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Debt

3 Months Ended

Mar. 31, 2021

Debt Disclosure [Abstract]

Debt

Debt

The following table sets forth information with respect to the Company’s outstanding indebtedness:

			March 31, 2021						December 31, 2020						Interest Rate(1)						Contractual Maturity Date
UNSECURED AND SECURED DEBT
Unsecured debt
Unsecured revolving credit facility(2)(3)			$	—					$	—					LIBOR + 1.05% to 1.50%						3/13/2022			(4)
Series A notes			110,000						110,000						4.34%						1/2/2023
Series B notes			259,000						259,000						4.69%						12/16/2025
Series C notes			56,000						56,000						4.79%						12/16/2027
Series D notes			150,000						150,000						3.98%						7/6/2026
Series E notes			50,000						50,000						3.66%						9/15/2023
3.95% Registered senior notes			400,000						400,000						3.95%						11/1/2027
4.65% Registered senior notes			500,000						500,000						4.65%						4/1/2029
3.25% Registered senior notes			400,000						400,000						3.25%						1/15/2030
Total unsecured debt			1,925,000						1,925,000
Secured debt
Hollywood Media Portfolio, net(5)(6)			792,186						792,186						LIBOR + 2.15%						8/9/2022
10950 Washington(7)			25,558						25,717						5.32%						3/11/2022
One Westside and 10850 Pico(8)			159,049						106,073						LIBOR + 1.70%						12/18/2023			(4)
Element LA			168,000						168,000						4.59%						11/6/2025
1918 Eighth(9)			314,300						314,300						LIBOR + 1.70%						12/18/2025
Hill7(10)			101,000						101,000						3.38%						11/6/2028
Total secured debt			1,560,093						1,507,276
Total unsecured and secured debt			3,485,093						3,432,276
Unamortized deferred financing costs and loan discounts/premiums(11)			(30,278)						(32,784)
TOTAL UNSECURED AND SECURED DEBT, NET			$	3,454,815					$	3,399,492
IN-SUBSTANCE DEFEASED DEBT(12)			$	130,828					$	131,707					4.47%						10/1/2022
JOINT VENTURE PARTNER DEBT(13)			$	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 March 31, 2021, which may be different than the interest rates as of December 31, 2020 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 March 31, 2021, no such election had been made.

3.The Company has a total capacity of $600.0 million available under its unsecured revolving credit facility.

4.The maturity date may be extended once for an additional one-year term.

5.The Company owns 51% of the ownership interest in the consolidated joint venture that owns the Hollywood Media Portfolio. The joint venture holds a $900.0 million mortgage loan secured by the Hollywood Media Portfolio. This loan has an initial term of two years from the first payment date, with three one-year extension options, subject to certain requirements. The Company and Blackstone purchased bonds comprising the loan in the amounts of $107.8 million and $12.5 million, respectively.

6.The interest rate on a portion of the outstanding loan balance has been effectively fixed through the use of interest rate swaps under the first payments approach. As of March 31, 2021, the LIBOR component of the interest rate was fixed at 1.76% with respect to $350.0 million and 1.43% with respect to $125.0 million of the loan secured by the Hollywood Media Portfolio, respectively.

7.Monthly debt service includes annual debt amortization payments based on a 30-year amortization schedule with a balloon payment at maturity.

8.The Company has the ability to draw up to $414.6 million under the construction loan secured by the One Westside and 10850 Pico properties.

9.The Company owns 55% of the ownership interest in the consolidated joint venture that owns the 1918 Eighth property. The full amount of the loan is shown. This loan has an initial interest rate of LIBOR plus 1.70% per annum and is interest-only through the five-year term.

10.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.

11.Excludes deferred financing costs related to establishing the Company’s unsecured revolving credit facility, which are reflected in prepaid and other assets, net on the Consolidated Balance Sheets. See Note 7 for details.

12.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.

13.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 three months ended March 31, 2021, there were no borrowings on the unsecured revolving credit facility. The Company generally uses the unsecured revolving credit facility to finance the acquisition of properties, to provide funds for tenant improvements and capital expenditures and to provide for working capital and other corporate purposes.

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 future minimum principal payments due on the Company’s debt (before the impact of extension options, if applicable) as of March 31, 2021:

Year						Unsecured and Secured Debt						In-substance Defeased Debt						Joint Venture Partner Debt
Remaining 2021						$	473					$	2,615					$	—
2022						817,271						128,213						—
2023						319,049						—						—
2024						—						—						—
2025						741,300						—						—
Thereafter						1,607,000						—						66,136
TOTAL						$	3,485,093					$	130,828					$	66,136

Unsecured Revolving Credit Facility

The following table summarizes the balance and key terms of the unsecured revolving credit facility as of:

			March 31, 2021						December 31, 2020
Outstanding borrowings			$	—					$	—
Remaining borrowing capacity			600,000						600,000
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 March 31, 2021, 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 as of March 31, 2021 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%

38.2%

Unsecured indebtedness to unencumbered asset value

≤ 60%

37.3%

Adjusted EBITDA to fixed charges

≥ 1.5x

3.5x

Secured indebtedness to total asset value

≤ 45%

18.0%

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 as of March 31, 2021:

Covenant Ratio(1)

Covenant Level

Actual Performance

Debt to total assets

≤ 60%

41.0%

Total unencumbered assets to unsecured debt

≥ 150%

290.3%

Consolidated income available for debt service to annual debt service charge

≥ 1.5x

3.7x

Secured debt to total assets

≤ 45%

19.0%

_________________

1.The covenant and actual performance metrics above represent terms and definitions reflected in the indentures governing the 3.25% Senior Notes, 3.95% Senior Notes and 4.65% Senior Notes.

The operating partnership was in compliance with its financial covenants as of March 31, 2021.

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 guarantees the operating partnership’s unsecured debt.

Interest Expense

The following table represents a reconciliation from gross interest expense to the interest expense line item on the Consolidated Statements of Operations:

			Three Months Ended March 31,
			2021						2020
Gross interest expense(1)			$	33,540					$	30,287
Capitalized interest			(5,671)						(5,115)
Amortization of deferred financing costs and loan discounts/premiums			2,417						1,245
INTEREST EXPENSE			$	30,286					$	26,417

_________________

1.Includes interest on the Company’s debt and hedging activities and term loans.

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- References

No definition available.

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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

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