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Debt | 12 Months Ended
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Dec. 31, 2015
Debt [Abstract] |
Debt | 8. Debt Long-term Debt and Capital and Financing Lease Obligations Long-term debt and capital and financing lease obligations consist of the following (dollars in thousands):
|  | December 31, |
|  | 2015 |  |  | 2014 |
Mortgage notes payable due 2016 through 2047; weighted average interest rate of 4.51% in 2015, including net debt premium and deferred financing costs of $3.3 million in 2015 and including net debt premium and deferred financing costs of $42.9 million in 2014 (weighted average interest rate of 4.84% in 2014) |  | $ | 3,246,513 |  |  | $ | 3,088,752 |
Capital and financing lease obligations payable through 2031; weighted average interest rate of 8.11% in 2015 (weighted average interest rate of 8.57% in 2014) |  |  | 2,489,588 |  |  |  | 2,649,226 |
Convertible notes payable in aggregate principal amount of $316.3 million, less debt discount and deferred financing costs of $34.3 million and $46.9 million in 2015 and 2014, respectively, interest at 2.75% per annum, due June 2018 |  |  | 281,902 |  |  |  | 269,300 |
Construction financing due 2017 through 2019; weighted average interest rate of 4.84% in 2015 (weighted average interest rate of 4.90% in 2014) |  |  | 24,105 |  |  |  | 50,118 |
Notes payable issued to finance insurance premiums (weighted average interest rate of 2.82% in 2014) |  |  | — |  |  |  | 22,586 |
Other notes payable, weighted average interest rate of 5.16% in 2015 (weighted average interest rate of 4.75% in 2014) and maturity dates ranging from 2016 to 2020 |  |  | 80,305 |  |  |  | 66,271 |
Total debt and capital and financing lease obligations |  |  | 6,122,413 |  |  |  | 6,146,253 |
Less current portion |  |  | 235,604 |  |  |  | 268,399 |
Total long-term debt and capital and financing lease obligations |  | $ | 5,886,809 |  |  | $ | 5,877,854 |
As of December 31, 2015, the current portion of long-term debt within the Company's consolidated financial statements includes $60.8 million of mortgage notes payable secured by assets held for sale. This debt will either be assumed by the prospective purchasers or be repaid with the proceeds from the sales. Refer to Note 4 for more information about the Company's assets held for sale. The annual aggregate scheduled maturities of long-term debt and capital and financing lease obligations outstanding as of December 31, 2015 are as follows (dollars in thousands):
Year Ending December 31, |  | Long-term Debt |  |  | Capital and Financing Lease Obligations |  |  | Total Debt |
2016 |  | $ | 180,423 |  |  | $ | 237,810 |  |  | $ | 418,233 |
2017 |  |  | 308,023 |  |  |  | 263,671 |  |  |  | 571,694 |
2018 |  |  | 1,179,702 |  |  |  | 282,951 |  |  |  | 1,462,653 |
2019 |  |  | 143,473 |  |  |  | 262,800 |  |  |  | 406,273 |
2020 |  |  | 490,605 |  |  |  | 207,594 |  |  |  | 698,199 |
Thereafter |  |  | 1,361,903 |  |  |  | 3,629,265 |  |  |  | 4,991,168 |
Total obligations |  |  | 3,664,129 |  |  |  | 4,884,091 |  |  |  | 8,548,220 |
Less amount representing debt discount and deferred financing costs, net |  |  | (31,304 | ) |  |  | — |  |  |  | (31,304 | )
Less amount representing interest (weighted average interest rate of 8.11%) |  |  | — |  |  |  | (2,394,503 | ) |  |  | (2,394,503 | )
Total |  | $ | 3,632,825 |  |  | $ | 2,489,588 |  |  | $ | 6,122,413 |
Credit Facilities On December 19, 2014, the Company entered into a Fourth Amended and Restated Credit Agreement with General Electric Capital Corporation, as administrative agent, lender and swingline lender, and the other lenders from time to time parties thereto. The amended credit agreement amended and restated in its entirety the Company's previously existing Third Amended and Restated Credit Agreement dated as of September 20, 2013, which provided a total commitment amount of $250.0 million. The amended agreement provides for a total commitment amount of $500.0 million, comprised of a $100.0 million term loan drawn at closing and a $400.0 million revolving credit facility (with a $50.0 million sublimit for letters of credit and a $50.0 million swingline feature to permit same day borrowing) and an option to increase the revolving credit facility by an additional $250.0 million, subject to obtaining commitments for the amount of such increase from acceptable lenders. In addition, the amended credit agreement extended the maturity date from March 31, 2018 to January 3, 2020 and decreased the interest rate payable on drawn amounts and the fee payable on the unused portion of the facility. Amounts drawn under the facility will continue to bear interest at 90-day LIBOR plus an applicable margin; however, the amended agreement reduces the applicable margin from a range of 3.25% to 4.25% to a range of 2.50% to 3.50%. The applicable margin varies based on the percentage of the total commitment drawn, with a 2.50% margin at utilization equal to or lower than 35%, a 3.25% margin at utilization greater than 35% but less than or equal to 50%, and a 3.50% margin at utilization greater than 50%. The amended agreement also eliminates the minimum 0.5% LIBOR rate included in the prior agreement. Amounts drawn on the facility may be used to finance acquisitions, fund working capital and capital expenditures and for other general corporate purposes. The facility is secured by a first priority mortgage on certain of the Company's communities. In addition, the amended agreement permits the Company to pledge the equity interests in subsidiaries that own other communities (rather than mortgaging such communities), provided that loan availability from pledged assets cannot exceed 10% of loan availability from mortgaged assets. The availability under the line will vary from time to time as it is based on borrowing base calculations related to the appraised value and performance of the communities securing the facility. The amended credit agreement contains typical