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Indebtedness | 12 Months Ended
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Dec. 31, 2015
Indebtedness |
Indebtedness | Note 6. Indebtedness Our principal debt obligations at December 31, 2015 were: (1) outstanding borrowings under our $1,000,000 unsecured revolving credit facility; (2) five public issuances of senior unsecured notes, including: (a) $400,000 principal amount at an annual interest rate of 3.25% due 2019, (b) $200,000 principal amount at an annual interest rate of 6.75% due 2020, (c) $300,000 principal amount at an annual interest rate of 6.75% due 2021, (d) $250,000 principal amount at an annual interest rate of 4.75% due 2024 and (e) $350,000 principal amount at an annual interest rate of 5.625% due 2042; (3) our $350,000 principal amount term loan due 2020; (4) our $200,000 principal amount term loan due 2022; and (5) $667,535 aggregate principal amount of mortgages secured by 56 of our properties (57 buildings) with maturity dates between 2016 and 2043. The 56 mortgaged properties (57 buildings) had a carrying value (before accumulated depreciation) of $1,083,616 at December 31, 2015. We also had two properties subject to capital leases with lease obligations totaling $1 2,156 at December 31, 2015; these two properties had a carrying value before depreciation of $35,901 at December 31, 2015. The capital leases expire in 2026. Our revolving credit facility agreement includes an accordion feature under which maximum borrowings under the facility may be increased to up to $1,500,000 in certain circumstances. In September 2015, we partially exercised this accordion feature and increased the maximum borrowings available under the facility to $1,000,000 from the previous amount of $750,000. All other material terms of our revolving credit facility agreement remained unchanged. The maturity date of our revolving credit facility is January 15, 2018 and, subject to the payment of an extension fee and meeting certain other conditions, we have an option to further extend the stated maturity date by an additional one year to January 15, 2019. Our revolving credit facility agreement provides that we can borrow, repay and re-borrow funds available under our revolving credit facility until maturity, and no principal repayment is due until maturity. Our revolving credit facility requires annual interest to be paid at LIBOR plus a premium, which was 130 basis points as of December 31, 2015, and the facility fee is 30 basis points per annum on the total amount of lending commitments. Both the interest rate premium and the facility fee are subject to adjustment based upon changes to our credit ratings. As of December 31, 2015, the annual interest rate payable on borrowings under our revolving credit facility was 1.7%, and the weighted average annual interest rates for borrowings under our revolving credit facility was 1.5%, 1.4% and 1.6% for the three years ended December 31, 2015, 2014 and 2013, respectively. As of December 31, 2015, we had $775,000 outstanding and $225,000 available for borrowing, and as of February 22, 2016, we had $593,000 outstanding and $407,000 available for borrowing under our revolving credit facility. We incurred interest expense and other associated costs related to our revolving credit facility of $9,252, $3,094 and $3,781 for the years ended December 31, 2015, 2014 and 2013, respectively. In September 2015, we entered into a term loan agreement with a syndicate of lenders, pursuant to which we obtained a $200,000 unsecured term loan. This term loan matures in September 2022, and is prepayable without penalty beginning September 29, 2017. In addition, this term loan includes an accordion feature under which maximum borrowings may be increased to up to $400,000 in certain circumstances. This term loan requires annual interest to be paid at LIBOR plus a premium of 180 basis points that is subject to adjustment based upon changes to our credit ratings. We used the net proceeds from this term loan to repay amounts outstanding under our revolving credit facility. As of December 31, 2015, the annual interest rate payable