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Notes Payable, net (Tables)
 9 Months Ended
Sep. 30, 2017
Debt Disclosure [Abstract]  
Schedule of long-term debt instruments
The following table sets forth information with respect to the amounts included in notes payable, net as of:
 
September 30, 2017
 
December 31, 2016
 
Interest Rate(1)
 
Contractual Maturity Date
 
UNSECURED NOTES PAYABLE
 
 
 
 
 
 
 
 
Unsecured Revolving Credit Facility(2)
$
250,000

 
$
300,000

 
LIBOR + 1.15% to 1.85%
 
4/1/2019
(3) 
5-Year Term Loan due April 2020(2)(4)
450,000

 
450,000

 
LIBOR + 1.30% to 2.20%
 
4/1/2020
 
5-Year Term Loan due November 2020(2)
175,000

 
175,000

 
LIBOR + 1.30% to 2.20%
 
11/17/2020
 
7-Year Term Loan due April 2022(2)(5)
350,000

 
350,000

 
LIBOR + 1.60% to 2.55%
 
4/1/2022
 
7-Year Term Loan due November 2022(2)(6)
125,000

 
125,000

 
LIBOR + 1.60% to 2.55%
 
11/17/2022
 
Series A Notes
110,000

 
110,000

 
4.34%
 
1/2/2023
 
Series E Notes
50,000

 
50,000

 
3.66%
 
9/15/2023
 
Series B Notes
259,000

 
259,000

 
4.69%
 
12/16/2025
 
Series D Notes
150,000

 
150,000

 
3.98%
 
7/6/2026
 
Series C Notes
56,000

 
56,000

 
4.79%
 
12/16/2027
 
TOTAL UNSECURED NOTES PAYABLE
1,975,000


2,025,000

 
 
 
 
 
 
 
 
 
 
 
 
 
 
SECURED NOTES PAYABLE
 
 
 
 
 
 
 
 
Rincon Center(7)
98,896

 
100,409

 
5.13%
 
5/1/2018
 
Sunset Gower Studios/Sunset Bronson Studios
5,001

 
5,001

 
LIBOR + 2.25%
 
3/4/2019
(3) 
Met Park North(8)
64,500

 
64,500

 
LIBOR + 1.55%
 
8/1/2020
 
10950 Washington(7)
27,549

 
27,929

 
5.32%
 
3/11/2022
 
Pinnacle I(9)(10)
129,000

 
129,000

 
3.95%
 
11/7/2022
 
Element LA
168,000

 
168,000

 
4.59%
 
11/6/2025
 
Pinnacle II(10)
87,000

 
87,000

 
4.30%
 
6/11/2026
 
Hill7(11)
101,000

 
101,000

 
3.38%
 
11/6/2026
 
TOTAL SECURED NOTES PAYABLE
680,946

 
682,839

 
 
 
 
 
TOTAL NOTES PAYABLE
2,655,946

 
2,707,839

 
 
 
 
 
Held for sale balances(10)
(216,000
)
 
(216,000
)
 
 
 
 
 
Deferred financing costs, net(12)
(15,588
)
 
(18,516
)
 
 
 
 
 
TOTAL NOTES PAYABLE, NET(13)
$
2,424,358

 
$
2,473,323

 
 
 
 
 
_________________
(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 September 30, 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 September 30, 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 was 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 was 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 was 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 was effectively fixed at 3.71% per annum through the 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. The Company entered into an agreement on September 14, 2017 to sell its ownership interest in the consolidated joint venture that owns Pinnacle I and Pinnacle II. The sale is expected to close in the fourth quarter of 2017. These properties meet the definition of properties held for sale.
(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.
(12)
Excludes deferred financing costs related to properties held for sale and amounts related to establishing the Company’s unsecured revolving credit facility.
(13)
Excludes amounts related to a public offering of senior notes that closed October 2, 2017.
Schedule of maturities of long-term debt
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 September 30, 2017:
Year
 
Annual Principal Payments
Remaining 2017
 
$
821

2018
 
101,157

2019
 
257,886

2020
 
692,493

2021
 
3,142

Thereafter
 
1,600,447

Total(1)
 
$
2,655,946

_________________
(1)
Includes balances related to properties that have been classified as held for sale.
Summary of balance and key terms of the unsecured revolving credit facility
The following table summarizes the balance and key terms of the unsecured revolving credit facility as of:
 
September 30, 2017
 
December 31, 2016
Outstanding borrowings
$
250,000

 
$
300,000

Remaining borrowing capacity
150,000

 
100,000

Total borrowing capacity
$
400,000

 
$
400,000

Interest rate(1)
LIBOR + 1.15% to 1.85%
Facility fee-annual rate(1)
0.20% or 0.35%
Contractual maturity date(2)
4/1/2019
_________________
(1)
The rate is based on the operating partnership’s leverage ratio.
(2)
The maturity date may be extended once for an additional one-year term.
Summary of existing covenants and their covenant levels
The following table summarizes existing covenants and their covenant levels, when considering the most restrictive terms:
Covenant Ratio
 
Covenant Level
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
Unsecured interest coverage ratio
 
minimum of 2.00:1.00
Schedule of interest costs incurred
The following table represents a reconciliation from the gross interest expense to the amount on the interest expense line item in the Consolidated Statements of Operations:
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2017
 
2016
 
2017
 
2016
Gross interest expense(1)
$
24,107

 
$
21,726

 
$
70,345

 
$
59,911

Capitalized interest
(2,831
)
 
(2,960
)
 
(7,817
)
 
(8,414
)
Amortization of deferred financing costs and loan premium, net
1,185

 
1,144

 
3,558

 
3,278

Interest expense
$
22,461

 
$
19,910

 
$
66,086

 
$
54,775


_________________
(1)
Includes interest on the Company’s notes payable and hedging activities.