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Debt Obligations | 9 Months Ended
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Sep. 30, 2011
Debt Obligations [Abstract] |
DEBT OBLIGATIONS | 7. DEBT OBLIGATIONS The following table sets forth information regarding the Company’s consolidated debt obligations outstanding at September 30, 2011 and December 31, 2010 (in thousands): MORTGAGE DEBT:
|  |  |  |  |  |  |  |  |  | Effective |  |
|  | September 30, |  |  | December 31, |  |  | Interest |  | Maturity
Property / Location |  | 2011 |  |  | 2010 |  |  | Rate |  | Date
Arboretum I, II, III & V |  | $ | — |  |  | $ | 20,386 |  |  | 7.59 | % (a) | Jul-11
Midlantic Drive/Lenox Drive/DCC I |  |  | — |  |  |  | 56,514 |  |  | 8.05 | % (b) | Oct-11
Research Office Center |  |  | — |  |  |  | 39,145 |  |  | 5.30 | % (c), (d) | Oct-11
Concord Airport Plaza |  |  | — |  |  |  | 34,494 |  |  | 5.55 | % (d), (e) | Jan-12
Newtown Square/Berwyn Park/Libertyview |  |  | 56,940 |  |  |  | 58,102 |  |  | 7.25 | % | May-13
Southpoint III |  |  | 2,070 |  |  |  | 2,597 |  |  | 7.75 | % | Apr-14
Tysons Corner |  |  | 95,299 |  |  |  | 96,507 |  |  | 5.36 | % (d) | Aug-15
Two Logan Square |  |  | 89,800 |  |  |  | 89,800 |  |  | 7.57 | % | Apr-16
One Logan Square |  |  | — |  |  |  | 60,000 |  |  | 4.50 | % (f) | Jul-16
IRS Philadelphia Campus |  |  | 204,301 |  |  |  | 208,366 |  |  | 7.00 | % | Sep-30
Cira South Garage |  |  | 44,879 |  |  |  | 46,335 |  |  | 7.12 | % | Sep-30
Principal balance outstanding |  |  | 493,288 |  |  |  | 712,246 |  |  |  |  |
Plus: unamortized fixed-rate debt premiums (discounts), net |  |  | (1,421 | ) |  |  | (457 | ) |  |  |  |
Total mortgage indebtedness |  | $ | 491,867 |  |  | $ | 711,789 |  |  |  |  |
UNSECURED DEBT: |  |  |  |  |  |  |  |  |  |  |  |
$345.0M 3.875% Guaranteed Exchangeable Notes due 2026 |  |  | 59,835 |  |  |  | 59,835 |  |  | 5.50 | % (g) | Oct-11
Bank Term Loan |  |  | 183,000 |  |  |  | 183,000 |  |  | LIBOR + 0.800 | % (h) | Jun-12
Credit Facility |  |  | 166,000 |  |  |  | 183,000 |  |  | LIBOR + 0.725 | % (h) | Jun-12
$300.0M 5.750% Guaranteed Notes due 2012 |  |  | 152,296 |  |  |  | 175,200 |  |  | 5.73 | % | Apr-12
$250.0M 5.400% Guaranteed Notes due 2014 |  |  | 242,681 |  |  |  | 242,681 |  |  | 5.53 | % | Nov-14
$250.0M 7.500% Guaranteed Notes due 2015 |  |  | 248,585 |  |  |  | 250,000 |  |  | 7.77 | % | May-15
$250.0M 6.000% Guaranteed Notes due 2016 |  |  | 250,000 |  |  |  | 250,000 |  |  | 5.95 | % | Apr-16
$300.0M 5.700% Guaranteed Notes due 2017 |  |  | 300,000 |  |  |  | 300,000 |  |  | 5.68 | % | May-17
$325.0M 4.950% Guaranteed Notes due 2018 |  |  | 325,000 |  |  |  | — |  |  | 5.14 | % | Apr-18
Indenture IA (Preferred Trust I) |  |  | 27,062 |  |  |  | 27,062 |  |  | LIBOR + 1.25 | % | Mar-35
Indenture IB (Preferred Trust I) |  |  | 25,774 |  |  |  | 25,774 |  |  | LIBOR + 1.25 | % | Apr-35
Indenture II (Preferred Trust II) |  |  | 25,774 |  |  |  | 25,774 |  |  | LIBOR + 1.25 | % | Jul-35
Principal balance outstanding |  |  | 2,006,007 |  |  |  | 1,722,326 |  |  |  |  |
Less: unamortized exchangeable debt discount |  |  | (91 | ) |  |  | (906 | ) |  |  |  |
unamortized fixed-rate debt discounts, net |  |  | (5,556 | ) |  |  | (2,763 | ) |  |  |  |
Total unsecured indebtedness |  | $ | 2,000,360 |  |  | $ | 1,718,657 |  |  |  |  |
Total Debt Obligations |  | $ | 2,492,227 |  |  | $ | 2,430,446 |  |  |  |  |
(a) |  | On April 1, 2011, the Company prepaid the remaining balance of the loan without penalty.
