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Debt Obligations, net | 9 Months Ended
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Sep. 30, 2018
Debt Disclosure [Abstract] |
Debt Obligations, net | Debt Obligations, net The Company's debt obligations were as follows ($ in thousands):
| Carrying Value as of |  | Stated Interest Rates |  | Scheduled Maturity Date
| September 30, 2018 |  | December 31, 2017 |  |
Secured credit facilities and mortgages: |  |  |  |  |  |  |
2015 $325 million Revolving Credit Facility | $ | — |  |  | $ | 325,000 |  |  | LIBOR + 2.50% |  | (1) | September 2020
2016 Senior Term Loan | 648,375 |  |  | 399,000 |  |  | LIBOR + 2.75% |  | (2) | June 2023
Mortgages collateralized by net lease assets(3) | 684,503 |  |  | 208,491 |  |  | 3.62% - 7.26% |  | (4) |
Total secured credit facilities and mortgages | 1,332,878 |  |  | 932,491 |  |  |  |  |  |
Unsecured notes: |  |  |  |  |  |  |
5.00% senior notes(5) | 497,000 |  |  | 770,000 |  |  | 5.00 | % |  | July 2019
4.625% senior notes(6) | 400,000 |  |  | 400,000 |  |  | 4.625 | % |  | September 2020
6.50% senior notes(7) | 275,000 |  |  | 275,000 |  |  | 6.50 | % |  | July 2021
6.00% senior notes(8) | 375,000 |  |  | 375,000 |  |  | 6.00 | % |  | April 2022
5.25% senior notes(9) | 400,000 |  |  | 400,000 |  |  | 5.25 | % |  | September 2022
3.125% senior convertible notes(10) | 287,500 |  |  | 287,500 |  |  | 3.125 | % |  | September 2022
Total unsecured notes | 2,234,500 |  |  | 2,507,500 |  |  |  |  |  |
Other debt obligations: |  |  |  |  |  |  |
Trust preferred securities | 100,000 |  |  | 100,000 |  |  | LIBOR + 1.50% |  |  | October 2035
Total debt obligations | 3,667,378 |  |  | 3,539,991 |  |  |  |  |  |
Debt discounts and deferred financing costs, net | (54,569 | ) |  | (63,591 | ) |  |  |  |  |
Total debt obligations, net(11) | $ | 3,612,809 |  |  | $ | 3,476,400 |  |  |  |  |  |
_______________________________________________________________________________
(1) | The loan bears interest at the Company's election of either: (i) a base rate, which is the greater of (a) prime, (b) federal funds plus 0.5% or (c) LIBOR plus 1.0% and subject to a margin ranging from 1.25% to 1.75%; or (ii) LIBOR subject to a margin ranging from 2.25% to 2.75%. At maturity, the Company may convert outstanding borrowings to a one year term loan which matures in quarterly installments through September 2021.
(2) | The loan bears interest at the Company's election of either: (i) a base rate, which is the greater of (a) prime, (b) federal funds plus 0.5% or (c) LIBOR plus 1.0% and subject to a margin of 1.75%; or (ii) LIBOR subject to a margin of 2.75%.
(3) | On June 30, 2018, the Company consolidated the Net Lease Venture and recorded $464.7 million to "Debt obligations, net" on the Company's consolidated balance sheet.
(4) | As of September 30, 2018, the weighted average interest rate of these loans is 4.60%, inclusive of the effect of interest rate swaps.
(5) | The Company can prepay these senior notes without penalty. In July 2018, the Company redeemed $273.0 million of the 5.00% senior notes. Subsequent to September 30, 2018, the Company called for redemption $122.0 million aggregate principal amount of such notes on November 2, 2018.
(6) | The Company can prepay these senior notes without penalty beginning June 15, 2020.
(7) | The Company can prepay these senior notes without penalty beginning July 1, 2020.
(8) | The Company can prepay these senior notes without penalty beginning April 1, 2021.
(9) | The Company can prepay these senior notes without penalty beginning September 15, 2021.
