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Mortgage Loans Payable and Credit Facility | 9 Months Ended
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Sep. 30, 2018
Debt Disclosure [Abstract] |
Mortgage Loans Payable and Credit Facility | Note 5. Mortgage Loans Payable and Credit Facility Debt is composed of the following at September 30, 2018:
|  |  |  | September 30, 2018 |
|  |  |  |  |  |  |  | Contractual |
|  | Maturity |  | Balance |  |  | interest rates |
Description |  | dates |  | outstanding |  |  | weighted-average |
Fixed-rate mortgage |  | Jun 2026 |  | $ | 47,917,000 |  |  | 3.9% |
Unsecured credit facilities: |  |  |  |  |  |  |  |  |  |
Variable-rate: |  |  |  |  |  |  |  |  |  |
Revolving credit facility |  | Sep 2021 | (a) |  | 102,000,000 |  |  | 3.5% |
Term loan |  | Sep 2022 |  |  | 50,000,000 |  |  | 3.4% |
Fixed-rate (b): |  |  |  |  |  |  |  |  |  |
Term loan |  | Feb 2021 |  |  | 75,000,000 |  |  | 3.6% |
Term loan |  | Feb 2022 |  |  | 50,000,000 |  |  | 3.0% |
Term loan |  | Sep 2022 | (c) |  | 50,000,000 |  |  | 2.8% |
Term loan |  | Apr 2023 |  |  | 100,000,000 |  |  | 3.2% |
Term loan |  | Sep 2024 | (d) |  | 75,000,000 |  |  | 3.3% |
Term loan |  | Jul 2025 |  |  | 75,000,000 |  |  | 4.6% |
|  |  |  |  | 624,917,000 |  |  | 3.5% |
Unamortized debt issuance costs |  |  |  |  | (3,418,000 | ) |  |  |  |
|  |  |  | $ | 621,499,000 |  |  |  |  |
| (a) | The revolving credit facility is subject to a one-year extension at the Company’s option.
| (b) | The interest rates on these term loans consist of LIBOR plus a credit spread based on the Company’s leverage ratio, for which the Company has interest rate swap agreements which convert the LIBOR rates to fixed rates. Accordingly, these term loans are presented as fixed-rate debt.
| (c) | The current interest rate swap agreement expires in February 2019 at which time a new interest rate swap agreement will begin resulting in an effective interest rate of 3.2%, based on the Company’s current leverage ratio.
| (d) | The current interest rate swap agreement expires in February 2020 at which time a new interest rate swap agreement will begin resulting in an effective interest ratio of 3.7%, based on the Company’s current leverage ratio.
Mortgage Loans Payable During 2018, the Company repaid the following mortgage loans payable:
|  |  |  | Principal payoff |
Property |  | Repayment date |  | amount |
East River Park |  | August 10, 2018 |  | $ | 18,772,000 |
Colonial Commons |  | August 24, 2018 |  | $ | 24,108,000 |
Shoppes at Arts District |  | August 24, 2018 |  | $ | 8,114,000 |
The Point |  | September 6, 2018 |  | $ | 27,003,000 |
In connection with these repayments, the Company incurred charges relating to early extinguishment of mortgage loans payable (defeasance fees, prepayment penalties and accelerated amortization of deferred financing and premium costs) of $4.8 million. Unsecured Revolving Credit Facility and Term Loans The Company has a $300 million unsecured credit facility which, as amended and restated on September 8, 2017, consists of (1) a $250 million revolving credit facility, expiring on September 8, 2021, and (2) a $50 million term loan, expiring on September 8, 2022. The revolving credit facility may be extended, at the Company’s option, for an additional one-year period, subject to customary conditions. Under an accordion feature, the facility can be increased to $750 million, subject to customary conditions and lending commitments. Interest on borrowings under the revolving credit facility component can range from the London Interbank Offered Rate (“LIBOR”) plus 135 basis points (“bps”) to 195 bps (135 bps at September 30, 2018) and interest on borrowings under the term loan component can range from LIBOR plus 130 to 190 bps (130 bps at September 30, 2018), each based on the Company’s leverage ratio. As of September 30, 2018, the Company had $135.1 million available for additional borrowings under the revolving credit facility. On July 24, 2018, the Company closed a new $75.0 million unsecured term loan maturing on July 24, 2025 (all of which was borrowed on September 28, 2018). Interest on borrowings under the term loan can range from LIBOR plus 170 to 225 bps (170 bps at September 30, 2018) based on the Company’s leverage ratio. Additionally, the