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Debt Obligations | 12 Months Ended
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Dec. 31, 2015
Debt Disclosure [Abstract] |
DEBT OBLIGATIONS | 7. DEBT OBLIGATIONS The following table sets forth information regarding the Company’s consolidated debt obligations outstanding at December 31, 2015 and 2014 (in thousands):
| December 31, 2015 |  |  | December 31, 2014 |  |  | Effective Interest Rate |  |  | Maturity Date |
MORTGAGE DEBT: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Tysons Corner | $ | - |  |  | $ | 89,513 |  |  |  | 5.36 | % |  | Oct 2015 | (a)
Two Logan Square |  | 86,886 |  |  |  | 87,767 |  |  |  | 7.57 | % |  | Apr 2016 |
Fairview Eleven Tower (b) |  | 20,838 |  |  |  | 21,242 |  |  |  | 4.25 | % |  | Jan 2017 |
One Commerce Square |  | 130,000 |  |  |  | 123,205 |  |  |  | 3.64 | % | (c) | Apr 2023 |
Two Commerce Square |  | 112,000 |  |  |  | 112,000 |  |  |  | 4.51 | % | (d) | Apr 2023 |
IRS Philadelphia Campus (e) |  | 177,425 |  |  |  | 184,442 |  |  |  | 7.00 | % |  | Sep 2030 |
Cira South Garage (e) |  | 35,546 |  |  |  | 37,765 |  |  |  | 7.12 | % |  | Sep 2030 |
Principal balance outstanding |  | 562,695 |  |  |  | 655,934 |  |  |  |  |  |  |  |
Plus: fair market value premium (discount), net |  | (3,198 | ) |  |  | (1,344 | ) |  |  |  |  |  |  |
Less: deferred financing costs |  | (13,744 | ) |  |  | (14,959 | ) |  |  |  |  |  |  |
Mortgage indebtedness | $ | 545,753 |  |  | $ | 639,631 |  |  |  |  |  |  |  |
UNSECURED DEBT |  |  |  |  |  |  |  |  |  |  |  |  |  |
Seven-Year Term Loan - Swapped to fixed | $ | 250,000 |  |  | $ | 200,000 |  |  |  | 3.72 | % | (f) | Oct 2022 |
$250.0M 6.00% Guaranteed Notes due 2016 |  | 149,919 |  |  |  | 149,919 |  |  |  | 5.95 | % |  | Apr 2016 |
$300.0M 5.70% Guaranteed Notes due 2017 |  | 300,000 |  |  |  | 300,000 |  |  |  | 5.68 | % |  | May 2017 |
$325.0M 4.95% Guaranteed Notes due 2018 |  | 325,000 |  |  |  | 325,000 |  |  |  | 5.13 | % |  | Apr 2018 |
$250.0M 3.95% Guaranteed Notes due 2023 |  | 250,000 |  |  |  | 250,000 |  |  |  | 4.02 | % |  | Feb 2023 |
$250.0M 4.10% Guaranteed Notes due 2024 |  | 250,000 |  |  |  | 250,000 |  |  |  | 4.33 | % |  | Oct 2024 |
$250.0M 4.55% Guaranteed Notes due 2029 |  | 250,000 |  |  |  | 250,000 |  |  |  | 4.60 | % |  | Oct 2029 |
Indenture IA (Preferred Trust I) |  | 27,062 |  |  |  | 27,062 |  |  |  | 2.75 | % |  | Mar 2035 |
Indenture IB (Preferred Trust I) |  | 25,774 |  |  |  | 25,774 |  |  |  | 3.30 | % |  | Apr 2035 |
Indenture II (Preferred Trust II) |  | 25,774 |  |  |  | 25,774 |  |  |  | 3.09 | % |  | Jul 2035 |
Principal balance outstanding |  | 1,853,529 |  |  |  | 1,803,529 |  |  |  |  |  |  |  |
Plus: original issue premium (discount), net |  | (5,714 | ) |  |  | (6,811 | ) |  |  |  |  |  |  |
Less: deferred financing costs |  | (8,851 | ) |  |  | (9,004 | ) |  |  |  |  |  |  |
Total unsecured indebtedness | $ | 1,838,964 |  |  | $ | 1,787,714 |  |  |  |  |  |  |  |
Total Debt Obligations | $ | 2,384,717 |  |  | $ | 2,427,345 |  |  |  |  |  |  |  |
(a) | On August 19, 2015, the Company entered into a forbearance agreement to extend the maturity date of the mortgage note payable collateralized by two of its properties located at 8260 Greensboro Drive and 1676 International Drive in Mclean, Virginia (referred to as "Tysons Corner" above). On October 9, 2015, the Company funded $88.4 million, including $0.4 million of accrued interest, in repayment of the Tysons Corner mortgage note with funds from the additional borrowings under the seven-year term loan referenced below.
