Debt

The following table sets forth a summary of the Company’s outstanding indebtedness, including borrowings under the Company’s unsecured credit facility, unsecured term loans, unsecured notes and mortgage notes as of September 30, 2015 and December 31, 2014 (dollars in thousands):



Loan	Principal outstanding as of September 30, 2015			Principal outstanding as of December 31, 2014			Interest Rate⁽²⁾		Current Maturity	Pre-payment Terms⁽³⁾
Unsecured credit facility:
$450 Million Wells Fargo Unsecured Credit Facility⁽¹⁾	$	177,750		$	131,000		L + 1.15%		Dec-18-2019	i
Total unsecured credit facility	$	177,750		$	131,000

Unsecured term loans:
$150 Million Wells Fargo Unsecured Term Loan A	$	150,000		$	150,000		L + 1.65%		Mar-31-2022	ii
$150 Million Wells Fargo Unsecured Term Loan B	—			—			L + 1.70%		Mar-21-2021	ii
$150 Million Wells Fargo Unsecured Term Loan C	—			—			L + 1.30%		Sep-29-2020	i
Total unsecured term loans	$	150,000		$	150,000

Unsecured notes:
$50 Million Series A Unsecured Notes	$	50,000		$	50,000		4.98	%	Oct-1-2024	ii
$50 Million Series B Unsecured Notes	50,000			50,000			4.98	%	Jul-1-2026	ii
$80 Million Series C Unsecured Notes	80,000			80,000			4.42	%	Dec-30-2026	ii
$100 Million Series D Unsecured Notes	100,000			—			4.32	%	Feb-20-2025	ii
$20 Million Series E Unsecured Notes	20,000			—			4.42	%	Feb-20-2027	ii
Total unsecured notes	$	300,000		$	180,000

Mortgage notes (secured debt):
Sun Life Assurance Company of Canada (U.S.)	$	3,285	⁽⁴⁾	$	3,445	⁽⁴⁾	6.05	%	Jun-1-2016	iii
Webster Bank, National Association	5,555			5,677			4.22	%	Aug-4-2016	iii
National Life Insurance Company	4,817		⁽⁴⁾	—			5.75	%	Aug-10-2016	iii
Union Fidelity Life Insurance Company	5,843		⁽⁴⁾	6,103		⁽⁴⁾	5.81	%	Apr-30-2017	iv
Principal Life Insurance Company	5,705		⁽⁴⁾	—			5.73	%	May-05-2017	iii
Webster Bank, National Association	2,968			3,035			3.66	%	May-29-2017	iii
Webster Bank, National Association	3,197			3,268			3.64	%	May-31-2017	iii
Wells Fargo, National Association	4,131		⁽⁴⁾	4,182		⁽⁴⁾	5.90	%	Aug-1-2017	v
Connecticut General Life Insurance Company -1 Facility	57,396			58,050			6.50	%	Feb-1-2018	vi
Connecticut General Life Insurance Company -2 Facility	58,335			59,065			5.75	%	Feb-1-2018	vi
Connecticut General Life Insurance Company -3 Facility	16,464			16,647			5.88	%	Feb-1-2018	vi
Wells Fargo Bank, National Association CMBS Loan	64,315			65,567			4.31	%	Dec-1-2022	vii
Total mortgage notes	$	232,011		$	225,039
Total unamortized fair market value premiums	557		⁽⁵⁾	308		⁽⁵⁾
Total carrying value mortgage notes	$	232,568		$	225,347
Total / weighted average interest rate⁽⁶⁾	$	860,318		$	686,347		4.09	%

____________________________________________________________________________


(1)	On September 29, 2015, the capacity of the unsecured credit facility was increased from $300.0 million to $450.0 million.


(2)	Current interest rates as of September 30, 2015. At September 30, 2015 and December 31, 2014, the one-month LIBOR (“L”) was 0.19300% and 0.17125%, respectively. The current interest rates presented in the table above are not adjusted to include the amortization of deferred financing fees incurred in obtaining debt or the unamortized fair market value premiums.

(3)

Prepayment terms consist of (i) pre-payable with no penalty; (ii) pre-payable with penalty; (iii) pre-payable without penalty three months prior to the maturity date; (iv) pre-payable without penalty two months prior to the maturity date; (v) pre-payable without penalty three months prior to the maturity date, however can be defeased; (vi) pre-payable without penalty six months prior to the maturity date; and (vii) pre-payable without penalty three months prior to the maturity date, however can be defeased beginning January 1, 2016.


(4)	The principal outstanding does not include an unamortized fair market value premium.


(5)	Represents total unamortized fair market value premium for the mortgage notes referenced by Note (4) above.


(6)	The weighted average interest rate was calculated using the fixed interest rate swapped on the current notional amount of $300 million of debt, and is not adjusted to include the amortization of deferred financing fees incurred in obtaining debt or the unamortized fair market value premiums.

The aggregate undrawn nominal commitments on the combined unsecured credit facility and unsecured term loans as of September 30, 2015 was $572.3 million. Our actual borrowing capacity at any given point in time may be less and is restricted to a maximum amount based on the Company's unencumbered assets.

On January 22, 2015, the Company assumed a mortgage note of approximately $11.8 million in connection with the acquisition of the Burlington, NJ property. The mortgage note was paid in full immediately subsequent to the acquisition.

