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Debt Obligations | 12 Months Ended
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Dec. 31, 2011
Debt Disclosure [Abstract] |
DEBT OBLIGATIONS | DEBT OBLIGATIONS The following table sets forth information regarding the Company’s consolidated debt obligations outstanding at December 31, 2011 and 2010 (in thousands):
Property / Location |  | December 31, 2011 |  | December 31, 2010 |  | Effective Interest Rate |  |  | Maturity Date
MORTGAGE DEBT: |  |  |  |  |  |  |  |  |
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 |  | 56,538 |  |  | 58,102 |  |  | 7.25 | % |  |  | May-13
Southpoint III |  | 1,887 |  |  | 2,597 |  |  | 7.75 | % |  |  | Apr-14
Tysons Corner |  | 94,882 |  |  | 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
Fairview Eleven Tower |  | 22,000 |  |  | — |  |  | 4.25 | % |  |  | Jan-17
IRS Philadelphia Campus |  | 202,905 |  |  | 208,366 |  |  | 7.00 | % |  |  | Sep-30
Cira South Garage |  | 44,379 |  |  | 46,335 |  |  | 7.12 | % |  |  | Sep-30
Principal balance outstanding |  | 512,391 |  |  | 712,246 |  |  |  |  |  |
Plus: unamortized fixed-rate debt premiums (discounts), net |  | (1,330 | ) |  | (457 | ) |  |  |  |  |
Total mortgage indebtedness |  | $ | 511,061 |  |  | $ | 711,789 |  |  |  |  |  |
UNSECURED DEBT: |  |  |  |  |  |  |  |  |
$345.0M 3.875% Guaranteed Exchangeable Notes due 2026 |  | — |  |  | 59,835 |  |  | 5.50 | % | (g) |  | Oct-11
Bank Term Loan |  | 37,500 |  |  | 183,000 |  |  | LIBOR+0.80% |  | (h) |  | Jun-12
Credit Facility |  | 275,500 |  |  | 183,000 |  |  | LIBOR+0.725% |  | (h) |  | Jun-12
$300.0M 5.750% Guaranteed Notes due 2012 |  | 151,491 |  |  | 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 |  | 227,329 |  |  | 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 |  |  | 2.75 | % |  |  | Mar-35
Indenture IB (Preferred Trust I) |  | 25,774 |  |  | 25,774 |  |  | 3.30 | % |  |  | Apr-35
Indenture II (Preferred Trust II) |  | 25,774 |  |  | 25,774 |  |  | LIBOR+1.25% |  |  |  | Jul-35
Principal balance outstanding |  | 1,888,111 |  |  | 1,722,326 |  |  |  |  |  |
Less: unamortized exchangeable debt discount |  | — |  |  | (906 | ) |  |  |  |  |
unamortized fixed-rate debt discounts, net |  | (5,177 | ) |  | (2,763 | ) |  |  |  |  |
Total unsecured indebtedness |  | $ | 1,882,934 |  |  | $ | 1,718,657 |  |  |  |  |  |
Total Debt Obligations |  | $ | 2,393,995 |  |  | $ | 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 year.
(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 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 December 8, 2011, the Company redeemed the remaining balance of the Exchangeable Notes pursuant to its right under the indenture agreement (see related discussion below).
(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. On December 15, 2011, the Company entered into binding agreements for lender commitments related a new $600.0 million four -year unsecured credit facility (the "New Credit Facility") and three unsecured term loans in the same aggregate amount of $600.0 million (collectively, the “New Term Loans”), consisting of a $150.0 million three-year loan, a $250.0 million four-year loan and a $200.0 million seven-year loan. Please see below for a related discussion regarding the New Credit Facility and Term Loans.
During 2011, 2010 and 2009, the Company’s weighted-average effective interest rate on its mortgage notes payable was 6.72%, 6.59% and 6.45%, respectively. As of December 31, 2011 and 2010, the net carrying value of the Company’s Properties that are encumbered by mortgage indebtedness was $678.0 million and $989.8 million, respectively. During the year ended December 31, 2011, the Company repurchased $106.2 million of its outstanding unsecured Notes in a series of transactions which are summarized in the table below (excluding accrued interest, in thousands):
Notes | Repurchase Amount |  | Principal |  | Loss |  | Deferred Financing Amortization
2011 3.875% Notes | $ | 59,835 |  |  | $ | 59,835 |  |  | $ | — |  |  | $ | — |
2012 5.750% Notes | 24,749 |  |  | 23,709 |  |  | 868 |  |  | 32 |
2015 7.500% Notes | 25,140 |  |  | 22,671 |  |  | 2,396 |  |  | 120 |
| $ | 109,724 |  |  | $ | 106,215 |  |  | $ | 3,264 |  |  | $ | 152 |
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 its unsecured revolving credit facility (the Credit Facility) borrowings for general business purposes, including the acquisition, development and redevelopment of properties and the repayment of other debt. The maturity date of the Credit Facility in place at December 31, 2011 was June 29, 2012. The per annum variable interest rate on the outstanding balances was LIBOR plus 0.725%. The interest rate and facility fee are subject to adjustment upon a change in the Company’s unsecured debt ratings. As of December 31, 2011, the Company had $275.5 million of borrowings, and $2.5 million in letters of credit outstanding, leaving $322.0 million of unused availability under the Credit Facility. During the years ended December 31, 2011 and 2010, the weighted-average interest rate on Credit Facility borrowings was 0.99% and 1.03%, respectively. As of December 31, 2011 and 2010, the weighted average interest rate on the Credit Facility was 1.01% and 1.02%, 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 December 31, 2011. The Company entered into binding agreements for lender commitments related to a New Credit Facility and New Term Loans as mentioned above. The Company closed on the New Credit Facility and Term Loans on February 1, 2012 and used the initial advances under the New Term Loans to repay all balances outstanding under, and concurrently terminate, its existing Credit Facility and the Bank Term Loan, both of which were scheduled to mature on June 29, 2012. The Company has the option to increase the amounts available to be advanced under the New Credit Facility, the $150.0 million three-year term loan, and the $250.0 million four-year term