8.Indebtedness

The Company’s indebtedness was comprised of the following as of December 31, 2015 and 2014 (dollars in thousands):


					Stated Interest		Stated Maturity
	Principal Balance				Rate		Date
	December 31,				December 31,
	2015		2014		2015
249 Central Park Retail(1)	$	15,282	$	15,566	5.99	%	September 8, 2016
Fountain Plaza Retail(1)		7,641		7,783	5.99	%	September 8, 2016
South Retail		6,742		6,867	5.99	%	September 8, 2016
4525 Main Street(2)		31,613		30,870	LIBOR + 1.95	%	January 30, 2017
Encore Apartments(2)		25,184		22,215	LIBOR + 1.95	%	January 30, 2017
North Point Center Note 5(3)		664		685	LIBOR + 2.00	%	February 1, 2017
Oyster Point		6,400		6,274	LIBOR+ 1.40%-2.00	%	February 28, 2017
Harrisonburg Regal		3,463		3,659	6.06	%	June 8, 2017
Commonwealth of Virginia - Chesapeake		4,933		3,585	LIBOR + 1.90	%	August 28, 2017
Hanbury Village Note 1		20,970		21,218	6.67	%	October 11, 2017
Lightfoot Marketplace		7,759		3,484	LIBOR + 1.90	%	November 14, 2017
Sandbridge Commons		9,010		5,892	LIBOR + 1.85	%	January 17, 2018
Columbus Village Note 1(3)		6,429		—	LIBOR + 2.00	%	April 5, 2018
Columbus Village Note 2		2,310		—	LIBOR + 2.00	%	April 5, 2018
Johns Hopkins Village		3,968		—	LIBOR + 1.90	%	July 30, 2018
North Point Center Note 1		9,969		10,149	6.45	%	February 5, 2019
Revolving credit facility		74,000		59,000	LIBOR+ 1.40%-2.00	%	February 20, 2019
Term loan(3)		50,000		—	LIBOR+ 1.35%-1.95	%	February 20, 2020
Socastee Commons		4,957		—	4.57	%	January 6, 2023
North Point Center Note 2		2,662		2,753	7.25	%	September 15, 2025
Smith's Landing		21,226		24,470	4.05	%	June 1, 2035
Liberty Apartments		20,312		20,603	5.66	%	November 1, 2043
The Cosmopolitan		46,519		47,132	3.75	%	July 1, 2051
Broad Creek Shopping Center Note 1		—		4,452	—		—
Broad Creek Shopping Center Note 2		—		8,173	—		—
Broad Creek Shopping Center Note 3		—		3,422	—		—
Commerce Street Retail		—		5,549	—		—
Dick's at Town Center		—		8,216	—		—
Hanbury Village Note 2		—		4,090	—		—
Oceaneering		—		13,490	—		—
Studio 56 Retail		—		2,618	—		—
Tyre Neck Harris Teeter		—		2,437	—		—
Whetstone Apartments		—		16,019	—		—
Total principal balance	$	382,013	$	360,671
Unamortized fair value adjustments		(1,287)		(1,442)
Unamortized debt issuance costs		(3,133)		(2,884)
Indebtedness, net	$	377,593	$	356,345

(1)

Cross collateralized.

(2)

Cross collateralized.

(3)

Subject to an interest rate swap agreement.

The Company’s indebtedness was comprised of the following fixed and variable-rate debt as of December 31, 2015 and 2014 (in thousands):


	December 31,
	2015		2014
Fixed-rate debt	$	159,743	$	144,622
Variable-rate debt		222,270		216,049
Total principal balance	$	382,013	$	360,671

Certain loans require the Company to comply with various financial and other covenants, including the maintenance of minimum debt coverage ratios. As of December 31, 2015, the Company was in compliance with all loan covenants.