Company entered into forward interest rate swap agreements which convert the LIBOR rate to a fixed rate through its maturity. The Company’s unsecured credit facility and term loans contain financial covenants including, but not limited to, maximum debt leverage, maximum secured debt, minimum fixed charge coverage, and minimum net worth. In addition, the facility contains restrictions including, but not limited to, limits on indebtedness, certain investments and distributions. Although the credit facility is unsecured, borrowing availability is based on unencumbered property adjusted net operating income, as defined in the agreements. The Company’s failure to comply with the covenants or the occurrence of an event of default under the facilities could result in the acceleration of the related debt and exercise of other lender remedies. As of September 30, 2018, the Company is in compliance with all financial covenants. Interest on borrowings under the unsecured credit facility and term loans are based on the Company’s leverage ratio. Derivative Financial Instruments At September 30, 2018, the Company had $15.8 million included in other assets and deferred charges, net, on the consolidated balance sheet relating to the fair value of the interest rate swaps applicable to the unsecured term loans discussed above. Charges and/or credits relating to the changes in the fair value of the interest rate swaps are made to accumulated other comprehensive income (loss), limited partners’ interest, or operations (included in interest expense), as applicable. Over time, the unrealized gains and losses recorded in accumulated other comprehensive loss will be reclassified into earnings as an increase or reduction to interest expense in the same periods in which the hedged interest payments affect earnings. The Company estimates that approximately $2.6 million of accumulated other comprehensive loss will be reclassified as a charge to earnings within the next twelve months. The following is a summary of the derivative financial instruments held by the Company at September 30, 2018 and December 31, 2017:
September 30, 2018
Designation/ |  |  |  |  |  |  |  | Fair |  |  | Maturity |  | Balance sheet
Cash flow |  | Derivative |  | Count |  |  | value |  |  | dates |  | location
Qualifying |  | Interest rate swaps |  |  | 9 |  |  | $ | 15,755,000 |  |  | 2019-2025 |  | Other assets and deferred charges, net
December 31, 2017
Designation/ |  |  |  |  |  |  |  | Fair |  |  | Maturity |  | Balance sheet
Cash flow |  | Derivative |  | Count |  |  | value |  |  | dates |  | location
Qualifying |  | Interest rate swaps |  |  | 6 |  |  | $ | 6,394,000 |  |  | 2019-2024 |  | Other assets and deferred charges, net
Qualifying |  | Interest rate swaps |  |  | 1 |  |  | $ | 511,000 |  |  | 2021 |  | Accounts payable and accrued liabilities
The notional values of the interest rate swaps held by the Company at September 30, 2018 and December 30, 2017 were $425.0 million and $350.0 million, respectively. 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 and nine months ended September 30, 2018 and 2017, respectively:
|  |  |  | Gain recognized in other |
|  |  |  | comprehensive (loss) income |
|  |  |  | (effective portion) |
Designation/ |  |  |  | Three months ended September 30, |  |  | Nine months ended September 30, |
Cash flow |  | Derivative |  | 2018 |  |  | 2017 |  |  | 2018 |  |  | 2017 |
Qualifying |  | Interest rate swaps |  | $ | 2,375,000 |  |  | $ | 872,000 |  |  | $ | 10,221,000 |  |  | $ | (332,000 | )
|  |  |  | Gain (loss) recognized in other |
|  |  |  | comprehensive (loss) income |
|  |  |  | reclassified into earnings (effective portion) |
|  |  |  | Three months ended September 30, |  |  | Nine months ended September 30, |
|  | Classification |  | 2018 |  |  | 2017 |  |  | 2018 |  |  | 2017 |
|  | Continuing Operations |  | $ | 246,000 |  |  | $ | (407,000 | ) |  | $ | 265,000 |  |  | $ | (1,923,000 | )
As of September 30, 2018 the Company believes it has no significant risk associated with non-performance of the financial institutions which are the counterparties to its derivative contracts.

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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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