Debt (United Dominion Reality.L.P [Member])

6 Months Ended

Jun. 30, 2011

United Dominion Reality.L.P [Member]

DEBT

5. DEBT

Our secured debt instruments generally feature either monthly interest and principal or monthly interest-only payments with balloon payments due at maturity. For purposes of classification in the following table, variable rate debt with a derivative financial instrument designated as a cash flow hedge is deemed as fixed rate debt due to the Operating Partnership having effectively established the fixed interest rate for the underlying debt instrument. Secured debt consists of the following as of June 30, 2011 (dollars in thousands):

					2011
	Principal Outstanding				Weighted			Weighted		Number of
	June 30,		December 31		Average			Average		Communities
	2011		2010		Interest Rate			Years to Maturity		Encumbered
Fixed Rate Debt
Mortgage notes payable	$	436,595	$	192,205		5.39	%		4.3		7
Tax-exempt secured notes payable		—		13,325		N/A			—		—
Fannie Mae credit facilities		560,993		560,993		5.21	%		5.9		9
Total fixed rate secured debt		997,588		766,523		5.29	%		5.2		16
Variable Rate Debt
Mortgage notes payable		69,317		100,590		2.16	%		3.3		3
Tax-exempt secured note payable		27,000		27,000		0.77	%		18.7		1
Fannie Mae credit facilities		175,948		175,948		1.86	%		4.2		17
Total variable rate secured debt		272,265		303,538		1.83	%		5.4		21
Total secured debt	$	1,269,853	$	1,070,061		4.55	%		5.2		37

As of June 30, 2011, the General Partner had secured credit facilities with Fannie Mae with an aggregate commitment of $1.4 billion with $1.2 billion outstanding. The Fannie Mae credit facilities are for an initial term of 10 years, bear interest at floating and fixed rates, and certain variable rate facilities can be extended for an additional five years at the General Partner’s option. At June 30, 2011, $895.9 million of the outstanding balance was fixed at a weighted average interest rate of 5.32% and the remaining balance of $260.5 million on these facilities had a weighted average variable interest rate of 1.61%. $736.9 million of these credit facilities were allocated to the Operating Partnership at June 30, 2011 based on the ownership of the assets securing the debt.

	June 30, 2011			December 31, 2010
	(dollar amounts in thousands)
Borrowings outstanding	$	736,941		$	736,941
Weighted average borrowings during the period ended		737,314			763,040
Maximum daily borrowings during the period		737,697			770,021
Weighted average interest rate during the period ended		4.5	%		4.5	%
Interest rate at the end of the period		4.4	%		4.4	%

The Operating Partnership may from time to time acquire properties subject to fixed rate debt instruments. In those situations, management will record the secured debt at its estimated fair value and amortize any difference between the fair value and par to interest expense over the life of the underlying debt instrument. The unamortized fair value adjustment of the fixed rate debt instruments on the Operating Partnership’s properties was a net premium/(discount) of $19.8 million and ($1.1 million) at June 30, 2011 and December 31, 2010, respectively.

Fixed Rate Debt

Mortgage notes payable. Fixed rate mortgage notes payable are generally due in monthly installments of principal and interest and mature at various dates from August 2011 through May 2019 and carry interest rates ranging from 3.66% to 5.94%.

Secured credit facilities. At June 30, 2011, the General Partner had borrowings against its fixed rate facilities of $895.9 million of which $561.0 million was allocated to the Operating Partnership based on the ownership of the assets securing the debt. As of June 30, 2011, the fixed rate Fannie Mae credit facilities allocated to the Operating Partnership had a weighted average fixed interest rate of 5.21%.

Variable Rate Debt

Mortgage notes payable. Variable rate mortgage notes payable are generally due in monthly installments of principal and interest and mature at various dates from July 2013 through April 2016. Interest on the variable rate mortgage notes is based on LIBOR plus some basis points, which translated into interest rates ranging from 1.06% to 3.45% at June 30, 2011.

Tax-exempt secured note payable. The variable rate mortgage note payable that secures tax-exempt housing bond issues matures in March 2030. Interest on this note is payable in monthly installments. The mortgage note payable has an interest rate of 0.77% as of June 30, 2011.

Secured credit facilities. At June 30, 2011, the General Partner had borrowings against its variable rate facilities of $260.5 million of which $175.9 million was allocated to the Operating Partnership based on the ownership of the assets securing the debt. As of June 30, 2011, the variable rate borrowings under the Fannie Mae credit facilities allocated to the Operating Partnership had a weighted average floating interest rate of 1.86%.

The aggregate maturities of the Operating Partnership’s secured debt due during each of the next five calendar years and thereafter are as follows (dollars in thousands):

	Fixed				Variable
	Mortgage		Credit		Mortgage		Tax Exempt		Credit
	Notes		Facilities		Notes		Notes Payable		Facilities		Total
2011	$	11,665	$	—	$	317	$	—	$	30,886	$	42,868
2012		53,836		136,792		633		—		59,529		250,790
2013		15,871		27,739		38,050		—		—		81,660
2014		7,656		—		635		—		—		8,291
2015		192,496		—		636		—		—		193,132
Thereafter		155,071		396,462		29,046		27,000		85,533		693,112
Total	$	436,595	$	560,993	$	69,317	$	27,000	$	175,948	$	1,269,853

Guarantor on Unsecured Debt

The Operating Partnership is a guarantor on the General Partner’s unsecured credit facility, with an aggregate borrowing capacity of $600 million, a $250 million term loan, a $100 million term loan, and $300 million of medium-term notes. At June 30, 2011 and December 31, 2010, the outstanding balance under the unsecured credit facility was $5.0 million and $31.8 million, respectively.

On September 30, 2010, the Operating Partnership guaranteed certain outstanding debt securities of the General Partner. These guarantees provide that the Operating Partnership, as primary obligor and not merely as surety, irrevocably and unconditionally guarantees to each holder of the applicable securities and to the trustee and their successors and assigns under the respective indenture (a) the full and punctual payment when due, whether at stated maturity, by acceleration or otherwise, of all obligations of the General Partner under the respective indenture whether for principal or interest on the securities (and premium, if any), and all other monetary obligations of the General Partner under the respective indenture and the terms of the applicable securities and (b) the full and punctual performance within the applicable grace periods of all other obligations of the General Partner under the respective indenture and the terms of applicable securities.