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Notes Payable, Net | 3 Months Ended
--- | ---
Mar. 31, 2017
Debt Disclosure [Abstract] |
Notes Payable, Net | Notes Payable, net The following table summarizes the balances of the Company’s indebtedness as of:
| March 31, 2017 |  | December 31, 2016
Notes payable | $ | 2,407,196 |  |  | $ | 2,707,839 |
Less: deferred financing costs, net(1) | (18,808 | ) |  | (19,829 | )
Notes payable, net | $ | 2,388,388 |  |  | $ | 2,688,010 |
________________
(1) | Excludes deferred financing costs related to establishing the Company’s unsecured revolving credit facility of $1.3 million and $1.5 million as of March 31, 2017 and December 31, 2016, respectively, which are included in prepaid expenses and other assets, net in the Consolidated Balance Sheets.
The following table sets forth information with respect to the amounts included in notes payable, net as of:
| March 31, 2017 |  | December 31, 2016 |  |  |  |  |
| Principal Amount |  | Deferred Financing Costs, net |  | Principal Amount |  | Deferred Financing Costs, net |  | Interest Rate(1) |  | Contractual Maturity Date |
UNSECURED LOANS |  |  |  |  |  |  |  |  |  |  |  |
Unsecured Revolving Credit Facility(2) | $ | — |  |  | $ | — |  |  | $ | 300,000 |  |  | $ | — |  |  | LIBOR+ 1.15% to 1.85% |  | 4/1/2019 | (3)
5-Year Term Loan due April 2020(2)(4) | 450,000 |  |  | (3,243 | ) |  | 450,000 |  |  | (3,513 | ) |  | LIBOR+ 1.30% to 2.20% |  | 4/1/2020 |
5-Year Term Loan due November 2020(2) | 175,000 |  |  | (697 | ) |  | 175,000 |  |  | (745 | ) |  | LIBOR +1.30% to 2.20% |  | 11/17/2020 |
7-Year Term Loan due April 2022(2)(5) | 350,000 |  |  | (2,157 | ) |  | 350,000 |  |  | (2,265 | ) |  | LIBOR+ 1.60% to 2.55% |  | 4/1/2022 |
7-Year Term Loan due November 2022(2)(6) | 125,000 |  |  | (892 | ) |  | 125,000 |  |  | (931 | ) |  | LIBOR +1.60% to 2.55% |  | 11/17/2022 |
Series A Notes | 110,000 |  |  | (891 | ) |  | 110,000 |  |  | (930 | ) |  | 4.34% |  | 1/2/2023 |
Series E Notes | 50,000 |  |  | (289 | ) |  | 50,000 |  |  | (300 | ) |  | 3.66% |  | 9/15/2023 |
Series B Notes | 259,000 |  |  | (2,207 | ) |  | 259,000 |  |  | (2,271 | ) |  | 4.69% |  | 12/16/2025 |
Series D Notes | 150,000 |  |  | (874 | ) |  | 150,000 |  |  | (898 | ) |  | 3.98% |  | 7/6/2026 |
Series C Notes | 56,000 |  |  | (527 | ) |  | 56,000 |  |  | (539 | ) |  | 4.79% |  | 12/16/2027 |
TOTAL UNSECURED LOANS | 1,725,000 |  |  | (11,777 | ) |  | 2,025,000 |  |  | (12,392 | ) |  |  |  |  |
MORTGAGE LOANS |  |  |  |  |  |  |  |  |  |  |  |
Mortgage Loan secured by Rincon Center(7) | 99,897 |  |  | (158 | ) |  | 100,409 |  |  | (198 | ) |  | 5.13% |  | 5/1/2018 |
Mortgage Loan secured by Sunset Gower Studios/Sunset Bronson Studios | 5,001 |  |  | (1,357 | ) |  | 5,001 |  |  | (1,534 | ) |  | LIBOR+2.25% |  | 3/4/2019 | (3)