(10) | The Company's 3.125% senior convertible fixed rate notes due September 2022 ("3.125% Convertible Notes") are convertible at the option of the holders at a conversion rate of 64.91 shares per $1,000 principal amount of 3.125% Convertible Notes, which equals a conversion price of $15.41 per share, at any time prior to the close of business on the business day immediately preceding September 15, 2022. Upon conversion, the Company will pay or deliver, as the case may be, a combination of cash and shares of its common stock. As such, at issuance in September 2017, the Company valued the debt component at $221.8 million, net of fees, and the equity component of the conversion feature at $22.5 million, net of fees, and recorded the equity component in "Additional paid-in capital" on the Company's consolidated balance sheet. In October 2017, the initial purchasers of the 3.125% Convertible Notes exercised their option to purchase an additional $37.5 million aggregate principal amount of the 3.125% Convertible Notes. At issuance, the Company valued the debt component at $34.0 million, net of fees, and the equity component of the conversion feature at $3.4 million, net of fees, and recorded the equity component in "Additional paid-in capital" on the Company's consolidated balance sheet. As of September 30, 2018, the carrying value of the 3.125% Convertible Notes was $261.1 million, net of fees, and the unamortized discount of the 3.125% Convertible Notes was $21.7 million, net of fees. During the three and nine months ended September 30, 2018, the Company recognized $2.2 million and $6.7 million, respectively, of contractual interest and $1.2 million and $3.5 million, respectively, of discount amortization on the 3.125% Convertible Notes. The effective interest rate was 5.2%.
(11) | The Company capitalized interest relating to development activities of $4.0 million and $8.5 million during the three and nine months ended September 30, 2018, respectively, and $2.1 million and $6.1 million during the three and nine months ended September 30, 2017, respectively.
Future Scheduled Maturities—As of September 30, 2018, future scheduled maturities of outstanding debt obligations are as follows ($ in thousands):
| Unsecured Debt |  | Secured Debt |  | Total
2018 (remaining three months) | $ | — |  |  | $ | 107,428 |  |  | $ | 107,428 |
2019(1) | 497,000 |  |  | 747 |  |  | 497,747 |
2020 | 400,000 |  |  | — |  |  | 400,000 |
2021 | 275,000 |  |  | 268,593 |  |  | 543,593 |
2022 | 1,062,500 |  |  | 57,457 |  |  | 1,119,957 |
Thereafter | 100,000 |  |  | 898,653 |  |  | 998,653 |
Total principal maturities | 2,334,500 |  |  | 1,332,878 |  |  | 3,667,378 |
Unamortized discounts and deferred financing costs, net | (44,655 | ) |  | (9,914 | ) |  | (54,569 | )
Total debt obligations, net | $ | 2,289,845 |  |  | $ | 1,322,964 |  |  | $ | 3,612,809 |
_______________________________________________________________________________
(1) | Subsequent to September 30, 2018, the Company called for redemption $122.0 million aggregate principal amount of senior notes on November 2, 2018.
2017 Secured Financing—In March 2017, the predecessor of SAFE (which at the time was comprised of the Company's wholly-owned subsidiaries conducting its Ground Lease business) entered into a $227.0 million secured financing transaction (the "2017 Secured Financing") that accrued interest at 3.795% and matures in April 2027. The 2017 Secured Financing was collateralized by the 12 properties comprising SAFE's initial portfolio. In connection with the 2017 Secured Financing, the Company incurred $7.3 million of lender and third-party fees, substantially all of which was capitalized in "Debt obligations, net" on the Company's consolidated balance sheets. In April 2017, the Company derecognized the 2017 Secured Financing when third parties acquired a controlling interest in SAFE's predecessor, prior to SAFE's initial public offering (refer to Note 4). The Company is providing a limited recourse guaranty and environmental indemnity under the 2017 Secured Financing that will remain in effect until SAFE has achieved either an equity market capitalization of at least $500.0 million (inclusive of the initial portfolio that the Company contributed to SAFE) or a net worth of at least $250.0 million (exclusive of the initial portfolio that the Company contributed to SAFE), and SAFE or another replacement guarantor provides similar guaranties and indemnities to the lenders. The management agreement with SAFE provides that SAFE may not terminate the management agreement unless a successor guarantor reasonably acceptable to the Company has agreed to replace the Company as guarantor and indemnitor or has provided the Company with a reasonably acceptable indemnity for any losses suffered by the Company as guarantor and indemnitor. SAFE has generally agreed to indemnify the Company for any amounts the Company is required to pay, or other losses the Company may suffer, under the limited recourse guaranty and environmental indemnity. 