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Debt | 12 Months Ended
--- | ---
Dec. 31, 2018
Debt Disclosure [Abstract] |
Debt | Debt Debt consisted of the following as of December 31, 2018 and 2017 (amounts in thousands):
|  |  |  |  | As of December 31, 2018 |
| Principal Balance as of December 31, 2018 |  | Principal Balance as of December 31, 2017 |  | Stated Rate |  | Effective Rate(1) |  | Maturity Date(2) |
Fixed rate mortgage debt |  |  |  |  |  |  |  |  |  |
Metro Center | $ | 91,838 |  |  | $ | 93,948 |  |  | 3.59 | % |  | 3.68 | % |  | 11/5/2024 |  |
10 Union Square | 50,000 |  |  | 50,000 |  |  | 3.70 | % |  | 3.97 | % |  | 4/1/2026 |  |
1542 Third Avenue | 30,000 |  |  | 30,000 |  |  | 4.29 | % |  | 4.53 | % |  | 5/1/2027 |  |
First Stamford Place(3) | 180,000 |  |  | 180,000 |  |  | 4.28 | % |  | 4.45 | % |  | 7/1/2027 |  |
1010 Third Avenue and 77 West 55th Street | 38,995 |  |  | 39,710 |  |  | 4.01 | % |  | 4.22 | % |  | 1/5/2028 |  |
10 Bank Street | 33,779 |  |  | 34,602 |  |  | 4.23 | % |  | 4.35 | % |  | 6/1/2032 |  |
383 Main Avenue | 30,000 |  |  | 30,000 |  |  | 4.44 | % |  | 4.55 | % |  | 6/30/2032 |  |
1333 Broadway | 160,000 |  |  | 66,602 |  |  | 4.21 | % |  | 4.29 | % |  | 2/5/2033 |  |
1400 Broadway |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
(first lien mortgage loan) | — |  |  | 66,632 |  |  | — |  |  | — |  |  | — |  |
(second lien mortgage loan) | — |  |  | 9,172 |  |  | — |  |  | — |  |  | — |  |
111 West 33rd Street |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
(first lien mortgage loan) | — |  |  | 74,045 |  |  | — |  |  | — |  |  | — |  |
(second lien mortgage loan) | — |  |  | 9,369 |  |  | — |  |  | — |  |  | — |  |
1350 Broadway | — |  |  | 37,144 |  |  | — |  |  | — |  |  | — |  |
Total mortgage debt | 614,612 |  |  | 721,224 |  |  |  |  |  |  |  |
Senior unsecured notes - exchangeable | 250,000 |  |  | 250,000 |  |  | 2.63 | % |  | 3.93 | % |  | 8/15/2019 |  |
Senior unsecured notes: (4) |  |  |  |  |  |  |  |  |  |
Series A | 100,000 |  |  | 100,000 |  |  | 3.93 | % |  | 3.96 | % |  | 3/27/2025 |  |
Series B | 125,000 |  |  | 125,000 |  |  | 4.09 | % |  | 4.12 | % |  | 3/27/2027 |  |
Series C | 125,000 |  |  | 125,000 |  |  | 4.18 | % |  | 4.21 | % |  | 3/27/2030 |  |
Series D | 115,000 |  |  | 115,000 |  |  | 4.08 | % |  | 4.11 | % |  | 1/22/2028 |  |
Series E | 160,000 |  |  | — |  |  | 4.26 | % |  | 4.27 | % |  | 3/22/2030 |  |
Series F | 175,000 |  |  | — |  |  | 4.44 | % |  | 4.45 | % |  | 3/22/2033 |  |
Unsecured revolving credit facility (4) | — |  |  | — |  |  | (5) |  | (5) |  | 8/29/2021 |  |
Unsecured term loan facility (4) | 265,000 |  |  | 265,000 |  |  | (6) |  | (6) |  | 8/29/2022 |  |
Total principal | 1,929,612 |  |  | 1,701,224 |  |  |  |  |  |  |  |
Unamortized (discount) premiums, net of unamortized premiums (discount) | (1,647 | ) |  | (3,370 | ) |  |  |  |  |  |  |
Deferred financing costs, net | (9,032 | ) |  | (9,133 | ) |  |  |  |  |  |  |
Total | $ | 1,918,933 |  |  | $ | 1,688,721 |  |  |  |  |  |  |  |
______________
(1) | The effective rate is the yield as of December 31, 2018, including the effects of debt issuance costs and the amortization of the fair value of debt adjustment.
