Debt Obligations

12 Months Ended

Dec. 31, 2022

9. Debt Obligations

Unsecured Credit Facility. We have an unsecured credit agreement (the “Credit Agreement”) that provides for an aggregate commitment of the lenders of up to $500,000,000 comprising of a $400,000,000 revolving credit facility (the “Revolving Line of Credit”) and two $50,000,000 term loans (the “Term Loans”). The Credit Agreement permits us to request increases to the Revolving Line of Credit and Term Loans commitments up to a total of $1,000,000,000. The Revolving Line of Credit matures on November 19, 2025 and provides for a one-year extension option at our discretion, subject to customary conditions. The Term Loans mature on November 19, 2025 and November 19, 2026. During the fourth quarter of 2022, we entered into the First Amendment (the “Amended Credit Agreement”) to replace LIBOR with SOFR, plus a credit spread adjustment of 10 basis points (“Adjusted SOFR”), as the reference rate for purpose of calculating interest under the Amended Credit Agreement. Other material terms of the Credit Agreement remain unchanged.

Based on our leverage at December 31, 2022, the Revolving Line of Credit provides for interest annually at Adjusted SOFR plus 115 points and a facility fee of 20 basis point and the Term Loans provide for interest annually at Adjusted SOFR plus 135 points.

Interest Rate Swap Agreements. In connection with entering into the Term Loans as discussed above, we entered into two receive variable/pay fixed interest rate swap agreements (“Interest Rate Swaps”) with maturities of November 19, 2025 and November 19, 2026, respectively, that will effectively lock-in the forecasted interest payments on the Term Loans’ borrowings over the four and five year terms of the loans. The Interest Rate Swaps are considered cash flow hedges and are recorded on our Consolidated Balance Sheets at fair value, with changes in the fair value of these instruments recognized in Accumulated other comprehensive income (loss) on our Consolidated Balance Sheets. In connection with entering into the Amended Credit Agreement discussed above, we entered into amendments to our Interest Rate Swaps to account for SOFR as the updated reference rate in the Amended Credit Agreement. During the year ended December 31, 2022 and 2021, we recorded $8,891,000 increase and $172 decrease, respectively, in fair value of Interest Rate Swaps.

As of December 31, 2022, the terms of our Interest Rate Swaps were as follows (dollar amounts in thousands):


						Notional	Fair Value at
Date Entered	Maturity Date	Swap Rate		Rate Index		Amount		December 31, 2022
November 2021	November 19, 2025	2.62	%	1-month SOFR	$	50,000	$	4,003
November 2021	November 19, 2026	2.76	%	1-month SOFR		50,000		4,716
					$	100,000	$	8,719

Senior Unsecured Notes. We have senior unsecured notes held by institutional investors with interest rates ranging from 3.66% to 5.03%. The senior unsecured notes mature between 2024 and 2033. During the twelve months ended December 31, 2022, we sold $75,000,000 aggregate principal amount of 3.66% senior unsecured notes. The notes have an average 10-year life, scheduled principal payments and mature in May 2033.

The senior unsecured notes and Credit Agreement, including the Revolving Line of Credit and the Term Loans, contain financial covenants, which are measured quarterly, require us to maintain, among other things:

(i)

a ratio of total indebtedness to total asset value not greater than 0.5 to 1.0;

(ii)

a ratio of secured debt to total asset value not greater than 0.35 to 1.0;

(iii)

a ratio of unsecured debt to the value of the unencumbered asset value not greater than 0.6 to 1.0; and

(iv)

a ratio of EBITDA, as calculated in the Unsecured Credit Agreement, to fixed charges not less than 1.50 to 1.0.

At December 31, 2022, we were in compliance with all applicable financial covenants. These debt obligations also contain additional customary covenants and events of default that are subject to a number of important and

significant limitations, qualifications and exceptions.

The following table sets forth information regarding debt obligations by component as of December 31, 2022 and 2021 (dollar amounts in thousands):


		At December 31, 2022				At December 31, 2021
	Applicable			Available				Available
	Interest	Outstanding		for		Outstanding		for
Debt Obligations	Rate ⁽¹⁾	Balance		Borrowing		Balance		Borrowing
Revolving line of credit ⁽²⁾	5.38%	$	130,000	$	270,000	$	110,900	$	289,100
Term loans, net of debt issue costs	2.69%		99,511		—		99,363		—
Senior unsecured notes, net of debt issue costs ⁽³⁾	4.25%		538,343		—		512,456		—
Total	4.24%	$	767,854	$	270,000	$	722,719	$	289,100

(1)	Represents weighted average of interest rate as of December 31, 2022.

(2)	Subsequent to December 31, 2022, we had a net borrowing of $162,700 under our unsecured revolving line of credit. Accordingly, we have $292,700 outstanding and $107,300 available for borrowing under our unsecured revolving line of credit.

(3)	Subsequent to December 31, 2022, we paid $7,000 under our senior unsecured notes, accordingly we have $531,343 outstanding, net of debt issue costs, under our senior unsecured notes.

Our borrowings and repayments for the years ended December 31, 2022, 2021 and 2020 are as follows (in thousands):


	Year Ended December 31,
	2022				2021				2020
Debt Obligations		Borrowings		Repayments	Borrowings		Repayments		Borrowings		Repayments
Revolving line of credit ⁽¹⁾	$	194,000	$	(174,900)	$	204,400	$	(183,400)	$	24,000	$	(28,000)
Term loans		—		—		100,000		—		—		—
Senior unsecured notes ⁽²⁾		75,000		(48,160)		—		(47,160)		—		(40,160)
Total	$	269,000	$	(223,060)	$	304,400	$	(230,560)	$	24,000	$	(68,160)

(1)	Subsequent to December 31, 2022, we had a net borrowing of $162,700 under our unsecured revolving line of credit. Accordingly, we have $292,700 outstanding and $107,300 available for borrowing under our unsecured revolving line of credit.

(2)	Subsequent to December 31, 2022, we paid $7,000 under our senior unsecured notes, accordingly we have $531,343 outstanding, net of debt issue costs, under our senior unsecured notes.

Scheduled Principal Payments. The following table represents our long-term contractual obligations (scheduled principal payments and amounts due at maturity) as of December 31, 2022, and excludes the effects of interest and debt issue costs (in thousands):


	Total			2023			2024		2025			2026		2027		Thereafter
Revolving line of credit	$	130,000	⁽¹⁾	$	—		$	—	$	130,000	⁽¹⁾	$	—	$	—	$	—
Term loans		100,000			—			—		50,000			50,000		—		—
Senior unsecured notes		539,820	⁽²⁾		49,160	⁽²⁾		49,160		49,500			51,500		54,500		286,000
	$	769,820		$	49,160		$	49,160	$	229,500		$	101,500	$	54,500	$	286,000

(1)	Subsequent to December 31, 2022, we borrowed $162,700 under our unsecured revolving line of credit. Accordingly, we have $292,700 outstanding and $107,300 available for borrowing under our unsecured revolving line of credit.

(2)	Subsequent to December 31, 2022, we paid $7,000 under our senior unsecured notes, accordingly we have $531,343 outstanding, net of debt issue costs, under our senior unsecured notes.

- 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

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+ Details