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Debt | 6 Months Ended
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Jun. 30, 2019
Debt Disclosure [Abstract] |
Debt | Debt The following table sets forth information with respect to the Company’s outstanding indebtedness:
| June 30, 2019 |  | December 31, 2018 |  | Interest Rate(1) |  | Contractual Maturity Date |  |
UNSECURED AND SECURED DEBT |  |  |  |  |  |  |  |  |
Unsecured debt |  |  |  |  |  |  |  |  |
Unsecured revolving credit facility(2)(3) | $ | 185,000 |  | $ | 400,000 |  | LIBOR + 1.05% to 1.50% |  | 3/13/2022 | (4) |
Term loan A(2)(5) | 300,000 |  | 300,000 |  | LIBOR + 1.20% to 1.70% |  | 4/1/2020 | (6) |
Term loan B(2)(7) | 350,000 |  | 350,000 |  | LIBOR + 1.20% to 1.70% |  | 4/1/2022 |  |
Term loan D(2)(8) | 125,000 |  | 125,000 |  | LIBOR + 1.20% to 1.70% |  | 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 |  |
3.95% Registered senior notes | 400,000 |  | 400,000 |  | 3.95% |  |  | 11/1/2027 |  |
Series C notes | 56,000 |  | 56,000 |  | 4.79% |  |  | 12/16/2027 |  |
4.65% Registered senior notes(9) | 500,000 |  | — |  | 4.65% |  |  | 4/1/2029 |  |
Term loan C | — |  | 75,000 |  | LIBOR + 1.30% to 2.20% |  | N/A |  |
Total unsecured debt | 2,485,000 |  | 2,275,000 |  |  |  |  |  |
Secured debt |  |  |  |  |  |  |  |  |
Met Park North(10) | 64,500 |  | 64,500 |  | LIBOR + 1.55% |  | 8/1/2020 |  |
10950 Washington(11) | 26,598 |  | 26,880 |  | 5.32% |  |  | 3/11/2022 |  |
Sunset Bronson Studios/ICON/CUE(12) | 5,001 |  | — |  | LIBOR + 1.35% |  |  | 3/1/2024 |  |
Element LA | 168,000 |  | 168,000 |  | 4.59% |  |  | 11/6/2025 |  |
Hill7(13) | 101,000 |  | 101,000 |  | 3.38% |  |  | 11/6/2028 |  |
Sunset Gower Studios/Sunset Bronson Studios | — |  | 5,001 |  | LIBOR + 2.25% |  | N/A |  |
Total secured debt | 365,099 |  | 365,381 |  |  |  |  |  |
Total unsecured and secured debt | 2,850,099 |  | 2,640,381 |  |  |  |  |  |
Unamortized deferred financing costs and loan discounts/premiums(14) | (15,314) |  | (16,546) |  |  |  |  |  |
TOTAL UNSECURED AND SECURED DEBT, NET | $ | 2,834,785 |  | $ | 2,623,835 |  |  |  |  |  |
IN-SUBSTANCE DEFEASED DEBT(15) | $ | 136,636 |  | $ | 138,223 |  | 4.47% |  | 10/1/2022 |  |
JOINT VENTURE PARTNER DEBT(16) | $ | 66,136 |  | $ | 66,136 |  | 4.50% |  |  | 10/9/2028 |  |
_________________ 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 June 30, 2019, which may be different than the interest rates as of December 31, 2018 for corresponding indebtedness. 2.The rate is based on the operating partnership’s leverage ratio. The Company has an option to make an irrevocable election to change the interest rate depending on the Company’s credit rating or a specified base rate plus an applicable margin. As of June 30, 2019, no such election had been made. 3.The Company has a total capacity of $600.0 million under its unsecured revolving credit facility. 4.The maturity date may be extended once for an additional one-year term. 5.The interest rate on the outstanding balance of the term loan was effectively fixed at 2.65% to 3.06% per annum through the use of two interest rate swaps. See Note 9 for details. 6.The maturity date may be extended twice, each time for an additional one-year term. 7.The interest rate on the outstanding balance of the term loan was effectively fixed at 2.96% to 3.46% per annum through the use of two interest rate swaps. See Note 9 for details. 8.The interest rate on the outstanding balance of the term loan was effectively fixed at 2.63% to 3.13% per annum through the use of an interest rate swap. See Note 9 for details. 9.On February 27, 2019, the operating partnership completed an underwritten public offering of $350.0 million of senior notes, which were issued at a discount at 98.663% of par. On June 14, 2019, the operating partnership completed an additional underwritten public offering of $150.0 million of senior notes, which were issued at a premium at 104.544% of par. These notes are treated as a single series of securities with an aggregate principal amount of $500.0 million. 10.Interest on the full loan amount has been effectively fixed at 3.71% per annum through the use of an interest rate swap. See Note 9 for details. 11.Monthly debt service includes annual debt amortization payments based on a 30-year amortization schedule with a balloon payment at maturity. 12.The Company has a total capacity of $235.0 million under the Sunset Bronson Studios/ICON/CUE revolving credit facility. This loan is secured by the Company’s Sunset Bronson Studios, ICON and CUE properties. 