(2) | Pre-payment is generally allowed for each loan upon payment of a customary pre-payment penalty.
(3) | Represents a $164 million mortgage loan bearing interest of 4.09% and a $16 million loan bearing interest at 6.25%.
(4) | At December 31, 2018, we were in compliance with all debt covenants.
(5) | At December 31, 2018, the unsecured revolving credit facility bears a floating rate at 30 day LIBOR plus 1.10%. The rate at December 31, 2018 was 3.60%.
(6) | The unsecured term loan facility bears a floating rate at 30 day LIBOR plus 1.20%. Pursuant to an interest rate swap agreement, the LIBOR rate is fixed at 2.1485% through maturity. The rate at December 31, 2018 was 3.35% .
Mortgage Debt During January 2018, we refinanced and increased our mortgage debt on 1333 Broadway from $66.6 million to $160.0 million. A portion of this increase was applied to release the $75.8 million mortgage lien on 1400 Broadway. During March 2018, we repaid our mortgage indebtedness on 111 West 33rd Street and 1350 Broadway. Principal Payments Aggregate required principal payments at December 31, 2018 are as follows (amounts in thousands):
Year | Amortization |  | Maturities |  | Total
2019 | $ | 3,790 |  |  | $ | 250,000 |  |  | $ | 253,790 |
2020 | 3,938 |  |  | — |  |  | 3,938 |
2021 | 4,090 |  |  | — |  |  | 4,090 |
2022 | 5,628 |  |  | 265,000 |  |  | 270,628 |
2023 | 7,876 |  |  | — |  |  | 7,876 |
Thereafter | 33,868 |  |  | 1,355,422 |  |  | 1,389,290 |
Total principal maturities | $ | 59,190 |  |  | $ | 1,870,422 |  |  | $ | 1,929,612 |
Deferred Financing Costs Deferred financing costs, net, consisted of the following at December 31, 2018 and 2017 (amounts in thousands):
| 2018 |  | 2017
Financing costs | $ | 25,315 |  |  | $ | 24,446 |
Less: accumulated amortization | (10,027 | ) |  | (7,039 | )
Total deferred financing costs, net | $ | 15,288 |  |  | $ | 17,407 |
At December 31, 2018 and 2017, $6.3 million and $8.3 million, respectively, of net deferred financing costs associated with the unsecured revolving credit facility were included in deferred costs, net on the consolidated balance sheet. Amortization expense related to deferred financing costs was $4.1 million, $4.7 million, and $5.0 million, for the years ended December 31, 2018, 2017 and 2016, respectively, and was included in interest expense. Unsecured Revolving Credit and Term Loan Facility During August 2017, we entered into an amended and restated senior unsecured revolving credit and term loan facility (the “Facility”) with Bank of America, N.A., as administrative agent, Merrill Lynch, Pierce, Fenner & Smith Incorporated and Wells Fargo Securities, LLC as Joint Lead Arrangers and Joint Bookrunners, Wells Fargo, National Association and Capital One, National Association, as co-syndication agents, and the lenders party thereto. The Facility amended and restated the credit facility dated as of January 23, 2015, with Bank of America, N.A., Merrill Lynch, Goldman Sachs and the other lenders party thereto. In connection with the modification of the credit facility and term loan, we incurred a loss on early extinguishment of debt of $2.2 million which is reflected in our consolidated statement of income for the year ended December 31, 2017. This transaction extended the unsecured revolving credit and term loan facility maturity, lowered borrowing costs and added flexibility to the financial covenants. The Facility is in the original principal amount of up to $1.365 billion which consists of a $1.1 billion revolving credit facility and a $265.0 million term loan facility. The new revolving credit facility replaced a credit facility which was due to mature in January 2019 and was undrawn when amended. The term loan facility was borrowed in full at closing and used to repay a $265.0 million term loan that had been due in 2022. We may request the Facility be increased through one or more increases in the revolving credit facility or one or more increases in the term loan facility or the addition of new pari passu term loan tranches, for a maximum aggregate principal amount not to exceed $1.75 billion. The initial maturity of the unsecured revolving credit facility is August 2021. We have the option to extend the initial term for up to two additional 6-month periods, subject to certain conditions, including the payment of an extension fee equal to 0.0625% and 0.075% of the then outstanding commitments under the unsecured revolving credit facility on the first and the second extensions, respectively. The term loan facility matures on August 2022. We may prepay the loans under the Facility at any time, subject to reimbursement of the lenders’ breakage and redeployment costs in the case of prepayment of Eurodollar Rate borrowings. The Facility includes the following financial covenants: (i) maximum leverage ratio of total indebtedness to total asset value (as defined in the agreement) of