(b) | Represents the full debt amount of a property in a consolidated real estate venture for which the Company maintains a 50% interest.
(c) | This loan was assumed upon acquisition of the related properties on December 19, 2013. On December 29, 2015, the Company refinanced the debt increasing the principal balance to $130.0 million and extended the term from the scheduled maturity from January 6, 2016 to April 5, 2023. The effective interest rate as of December 31, 2015 was 3.64%. A default under this loan will also constitute a default under the loan outstanding on Two Commerce Square. This loan is also secured by a lien on Two Commerce Square.
(d) | This loan was assumed upon acquisition of the related property on December 19, 2013. The interest rate reflects the market rate at the time of acquisition. A default under this loan will also constitute a default under the loan outstanding on One Commerce Square. This loan is also secured by a lien on One Commerce Square.
(e) | Mortgage debt was prepaid prior to the scheduled maturity. See Note 21, “Subsequent Events,” for additional information regarding the prepayment.
(f) | On October 8, 2015, the Company amended and restated its $200.0 million seven-year term loan maturing February 1, 2019. Pursuant to the terms of the amendment, the Company increased the term loan by an additional $50.0 million, lengthened the maturity date to October 8, 2022, and exercised the option to increase the aggregate amount by up to $150.0 million. The loan will bear interest at LIBOR plus 1.80%. Through a series of interest rate swaps, the $250.0 million outstanding balance of the term loan has a fixed interest rate of 3.72%.
During the fourth quarter of 2015, the Company adopted accounting guidance related to the presentation of deferred financing costs on the balance sheet and reclassified amounts from the deferred costs line to net against the liability for all periods presented. Deferred financing costs associated with our credit facility remain in deferred costs on the consolidated balance sheet. See Note 2, “Summary of Significant Accounting Policies,” for revisions to the accounting guidance for deferred financing costs. During 2015, 2014, and 2013, the Company’s weighted-average effective interest rate on its mortgage notes payable was 5.72%, 5.72%, and 5.73%, respectively. As of December 31, 2015 and 2014, the net carrying value of the Company’s Properties that are encumbered by mortgage indebtedness was $562.7 million and $655.9 million, respectively. 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 unsecured indebtedness. The Parent Company has no material assets other than its investment in the Operating Partnership. On September 16, 2014, the Company closed on an underwritten offering of its 2024 Notes and 2029 Notes (as defined above). The 2024 Notes were priced at 99.388% of their face amount with a yield to maturity of 4.175%, representing a spread at the time of pricing of 1.70%. The 2029 Notes were priced at 99.191% of their face amount with a yield to maturity of 4.625%, representing a spread at the time of pricing of 2.15%. The 2024 Notes and 2029 Notes have been reflected net of discounts of $1.3 million and $1.8 million, respectively, in the consolidated balance sheets as of December 31, 2015 and $1.5 million and $2.0 million, respectively, in the consolidated balance sheets as of December 31, 2014. The Company used a portion of the net proceeds from the sale of the 2024 Notes and 2029 Notes, aggregating $492.9 million after the deduction for underwriting discounts and offering expenses, to fund its repurchase, through a tender