On February 20, 2015, the Company issued $100 million of its 4.32% Series D 10-year unsecured notes and $20 million of its 4.42% Series E 12-year unsecured notes.

On June 25, 2015, the Company assumed a mortgage note with National Life Insurance Company of approximately $4.9 million in connection with the acquisition of the property located in Charlotte, NC, which serves as collateral for the debt. The debt matures on August 10, 2016 and bears interest at 5.75% per annum. The assumed debt was recorded at fair value and a fair value premium of approximately $0.1 million was recorded. The fair value of debt was determined by discounting the future cash flows using the current rate of approximately 3.05% at which loans would be made to borrowers with similar credit ratings for loans with similar remaining maturities, similar terms, and similar loan-to-value ratios. The fair value of the debt is based on Level 3 inputs and is a non-recurring fair value measurement.

On September 29, 2015, the Company assumed a mortgage note with Principal Life Insurance Company of approximately $5.7 million in connection with the acquisition of the property located in Conyers, GA, which serves as collateral for the debt. The debt matures on May 5, 2017 and bears interest at 5.73% per annum. The assumed debt was recorded at fair value and a fair value premium of approximately $0.3 million was recorded. The fair value of debt was determined by discounting the future cash flows using the current rate of approximately 2.64% at which loans would be made to borrowers with similar credit ratings for loans with similar remaining maturities, similar terms, and similar loan-to-value ratios. The fair value of the debt is based on Level 3 inputs and is a non-recurring fair value measurement.

On September 29, 2015, the Company entered into an amendment to the unsecured credit facility to increase the capacity thereunder to $450.0 million. Additionally, the accordion feature that allows the Company to request an increase in the aggregate commitments subject to satisfaction of conditions and lender consent was increased, such that if the accordion was exercised in full, total capacity would be $800.0 million. The material terms of the agreement, including the financial covenants, are unchanged. The Company incurred $1.0 million in deferred financing fees, which will be amortized over the remaining term of the unsecured credit facility.

On September 29, 2015, the Company closed a $150.0 million unsecured term loan with Wells Fargo, N.A. ("Wells Fargo Unsecured Term Loan C") with the following terms:



Applicable Terms	Wells Fargo Unsecured Term Loan C
Maturity Date:	Sep-29-2020
Eurodollar Rate⁽¹⁾:	L + 130.0 bps - 190.0 bps
Base Rate⁽¹⁾:	Base rate + 30.0 bps - 90.0 bps
Terminated Commitments Fees⁽²⁾:	50.0 bps
Unused Fees⁽³⁾:	17.5 bps
Annual Fee:	$50,000


(1)	The spread over the applicable rate is based on the Company's consolidated leverage ratio, as defined in the loan agreement.


(2)	The Company has until September 29, 2016 to draw the full $150.0 million.


(3)	The unused fees will begin to accrue on November 29, 2015 and are due and payable monthly until the earlier of all commitments having been drawn or September 29, 2016.

The Wells Fargo Unsecured Term Loan C has an accordion feature that allows the Company to increase its borrowing capacity to $250.0 million, subject to the satisfaction of certain conditions and bank approval. The Company incurred $1.0 million in deferred financing fees associated with the closing of the Wells Fargo Unsecured Term Loan C, which will be amortized over its five year term. The agreement includes a delayed draw feature that allows the Company to draw up to six advances of at least $25.0 million each. The Company and certain wholly owned subsidiaries of the Operating Partnership are guarantors of the Wells Fargo Unsecured Term Loan C. The agreement also contains financial covenants substantially similar to the financial covenants in the unsecured credit facility.

Deferred financing fees, net of accumulated amortization were $9.7 million and $7.8 million as of September 30, 2015 and December 31, 2014, respectively, and are included in prepaid expenses and other assets on the accompanying Consolidated Balance Sheets. During the three and nine months ended September 30, 2015 and September 30, 2014, amortization of deferred financing fees included in interest expense was $0.4 million, $1.1 million, $0.4 million and $1.1 million, respectively.

Financial Covenant Considerations

The Company’s unsecured credit facility, unsecured term loans, unsecured notes, and mortgage notes are subject to ongoing compliance with a number of financial and other covenants. The Company was in compliance with all financial covenants as of September 30, 2015 and December 31, 2014.

Fair Value of Debt

The fair value of the Company’s debt was determined by discounting the future cash flows using the current rates at which loans would be made to borrowers with similar credit ratings for loans with similar remaining maturities, similar terms, and similar loan-to-value ratios. The discount rates ranged from 1.34% to 4.39% and 1.32% to 4.27% at September 30, 2015 and December 31, 2014, respectively, and were applied to each individual debt instrument. The fair value of the Company’s debt is based on Level 3 inputs. The following table presents the aggregate principal outstanding of the Company’s debt and the corresponding estimate of fair value as of September 30, 2015 and December 31, 2014 (in thousands):



	September 30, 2015				December 31, 2014
	Principal Outstanding		Fair Value		Principal Outstanding		Fair Value
Unsecured credit facility	$	177,750	$	177,750	$	131,000	$	131,000
Unsecured term loans	150,000		150,000		150,000		150,000
Unsecured notes	300,000		306,005		180,000		187,587
Mortgage notes	232,011		241,592		225,039		237,602
Total principal amount	$	859,761	$	875,347	$	686,039	$	706,189
Total unamortized fair market value premium	557				308
Total carrying value	$	860,318			$	686,347