(b) |  | On June 3, 2011, the Company prepaid the remaining balance of the loan without penalty.
(c) |  | On June 30, 2011, the Company prepaid the remaining balance of the loan without penalty. The unamortized fixed-rate debt premium of $0.3 million related to this loan was included as part of the gain (loss) on early extinguishment of debt in the Company’s consolidated statement of operations during the current year.
(d) |  | These loans were assumed upon acquisition of the related properties. The interest rates reflect the market rate at the time of acquisition.
(e) |  | On September 1, 2011, the Company prepaid the remaining balance of the loan without penalty. The unamortized fixed-rate debt premium of $0.2 million related to this loan was included as part of the gain (loss) on early extinguishment of debt in the Company’s consolidated statement of operations during the quarter.
(f) |  | This mortgage was subject to an interest rate floor of 4.50% on a monthly basis. On July 11, 2011, the Company prepaid the balance of the loan without penalty.
(g) |  | On October 20, 2011, holders representing $59.5 million of the outstanding Exchangeable Notes as of September 30, 2011, exercised their right to cause the Company to redeem their notes at par plus accrued and unpaid interest leaving an outstanding balance of $0.4 million. On October 15, 2016, the remaining holders have the right to request, with proper notice, the redemption of all or a portion of their Exchangeable Notes at a price equal to 100% of the principal amount of the Exchangeable Notes plus accrued and unpaid interest. Accordingly, the remaining balance of the Exchangeable Notes after October 20, 2011 will reflect a maturity date of October 15, 2016, notwithstanding their final maturity date of October 15, 2026.
(h) |  | On March 31, 2011, the maturity dates of the Bank Term Loan and the Credit Facility were extended to June 29, 2012 from June 29, 2011. On June 29, 2011, the Company paid a total extension fee amounting to $1.2 million which is equal to 15 basis points of the outstanding principal balance of the Bank Term Loan and of the committed amount under the Credit Facility. The extension of the maturity dates was at the Company’s option under the Bank Term Loan and the Credit Facility agreements. There were no changes in the terms and conditions of the loan agreements as a result of the maturity date extensions.
