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SECURED AND UNSECURED DEBT, NET
3 Months Ended
Mar. 31, 2020
SECURED AND UNSECURED DEBT, NET  
SECURED AND UNSECURED DEBT, NET

7. SECURED AND UNSECURED DEBT, NET

The following is a summary of our secured and unsecured debt at March 31, 2020 and December 31, 2019 (dollars in thousands):

Principal Outstanding

As of March 31, 2020

Weighted

Weighted

Average

Average

Number of

March 31, 

December 31, 

Interest

Years to

Communities

    

2020

    

2019

    

Rate

    

Maturity

    

Encumbered

Secured Debt:

  

  

  

  

  

Fixed Rate Debt

 

  

 

  

 

  

 

  

 

  

Mortgage notes payable (a)

$

883,249

$

884,869

 

3.61

%  

5.9

 

15

Credit facilities (b)

 

203,429

 

204,590

 

4.90

%  

2.8

 

4

Deferred financing costs and other non-cash adjustments

 

30,585

 

33,046

 

  

 

  

 

  

Total fixed rate secured debt, net

 

1,117,263

 

1,122,505

 

3.85

%  

5.3

 

19

Variable Rate Debt

 

  

 

  

 

  

 

  

 

  

Tax-exempt secured notes payable (c)

 

27,000

 

27,000

 

1.91

%  

12.0

 

1

Deferred financing costs

 

(62)

 

(64)

 

  

 

  

 

  

Total variable rate secured debt, net

 

26,938

 

26,936

 

1.91

%  

12.0

 

1

Total Secured Debt, net

 

1,144,201

 

1,149,441

 

3.80

%  

5.5

 

20

Unsecured Debt:

 

  

 

  

 

  

 

  

 

  

Variable Rate Debt

 

  

 

  

 

  

 

  

 

  

Borrowings outstanding under unsecured credit facility due January 2023 (d) (m)

 

50,000

 

 

1.75

%  

2.8

 

  

Borrowings outstanding under unsecured commercial paper program due April 2020 (e) (m) (n)

215,000

300,000

1.58

%  

0.1

Borrowings outstanding under unsecured working capital credit facility due January 2021 (f)

 

24,797

 

16,583

 

1.82

%  

0.8

 

  

Term Loan due September 2023 (d) (m)

 

35,000

 

35,000

 

2.48

%  

3.5

 

  

Fixed Rate Debt

 

  

 

  

 

  

 

  

 

  

1.93% Term Loan due September 2023 (d) (m)

315,000

 

315,000

 

1.93

%  

3.5

3.75% Medium-Term Notes due July 2024 (net of discounts of $443 and $470, respectively) (g) (m)

 

299,557

 

299,530

 

3.75

%  

4.3

 

  

8.50% Debentures due September 2024

 

15,644

 

15,644

 

8.50

%  

4.5

 

  

4.00% Medium-Term Notes due October 2025 (net of discounts of $379 and $396, respectively) (h) (m)

 

299,621

 

299,604

 

4.00

%  

5.5

 

  

2.95% Medium-Term Notes due September 2026 (m)

 

300,000

 

300,000

 

2.95

%  

6.4

 

  

3.50% Medium-Term Notes due July 2027 (net of discounts of $511 and $529, respectively) (m)

299,489

299,471

3.50

%  

7.3

3.50% Medium-Term Notes due January 2028 (net of discounts of $924 and $954, respectively) (m)

299,076

299,046

3.50

%  

7.8

4.40% Medium-Term Notes due January 2029 (net of discounts of $5 and $5, respectively) (i) (m)

299,995

299,995

4.40

%  

8.8

3.20% Medium-Term Notes due January 2030 (net of premiums of $13,442 and $2,281, respectively) (j) (m)

613,442

402,281

3.20

%  

9.8

3.00% Medium-Term Notes due August 2031 (net of discounts of $1,099 and $1,123, respectively) (k) (m)

398,901

398,877

3.00

%  

11.4

3.10% Medium-Term Notes due November 2034 (net of discounts of $1,287 and $1,309, respectively) (l) (m)

298,713

298,691

3.10

%  

14.6

Other

 

12

 

13

 

  

 

  

 

  

Deferred financing costs

 

(23,310)

 

(21,652)

 

  

 

  

 

  

Total Unsecured Debt, net

 

3,740,937

 

3,558,083

 

3.29

%  

7.5

 

  

Total Debt, net

$

4,885,138

$

4,707,524

 

3.28

%  

7.1

 

  

For purposes of classification of the above table, variable rate debt with a derivative financial instrument designated as a cash flow hedge is deemed as fixed rate debt due to the Company having effectively established a fixed interest rate for the underlying debt instrument.

Our secured debt instruments generally feature either monthly interest and principal or monthly interest-only payments with balloon payments due at maturity. As of March 31, 2020, secured debt encumbered $2.1 billion or 16.6% of UDR’s total real estate owned based upon gross book value ($10.7 billion or 83.4% of UDR’s real estate owned based on gross book value is unencumbered).

