Quarterly report pursuant to Section 13 or 15(d)

DEBT FINANCING

v3.5.0.2
DEBT FINANCING
6 Months Ended
Jun. 30, 2016
Debt Disclosure [Abstract]  
DEBT FINANCING
DEBT FINANCING
The Company's outstanding debt as of June 30, 2016 and December 31, 2015 is summarized as follows (dollars in thousands):
 
Interest
 
June 30,
 
December 31,
 
Rate (1)
 
2016
 
2015
Credit Facility:
 
 
 
 
 
Revolving line of credit
1.87%
 
$
109,922

 
$
187,975

Term loan A
2.61%
 
225,000

 
200,000

     Term loan B
3.15%
 
100,000

 

Term loan facility
3.08%
 
100,000

 

Fixed rate mortgages payable
4.00%
 
213,283

 
176,911

Total principal
 
 
748,205

 
564,886

Unamortized debt issuance costs and debt premium, net
 
 
6,456

 
2,909

Total debt
 
 
$
754,661

 
$
567,795


(1) 
Represents the effective interest rate as of June 30, 2016. Effective interest rate incorporates the stated rate plus the impact of interest rate cash flow hedges and discount and premium amortization, if applicable. For the revolving line of credit, the effective interest rate excludes fees for unused borrowings. 
Credit Facility
On May 6, 2016, the Company entered into an amended and restated agreement with a syndicated group of lenders with respect to its unsecured credit facility (the "credit facility"), which was originally entered into on April 1, 2014. The amendment increased the borrowing capacity of the credit facility by $125.0 million for a total credit facility of $675.0 million, consisting of three components: (i) a Revolver which provides for a total borrowing commitment up to $350.0 million, whereby the Company may borrow, repay and re-borrow amounts under the revolving line of credit, (ii) a $225.0 million tranche A term loan facility (the "Term Loan A"), and (iii) a $100.0 million tranche B term loan facility (the "Term Loan B" and together with the Revolver and the Term Loan A, the "Facilities").
The Revolver matures in May 2020; provided that the Company may elect to extend the maturity to May 2021 by paying an extension fee of 0.15% of the total borrowing commitment thereunder at the time of extension and meeting other customary conditions with respect to compliance. The Term Loan A matures in May 2021 and the Term Loan B matures in May 2022. None of the Facilities is subject to any scheduled reduction or amortization payments prior to maturity.
Interest rates applicable to loans under the Facilities are determined based on a 1, 2, 3 or 6 month LIBOR period (as elected by the Company at the beginning of any applicable interest period) plus an applicable margin or a base rate, determined by the greatest of the Key Bank prime rate, the federal funds rate plus 0.50% or one month LIBOR plus 1.00%, plus an applicable margin. The applicable margins for the Facilities are leverage based and range from 1.35% to 2.15% for LIBOR loans and 0.35% to 1.15% for base rate loans; provided that after such time as the Company achieves an investment grade rating from at least two rating agencies, the Company may elect (but is not required to elect) that the Facilities are subject to the rating based on applicable margins ranging from 0.85% to 2.30% for LIBOR Loans and 0.00% to 1.30% for base rate loans. The Company is also required to pay the following usage based fees ranging from 0.15% to 0.25% with respect to the unused portion of the Revolver; provided that if the Company makes an investment grade pricing election as described in the preceding sentence, the Company will be required to pay rating based fees ranging from 0.125% to 0.300% with respect to the entire Revolver in lieu of any usage based fees.
As of June 30, 2016, the Company would have had the capacity to borrow the full remaining Revolver commitments of $240.1 million while remaining in compliance with the Facilities' financial covenants described in the following paragraph.
The Company is required to comply with the following financial covenants under the Facilities:
Maximum total leverage ratio not to exceed 60%
Minimum fixed charge coverage ratio of at least 1.5x
Minimum net worth of at least $682.6 million plus 75% of future equity issuances
Maximum unsecured debt to unencumbered asset value ratio not to exceed 60%
Unencumbered adjusted net operating income to unsecured interest expense of at least 2.0x
In addition, the terms of the Facilities contain customary affirmative and negative covenants that, among other things, limit the Company's ability to make distributions or certain investments, incur debt, incur liens and enter into certain transactions. At June 30, 2016, the Company was in compliance with all such covenants.
Term Loan Facility
On June 30, 2016, the Company entered into a credit agreement with a syndicated group of lenders to make available a term loan facility (the "Term Loan Facility") in an aggregate amount of $100.0 million. The Term Loan Facility matures in June 2023. The entire outstanding principal amount of, and all accrued but unpaid interest, is due on the maturity date. The Company has an expansion option under the Term Loan Facility, which, if exercised in full, would provide for a total Term Loan Facility in an aggregate amount of $200.0 million.
Interest rates applicable to loans under the Term Loan Facility are payable during such periods as such loans are LIBOR loans, at the applicable LIBOR based on a 1, 2, 3 or 6 month LIBOR period (as elected by the Company at the beginning of any applicable interest period) plus an applicable margin, and during the period that such loans are base rate loans, at the base rate under the Term Loan Facility in effect from time to time plus an applicable margin. The base rate under the Term Loan Facility is equal to the greatest of the Capital One prime rate, the federal funds rate plus 0.50% or one month LIBOR plus 1.00%. The applicable margin for the Term Loan Facility is leverage-based and ranges from 1.75% to 2.35% for LIBOR loans and 0.75% to 1.35% for base rate loans; provided that after such time as the Company achieves an investment grade rating from at least two rating agencies, the Company may elect (but is not required to elect) that the Term Loan Facility is subject to the rating based on applicable margins ranging from 1.50% to 2.45% for LIBOR Loans and 0.50% to 1.45% for base rate loans.
The Company is required to comply with the same financial covenants under the Term Loan Facility as it is with the Facilities. In addition, the terms of the Term Loan Facility contain customary affirmative and negative covenants that, among other things, limit the Company's ability to make distributions or certain investments, incur debt, incur liens and enter into certain transactions.
Fixed Rate Mortgages Payable
Fixed rate mortgages have scheduled maturities at various dates through October 2031, and have effective interest rates that range from 2.43% to 5.00%. Principal and interest are generally payable monthly or in monthly interest-only payments with balloon payments due at maturity.
Future Debt Obligations
Based on existing debt agreements in effect as of June 30, 2016, the scheduled principal and maturity payments for outstanding borrowings under the Company's credit facility and fixed rate mortgages are presented in the table below (in thousands):
Year Ending December 31,
 
Scheduled Principal and Maturity Payments
 
Premium Amortization and Unamortized Debt Issuance Costs
 
Total
Remainder of 2016
 
$
9,197

 
$
544

 
$
9,741

2017
 
17,495

 
630

 
18,125

2018
 
10,617

 
534

 
11,151

2019
 
4,983

 
466

 
5,449

2020
 
149,167

 
115

 
149,282

2021
 
232,509

 
10

 
232,519

Thereafter
 
324,237

 
4,157

 
328,394

 
 
$
748,205

 
$
6,456

 
$
754,661