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Debt
 9 Months Ended
Sep. 30, 2023
Debt Disclosure [Abstract]  
Debt Debt
Senior Unsecured Credit Facility

As of December 31, 2022, we had a senior credit facility, which had capacity of approximately $2.4 billion, comprised of (i) a $1.8 billion unsecured revolving credit facility for our working capital needs, acquisitions, and other general corporate purposes (our “Unsecured Revolving Credit Facility”), (ii) a £270.0 million term loan (our “Term Loan due 2025”), and (iii) a €215.0 million delayed draw term loan (our “Delayed Draw Term Loan due 2025”). We refer to the entire facility collectively as our “Senior Unsecured Credit Facility.” As of December 31, 2022, the aggregate principal amount (of revolving and term loans) available under the Senior Unsecured Credit Facility was able to be increased up to an amount not to exceed the U.S. dollar equivalent of $2.75 billion, subject to the conditions to increase set forth in our credit agreement.

In January 2023, we entered into a Third Amendment to the Credit Agreement to transition from LIBOR to SOFR. In connection with this amendment, we also increased the aggregate principal amount (of revolving and term loans) available under the Senior Unsecured Credit Facility to an amount not to exceed the U.S. dollar equivalent of $3.05 billion, subject to the conditions to increase set forth in the credit agreement (Note 2).

The Senior Unsecured Credit Facility includes the ability to borrow in certain currencies other than U.S. dollars and has a maturity date of February 20, 2025. At September 30, 2023, our Unsecured Revolving Credit Facility had available capacity of approximately $1.3 billion (net of amounts reserved for standby letters of credit totaling $1.9 million). We incur an annual facility fee of 0.15% of the total commitment on our Unsecured Revolving Credit Facility, which is included within Interest expense in our consolidated statements of income.

Term Loan Agreement

On April 24, 2023, we entered into a €500.0 million unsecured term loan maturing on April 24, 2026 (our “Unsecured Term Loan due 2026”), comprised of (i) a €300.0 million term loan (our “Term Loan due 2026”) and (ii) a €200.0 million delayed draw term loan (our “Delayed Draw Term Loan due 2026”), which was drawn in full at closing. The amount available under the Unsecured Term Loan due 2026 may be increased up to an amount not to exceed €750.0 million, subject to the conditions to increase set forth in the related credit agreement.

The Unsecured Term Loan due 2026 borrowing rate pursuant to the credit agreement is 85 basis points over EURIBOR, based on our credit ratings of BBB+ and Baa1. In conjunction with the closing of the Unsecured Term Loan due 2026, we executed variable-to-fixed interest rate swaps that fix the total per annum interest rate at 4.34% through the end of 2024 (Note 10).

We refer to our Term Loan due 2025, Delayed Draw Term Loan due 2025, and Unsecured Term Loan due 2026 collectively as our “Unsecured Term Loans.”
The following table presents a summary of our Unsecured Term Loans and Unsecured Revolving Credit Facility (dollars in thousands):
Unsecured Term Loans and Unsecured Revolving Credit Facility
Interest Rate at
September 30, 2023 (a)
Maturity Date at September 30, 2023
Principal Outstanding Balance at
September 30, 2023December 31, 2022
Unsecured Term Loans:
Unsecured Term Loan due 2026 — borrowing in euros (b)
4.34%
4/24/2026$529,700 $— 
Term Loan due 2025 — borrowing in British pounds sterling (c) (d)
SONIA + 0.85%
2/20/2025330,840 324,695 
Delayed Draw Term Loan due 2025 — borrowing in euros (e)
EURIBOR + 0.85%
2/20/2025227,771 229,319 
1,088,311 554,014 
Unsecured Revolving Credit Facility:
Borrowing in euros (e)
EURIBOR + 0.775%
2/20/2025345,364 258,117 
Borrowing in U.S. dollars (f)
SOFR + 0.775%
2/20/2025155,000 — 
Borrowing in Japanese yen (g)
TIBOR + 0.775%
2/20/202516,149 18,275 
516,513 276,392 


$1,604,824 $830,406 
__________
(a)The applicable interest rate at September 30, 2023 was based on the credit rating for our Senior Unsecured Notes of BBB+/Baa1.
(b)Balance excludes unamortized discount of $3.5 million and unamortized deferred financing costs of $0.3 million at September 30, 2023.
(c)SONIA means Sterling Overnight Index Average and includes a spread adjustment of 0.0326%.
(d)Balance excludes unamortized discount of $1.0 million and $1.5 million at September 30, 2023 and December 31, 2022, respectively
(e)EURIBOR means Euro Interbank Offered Rate.
(f)SOFR includes a spread adjustment of 0.10%.
(g)TIBOR means Tokyo Interbank Offered Rate.

Debt Facility — Net Lease Office Properties

On September 20, 2023, in connection with the proposed Spin-Off (Note 1), NLOP and certain of its wholly-owned direct and indirect subsidiaries entered into financing arrangements for which funding was subject to certain conditions (including the closing of the Spin-Off), including (i) a $335.0 million senior secured mortgage loan maturing on November 9, 2025 (the “NLOP Mortgage Loan”) and (ii) a $120.0 million mezzanine loan facility maturing on November 9, 2028 (the “NLOP Mezzanine Loan” and, together with the NLOP Mortgage Loan, the “NLOP Financing Arrangements”). At that time, NLOP was a wholly-owned subsidiary of WPC.

