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Mortgage Notes Payable, Revolving Credit Facility, Interest Expense and Amortization of Deferred Debt Costs | 12 Months Ended
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Dec. 31, 2016
Debt Disclosure [Abstract] |
Mortgage Notes Payable, Revolving Credit Facility, Interest Expense and Amortization of Deferred Debt Costs | MORTGAGE NOTES PAYABLE, REVOLVING CREDIT FACILITY, INTEREST EXPENSE AND AMORTIZATION OF DEFERRED DEBT COSTS At December 31, 2016, the principal amount of outstanding debt totaled $907.8 million, of which $844.3 million was fixed rate debt and $63.5 million was variable rate debt. The principal amount of the Company’s outstanding debt totaled $875.2 million at December 31, 2015, of which $832.4 million was fixed rate debt and $42.8 million was variable rate debt. At December 31, 2016, the Company had a $275.0 million unsecured revolving credit facility, which can be used for working capital, property acquisitions or development projects. The revolving credit facility matures on June 23, 2018, and may be extended by the Company for one additional year subject to the Company’s satisfaction of certain conditions. Saul Centers and certain consolidated subsidiaries of the Operating Partnership have guaranteed the payment obligations of the Operating Partnership under the revolving credit facility. Letters of credit may be issued under the revolving credit facility. On December 31, 2016, based on the value of the Company's unencumbered properties, approximately $225.6 million was available under the line, $49.0 million was outstanding and approximately $448,000 was committed for letters of credit. The interest rate under the facility is variable and equals the sum of one-month LIBOR and a margin that is based on the Company’s leverage ratio and which can range from 145 basis points to 200 basis points. As of December 31, 2016, the margin was 145 basis points. Saul Centers is a guarantor of the revolving credit facility, of which the Operating Partnership is the borrower, the Metro Pike Center bank loan (approximately $7.8 million of the $14.5 million outstanding at December 31, 2016) and all of the Park Van Ness construction-to-permanent loan. All other notes payable are non-recourse. On June 24, 2014, the Company amended and restated its revolving credit facility. The unsecured revolving credit facility, which can be used for working capital, property acquisitions, development projects or letters of credit was increased to $275.0 million. The revolving credit facility matures on June 23, 2018, and may be extended by the Company for one additional year subject to the Company’s satisfaction of certain conditions. Saul Centers and certain consolidated subsidiaries of the Operating Partnership have guaranteed the payment obligations of the Operating Partnership under the revolving credit facility. Letters of credit may be issued under the revolving credit facility. The interest rate under the facility is variable and equals the sum of one-month LIBOR and a margin that is based on the Company’s leverage ratio, and which can range from 145 basis points to 200 basis points. On March 3, 2015, the Company closed on a 15-year, non-recourse $30.0 million mortgage loan secured by Shops at Fairfax and Boulevard. The loan matures in 2030, bears interest at a fixed rate of 3.69%, requires monthly principal and interest payments totaling $153,300 based on a 25-year amortization schedule and requires a final payment of $15.5 million at maturity. Proceeds were used to repay in full the $15.2 million remaining balance of existing debt secured by Shops at Fairfax and Boulevard and to reduce outstanding borrowings under the revolving credit facility. On April 1, 2015, the Company closed on a 15-year, non-recourse $16.0 million mortgage loan secured by Northrock. The loan matures in 2030, bears interest at a fixed rate of 3.99%, requires monthly principal and interest payments totaling $84,400 based on a 25-year amortization schedule and requires a final payment of $8.4 million at maturity. Proceeds were used to repay in full the $14.5 million remaining balance of existing debt secured by Northrock. In November 2016, the existing loan secured by Beacon Center was increased by $11.25 million. The interest rate, amortization period and maturity date did not change; the required monthly payment was increased to $268,500. Proceeds were used to partially fund the purchase of the ground which underlies Beacon Center. The following is a summary of notes payable as of December 31, 2016 and 2015.