Scheduled principal repayments and term-loan maturities during each of the next five years and thereafter are as follows (in thousands):


	Scheduled		Term-
	Principal		Loan		Total
Year	Payments		Maturities		Payments
2016	$	3,365	$	29,281	$	32,646
2017		2,914		100,194		103,108
2018		2,300		20,731		23,031
2019		2,132		83,333		85,465
2020		2,207		50,000		52,207
Thereafter		79,989		5,567		85,556
Total	$	92,907	$	289,106	$	382,013

Prior Credit Facility

On May 13, 2013, the Operating Partnership, as borrower, and the Company, as parent guarantor, entered into a $100.0 million senior secured revolving credit facility. On October 10, 2013, the Operating Partnership increased the aggregate capacity under the credit facility to $155.0 million. The credit facility was scheduled to mature on May 13, 2016; however, the Operating Partnership repaid all amounts due under this credit facility with proceeds from a new credit facility and terminated the prior credit facility on February 20, 2015, as discussed below.

New Credit Facility

On February 20, 2015, the Operating Partnership, as borrower, and the Company, as parent guarantor, entered into a new $200.0 million senior unsecured credit facility that includes a $150.0 million senior unsecured revolving credit facility and a $50.0 million senior unsecured term loan facility. The new credit facility includes an accordion feature that allows the total commitments to be increased to $350.0 million, subject to certain conditions. The new credit facility replaced the prior $155.0 million senior secured revolving credit facility that was scheduled to mature on May 13, 2016. On February 20, 2015, the Operating Partnership borrowed $54.0 million under the revolving credit facility and $50.0 million under the term loan facility to repay in full all outstanding amounts due under the prior credit facility and to repay approximately $39.0 million of other indebtedness secured by the following properties in the Company’s portfolio: (i) Broad Creek Shopping Center, (ii) Commerce Street Retail, (iii) Dick’s at Town Center, (iv) Hanbury Village, (v) Studio 56 Retail and (vi) Tyre Neck Harris Teeter. The Company recognized a $0.2 million loss on extinguishment of debt representing the unamortized debt issuance costs associated with the $39.0 million of other indebtedness repaid on February 20, 2015.

Depending on the Operating Partnership’s total leverage, the revolving credit facility bears interest at LIBOR plus 1.40% to 2.00% and the term loan facility bears interest at LIBOR plus 1.35% to 1.95%. As of December 31, 2015, the interest rates on the revolving credit facility and the term loan facility were 2.17% and 2.12%, respectively. If the Company attains investment grade credit ratings from S&P and Moody’s, the Operating Partnership may elect to have borrowings become subject to interest rates based on such credit ratings.

The Operating Partnership is also obligated to pay an unused commitment fee of 15 or 25 basis points on the unused portions of the commitments under the new credit facility, depending on the amount of borrowings under the new credit facility.

The revolving credit facility has a scheduled maturity date of February 20, 2019, with a one-year extension option, subject to certain conditions, and the term loan facility has a scheduled maturity date of February 20, 2020. The Operating Partnership may, at any time, voluntarily prepay any loan under the new credit facility in whole or in part without premium or penalty.

The amount permitted to be borrowed under the new credit facility, together with all of the Operating Partnership’s other unsecured indebtedness is generally limited to the lesser of: (i) 60% of the value of the unencumbered borrowing base properties, (ii) the maximum amount of principal that would result in a debt service coverage ratio of 1.50 to 1.0, and (iii) the maximum aggregate loan commitment, which was $200.0 million as of December 31, 2015.

The new credit facility requires the Operating Partnership to comply with various financial covenants, affirmative covenants and other restrictions, including the following:

Total leverage ratio of the Company of not more than 60%;

Ratio of adjusted EBITDA to fixed charges of the Company of not less than 1.50 to 1.0;

Tangible net worth of not less than the sum of $220.0 million and 75% of the net equity proceeds received after December 31, 2014;

Ratio of variable rate indebtedness to total asset value of not more than 30%;

Ratio of secured indebtedness to total asset value of not more than 45%; and

Ratio of secured recourse debt to total asset value of not more than 25%.