Upon funding of the borrowing pursuant to the NLOP Mortgage Loan, the NLOP Mortgage Loan will bear interest at an annual rate of one-month Term SOFR rate (subject to a floor of 3.85%) plus 5.0%. In addition, NLOP entered into an interest rate cap agreement at a strike rate of 5.35% under the terms set forth under the NLOP Mortgage Loan. Upon funding of the borrowing pursuant to the NLOP Mezzanine Loan, the NLOP Mezzanine Loan will bear interest at an annual rate of 14.5% (10.0% of which is required to be paid current on a monthly basis, and 4.5% of which will be a payment-in-kind accrual, on a quarterly basis).

Upon the closing of the Spin-Off and funding of the loans on November 1, 2023 (Note 17), the principal balance of the NLOP Financing Arrangements was spun off to NLOP, and approximately $350 million of the balance (net of transaction expenses) was retained by us in connection with the Spin-Off.

In connection with the closing of the NLOP Financing Arrangements, we incurred financing costs totaling $14.4 million as of September 30, 2023, which is included in Other assets, net, on our consolidated financial statements and was reimbursed to us by NLOP in connection with the Spin-Off (Note 17).
Senior Unsecured Notes

As set forth in the table below, we have euro and U.S. dollar-denominated senior unsecured notes outstanding with an aggregate principal balance outstanding of $5.9 billion at September 30, 2023 (the “Senior Unsecured Notes”).

Interest on the Senior Unsecured Notes is payable annually or semi-annually in arrears. The Senior Unsecured Notes can be redeemed at par within three months of their respective maturities, or we can call the notes at any time for the principal, accrued interest, and a make-whole amount based upon the applicable government bond yield plus 20 to 35 basis points. The following table presents a summary of our Senior Unsecured Notes outstanding at September 30, 2023 (currency in thousands):
Principal AmountCoupon RateMaturity DatePrincipal Outstanding Balance at
Senior Unsecured Notes, net (a)
Issue DateSeptember 30, 2023December 31, 2022
4.6% Senior Notes due 2024
3/14/2014$500,000 4.6 %4/1/2024$500,000 $500,000 
2.25% Senior Notes due 2024
1/19/2017€500,000 2.25 %7/19/2024529,700 533,300 
4.0% Senior Notes due 2025
1/26/2015$450,000 4.0 %2/1/2025450,000 450,000 
2.25% Senior Notes due 2026
10/9/2018€500,000 2.25 %4/9/2026529,700 533,300 
4.25% Senior Notes due 2026
9/12/2016$350,000 4.25 %10/1/2026350,000 350,000 
2.125% Senior Notes due 2027
3/6/2018€500,000 2.125 %4/15/2027529,700 533,300 
1.35% Senior Notes due 2028
9/19/2019€500,000 1.35 %4/15/2028529,700 533,300 
3.85% Senior Notes due 2029
6/14/2019$325,000 3.85 %7/15/2029325,000 325,000 
3.41% Senior Notes due 2029
9/28/2022€150,000 3.41 %9/28/2029158,910 159,990 
0.95% Senior Notes due 2030
3/8/2021€525,000 0.95 %6/1/2030556,185 559,965 
2.4% Senior Notes due 2031
10/14/2020$500,000 2.4 %2/1/2031500,000 500,000 
2.45% Senior Notes due 2032
10/15/2021$350,000 2.45 %2/1/2032350,000 350,000 
3.7% Senior Notes due 2032
9/28/2022€200,000 3.7 %9/28/2032211,880 213,320 
2.25% Senior Notes due 2033
2/25/2021$425,000 2.25 %4/1/2033425,000 425,000 
$5,945,775 $5,966,475 
__________
(a)Aggregate balance excludes unamortized deferred financing costs totaling $22.1 million and $25.9 million, and unamortized discount totaling $20.8 million and $24.1 million, at September 30, 2023 and December 31, 2022, respectively.

Covenants

The credit agreements for our Senior Unsecured Credit Facility and Unsecured Term Loan due 2026, each of the Senior Unsecured Notes, and certain of our non-recourse mortgage loan agreements include customary financial maintenance covenants that require us to maintain certain ratios and benchmarks at the end of each quarter. There have been no significant changes in our debt covenants from what was disclosed in the 2022 Annual Report. We were in compliance with all of these covenants at September 30, 2023.

Non-Recourse Mortgages
 
At September 30, 2023, the weighted-average interest rate for our total non-recourse mortgage notes payable was 4.7% (fixed-rate and variable-rate non-recourse mortgage notes payable were 4.6% and 5.2%, respectively), with maturity dates ranging from October 2023 to April 2039.

Repayments

During the nine months ended September 30, 2023, we (i) repaid non-recourse mortgage loans at or close to maturity with an aggregate principal balance of approximately $226.9 million and (ii) prepaid non-recourse mortgage loans totaling $99.4 million. We recognized a net gain on extinguishment of debt of $2.4 million on these repayments, which is included within Other gains and (losses) on our consolidated statements of income. The weighted-average interest rate for these non-recourse mortgage loans on their respective dates of repayment was 4.8%.
Foreign Currency Exchange Rate Impact

During the nine months ended September 30, 2023, the U.S. dollar strengthened against the euro, resulting in a decrease of $40.6 million in the aggregate carrying values of our Non-recourse mortgages, net, Senior Unsecured Credit Facility, Unsecured Term Loan due 2026, and Senior Unsecured Notes, net from December 31, 2022 to September 30, 2023.

Scheduled Debt Principal Payments
 
Scheduled debt principal payments as of September 30, 2023 are as follows (in thousands):
Years Ending December 31, Total
2023 (remainder)$111,174 
20241,223,399 
20251,903,802 
20261,509,747 
2027530,368 
Thereafter through 20393,063,067 
Total principal payments8,341,557 
Unamortized discount, net(31,472)
Unamortized deferred financing costs(22,371)
Total$8,287,714 

Certain amounts in the table above are based on the applicable foreign currency exchange rate at September 30, 2023.