Note 6. Debt

Credit Facility

The Company has a $300 million secured credit facility (the “Credit Facility”), which is comprised of a four-year $75 million term loan, expiring on January 26, 2016, and a three-year $225 million revolving credit facility, expiring on January 26, 2015, subject to collateral in place. Subject to customary conditions, the term loan and the revolving credit facility may each be extended for one additional year at the Company’s option. The Credit Facility contains financial covenants including, but not limited to, maximum debt leverage, minimum interest coverage, minimum fixed charge coverage, and minimum net worth. In addition, the Credit Facility contains restrictions including, but not limited to, limits on indebtedness, certain investments and distributions. The Company’s failure to comply with these covenants or the occurrence of an event of default under the Credit Facility could result in the acceleration of the related debt.

Borrowings under the Credit Facility are priced at LIBOR plus 250 bps (a weighted average rate of 2.8% per annum at March 31, 2013), and can range from LIBOR plus 200 to 300 bps based on the Company’s leverage ratio. Under an accordion feature, the Credit Facility can be increased to $500 million, subject to customary conditions, collateral in place and lending commitments from participating banks. As of March 31, 2013, the Company had $75.0 million outstanding under the term loan and $90.2 million outstanding under the revolving credit facility, and had $73.4 million available for additional borrowings as of that date.

Mortgage loans payable

During the three months ended March 31, 2013, the Company paid off $38.0 million of mortgage loans payable, of which $32.6 million represented prepayments. In this connection, the Company incurred charges relating to early extinguishment of debt (prepayment penalty and accelerated amortization of deferred financing costs) of approximately $522,000 (including $437,000 classified as discontinued operations).

Derivative financial instruments

At March 31, 2013, the Company had two mortgage loans payable aggregating approximately $25.9 million subject to interest rate swaps. Such interest rate swaps converted LIBOR-based variable rates to fixed annual rates of 5.2% and 6.5% per annum. At that date, the Company had accrued liabilities of $1.3 million (included in accounts payable and accrued liabilities on the consolidated balance sheet) relating to the fair value of interest rate swaps applicable to existing mortgage loans payable. Charges and/or credits relating to the changes in fair values of such interest rate swaps are made to accumulated other comprehensive (loss) income, noncontrolling interests (minority interests in consolidated joint ventures and limited partners’ interest), or operations (included in interest expense), as appropriate.

The following is a summary of the derivative financial instruments held by the Company at March 31, 2013 and December 31, 2012:

Notional values

Balance

Fair value

Designation/

March 31,

December 31,

Maturity

sheet

March 31,

December 31,

Cash flow

Derivative

Count

2013

Count

2012

dates

location

2013

2012

Interest

Accrued

rate swaps

liabilities

Qualifying

Consolidated

$ 25,882,000

$ 31,417,000

2013-2018

Consolidated

$ 1,324,000

$ 1,577,000

The following presents the effect of the Company’s derivative financial instruments on the consolidated statements of operations and the consolidated statements of equity for the three months ended March 31, 2013 and 2012, respectively:


		Amount of gain recognized in other
		comprehensive income (loss) (effective portion)
Designation/		Three months ended March 31,
Cash flow	Derivative	2013		2012

Qualifying	Consolidated	$ 340,000	(a)	$ 288,000
	Cedar/RioCan
Qualifying	Joint Venture	$ -		$ 54,000

(a) Of this amount, $333,000 was reclassified from other comprehensive income to interest expense in the consolidated statements of operations.

As of March 31, 2013, the Company believes it has no significant risk associated with non-performance of the financial institutions which are the counterparties to its derivative contracts. Additionally, based on the rates in effect as of March 31, 2013, if a counterparty were to default, the Company would receive a net interest benefit.