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Debt Obligations | 9 Months Ended
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Sep. 30, 2018
Debt Disclosure [Abstract] |
DEBT OBLIGATIONS | 6. DEBT OBLIGATIONS The following table sets forth information regarding the Company’s consolidated debt obligations outstanding at September 30, 2018 and December 31, 2017 (in thousands):
| September 30, 2018 |  |  | December 31, 2017 |  |  | Effective Interest Rate |  |  | Maturity Date
MORTGAGE DEBT: |  |  |  |  |  |  |  |  |  |  |  |  |
Two Logan Square | $ | 83,220 |  |  | $ | 84,440 |  |  | 3.98% |  |  | May 2020
Four Tower Bridge |  | 9,583 |  |  |  | - |  |  | 4.50% |  | (a) | Feb 2021
One Commerce Square |  | 121,066 |  |  |  | 123,667 |  |  | 3.64% |  |  | Apr 2023
Two Commerce Square |  | 111,017 |  |  |  | 112,000 |  |  | 4.51% |  |  | Apr 2023
Principal balance outstanding |  | 324,886 |  |  |  | 320,107 |  |  |  |  |  |  |
Plus: fair market value premium (discount), net |  | (1,853 | ) |  |  | (2,325 | ) |  |  |  |  |  |
Less: deferred financing costs |  | (445 | ) |  |  | (566 | ) |  |  |  |  |  |
Mortgage indebtedness | $ | 322,588 |  |  | $ | 317,216 |  |  |  |  |  |  |
UNSECURED DEBT |  |  |  |  |  |  |  |  |  |  |  |  |
Seven-Year Term Loan - Swapped to fixed | $ | 250,000 |  |  | $ | 250,000 |  |  | 3.72% |  |  | Oct 2022
$350.0M 3.95% Guaranteed Notes due 2023 |  | 350,000 |  |  |  | 350,000 |  |  | 3.87% |  |  | Feb 2023
$250.0M 4.10% Guaranteed Notes due 2024 |  | 250,000 |  |  |  | 250,000 |  |  | 4.33% |  |  | Oct 2024
$450.0M 3.95% Guaranteed Notes due 2027 |  | 450,000 |  |  |  | 450,000 |  |  | 4.03% |  |  | Nov 2027
$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 |  |  | LIBOR + 1.25% |  |  | Mar 2035
Indenture IB (Preferred Trust I) - Swapped to fixed |  | 25,774 |  |  |  | 25,774 |  |  | 3.30% |  |  | Apr 2035
Indenture II (Preferred Trust II) - Swapped to fixed |  | 25,774 |  |  |  | 25,774 |  |  | 3.09% |  |  | Jul 2035
Principal balance outstanding |  | 1,628,610 |  |  |  | 1,628,610 |  |  |  |  |  |  |
Plus: original issue premium (discount), net |  | (4,178 | ) |  |  | (4,423 | ) |  |  |  |  |  |
Less: deferred financing costs |  | (9,483 | ) |  |  | (10,575 | ) |  |  |  |  |  |
Total unsecured indebtedness | $ | 1,614,949 |  |  | $ | 1,613,612 |  |  |  |  |  |  |
Total Debt Obligations | $ | 1,937,537 |  |  | $ | 1,930,828 |  |  |  |  |  |  |
(a) | This loan was assumed upon acquisition of the related property on January 5, 2018. The interest rate reflects the market rate at the time of acquisition.
As of September 30, 2018 and December 31, 2017, the Company’s weighted-average effective interest rates on its mortgage notes payable were 4.05% and 4.04%, respectively. On July 17, 2018, the Company executed the Amended and Restated Revolving Credit Agreement (as amended and restated, the “2018 Credit Facility”). The amendment and restatement, among other things: (i) maintained the total commitment of the revolving line of credit of $600.0 million; (ii) extended the maturity date from May 15, 2019 to July 15, 2022, with two six-month extensions at the Company’s election subject to specified conditions and subject to payment of an extension fee; (iii) reduced the interest rate margins applicable to Eurodollar loans; (iv) provided for an additional interest rate option based on a floating LIBOR rate; and (v) removed the covenant requiring the Company to maintain a minimum net worth. In connection with the amendments, the Company capitalized $2.7 million in financing costs, which will be amortized through the July 15, 2022 maturity date. At the Company's option, loans outstanding under the 2018 Credit Facility will bear interest at a rate per annum equal to (1) LIBOR plus between 0.775% and 1.45%, 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 0.45% based on the Company's credit rating. The 2018 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 1.10% and the facility fee is 0.25%. The terms of the 2018 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 leverage ratio less than or equal to 0.60 to 1.00, subject to specified exceptions; (iii) a ratio of unsecured indebtedness to unencumbered asset value less than or equal to 0.60 to 1.00, subject to specified exceptions; (iv) a ratio of secured indebtedness to total asset value less than or equal to 0.40 to 1.00; and (v) a ratio of unencumbered cash flow to interest expense on unsecured debt greater than 1.75 to 1.00. In addition, the 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. The Company had no borrowings under the 2018 Credit Facility as of and during the nine-month period ended September 30, 2018. As of September 30, 2017, the Company had $178.0 million of borrowings under the Credit Facility and $13.5 million in letters of credit outstanding. During the nine months ended September 30, 2017, the weighted-average interest rate on Credit Facility borrowings was 2.34%. As of September 30, 2017, the effective interest rate on Credit Facility borrowings was 2.43%. Concurrently with its entry into the 2018 Credit Facility, the Company terminated its then existing unsecured revolving credit facility, which had a scheduled maturity date of May 15, 2019. 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. The Company was in compliance with all financial covenants as of September 30, 2018. Management continuously monitors the Company’s current and anticipated compliance with the covenants. Certain of the covenants restrict the Company’s ability to obtain alternative sources of capital. As of September 30, 2018, the Company’s aggregate scheduled principal payments of debt obligations, excluding amortization of discounts and premiums, are as follows (in thousands):
2018 (three months remaining) | $ | 1,854 |
2019 |  | 7,595 |
2020 |  | 87,226 |
2021 |  | 15,143 |
2022 |  | 256,332 |
Thereafter |  | 1,585,346 |
Total principal payments |  | 1,953,496 |
Net unamortized premiums/(discounts) |  | (6,031 | )
Net deferred financing costs |  | (9,928 | )
Outstanding indebtedness | $ | 1,937,537 |

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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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -URI http://asc.fasb.org/topic&trid=2208564 + Details
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