for amounts outstanding under this term loan was 2.2%. The weighted average annual interest rate for amounts outstanding under our term loan was 2.0% for the period from September 28, 2015 (the day we entered into this term loan agreement) to December 31, 2015. We incurred interest expense and other associated costs related to this term loan of $1,061 for the period from September 28, 2015 (the day we entered into this term loan agreement) to December 31, 2015. In addition to our $200,000 term loan, we also have a $350,000 unsecured term loan, which we borrowed in 2014. This term loan matures in January 2020, and is prepayable without penalty at any time. This term loan includes an accordion feature under which maximum borrowings may be increased to up to $700,000 in certain circumstances. This term loan requires annual interest to be paid at LIBOR plus a premium of 140 basis points that is subject to adjustment based upon changes to our credit ratings. As of December 31, 2015, the annual interest rate payable on amounts outstanding under this term loan was 1.6%. The weighted average annual interest rate for amounts outstanding under this term loan was 1.6% for the year ended December 31, 2015 and 1.6% for the period from May 30, 2014 (the day we entered into this term loan agreement) to December 31, 2014. We incurred interest expense and other associated costs related to this term loan of $5,686 for the year ended December 31, 2015 and $3,263 for the period from May 30, 2014 (the day we entered into this term loan agreement) to December 31, 2015. In February 2016, we sold $250,000 of 6.25% senior unsecured notes due 2046, raising net proceeds of approximately $242,125 after underwriting discounts and before expenses. We have also granted the underwriters an option to purchase up to an additional $37,500 in aggregate principal amount of the notes. We used the net proceeds of this offering to repay amounts outstanding under our revolving credit facility and for general business purposes. Our revolving credit facility and term loan agreements and our senior unsecured notes indentures and their supplements provide for acceleration of payment of all amounts due thereunder upon the occurrence and continuation of certain events of default, such as, in the case of our revolving credit facility and term loan agreements, a change of control of us, which includes RMR LLC ceasing to act as our business manager and property manager. Our revolving credit facility and term loan agreements and our senior unsecured notes indentures and their supplements also contain a number of covenants, including covenants that restrict our ability to incur debts, and generally require us to maintain certain financial ratios, and our revolving credit facility and term loan agreements restrict our ability to make distributions under certain circumstances. We believe we were in compliance with the terms and conditions of the respective covenants under our senior unsecured notes indentures and their supplements and our revolving credit facility and term loan agreements at December 31, 2015. In December 2014, we entered an agreement to acquire the 38 senior living communities discussed in Note 3 above. Simultaneous with entering this agreement, we obtained a bridge loan commitment for $700,000. In February 2015, we terminated the bridge loan commitment and we recognized a loss of $1,409 on early extinguishment of debt in the first quarter of 2015 in connection with that termination. As discussed in Note 3 above, we acquired these senior living communities in May and September 2015 and financed the acquisition using cash on hand, borrowings under our revolving credit facility and the assumption of approximately $151,477 of mortgage debts with a weighted average annual interest rate of 4.57%. These mortgages have maturity dates from October 2018 through July 2019. We determined the fair value of the assumed mortgage debts using a market approach based upon Level 3 inputs (significant other unobservable inputs) in the fair value hierarchy provided by the Fair Value Topic of the Codification. In connection with two of the 23 MOBs we