Debt

All of the Company's indebtedness is debt of the Operating Partnership. AH4R is not directly obligated under any indebtedness, but guarantees some of the debt of the Operating Partnership. The following table presents the Company’s debt as of September 30, 2018, and December 31, 2017 (in thousands):



			Outstanding Principal Balance
	Interest Rate (1)	Maturity Date	September 30, 2018			December 31, 2017
AH4R 2014-SFR2 securitization	4.42%	October 9, 2024	$	492,478		$	496,326
AH4R 2014-SFR3 securitization	4.40%	December 9, 2024	508,080			512,041
AH4R 2015-SFR1 securitization (2)	4.14%	April 9, 2045	533,578			537,723
AH4R 2015-SFR2 securitization (3)	4.36%	October 9, 2045	463,552			467,267
Total asset-backed securitizations			1,997,688			2,013,357
Unsecured senior notes (4)	4.08%	February 15, 2028	500,000			—
Exchangeable senior notes	3.25%	November 15, 2018	115,000			115,000
Secured note payable (5)	N/A	N/A	—			48,859
Revolving credit facility (6)	3.46%	June 30, 2022	—			140,000
Term loan facility (7)	3.61%	June 30, 2022	100,000			200,000
Total debt (8)			2,712,688			2,517,216
Unamortized discounts on unsecured and exchangeable senior notes			(2,751		)	(895		)
Equity component of exchangeable senior notes			(358		)	(2,408		)
Deferred financing costs, net (9)			(37,876		)	(38,026		)
Total debt per balance sheet			$	2,671,703		$	2,475,887


(1)	Interest rates are as of September 30, 2018. Unless otherwise stated, interest rates are fixed percentages.


(2)	The AH4R 2015-SFR1 securitization has a maturity date of April 9, 2045, with an anticipated repayment date of April 9, 2025.


(3)	The AH4R 2015-SFR2 securitization has a maturity date of October 9, 2045, with an anticipated repayment date of October 9, 2025.


(4)	The stated interest rate on the unsecured senior notes is 4.25%, which was effectively hedged to yield an interest rate of 4.08%.


(5)	The secured note payable was paid off in full during the second quarter of 2018.

(6)

The revolving credit facility provides for a borrowing capacity of up to $800.0 million, with a fully extended maturity date of June 2022, and bears interest at a LIBOR rate plus a margin ranging from 0.825% to 1.55% or a base rate (generally determined according to a prime rate or federal funds rate) plus a margin ranging from 0.00% to 0.55%. The interest rate stated represents the applicable spread for LIBOR based borrowings as of September 30, 2018, plus 1-month LIBOR.

(7)

The term loan component of our credit facility matures June 2022, and bears interest at a LIBOR rate plus a margin ranging from 0.90% to 1.75% or a base rate (generally determined according to a prime rate or federal funds rate) plus a margin ranging from 0.00% to 0.75%. The interest rate stated represents the applicable spread for LIBOR based borrowings as of September 30, 2018, plus 1-month LIBOR.


(8)	The Company was in compliance with all debt covenants associated with its asset-backed securitizations, unsecured senior notes, secured note payable, revolving credit facility and term loan facility as of September 30, 2018, and December 31, 2017.

(9)

Deferred financing costs relate to our asset-backed securitizations, term loan facility and unsecured senior notes. Amortization of deferred financing costs was $1.5 million and $1.4 million for the three months ended September 30, 2018 and 2017, respectively, and $4.4 million and $5.0 million for the nine months ended September 30, 2018 and 2017, respectively, which has been included in gross interest, prior to interest capitalization.

Early Extinguishment of Debt

During the second quarter of 2018, the Company paid off the outstanding principal on the secured note payable of approximately $48.4 million, which resulted in $0.5 million of charges that were included in loss on early extinguishment of debt within the condensed consolidated statements of operations. The payoff of the secured note payable also resulted in the release of the 572 homes pledged as collateral and $2.1 million of restricted cash for lender requirements. Also during the second quarter of 2018, the Company paid down $100.0 million on our term loan facility, which resulted in $0.9 million of charges related to the write-off of unamortized deferred financing costs that were included in loss on early extinguishment of debt within the condensed consolidated statements of operations. During the second quarter of 2017, the Company paid off the outstanding principal on the AH4R 2014-SFR1 asset-backed securitization of approximately $455.4 million, which resulted in $6.6 million of charges primarily related to the write-off of unamortized deferred financing costs that were included in loss on early extinguishment of debt within the condensed consolidated statements of operations. The payoff of the AH4R 2014-SFR1 asset-backed securitization also resulted in the release of the 3,799 homes pledged as collateral and $9.4 million of restricted cash for lender requirements.

