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Indebtedness | 12 Months Ended
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Dec. 31, 2012
Indebtedness |
Indebtedness | Note 7. Indebtedness Our principal debt obligations at December 31, 2012 were: our $750,000 unsecured revolving credit facility; four public issuances of unsecured senior notes, including: $250,000 principal amount due 2016 at an annual interest rate of 4.30%, $200,000 principal amount due 2020 at an annual interest rate of 6.75%, $300,000 principal amount due 2021 at an annual interest rate of 6.75% and $350,000 principal amount due 2042 at an annual interest rate of 5.625%; and $705,255 aggregate principal amount of mortgages secured by 56 of our properties with maturity dates from 2013 to 2043. The 56 mortgaged properties had a carrying value of $992,645 at December 31, 2012. We also have two properties subject to capital leases totaling $13,792 at December 31, 2012; these two properties had a carrying value of $15,602 at December 31, 2012. In connection with the acquisitions discussed in Note 3 above, during the year ended December 31, 2012, we assumed $121,793 of mortgage debt, which was recorded at an aggregate fair value of $127,722. These mortgages have a weighted average interest rate of 5.84% and a weighted average maturity of 4.7 years. We recorded the assumed mortgages at their fair value, which exceeded their outstanding principal balances by $5,929. We determined the fair value of the assumed mortgages using a market approach based upon Level 2 inputs (significant other observable inputs) in the fair value hierarchy. In January 2012, we repaid all $225,000 of our 8.625% unsecured senior notes at their maturity date. We funded this repayment using borrowings under our revolving credit facility. In February 2012, we paid in full a mortgage loan encumbering one of our properties that had a principal balance of approximately $12,386, an interest rate of 6.03% and a maturity date in March 2012. In April 2012, we paid in full 17 mortgage loans encumbering 17 of our properties that had an aggregate principal balance of $32,576, weighted average interest rate of 6.95% and maturity dates in June and July 2012. In June 2012, we paid in full a mortgage loan encumbering one of our properties that had a principal balance of approximately $3,140, an interest rate of 6.07% and a maturity date in September 2012. In October 2012, we paid in full a mortgage loan encumbering one of our properties that had a principal balance of approximately $4,152, an interest rate of 6.50% and a maturity date in January 2013. In July 2012, we sold $350,000 of unsecured senior notes. The notes require interest at a fixed rate of 5.625% per annum and are due in 2042. The notes can also be prepaid at par at any time beginning in July 2017. Net proceeds from this sale of the notes, after underwriting discounts, fees and other expenses were approximately $338,561. Interest on the notes is payable quarterly in arrears. We used a part of the net proceeds of this offering to repay borrowings outstanding under our revolving credit facility and we used the remaining net proceeds from this offering to prepay a part of our FNMA secured term loan and for general business purposes, which included funding a part of our recent acquisitions of properties discussed in Note 3 above. In August 2012, we prepaid approximately $199,197 of the outstanding principal balance of our FNMA secured term loan that had an interest rate of 6.4% at August 31, 2012 and a maturity date in September 2019, using, among other funds, net proceeds from our July 2012 debt offering. As a result of this prepayment, 11 of the 28 properties securing this loan