Notes Payable | December 31, |  | Interest |  | Scheduled
(Dollars in thousands) | 2016 |  |  |  | 2015 |  | Rate * |  | Maturity *
Fixed rate mortgages: | $ | 29,428 |  |  | (a) |  | $ | 30,778 |  |  | 6.01 | % |  | Feb-2018
| 32,036 |  |  | (b) |  | 33,766 |  |  | 5.88 | % |  | Jan-2019
| 10,372 |  |  | (c) |  | 10,928 |  |  | 5.76 | % |  | May-2019
| 14,335 |  |  | (d) |  | 15,098 |  |  | 5.62 | % |  | Jul-2019
| 14,325 |  |  | (e) |  | 15,064 |  |  | 5.79 | % |  | Sep-2019
| 12,725 |  |  | (f) |  | 13,387 |  |  | 5.22 | % |  | Jan-2020
| 10,277 |  |  | (g) |  | 10,587 |  |  | 5.60 | % |  | May-2020
| 8,697 |  |  | (h) |  | 9,127 |  |  | 5.30 | % |  | Jun-2020
| 39,213 |  |  | (i) |  | 40,360 |  |  | 5.83 | % |  | Jul-2020
| 7,685 |  |  | (j) |  | 8,025 |  |  | 5.81 | % |  | Feb-2021
| 5,808 |  |  | (k) |  | 5,959 |  |  | 6.01 | % |  | Aug-2021
| 33,571 |  |  | (l) |  | 34,420 |  |  | 5.62 | % |  | Jun-2022
| 10,253 |  |  | (m) |  | 10,492 |  |  | 6.08 | % |  | Sep-2022
| 11,129 |  |  | (n) |  | 11,365 |  |  | 6.43 | % |  | Apr-2023
| 13,401 |  |  | (o) |  | 14,177 |  |  | 6.28 | % |  | Feb-2024
| 15,917 |  |  | (p) |  | 16,348 |  |  | 7.35 | % |  | Jun-2024
| 13,832 |  |  | (q) |  | 14,197 |  |  | 7.60 | % |  | Jun-2024
| 24,504 |  |  | (r) |  | 25,088 |  |  | 7.02 | % |  | Jul-2024
| 28,945 |  |  | (s) |  | 29,714 |  |  | 7.45 | % |  | Jul-2024
| 28,822 |  |  | (t) |  | 29,564 |  |  | 7.30 | % |  | Jan-2025
| 14,961 |  |  | (u) |  | 15,360 |  |  | 6.18 | % |  | Jan-2026
| 109,144 |  |  | (v) |  | 112,299 |  |  | 5.31 | % |  | Apr-2026
| 33,097 |  |  | (w) |  | 34,133 |  |  | 4.30 | % |  | Oct-2026
| 37,701 |  |  | (x) |  | 38,842 |  |  | 4.53 | % |  | Nov-2026
| 17,630 |  |  | (y) |  | 18,150 |  |  | 4.70 | % |  | Dec-2026
| 66,210 |  |  | (z) |  | 67,850 |  |  | 5.84 | % |  | May-2027
| 16,352 |  |  | (aa) |  | 16,826 |  |  | 4.04 | % |  | Apr-2028
| 41,753 |  |  | (bb) |  | 31,844 |  |  | 3.51 | % |  | Jun-2028
| 16,543 |  |  | (cc) |  | 17,011 |  |  | 3.99 | % |  | Sep-2028
| 28,679 |  |  | (dd) |  | 29,444 |  |  | 3.69 | % |  | Mar-2030
| 15,357 |  |  | (ee) |  | 15,748 |  |  | 3.99 | % |  | Apr-2030
| 70,144 |  |  | (ff) |  | 45,208 |  |  | 4.88 | % |  | Sep-2032
| 11,446 |  |  | (gg) |  | 11,282 |  |  | 8.00 | % |  | Apr-2034
Total fixed rate | 844,292 |  |  |  |  | 832,441 |  |  | 5.48 | % |  | 8.5 Years
Variable rate loans: |  |  |  |  |  |  |  |  |
| 49,000 |  |  | (hh) |  | 28,000 |  |  | LIBOR + 1.45 | % |  | Jun-2018
| 14,482 |  |  | (ii) |  | 14,801 |  |  | LIBOR + 1.65 | % |  | Feb-2018
Total variable rate | $ | 63,482 |  |  |  |  | $ | 42,801 |  |  | 2.22 | % |  | 1.3 Years
Total notes payable | $ | 907,774 |  |  |  |  | $ | 875,242 |  |  | 5.25 | % |  | 8.0 Years
* | Interest rate and scheduled maturity data presented as of December 31, 2016. Totals computed using weighted averages. Amounts shown are principal amounts and have not been reduced by any deferred debt issuance costs.