loan by an aggregate of $200.0 million, subject to customary conditions and limitations, by obtaining additional commitments from the current lenders and other financial institutions. The Company also has the option to extend the maturity dates of each of the New Credit Facility, the $150.0 million three-year term loan and the $250.0 million four-year term loan by one year, subject to payment of an extension fee and other customary conditions and limitations. The $150.0 million three-year term and the $250.0 million four-year term loans can be prepaid by the Company at any time without penalty. The $200.0 million seven-year term loan is subject to a declining prepayment penalty ranging from 3.00% a year after closing, 2.00% after two years, 1.00% after three years and without penalty thereafter. The spread to LIBOR for LIBOR-based loans under the New Credit Facility and New Term Loans will depend on the Company's unsecured senior debt credit rating. Based on the Company's current credit rating, the spread for such loans will be 150, 175, 175 and 190 basis points under the New Credit Facility, the $150.0 million three-year term loan, the $250.0 million four-year term loan and the $200.0 million seven-year term loan, respectively. At the Company's option, loans under the New Credit Facility and New Term Loans may also bear interest at a per annum floating rate equal to the higher of the prime rate or the federal funds rate plus 0.50% per annum. The New Credit Facility contains a competitive bid option that allows banks that are part of the lender consortium to bid to make loans to the Company at a reduced rate. The Company executed hedging transactions that fix the rate on the $200.0 million seven-year term loan at a 3.623% average for its full term, the rate on $300.0 million of notional principal for the other loans at rates in a range of 2.470% to 2.910% for periods of three to five years. All hedges commenced on February 1, 2012 and the rates are inclusive of the LIBOR spread based on the current investment grade rating. See Note 9 for details of the interest rate swaps entered into as of December 31, 2011. The New Credit Facility and New Term Loans contain financial and operating covenants and restrictions. The Company accounted 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 convertible debt that may be settled in cash to be bifurcated between a liability component and an equity component. 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). On December 8, 2011, the Company redeemed the remaining balance of the 3.875% Exchangeable Notes pursuant to its right under the indenture agreement. The principal amount outstanding of the 3.875% Guaranteed Exchangeable Notes was $59.8 million at December 31, 2010. 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 debt discount was fully amortized through October 15, 2011. The unamortized debt discount was $0.9 million at December 31, 2010. The effective interest rate at December 31, 2010 was 5.5%. The Company recognized contractual coupon interest of $1.9 million and $3.2 million for the years ended December 31, 2011 and 2010, respectively. In addition, the Company recognized interest on amortization of debt discount of $0.9 million and $1.6 million during the years ended December 31, 2011 and 2010, respectively. There were no debt discount write-offs resulting from debt repurchases for the year ended December 31, 2011. Debt discount write-offs resulting from debt repurchases amounted to $2.0 million for the years ended December 31, 2010. On August 26, 2010, the Company received $254.0 million of gross proceeds from a $256.5 million forward financing commitment it obtained on June 29, 2009. The Company paid a $17.7 million commitment fee in connection with this commitment. The loan proceeds, together with the commitment fee, had been escrowed with an institutional trustee pending the completion of the development of the IRS Philadelphia Campus and the Cira South Garage as well as the commencement of the leases at these facilities. The financing consists of two separate loans of $209.7 million secured by the IRS Philadelphia Campus and $46.8 million secured by the Cira South Garage. The lender held back $2.5 million of the loan proceeds pending the completion of certain conditions related to the IRS Philadelphia Campus and Cira South Garage. As of December 31, 2011, the Company has received $2.1 million of the total amounts held back. The loans are non-recourse and are secured by the IRS Philadelphia Campus and Cira South Garage, respectively. The loans bear interest of 5.93% per annum with interest only through September 10, 2010 and thereafter require principal and interest monthly payments through its maturity in September 2030. As of December 31, 2011, total financing costs related to this transaction amounted to $19.9 million which is included as part of the deferred costs in the Company’s consolidated balance sheet and will be amortized over the 20 year term of the loans using the effective interest rate method. The total financing costs included the commitment fee which was reduced to $16.0 million after the receipt of a refund resulting from the overpayment made on the commitment fee of $1.7 million. Other related transaction costs included as part of total financing costs amounted to $3.8 million. The Company used the loan proceeds to reduce borrowings under its Credit Facility and for general corporate purposes. As of December 31, 2011, the Company’s aggregate scheduled principal payments of debt obligations are as follows (in thousands):
2012 | $ | 476,889 |
2013 | 66,806 |
2014 | 254,787 |
2015 | 327,225 |
2016 | 347,065 |
Thereafter | 927,730 |
Total principal payments | 2,400,502 |
Net unamortized premiums/(discounts) | (6,507 | )
Outstanding indebtedness | $ | 2,393,995 |

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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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