were released from the related mortgage. Also, as a result of this prepayment, we recorded a loss on early extinguishment of debt of approximately $6,349 consisting of a debt prepayment premium, legal fees and the write off of unamortized deferred financing fees. We have a $750,000 unsecured revolving credit facility that is available for general business purposes, including acquisitions. The maturity date of our revolving credit facility is June 24, 2015 and, subject to the payment of an extension fee and meeting certain other conditions, includes an option for us to extend the stated maturity date of our revolving credit facility by one year to June 24, 2016. In addition, our revolving credit facility includes a feature under which maximum borrowings may be increased to up to $1,500,000 in certain circumstances. Borrowings under our revolving credit facility bear interest at LIBOR plus a spread, which was 160 basis points as of December 31, 2012. We also pay a facility fee of 35 basis points per annum on the total amount of lending commitments under our revolving credit facility. Both the interest rate spread and the facility fee are subject to adjustment based upon changes to our credit ratings. We can borrow, repay and reborrow funds available under our revolving credit facility until maturity, and no principal repayment is due until maturity. As of December 31, 2012, the interest rate payable on borrowings under our revolving credit facility was 1.8% and the weighted average interest rate for borrowings under our revolving credit facility was 1.8% and 1.7% for the years ended December 31, 2012 and 2011, respectively. As of December 31, 2012 and February 19, 2013, we had $190,000 and zero amounts, respectively outstanding under our revolving credit facility. We incurred interest expense and other associated costs related to our revolving credit facility of $5,733, $2,745 and $1,606 for the years ended December 31, 2012, 2011 and 2010, respectively. Our credit facility agreement provides for acceleration of payment of all amounts due thereunder upon the occurrence and continuation of certain events of default, including a change of control of us and the termination of our business management agreement with RMR. Our public debt indentures and related supplements and our credit facility agreement contain a number of financial and other covenants, including covenants that restrict our ability to incur indebtedness or to make distributions under certain circumstances and require us to maintain financial ratios and a minimum net worth. In January 2011, we sold $250,000 of senior unsecured notes. The notes require interest at a fixed rate of 4.30% per annum and are due in 2016. Net proceeds from this sale of the notes, after underwriting discounts, fees and other expenses, were approximately $245,354. Interest on the notes is payable semi-annually in arrears. No principal payments are due until maturity. We used the net proceeds of this offering to repay $120,000 in borrowings under our revolving credit facility and for general business purposes, including funding in part the acquisitions described in Note 3 above. In December 2011, we sold $300,000 of senior unsecured notes. The notes require interest at a fixed rate of 6.75% per annum and are due in 2021. Net proceeds from this sale of the notes, after underwriting discounts, fees and other expenses, were approximately $292,126. Interest on the notes is payable semi-annually in arrears. No principal payments are due until maturity. We used the net proceeds of this offering to repay $70,000 in borrowings under our revolving credit facility and for general business purposes, including funding in part the acquisitions described in Note 3 above. At December 31, 2012 and 2011, our additional outstanding debt consisted of the following:
|  |  |  |  |  | December 31, 2012 |  | December 31, 2011 |
--- | --- | --- | --- | --- | --- | --- | --- | --- | ---
Unsecured Debt |  | Coupon |  | Maturity |  | Face Amount |  | Unamortized Discount |  | Face Amount |  | Unamortized Discount |
Senior notes |  |  | 8.625% |  |  | 2012 |  | $ | — |  | $ | — |  | $ | 225,000 |  | $ | — |
Senior notes |  |  | 4.300% |  |  | 2016 |  |  | 250,000 |  |  | 1,620 |  |  | 250,000 |  |  | 2,154 |
Senior notes |  |  | 6.750% |  |  | 2020 |  |  | 200,000 |  |  | 1,563 |  |  | 200,000 |  |  | 1,777 |
Senior notes |  |  | 6.750% |  |  | 2021 |  |  | 300,000 |  |  | 4,764 |  |  | 300,000 |  |  | 5,299 |
Senior notes |  |  | 5.625% |  |  | 2042 |  |  | 350,000 |  |  | — |  |  | — |  |  | — |
Total unsecured debt |  |  |  |  |  |  |  | $ | 1,100,000 |  | $ | 7,947 |  | $ | 975,000 |  | $ | 9,230 |
|  | Principal Balance as of December 31, |  |  |  |  |  |  |  |  |  | Net Book Value of Collateral |
--- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | ---
|  |  |  |  |  | Number of Properties as Collateral |  | Initial Cost of Collateral |
Secured and Other Debt |  | 2012(1) |  | 2011(1) |  | Interest Rate |  | Maturity |  | 2012 |  | 2011 |
Mortgage(2) |  | $ | — |  | $ | 12,400 |  |  | 6.03% |  |  | Mar 12 |  |  | — |  | $ | 17,158 |  | $ | — |  | $ | 17,076 |
Mortgage(2) |  |  | — |  |  | 2,356 |  |  | 6.73% |  |  | Jun 12 |  |  | — |  |  | 4,450 |  |  | — |  |  | 3,696 |
Mortgages(2) |  |  | — |  |  | 30,580 |  |  | 6.97% |  |  | Jul 12 |  |  | — |  |  | 70,114 |  |  | — |  |  | 61,542 |
Mortgage(2)(3) |  |  | — |  |  | 3,177 |  |  | 6.07% |  |  | Sep 12 |  |  | — |  |  | 22,143 |  |  | — |  |  | — |
Mortgage(2) |  |  | — |  |  | 4,224 |  |  | 6.50% |  |  | Jan 13 |  |  | — |  |  | 7,560 |  |  | — |  |  | 7,406 |
Mortgages |  |  | 10,565 |  |  | 10,920 |  |  | 6.11% |  |  | Dec 13 |  |  | 4 |  |  | 17,034 |  |  | 14,883 |  |  | 14,814 |
Mortgages |  |  | 13,759 |  |  | 14,009 |  |  | 6.91% |  |  | Dec 13 |  |  | 2 |  |  | 36,359 |  |  | 33,057 |  |  | 33,702 |
Mortgages |  |  | 36,906 |  |  | 37,619 |  |  | 5.83% |  |  | Jun 14 |  |  | 2 |  |  | 79,000 |  |  | 78,594 |  |  | 79,108 |
Mortgage |  |  | 30,944 |  |  | — |  |  | 6.015% |  |  | Mar 15 |  |  | 1 |  |  | 99,000 |  |  | 98,346 |  |  | — |
Mortgage(3) |  |  | 5,121 |  |  | 5,215 |  |  | 5.65% |  |  | Jun 15 |  |  | 1 |  |  | — |  |  | 21,435 |  |  | 21,838 |
Mortgage |  |  | 11,612 |  |  | 11,747 |  |  | 6.365% |  |  | Jul 15 |  |  | 1 |  |  | 14,849 |  |  | 14,432 |  |  | 14,697 |
Mortgages |  |  | 13,051 |  |  | 13,310 |  |  | 5.66% |  |  | Jul 15 |  |  | 3 |  |  | 26,606 |  |  | 25,868 |  |  | 26,377 |
Mortgage |  |  | 2,878 |  |  | 2,946 |  |  | 5.88% |  |  | Jul 15 |  |  | 1 |  |  | 15,397 |  |  | 14,774 |  |  | 15,173 |
Mortgage |  |  | 6,792 |  |  | — |  |  | 5.81% |  |  | Oct 15 |  |  | 1 |  |  | 9,650 |  |  | 9,665 |  |  | — |
Mortgage |  |  | 4,596 |  |  | 4,684 |  |  | 5.81% |  |  | Oct 15 |  |  | 1 |  |  | 8,600 |  |  | 8,391 |  |  | 8,532 |
Mortgages |  |  | 52,000 |  |  | — |  |  | 5.64% |  |  | Jan 16 |  |  | 1 |  |  | 70,495 |  |  | 66,123 |  |  | — |
Mortgage |  |  | 6,476 |  |  | 6,581 |  |  | 5.97% |  |  | Apr 16 |  |  | 1 |  |  | 10,272 |  |  | 10,051 |  |  | 10,194 |
Mortgages |  |  | 90,607 |  |  | 93,133 |  |  | 5.924% |  |  | Nov 16 |  |  | 2 |  |  | 157,500 |  |  | 154,691 |  |  | 157,640 |
Mortgage |  |  | 12,537 |  |  | 12,695 |  |  | 6.25% |  |  | Nov 16 |  |  | 1 |  |  | 22,102 |  |  | 21,968 |  |  | 21,984 |
Mortgage |  |  | 5,810 |  |  | — |  |  | 5.86% |  |  | Mar 17 |  |  | 1 |  |  | 11,280 |  |  | 11,562 |  |  | — |