affirmative and negative covenants, including financial covenants with respect to minimum consolidated fixed charge coverage and minimum consolidated tangible net worth. A violation of any of these covenants could result in a default under the credit agreement, which would result in termination of all commitments under the credit agreement and all amounts owing under the amended credit agreement and certain other loan agreements becoming immediately due and payable. As of December 31, 2015, the outstanding balance under this credit facility was $310.0 million. Additionally, there were $19.4 million of letters of credit outstanding under this credit facility. In addition to the sublimit for letters of credit on this credit facility, the Company also had secured and unsecured letter of credit facilities of up to $80.2 million in the aggregate as of December 31, 2015. Letters of credit totaling $63.0 million had been issued under these separate facilities as of that date. Convertible Debt Offering In June 2011, the Company completed a registered offering of $316.3 million aggregate principal amount of 2.75% convertible senior notes due 2018 (the "Notes"). The Company received net proceeds of approximately $308.2 million after the deduction of underwriting commissions and offering expenses. The Company used a portion of the net proceeds to pay the Company's cost of the convertible note hedge transactions described below, taking into account the proceeds to the Company of the warrant transactions described below, and used the balance of the net proceeds to repay existing outstanding debt. The Notes are senior unsecured obligations and rank equally in right of payment to all of the Company's other senior unsecured debt, if any. The Notes will be senior in right of payment to any of the Company's debt which is subordinated by its terms to the Notes (if any). The Notes are also structurally subordinated to all debt and other liabilities and commitments (including trade payables) of the Company's subsidiaries. The Notes are also effectively subordinated to the Company's secured debt to the extent of the assets securing the debt. The Notes bear interest at 2.75% per annum, payable semi-annually in cash. The Notes are convertible at an initial conversion rate of 34.1006 shares of Company common stock per $1,000 principal amount of Notes (equivalent to an initial conversion price of approximately $29.33 per share), subject to adjustment. On and after March 15, 2018, until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert their Notes at any time. In addition, Holders may convert their Notes at their option under the following circumstances: (i) during any fiscal quarter if the last reported sale price of the Company's common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the preceding fiscal quarter is greater than or equal to 130% of the applicable conversion price on the last day of such preceding fiscal quarter; (ii) during the five business day period after any five consecutive trading day period (the "measurement period"), in which the trading price per $1,000 principal amount of notes for each trading day of that measurement period was less than 98% of the product of the last reported sale price of the Company's common stock and the applicable conversion rate on each such day; or (iii) upon the occurrence of specified corporate events. As of December 31, 2015, the Notes are not convertible. Unconverted Notes mature at par in June 2018. Upon conversion, the Company will satisfy its conversion obligation by paying or delivering, as the case may be, cash, shares of the Company's common stock or a combination of cash and shares of the Company's common stock at the Company's election. It is the Company's current intent and policy to settle the principal amount of the Notes (or, if less, the amount of the conversion obligation) in cash upon conversion. In addition, following certain corporate transactions, the Company will increase the conversion rate for a holder who elects to convert in connection with such transaction by a number of additional shares of common stock as set forth in the supplemental indenture governing the Notes. The Notes were issued in an offering registered under the Securities Act of 1933, as amended (Securities Act). In accordance with FASB guidance regarding the accounting for convertible debt instruments that may be settled in cash upon conversion (including partial settlement), the liability and equity components of the convertible debt are separated in a manner that will reflect the Company's non-convertible debt borrowing rate when interest expense is recognized in subsequent periods. The Company is accreting the carrying value to the principal amount at maturity using an imputed interest rate of 7.5% (the estimated effective borrowing rate for nonconvertible debt at the time of issuance, Level 2) over its expected life of seven years. As of December 31, 2015, the "if converted" value of the Notes does not exceed their principal amount. The interest expense associated with the Notes (excluding amortization of the associated deferred financing costs) was as follows (dollars in thousands):
| For the Years Ended December 31, |
| 2015 |  | 2014 |  |  | 2013 |
Coupon interest |  | $ | 8,697 |  |  | $ | 8,697 |  |  | $ | 8,697 |
Amortization of discount |  |  | 11,732 |  |  |  | 10,902 |  |  |  | 10,131 |
Interest expense related to convertible notes |  | $ | 20,429 |  |  | $ | 19,599 |  |  | $ | 18,828 |
