XML 64 R12.htm IDEA: XBRL DOCUMENT

Debt

12 Months Ended

Dec. 31, 2012

6. Debt

A detail of our construction and mortgage loans, line of credit, and other debt is presented below (in thousands):

	As of December 31,
	2012		2011

Fixed-rate mortgage loans	$	166,706	$	109,276
Variable-rate mortgage loans		12,635		28,726
Construction loans		38,996		48,912
Line of credit		72,000		79,500
Other debt		3,375		2,552
	$	293,712	$	268,966

The estimated fair value of our construction loans and fixed rate mortgage loans at December 31, 2012 and 2011 was approximately $227.3 and $185.2 million, respectively. These estimated fair values were determined by comparing current borrowing rates and risk spreads to the stated interest rates and risk spreads. The weighted average interest rate for all borrowings was 3.99% and 4.07% at December 31, 2012 and 2011, respectively.

Mortgage and Construction Loans

Mortgage and construction loans are collateralized by properties and their related revenue streams. Mortgage loans are not cross-defaulted or cross-collateralized with any other indebtedness. Our mortgage loans generally may not be prepaid prior to maturity; however, in certain cases, prepayment is allowed subject to prepayment penalties. Our construction note agreements contain representations, warranties, covenants (including financial covenants upon commencement of operations) and other terms that are customary for construction financing. Construction loans are generally secured by a first deed of trust or mortgage on each property, primary UCC filings, and an assignment of rents, leases and profits from the respective property. Mortgage and construction loans for the periods presented consisted of the following (in thousands):

			Principal		Principal
			Outstanding		Outstanding				Interest
	Face		at		at			Stated Interest	Rate at			Maturity
	Amount		12/31/2012		12/31/2011			Rate	12/31/2012			Date			Amortization
Construction loans
The Grove at Orono	$	15,206	$	10,506	$	-		LIBOR + 275 bps		2.96	%		6/30/2014	⁽¹⁾	Interest only
The Grove at Auburn		16,294		13,157		-		LIBOR + 295 bps		3.16	%		7/22/2014	⁽²⁾	Interest only
The Grove at Flagstaff		19,842		15,331		-		Prime + 25 bps /		3.06	%		12/9/2014	⁽³⁾	Interest only
								LIBOR + 250 bps
The Grove at Muncie		14,567		1		-		LIBOR + 225 bps		2.46	%		7/3/2015	(4)	Interest only
The Grove at Fort Collins		19,073		1		-		LIBOR + 225 bps		2.46	%		7/13/2015	⁽⁵⁾	Interest only
The Grove at Pullman		16,016		-		-		LIBOR + 220 bps		2.41	%		9/5/2015	⁽⁶⁾	Interest only
Construction (three properties)		37,523		-		33,536		LIBOR + 475 bps		N/A	⁽⁷⁾		N/A	⁽⁷⁾	Interest only
Mortgage loans
The Grove at Carrollton and The Grove at Las Cruces		29,790		29,408		29,738		6.13%		6.13	%		10/11/2016		30 years	⁽⁸⁾
The Grove at Huntsville		12,635		12,635		12,635	⁽⁹⁾	LIBOR + 250 bps		2.71	%		1/9/2013	⁽¹⁰⁾	Interest only
The Grove at Stateboro		18,100		18,100		16,091	⁽⁹⁾	4.01%		4.01	%		1/1/2023		30 years
The Grove at Asheville		14,800		14,684		14,800		5.77%		5.77	%		4/11/2017		30 years	⁽⁸⁾
The Grove at Milledgeville		16,250		16,041		16,221		6.12%		6.12	%		10/1/2016		30 years	⁽⁸⁾
The Grove at Ellensburg		16,125		16,125		16,125		5.10%		5.10	%		9/1/2018		30 years	⁽¹¹⁾
The Grove at Nacogdoches		17,160		17,160		17,160		5.01%		5.01	%		9/1/2018		30 years	⁽¹¹⁾
The Grove at Greeley		15,233		15,233		15,233		4.29%		4.29	%		10/1/2018		30 years	⁽¹¹⁾
The Grove at Clarksville		16,350		16,350		-		4.03%		4.03	%		7/1/2022		30 years	⁽¹¹⁾ ⁽¹²⁾
The Grove at Columbia		23,775		23,605		15,375		3.83%		3.83	%		7/1/2022		30 years	⁽¹³⁾
			$	218,337	$	186,914