Mortgages |  |  | 46,753 |  |  | 47,688 |  |  | 6.54% |  |  | May 17 |  |  | 8 |  |  | 62,500 |  |  | 56,341 |  |  | 57,873 |
Mortgage |  |  | 11,419 |  |  | — |  |  | 6.15% |  |  | Aug 17 |  |  | 1 |  |  | 16,400 |  |  | 15,507 |  |  | — |
Mortgage- |  |  | 9,641 |  |  | — |  |  | 6.73% |  |  | Apr 18 |  |  | 1 |  |  | 15,100 |  |  | 11,526 |  |  | — |
Mortgage(4) |  |  | 296,437 |  |  | 300,669 |  |  | 6.71% |  |  | Sep 19 |  |  | 17 |  |  | 617,161 |  |  | 260,274 |  |  | 505,214 |
Mortgage(4) |  |  | — |  |  | 200,078 |  |  | 6.39% |  |  | Sep 19 |  |  | — |  |  | — |  |  | — |  |  | — |
Mortgage(5) |  |  | 3,270 |  |  | 3,515 |  |  | 7.31% |  |  | Jan 22 |  |  | 1 |  |  | 18,827 |  |  | 16,839 |  |  | 17,243 |
Mortgage(5) |  |  | 1,608 |  |  | 1,725 |  |  | 7.85% |  |  | Jan 22 |  |  | — |  |  | — |  |  | — |  |  | — |
Mortgage |  |  | 3,534 |  |  | 3,619 |  |  | 6.25% |  |  | Feb 33 |  |  | 1 |  |  | 5,200 |  |  | 4,695 |  |  | 4,807 |
Mortgage |  |  | 9,492 |  |  | 9,623 |  |  | 5.95% |  |  | Sep 38 |  |  | 2 |  |  | 11,425 |  |  | 9,295 |  |  | 19,589 |
Mortgage |  |  | 4,747 |  |  | — |  |  | 4.375% |  |  | Sep 43 |  |  | 1 |  |  | 8,059 |  |  | 7,768 |  |  | — |
Bonds |  |  | 14,700 |  |  | 14,700 |  |  | 5.875% |  |  | Dec 27 |  |  | 1 |  |  | 34,307 |  |  | 26,559 |  |  | 27,503 |
Capital leases |  |  | 13,792 |  |  | 14,211 |  |  | 7.70% |  |  | Apr 26 |  |  | 2 |  |  | 28,601 |  |  | 15,602 |  |  | 16,027 |
Total secured |  | $ | 719,047 |  | $ | 861,424 |  |  |  |  |  |  |  |  | 58 |  | $ | 1,517,149 |  | $ | 1,008,246 |  | $ | 1,142,035 |
(1) The principal balances are the amounts stated in the contracts. In accordance with GAAP, our carrying values and recorded interest expense may be different because of market conditions at the time we assumed certain of these debts. As of December 31, 2012 and 2011, the unamortized net premiums on certain of these mortgages were $5,430 and $191, respectively. (2) In 2012 we repaid this debt. (3) These two mortgages are collateralized by one property acquired in June 2011. One of these mortgages was repaid in 2012. (4) These two mortgages were closed in August 2009 and originally collateralized by 28 properties. A part of this loan requires interest at a fixed rate of 6.71% and a part of the loan required interest at a variable rate. In August 2012, we repaid the variable rate portion of the mortgage and 11 properties were released from the collateral. (5) These two mortgages are collateralized by one MOB property acquired in July 2008. We include amortization of capital lease assets in depreciation expense. Assets encumbered by capital leases had a net book value of $13,792 and $14,211 at December 31, 2012 and 2011, respectively. Interest on our unsecured senior notes and our bonds is payable semi-annually in arrears; however, no principal repayments are due until maturity. Required monthly payments on our mortgages include principal and interest. Payments under our capital leases are due monthly. Required principal payments on our outstanding debt as of December 31, 2012, are as follows:
2013 |  | $ | 36,109 |
2014 |  |  | 48,022 |
2015 |  |  | 272,356 |
2016 |  |  | 410,136 |
2017 |  |  | 65,382 |
Thereafter |  |  | 1,177,042 |

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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 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 Reference 2: 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 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 02 -Paragraph 19, 20, 22 -Article 5 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 129 -Paragraph 2, 4 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. + Details
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