offer, of a portion of the 5.40% Guaranteed Notes due November 1, 2014 (the “2014 Notes”) and 7.50% Guaranteed Notes due May 15, 2015 (the “2015 Notes”). Specifically, on September 16, 2014, the Company funded, under the tender offer, $75.1 million in respect of the 2014 Notes and $42.7 million in respect of the 2015 Notes. The Company recognized a $2.6 million loss on early extinguishment of debt related to the total repurchase during the year ended December 31, 2014. On September 16, 2014, the Company repaid the entire $150.0 million three-year term loan and $100.0 million four-year term loan prior to their scheduled February 2015 and 2016 maturities, respectively. In connection with these repayments, the Company accelerated $0.3 million of deferred financing amortization expense and also incurred a $0.8 million charge on the termination of associated interest rate swap contracts, as reflected in the Company’s consolidated statements of operations. See Note 9, “Risk Management and Use of Financial Instruments,” for further information related to the termination of the interest rate swap contracts. On September 16, 2014, the Company gave notice of redemption, in full, of the $143.5 million in principal amount of 2014 Notes that remained outstanding following completion of the tender offer. The Company completed the redemption of the 2014 Notes on October 16, 2014 at a cash redemption price of $1,026.88 per $1,000 principal amount of the 2014 Notes (inclusive of accrued interest to the redemption date). Also on September 16, 2014, the Company gave notice of redemption, in full, of the $114.9 million in principal amount of 2015 Notes that remained outstanding following completion of the tender offer. The Company completed the redemption of the 2015 Notes on October 16, 2014 at a cash redemption price of $1,070.24 per $1,000 principal amount of the 2015 Notes (inclusive of accrued interest to the redemption date). The Company recognized a $5.0 million loss on early extinguishment of debt related to total repurchase during the year ended December 31, 2014. There were no repurchases of unsecured debt during the twelve months ended December 31, 2015. The following table provides additional information on the Company’s repurchase of $376.2 million in aggregate principal amount of its outstanding unsecured notes (consisting of the 2014 Notes and 2015 Notes, as indicated above) during the twelve months ended December 31, 2014 (in thousands):
Notes | Principal |  |  | Repurchase Amount (a) |  |  | Gain (Loss) on Early Extinguishment of Debt (b) |  |  | Acceleration of Deferred Financing |
2014 5.40% Notes | $ | 218,549 |  |  | $ | 219,404 |  |  | $ | (855 | ) |  | $ | 9 |
2015 7.50% Notes |  | 157,625 |  |  |  | 164,364 |  |  |  | (6,739 | ) |  |  | 143 |
| $ | 376,174 |  |  | $ | 383,768 |  |  | $ | (7,594 | ) |  | $ | 152 |
During the year-ended December 31, 2013, the Company repurchased $29.3 million of its outstanding unsecured Notes in a series of transactions that are summarized in the following table (in thousands):
Notes | Principal |  |  | Repurchase Amount (a) |  |  | Gain (Loss) on Early Extinguishment of Debt (b) |  |  | Acceleration of Deferred Financing |
2014 5.40% Notes | $ | 19,830 |  |  | $ | 20,853 |  |  | $ | (1,020 | ) |  | $ | 16 |
2015 7.50% Notes |  | 8,910 |  |  |  | 9,945 |  |  |  | (1,036 | ) |  |  | 23 |
2016 6.00% Notes |  | 510 |  |  |  | 571 |  |  |  | (63 | ) |  |  | 1 |
| $ | 29,250 |  |  | $ | 31,369 |  |  | $ | (2,119 | ) |  | $ | 40 |
(a) | Includes cash losses with respect to redemption of debt.
(b) | Includes unamortized balance of the original issue discount.