In connection with the offering of the Notes, in June 2011, the Company entered into convertible note hedge transactions (the "Convertible Note Hedges") with certain financial institutions (the "Hedge Counterparties"). The Convertible Note Hedges cover, subject to customary anti-dilution adjustments, 10,784,315 shares of common stock. The Company also entered into warrant transactions with the Hedge Counterparties whereby the Company sold to the Hedge Counterparties warrants to acquire, subject to customary anti-dilution adjustments, up to 10,784,315 shares of common stock (the "Sold Warrant Transactions"). The warrants have a strike price of $40.25 per share, subject to customary anti-dilution adjustments. The Convertible Note Hedges are expected to reduce the potential dilution with respect to common stock upon conversion of the Notes in the event that the price per share of common stock at the time of exercise is greater than the strike price of the Convertible Note Hedges, which corresponds to the initial conversion price of the Notes and is similarly subject to customary anti-dilution adjustments. If, however, the price per share of common stock exceeds the strike price of the Sold Warrant Transactions when they expire, there would be additional dilution from the issuance of common stock pursuant to the warrants. The Convertible Note Hedges and Sold Warrant Transactions are separate transactions (in each case entered into by the Company and Hedge Counterparties), are not part of the terms of the Notes and will not affect the holders' rights under the Notes. Holders of the Notes do not have any rights with respect to the Convertible Note Hedges or the Sold Warrant Transactions. These hedging transactions had a net cost of approximately $31.9 million, which was paid from the proceeds of the Notes and recorded as a reduction of additional paid-in capital. The Company has contractual rights, and, at execution of the related agreements, had the ability to settle its obligations under the conversion features of the Notes, the Convertible Note Hedges and Sold Warrant Transactions, with the Company's common stock. Accordingly, these transactions are accounted for as equity, with no subsequent adjustment for changes in the value of these obligations. 2015 Financings On March 31, 2015, the Company obtained a $63.0 million loan, secured by first mortgages on six communities. The loan bears interest at a variable rate equal to 90-day LIBOR plus a margin of 325 basis points and matures on April 1, 2020. On April 30, 2015, the Company obtained a $65.3 million loan, secured by first mortgages on six communities. The loan bears interest at a fixed rate of 3.98% and matures on May 1, 2027. On August 27, 2015, the Company obtained $226.4 million in loans secured by first mortgages on 21 communities. The mortgage facility has a ten year term and 75% of it bears interest at a variable rate of 30-day LIBOR plus a margin of 221 basis points and the remaining 25% bears interest at a fixed rate of 4.80%. Proceeds of the loans were used to refinance $209.9 million of fixed rate mortgage debt on 28 communities that was scheduled to mature in September 2017. In connection with the transaction, the Company paid a prepayment penalty of $17.9 million, of which $10.4 million was recorded against the existing debt premium, $6.3 million was recorded as a debt discount for the new loans, and $1.2 million was recorded as an extinguishment cost for the seven communities that became unencumbered. On September 15, 2015, the Company obtained $140.4 million in loans secured by first mortgages on 18 communities. The mortgage facility has a seven year term and bears interest at a variable rate of one-month LIBOR plus a margin of 223 basis points. Proceeds of the loans were used to refinance $122.3 million of fixed rate mortgage debt that was scheduled to mature in May 2018. In connection with the transaction, the Company paid a prepayment penalty of $13.6 million, of which $7.6 million was recorded against the existing debt premium and $6.0 million was recorded as a debt discount for the new loans. The financings that occurred during the three months ended September 30, 2015 were accounted for as debt modifications and $5.5 million of debt modification costs were recorded on the consolidated statement of operations for that period. 2014 Financings On April 9, 2014, the Company obtained $146.0 million in loans, secured by first mortgages, on 20 communities. The loans bear interest at a fixed rate of 4.77% and mature in May 2021. Proceeds of the loans were used to refinance $140.0 million of mortgage debt that was scheduled to mature in November 2014. In October 2014, the Company obtained $89.7 million in supplemental loans, secured by the 21 underlying communities. The loans bear interest at a fixed rate of approximately 4.6%. In the fourth quarter of 2014, the Company repaid $275.9 million of existing long-term debt with a weighted average interest rate of approximately 5.5%, including the $68 million loan from HCP used to fund the Company's initial capital contribution to the HCP 49 Venture. The Company financed the repayment of debt primarily with the proceeds from the public equity offering completed during the third quarter. See Note 4 for more information about the HCP 49 Venture and the public equity offering. As of December 31, 2015, the Company is in compliance with the financial covenants of its outstanding debt and lease agreements. Interest Rate Caps In the normal course of business, the Company has entered into certain interest rate protection agreements to effectively manage the risk above certain interest rates for a portion of the Company's variable rate debt. The following table summarizes the Company's interest rate cap instruments at December 31, 2015 (dollars in thousands):
Current notional balance |  | $ | 983,281 |
Weighted average fixed cap rate |  |  | 4.34 | %
Earliest maturity date |  |  | 2016 |
Latest maturity date |  |  | 2018 |
Estimated asset fair value (included in other assets, net at December 31, 2015) |  | $ | 29 |
Estimated asset fair value (included in other assets, net at December 31, 2014) |  | $ | 763 |

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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://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21475-112644 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.19,20,22) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 + Details
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