgage loan secured by Pinnacle I⁽¹³⁾	129,000		129,000		3.954%	11/7/2022
Subtotal	$	917,238	$	925,988
Unamortized loan premium, net⁽¹⁴⁾	3,622		5,320
Total	$	920,860	$	931,308

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(1)	Interest rate with respect to indebtedness is calculated on the basis of a 360-day year for the actual days elapsed, excluding the amortization of loan fees and costs.


(2)	This loan was assumed on May 22, 2013 in connection with the closing of our acquisition of the 3401 Exposition Blvd. property. This loan was paid in full in June 2014.


(3)	This loan was assumed on November 22, 2011 in connection with the closing of our acquisition of the 6922 Hollywood Blvd. property. This loan is amortizing based on a 30-year amortization schedule.

(4)

This loan was assumed on June 14, 2013 in connection with the contribution of the Pinnacle II building to the Company’s joint venture with M. David Paul & Associates/Worthe Real Estate Group. This loan bore interest only for the first five years. Beginning with the payment due October 6, 2011, monthly debt service includes annual debt amortization payments based on a 30-year amortization schedule.


(5)	On October 29, 2012, we obtained a loan for our 901 Market property pursuant to which we borrowed $49.6 million upon closing, with the ability to draw up to an additional $11.9 million for budgeted base building, tenant improvements, and other costs associated with the renovation and lease-up of that property.


(6)	We have the ability to draw up to $65.5 million for budgeted site-work, construction of a parking garage, base building, tenant improvement, and leasing commission costs associated with the renovation and lease-up of the property.

(7)

On March 16, 2011, we purchased an interest rate cap in order to cap one-month LIBOR at 3.715% with respect to $50.0 million of the loan through February 11, 2016. On January 11, 2012 we purchased an interest rate cap in order to cap one-month LIBOR at 2.00% with respect to $42.0 million of the loan through February 11, 2016. Effective August 22, 2013, the terms of this loan were amended to increase the outstanding balance from $92.0 million to $97.0 million, reduce the interest rate from LIBOR plus 3.50% to LIBOR plus 2.25%, and extend the maturity date from February 11, 2016 to February 11, 2018.


(8)	This loan is amortizing based on a 30-year amortization schedule.


(9)	This loan bears interest only for the first two years. Beginning with the payment due August 1, 2015, monthly debt service will include annual debt amortization payments of $1.6 million based on a 30-year amortization schedule.


(10)	This loan bears interest only at a rate equal to one-month LIBOR plus 1.55%. The full loan amount is subject to an interest rate contract that swapped one-month LIBOR to a fixed rate of 2.1644% through the loan's maturity on August 1, 2020.


(11)	This loan bears interest only for the first two years. Beginning with the payment due March 1, 2014, monthly debt service will include principal payments based on a 30-year amortization schedule, for total annual debt service of $2.6 million.


(12)	This loan is amortizing based on a 30-year amortization schedule.


(13)	This loan bears interest only for the first five years. Beginning with the payment due December 6, 2017, monthly debt service will include annual debt amortization payments based on a 30-year amortization schedule.


(14)	Represents unamortized amount of the non-cash mark-to-market adjustment on debt associated with 6922 Hollywood Blvd. and Pinnacle II.

The Company presents its financial statements on a consolidated basis. Notwithstanding such presentation, except to the extent expressly indicated, such as in the case of the project financing for our Sunset Gower and Sunset Bronson properties, our separate property-owning subsidiaries are not obligors of or under the debt of their respective affiliates and each property-owning subsidiary’s separate liabilities do not constitute obligations of its respective affiliates.

The minimum future annual principal payments due on our secured and unsecured notes payable at September 30, 2014, excluding the non-cash loan premium amortization, were as follows (in thousands):



2014 (three months ending December 31, 2014)	$	1,260
2015	58,569
2016	138,908
2017	16,905
2018	294,104
2019	153,706
Thereafter	253,786
Total	$	917,238