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Indebtedness
 9 Months Ended
Sep. 30, 2020
Debt Disclosure [Abstract]  
Debt Disclosure [Text Block] Indebtedness
    Mortgage Notes Payable

Mortgage financing of property acquisitions

During the nine-month period ended September 30, 2020, the Company obtained original mortgage financing on the following properties as shown in the following table:
PropertyDateInitial principal amount
(in thousands)		Fixed/Variable rateInterest rateMaturity date
251 Armour Yards1/22/2020$3,522 Fixed4.50 %1/22/2025
Wakefield Crossing1/29/20207,891 Fixed3.66 %2/1/2032
Morrocroft Centre3/19/202070,000 Fixed3.40 %4/10/2033
Horizon at Wiregrass Ranch4/23/202052,000 Fixed2.90 %5/1/2030
Parkside at the Beach4/30/202045,037 Fixed2.95 %5/1/2030
$178,450 
        

Repayments and refinancings

The following table summarizes our mortgage debt refinancing and repayment activity for the nine-month periods ended September 30, 2020 and 2019:
DatePropertyPrevious balance (millions)Previous interest rate / spread over 1 month LIBORLoan refinancing costs expensed (thousands)New balance (millions)New interest rateAdditional deferred loan costs from refinancing (thousands)
1/3/2020Ursa$31.4 L + 300$— $— n/a$— 
6/25/2020CityPark View19.8 3.27 %1,314 29.0 2.75 %314 
6/29/2020Aster at Lely Resort30.7 3.84 %293 50.4 2.95 %2,777 
6/29/2020Avenues at Northpointe26.0 3.16 %166 33.5 2.79 %1,247 
6/30/2020Avenues at Cypress20.5 3.43 %1,607 28.4 2.96 %336 
6/30/2020Venue at Lakewood Ranch27.8 3.55 %2,457 36.6 2.99 %384 
6/30/2020Crosstown Walk29.9 3.90 %248 46.5 2.92 %2,841 
6/30/2020Summit Crossing II13.1 4.49 %779 20.7 L + 278136 
7/10/2020Citrus Village28.5 3.65 %704 40.9 2.95 %522 
7/31/2020Village at Baldwin Park70.1 4.16 %16 70.1 3.59 %864 
$297.8 $7,584 $356.1 $9,421 
9/17/2019Spring Hill Plaza$9.1 3.36 %$— $8.2 3.72 %$195 
9/17/2019Parkway Town Centre6.6 3.36 %— 8.1 3.72 %195 
8/16/2019Deltona Landings6.5 3.48 %5 6.3 4.18 %204 
8/16/2019Barclay Crossing6.1 3.48 %4 6.3 4.18 %209 
8/16/2019Parkway Center4.3 3.48 %3 4.6 4.18 %148 
8/13/2019Powder Springs6.9 3.48 %4 8.0 3.65 %236 
7/29/2019Citi Lakes41.1 L + 217155 41.3 3.66 %668 
4/12/2019Royal Lakes Marketplace9.5 L + 25052 9.7 4.29 %287 
4/12/2019Cherokee Plaza24.5 L + 225317 25.2 4.28 %723 
2/28/2019Lenox Village Town Center29.2 3.82 %17 39.3 4.34 %1,153 
$143.8 $557 $157.0 $4,018 
The following table summarizes our mortgage notes payable at September 30, 2020:
(In thousands)
Fixed rate mortgage debt:Principal balances dueWeighted-average interest rateWeighted average remaining life (years)
Residential Properties$1,442,905 3.68 %8.8
New Market Properties 571,320 4.00 %7.6
Preferred Office Properties634,876 4.13 %12.7
Total fixed rate mortgage debt2,649,101 3.86 %9.5
Variable rate mortgage debt:
Residential Properties117,917 3.76 %3.3
New Market Properties 47,150 2.81 %3.1
Preferred Office Properties— — %— 
Total variable rate mortgage debt165,067 3.49 %3.3
Total mortgage debt:
Residential Properties1,560,823 3.68 %8.4
New Market Properties 618,470 3.91 %7.2
Preferred Office Properties634,876 4.13 %12.7
Total principal amount2,814,169 3.83 %9.1
Deferred loan costs(44,338)
Mark to market loan adjustment(4,038)
Mortgage notes payable, net$2,765,793 

The Company has placed interest rate caps on the variable rate mortgages on its Avenues at Creekside, Summit Crossing II, Tradition and Bloc residential properties. Under guidance provided by ASC 815-10, these interest rate caps are derivatives that are embedded in the debt hosts. Because the interest rate caps are deemed to be clearly and closely related to the debt hosts, bifurcation and fair value accounting treatment is not required.

The mortgage note secured by our Independence Square property is a seven year term with an anticipated repayment date of September 1, 2022. If the Company elects not to pay its principal balance at the anticipated repayment date, the term will be extended for an additional five years, maturing on September 1, 2027. The interest rate from September 1, 2022 to September 1, 2027 will be the greater of (i) the Initial Interest Rate of 3.93% plus 200 basis points or (ii) the yield on the seven year U.S. treasury security rate plus approximately 400 basis points.

As of September 30, 2020, the weighted-average remaining life of deferred loan costs related to the Company's mortgage indebtedness was approximately 9.3 years. Our mortgage notes have maturity dates between June 6, 2021 and June 1, 2054.