Mortgage Loan secured by Met Park North(8) | 64,500 |  |  | (370 | ) |  | 64,500 |  |  | (398 | ) |  | LIBOR+1.55% |  | 8/1/2020 |
Mortgage Loan secured by 10950 Washington(7) | 27,798 |  |  | (337 | ) |  | 27,929 |  |  | (354 | ) |  | 5.32% |  | 3/11/2022 |
Mortgage Loan secured by Pinnacle I(9)(10) | 129,000 |  |  | (567 | ) |  | 129,000 |  |  | (593 | ) |  | 3.95% |  | 11/7/2022 |
Mortgage Loan secured by Element LA | 168,000 |  |  | (2,256 | ) |  | 168,000 |  |  | (2,321 | ) |  | 4.59% |  | 11/6/2025 |
Mortgage Loan secured by Pinnacle II(10) | 87,000 |  |  | (701 | ) |  | 87,000 |  |  | (720 | ) |  | 4.30% |  | 6/11/2026 |
Mortgage Loan secured by Hill7(11) | 101,000 |  |  | (1,285 | ) |  | 101,000 |  |  | (1,319 | ) |  | 3.38% |  | 11/6/2026 |
TOTAL MORTGAGE LOANS | 682,196 |  |  | (7,031 | ) |  | 682,839 |  |  | (7,437 | ) |  |  |  |  |
TOTAL | $ | 2,407,196 |  |  | $ | (18,808 | ) |  | $ | 2,707,839 |  |  | $ | (19,829 | ) |  |  |  |  |
_________________
(1) | Interest rate with respect to indebtedness is calculated on the basis of a 360-day year for the actual days elapsed. Interest rates are as of March 31, 2017, which may be different than the interest rates as of December 31, 2016 for corresponding indebtedness.
(2) | The Company has the option to make an irrevocable election to change the interest rate depending on the Company’s credit rating. As of March 31, 2017, no such election had been made.
(3) | The maturity date may be extended once for an additional one-year term.
(4) | Effective July 2016, $300.0 million of the term loan has been effectively fixed at 2.75% to 3.65% per annum through the use of two interest rate swaps. See Note 10 for details.
(5) | Effective July 2016, the outstanding balance of the term loan has been effectively fixed at 3.36% to 4.31% per annum through the use of two interest rate swaps. See Note 10 for details.
(6) | Effective June 1, 2016, the outstanding balance of the term loan has been effectively fixed at 3.03% to 3.98% per annum through the use of an interest rate swap. See Note 10 for details.
(7) | Monthly debt service includes annual debt amortization payments based on a 30-year amortization schedule with a balloon payment at maturity.
(8) | This loan bears interest only. Interest on the full loan amount has been effectively fixed at 3.71% per annum through use of an interest rate swap. See Note 10 for details.
(9) | 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 with a balloon payment at maturity.
(10) | The Company owns 65% of the ownership interests in the consolidated joint venture that owns the Pinnacle I and II properties. The full amount of the loan is shown.
(11) | The Company owns 55% of the ownership interest in the consolidated joint venture that owns the Hill7 property. The full amount of the loan is shown. The maturity date of this loan can be extended for an additional two years at a higher interest rate and with principal amortization.
