Indebtedness

Our principal debt obligations at December 31, 2017 were: (1) outstanding borrowings under our $1,000,000 unsecured revolving credit facility; (2) six 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, (e) $350,000 principal amount at an annual interest rate of 5.625% due 2042 and (f) $250,000 principal amount at an annual interest rate of 6.25% due 2046; (3) our $350,000 principal amount unsecured term loan due 2020; (4) our $200,000 principal amount unsecured term loan due 2022; and (5) $796,616 aggregate principal amount of mortgages (excluding premiums, discounts and net debt issuance costs) secured by 23 of our properties (24 buildings) with maturity dates between 2018 and 2043. The 23 mortgaged properties (24 buildings) had a carrying value (before accumulated depreciation) of $1,219,441 at December 31, 2017. We also had two properties subject to capital leases with lease obligations totaling $10,694 at December 31, 2017; these two properties had a carrying value (before accumulated depreciation) of $36,238 at December 31, 2017, and the capital leases expire in 2026.

We have a $1,000,000 revolving credit facility that is available for general business purposes, including acquisitions. Our revolving credit facility 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. In August 2017, we amended the agreement governing our revolving credit facility. As a result of the amendment, the interest rate payable on borrowings under the facility was reduced from LIBOR plus a premium of 130 basis points per annum to LIBOR plus a premium of 120 basis points per annum, and the facility fee was reduced from 30 basis points per annum to 25 basis points per annum on the total amount of lending commitments under the facility. The interest rate premium and facility fee are each subject to adjustment based upon changes to our credit ratings. Also as a result of the amendment, the stated maturity date of the facility was extended from January 15, 2018 to January 15, 2022, and, subject to the payment of an extension fee and meeting other conditions, we have the option to extend the maturity date of the facility for an additional year. The facility also includes a feature pursuant to which in certain circumstances maximum borrowings under the facility may be increased to up to $2,000,000. In connection with this amendment, in August 2017 we recorded a loss on early extinguishment of debt of $149 to write off unamortized debt issuance costs.

As of December 31, 2017, the annual interest rate payable on borrowings under our revolving credit facility was 2.7%. The weighted average annual interest rates for borrowings under our revolving credit facility were 2.4%, 1.8% and 1.5% for the years ended December 31, 2017, 2016 and 2015, respectively. As of December 31, 2017, we had $596,000 outstanding and $404,000 available for borrowing, and as of February 26, 2018, we had $294,000 outstanding and $706,000 available for borrowing under our revolving credit facility. We incurred interest expense and other associated costs related to our revolving credit facility of $14,346, $13,100 and $10,836 for the years ended December 31, 2017, 2016 and 2015, respectively.

We have a $200,000 term loan, which we borrowed in 2015. This term loan matures in September 2022 and is prepayable without penalty. In August 2017, we amended the agreement governing this term loan. As a result of the amendment, the interest rate payable was reduced from the rate of LIBOR plus a premium of 180 basis points per annum to the rate of LIBOR plus a premium of 135 basis points per annum, subject to adjustment based upon changes to our credit ratings. In connection with this amendment, in August 2017 we recorded loss on early extinguishment of debt of $125 to write off unamortized debt issuance costs. At December 31, 2017, the annual interest rate payable for amounts outstanding under this term loan was 2.9%. The weighted average annual interest rate for amounts outstanding under this term loan was 2.7%, 2.3% and 2.0% and for the years ended December 31, 2017, 2016 and 2015, respectively. We incurred interest expense and other associated costs related to this term loan of $5,482, $4,645 and $1,061 for the years ended December 31, 2017, 2016 and 2015, respectively. This term loan includes an accordion feature under which maximum borrowings may be increased to up to $400,000 in certain circumstances.

