Indebtedness

9 Months Ended

Sep. 30, 2023

Debt Disclosure [Abstract]

Indebtedness

Indebtedness

Our principal debt obligations as of September 30, 2023 were: (1) $200,000 of outstanding borrowings under our $750,000 unsecured revolving credit facility; (2) $2,212,000 aggregate outstanding principal amount of senior unsecured notes; and (3) $177,320 aggregate outstanding principal amount of mortgage notes.

Our $750,000 revolving credit facility is governed by a credit agreement, or our credit agreement, with a syndicate of institutional lenders that includes a feature under which the maximum aggregate borrowing availability may be increased to up to $1,950,000 in certain circumstances. Our revolving credit facility is available for general business purposes, including acquisitions. The maturity date of our revolving credit facility is January 31, 2024. We can borrow, repay and reborrow funds available under our revolving credit facility until maturity and no principal repayment is due until maturity.

In March 2023, we amended our credit agreement to, among other things, replace LIBOR with the secured overnight financing rate, or SOFR, as the benchmark interest rate for calculating interest payable on the amounts outstanding under our revolving credit facility. We are required to pay interest at a rate of SOFR plus a premium, which was 145 basis points per annum at September 30, 2023, on the amount outstanding under our revolving credit facility. We also pay a facility fee on the total amount of lending commitments under our revolving credit facility, which was 30 basis points per annum at September 30, 2023. Both the interest rate premium and facility fee are subject to adjustment based upon changes to our credit ratings. As of September 30, 2023 and December 31, 2022, the annual interest rate payable on borrowings under our revolving credit facility was 6.9% and 5.4%, respectively. The weighted average annual interest rate for borrowings under our revolving credit facility was 6.8% and 6.4% for the three and nine months ended September 30, 2023, respectively, and 3.3% and 3.2% for the three and nine months ended September 30, 2022. As of September 30, 2023 and October 27, 2023, we had $200,000 and $205,000, respectively, outstanding under our revolving credit facility, and $550,000 and $545,000, respectively, available for borrowing, subject to meeting required financial covenants.

Our credit agreement and senior unsecured notes indentures and their supplements provide for acceleration of payment of all amounts due thereunder upon the occurrence and continuation of certain events of default, such as, in the case of our credit agreement, a change of control of us, which includes RMR ceasing to act as our business and property manager. Our credit agreement and senior unsecured notes indentures and their supplements also contain covenants, including covenants that restrict our ability to incur debts, require us to comply with certain financial covenants and, in the case of our credit agreement, restrict our ability to make distributions under certain circumstances. We believe we were in compliance with the terms and conditions of the respective covenants under our credit agreement and senior unsecured notes indentures and their supplements at September 30, 2023.

We are currently in discussion with our lenders regarding a new revolving credit facility. We are also evaluating different options to repay our maturing senior notes, including new financings and potential property sales. While our plans could be impacted by factors outside of our control, including unfavorable market, economic and commercial real estate conditions, we believe based on our current discussions and history of working with our lenders that it is probable that these plans will allow us to repay our maturing debt.

Mortgage Note Issuances

During the nine months ended September 30, 2023, we issued six fixed rate, interest-only mortgage notes as summarized in the following table:

Issuance Date	Secured By	Principal Balance (1)		Interest Rate	Maturity	Net Book Value of Collateral as of September 30, 2023
May 2023 (2)	One property	$	30,680	7.210%	7/1/2033	$	36,752
June 2023	One property	26,340		8.139%	7/1/2028	52,878
June 2023	One property	42,700		8.272%	7/1/2028	43,445
June 2023	One property	8,400		7.305%	7/1/2033	19,085
August 2023	One property	14,900		7.717%	9/1/2033	24,113
September 2023	Two properties	54,300		7.671%	10/6/2028	64,192
Total / Weighted Average		$	177,320	7.792%		$	240,465

(1)Our mortgage notes are non-recourse, subject to certain limited exceptions and do not contain any material financial covenants.

(2)Requires interest-only payments through May 2028, at which time principal and interest payments are due monthly through the maturity date.

Mortgage Note Repayment

In June 2023, we repaid at maturity, a mortgage note secured by one property with an outstanding principal balance of $50,000 and an annual interest rate of 3.70%.