Indebtedness 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 Sunset Gower Studios and Sunset Bronson Studios, the Company’s 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. Loan agreements include events of default that the Company believes are usual for loan and transactions of this type. As of the date of this filing, there have been no events of default associated with the Company’s loans. The following table summarizes the minimum future principal payments due (before the impact of extension options, if applicable) on the operating partnership’s secured and unsecured notes payable as of March 31, 2017:
Year |  | Annual Principal Payments
Remaining 2017 |  | $ | 2,071 |
2018 |  | 101,157 |
2019 |  | 7,886 |
2020 |  | 692,493 |
2021 |  | 3,142 |
Thereafter |  | 1,600,447 |
Total |  | $ | 2,407,196 |
Unsecured Revolving Credit Facility The operating partnership’s unsecured revolving credit facility is amended from time to time. The terms of the arrangement are more fully described in the Company’s 2016 Annual Report on Form 10-K. Under the unsecured revolving credit facility, as amended and restated to date (“Amended and Restated Credit Facility”), the Company has $400.0 million of total capacity. The maturity date of April 1, 2019 can be extended with a one-year extension option. The Company uses the unsecured revolving credit facility to finance the acquisition of other properties, to provide funds for tenant improvements and capital expenditures, and to provide for working capital and other corporate purposes. Interest on the Amended and Restated Credit Facility is generally based upon, at our option, either (i) LIBOR plus the applicable LIBOR margin or (ii) a specified base rate plus the applicable base rate margin, dependent on the operating partnership’s leverage ratio. The applicable LIBOR margin will range from 1.15% to 1.85% for the Amended and Restated Credit Facility, 1.30% to 2.20% for the 5-Year Term Loan due April 2020, depending on the operating partnership’s leverage ratio and 1.60% to 2.55% for the 7-Year Term Loan due April 2022, depending on the operating partnership’s leverage ratio. The Amended and Restated Credit Facility requires a facility fee in an amount equal to 0.20% or 0.35% of the operating partnership’s revolving credit commitments depending on the operating partnership’s leverage ratio. Unused amounts under the Amended and Restated Credit Facility are not subject to a separate fee. Subject to the satisfaction of certain conditions and lender commitments, the operating partnership may increase the availability of the Amended and Restated Credit Facility so long as the aggregate commitments under the Amended and Restated Credit Facility do not exceed $2.0 billion. If the Company obtains a credit rating for the Company’s senior unsecured long-term indebtedness, the operating partnership may make an irrevocable election to change the interest rate and facility fee. During 2016, the Company’s senior unsecured long-term indebtedness was assigned an investment grade rating. The Company has not made the credit rating election. The operating partnership continues to be the borrower under the Amended and Restated Credit Facility, and the Company and all subsidiaries that own unencumbered properties will continue to provide guarantees 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 guarantees are not required except under limited circumstances. Debt Covenants The operating partnership’s ability to borrow under its unsecured loan arrangements remains subject to ongoing compliance with financial and other covenants as defined in the respective agreements, including, when considering the most restrictive terms, maintaining a leverage ratio (maximum of 0.60:1.00), unencumbered leverage ratio (maximum of 0.60:1.00), fixed charge coverage ratio (minimum of 1.50:1.00), secured indebtedness leverage ratio (maximum of 0.45:1.00), and unsecured interest coverage ratio (minimum 2.00:1.00). Certain financial covenant ratios are subject to change in the occurrence of material acquisitions as defined in the respective agreements. Other covenants include certain limitations on dividend payouts and distributions, limits on certain types of investments outside of the operating partnership’s primary business, and other customary affirmative and negative covenants. The operating partnership was in compliance with its financial covenants as of March 31, 2017. Repayment Guaranties Sunset Gower Studios and Sunset Bronson Studios Loan In connection with the loan secured by the Sunset Gower Studios and Sunset Bronson Studios properties, the Company has guaranteed in favor of and promised to pay to the lender 19.5% of the principal payable under the loan in the event the borrower, a wholly-owned entity of the operating partnership, does not do so. As of March 31, 2017, the outstanding balance was $5.0 million, which results in a maximum guarantee amount for the principal under this loan of $1.0 million. Furthermore, the Company agreed to guarantee the completion of the construction improvements, including tenant improvements, as defined in the agreement, in the event of any default of the borrower. If the borrower fails to complete the remaining required work, the guarantor agrees to perform timely all of the completion obligations, as defined in the agreement. As of the date of this filing, there has been no event of default associated with this loan. Other Loans Although the rest of the operating partnership’s loans are secured and non-recourse, the operating partnership provides limited customary secured debt guarantees for items such as voluntary bankruptcy, fraud, misapplication of payments and environmental liabilities.

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- Definition The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21475-112644 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.19,20,22) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 + Details
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