13.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. This loan bears interest only at 3.38% until November 6, 2026, at which time the interest rate will increase and monthly debt service will include principal payments with a balloon payment at maturity. 14.Excludes deferred financing costs related to establishing the Company’s unsecured revolving credit facility and Sunset Bronson Studios/ICON/CUE revolving credit facility, which are reflected in prepaid and other assets, net line item in the Consolidated Balance Sheets. See Note 7 for details. 15.The Company owns 75% of the ownership interest in the joint venture that owns the One Westside and 10850 Pico properties. The full amount of the loan is shown. Monthly debt service includes annual debt amortization payments based on a 10-year amortization schedule with a balloon payment at maturity. 16.This amount relates to debt attributable to Allianz U.S. Private REIT LP (“Allianz”), the Company’s partner in the joint venture that owns the Ferry Building property. The maturity date may be extended twice for an additional two-year term each. Current Year Activity During the six months ended June 30, 2019, the outstanding borrowings on the unsecured revolving credit facility decreased by $215.0 million, net of draws. 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. On February 27, 2019, the operating partnership completed an underwritten public offering of $350.0 million in senior notes due April 1, 2029. The notes are fully and unconditionally guaranteed by the Company. The net proceeds from the offering, after deducting the underwriting discount, were approximately $343.0 million and were used to repay outstanding borrowings under its unsecured revolving credit facility and $75.0 million of its five-year term loan due November 17, 2020. On March 1, 2019, the Company entered into a loan agreement to borrow up to $235.0 million on a revolving basis, maturing on March 1, 2024. The Company drew $5.0 million to pay down the Sunset Gower Studios/Sunset Bronson Studios construction loan that matured on March 4, 2019. The unused fee rate is 0.20%. On June 14, 2019, the operating partnership completed an underwritten public offering of $150.0 million in senior notes due April 1, 2029. These notes were issued as additional notes under the indenture pursuant to which the operating partnership previously issued $350.0 million of 4.65% senior notes due 2029. The notes are fully and unconditionally guaranteed by the Company. The net proceeds from the offering, after deducting the underwriting discount and commissions, were approximately $155.3 million, $150.0 million of which were used by the operating partnership to repay outstanding borrowings under its unsecured revolving credit facility. Indebtedness The Company presents its financial statements on a consolidated basis. Notwithstanding such presentation, except to the extent expressly indicated, 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 loans 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 provides information regarding the Company’s minimum future principal payments due on the Company’s debt (before the impact of extension options, if applicable) as of June 30, 2019:
Year |  | Unsecured and Secured Debt |  | In-substance Defeased Debt |  | Joint Venture Partner Debt
Remaining 2019 |  | $ | 286 |  | $ | 1,606 |  | $ | —
2020 |  | 365,095 |  | 3,323 |  | —
2021 |  | 632 |  | 3,494 |  | —
2022 |  | 685,085 |  | 128,213 |  | —
2023 |  | 160,000 |  | — |  | —
Thereafter |  | 1,639,001 |  | — |  | 66,136
TOTAL |  | $ | 2,850,099 |  | $ | 136,636 |  | $ | 66,136
Unsecured Debt Registered Senior Notes The following table provides further information on the operating partnership’s Registered senior notes as of June 30, 2019:
| Issuance Date |  | Maturity Date |  | Par Value |  | Issuance at Par |  | Coupon at Offer |  | Effective Interest Rate
4.65% Registered senior notes | 6/14/2019 |  | 4/1/2029 |  | $ | 150,000 |  | 104.544 | % |  | 4.65 | % |  | 4.12 | %
4.65% Registered senior notes | 2/27/2019 |  | 4/1/2029 |  | $ | 350,000 |  | 98.663 | % |  | 4.65 | % |  | 4.82 | %
3.95% Registered senior notes | 10/2/2017 |  | 11/1/2027 |  | $ | 400,000 |  | 99.815 | % |  | 3.95 | % |  | 3.97 | %