(a) | The loan is collateralized by Washington Square and requires equal monthly principal and interest payments of $264,000 based upon a 27.5-year amortization schedule and a final payment of $28.0 million at loan maturity. Principal of $1.4 million was amortized during 2016.
(b) | The loan is collateralized by three shopping centers, Broadlands Village, The Glen and Kentlands Square I, and requires equal monthly principal and interest payments of $306,000 based upon a 25-year amortization schedule and a final payment of $28.4 million at loan maturity. Principal of $1.7 million was amortized during 2016.
(c) | The loan is collateralized by Olde Forte Village and requires equal monthly principal and interest payments of $98,000 based upon a 25-year amortization schedule and a final payment of $9.0 million at loan maturity. Principal of $556,000 was amortized during 2016.
(d) | The loan is collateralized by Countryside and requires equal monthly principal and interest payments of $133,000 based upon a 25-year amortization schedule and a final payment of $12.3 million at loan maturity. Principal of $763,000 was amortized during 2016.
(e) | The loan is collateralized by Briggs Chaney MarketPlace and requires equal monthly principal and interest payments of $133,000 based upon a 25-year amortization schedule and a final payment of $12.2 million at loan maturity. Principal of $739,000 was amortized during 2016.
(f) | The loan is collateralized by Shops at Monocacy and requires equal monthly principal and interest payments of $112,000 based upon a 25-year amortization schedule and a final payment of $10.6 million at loan maturity. Principal of $662,000 was amortized during 2016.
(g) | The loan is collateralized by Boca Valley Plaza and requires equal monthly principal and interest payments of $75,000 based upon a 30-year amortization schedule and a final payment of $9.1 million at loan maturity. Principal of $310,000 was amortized during 2016.
(h) | The loan is collateralized by Palm Springs Center and requires equal monthly principal and interest payments of $75,000 based upon a 25-year amortization schedule and a final payment of $7.1 million at loan maturity. Principal of $430,000 was amortized during 2016.
(i) | The loan and a corresponding interest-rate swap closed on June 29, 2010 and are collateralized by Thruway. On a combined basis, the loan and the interest-rate swap require equal monthly principal and interest payments of $289,000 based upon a 25-year amortization schedule and a final payment of $34.8 million at loan maturity. Principal of $1,147,000 was amortized during 2016.
(j) | The loan is collateralized by Jamestown Place and requires equal monthly principal and interest payments of $66,000 based upon a 25-year amortization schedule and a final payment of $6.1 million at loan maturity. Principal of $340,000 was amortized during 2016.
(k) | The loan is collateralized by Hunt Club Corners and requires equal monthly principal and interest payments of $42,000 based upon a 30-year amortization schedule and a final payment of $5.0 million, at loan maturity. Principal of $151,000 was amortized during 2016.
(l) | The loan is collateralized by Lansdowne Town Center and requires monthly principal and interest payments of $230,000 based on a 30-year amortization schedule and a final payment of $28.2 million at loan maturity. Principal of $849,000 was amortized during 2016.
(m) | The loan is collateralized by Orchard Park and requires equal monthly principal and interest payments of $73,000 based upon a 30-year amortization schedule and a final payment of $8.6 million at loan maturity. Principal of $239,000 was amortized during 2016.
(n) | The loan is collateralized by BJ’s Wholesale and requires equal monthly principal and interest payments of $80,000 based upon a 30-year amortization schedule and a final payment of $9.3 million at loan maturity. Principal of $236,000 was amortized during 2016.