On May 15, 2015, the Company closed on a new four-year unsecured revolving credit facility (the "New Credit Facility") that provides for borrowings of up to $600.0 million. The Company expects to use advances under the New Credit Facility for general business purposes, including to fund costs of acquisitions, developments and redevelopments of properties, fund share repurchases and to repay from time to time other debt. On terms and conditions specified in the credit agreement, the Company may enter into unsecured term loans and/or increase the initial amount of the credit facility by up to, in the aggregate for all such term loans and increases, an additional $400.0 million. The New Credit Facility includes a $65.0 million sub-limit for the issuance of letters of credit and a $60.0 million sub-limit for swing-loans. The New Credit Facility has a scheduled maturity date of May 15, 2019, and is subject to two six-month extensions on terms and conditions specified in the credit agreement. At the Company's option, loans outstanding under the New Credit Facility will bear interest at a rate per annum equal to (1) LIBOR plus between 0.875% and 1.55% based on the Company's credit rating or (2) a base rate equal to the greatest of (a) the Administrative Agent's prime rate, (b) the Federal Funds rate plus 0.5% or (c) LIBOR for a one month period plus 1.00%, in each case, plus a margin ranging from 0.0% to 0.55% based on the Company's credit rating. The New Credit Facility also contains a competitive bid option that allows banks that are part of the lender consortium to bid to make loan advances to the Company at a reduced interest rate. In addition, the Company is also obligated to pay (1) in quarterly installments a facility fee on the total commitment at a rate per annum ranging from 0.125% to 0.30% based on the Company's credit rating and (2) an annual fee on the undrawn amount of each letter or credit equal to the LIBOR Margin. Based on the Company's current credit rating, the LIBOR margin is 1.20% and the facility fee is 0.25%. The Company had no borrowings under the New Credit Facility as of December 31, 2015. The New Credit Facility contains financial and operating covenants and restrictions, including covenants that relate to our incurrence of additional debt; granting liens; consummation of mergers and consolidations; the disposition of assets and interests in subsidiaries; the making of loans and investments and the payment of dividends. The terms of the New Credit Facility require that the Company maintain customary financial and other covenants, including: (i) a fixed charge coverage ratio greater than or equal to 1.5 to 1.00; (ii) a minimum net worth; (iii) a leverage ratio less than or equal to 0.60 to 1.00, subject to specified exceptions; (iv) a ratio of unsecured indebtedness to unencumbered asset value less than or equal to 0.60 to 1.00, subject to specified exceptions; (v) a ratio of secured indebtedness to total asset value less than or equal to 0.40 to 1.00; and (vi) a ratio of unencumbered cash flow to interest expense on unsecured debt greater than 1.75 to 1.00. In addition, the New Credit Facility restricts payments of dividends and distributions on shares in excess of 95% of the Company's funds from operations (FFO) except to the extent necessary to enable the Company to continue to qualify as a REIT for Federal income tax purposes. At December 31, 2015, the Company was in compliance with all covenants in the New Credit Facility. Concurrently with its entry into the New Credit Facility, the Company terminated its then existing unsecured revolving credit facility, which had a scheduled maturity date of February 1, 2016. As amended, Term Loan C contains financial and operating covenants and restrictions, including covenants that relate to the incurrence of additional debt; the granting of liens; the consummation of mergers and consolidations; the disposition of assets and interests in subsidiaries; the making of loans and investments; negative pledges; transactions with affiliates and the payment of dividends. The restriction on dividends permits the Company to pay dividends to the greater of (i) an amount required for the Company to retain its qualification as a REIT and (ii) 95% of its funds from operations. The term loan includes financial covenants that require the Company to maintain an interest coverage ratio, a fixed charge coverage ratio and an unencumbered cash flow ratio above specified levels; to maintain a minimum net worth above an amount determined on a specified formula; and to maintain a leverage ratio and a secured debt ratio below certain maximum levels. Another financial covenant limits the ratio of unsecured debt to the value of unencumbered properties As of December 31, 2015, the Company’s aggregate scheduled principal payments of debt obligations, excluding amortization of discounts and premiums, are as follows (in thousands):
2016 | $ | 249,468 |
2017 |  | 333,682 |
2018 |  | 340,437 |
2019 |  | 16,768 |
2020 |  | 17,661 |
Thereafter |  | 1,458,208 |
Total principal payments |  | 2,416,224 |
Net unamortized premiums/(discounts) |  | (8,912 | )
Net deferred financing costs |  | (22,595 | )
Outstanding indebtedness | $ | 2,384,717 |

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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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