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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, 2018
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, 2018, the principal amount of outstanding debt totaled $1.0 billion, of which $910.2 million was fixed rate debt and $122.0 million was variable rate debt. The principal amount of the Company’s outstanding debt totaled $965.5 million at December 31, 2017, of which $890.4 million was fixed rate debt and $75.1 million was variable rate debt. At December 31, 2018, the Company had a $400.0 million unsecured credit facility, which can be used for working capital, property acquisitions or development projects, of which $325.0 million is a revolving credit facility and $75.0 million is a term loan. The revolving credit facility matures on January 26, 2022, and may be extended by the Company for one additional year subject to the Company’s satisfaction of certain conditions. The term loan matures on January 26, 2023, and may not be extended. Saul Centers and certain consolidated subsidiaries of the Operating Partnership have guaranteed the payment obligations of the Operating Partnership under the credit facility. Letters of credit may be issued under the revolving credit facility. On December 31, 2018, based on the value of the Company's unencumbered properties, approximately $190.7 million was available under the revolving credit facility, $47.0 million was outstanding and approximately $184,600 was committed for letters of credit. Interest at a rate equal to the sum of one-month LIBOR and a margin that is based on the Company’s leverage ratio and which can range from 135 basis points to 195 basis points under the revolving facility and from 130 basis points to 190 basis points under the term loan. As of December 31, 2018, the margin was 135 basis points under the revolving facility and 130 basis points under the term loan. Saul Centers is a guarantor of the credit facility, of which the Operating Partnership is the borrower. The Operating Partnership is the guarantor of (a) a portion of the Park Van Ness loan (approximately $10.0 million of the $69.7 million outstanding balance at December 31, 2018, which guarantee will be reduced to (i) $6.7 million on October 1, 2019, (ii) $3.3 million on October 1, 2020 and (iii) zero on October 1, 2021), (b) a portion of the Kentlands Square II mortgage loan (approximately $8.8 million of the $35.3 million outstanding balance at December 31, 2018) and (c) a portion of the Broadlands mortgage (approximately $4.0 million of the $31.9 million outstanding balance at December 31, 2018). All other notes payable are non-recourse. 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. On January 18, 2017, the Company closed on a 15-year, non-recourse $40.0 million mortgage loan secured by Burtonsville Town Square. The loan matures in 2032, bears interest at a fixed rate of 3.39%, requires monthly principal and interest payments of $197,900 based on a 25-year amortization schedule and requires a final payment of $20.3 million million at maturity. On August 14, 2017, the Company closed on a $157.0 million construction-to-permanent loan, the proceeds of which will be used to partially fund the Glebe Road development project. The loan matures in 2035, bears interest at a fixed rate of 4.67%, requires interest only payments, which will be funded by the loan, until conversion to permanent. The conversion is expected in the fourth quarter of 2021, and thereafter, monthly principal and interest payments of $887,900 based on a 25-year amortization schedule will be required. Effective September 1, 2017, the Company's $71.6 million construction-to-permanent loan, which is fully drawn and secured by Park Van Ness, converted to permanent financing. The loan matures in 2032, bears interest at a fixed rate of 4.88%, requires monthly principal and interest payments of $413,460 based on a 25-year amortization schedule and requires a final payment of $39.6 million at maturity. On November 20, 2017, the Company closed on a 15-year, non-recourse $60.0 million mortgage loan secured by Washington Square. The loan matures in 2032, bears interest at a fixed rate of 3.75%, requires monthly principal and interest payments of $308,500 based on a 25-year amortization schedule and requires a final payment of $31.1 million. Proceeds were used to repay the remaining balance of approximately $28.1 million on the existing mortgage and reduce the outstanding balance of the revolving credit facility. On October 3, 2018, the Company closed on a 15-year , non-recourse $32.0 million mortgage loan secured by Broadlands Village. The loan matures in 2033, bears interest at a fixed-rate of 4.41%, requires monthly principal and interest payments of $176,200 based on a 25-year amortization schedule and requires a final payment of $17.3 million at maturity. On December 18, 2018, the Company closed on a 15-year, non-recourse $22.9 million mortgage loan secured by The Glen. The loan matures in 2034, bears interest at a fixed-rate of 4.69%, requires monthly principal and interest payments of $129,800 based on a 25-year amortization schedule and requires a final payment of $12.5 million at maturity. The following is a summary of notes payable as of December 31, 2018 and 2017.