the loan parties and their consolidated subsidiaries will not exceed 60%, (ii) consolidated secured indebtedness will not exceed 40% of total asset value, (iii) tangible net worth will not be less than $1.2 billion plus 75% of net equity proceeds received by us (other than proceeds received within ninety (90) days after the redemption, retirement or repurchase of ownership or equity interests in us up to the amount paid by us in connection with such redemption, retirement or repurchase, where, the net effect is that we shall not have increased our net worth as a result of any such proceeds), (iv) adjusted EBITDA (as defined in the Facility) to consolidated fixed charges will not be less than 1.50 x, (v) the aggregate net operating income with respect to all unencumbered eligible properties to the portion of interest expense attributable to unsecured indebtedness will not be less than 1.75 x, and (vi) the ratio of total unsecured indebtedness to unencumbered asset value will not exceed 60%. The Facility contains customary covenants, including limitations on liens, investment, distributions, debt, fundamental changes, and transactions with affiliates, and requires certain customary financial reports. The Facility contains customary events of default (subject in certain cases to specified cure periods), including but not limited to non-payment, breach of covenants, representations or warranties, cross defaults, bankruptcy or other insolvency events, judgments, ERISA events, invalidity of loan documents, loss of real estate investment trust qualification, and occurrence of a change of control (defined in the agreement for the Facility). As of December 31, 2018, we were in compliance with the covenants under the Facility. Senior Unsecured Notes Exchangeable During August 2014, we issued $250.0 million principal amount of 2.625% Exchangeable Senior Notes (“2.625% Exchangeable Senior Notes”) due August 15, 2019. Interest on the 2.625% Exchangeable Senior Notes is payable semi-annually in arrears on February 15 and August 15 of each year. The 2.625% Exchangeable Senior Notes are senior unsecured obligations and rank equally in right of payment with all of our other senior unsecured indebtedness and effectively subordinated in right of payment to all of our secured indebtedness (to the extent of the value of the collateral securing such indebtedness) and structurally subordinated to all liabilities and preferred equity of our subsidiaries. The 2.625% Exchangeable Senior Notes will mature on August 15, 2019, unless earlier exchanged, redeemed or repurchased. Holders may exchange their 2.625% Exchangeable Senior Notes at their option at any time prior to the close of business on the business day immediately preceding May 15, 2019 only under the following circumstances: (i) during any calendar quarter beginning after September 30, 2014 (and only during such quarter) if the closing sale price of our Class A common stock is more than 130% of the then current exchange price for at least 20 trading days (whether or not consecutive) in the period of the 30 consecutive trading days ending on the last trading day of the previous calendar quarter; (ii) during the five consecutive business-day period following any five consecutive trading-day period in which the trading price per 1,000 principal amount of the 2.625% Exchangeable Senior Notes for each trading day during such five consecutive trading-day period in which the trading price per 1,000 principal amount of the 2.625% Exchangeable Senior Notes for each trading day during such five trading-day period was less than 98% of the closing sale price of our Class A common stock, for each trading day during such five trading-day period multiplied by the then current exchange rate; (iii) if we call any or all of the 2.625% Exchangeable Senior Notes for redemption, at any time prior to the close of business on the scheduled trading day immediately preceding the redemption date; or (iv) upon the occurrence of specified corporate transactions (significant consolidation, sale, merger, share exchange, fundamental change, etc.). On or after May 15, 2019, and on or prior to the second scheduled trading day immediately preceding the maturity date, holders may exchange their notes without regard to the foregoing conditions. The 2.625% Exchangeable Senior Notes will be exchangeable into cash, shares of Class A common stock or a combination of cash and shares of Class A common stock, at our election. We have asserted it is our intent and ability to settle the principal amount of the 2.625% Exchangeable Senior Notes in cash. The initial exchange rate of 2.625% Exchangeable Senior Notes is 51.4059 shares per $1,000 principal amount of notes (equivalent to an initial exchange price of approximately $19.45 per share of Class A common stock), subject to adjustment, as described in the related indenture