The new credit facility limits the Company’s ability to pay cash dividends. However, so long as no default or event of default exists, the credit agreement allows the Company to pay cash dividends with respect to any 12-month period in an amount not to exceed the greater of: (i) 95% of adjusted funds from operations (as defined in the credit agreement) or (ii) the amount required for the Company (a) to maintain its status as a REIT and (b) to avoid income or excise tax. If certain defaults or events of default exist, the Company may pay cash dividends with respect to any 12-month period to the extent necessary to maintain its status as a REIT. The new credit facility also restricts the amount of capital that the Operating Partnership can invest in specific categories of assets, such as unimproved land holdings, development properties, notes receivable, mortgages, mezzanine loans and unconsolidated affiliates.

Subsequent to December 31, 2015

On January 5, 2016, the Company increased the borrowings under the senior unsecured term loan facility to $75.0 million and increased the total capacity of the senior unsecured credit facility to $225.0 million, pursuant to the accordion feature of the credit facility.

Other 2015 Financing Activity

On May 20, 2015, the Company repaid the $17.8 million construction loan secured by Whetstone Apartments and recognized a loss on extinguishment of debt of $0.1 million representing unamortized debt issuance costs.

On May 27, 2015, the Company repaid the existing $24.4 million mortgage secured by Smith’s Landing and refinanced the property with a new $21.6 million loan that bears interest at 4.05% and matures on June 1, 2035. As a result of the refinancing, the Company recognized a $0.1 million loss on extinguishment of debt representing the unamortized debt issuance costs associated with the repaid mortgage.

On July 1, 2015, the Company assumed debt with an outstanding principal balance of $5.0 million in connection with the acquisition of Socastee Commons. The mortgage bears interest at 4.57% and matures on January 6, 2023.

On July 10, 2015, the Company assumed two loans with an aggregate outstanding principal balance of $8.8 million in connection with the acquisition of Columbus Village. Both loans bear interest at LIBOR plus 2.00% and mature on April 5, 2018.

On July 30, 2015, the Company entered into a $50.0 million loan agreement to fund the development and construction of Johns Hopkins Village. The construction loan bears interest at LIBOR plus 1.90% and matures on July 30, 2018.

On September 1, 2015, the Company repaid the $6.1 million mortgage secured by the Oyster Point office building.

On October 6, 2015, the Operating Partnership entered into a $6.4 million note secured by the Oyster Point office building, which bears interest at LIBOR plus 1.40% to 2.00% and matures on February 28, 2017.

On October 30, 2015, the Company repaid the $18.7 million construction loan secured by the Oceaneering International building and recognized a loss on debt extinguishment of debt of $0.1 million representing unamortized debt issuance costs.

Other 2014 Financing Activity

On January 17, 2014, the Company assumed $17.0 million of debt at fair value in connection with the acquisition of Liberty Apartments. The fair value adjustment to the assumed debt of Liberty Apartments was a $1.5 million discount. The outstanding principal balance of the assumed debt of Liberty Apartments at the acquisition date was $18.5 million. On June 13, 2014, the Company borrowed the remaining $2.4 million available under the Liberty Apartments loan. The loan amortizes over 30 years, bears interest at 5.66% and matures on November 1, 2043.

On February 28, 2014, the Company closed on a $19.5 million loan to fund the development and construction of the Oceaneering International facility. The construction loan bears interest at LIBOR plus 1.75% and matures on February 28, 2018.

On August 15, 2014, the Company defeased the loan secured by Dimmock Square for $10.1 million.

On August 28, 2014, the Company closed on a $5.4 million loan to fund the development and construction of a new administrative building for the Commonwealth of Virginia. The construction loan bears interest at LIBOR plus 1.90% and matures on August 28, 2017.

On November 3, 2014, the Company repaid North Point Center Note 4 for $1.0 million.

On November 14, 2014, the Company closed on a $15.0 million loan to fund the development and construction of Lightfoot Marketplace. The construction loan bears interest at LIBOR plus 1.90% and matures on November 14, 2017.