(1)

The effective interest rate is calculated based on the Secured Overnight Financing Rate plus an 11.448 basis point adjustment (“Term SOFR”), plus a margin ranging from 1.25% to 2.00% depending on our consolidated leverage ratio. As of September 30, 2022, the unused and available portions under the line of credit were approximately $715.0 million and $573.3 million, respectively. The line of credit is available for general business purposes including, but not limited to, refinancing of existing indebtedness and financing the acquisition of permitted investments, including commercial properties.

(2)

The effective interest rate is calculated based on Term SOFR, plus a margin ranging from 1.20% to 1.90% depending on our consolidated leverage ratio. Total commitments for this term loan are $400.0 million. The weighted-average interest rate is the all-in interest rate, including the effects of interest rate swap agreements relating to approximately $300.0 million in borrowings under this term loan.

(3)

(4)

The effective interest rate is calculated based on the London Interbank Offered Rate (“LIBOR”) plus a margin. As of both September 30, 2022 and December 31, 2021, our floating-rate mortgage notes were subject to interest rate spreads ranging from 1.55% to 2.50%. As of September 30, 2022, our floating-rate mortgage notes were capped at 4.50% and 4.55% through interest rate cap agreements.

(5)	The weighted-average remaining term of our consolidated borrowings was approximately 4.2 years as of September 30, 2022, excluding the impact of certain extension options.

As of September 30, 2022, the principal payments due on our consolidated debt during each of the next five years and thereafter were as follows:


(in thousands)	Line of Credit (1)		Term Loans		Mortgage Notes		Total
Remainder of 2022	$	—	$	—	$	204	$	204
2023		—		—		1,463		1,463
2024		—		—		129,265		129,265
2025		185,000		—		72,360		257,360
2026		—		400,000		84,214		484,214
Thereafter		—		400,000		300,640		700,640
Total principal payments	$	185,000	$	800,000	$	588,146	$	1,573,146

(1)	The term of the line of credit may be extended pursuant to two six-month extension options, subject to certain conditions.

In July 2017, the Financial Conduct Authority (“FCA”) that regulates LIBOR announced it intends to stop compelling banks to submit rates for the calculation of LIBOR after 2021. As a result, the Federal Reserve Board and the Federal Reserve Bank of New York organized the Alternative Reference Rates Committee (“ARRC”), which identified the Secured Overnight Financing Rate as its preferred alternative rate for LIBOR in derivatives and other financial contracts. Any changes adopted by the FCA or other governing bodies in the method used for determining LIBOR may result in a sudden or prolonged increase or decrease in reported LIBOR. If that were to occur, our interest payments could change. In addition, uncertainty about the extent and manner of future changes may result in interest rates and/or payments that are higher or lower than if LIBOR were to remain available in its current form.

LIBOR is expected to be phased out or modified by June 2023. As of September 30, 2022, certain of our mortgage notes have initial or extended maturity dates beyond 2023 with exposure to LIBOR. The agreements governing these loans provide procedures for determining a replacement or alternative base rate in the event that LIBOR is discontinued. However, there can be no assurances as to whether such replacement or alternative base rate will be more or less favorable than LIBOR. We intend to monitor the developments with respect to the phasing out of LIBOR after 2023 and work with our lenders to seek to ensure any transition away from LIBOR will have minimal impact on our financial condition, but can provide no assurances regarding the impact of the discontinuation of LIBOR.

Debt Covenants

Our line of credit, term loans and mortgage note agreements contain various property-level covenants, including customary affirmative and negative covenants. In addition, the line of credit and term loan agreements contain certain corporate-level financial covenants, including leverage ratio, fixed charge coverage ratio, and tangible net worth thresholds. We were in compliance with our debt covenants as of September 30, 2022.

Derivative Instruments

To manage interest rate risk for certain of our variable-rate debt, we use interest rate derivative instruments as part of our risk management strategy. These derivatives are designed to mitigate the risk of future interest rate increases by either providing a fixed interest rate or capping the variable interest rate for a limited, pre-determined period of time. Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for us making fixed-rate payments over the life of the interest rate swap agreements without exchange of the underlying notional amount. Interest rate caps involve the receipt of

variable amounts from a counterparty at the end of each period in which the interest rate exceeds the agreed fixed price. Interest rate caps are not designated as hedges. Certain of our variable-rate borrowings are not hedged, and therefore, to an extent, we have ongoing exposure to interest rate movements.

For derivative instruments that are designated and qualify as cash flow hedges, the gain or loss is recorded as a component of accumulated other comprehensive income (loss) (“AOCI”) on the condensed consolidated balance sheets and is reclassified into earnings as interest expense for the same period that the hedged transaction affects earnings, which is when the interest expense is recognized on the related debt. During the next 12 months, we estimate that approximately $10.2 million will be reclassified as a decrease to interest expense related to active effective hedges of existing floating-rate debt. Our interest rate cap derivative instruments are not designated as hedges and therefore, changes in fair value must be recognized through income. As a result, in periods with high interest rate volatility, we may experience significant fluctuations in our net income (loss).

The following table summarizes the location and fair value of our consolidated derivative instruments on our condensed consolidated balance sheets:


	Number of			Fair Value
($ in thousands)	Contracts	Notional Amount			Other Assets	Other Liabilities
As of September 30, 2022
Interest rate swaps	12	$	650,000	$	20,148	$	—
Interest rate caps	2		207,600		4,341		—
Total derivative instruments	14	$	857,600	$	24,489	$	—
As of December 31, 2021
Interest rate swaps	13	$	500,000	$	164	$	11,236
Interest rate caps	2		207,600		159		—
Total derivative instruments	15	$	707,600	$	323	$	11,236

The following table presents the effect of our consolidated derivative instruments on our condensed consolidated financial statements:


	For the Three Months Ended				For the Nine Months Ended
	September 30,				September 30,
(in thousands)	2022		2021		2022		2021
Derivative instruments designated as cash flow hedges:
Gain (loss) recognized in AOCI	$	17,114	$	(224)	$	27,976	$	2,519
Amount reclassified from AOCI into interest expense		331		2,537		3,282		7,740
Total interest expense presented in the condensed consolidated statements of operations in which the effects of cash flow hedges are recorded		42,255		17,866		100,439		51,477
Derivative instruments not designated as cash flow hedges:
Gain (loss) recognized in other income	$	1,691	$	—	$	4,223	$	(13)