Notes Payable | December 31, |  | Interest |  | Scheduled
(Dollars in thousands) | 2018 |  |  |  | 2017 |  | Rate * |  | Maturity *
Fixed rate mortgages: | $ | — |  |  | (a) |  | $ | 30,201 |  |  | 5.88 | % |  | Jan-2019
| 9,159 |  |  | (b) |  | 9,783 |  |  | 5.76 | % |  | May-2019
| 12,676 |  |  | (c) |  | 13,529 |  |  | 5.62 | % |  | Jul-2019
| 12,714 |  |  | (d) |  | 13,543 |  |  | 5.79 | % |  | Sep-2019
| 11,295 |  |  | (e) |  | 12,029 |  |  | 5.22 | % |  | Jan-2020
| 9,601 |  |  | (f) |  | 9,948 |  |  | 5.60 | % |  | May-2020
| 7,766 |  |  | (g) |  | 8,244 |  |  | 5.30 | % |  | Jun-2020
| 36,711 |  |  | (h) |  | 37,998 |  |  | 5.83 | % |  | Jul-2020
| 6,943 |  |  | (i) |  | 7,325 |  |  | 5.81 | % |  | Feb-2021
| 5,480 |  |  | (j) |  | 5,649 |  |  | 6.01 | % |  | Aug-2021
| 31,723 |  |  | (k) |  | 32,673 |  |  | 5.62 | % |  | Jun-2022
| 9,728 |  |  | (l) |  | 9,999 |  |  | 6.08 | % |  | Sep-2022
| 10,609 |  |  | (m) |  | 10,877 |  |  | 6.43 | % |  | Apr-2023
| 11,702 |  |  | (n) |  | 12,577 |  |  | 6.28 | % |  | Feb-2024
| 14,952 |  |  | (o) |  | 15,452 |  |  | 7.35 | % |  | Jun-2024
| 13,013 |  |  | (p) |  | 13,438 |  |  | 7.60 | % |  | Jun-2024
| 23,198 |  |  | (q) |  | 23,873 |  |  | 7.02 | % |  | Jul-2024
| 27,222 |  |  | (r) |  | 28,115 |  |  | 7.45 | % |  | Jul-2024
| 27,168 |  |  | (s) |  | 28,025 |  |  | 7.30 | % |  | Jan-2025
| 14,086 |  |  | (t) |  | 14,537 |  |  | 6.18 | % |  | Jan-2026
| 102,310 |  |  | (u) |  | 105,817 |  |  | 5.31 | % |  | Apr-2026
| 30,888 |  |  | (v) |  | 32,016 |  |  | 4.30 | % |  | Oct-2026
| 35,258 |  |  | (w) |  | 36,507 |  |  | 4.53 | % |  | Nov-2026
| 16,515 |  |  | (x) |  | 17,086 |  |  | 4.70 | % |  | Dec-2026
| 62,630 |  |  | (y) |  | 64,472 |  |  | 5.84 | % |  | May-2027
| 15,345 |  |  | (z) |  | 15,859 |  |  | 4.04 | % |  | Apr-2028
| 38,120 |  |  | (aa) |  | 39,968 |  |  | 3.51 | % |  | Jun-2028
| 15,547 |  |  | (bb) |  | 16,055 |  |  | 3.99 | % |  | Sep-2028
| 27,060 |  |  | (cc) |  | 27,884 |  |  | 3.69 | % |  | Mar-2030
| 14,526 |  |  | (dd) |  | 14,950 |  |  | 3.99 | % |  | Apr-2030
| 38,076 |  |  | (ee) |  | 39,140 |  |  | 3.39 | % |  | Feb-2032
| 69,691 |  |  | (ff) |  | 71,211 |  |  | 4.88 | % |  | Sep-2032
| 58,523 |  |  | (gg) |  | 60,000 |  |  | 3.75 | % |  | Dec-2032
| 31,941 |  |  | (hh) |  | — |  |  | 4.41 | % |  | Nov-2033
| 22,900 |  |  | (ii) |  | — |  |  | 4.69 | % |  | Jan-2034
| 11,781 |  |  | (jj) |  | 11,613 |  |  | 8.00 | % |  | Apr-2034
| 23,332 |  |  | (kk) |  | — |  |  | 4.67 | % |  | Sep-2035
Total fixed rate | 910,189 |  |  |  |  | 890,393 |  |  | 5.18 | % |  | 8.5 Years
Variable rate loans: |  |  |  |  |  |  |  |  |
| 47,000 |  |  | (ll) |  | 61,000 |  |  | LIBOR + 1.35 | % |  | Jan-2022
| 75,000 |  |  | (mm) |  | — |  |  | LIBOR + 1.30 | % |  | Jan-2023
| — |  |  | (nn) |  | 14,135 |  |  | LIBOR + 1.65 | % |  | Feb-2018
Total variable rate | 122,000 |  |  |  |  | 75,135 |  |  | 3.84 | % |  | 3.7 Years
Total notes payable | $ | 1,032,189 |  |  |  |  | $ | 965,528 |  |  | 5.02 | % |  | 8.0 Years
* Interest rate and scheduled maturity data presented as of December 31, 2018. Totals computed using weighted averages. Amounts shown are principal amounts and have not been reduced by any deferred debt issuance costs.