2016 Senior Term Loan—In June 2016, the Company entered into a senior term loan of $450.0 million (the "2016 Senior Term Loan"). In August 2016, the Company upsized the facility to $500.0 million. The initial $450.0 million of the 2016 Senior Term Loan was issued at 99% of par and the upsize was issued at par. In September 2017, the Company reduced, repriced and extended the 2016 Senior Term Loan to $400.0 million priced at LIBOR plus 3.00% with a 0.75% LIBOR floor and maturing in October 2021. In June 2018, the Company increased the 2016 Senior Term Loan to $650.0 million, re-priced at LIBOR plus 2.75% and extended its maturity to June 2023. The facility was also modified to permit substitution of collateral, subject to overall collateral pool coverage and concentration limits, over the life of the facility. This modification eliminates the mandatory amortization upon payoff or sale of collateral which existed prior to the upsize and broadens the types of collateral permitted under the facility. The Company may make optional prepayments, subject to prepayment fees, and is required to repay 0.25% of the principal amount each quarter. During the nine months ended September 30, 2018, repayments of the 2016 Senior Term Loan prior to its modification and the modification and upsize of the 2016 Senior Term Loan resulted in losses on early extinguishment of debt of $2.5 million. 2015 Revolving Credit Facility—In March 2015, the Company entered into a secured revolving credit facility with a maximum capacity of $250.0 million (the "2015 Revolving Credit Facility"). In September 2017, the Company upsized the 2015 Revolving Credit Facility to $325.0 million, added additional lenders to the syndicate, extended the maturity date to September 2020 and made certain other changes. This facility is secured by a pledge of the equity interest in a pool of assets which provide asset value coverage for borrowings under the facility. Borrowings under this credit facility bear interest at a floating rate indexed to one of several base rates plus a margin which adjusts upward or downward based upon the Company's corporate credit rating. An undrawn credit facility commitment fee ranges from 0.30% to 0.50%, based on corporate credit ratings. At maturity, the Company may convert outstanding borrowings to a one year term loan which matures in quarterly installments through September 2021. During the nine months ended September 30, 2018, the Company repaid from cash on hand the $325.0 million outstanding on the 2015 Revolving Credit Facility and as of September 30, 2018, based on the Company's borrowing base of assets, the Company had $325.0 million of borrowing capacity available under the 2015 Revolving Credit Facility. Unsecured Notes—In September 2017, the Company issued $400.0 million principal amount of 4.625% senior unsecured notes due September 2020, $400.0 million principal amount of 5.25% senior unsecured notes due September 2022 and $250.0 million of 3.125% Convertible Notes due September 2022. The Company incurred approximately $18.6 million in fees related to these offerings, all of which was capitalized in "Debt obligations, net" on the Company's consolidated balance sheets. Proceeds from these offerings, together with cash on hand, were used to repay in full the $550.0 million principal amount outstanding of the 4.0% senior unsecured notes due November 2017, the $300.0 million principal amount outstanding of the 7.125% senior unsecured notes due February 2018 and the $300.0 million principal amount outstanding of the 4.875% senior unsecured notes due July 2018. In addition, the initial purchasers of the 3.125% Convertible Notes exercised their option to purchase an additional $37.5 million aggregate principal amount of the 3.125% Convertible Notes. During the three and nine months ended September 30, 2018, repayments of unsecured notes prior to maturity resulted in losses on early extinguishment of debt of $0.9 million. During the nine months ended September 30, 2017, repayments of senior unsecured notes prior to maturity resulted in losses on early extinguishment of debt of $3.1 million. Collateral Assets—The carrying value of the Company's assets that are directly pledged or are held by subsidiaries whose equity is pledged as collateral to secure the Company's obligations under its secured debt facilities are as follows, by asset type ($ in thousands):
| As of
| September 30, 2018 |  | December 31, 2017
| Collateral Assets(1) |  | Non-Collateral Assets |  | Collateral Assets(1) |  | Non-Collateral Assets
Real estate, net | $ | 1,570,920 |  |  | $ | 322,869 |  |  | $ | 795,321 |  |  | $ | 486,710 |
Real estate available and held for sale | 31,145 |  |  | 30,404 |  |  | 20,069 |  |  | 48,519 |
Land and development, net | 17,500 |  |  | 633,031 |  |  | 25,100 |  |  | 835,211 |
Loans receivable and other lending investments, net(2)(3) | 499,895 |  |  | 525,103 |  |  | 194,529 |  |  | 1,021,340 |
Other investments | — |  |  | 302,318 |  |  | — |  |  | 321,241 |
Cash and other assets | 6,398 |  |  | 1,136,352 |  |  | — |  |  | 898,252 |
Total | $ | 2,125,858 |  |  | $ | 2,950,077 |  |  | $ | 1,035,019 |  |  | $ | 3,611,273 |
_______________________________________________________________________________
(1) | The 2016 Senior Term Loan and the 2015 Revolving Credit Facility are secured only by pledges of equity of certain of the Company's subsidiaries and not by pledges of the assets held by such subsidiaries. Such subsidiaries are subject to contractual restrictions under the terms of such credit facilities, including restrictions on incurring new debt (subject to certain exceptions). As of September 30, 2018, Collateral Assets includes $410.4 million carrying value of assets held by entities pledged as collateral for the $325.0 million 2015 Revolving Credit Facility that is undrawn as of September 30, 2018.
