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Notes Payable, Bank Credit Facility, Interest and Amortization of Deferred Debt Costs | 9 Months Ended
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Sep. 30, 2022
Debt Disclosure [Abstract] |
Notes Payable, Bank Credit Facility, Interest and Amortization of Deferred Debt Costs | Notes Payable, Bank Credit Facility, Interest and Amortization of Deferred Debt CostsAt September 30, 2022, the Company had a $525.0 million senior unsecured credit facility (the “Credit Facility”) comprised of a $425.0 million revolving credit facility and a $100.0 million term loan. The revolving credit facility matures on August 29, 2025, which may be extended by the Company for one additional year, subject to satisfaction of certain conditions. The term loan matures on February 26, 2027, and may not be extended. Through October 2, 2022, interest accrues at the London Interbank Offered Rate (“LIBOR”) plus an applicable spread, which is determined by certain leverage tests. Effective October 3, 2022, in conjunction with the execution of the First Amendment to the Credit Facility, interest accrues at the Secured Overnight Financing Rate (“SOFR”) plus 10 basis points plus an applicable spread, which is determined by certain leverage tests. As of September 30, 2022, the applicable spread for borrowings was 140 basis points related to the revolving credit facility and 135 basis points related to the term loan. Letters of credit may be issued under the Credit Facility. On September 30, 2022, based on the value of the Company’s unencumbered properties, approximately $248.8 million was available under the Credit Facility, $228.0 million was outstanding and approximately $185,000 was committed for letters of credit. On August 23, 2022, the Company entered into two floating-to-fixed interest rate swap agreements to manage the interest rate risk associated with $100.0 million of its variable-rate debt. The effective date of each swap agreement is October 3, 2022 and each has a $50.0 million notional amount. One agreement terminates on October 1, 2027 and effectively fixes SOFR at 2.96%. The other agreement terminates on October 1, 2030 and effectively fixes SOFR at 2.91%. Because the interest-rate swaps effectively fix SOFR for $100.0 million of variable-rate debt, unless otherwise indicated, $100.0 million of variable-rate debt will be treated as fixed-rate debt for disclosure purposes as of September 30, 2022. The Company has designated the agreements as cash flow hedges for accounting purposes. As of September 30, 2022, the fair value of the interest-rate swaps totaled approximately $4.3 million, which is included in Other assets in the Consolidated Balance Sheets. The increase in value from inception of the swaps is reflected in Other Comprehensive Income in the Consolidated Statements of Comprehensive Income. On February 23, 2022, the Company closed on a $133.0 million construction-to-permanent loan, the proceeds of which will be used to partially fund Hampden House. The loan matures in 2040, bears interest at a fixed rate of 3.90%, and requires interest only payments, which will be funded by the loan, until conversion to permanent. The conversion is expected in the first quarter of 2026, and thereafter, monthly principal and interest payments based on a 25-year amortization schedule will be required. On March 11, 2022, the Company repaid in full the remaining principal balance of $28.3 million of the mortgage loan secured by Lansdowne Town Center, which was scheduled to mature in June 2022. On June 7, 2022, the Company repaid in full the remaining principal balance of $8.6 million of the mortgage loan secured by Orchard Park, which was scheduled to mature in September 2022. On August 4, 2022, the Company closed on a 15-year, non-recourse, $25.3 million mortgage secured by Village Center. The loan matures in 2037, bears interest at a fixed-rate of 4.14%, requires monthly principal and interest payments of $135,200 based on a 25-year amortization schedule and requires a final payment of $13.4 million at maturity. Proceeds were used to repay the remaining balance of approximately $11.2 million on the existing mortgage and reduce the outstanding balance of the revolving credit facility. A loss on early extinguishment of debt of $0.4 million was recognized. On August 24, 2022, the Company closed on a 7-year, non-recourse, $31.5 million mortgage secured by Great Falls Center. The loan matures in 2029, bears interest at a fixed-rate of 3.91%, requires monthly principal and interest payments of $164,700 based on a 25-year amortization schedule and requires a final payment of $25.7 million at maturity. Proceeds were used to repay the remaining balance of approximately $8.0 million on the existing mortgage and reduce the outstanding balance of the revolving credit facility. A loss on early extinguishment of debt of $0.2 million was recognized. On September 6, 2022, the Company closed on a 15-year, non-recourse, $143.0 million mortgage secured by Beacon Center and Seven Corners Center. The loan matures in 2037, bears interest at a fixed-rate of 5.05%, requires monthly principal and interest payments of $840,100 based on a 25-year amortization schedule and requires a final payment of $79.9 million at maturity. Proceeds were used to repay the remaining balance of approximately $85.3 million on the existing mortgages and reduce the outstanding balance of the revolving credit facility. This transaction was treated as a modification of the original debt agreement. A prepayment penalty of $5.9 million was incurred, which will be deferred and amortized as interest expense over the life of the loan and is included as a reduction to notes payable, net in the