(a) | The loan was collateralized by three shopping centers, Broadlands Village, The Glen and Kentlands Square I, and required 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. The loan was repaid in full in 2018 and replaced with two new loans. See (hh) and (ii) below.
(b) | 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 $624,100 was amortized during 2018.
(c) | 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 $853,100 was amortized during 2018.
(d) | 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 $829,100 was amortized during 2018.
(e) | 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 $733,800 was amortized during 2018.
(f) | 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 $347,300 was amortized during 2018.
(g) | 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 $477,900 was amortized during 2018.
(h) | 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 $1.3 million was amortized during 2018.
(i) | 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 $381,700 was amortized during 2018.
(j) | 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 $169,300 was amortized during 2018.
(k) | 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 $949,600 was amortized during 2018.
(l) | 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 $270,300 was amortized during 2018.
(m) | 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 $268,400 was amortized during 2018.
(n) | 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 $874,800 was amortized during 2018.
(o) | 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 $499,800 was amortized during 2018.
(p) | 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 $424,700 was amortized during 2018.
(q) | 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 $675,200 was amortized during 2018.
(r) | 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 $893,200 was amortized during 2018.
(s) | 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 $857,000 was amortized during 2018.
(t) | 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 $451,200 was amortized during 2018.
(u) | 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 $3.5 million was amortized during 2018.
(v) | 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 $1.1 million was amortized during 2018.
(w) | 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 $1.2 million was amortized during 2018.
(x) | 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 $570,500 was amortized during 2018.
(y) | 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 $1.8 million was amortized during 2018.
(z) | 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 $513,700 was amortized in 2018.
(aa) | 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 $1.8 million was amortized in 2018.
(bb) | 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 $507,600 was amortized in 2018.
(cc) | 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 $824,000 was amortized in 2018.
(dd) 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 $423,600 was amortized in 2018.