acquired in January 2015, as further discussed in Note 3 above, we assumed $29,955 of mortgage debts which we recorded at their aggregate fair value of $31,029. These two assumed mortgage debts have a contractual weighted average annual interest rate of 4.73% and mature in July 2016 and October 2022. We determined the fair value of the assumed mortgages using a market approach based upon Level 3 inputs (significant other unobservable inputs) in the fair value hierarchy provided by the Fair Value Topic of the Codification. In November 2015, we prepaid all $250,000 of our 4.30% senior unsecured notes due January 2016. As a result, we recognized a loss on early extinguishment of debt of $175 for the year ended December 31, 2015. In February 2015, we repaid at maturity a mortgage that encumbered one of our properties that had a principal balance of $29,227 and an annual interest rate of 6.02%. In April 2015, we prepaid a mortgage that encumbered one of our properties that had a principal balance of $6,274 and an annual interest rate of 5.81%. In May 2015, we prepaid four mortgages encumbering four properties with an aggregate principal balance of $15,077 and a weighted average annual interest rate of 5.70%. In June 2015, we repaid at maturity a mortgage encumbering one property with a principal balance of $4,867 and an annual interest rate of 5.65%. Also in June 2015, we prepaid a mortgage encumbering one property with a principal balance of $4,351 and an annual interest rate of 5.81%. In October 2015, we prepaid two mortgages encumbering one property with a principal balance of $52,000 and a weighted average annual interest rate of 5.64%. As a result, we recognized losses on early extinguishment of debt of $290 for the year ended December 31, 2015. In January 2016, we prepaid a mortgage that encumbered one of our properties that had a principal balance of $6,115 and an annual interest rate of 5.97%. In June 2014, we repaid at maturity mortgages that encumbered two of our properties that had an aggregate principal balance of $35,807 and a weighted average annual interest rate of 5.8%. In October 2014, we prepaid at par our $14,700 loan incurred in connection with certain revenue bonds scheduled to mature in December 2027. That loan had an annual interest rate of 5.875%. Also in October 2014, we prepaid a mortgage note scheduled to mature in May 2015 that encumbered one of our properties that had a principal balance of $11,900 and an annual interest rate of 6.25%. In December 2014, we prepaid a mortgage note scheduled to mature in July 2015 that encumbered one of our properties that had a principal balance of $11,308 and an annual interest rate of 6.37%. As a result, we recognized losses on early extinguishment of debt of $12 for the year ended December 31, 2014. At December 31, 2015 and 2014, our outstanding senior unsecured notes and secured debt consisted of the following:
|  |  |  |  |  | December 31, 2015 |  | December 31, 2014 |
|  |  |  |  |  | Face |  | Unamortized |  | Face |  | Unamortized |
Senior Unsecured Notes |  | Coupon |  | Maturity |  | Amount |  | Discount |  | Amount |  | Discount |
Senior unsecured notes(1) |  | 4.300 | % | 2016 |  | $ | — |  | $ | — |  | $ | 250,000 |  | $ | 551 |
Senior unsecured notes |  | 3.250 | % | 2019 |  |  | 400,000 |  |  | 197 |  |  | 400,000 |  |  | 256 |
Senior unsecured notes |  | 6.750 | % | 2020 |  |  | 200,000 |  |  | 918 |  |  | 200,000 |  |  | 1,133 |
Senior unsecured notes |  | 6.750 | % | 2021 |  |  | 300,000 |  |  | 3,161 |  |  | 300,000 |  |  | 3,696 |
Senior unsecured notes |  | 4.750 | % | 2024 |  |  | 250,000 |  |  | 658 |  |  | 250,000 |  |  | 737 |
Senior unsecured notes |  | 5.625 | % | 2042 |  |  | 350,000 |  |  | — |  |  | 350,000 |  |  | — |
Total senior unsecured notes |  |  |  |  |  | $ | 1,500,000 |  | $ | 4,934 |  | $ | 1,750,000 |  | $ | 6,373 |
| (1) |  | In November 2015, we prepaid all $250,000 of our 4.30% senior unsecured notes due January 2016.
|  |  |  |  |  |  |  |  |  |  |  | Number of |  |  |  |  |  |  |
|  | Principal Balance as of |  |  |  |  |  | Properties as |  | Net Book Value of Collateral as of |