Debt Maturities

The following table summarizes the contractual maturities of the Company's debt on a fully extended basis as of September 30, 2018 (in thousands):



Remaining 2018	$	120,179
2019	20,714
2020	20,714
2021	20,714
2022	120,714
Thereafter	2,409,653
Total debt	2,712,688
Unamortized discounts and deferred financing costs (1)	(40,985		)
Total debt per balance sheet	$	2,671,703


(1)	Includes the unamortized discounts on the unsecured and exchangeable senior notes, the equity component of the exchangeable senior notes and deferred financing costs, net.

Unsecured Senior Notes

In February 2018, the Operating Partnership issued $500.0 million of 4.25% unsecured senior notes with a maturity date of February 15, 2028 (the "2028 Notes"). Interest on the 2028 Notes is payable semi-annually in arrears on February 15 and August 15 of each year, commencing on August 15, 2018. The Operating Partnership received net proceeds of $494.0 million from this issuance, after underwriting fees of approximately $3.2 million and a $2.8 million discount, and before estimated offering costs of $1.9 million. The net proceeds from this issuance were used for general corporate purposes, including, without limitation, acquisitions of additional properties, the repayment of outstanding indebtedness, capital expenditures, the expansion, redevelopment and/or improvement of our properties, working capital and other general purposes, including repurchases of securities. The 2028 Notes are the Operating Partnership's unsecured and unsubordinated obligation and rank equally in right of payment with all of the Operating Partnership’s existing and future unsecured and unsubordinated indebtedness. The Operating Partnership may redeem the 2028 Notes at any time, in whole or in part, at the applicable redemption price specified in the Indenture with respect to the 2028 Notes. If the 2028 Notes are redeemed on or after November 15, 2027 (three months prior to the maturity date), the redemption price will be equal to 100% of the principal amount of the 2028 Notes being redeemed plus accrued and unpaid interest thereon to, but not including, the redemption date. The 2028 Notes have been initially guaranteed by American Residential Properties OP, L.P., (the “Guarantor Subsidiary”), a 100% owned subsidiary of the Operating Partnership, but such guarantee will be automatically released at the time that the Guarantor Subsidiary no longer guarantees our credit facility. Including the effect of a cash flow hedging instrument settled in February 2018 (see Note 13), the 2028 Notes yield an effective interest rate of 4.08%.

Exchangeable Senior Notes, Net

The exchangeable senior notes, which were assumed in connection with the Company's merger (the "ARPI Merger") with American Residential Properties, Inc. ("ARPI") during 2016, contain an exchange settlement feature, which provides that the exchangeable senior notes may, under certain circumstances, be exchangeable for cash, our Class A common shares or a combination of cash and our Class A common shares, at the option of the Operating Partnership, based on an initial exchange rate of 46.9423 shares of ARPI's common stock per $1,000 principal amount of the notes. The adjusted initial exchange rate would be 53.2795 of our Class A common shares per $1,000 principal amount of the notes, based on the 1.135 exchange ratio of ARPI shares to our shares resulting from the ARPI Merger. The current exchange rate as of September 30, 2018, was 55.6688 of the Company's Class A common shares per $1,000 principal amount of the notes. The exchange rate is adjusted based on the Company's Class A common share price and distributions to common shareholders. In August 2018, the Operating Partnership provided notice to the holders of the exchangeable senior notes that we have elected the cash settlement option for the payoff of the exchangeable senior notes, which mature on November 15, 2018.

Interest Expense

The following table displays our total gross interest, which includes unused commitment and other fees on our credit facilities and amortization of deferred financing costs, the discounts on senior notes and the fair value of the exchange settlement feature of the exchangeable senior notes, and capitalized interest for the three and nine months ended September 30, 2018 and 2017 (in thousands):



	For the Three Months Ended						For the Nine Months Ended
	September 30, 2018			September 30, 2017			September 30, 2018			September 30, 2017
Gross interest	$	32,344		$	28,125		$	97,422		$	90,044
Capitalized interest	(1,414		)	(1,533		)	(5,213		)	(3,171		)
Interest expense	$	30,930		$	26,592		$	92,209		$	86,873