(a) At March 31, 2020, fixed rate mortgage notes payable are generally due in monthly installments of principal and interest and mature at various dates from August 2020 through February 2030 and carry interest rates ranging from 2.70% to 4.35%.

The Company will from time to time acquire properties subject to fixed rate debt instruments. In those situations, the Company records the debt at its estimated fair value and amortizes any difference between the fair value and par value to interest expense over the life of the underlying debt instrument.

(b) UDR had one secured credit facility with New York Life with an outstanding balance of $203.4 million at March 31, 2020. The New York Life credit facility matures in January 2023 and bears interest at a fixed rate of 4.90%.

During the three months ended March 31, 2020 and 2019, the Company had $2.6 million and $0.6 million, respectively, of amortization of the fair market adjustment of debt assumed in the acquisition of properties inclusive of its fixed rate mortgage notes payable and credit facilities, which was included in Interest expense on the Consolidated Statements of Operations. The unamortized fair market adjustment was a net premium of $32.7 million and $35.3 million at March 31, 2020 and December 31, 2019, respectively.

(c) The variable rate mortgage note payable secures a tax-exempt housing bond issue that matures in March 2032. Interest on this note is payable in monthly installments. As of March 31, 2020, the variable interest rate on the mortgage note was 1.91%.
(d) The Company has a $1.1 billion unsecured revolving credit facility (the “Revolving Credit Facility”) and a $350.0 million unsecured term loan (the “Term Loan”). The credit agreement for these facilities (the “Credit Agreement”) allows the total commitments under the Revolving Credit Facility and the total borrowings under the Term Loan to be increased to an aggregate maximum amount of up to $2.0 billion, subject to certain conditions, including obtaining commitments from one or more lenders. The Revolving Credit Facility has a scheduled maturity date of January 31, 2023, with two six-month extension options, subject to certain conditions. The Term Loan has a scheduled maturity date of September 30, 2023.

Based on the Company’s current credit rating, the Revolving Credit Facility has an interest rate equal to LIBOR plus a margin of 82.5 basis points and a facility fee of 15 basis points, and the Term Loan has an interest rate equal to LIBOR plus a margin of 90 basis points. Depending on the Company’s credit rating, the margin under the Revolving Credit Facility ranges from 75 to 145 basis points, the facility fee ranges from 10 to 30 basis points, and the margin under the Term Loan ranges from 80 to 165 basis points.

The Credit Agreement contains customary representations and warranties and financial and other affirmative and negative covenants. The Credit Agreement also includes customary events of default, in certain cases subject to customary periods to cure. The occurrence of an event of default, following the applicable cure period, would permit the lenders to, among other things, declare the unpaid principal, accrued and unpaid interest and all other amounts payable under the Credit Agreement to be immediately due and payable.

The following is a summary of short-term bank borrowings under the Revolving Credit Facility at March 31, 2020 and December 31, 2019 (dollars in thousands):

    

March 31, 

    

December 31, 

 

2020

 

2019

Total revolving credit facility

$

1,100,000

$

1,100,000

Borrowings outstanding at end of period (1)

 

50,000

 

Weighted average daily borrowings during the period ended

 

11,538

 

55

Maximum daily borrowings during the period ended

 

50,000

 

20,000

Weighted average interest rate during the period ended

 

1.8

%  

 

2.6

%

Interest rate at end of the period

 

1.8

%  

 

%

(1)Excludes $2.5 million and $2.9 million of letters of credit at March 31, 2020 and December 31, 2019, respectively.
(e) The Company has an unsecured commercial paper program. Under the terms of the program, the Company may issue unsecured commercial paper up to a maximum aggregate amount outstanding of $500.0 million. The notes are sold under customary terms in the United States commercial paper market and rank pari passu with all of the Company’s other unsecured indebtedness. The notes are fully and unconditionally guaranteed by the Operating Partnership.

The following is a summary of short-term bank borrowings under the unsecured commercial paper program at March 31, 2020 and December 31, 2019 (dollars in thousands):

    

March 31, 

    

December 31, 

 

2020

2019

 

Total unsecured commercial paper program

 

$

500,000

$

500,000

Borrowings outstanding at end of period

 

215,000

 

300,000

Weighted average daily borrowings during the period ended

 

346,978

 

173,353

Maximum daily borrowings during the period ended

 

500,000

 

435,000

Weighted average interest rate during the period ended

 

1.8

%  

 

2.5

%

Interest rate at end of the period

 

1.6

%  

 

2.0

%

(f) The Company has a working capital credit facility, which provides for a $75.0 million unsecured revolving credit facility (the “Working Capital Credit Facility”) with a scheduled maturity date of January 15, 2021. Based on the Company’s current credit rating, the Working Capital Credit Facility has an interest rate equal to LIBOR plus a margin of 82.5 basis points. Depending on the Company’s credit rating, the margin ranges from 75 to 145 basis points.

