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Debt
 12 Months Ended
Dec. 31, 2023
Debt Disclosure [Abstract]  
Debt Debt
The following table sets forth information with respect to our outstanding indebtedness:
December 31, 2023December 31, 2022
Interest Rate(1)
Contractual Maturity Date(2)
UNSECURED AND SECURED DEBT
Unsecured debt
Unsecured revolving credit facility(3)(4)
$192,000 $385,000 
SOFR + 1.15% to 1.60%
12/21/2026
(5)
Series A notes— 110,000 4.34%1/2/2023
Series B notes259,000 259,000 4.69%12/16/2025
Series C notes56,000 56,000 4.79%12/16/2027
Series D notes150,000 150,000 3.98%7/6/2026
Series E notes— 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
5.95% Registered senior notes(6)
350,000 350,000 5.95%2/15/2028
Total unsecured debt2,307,000 2,660,000 
Secured debt
Hollywood Media Portfolio
1,100,000 1,100,000 
SOFR + 1.10%
8/9/2026
(7)
Acquired Hollywood Media Portfolio debt
(30,233)(209,814)
SOFR + 2.11%
8/9/2026
(7)
Hollywood Media Portfolio, net(8)(9)
1,069,767 890,186 
One Westside and Westside Two(10)
— 316,602 
SOFR + 1.60%
12/18/2024
Element LA168,000 168,000 4.59%11/6/2025
1918 Eighth(11)
314,300 314,300 
SOFR + 1.40%
12/18/2025
Hill7(12)
101,000 101,000 3.38%11/6/2028
Quixote(13)
— 160,000 5.00%12/31/2023
Total secured debt1,653,067 1,950,088 
Total unsecured and secured debt3,960,067 4,610,088 
Unamortized deferred financing costs/loan discounts(14)
(14,753)(24,226)
TOTAL UNSECURED AND SECURED DEBT, NET$3,945,314 $4,585,862 
JOINT VENTURE PARTNER DEBT (15)
$66,136 $66,136 4.50%10/9/2032
(16)
_____________
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 December 31, 2023, which may be different than the interest rates as of December 31, 2022 for corresponding indebtedness.
2.Maturity dates include the effect of extension options.
3.The annual facility fee rate ranges from 0.15% or 0.30% 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 December 31, 2023, no such election had been made and the unsecured revolving credit facility bore interest at SOFR + 1.35%.
4.The Company has a total capacity of $900.0 million available under its unsecured revolving credit facility, up to $225.0 million of which can be used for borrowings in pounds sterling or Canadian dollars. Subject to the satisfaction of certain conditions and lender commitments, the operating partnership may increase the commitments held under the Amended and Restated Credit Agreement up to a total of $2.0 billion either in the form of an increase to an existing unsecured revolving credit facility or a new loan, including a term loan.
5.Includes the option to extend the initial maturity date of December 21, 2025 twice for an additional six-month term each.
6.An amount equal to the net proceeds from the 5.95% registered senior notes has been allocated to new or existing eligible green projects.
7.Includes the option to extend the initial maturity date of August 9, 2023 three times for an additional one-year term each. The first extension option was executed as of August 9, 2023.
8.As of December 31, 2023 and December 31, 2022, the Company owned bonds comprising the loan in the amounts of $30.2 million and $209.8 million, respectively.
9.The floating interest rate on $539.0 million of principal has been capped at 5.70% through the use of an interest rate cap. The floating interest rate on $351.2 million of principal is effectively fixed at 3.31% through the use of an interest rate swap.
10.The construction loan was settled in full in December 2023 with the proceeds from sale of the One Westside and Westside Two properties.
11.This loan is interest-only through its term. The floating interest rate on $141.4 million of principal has been capped at 5.00% through the use of an interest rate cap. The floating interest rate on the remaining $172.9 million of principal has been effectively fixed at 3.75% through the use of an interest rate swap.
12.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.
13.The note was settled in April 2023 for consideration of $150.0 million, a $10.0 million discount on the note’s principal balance.
14.Excludes deferred financing costs related to establishing the Company’s unsecured revolving credit facility, which are reflected in prepaid expenses and other assets, net on the Consolidated Balance Sheets. See Note 2 for details.
15.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.
16.Includes the option to extend the initial maturity date of October 9, 2028 twice for an additional two-year term each.

Current Year Activity

During the year ended December 31, 2023, there were $193.0 million of repayments on the unsecured revolving credit facility, net of borrowings. The Company generally uses the unsecured revolving credit facility to finance the acquisition of properties and businesses, to provide funds for tenant improvements and capital expenditures and to provide for working capital and other corporate purposes.

In January 2023, the Company repaid its $110.0 million Series A notes in full.

In April 2023, the Company settled the Quixote note for consideration of $150.0 million, a $10.0 million discount on the note’s principal balance, which resulted in a gain on extinguishment of debt of $10.0 million during the year ended December 31, 2023. The Company drew on its unsecured revolving credit facility to fund the settlement.

