Capital Markets Long Term Debt (Notes)

9 Months Ended

Sep. 30, 2020

Debt Disclosure [Abstract]

Long-term Debt [Text Block]

On June 29, 2020, the Company amended its Consolidated Credit Agreement, which governs its unsecured revolving credit facility and its unsecured term loan facility, and its Note Purchase Agreement, which governs its private placement notes. The amendments modified certain provisions and waived the Company's obligation to comply with certain covenants under these debt agreements in light of the continuing financial and operational impacts of the COVID-19 pandemic on the Company and its tenants and borrowers. The Company further amended its Consolidated Credit Agreement on November 3, 2020, as discussed below. The modifications, prior to being further amended, were generally effective during the covenant relief period, which was defined as the period of time beginning June 29, 2020 and ending on the earlier of (i) April 1, 2021 or (ii) the date on which the Company provides notice that it elects to terminate the covenant relief period, together with evidence that it would have been

in compliance with the applicable financial covenants at the end of the most recently ended fiscal quarter even if the covenant relief period had not been in effect for such fiscal quarter.

During the covenant relief period, the initial interest rates for the revolving credit facility and term loan facility were set at LIBOR plus 1.375% and LIBOR plus 1.75%, respectively, (with a LIBOR floor of 0.50%) and the facility fee on the revolving credit facility was increased to 0.375%. On August 20, 2020, as a result of a downgrade of the Company's unsecured debt rating by Moody's to Baa3, the spreads on the revolving credit and term loan facilities each increased by 0.25%. Subsequent to September 30, 2020, the Company's unsecured debt rating was downgraded to BB+ by both Fitch and Standard & Poor's. If the Company's unsecured debt rating is further downgraded by Moody's, the interest rates on the revolving credit and term loan facilities would both increase by 0.35% during the covenant relief period. After the covenant relief period, the interest rates for the revolving credit and term loan facilities, based on the Company's current unsecured debt ratings, are scheduled to return to LIBOR plus 1.20% and LIBOR plus 1.35%, respectively, (with a LIBOR floor of zero) and the facility fee will be 0.25%, however these rates are subject to change based on the Company's unsecured debt ratings.

During the covenant relief period, the interest rates for the private placement notes were set at 5.00% and 5.21% for the Series A notes due 2024 and the Series B notes due 2026, respectively. Subsequent to September 30, 2020, as a result of downgrades of the Company's unsecured debt rating to BB+ by both Fitch and Standard and Poor's, the spreads on the private placement notes each increased by 0.60% during the covenant relief period. After the covenant relief period, the interest rates for the private placement notes are scheduled to return to 4.35% and 4.56% for the Series A notes due 2024 and the Series B notes due 2026, respectively.

On November 3, 2020, the Company further amended its Consolidated Credit Agreement. The amendment modified certain provisions and extended the waiver of the Company's obligation to comply with the covenants discussed below under this agreement through December 31, 2021 in light of the continuing financial and operational impacts of the COVID-19 pandemic on the Company and its tenants and borrowers. The Company can still elect to terminate the covenant relief period early, subject to certain conditions. The loans subject to the modifications continue to bear interest at the same higher rates during the covenant relief period as specified in the previous waiver described above, and will return to the original pre-waiver levels discussed above at the end of such period, subject to certain conditions. The rates during and after the covenant relief period continue to be subject to change based on unsecured debt ratings, as defined in the agreement. The amendment also continues to impose the additional restrictions on the Company discussed below during the covenant relief period. The Company is currently in process of negotiating a similar covenant waiver extension relating to its $340.0 million of private placement notes.

The June 29, 2020 and November 3, 2020 amendments to the Company's revolving credit and term loan facilities permanently modified certain financial covenants and provided relief from compliance with certain financial covenants during all or a portion of the covenant relief period, as follows: (i) a new minimum liquidity financial covenant during the covenant relief period was added in the initial amendment and increased in the subsequent amendment; (ii) compliance with the total-debt-to-total-asset-value and the maximum-unsecured-debt-to-unencumbered-asset-value financial covenants was suspended during the covenant relief period; (iii) compliance with the minimum unsecured interest coverage ratio and the minimum fixed charge ratio financial covenants was suspended for the period beginning on June 29, 2020 and ending on the earlier to occur of December 31, 2021 or the earlier termination of the covenant relief period; (iv) permanent amendments to the unsecured-debt-to-unencumbered-asset-value financial covenant to allow short-term indebtedness to be offset by unrestricted cash in the calculation and to allow unrestricted cash not otherwise offset against short term indebtedness to be counted as an unencumbered asset; and (v) permanent amendments to financial covenants to allow deferred payments to be included as recurring property revenue in these calculations. The amendments also imposed additional restrictions on the Company and its subsidiaries during the covenant relief period, including limitations on certain investments, incurrences of indebtedness, capital expenditures, payment of dividends or other distributions and stock repurchases, and maintenance of a minimum liquidity amount, in each case subject to certain exceptions. In addition, the amendments require the Company to cause certain of its key subsidiaries to guarantee the Company's obligations and pledge the equity interests of certain of those subsidiary guarantors upon the occurrence of certain events during the covenant relief period.

Subsequent to September 30, 2020, the Company's unsecured debt rating was downgraded to BB+ by both Fitch and Standard & Poor's. As a result of these downgrades, the Company is in the process of causing certain of its key subsidiaries to guarantee the Company's obligations under its bank credit facilities, private placement notes and other outstanding senior unsecured notes in accordance with existing agreements with the holders of such indebtedness. If the Company's unsecured debt rating is further downgraded by Moody's, the Company will also be required to cause the equity owners of certain of those guarantor subsidiaries to pledge their equity interests in such guarantor subsidiaries to secure the Company's obligations under its bank credit facilities and its private placement notes.In connection with the amendments on June 20, 2020, $0.8 million of fees paid to third parties were expensed and included in costs associated with loan refinancing in the accompanying consolidated statements of (loss) income and comprehensive (loss) income for the three and nine months ended September 30, 2020. In addition, the Company paid $2.6 million in fees to existing lenders that were capitalized in deferred financing costs and amortized as part of the effective yield. These fees consisted of $1.6 million related to the unsecured revolving credit facility and included in other assets and $1.0 million related to the term loan and private placement notes and shown as a reduction of debt. In connection with the amendments on November 3, 2020, the Company expects to pay approximately $3.0 million in fees to existing lenders and third parties which will primarily be capitalized in deferred financing costs and amortized as part of the effective yield.