(2) | As of September 30, 2018 and December 31, 2017, the amounts presented exclude general reserves for loan losses of $14.3 million and $17.5 million, respectively.
(3) | As of September 30, 2018 and December 31, 2017, the amounts presented exclude loan participations of $18.4 million and $102.3 million, respectively.
Debt Covenants The Company's outstanding unsecured debt securities contain corporate level covenants that include a covenant to maintain a ratio of unencumbered assets to unsecured indebtedness, as such terms are defined in the indentures governing the debt securities, of at least 1.2 x and a covenant not to incur additional indebtedness (except for incurrences of permitted debt), if on a pro forma basis the Company's consolidated fixed charge coverage ratio, determined in accordance with the indentures governing the Company's debt securities, is 1.5 x or lower. If any of the Company's covenants are breached and not cured within applicable cure periods, the breach could result in acceleration of its debt securities unless a waiver or modification is agreed upon with the requisite percentage of the bondholders. If the Company's ability to incur additional indebtedness under the fixed charge coverage ratio is limited, the Company is permitted to incur indebtedness for the purpose of refinancing existing indebtedness and for other permitted purposes under the indentures. The Company's 2016 Senior Term Loan and the 2015 Revolving Credit Facility contain certain covenants, including covenants relating to collateral coverage, restrictions on fundamental changes, transactions with affiliates, matters relating to the liens granted to the lenders and the delivery of information to the lenders. In particular, the 2016 Senior Term Loan requires the Company to maintain collateral coverage of at least 1.25 x outstanding borrowings on the facility. The 2015 Revolving Credit Facility is secured by a borrowing base of assets and requires the Company to maintain both borrowing base asset value of at least 1.5 x outstanding borrowings on the facility and a consolidated ratio of cash flow to fixed charges of at least 1.5 x. The 2015 Revolving Credit Facility does not require that proceeds from the borrowing base be used to pay down outstanding borrowings provided the borrowing base asset value remains at least 1.5 x outstanding borrowings on the facility. To satisfy this covenant, the Company has the option to pay down outstanding borrowings or substitute assets in the borrowing base. The Company may not pay common dividends if it ceases to qualify as a REIT. In June 2018, the Company amended the terms of the 2016 Senior Term Loan and the 2015 Revolving Credit Facility to include the ability to pay common dividends with no restrictions so long as the Company is not in default on any of its debt obligations. The Company's 2016 Senior Term Loan and the 2015 Revolving Credit Facility contain cross default provisions that would allow the lenders to declare an event of default and accelerate the Company's indebtedness to them if the Company fails to pay amounts due in respect of its other recourse indebtedness in excess of specified thresholds or if the lenders under such other indebtedness are otherwise permitted to accelerate such indebtedness for any reason. The indentures governing the Company's unsecured public debt securities permit the bondholders to declare an event of default and accelerate the Company's indebtedness to them if the Company's other recourse indebtedness in excess of specified thresholds is not paid at final maturity or if such indebtedness is accelerated.

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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 470 -URI http://asc.fasb.org/topic&trid=2208564 + Details
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