During the nine-month periods ended September 30, 2011 and 2010, the Company’s weighted-average effective interest rate on its mortgage notes payable was 6.83% and 6.62%, respectively. During the nine-months ended September 30, 2011, the Company repurchased $24.3 million of its outstanding unsecured Notes in a series of transactions which are summarized in the table below (in thousands):
|  | Repurchase |  |  |  |  |  |  |  |  |  |  | Deferred Financing |
Notes |  | Amount |  |  | Principal |  |  | Loss |  |  | Amortization |
2012 5.750% Notes |  | $ | 23,765 |  |  | $ | 22,904 |  |  | $ | (857 | ) |  | $ | 32 |
2015 7.500% Notes |  |  | 1,600 |  |  |  | 1,415 |  |  |  | (212 | ) |  |  | 8 |
|  | $ | 25,365 |  |  | $ | 24,319 |  |  | $ | (1,069 | ) |  | $ | 40 |
The Parent Company unconditionally guarantees the unsecured debt obligations of the Operating Partnership (or is a co-borrower with the Operating Partnership) but does not, by itself incur indebtedness. The Company utilizes credit facility borrowings for general business purposes, including the acquisition, development and redevelopment of properties and the repayment of other debt. The per annum variable interest rate on the outstanding balances is LIBOR plus 0.725%. The interest rate and facility fee are subject to adjustment upon a change in the Company’s unsecured debt ratings. The Company has the option to increase the Credit Facility to $800.0 million provided that the Company has not committed any defaults under the Credit Facility and is able to acquire additional commitments from its existing lenders or new lenders. As of September 30, 2011, the Company had $166.0 million of borrowings and $10.6 million in letters of credit outstanding, leaving $423.4 million of unused availability under the Credit Facility. During the nine-month periods ended September 30, 2011 and 2010, the weighted-average interest rate on Credit Facility borrowings was 0.98% and 1.14%, respectively. As of September 30, 2011 and 2010, the weighted average interest rate on the Credit Facility was 0.95% and 0.98%, respectively. The Credit Facility requires the maintenance of ratios related to minimum net worth, debt-to-total capitalization and fixed charge coverage and includes non-financial covenants. The Company was in compliance with all financial covenants as of September 30, 2011. The Company accounts for its outstanding 3.875% Guaranteed Exchangeable Notes in accordance with the accounting standard for convertible debt instruments. The accounting standard requires the initial proceeds from the Company’s issuance of the 3.875% Guaranteed Exchangeable Notes to be allocated between a liability component and an equity component in a manner that reflects interest expense at the interest rate of a similar nonconvertible debt that could have been issued by the Company at such time. This is accomplished through the creation of a discount on the debt that would be accreted using the effective interest method as additional non-cash interest expense over the period the debt is expected to remain outstanding (i.e. through the first optional redemption date). The principal amount outstanding of the 3.875% Guaranteed Exchangeable Notes was $59.8 million, both at September 30, 2011 and December 31, 2010, respectively. At certain times and upon certain events, the notes are exchangeable for cash up to their principal amount and, with respect to the remainder, if any, of the exchange value in excess of such principal amount, cash or common shares or a combination of both at the Company’s option. The initial exchange rate is 25.4065 shares per $1,000 principal amount of notes (which is equivalent to an initial exchange price of $39.36 per share). The carrying amount of the equity component is $24.4 million and is reflected within additional paid-in capital in the Company’s consolidated balance sheets. The unamortized debt discount is $0.1 million at September 30, 2011 and $0.9 million at December 31, 2010, respectively, and will be amortized through October 15, 2011. The effective interest rate at September 30, 2011 and December 31, 2010 was 5.5%. The Company recognized contractual coupon interest of $0.6 million and $1.7 million for the three and nine-month periods ended September 30, 2011 and $0.7 million and $2.6 million for the three and nine-month periods ended September 30, 2010, respectively. In addition, the Company recognized interest expense on amortization of debt discount of $0.3 million and $0.8 million during the three and nine-month periods ended September 30, 2011 and $0.3 million and $1.3 million during the three and nine-month periods ended September 30, 2010, respectively. Debt discount write-offs resulting from debt repurchases amounted to $1.6 million for the nine-month period ended September 30, 2010. There were no repurchases of the notes during the three and nine-month periods ended September 30, 2011. See note (g) to the above table for activity subsequent to September 30, 2011. As of September 30, 2011, the Company’s aggregate scheduled principal payments of debt obligations, excluding amortization of discounts and premiums, were as follows (in thousands):
2011 |  | $ | 62,732 |
2012 |  |  | 513,694 |
2013 |  |  | 66,467 |
2014 |  |  | 254,401 |
2015 |  |  | 348,079 |
Thereafter |  |  | 1,253,922 |
Total principal payments |  |  | 2,499,295 |
Net unamortized premiums/(discounts) |  |  | (7,068 | )
Outstanding indebtedness |  | $ | 2,492,227 |

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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 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. 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 Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21475-112644 + Details
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