Consolidated Balance Sheets. Saul Centers and certain consolidated subsidiaries of the Operating Partnership have guaranteed the payment obligations of the Operating Partnership under the Credit Facility. The Operating Partnership is the guarantor of (a) a portion of the Broadlands mortgage (approximately $3.7 million of the $29.1 million outstanding balance at September 30, 2022), (b) a portion of the Avenel Business Park mortgage (approximately $6.3 million of the $23.2 million outstanding balance at September 30, 2022), (c) a portion of The Waycroft mortgage (approximately $23.6 million of the $153.6 million outstanding balance at September 30, 2022), (d) the Ashbrook Marketplace mortgage (totaling $21.0 million at September 30, 2022), and (e) the mortgage secured by Kentlands Place, Kentlands Square I and Kentlands Pad (totaling $28.4 million at September 30, 2022). All other notes payable are non-recourse. The principal amount of the Company’s outstanding debt totaled approximately $1.2 billion at September 30, 2022, of which approximately $1.1 billion was fixed-rate debt and approximately $128.0 million was variable rate debt outstanding under the Credit Facility. The carrying amount of the properties collateralizing the notes payable totaled approximately $1.0 billion as of September 30, 2022. At December 31, 2021, the principal amount of the Company’s outstanding debt totaled approximately $1.2 billion, of which $949.0 million was fixed rate debt and $206.0 million was variable rate debt outstanding under the Credit Facility. The carrying amount of the properties collateralizing the notes payable totaled approximately $1.1 billion as of December 31, 2021. At September 30, 2022, the scheduled maturities of debt, including scheduled principal amortization, for years ending December 31, were as follows:
(In thousands) | Balloon Payments |  | Scheduled Principal Amortization |  | Total
October 1 through December 31, 2022 | $ | — |  |  | $ | 8,050 |  |  | $ | 8,050 |
2023 | 9,225 |  |  | 32,938 |  |  | 42,163 |
2024 | 50,117 |  |  | 33,575 |  |  | 83,692 |
2025 | 148,363 |  | (a) | 31,437 |  |  | 179,800 |
2026 | 134,088 |  |  | 28,076 |  |  | 162,164 |
2027 | 100,000 |  | (b) | 23,469 |  |  | 123,469 |
Thereafter | 440,093 |  |  | 171,057 |  |  | 611,150 |
Principal amount | $ | 881,886 |  |  | $ | 328,602 |  |  | 1,210,488 |
Unamortized deferred debt costs |  |  |  |  | 16,288 |
Net |  |  |  |  | $ | 1,194,200 |
(a) Includes $128.0 million outstanding under the Credit Facility. (b) Includes $100.0 million outstanding under the Credit Facility. Deferred debt costs consist of fees and costs incurred to obtain long-term financing, construction financing and the Credit Facility. These fees and costs are being amortized on a straight-line basis over the terms of the respective loans or agreements, which approximates the effective interest method. Deferred debt costs totaled $16.3 million and $11.2 million, net of accumulated amortization of $7.4 million and $7.7 million, at September 30, 2022 and December 31, 2021, respectively, and are reflected as a reduction of the related debt in the Consolidated Balance Sheets. Interest expense, net and amortization of deferred debt costs for the three and nine months ended September 30, 2022 and 2021, were as follows:
| Three Months Ended September 30, |  | Nine Months Ended September 30,
(In thousands) | 2022 |  | 2021 |  | 2022 |  | 2021
Interest incurred | $ | 13,627 |  |  | $ | 12,481 |  |  | $ | 38,408 |  |  | $ | 38,062 |
Amortization of deferred debt costs | 486 |  |  | 425 |  |  | 1,428 |  |  | 1,237 |
Capitalized interest | (3,002) |  |  | (1,991) |  |  | (7,663) |  |  | (4,734) |
Interest expense | 11,111 |  |  | 10,915 |  |  | 32,173 |  |  | 34,565 |
Less: Interest income | 8 |  |  | 1 |  |  | 11 |  |  | 6 |
Interest expense, net and amortization of deferred debt costs | $ | 11,103 |  |  | $ | 10,914 |  |  | $ | 32,162 |  |  | $ | 34,559 |

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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 https://asc.fasb.org/topic&trid=2208564 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1B -Subparagraph (h) -URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495323-112611 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1C -Subparagraph (c) -URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495334-112611 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1I -Subparagraph (a) -URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495371-112611 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1I -Subparagraph (d) -URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495371-112611 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(c)) -URI https://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1B -Subparagraph (g) -URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495323-112611 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1C -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495334-112611 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1C -Subparagraph (a) -URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495334-112611 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1E -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495348-112611 Reference 11: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1B -URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495323-112611 Reference 12: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1I -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495371-112611 Reference 13: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1B -Subparagraph (i) -URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495323-112611 + Details
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