We also have a $350,000 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 requires annual interest to be paid at the rate of LIBOR plus a premium of 140 basis points that is subject to adjustment based upon changes to our credit ratings. At December 31, 2017, the annual interest rate payable on amounts outstanding under this term loan was 2.8%. The weighted average annual interest rate for amounts outstanding under this term loan was 2.5%, 1.9% and 1.6% for the years ended December 31, 2017, 2016 and 2015, respectively. We incurred interest expense and other associated costs related to this term loan of $8,828, $6,721 and $5,686 for the years ended December 31, 2017, 2016 and 2015, respectively. This term loan includes an accordion feature under which maximum borrowings may be increased to up to $700,000 in certain circumstances.

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, as defined, which includes RMR LLC ceasing to act as our business 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 revolving credit facility and term loan agreements and our senior unsecured notes indentures and their supplements at December 31, 2017.

In February 2018, we issued $500,000 of 4.75% senior unsecured notes due 2028. We used the net proceeds of this offering to reduce amounts outstanding under our revolving credit facility.

In February 2016, we issued $250,000 of 6.25% senior unsecured notes due 2046. We used the net proceeds of this offering to repay amounts outstanding under our revolving credit facility and for general business purposes.

In July 2016, we entered loan agreements and obtained an aggregate $620,000 secured debt financing that matures in August 2026. These loans are secured by one MOB (two buildings) located in Massachusetts and require interest to be paid at a weighted average fixed annual interest rate of 3.53%. We used the net proceeds from these loans to repay, in part, the then outstanding amount under our revolving credit facility and for general business purposes. The loan agreements contain customary covenants and provide for acceleration of payment of all amounts due thereunder upon the occurrence and continuation of certain events of default. The property encumbered by these mortgages is owned by a joint venture in which we own a 55% equity interest.

In April 2017, we prepaid a mortgage note secured by 17 of our properties with an outstanding principal balance of approximately $277,837 plus an aggregate premium of $5,449 plus accrued interest, a maturity date in September 2019 and an annual interest rate of 6.71%. In May 2017, we prepaid, at par plus accrued interest, a mortgage note secured by one of our properties with an outstanding principal balance of approximately $10,579, a maturity date in August 2017 and an annual interest rate of 6.15%. In June 2017, we prepaid, at par plus accrued interest, a mortgage note secured by one of our properties with an outstanding principal balance of approximately $8,807, a maturity date in August 2037 and an annual interest rate of 5.95%. In December 2017, we prepaid, at par plus accrued interest, a mortgage note secured by one of our properties with an outstanding principal balance of approximately $8,403, a maturity date in April 2018 and an annual interest rate of 6.73%. As a result of these prepayments, we recorded a loss on early extinguishment of debt of $7,353 for the year ended December 31, 2017. In January 2018, we prepaid, at par plus accrued interest, a mortgage note secured by one of our properties with an outstanding principal balance of approximately $4,338, a maturity date in September 2043 and annual interest rate of 4.38%. We prepaid these mortgages using cash on hand and borrowings under our revolving credit facility.

In January 2016, we prepaid, at par plus accrued interest, a $6,115 mortgage note secured by one of our properties with a maturity date in April 2016 and an annual interest rate of 5.97%. In April 2016, we prepaid, at par plus accrued interest, an $18,000 mortgage note secured by one of our properties with a maturity date in July 2016 and an annual interest rate of 4.65%. In July 2016, we prepaid, at par plus accrued interest, an $11,871 mortgage note secured by one of our properties with a maturity date in November 2016 and an annual interest rate of 6.25%. In September 2016, we prepaid, at par plus accrued interest, two mortgage notes secured by two properties with an aggregate principal balance of $79,957, maturity dates in November 2016 and a weighted average annual interest rate of 5.92%. In October 2016, we prepaid, at par plus prepayment premiums and accrued interest, mortgage notes secured by eight properties with an aggregate principal balance of $42,542, maturity dates in May 2017 and a weighted average annual interest rate of 6.54%. In December 2016, we prepaid, at par plus accrued interest, one mortgage note secured by one of our properties with an outstanding principal balance of approximately $5,428, a maturity date in March 2017 and an annual interest rate of 5.86%. As a result of these prepayments, we recognized a net loss on early extinguishment of debt of $526 for the year ended December 31, 2016.