governing the 2.625% Exchangeable Senior Notes. As of December 31, 2018, the exchange rate of the 2.625% Exchangeable Senior Notes was 52.0116 shares per $1,000 principal amount of notes (equivalent to an initial exchange price of approximately $19.23 per share of Class A common stock), subject to adjustment, as described in the related indenture governing the 2.625% Exchangeable Senior Notes. Following certain corporate transactions which constitute a make-whole fundamental change (defined in the indenture), we will increase the exchange rate for holders who elect to exchange their 2.625% Exchangeable Senior Notes in connection with such make whole fundamental change in certain circumstances. Following certain corporate transactions which constitute a fundamental change, holders may require us to repurchase the 2.625% Exchangeable Senior Notes for cash at a price equal to 100% of the principal amount of the notes to be purchased plus any accrued and unpaid interest to, but excluding, the repurchase date. We have separately accounted for the liability and equity components of the 2.625% Exchangeable Senior Notes by bifurcating gross proceeds between the indebtedness, or liability component, and the embedded conversion option, or the equity component. The bifurcation was done by estimating an effective interest rate as of the date of the issuance for similar notes which do not contain an embedded conversion option. This effective interest rate was estimated to be 3.8% and was used to compute the fair value at the time of issuance for the indebtedness of $236.6 million. The gross proceeds from the issuance of the 2.625% Exchangeable Senior Notes less the initial amount allocated to the indebtedness resulted in a $13.4 million allocation to the embedded conversion option which is included in Equity, net of financing costs, in the consolidated balance sheets as of December 31, 2018 and 2017. The resulting debt discount is being amortized over the five year period in which the 2.625% Exchangeable Senior Notes are expected to be outstanding (that is, through maturity date) as additional non-cash interest expense. As of December 31, 2018 and 2017, the unamortized discount was $1.6 million and $4.3 million, respectively. Underwriting discounts and commissions and issuance costs totaled $3.1 million and were allocated to the indebtedness and the embedded conversion option on a pro-rata basis and accounted for as debt issuance costs and equity issuance costs, respectively. In this connection, $2.9 million attributable to the indebtedness was recorded as part of deferred costs, to be subsequently amortized using the effective interest method as interest expense over the expected term of the 2.625% Exchangeable Senior Notes, and $0.2 million attributable to the embedded conversion option was recorded as a reduction to Equity in the consolidated balance sheets as of December 31, 2018 and 2017. For the years ended December 31, 2018, 2017 and 2016, total interest expense related to the 2.625% Exchangeable Senior Notes was $9.9 million, $9.9 million and $9.9 million, respectively, consisting of (i) contractual interest expense of $6.6 million, $6.6 million and $6.6 million, respectively, (ii) additional non-cash interest expense of $2.7 million, $2.7 million and $2.7 million, respectively, related to the accretion of the debt discount, and (iii) amortization of deferred financing costs of $0.6 million, $0.6 million and $0.6 million, respectively. Senior Unsecured Notes During December 2017, we entered into an agreement to issue and sell an aggregate principal amount of $450.0 million of senior unsecured notes consisting of $115.0 million of 4.08% Series D Senior Notes due 2028, $160.0 million of 4.26% Series E Senior Notes due 2030, and $175.0 million of 4.44% Series F Senior Notes due 2033. We issued and sold the Series D Senior Notes in December 2017 and the Series E and F Senior Notes in March 2018. In connection with the March 2018 issuance of the notes, we repaid our mortgage indebtedness on 111 West 33rd Street and 1350 Broadway. The terms of the Series A, B, C, D, E, and F senior notes agreements include customary covenants, including limitations on liens, investment, distributions, debt, fundamental changes, and transactions with affiliates and require certain customary financial reports. It also requires compliance with financial ratios including a maximum leverage ratio, a maximum secured leverage ratio, a minimum amount of tangible net worth, a minimum fixed charge coverage ratio, a minimum unencumbered interest coverage ratio, and a maximum unsecured leverage ratio. As of December 31, 2018, we were in compliance with the covenants under the outstanding Senior Unsecured Notes.

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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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