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Debt | 6 Months Ended
--- | ---
Jun. 30, 2024
Debt Disclosure [Abstract] |
Debt | Debt The following table sets forth information with respect to the Company’s outstanding indebtedness:
| June 30, 2024 |  | December 31, 2023 |  | Interest Rate(1) |  | Contractual Maturity Date(2) |  |
UNSECURED AND SECURED DEBT |  |  |  |  |  |  |  |  |
Unsecured debt |  |  |  |  |  |  |  |  |
Unsecured revolving credit facility(3)(4) | $ | 272,000 |  |  | $ | 192,000 |  |  | SOFR + 1.15% to 1.60% |  | 12/21/2026 | (5) |
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 |  |
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 debt | 2,387,000 |  |  | 2,307,000 |  |  |  |  |  |  |
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) |  |  | (30,233) |  |  | SOFR + 2.11% |  | 8/9/2026 | (7) |
Hollywood Media Portfolio, net(8)(9) | 1,069,767 |  |  | 1,069,767 |  |  |  |  |  |  |
Element LA | 168,000 |  |  | 168,000 |  |  | 4.59% |  | 11/6/2025 |  |
1918 Eighth(10) | 314,300 |  |  | 314,300 |  |  | SOFR + 1.40% |  | 12/18/2025 |  |
Hill7(11) | 101,000 |  |  | 101,000 |  |  | 3.38% |  | 11/6/2028 |  |
Sunset Glenoaks Studios(12)(13) | 87,201 |  |  | — |  |  | SOFR + 3.10% |  | 1/9/2027 |  |
Total secured debt | 1,740,268 |  |  | 1,653,067 |  |  |  |  |  |  |
Total unsecured and secured debt | 4,127,268 |  |  | 3,960,067 |  |  |  |  |  |  |
Unamortized deferred financing costs/loan discounts(14) | (13,143) |  |  | (14,753) |  |  |  |  |  |  |
TOTAL UNSECURED AND SECURED DEBT, NET | $ | 4,114,125 |  |  | $ | 3,945,314 |  |  |  |  |  |  |
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 June 30, 2024, which may be different than the interest rates as of December 31, 2023 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 June 30, 2024, 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 Fourth 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.The Company purchased bonds comprising the loan in the amount of $30.2 million. 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 $531.2 million of principal is effectively fixed at 3.31% through the use of an interest rate swap. The floating interest rate on $180.0 million of principal is effectively fixed at 4.13% through the use of an interest rate swap. 10.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. 11.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. 12.This loan has a total capacity of $100.6 million and an initial interest rate of SOFR + 3.10% per annum until the construction at Sunset Glenoaks Studios is complete and certain performance targets have been met, at which time the effective interest rate will decrease to SOFR + 2.50%. This loan is interest-only through its term. The maturity date includes the effect of extension options. The floating interest rate on the full principal amount has been effectively capped at 4.50% through the use of an interest rate cap. 13.Sunset Glenoaks Studios was consolidated as of June 30, 2024 and unconsolidated as of December 31, 2023. Therefore, the December 31, 2023 balance is reported at $0. The Company has provided various guarantees for this loan, including a completion guarantee, equity guarantee and recourse carve-out guarantee. The Company believes likelihood of loss relating to the completion guarantee is remote as of June 30, 2024. 14.Excludes deferred financing costs related to the Company’s unsecured revolving credit facility, which are reflected in prepaid expenses and other assets, net on the Consolidated Balance Sheets. See Note 8 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 six months ended June 30, 2024, there were $80.0 million of borrowings on the unsecured revolving credit facility, net of repayments. 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. 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 June 30, 2024:
Year |  | Unsecured and Secured Debt |  | Joint Venture Partner Debt
Remaining 2024 |  | $ | — |  |  | $ | — |
2025 |  | 741,300 |  |  | — |
2026 |  | 1,491,767 |  |  | — |
2027 |  | 543,201 |  |  | — |
2028 |  | 451,000 |  |  | 66,136 |
Thereafter |  | 900,000 |  |  | — |
TOTAL |  | $ | 4,127,268 |  |  | $ | 66,136 |
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 June 30, 2024 related to our unsecured revolving credit facility and term loans:
Covenant Ratio(1) |  | Covenant Level |  | Actual Performance
Total liabilities to total asset value |  | ≤ 65% |  | 48.1%
Unsecured indebtedness to unencumbered asset value |  | ≤ 65% |  | 42.6%
Adjusted EBITDA to fixed charges |  | ≥ 1.5x |  | 1.7x
Secured indebtedness to total asset value |  | ≤ 45% |  | 21.0%
Unencumbered NOI to unsecured interest expense |  | ≥ 2.0x |  | 2.4x
_________________ 1.Based on the provisions of the fourth quarter 2023 amendment to the unsecured revolving credit facility, the total leverage and the unsecured leverage thresholds have been extended from 60% to 65% through December 31, 2024 (or until such time as the private placement covenant calculations are amended to reflect the recent adjustments to the credit facility covenants, if sooner). The following table summarizes existing covenants and their covenant levels as of June 30, 2024 related to our private placement notes:
Covenant Ratio(1) |  | Covenant Level |  | Actual Performance
Total liabilities to total asset value |  | ≤ 60% |  | 51.9%
Unsecured indebtedness to unencumbered asset value |  | ≤ 65% |  | 52.1%
Adjusted EBITDA to fixed charges |  | ≥ 1.5x |  | 1.7x
Secured indebtedness to total asset value |  | ≤ 45% |  | 22.6%
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. 2.Based on the provisions of the fourth quarter 2023 amendment to the unsecured revolving credit facility, the total leverage and the unsecured leverage thresholds have been extended from 60% to 65% through December 31, 2024 (or until such time as the private placement covenant calculations are amended to reflect the recent adjustments to the credit facility covenants, if sooner). The following table summarizes existing covenants and their covenant levels related to the registered senior notes as of June 30, 2024:
Covenant Ratio(1) |  | Covenant Level |  | Actual Performance
Debt to total assets |  | ≤ 60% |  | 44.2%
Total unencumbered assets to unsecured debt |  | ≥ 150% |  | 240.9%
Consolidated income available for debt service to annual debt service charge |  | ≥ 1.5x |  | 1.7x
Secured debt to total assets |  | ≤ 45% |  | 19.2%
_________________ 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 June 30, 2024. 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 June 30, 2024. Interest Expense The following table represents a reconciliation from gross interest expense to the interest expense on the Consolidated Statements of Operations:
| Three Months Ended June 30, |  | Six Months Ended June 30,
| 2024 |  | 2023 |  | 2024 |  | 2023
Gross interest expense(1) | $ | 53,077 |  |  | $ | 54,425 |  |  | $ | 103,733 |  |  | $ | 107,723 |
Capitalized interest | (10,912) |  |  | (7,311) |  |  | (19,394) |  |  | (14,173) |
Non-cash interest expense(2) | 1,994 |  |  | 7,534 |  |  | 3,909 |  |  | 14,905 |
INTEREST EXPENSE | $ | 44,159 |  |  | $ | 54,648 |  |  | $ | 88,248 |  |  | $ | 108,455 |
_________________ 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.

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