Indebtedness

The Company’s indebtedness was comprised of the following as of December 31, 2016 and 2015 (dollars in thousands):



							Stated Interest		Stated Maturity
	Principal Balance						Rate		Date
	December 31,						December 31,
	2016			2015			2016
249 Central Park Retail (1)	$	17,076		$	15,282		LIBOR + 1.95%		August 8, 2021
Fountain Plaza Retail (1)	10,281			7,641			LIBOR + 1.95%		August 8, 2021
South Retail (1)	7,493			6,742			LIBOR + 1.95%		August 8, 2021
4525 Main Street (2)	32,034			31,613			3.25	%	September 10, 2021
Encore Apartments (2)	24,966			25,184			3.25	%	September 10, 2021
North Point Center Note 5 (3)	643			664			LIBOR + 2.00%		February 1, 2017
Oyster Point	—			6,400			LIBOR+1.40%-2.00%		February 28, 2017
Harrisonburg Regal	3,256			3,463			6.06	%	June 8, 2017
Commonwealth of Virginia - Chesapeake	4,933			4,933			LIBOR + 1.90%		August 28, 2017
Hanbury Village Note 1	20,709			20,970			6.67	%	October 11, 2017
Lightfoot Marketplace	12,194			7,759			LIBOR + 1.90%		November 14, 2017
Sandbridge Commons	9,376			9,010			LIBOR + 1.85%		January 17, 2018
Southgate Square	21,150			—			LIBOR + 2.00%		April 29, 2021
Columbus Village Note 1 (3)	6,258			6,429			LIBOR + 2.00%		April 5, 2018
Columbus Village Note 2	2,266			2,310			LIBOR + 2.00%		April 5, 2018
Johns Hopkins Village	43,841			3,968			LIBOR + 1.90%		July 30, 2018
North Point Center Note 1	9,776			9,969			6.45	%	February 5, 2019
Revolving credit facility	107,000			74,000			LIBOR+1.40%-2.00%		February 20, 2019
Term loan(3)	50,000			50,000			LIBOR+1.35%-1.95%		February 20, 2020
Term loan	50,000			—			LIBOR+1.35%-1.95%		February 20, 2020
Socastee Commons	4,866			4,957			4.57	%	January 6, 2023
North Point Center Note 2	2,564			2,662			7.25	%	September 15, 2025
Smith's Landing	20,511			21,226			4.05	%	June 1, 2035
Liberty Apartments	20,005			20,312			5.66	%	November 1, 2043
The Cosmopolitan	45,884			46,519			3.75	%	July 1, 2051
Total principal balance	$	527,082		$	382,013
Unamortized fair value adjustments	(1,250		)	(1,287		)
Unamortized debt issuance costs	(3,652		)	(3,133		)
Indebtedness, net	$	522,180		$	377,593

________________________________________


(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, 2016 and 2015 (in thousands):



	December 31,
	2016		2015
Fixed-rate debt	$	241,472	$	159,743
Variable-rate debt	285,610		222,270
Total principal balance	$	527,082	$	382,013

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, 2016, 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):



Year	Scheduled Principal Payments		Term-Loan Maturities		Total Payments
2017	$	3,778	$	41,432	$	45,210
2018	3,655		60,873		64,528
2019	3,485		116,333		119,818
2020	4,482		100,000		104,482
2021	3,588		106,274		109,862
Thereafter	77,615		5,567		83,182
Total	$	96,603	$	430,479	$	527,082

Credit Facility

On February 20, 2015, the Operating Partnership, as borrower, and the Company, as parent guarantor, entered into a $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 credit facility includes an accordion feature that allows the total commitments to be increased to $350.0 million, subject to certain conditions. On January 5, 2016 and March 31, 2016, the Company increased the total borrowing capacity to $225.0 million and $250.0 million, respectively. The credit facility replaced the prior $155.0 million senior secured revolving credit facility that was scheduled to mature on May 13, 2016.

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, 2016, the interest rates on the revolving credit facility and the term loan facility were 2.32% and 2.27%, 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 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 credit facility in whole or in part without a material 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 $250.0 million as of December 31, 2016.

The 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% (or 65% for the two consecutive quarters following any acquisition that is equal to or greater than 10% of our total asset value (as defined in the credit agreement), but only up to two times during the term of the credit facility);


•	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 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 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, 2016

On February 1, 2017, the Company increased the borrowings under the senior unsecured term loan facility to $125.0 million and increased the total capacity of the senior unsecured credit facility to $275.0 million, pursuant to the accordion feature of the credit facility.

On February 1, 2017, the Company paid off the North Point Center Note 5 in full.

On February 24, 2017, the Company secured a $29.8 million construction loan for the Harding Place project in Charlotte, North Carolina.

Other 2016 Financing Activity

On August 8, 2016, the Company repaid the existing $15.1 million mortgage loan secured by 249 Central Park Retail, the $6.7 million mortgage loan on South Retail and the $7.6 million mortgage loan on Fountain Plaza and refinanced them with a $35.0 million five-year term mortgage loan that bears interest at LIBOR plus 1.95% and matures on August 8, 2021. The new mortgage loan is collateralized by all three properties. The loss on extinguishment of debt recognized on the refinancing was less than $0.1 million.

On August 30, 2016, the Company repaid the existing $31.6 million construction loan secured by 4525 Main Street and the $25.2 million construction loan on Encore Apartments and refinanced them with a $57.0 million five-year term mortgage loan that bears interest at 3.25% and matures on September 10, 2021. The new mortgage is collateralized by both properties. The loss on extinguishment of debt recognized on the refinancing was less than $0.1 million for the year ended December 31, 2016.

During the year ended December 31, 2016, the Company borrowed $44.4 million under its construction loans to fund new development and construction.

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. This note was paid in full in conjunction with the sale of the Oyster Point office building.

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.