(o) | The loan is collateralized by Great Falls shopping center. The loan consists of three notes which require equal monthly principal and interest payments of $138,000 based upon a weighted average 26-year amortization schedule and a final payment of $6.3 million at maturity. Principal of $776,000 was amortized during 2016.
(p) | The loan is collateralized by Leesburg Pike and requires equal monthly principal and interest payments of $135,000 based upon a 25-year amortization schedule and a final payment of $11.5 million at loan maturity. Principal of $431,000 was amortized during 2016.
(q) | The loan is collateralized by Village Center and requires equal monthly principal and interest payments of $119,000 based upon a 25-year amortization schedule and a final payment of $10.1 million at loan maturity. Principal of $365,000 was amortized during 2016.
(r) | The loan is collateralized by White Oak and requires equal monthly principal and interest payments of $193,000 based upon a 24.4 year weighted amortization schedule and a final payment of $18.5 million at loan maturity. The loan was previously collateralized by Van Ness Square. During 2012, the Company substituted White Oak as the collateral and borrowed an additional $10.5 million. Principal of $584,000 was amortized during 2016.
(s) | The loan is collateralized by Avenel Business Park and requires equal monthly principal and interest payments of $246,000 based upon a 25-year amortization schedule and a final payment of $20.9 million at loan maturity. Principal of $769,000 was amortized during 2016.
(t) | The loan is collateralized by Ashburn Village and requires equal monthly principal and interest payments of $240,000 based upon a 25-year amortization schedule and a final payment of $20.5 million at loan maturity. Principal of $742,000 was amortized during 2016.
(u) | The loan is collateralized by Ravenwood and requires equal monthly principal and interest payments of $111,000 based upon a 25-year amortization schedule and a final payment of $10.1 million at loan maturity. Principal of $399,000 was amortized during 2016.
(v) | The loan is collateralized by Clarendon Center and requires equal monthly principal and interest payments of $753,000 based upon a 25-year amortization schedule and a final payment of $70.5 million at loan maturity. Principal of $3.2 million was amortized during 2016.
(w) | The loan is collateralized by Severna Park MarketPlace and requires equal monthly principal and interest payments of $207,000 based upon a 25-year amortization schedule and a final payment of $20.3 million at loan maturity. Principal of $1,036,000 was amortized during 2016.
(x) | The loan is collateralized by Kentlands Square II and requires equal monthly principal and interest payments of $240,000 based upon a 25-year amortization schedule and a final payment of $23.1 million at loan maturity. Principal of $1,141,000 was amortized during 2016.
(y) | The loan is collateralized by Cranberry Square and requires equal monthly principal and interest payments of $113,000 based upon a 25-year amortization schedule and a final payment of $10.9 million at loan maturity. Principal of $520,000 was amortized during 2016.
(z) | The loan in the original amount of $73.0 million closed in May 2012, is collateralized by Seven Corners and requires equal monthly principal and interest payments of $463,200 based upon a 25-year amortization schedule and a final payment of $42.3 million at loan maturity. Principal of $1.6 million was amortized during 2016.
(aa) | The loan is collateralized by Hampshire Langley and requires equal monthly principal and interest payments of $95,400 based upon a 25 -year amortization schedule and a final payment of $9.5 million at loan maturity. Principal of $474,000 was amortized in 2016.
(bb) | The loan is collateralized by Beacon Center and requires equal monthly principal and interest payments of $268,500 based upon a 20-year amortization schedule and a final payment of $17.1 million at loan maturity. Principal of $1.3 million was amortized in 2016.
(cc) | The loan is collateralized by Seabreeze Plaza and requires equal monthly principal and interest payments of $94,900 based upon a 25-year amortization schedule and a final payment of $9.5 million at loan maturity. Principal of $468,000 was amortized in 2016.
(dd) | The loan is collateralized by Shops at Fairfax and Boulevard shopping centers and requires equal monthly principal and interest payments totaling $153,300 based upon a 25-year amortization schedule and a final payment of $15.5 million at maturity. Principal of $765,000 was amortized in 2016.