(ee) | The loan is collateralized by Burtonsville Town Square and requires equal monthly principal and interest payments of $197,900 based on a 25-year amortization schedule and a final payment of $20.3 million at loan maturity. Principal of $1.1 million was amortized in 2018.
(ff) | The loan is a $71.6 million construction-to-permanent facility that is collateralized by and financed a portion of the construction costs of Park Van Ness. During the construction period, interest was funded by the loan. Effective September 1, 2017, the loan converted to permanent financing and requires monthly principal and interest payments totaling $413,500 based upon a 25-year amortization schedule. A final payment of $39.6 million will be due at maturity. Principal of $1.5 million was amortized in 2018.
(gg) | The loan is collateralized by Washington Square and requires equal monthly principal and interest payments of $308,500 based upon a 25-year amortization schedule and a final payment of $31.1 million at loan maturity. Principal of $1.5 million was amortized in 2018.
(hh) | The loan is collateralized by Broadlands Village and requires equal monthly principal and interest payments of $176,200 based on a 25-year amortization schedule and a final payment of $17.3 million at loan maturity. Principal of $58,600 was amortized in 2018.
(ii) | The loan is collateralized by The Glen and requires equal monthly principal and interest payments of $129,800 based on a 25-year amortization schedule and a final payment of $12.5 million at loan maturity.
(jj) | 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 2018 totaled $168,600.
(kk) | The loan is a $157.0 million construction-to-permanent facility that is collateralized by and will finance a portion of the construction costs of Glebe Road. During the construction period, interest will be funded by the loan. After conversion to a permanent loan, monthly principal and interest payments totaling $887,900 will be required based upon a 25-year amortization schedule.
(ll) | The loan is a $325.0 million unsecured revolving credit facility. Interest accrues at a rate equal to the sum of one-month LIBOR plus a spread of 135 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.
(mm) | The loan is a $75.0 million unsecured term facility. Interest accrues at a rate equal to the sum of one-month LIBOR plus a spread of 130 basis points. Monthly payments are interest only.
(nn) | The loan was 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. The loan was repaid in full during 2018.
The carrying value of the properties collateralizing the mortgage notes payable totaled $1.1 billion and $1.0 billion, as of December 31, 2018 and 2017, 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, 2018.
• | 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 1.4x on a trailing four-quarter basis (fixed charge coverage).
Mortgage notes payable at each of December 31, 2018 and 2017, totaling $51.0 million, are guaranteed by members of the Saul Organization. As of December 31, 2018, 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
2019 | $ | 60,794 |  |  | $ | 2,257 |  |  | $ | 63,051 |
2020 | 61,163 |  |  | 28,042 |  |  | 89,205 |
2021 | 11,012 |  |  | 27,815 |  |  | 38,827 |
2022 | 83,502 |  | (a) | 28,381 |  |  | 111,883 |
2023 | 84,225 |  |  | 28,745 |  |  | 112,970 |
Thereafter | 480,132 |  |  | 136,121 |  |  | 616,253 |
Principal amount | $ | 780,828 |  |  | $ | 251,361 |  |  | 1,032,189 |
Unamortized deferred debt costs |  |  |  |  | 10,343 |
Net |  |  |  |  | $ | 1,021,846 |
(a) Includes $47.0 million outstanding under the revolving facility. The components of interest expense are set forth below.
(in thousands) | Year ended December 31,
| 2018 |  | 2017 |  | 2016
Interest incurred | $ | 49,652 |  |  | $ | 49,322 |  |  | $ | 46,867 |
Amortization of deferred debt costs | 1,610 |  |  | 1,392 |  |  | 1,343 |
Capitalized interest | (6,222 | ) |  | (3,489 | ) |  | (2,527 | )
Total | $ | 45,040 |  |  | $ | 47,225 |  |  | $ | 45,683 |
Deferred debt costs capitalized during the years ending December 31, 2018, 2017 and 2016 totaled $3.2 million, $2.6 million and $0.1 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://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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