(1)

The construction loan matures on June 30, 2014, but can be extended until December 31, 2015, subject to certain conditions.

(2)

The construction loan matures on July 22, 2014, but can be extended until October 22, 2015, subject to certain conditions.

(3)

The construction loan matures on December 9, 2014, but can be extended until April 9, 2015, subject to certain conditions.

(4)

The construction loan matures on July 3, 2015, but can be extended until July 3, 2016 and/or July 3, 2017, subject to certain conditions.

(5)

The construction loan matures on July 13, 2015, but can be extended until July 13, 2016 and/or July 13, 2017, subject to certain conditions.

(6)

The construction loan matures on September 5, 2015, but can be extended until September 5, 2016 and/or September 5, 2017, subject to certain conditions.

(7)

Not applicable as the loan was paid off during the first quarter of 2012.

(8)

Loans require interest only payments, plus certain reserves and escrows, that are payable monthly for a period of five years. Monthly payments of principal and interest, plus certain reserve and escrow amounts, are due thereafter until maturity when all principal is due.

(9)

Amounts were originally combined in December 31, 2011.

(10)

Loan was paid off during the first quarter of 2013.

(11)

Interest only for the first two years, followed by 30 year amortization.

(12)

Loan requires interest only payments, plus certain reserves and escrows payable monthly through August 2014, thereafter, principal and interest, plus certain reserves and escrows that are payable monthly until maturity.

(13)

Loan requires monthly payments of principal and interest, plus certain reserve and escrows, are due thereafter until maturity when all principal is due.

Line of Credit

At December 31, 2012, we held a revolving credit facility (the “Credit Facility”) with Citibank, N.A. and certain other parties thereto. The Credit Facility provided for borrowing capacity of up to $200.0 million and included an accordion feature that allowed us to request an increase in the total commitments of an additional $125.0 million to a total commitment of $325.0 million. The Credit Facility was to mature in August 2014 and provided us a one-year extension option, subject to certain terms and conditions. Amounts outstanding under the Credit Facility bore interest at a floating rate equal to, at our election, the Eurodollar Rate or the Base Rate (each as defined in the Credit Facility) plus a spread. The spread depended upon our leverage ratio and ranges from 1.75% to 2.50% for Eurodollar Rate based borrowings and from 0.75% to 1.50% for Base Rate based borrowings. At December 31, 2012, the interest rate on the Credit Facility was 2.49%.

In January 2013, we entered into the second amended and restated credit agreement (the "Second Amended and Restated Credit Agreement") with Citibank, N.A. and certain other lenders (see Note 15). The Second Amended and Restated Credit Agreement provides for a senior unsecured revolving credit facility (the "Revolving Credit Facility") of up to $250.0 million, with a sub-limits of $30 million for swing line loans and $15.0 million for letters of credit. The Second Amended and Restated Credit Agreement also provides for a term loan of $50.0 million (the “Term Loan,” and together with the Revolving Credit Facility, the “Amended Credit Facility”). Unless otherwise terminated pursuant to the terms of the Second Amended and Restated Credit Agreement, the Amended Credit Facility will mature on January 8, 2017, subject to a one-year extension which we may exercise at our option, pursuant to certain terms and conditions, including the payment of an extension fee.