|  | December 31, |  | Interest |  |  |  | Collateral |  | December 31, |
Secured and Other Debt |  | 2015(1) |  | 2014(1) |  | Rate |  | Maturity |  | at December 31, 2015 |  | 2015 |  | 2014 |
Mortgage(2) |  | $ | — |  | $ | 29,362 |  | 6.02 | % | Mar 15 |  | — |  | $ | — |  | $ | 94,245 |
Mortgage(2) |  |  | — |  |  | 4,914 |  | 5.65 | % | Jun 15 |  | — |  |  | — |  |  | 20,511 |
Mortgage(2) |  |  | — |  |  | 12,479 |  | 5.66 | % | Jul 15 |  | — |  |  | — |  |  | 24,948 |
Mortgage(2) |  |  | — |  |  | 2,728 |  | 5.88 | % | Jul 15 |  | — |  |  | — |  |  | 13,991 |
Mortgage(2) |  |  | — |  |  | 6,353 |  | 5.81 | % | Oct 15 |  | — |  |  | — |  |  | 9,927 |
Mortgage(2) |  |  | — |  |  | 4,403 |  | 5.81 | % | Oct 15 |  | — |  |  | — |  |  | 8,211 |
Mortgage(2) |  |  | — |  |  | 52,000 |  | 5.64 | % | Jan 16 |  | — |  |  | — |  |  | 64,175 |
Mortgage(3) |  |  | 6,115 |  |  | 6,243 |  | 5.97 | % | Apr 16 |  | 1 |  |  | 9,291 |  |  | 9,552 |
Mortgage |  |  | 18,000 |  |  | — |  | 4.65 | % | Jul 16 |  | 1 |  |  | 36,783 |  |  | — |
Mortgage |  |  | 82,070 |  |  | 85,085 |  | 5.92 | % | Nov 16 |  | 2 |  |  | 146,236 |  |  | 150,036 |
Mortgages |  |  | 11,989 |  |  | 12,184 |  | 6.25 | % | Nov 16 |  | 1 |  |  | 20,700 |  |  | 21,255 |
Mortgage |  |  | 5,524 |  |  | 5,625 |  | 5.86 | % | Mar 17 |  | 1 |  |  | 10,710 |  |  | 11,004 |
Mortgage |  |  | 43,549 |  |  | 44,687 |  | 6.54 | % | May 17 |  | 8 |  |  | 52,561 |  |  | 53,878 |
Mortgage |  |  | 10,861 |  |  | 11,059 |  | 6.15 | % | Aug 17 |  | 1 |  |  | 14,487 |  |  | 14,846 |
Mortgage |  |  | 8,948 |  |  | 9,195 |  | 6.73 | % | Apr 18 |  | 1 |  |  | 10,891 |  |  | 11,103 |
Mortgages |  |  | 12,976 |  |  | — |  | 6.31 | % | Oct 18 |  | 1 |  |  | 17,184 |  |  | — |
Mortgage |  |  | 12,250 |  |  | — |  | 6.24 | % | Oct 18 |  | 1 |  |  | 15,798 |  |  | — |
Mortgages |  |  | 72,062 |  |  | — |  | 4.47 | % | Oct 18 |  | 10 |  |  | 185,666 |  |  | — |
Mortgage |  |  | 6,692 |  |  | — |  | 4.69 | % | Jan 19 |  | 1 |  |  | 9,952 |  |  | — |
Mortgage |  |  | 45,327 |  |  | — |  | 3.79 | % | Jul 19 |  | 4 |  |  | 65,551 |  |  | — |
Mortgage |  |  | 284,138 |  |  | 288,519 |  | 6.71 | % | Sep 19 |  | 17 |  |  | 238,488 |  |  | 245,593 |
Mortgage(4) |  |  | 2,420 |  |  | 2,723 |  | 7.31 | % | Jan 22 |  | 1 |  |  | 15,775 |  |  | 16,136 |
Mortgage(4) |  |  | 1,196 |  |  | 1,345 |  | 7.85 | % | Jan 22 |  | — |  |  | — |  |  | — |
Mortgage |  |  | 14,825 |  |  | 15,318 |  | 6.28 | % | Jul 22 |  | 1 |  |  | 25,371 |  |  | 25,848 |
Mortgage |  |  | 11,787 |  |  | — |  | 4.85 | % | Oct 22 |  | 1 |  |  | 21,992 |  |  | — |
Mortgage |  |  | 3,246 |  |  | 3,348 |  | 6.25 | % | Feb 33 |  | 1 |  |  | 4,374 |  |  | 4,483 |
Mortgage |  |  | 9,047 |  |  | 9,205 |  | 5.95 | % | Sep 38 |  | 1 |  |  | 8,650 |  |  | 8,865 |
Mortgage |  |  | 4,512 |  |  | 4,594 |  | 4.375 | % | Sep 43 |  | 1 |  |  | 7,305 |  |  | 7,459 |
Capital Leases |  |  | 12,156 |  |  | 12,770 |  | 7.70 | % | Apr 26 |  | 2 |  |  | 19,400 |  |  | 18,237 |
Total secured |  | $ | 679,690 |  | $ | 624,139 |  |  |  |  |  | 58 |  | $ | 937,165 |  | $ | 834,303 |
| (1) |  | The principal balances are the amounts stated in the contracts. In accordance with U.S. generally accepted accounting principles, 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, 2015 and 2014, the unamortized net premiums on certain of these mortgages were $3,267 and $2,937, respectively.
| (2) |  | In 2015, we repaid this debt.
| (3) |  | In 2016, we repaid this debt.
| (4) |  | These two mortgages are collateralized by one MOB property acquired in July 2008.
Interest on our senior unsecured notes are payable either semi‑annually or quarterly 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. We include amortization of capital lease assets in depreciation expense. Required principal payments on our outstanding debt as of December 31, 2015, are as follows:
2016 |  | $ | 130,380 |
2017 |  | $ | 69,838 |
2018 |  | $ | 884,768 |
2019 |  | $ | 720,919 |
2020 |  | $ | 553,080 |
Thereafter |  | $ | 1,145,707 |

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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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