    Credit Facility

The Company has a credit facility, or Credit Facility, with KeyBank National Association, or KeyBank, which includes a revolving line of credit, or Revolving Line of Credit, which is used to fund investments, capital expenditures, dividends (with consent of KeyBank), working capital and other general corporate purposes on an as needed basis. On March 23, 2018, the maximum borrowing capacity on the Revolving Line of Credit was increased to $200 million pursuant to an accordion feature. The accordion feature permits the maximum borrowing capacity to be expanded or contracted without amending any further terms of the instrument. On December 12, 2018, the Fourth Amended and Restated Credit Agreement, or the Amended and Restated Credit Agreement, was amended to extend the maturity to December 12, 2021, with an option to extend the maturity
date to December 12, 2022, subject to certain conditions described therein. The Revolving Line of Credit accrues interest at a variable rate of one month LIBOR plus an applicable margin of 2.75% to 3.50% per annum, depending upon the Company’s leverage ratio. The weighted average interest rate for the Revolving Line of Credit was 3.91% for the nine-month period ended September 30, 2020. The Amended and Restated Credit Agreement also reduced the commitment fee on the average daily unused portion of the Revolving Line of Credit to 0.25% or 0.30% per annum, depending upon the Company’s outstanding Credit Facility balance.

On December 20, 2019, the Company entered into a $70.0 million interim term loan with KeyBank, or the 2019 Term Loan, to partially finance the acquisition of Morrocroft Centre, an office building located in Charlotte, North Carolina. The 2019 Term Loan accrues interest at a rate of LIBOR plus 1.7% per annum. The 2019 Term Loan was repaid in conjunction with the closing of permanent mortgage financing for Morrocroft Centre on March 19, 2020.
The Fourth Amended and Restated Credit Agreement contains certain affirmative and negative covenants, including negative covenants that limit or restrict secured and unsecured indebtedness, mergers and fundamental changes, investments and acquisitions, liens and encumbrances, dividends, transactions with affiliates, burdensome agreements, changes in fiscal year and other matters customarily restricted in such agreements. The amount of dividends that may be paid out by the Company is restricted to a maximum of 95% of AFFO for the trailing four quarters without the lender's consent; solely for purposes of this covenant, AFFO is calculated as earnings before interest, taxes, depreciation and amortization expense, plus reserves for capital expenditures, less normally recurring capital expenditures, less consolidated interest expense.
As of September 30, 2020, the Company was in compliance with all covenants related to the Revolving Line of Credit, as shown in the following table:
Covenant (1)
RequirementResult
Net worthMinimum $1.7 billion$1.9 billion
(3)
Debt yieldMinimum 8.25%9.89%
Payout ratioMaximum 95%
(2)
88.1%
Total leverage ratioMaximum 65%63.7%
Debt service coverage ratioMinimum 1.50x1.74x

(1) All covenants are as defined in the credit agreement for the Revolving Line of Credit.
(2) Calculated on a trailing four-quarter basis, except for Common Stock dividends, which are annualized off of the trailing two quarters' dividend. For the year ended September 30, 2020, the maximum dividends and distributions allowed under this covenant was approximately $179.8 million.
(3) Adjusted to exclude the effect of costs incurred with internalization.

Loan fees and closing costs for the establishment and subsequent amendments of the Credit Facility are amortized utilizing the straight line method over the life of the Credit Facility. At September 30, 2020, unamortized loan fees and closing costs for the Credit Facility were approximately $0.8 million, which will be amortized over a remaining loan life of approximately 1.3 years. Loan fees and closing costs for the mortgage debt on the Company's properties are amortized utilizing the effective interest rate method over the lives of the loans.

    Acquisition Facility

On February 28, 2017, the Company entered into a credit agreement, or Acquisition Credit Agreement, with Freddie Mac through KeyBank to obtain an acquisition revolving credit facility, or Acquisition Facility, with a maximum borrowing capacity of $200 million. The purpose of the Acquisition Facility is to finance acquisitions. The maximum borrowing capacity on the Acquisition Facility may be increased at the Company's request up to $300 million at any time prior to March 1, 2021. On March 25, 2019, the maximum borrowing capacity was decreased to $90 million by agreement between the Company and KeyBank.The Acquisition Facility accrues interest at a variable rate of one month LIBOR plus a margin of between 1.75% per annum and 2.20% per annum, depending on the type of assets acquired and the resulting property debt service coverage ratio. The Acquisition Facility has a maturity date of March 1, 2022 and has two one-year extension options, subject to certain conditions described therein. At September 30, 2020, unamortized loan fees and closing costs for the establishment of the Acquisition Facility were approximately $0.1 million, which will be amortized over a remaining loan life of approximately 1.4 years. 
    Interest Expense

Interest expense, including amortization of deferred loan costs was:
(In thousands)Three-month periods ended September 30,Nine-month periods ended September 30,
2020201920202019
Residential Properties$15,739 $16,108 $46,537 $46,729 
New Market Properties6,539 6,422 19,876 18,123 
Preferred Office Properties6,699 5,909 20,256 16,617 
Interest paid to real estate loan participants— — — 110 
Total28,977 28,439 86,669 81,579 
Credit Facility and Acquisition Facility902 360 3,939 1,587 
Interest Expense$29,879 $28,799 $90,608 $83,166 
    Future Principal Payments
The Company’s estimated future principal payments due on its debt instruments as of September 30, 2020 were:
PeriodFuture principal payments
(in thousands)
2020 (1)
$44,152 
2021166,730 
2022105,432 
2023117,605 
2024367,421 
Thereafter2,045,829 
Total$2,847,169 
(1) Includes the principal amount due on our revolving line of credit of $33.0 million as of September 30, 2020.