The amount available for us to borrow under the Amended Credit Facility is based on the sum of (a) the lesser of (i) 60.0% of the “as-is” appraised value of our properties that form the borrowing base of the Amended Credit Facility and (ii) the amount that would create a debt service coverage ratio of not less than 1.5, and (b) 50% of the aggregate of the lesser of (i) the book value of each of our development assets (as such term is defined in the Second Amended and Restated Credit Agreement) and (ii) the “as-is” appraised value of each of our development assets, subject to certain limitations in the Second Amended and Restated Credit Agreement.

Additionally, the Amended Credit Facility has an accordion feature that allows us to request an increase in the total commitments from $300 million to $600 million, subject to conditions. Amounts outstanding under the Amended Credit Facility bear interest at a floating rate equal to, at our election, the Eurodollar Rate or the Base Rate (each as defined in the Second Amended and Restated Credit Agreement) plus a spread that depends upon our leverage ratio. The spread for borrowings under the Revolving Credit Facility ranges from 1.75% to 2.50% for Eurodollar Rate based borrowings and from 0.75% to 1.50% for Base Rate based borrowings, and the spread for the Term Loan ranges from 1.70% to 2.45% for Eurodollar Rate based borrowings and from 0.70% to 1.45% for Base Rate based borrowings.

Our ability to borrow under the Amended Credit Facility is subject to its ongoing compliance with a number of customary financial covenants, including:

·

a maximum leverage ratio of not greater than 0.60:1.00;

·

a minimum fixed charge coverage ratio of not less than 1.50:1.00;

·

a minimum ratio of fixed rate debt and debt subject to hedge agreements to total debt of not less than 66.67%;

·

a maximum secured recourse debt ratio of not greater than 20%;

·

a minimum tangible net worth of not less than the sum of $330,788,250 plus an amount equal to 75% of the net proceeds of any additional equity issuances; and

·

a maximum secured debt ratio of not greater than 50% through February 17, 2013 and not greater than 45% on any date thereafter.

Pursuant to the terms of the Amended Credit Facility, we may not pay distributions that exceed the greater of (i) 95.0% of our funds from operations, or (ii) the minimum amount required for us to qualify and maintain our status as a REIT. If a default or event of default occurs and is continuing, we also may be precluded from making certain distributions (other than those required to allow us to qualify and maintain our status as a REIT).

We and certain of our subsidiaries guarantee the obligations under the Amended Credit Facility and we and certain of our subsidiaries have provided a negative pledge against specified assets (including real property), stock and other interests.

The Second Amended and Restated Credit Agreement had the effect of retroactively applying the amended terms, including interest rates, covenants and borrowing capacity limits, to December 31, 2012. At December 31, 2012, we had approximately $134.9 million of borrowing capacity under the Amended Credit Facility and $2.8 million of availability was restricted related to outstanding letters of credit. As of December 31, 2012, we had approximately $72.0 million outstanding under the Amended Credit Facility and were in compliance with the above financial covenants with respect to our Amended Credit Facility.

In February 2013, we amended the Second Amended and Restated Credit Agreement held with Citibank, N.A. and certain other lenders to provide for certain exclusions related to our investments in joint ventures as well as the treatment of certain other investments within the compliance calculation of our secured debt ratio and certain negative covenants.

Schedule of Debt Maturities

Scheduled debt maturities for each of the five years subsequent to December 31, 2012 and thereafter, are as follows (in thousands):

2013	$	86,690	⁽¹⁾
2014		41,583
2015		2,868
2016		46,050
2017		16,128
Thereafter		100,393
	$	293,712

(1)

Includes our Credit Facility. In January 2013, we amended our Credit Facility, thereby extending the maturity date to January 2017, subject to a one-year extension option.

Amortization of deferred financing costs approximated $2.8 million, $1.3 million, $1.6 million, and $0.8 million, for the years ended December 31, 2012 and 2011, for the period from October 19, 2010 through December 31, 2010, and the period from January 1, 2010 through October 18, 2010.

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

+ References+ Details