(ee) The loan is collateralized by Northrock and requires equal monthly principal and interest payments totaling $84,400 based upon a 25-year amortization schedule and a final payment of $8.4 million at maturity. Principal of $391,000 was amortized in 2016.
(ff) | The loan is a $71.6 million construction-to-permanent facility that is collateralized by and will finance a portion of the construction costs of Park Van Ness. During the construction period, interest will be funded by the loan. After conversion to a permanent loan, monthly principal and interest payments totaling $413,500 will be required based upon a 25-year amortization schedule. A final payment of $39.6 million will be due at maturity.
(gg) | The Company entered into a sale-leaseback transaction with its Olney property and is accounting for that transaction as a secured financing. The arrangement requires monthly payments of $60,400 which increase by 1.5% on May 1, 2015, and every May 1 thereafter. The arrangement provides for a final payment of $14.7 million and has an implicit interest rate of 8.0%. Negative amortization in 2016 totaled $164,000.
(hh) | The loan is a $275.0 million unsecured revolving credit facility. Interest accrues at a rate equal to the sum of one-month LIBOR plus a spread of 145 basis points. The line may be extended at the Company’s option for one year with payment of a fee of 0.15%. Monthly payments, if required, are interest only and vary depending upon the amount outstanding and the applicable interest rate for any given month.
(ii) | The loan is collateralized by Metro Pike Center and requires monthly principal and interest payments of approximately $48,000 and a final payment of $14.2 million at loan maturity. Principal of $319,000 was amortized during 2016.
The carrying value of the properties collateralizing the mortgage notes payable totaled $957.2 million and $856.8 million, as of December 31, 2016 and 2015, respectively. The Company’s credit facility requires the Company and its subsidiaries to maintain certain financial covenants, which are summarized below. The Company was in compliance as of December 31, 2016.
• | maintain tangible net worth, as defined in the loan agreement, of at least $542.1 million plus 80% of the Company’s net equity proceeds received after March 2014;
• | limit the amount of debt as a percentage of gross asset value, as defined in the loan agreement, to less than 60% (leverage ratio);
• | limit the amount of debt so that interest coverage will exceed 2.0 x on a trailing four-quarter basis (interest expense coverage); and
• | limit the amount of debt so that interest, scheduled principal amortization and preferred dividend coverage exceeds 1.3 x on a trailing four-quarter basis (fixed charge coverage).
Mortgage notes payable at each of December 31, 2016 and 2015, totaling $51.0 million, are guaranteed by members of the Saul Organization. As of December 31, 2016, the scheduled maturities of all debt including scheduled principal amortization for years ended December 31 are as follows:
(in thousands) | Balloon Payments |  | Scheduled Principal Amortization |  | Total
2017 | $ | — |  |  | $ | 26,418 |  |  | $ | 26,418 |
2018 | 90,865 |  | (a) | 26,394 |  |  | 117,259 |
2019 | 60,793 |  |  | 25,037 |  |  | 85,830 |
2020 | 61,163 |  |  | 22,331 |  |  | 83,494 |
2021 | 11,011 |  |  | 21,859 |  |  | 32,870 |
Thereafter | 452,142 |  |  | 109,761 |  |  | 561,903 |
Principal amount | $ | 675,974 |  |  | $ | 231,800 |  |  | 907,774 |
Unamortized deferred debt costs |  |  |  |  | 7,485 |
Net |  |  |  |  | $ | 900,289 |
(a) Includes $49.0 million outstanding under the line of credit. The components of interest expense are set forth below.
(in thousands) | Year ended December 31,
| 2016 |  | 2015 |  | 2014
Interest incurred | $ | 46,867 |  |  | $ | 45,898 |  |  | $ | 45,396 |
Amortization of deferred debt costs | 1,343 |  |  | 1,433 |  |  | 1,327 |
Capitalized interest | (2,527 | ) |  | (2,166 | ) |  | (689 | )
Total | $ | 45,683 |  |  | $ | 45,165 |  |  | $ | 46,034 |
Deferred debt costs capitalized during the years ending December 31, 2016, 2015 and 2014 totaled $0.1 million, $0.3 million and $1.3 million, respectively.

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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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