In July 2023, the Company modified the existing loan agreement secured by the Hollywood Media Portfolio, whereby the LIBOR-based floating interest rate was replaced with a term SOFR-based floating interest rate. The Company applied the relief provisions of ASC 848, Reference Rate Reform, and accounted for this modification as a continuation of the existing loan agreement.

In September 2023, the Company repaid its $50.0 million Series E notes in full.

In November 2023, the Company sold $179.6 million of the acquired Hollywood Media Portfolio debt and recorded a $34.0 million loss in connection with this sale on the Consolidated Statement of Operations for the year ended December 31, 2023.

In December 2023, the Company entered into the Second Modification to the Fourth Amended and Restated Credit Agreement governing its unsecured revolving credit facility, whereby certain definitions and covenant calculations were amended and the borrowing capacity of the unsecured revolving credit facility was reduced to $900.0 million.

In December 2023, the Company repaid its $324.6 million One Westside and Westside Two construction loan in connection with the sale of these properties.

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 (after the impact of extension options, if applicable) as of December 31, 2023:
For the Year Ended December 31,Unsecured and Secured DebtJoint Venture Partner Debt
2024$— $— 
2025741,300 — 
20261,411,767 — 
2027456,000 — 
2028451,000 — 
Thereafter900,000 66,136 
TOTAL$3,960,067 $66,136 

Unsecured Debt

Credit Facility

The operating partnership continues to be the borrower under its credit facility agreement, 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 Standard & Poor’s (“S&P”) or Baa3 from Moody’s, in which case such guarantees are not required except under limited circumstances. As of December 31, 2023, the Company’s S&P and Moody’s ratings were BB+ and Ba1, respectively. On January 12, 2024, S&P downgraded our credit rating from “BB+” to “BB”.

Note Purchase Agreements

The operating partnership may prepay at any time all or, from time to time, any part of the note purchase agreements in an amount not less than 5% of the aggregate principal amount of any series of note purchase agreements then outstanding in the case of a partial prepayment, at 100% of the principal amount so prepaid plus a make-whole premium.    

The operating partnership’s obligations under note purchase agreements are fully and unconditionally guaranteed by the Company. Subsidiaries of the Company will also issue unconditional guarantees upon the occurrence of certain conditions, including such subsidiaries providing guarantees under the Amended and Restated Credit Agreement, by and among the operating partnership, the financial institutions party thereto, and Wells Fargo Bank, National Association as administrative agent.

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 December 31, 2023 related to our unsecured revolving credit facility and term loans, when considering the most restrictive terms:

Covenant RatioCovenant LevelActual Performance
Total liabilities to total asset value
≤ 65%
45.1%
Unsecured indebtedness to unencumbered asset value
≤ 65%
41.8%
Adjusted EBITDA to fixed charges
≥ 1.5x
1.9x
Secured indebtedness to total asset value
≤ 45%
19.9%
Unencumbered NOI to unsecured interest expense
≥ 2.0x
2.4x
The following table summarizes existing covenants and their covenant levels as of December 31, 2023 related to our private placement notes:

Covenant Ratio(1)
Covenant LevelActual Performance
Total liabilities to total asset value
≤ 65%
48.5%
Unsecured indebtedness to unencumbered asset value
≤ 65%
51.3%
Adjusted EBITDA to fixed charges
≥ 1.5x
1.9x
Secured indebtedness to total asset value
≤ 45%
21.4%
Unencumbered NOI to unsecured interest expense
≥ 2.0x
2.4x
_________________
1.The covenant and actual performance metrics above represent terms and definitions reflected in the indentures governing the Series B, Series C and Series D notes.


The following table summarizes existing covenants and their covenant levels as of December 31, 2023 related to our registered senior notes:

Covenant Ratio(1)
Covenant LevelActual Performance
Debt to total assets
≤ 60%
43.3%
Total unencumbered assets to unsecured debt
  ≥ 150%
250.5%
Consolidated income available for debt service to annual debt service charge
≥ 1.5x
1.9x
Secured debt to total assets
≤ 45%
18.9%
_________________
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, 4.65% Senior Notes and 5.95% Senior Notes.

The operating partnership was in compliance with its financial covenants as of December 31, 2023.

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 and certain of its subsidiaries guarantee the operating partnership’s unsecured debt. The likelihood of loss relating to this guarantee is remote as of December 31, 2023.

Interest Expense

The following table represents a reconciliation from gross interest expense to interest expense on the Consolidated Statements of Operations:
Year Ended December 31,
202320222021
Gross interest expense(1)
$224,801 $162,778 $133,165 
Capitalized interest(32,253)(18,031)(21,689)
Non-cash interest expense(2)
21,867 5,154 10,463 
INTEREST EXPENSE$214,415 $149,901 $121,939 
_________________
1.Includes interest on the Company’s debt and hedging activities.
2.Includes the amortization of deferred financing costs and fair market value adjustments for our mark-to-market interest rate derivatives.