Note 6. Debt

Credit facility

On August 1, 2013, the Company amended and extended, on an unsecured basis, its credit facility. As amended, the $310 million credit facility is comprised of a three-year $260 million revolving credit facility, expiring on August 1, 2016, and a five-year $50 million term loan, expiring on August 1, 2018. Subject to customary conditions, the revolving credit facility may be extended, at the Company’s option, for two additional one-year periods. Under an accordion feature, the new facility can be increased to $500 million, subject to customary conditions, and lending commitments from participating banks. The new facility contains financial covenants including, but not limited to, maximum debt leverage, maximum secured debt, minimum interest coverage, minimum fixed charge coverage, and minimum net worth. In addition, the new facility contains restrictions including, but not limited to, limits on indebtedness, certain investments and distributions. Although the new facility is unsecured, borrowing availability is based on unencumbered property adjusted net operating income, as defined in the agreement. The Company’s failure to comply with the covenants or the occurrence of an event of default under the new facility could result in the acceleration of the related debt. In connection with the transaction, the Company paid fees and legal expenses of approximately $1.7 million.

Borrowings under the new facility are priced at LIBOR plus 195 bps (a weighted average rate of 2.2% per annum at September 30, 2013), and can range from LIBOR plus 165 bps to 225 bps based on the Company’s leverage ratio. As of September 30, 2013, the Company had $130.0 million outstanding under the revolving credit facility and $50.0 million outstanding under the term loan, and had $106.8 million available for additional borrowings.

Mortgage loans payable

During the three and nine months ended September 30, 2013, the Company paid off $13.7 million and $56.4 million of mortgage loans payable, respectively, of which $0 and $37.3 million, respectively, represented prepayments. In this connection, during the three and nine months ended September 30, 2013, the Company incurred charges relating to early extinguishment of debt (prepayment penalties and accelerated amortization of deferred financing costs) of approximately $0 and $543,000 (including $437,000 classified as discontinued operations), respectively.

On November 1, 2013, the Company prepaid a $7.6 million mortgage loan payable, without penalty, that was due to mature in January 2014.

Derivative financial instruments

At September 30, 2013, the Company had a mortgage loan payable of approximately $12.0 million subject to an interest rate swap. The interest rate swap converted the LIBOR-based variable rate to a fixed rate of 5.2% per annum. At that date, the Company had accrued liabilities of $0.8 million (included in accounts payable and accrued liabilities on the consolidated balance sheet) relating to the fair value of the interest rate swap applicable to the existing mortgage loan payable. Charges and/or credits relating to the changes in the fair value of the interest rate swap are made to accumulated other comprehensive income (loss), noncontrolling interests (minority interests in consolidated joint ventures and limited partners’ interest), or operations (included in interest expense), as appropriate.

The following is a summary of the derivative financial instruments held by the Company at September 30, 2013 and December 31, 2012:

Notional values

Balance

Fair value

Designation/

September 30,

December 31,

Maturity

sheet

September 30,

December 31,

Cash flow

Derivative

Count

2013

Count

2012

date

location

2013

2012

Interest

Accrued

rate swaps

liabilities

Qualifying

Consolidated

$ 11,965,000

$ 31,417,000

2018

Consolidated

$ 752,000

$ 1,577,000

The following presents the effect of the Company’s derivative financial instruments on the consolidated statements of operations and the consolidated statements of equity for the three and nine months ended September 30, 2013 and 2012, respectively:


		Amount of gain recognized in other
		comprehensive income (loss) (effective portion)
Designation/		Three months ended September 30,			Nine months ended September 30,
Cash flow	Derivative	2013		2012	2013		2012

Qualifying	Consolidated	$ 166,000	(a)	$ 174,000	$ 1,076,000	(a)	$ 483,000
	Cedar/RioCan
Qualifying	Joint Venture	$ -		$ 20,000	$ -		$ 78,000

(a) For the three and nine months ended September 30, 2013, $258,000 and $901,000, respectively, were reclassified from other comprehensive income to interest expense in the consolidated statements of operations.

As of September 30, 2013, the Company believes it has no significant risk associated with non-performance of the financial institutions which are the counterparties to its derivative contracts. Additionally, based on the rates in effect as of September 30, 2013, if a counterparty were to default, the Company would receive a net interest benefit.