The following is a summary of short-term bank borrowings under the Working Capital Credit Facility at March 31, 2020 and December 31, 2019 (dollars in thousands):

    

March 31, 

    

December 31, 

 

2020

2019

 

Total working capital credit facility

$

75,000

$

75,000

Borrowings outstanding at end of period

 

24,797

 

16,583

Weighted average daily borrowings during the period ended

 

25,212

 

23,487

Maximum daily borrowings during the period ended

 

46,419

 

66,170

Weighted average interest rate during the period ended

 

2.2

%  

 

3.1

%

Interest rate at end of the period

 

1.8

%  

 

2.6

%

(g) The Company previously entered into forward starting interest rate swaps to hedge against interest rate risk on $100.0 million of this debt. The all-in weighted average interest rate, inclusive of the impact of these interest rate swaps, was 3.69%.
(h) The Company previously entered into forward starting interest rate swaps to hedge against interest rate risk on $200.0 million of this debt. The all-in weighted average interest rate, inclusive of the impact of these interest rate swaps, was 4.53%.
(i) The Company previously entered into forward starting interest rate swaps to hedge against interest rate risk on $150.0 million of this debt. The all-in weighted average interest rate, inclusive of the impact of these interest rate swaps, was 4.27%.
(j) The Company previously entered into forward starting interest rate swaps to hedge against the interest rate risk of this debt. The all-in weighted average interest rate, inclusive of the impact of these interest rate swaps, was 3.42% for the initial $300.0 million issued. In connection with the additional $100.0 million issued in October 2019, the Company entered into treasury lock agreements to hedge against interest rate risk on all of this debt. The all-in weighted average interest rate, inclusive of the impact of the treasury locks, was 3.24% for the 2030 notes.

In February 2020, the Company issued $200.0 million of 3.20% senior unsecured medium-term notes due 2030. Interest is payable semi-annually in arrears on January 15 and July 15 of each year, beginning on July 15, 2020. The notes were priced at 105.660% of the principal amount at issuance. This was a further issuance of the 2030 notes, and forms a single series with, the $300.0 million aggregate principal amount of the Company’s 3.20% notes due 2030 that were issued in July 2019 and the $100.0 million aggregate principal amount of the Company’s 3.20% notes due 2030 that were issued in October 2019. As of the completion of the offering, the aggregate principal amount of outstanding 2030 notes was $600.0 million. 

(k) The Company entered into a treasury lock agreement to hedge against interest rate risk on $150.0 million of this debt. The all-in weighted average interest rate, inclusive of the impact of the treasury lock, was 3.01%.
(l) The Company previously entered into forward starting interest rate swaps to hedge against the interest rate risk of this debt. The all-in weighted average interest rate, inclusive of the impact of these interest rate swaps, was 3.13%.
(m) The Operating Partnership is the guarantor of this debt.

The aggregate maturities, including amortizing principal payments on secured and unsecured debt, of total debt for the next ten calendar years subsequent to March 31, 2020 are as follows (dollars in thousands):

    

Total Fixed

    

Total Variable

    

Total 

    

Total 

    

Total 

Year

Secured Debt

Secured Debt

Secured Debt

Unsecured Debt

Debt

2020

$

112,592

$

$

112,592

$

215,000

(a)

$

327,592

2021

8,763

8,763

24,797

33,560

2022

 

9,159

 

 

9,159

 

 

9,159

2023

 

295,965

 

 

295,965

 

400,000

 

695,965

2024

 

95,280

 

 

95,280

 

315,644

 

410,924

2025

 

173,189

 

 

173,189

 

300,000

 

473,189

2026

 

51,070

 

 

51,070

 

300,000

 

351,070

2027

 

1,111

 

 

1,111

 

300,000

 

301,111

2028

 

122,465

 

 

122,465

 

300,000

 

422,465

2029

 

144,584

 

 

144,584

 

300,000

 

444,584

Thereafter

 

72,500

 

27,000

 

99,500

 

1,300,000

 

1,399,500

Subtotal

 

1,086,678

 

27,000

 

1,113,678

 

3,755,441

 

4,869,119

Non-cash (b)

 

30,585

 

(62)

 

30,523

 

(14,504)

 

16,019

Total

$

1,117,263

$

26,938

$

1,144,201

$

3,740,937

$

4,885,138

(a)All unsecured debt due in the remainder of 2020 is related to the Company’s commercial paper program.
(b)Includes the unamortized balance of fair market value adjustments, premiums/discounts and deferred financing costs. The Company amortized $1.0 million and $1.0 million, respectively, during the three months ended March 31, 2020 and 2019, of deferred financing costs into Interest expense.

We were in compliance with the covenants of our debt instruments at March 31, 2020.

(n) In April 2020, the entire $215.0 million of outstanding unsecured commercial paper as of March 31, 2020 was repaid at maturity with draws on the Company’s Revolving Credit Facility and Working Capital Credit Facility.