At December 31, 2017 and 2016, our outstanding senior unsecured notes and secured debt consisted of the following:



				December 31, 2017				December 31, 2016
Senior Unsecured Notes	Coupon		Maturity	Face Amount		Unamortized Discount		Face Amount		Unamortized Discount
Senior unsecured notes	3.250	%	2019	$	400,000	$	78	$	400,000	$	138
Senior unsecured notes	6.750	%	2020	200,000		488		200,000		703
Senior unsecured notes	6.750	%	2021	300,000		2,093		300,000		2,627
Senior unsecured notes	4.750	%	2024	250,000		500		250,000		579
Senior unsecured notes	5.625	%	2042	350,000		—		350,000		—
Senior unsecured notes	6.250	%	2046	250,000		—		250,000		—
Total senior unsecured notes				$	1,750,000	$	3,159	$	1,750,000	$	4,047



	Principal Balance as of							Number of Properties as Collateral	Net Book Value of Collateral as of
	December 31,							Number of Properties as Collateral	December 31,
Secured and Other Debt	2017⁽¹⁾		2016⁽¹⁾		Interest Rate		Maturity	At December 31, 2017	2017		2016
Mortgage⁽²⁾	$	—	$	10,653	6.15	%	Aug 17	—	$	—	$	14,162
Mortgage⁽²⁾	—		8,686		6.73	%	Apr 18	—	—		10,656
Mortgage notes	12,552		12,772		6.31	%	Oct 18	1	16,470		16,827
Mortgage notes	11,858		12,061		6.24	%	Oct 18	1	15,025		15,453
Mortgage note	67,749		69,953		4.47	%	Oct 18	10	175,975		180,933
Mortgage note	6,430		6,565		4.69	%	Jan 19	1	9,477		9,687
Mortgage note	43,558		44,462		3.79	%	Jul 19	4	62,596		64,154
Mortgage note⁽²⁾	—		279,505		6.71	%	Sep 19	—	—		235,068
Mortgage note	2,603		3,128		7.49	%	Jan 22	1	15,099		15,360
Mortgage note	13,741		14,300		6.28	%	Jul 22	1	24,414		24,834
Mortgage note	11,392		11,594		4.85	%	Oct 22	1	21,065		21,529
Mortgage notes⁽³⁾	620,000		620,000		3.53	%	Aug 26	1	764,622		785,805
Mortgage note	2,395		2,819		6.25	%	Feb 33	1	4,473		4,267
Mortgage note⁽²⁾	—		8,882		5.95	%	Aug 37	—	—		8,656
Mortgage note⁽⁴⁾	4,338		4,427		4.38	%	Sep 43	1	7,290		7,202
Capital Leases	10,694		11,466		7.70	%	Apr 26	2	18,525		18,968
Total secured	$	807,310	$	1,121,273				25	$	1,135,031	$	1,433,561


(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, 2017 and 2016, the unamortized net premiums and debt issuance costs on certain of these mortgages were $1,906 and $3,624, respectively.


(2)	In 2017, we prepaid these debts.


(3)	In July 2016, we entered loan agreements and obtained an aggregate $620,000 secured debt financing that matures in August 2026. These loans are secured by one MOB (two buildings). The property encumbered by these mortgages is owned by a joint venture in which we own a 55% equity interest.


(4)	In January 2018, we prepaid this debt.

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 and amortization expense.

Required principal payments on our outstanding debt as of December 31, 2017, are as follows:



2018	$	95,811
2019	$	451,592
2020	$	552,869
2021	$	303,102
2022	$	819,227
Thereafter	$	1,480,709