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Notes Payable, Bank Credit Facility, Interest and Amortization of Deferred Debt Costs | 3 Months Ended
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Mar. 31, 2024
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 Costs At March 31, 2024, 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, and may be extended by the Company for one additional year, subject to satisfaction of certain conditions. The term loan matures on February 26, 2027. 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 March 31, 2024, 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 March 31, 2024, based on the value of the Company’s unencumbered properties calculated in accordance with the terms of the Credit Facility, approximately $127.6 million was available and undrawn under the Credit Facility and $374.0 million was outstanding. 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 is being treated as fixed-rate debt for disclosure purposes beginning September 30, 2022. The Company has designated the agreements as cash flow hedges for accounting purposes. As of March 31, 2024, the fair value of the interest-rate swaps totaled approximately $4.5 million, which is included in Other assets in the Consolidated Balance Sheets. The change in value during the period is reflected in Other Comprehensive Income in the Consolidated Statements of Comprehensive Income. During the second quarter of 2023, the Company commenced drawing on its $145.0 million construction-to-permanent loan related to the residential and retail portions of Phase I of the Twinbrook Quarter development project. As of March 31, 2024, the balance of the loan was $90.3 million, net of unamortized deferred debt costs. During the fourth quarter of 2023, the Company commenced drawing on its $133.0 million loan related to the Hampden House development project. As of March 31, 2024, the balance of the loan was $18.6 million, net of unamortized deferred debt costs. 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) the mortgage secured by Kentlands Place, Kentlands Square I and Kentlands pad (totaling $27.1 million at March 31, 2024), (b) a portion of The Waycroft mortgage (approximately $23.6 million of the $148.1 million outstanding balance at March 31, 2024, (c) the Ashbrook Marketplace mortgage (totaling $20.1 million at March 31, 2024), and (d) a portion of the Avenel Business Park mortgage (approximately $6.3 million of the $21.3 million outstanding balance at March 31, 2024). The Company provides a repayment guaranty of 100% of the loan secured by Twinbrook Quarter during construction and lease-up. Such guaranty is expected to be reduced in the future as the development achieves certain metrics. As of March 31, 2024, the loan balance and the amount guaranteed were $92.8 million. The Company also provides the lender with a 100% construction completion guaranty. The Company provides a limited repayment guaranty of $26.6 million during construction and lease-up for the loan secured by Hampden House. Such guaranty is expected to be reduced in the future as the development achieves certain metrics. As of March 31, 2024, the loan balance and the amount guaranteed was $21.4 million. The Company also provides the lender with a 100% construction completion guaranty. All other notes payable are non-recourse. The principal amount of the Company’s outstanding debt totaled approximately $1.43 billion at March 31, 2024, of which approximately $1.15 billion was fixed-rate debt and approximately $274.0 million was unhedged variable rate debt outstanding under the Credit Facility. The carrying amount of the properties collateralizing the notes payable totaled approximately $1.56 billion as of March 31, 2024. At December 31, 2023, the principal amount of the Company’s outstanding debt totaled approximately $1.41 billion, of which $1.13 billion was fixed rate debt and $276.0 million was unhedged variable rate debt outstanding under the Credit Facility. The carrying amount of the properties collateralizing the notes payable totaled approximately $1.52 billion as of December 31, 2023. At March 31, 2024, the future principal payments of debt, including scheduled maturities and amortization, for years ending December 31, were as follows:
(In thousands) |  |  |  |  | Principal Payments |
April 1 through December 31, 2024 |  |  |  |  | $ | 75,457 |  |
2025 |  |  |  |  | 326,086 |  | (a)
2026 |  |  |  |  | 163,051 |  |
2027 |  |  |  |  | 126,589 |  | (b)
2028 |  |  |  |  | 44,770 |  |
2029 |  |  |  |  | 52,627 |  |
Thereafter |  |  |  |  | 638,711 |  |
Principal amount |  |  |  |  | 1,427,291 |  |
Unamortized deferred debt costs |  |  |  |  | 18,641 |  |
Net |  |  |  |  | $ | 1,408,650 |  |
(a) Includes $274.0 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 totaling $18.6 million and $19.3 million, net of accumulated amortization of $11.3 million and $10.6 million, at March 31, 2024 and December 31, 2023, respectively, 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 months ended March 31, 2024 and 2023, were as follows:
| Three Months Ended March 31, |  |
(In thousands) | 2024 |  | 2023 |  |  |  |
Interest incurred | $ | 18,084 |  |  | $ | 15,513 |  |  |  |  |
Amortization of deferred debt costs | 564 |  |  | 559 |  |  |  |  |
Capitalized interest | (6,168) |  |  | (4,142) |  |  |  |  |
Interest expense | 12,480 |  |  | 11,930 |  |  |  |  |
Less: Interest income | 32 |  |  | 109 |  |  |  |  |
Interest expense, net and amortization of deferred debt costs | $ | 12,448 |  |  | $ | 11,821 |  |  |  |  |

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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/disclosureRef -Topic 470 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 1B -Subparagraph (h) -Publisher FASB -URI https://asc.fasb.org//1943274/2147481139/470-20-50-1B Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 235 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(c)) -Publisher FASB -URI https://asc.fasb.org//1943274/2147480678/235-10-S99-1 Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 470 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//470/tableOfContent Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 470 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 1B -Publisher FASB -URI https://asc.fasb.org//1943274/2147481139/470-20-50-1B Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Topic 470 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 1B -Subparagraph (g) -Publisher FASB -URI https://asc.fasb.org//1943274/2147481139/470-20-50-1B Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Topic 470 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 1B -Subparagraph (i) -Publisher FASB -URI https://asc.fasb.org//1943274/2147481139/470-20-50-1B Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Topic 470 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 1C -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org//1943274/2147481139/470-20-50-1C Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Topic 470 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 1C -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org//1943274/2147481139/470-20-50-1C Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Topic 470 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 1C -Subparagraph (c) -Publisher FASB -URI https://asc.fasb.org//1943274/2147481139/470-20-50-1C Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Topic 470 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 1E -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org//1943274/2147481139/470-20-50-1E Reference 11: http://www.xbrl.org/2003/role/disclosureRef -Topic 470 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 1I -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org//1943274/2147481139/470-20-50-1I Reference 12: http://www.xbrl.org/2003/role/disclosureRef -Topic 470 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 1I -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org//1943274/2147481139/470-20-50-1I Reference 13: http://www.xbrl.org/2003/role/disclosureRef -Topic 470 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 1I -Subparagraph (d) -Publisher FASB -URI https://asc.fasb.org//1943274/2147481139/470-20-50-1I + Details
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