Term Loan and Credit Facility On March 13, 2018, the operating partnership entered into a third amended and restated credit agreement (the “Amended and Restated Credit Agreement”) with various financial institutions. The Amended and Restated Credit Agreement amends and restates and replaces (i) the operating partnership’s existing second amended and restated credit agreement, entered into on March 31, 2015, which governed its $400.0 million unsecured revolving credit facility, $300.0 million unsecured 5-year term loan facility and $350.0 million unsecured 7-year term loan facility, and (ii) the operating partnership’s Term Loan Credit Agreement, entered into on November 17, 2015, which governed its $75.0 million unsecured 5-year term loan facility and $125.0 million unsecured 7-year term loan facility. The Amended and Restated Credit Agreement provides for (i) the increase of the operating partnership’s unsecured revolving credit facility to $600.0 million and the extension of the term to March 13, 2022 and (ii) term loans in amount and tenor equal to the term loans outstanding under the previous agreements ($300.0 million term loan A maturing April 1, 2020, $350.0 million term loan B maturing April 1, 2022, $75.0 million term loan C maturing November 17, 2020 and $125.0 million term loan D maturing November 17, 2022). The $75.0 million term loan was repaid with proceeds from the Company’s 4.65% registered senior notes. The following table summarizes the balance and key terms of the unsecured revolving credit facility as of:
| June 30, 2019 |  | December 31, 2018
Outstanding borrowings | $ | 185,000 |  | $ | 400,000
Remaining borrowing capacity | 415,000 |  | 200,000
TOTAL BORROWING CAPACITY | $ | 600,000 |  | $ | 600,000
Interest rate(1) | LIBOR + 1.05% to 1.50% |  |
Annual facility fee rate(1) | 0.15% or 0.30% |  |
Contractual maturity date(2) | 3/13/2022 |  |
_________________ 1.The rate is based on the operating partnership’s leverage ratio. The Company has the option to make an irrevocable election to change the interest rate depending on the Company’s credit rating. As of June 30, 2019, no such election had been made. 2.The maturity date may be extended once for an additional one-year term. 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. 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 following table summarizes existing covenants and their covenant levels related to the unsecured revolving credit facility, term loans, and note purchase agreements, when considering the most restrictive terms:
Covenant Ratio |  | Covenant Level |  | Actual Performance
Total liabilities to total asset value |  | ≤ 60% |  | 37.8% |
Unsecured indebtedness to unencumbered asset value |  | ≤ 60% |  | 45.0% |
Adjusted EBITDA to fixed charges |  | ≥ 1.5x |  | 3.7x
Secured indebtedness to total asset value |  | ≤ 45% |  | 5.9% |
Unencumbered NOI to unsecured interest expense |  | ≥ 2.0x |  | 3.5x
The following table summarizes existing covenants and their covenant levels related to the registered senior notes:
Covenant Ratio |  | Covenant Level |  | Actual Performance
Debt to total assets |  | ≤ 60% |  | 38.2% |
Total unencumbered assets to unsecured debt |  | ≥ 150% |  | 243.8% |
Consolidated income available for debt service to annual debt service charge |  | ≥ 1.5x |  | 3.8x
Secured debt to total assets |  | ≤ 40% |  | 5.9% |
The operating partnership was in compliance with its financial covenants as of June 30, 2019. Repayment Guarantees 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. The Company guaranteed the operating partnership’s unsecured debt. Interest Expense The following table represents a reconciliation from gross interest expense to the interest expense line item in the Consolidated Statements of Operations:
| Three Months Ended June 30, |  |  |  | Six Months Ended June 30, |  |
| 2019 |  | 2018 |  | 2019 |  | 2018
Gross interest expense(1) | $ | 28,980 |  | $ | 21,514 |  | $ | 56,445 |  | $ | 43,945
Capitalized interest | (3,871) |  | (3,618) |  | (8,577) |  | (7,204)
Amortization of deferred financing costs and loan discounts/premiums | 1,443 |  | 1,435 |  | 3,034 |  | 3,093
INTEREST EXPENSE | $ | 26,552 |  | $ | 19,331 |  | $ | 50,902 |  | $ | 39,834
_________________ 1.Includes interest on the Company’s debt and hedging activities and extinguishment costs related to paydowns in the term loans.

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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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -URI http://asc.fasb.org/topic&trid=2208564 + Details
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