Debt

3 Months Ended

Mar. 31, 2020

A summary of the Company’s outstanding consolidated indebtedness, including unamortized debt premiums and discounts, is as follows:



	March 31, 2020			December 31, 2019
Debt secured by owned properties:
Mortgage loans payable:
Unpaid principal balance	$	657,840		$	693,584
Unamortized deferred financing costs	(1,172		)	(1,294		)
Unamortized debt premiums	5,173			6,596
Unamortized debt discounts	(187		)	(199		)
	661,654			698,687
Debt secured by on-campus participating properties:
Mortgage loans payable⁽¹⁾	65,428			65,942
Bonds payable ⁽¹⁾	23,215			23,215
Unamortized deferred financing costs	(395		)	(418		)
	88,248			88,739
Total secured mortgage, construction and bond debt	749,902			787,426
Unsecured notes, net of unamortized OID and deferred financing costs ⁽²⁾	1,981,472			1,985,603
Unsecured term loans, net of unamortized deferred financing costs ⁽³⁾	199,209			199,121
Unsecured revolving credit facility	609,700			425,700
Total debt, net	$	3,540,283		$	3,397,850


⁽¹⁾	The creditors of mortgage loans payable and bonds payable related to on-campus participating properties do not have recourse to the assets of the Company.


⁽²⁾	Includes net unamortized original issue discount (“OID”) of $2.8 million and $2.3 million at March 31, 2020 and December 31, 2019, respectively, and net unamortized deferred financing costs of $15.7 million and $12.1 million at March 31, 2020 and December 31, 2019, respectively.


⁽³⁾	Includes net unamortized deferred financing costs of $0.8 million and $0.9 million at March 31, 2020 and December 31, 2019, respectively.

Mortgage Loans Payable

During the three months ended March 31, 2020, the Company paid off approximately $34.2 million of fixed rate mortgage debt secured by one owned property. During the three months ended March 31, 2019, the Company did not pay off any mortgage debt.

In January 2019, the Company refinanced $70.0 million of variable rate debt on one wholly-owned property, extending the maturity to January 2024. The Company entered into an interest rate swap contract to hedge the variable rate cash flows associated with interest payments on this LIBOR-based mortgage loan, resulting in a fixed rate of 4.00%. Refer to Note 10 for information related to derivatives.

Unsecured Notes

In January 2020, the Operating Partnership closed a $400 million offering of senior unsecured notes under its existing shelf registration. These 10-year notes were issued at 99.81% of par value with a coupon of 2.85% and are fully and unconditionally guaranteed by the Company. Interest on the notes is payable semi-annually on February 1 and August 1, with the first payment due and payable on August 1, 2020. The notes will mature on February 1, 2030. Net proceeds from the sale of the senior unsecured notes totaled approximately $394.5 million, after deducting the underwriting discount and offering expenses which will be amortized over the term of the unsecured notes. The Company used the proceeds to fund the early redemption of its $400 million 3.35% Senior Notes due October 2020. The prepayment resulted in a loss from early extinguishment of debt of approximately $4.8 million for the three months ended March 31, 2020, which is included in the accompanying statements of comprehensive income.

The following senior unsecured notes issued by the Company are outstanding as of March 31, 2020:



Date Issued	Amount		% of Par Value	Coupon		Yield			Original Issue Discount		Term (Years)
April 2013	$	400,000	99.659	3.750	%	3.791	%		$	1,364	10
June 2014	400,000		99.861	4.125	%	4.269	%	⁽¹⁾	556		10
October 2017	400,000		99.912	3.625	%	3.635	%		352		10
June 2019	400,000		99.704	3.300	%	3.680	%	⁽¹⁾	1,184		7
January 2020	400,000		99.810	2.850	%	2.872	%		760		10
	$	2,000,000							$	4,216


⁽¹⁾	The yield includes the effect of the amortization of interest rate swap terminations (see Note 10).

The notes are fully and unconditionally guaranteed by the Company. Interest on the notes is payable semi-annually. The terms of the unsecured notes include certain financial covenants that require the Operating Partnership to limit the amount of total debt and secured debt as a percentage of total asset value, as defined. In addition, the Operating Partnership must maintain a minimum ratio of unencumbered asset value to unsecured debt, as well as a minimum interest coverage level. As of March 31, 2020, the Company was in compliance with all such covenants.

Unsecured Revolving Credit Facility

In February 2019, the Company exercised the option under the existing credit agreement to increase the capacity of the unsecured revolving credit facility from $700 million to $1.0 billion. It may be expanded by up to an additional $200 million upon the satisfaction of certain conditions. The maturity date of the revolving credit facility is March 2022.

The unsecured revolving credit facility bears interest at a variable rate, at the Company’s option, based upon a base rate of one-, two-, three- or six-month LIBOR, plus, in each case, a spread based upon the Company’s investment grade rating from either Moody’s Investor Services, Inc. or Standard & Poor’s Rating Group. Additionally, the Company is required to pay a facility fee of 0.20% per annum on the $1.0 billion revolving credit facility. As of March 31, 2020, the revolving credit facility bore interest at a weighted average annual rate of 2.13% (0.93% + 1.00% spread + 0.20% facility fee), and availability under the revolving credit facility totaled $390.3 million.

The terms of the unsecured credit facility include certain restrictions and covenants, which limit, among other items, the incurrence of additional indebtedness and liens. The facility contains customary affirmative and negative covenants and also contains financial covenants that, among other things, require the Company to maintain certain maximum leverage ratios and minimum ratios of “EBITDA” (earnings before interest, taxes, depreciation and amortization) to fixed charges. The financial covenants also include a minimum asset value requirement, a maximum secured debt ratio, and a minimum unsecured debt service coverage ratio. As of March 31, 2020, the Company was in compliance with all such covenants.

Unsecured Term Loans

The Company is currently party to an Unsecured Term Loan Credit Agreement (the “Term Loan Facility”) totaling $200 million which matures in June 2022. The agreement has an accordion feature that allows the Company to expand the amount by up to an additional $100 million, subject to the satisfaction of certain conditions. In November and December 2019, the Company entered into two interest rate swap contracts to hedge the variable rate cash flows associated with the LIBOR-based interest payments on the Term Loan Facility. The weighted average annual rate on the Term Loan Facility was 2.54% (1.44% + 1.10% spread) at March 31, 2020. The terms of the Term Loan Facility include certain restrictions and covenants consistent with those of the unsecured revolving credit facility discussed above. As of March 31, 2020, the Company was in compliance with all such covenants.