DEBT OBLIGATIONS

12 Months Ended

Dec. 31, 2019

8. DEBT OBLIGATIONS

The following table sets forth information regarding the Company’s consolidated debt obligations outstanding at December 31, 2019 and 2018 (in thousands):



	December 31, 2019			December 31, 2018			Effective Interest Rate		Maturity Date
MORTGAGE DEBT:
Two Logan Square	$	81,103		$	82,805		3.98%		May 2020
Four Tower Bridge	9,291			9,526			4.50%	(a)	February 2021
One Commerce Square	116,571			120,183			3.64%		April 2023
Two Commerce Square	108,472			110,518			4.51%		April 2023
Principal balance outstanding	315,437			323,032
Plus: fair market value premium (discount), net	(1,383		)	(1,759		)
Less: deferred financing costs	(242		)	(404		)
Mortgage indebtedness	$	313,812		$	320,869

UNSECURED DEBT
$600 million Unsecured Credit Facility	$	—		$	92,500		LIBOR + 1.10%		July 2022
Seven-Year Term Loan - Swapped to fixed	250,000			250,000			2.87%		October 2022
$350.0M 3.95% Guaranteed Notes due 2023	350,000			350,000			3.87%		February 2023
$350.0M 4.10% Guaranteed Notes due 2024	350,000			250,000			3.78%		October 2024
$450.0M 3.95% Guaranteed Notes due 2027	450,000			450,000			4.03%		November 2027
$350.0M 4.55% Guaranteed Notes due 2029	350,000			250,000			4.30%		October 2029
Indenture IA (Preferred Trust I)	27,062			27,062			LIBOR + 1.25%		March 2035
Indenture IB (Preferred Trust I) - Swapped to fixed	25,774			25,774			3.30%		April 2035
Indenture II (Preferred Trust II)	25,774			25,774			LIBOR + 1.25%		July 2035
Principal balance outstanding	1,828,610			1,721,110
Plus: original issue premium (discount), net	12,090			(4,096		)
Less: deferred financing costs	(10,094		)	(9,837		)
Total unsecured indebtedness	$	1,830,606		$	1,707,177
Total Debt Obligations	$	2,144,418		$	2,028,046


(a)	Assumed upon acquisition of the related property on January 5, 2018. The interest rate reflects the market rate at the time of acquisition.

The Parent Company unconditionally guarantees the unsecured debt obligations of the Operating Partnership (or is a co-borrower with the Operating Partnership) but does not by itself incur unsecured indebtedness. The Parent Company has no material assets other than its investment in the Operating Partnership.

On October 10, 2019, the Company completed underwriting offerings of an additional $100.0 million of its 4.10% Guaranteed Notes due 2024 (the "2024 Notes") and an additional $100.0 million of its 4.55% Guaranteed Notes due 2029 (the "2029 Notes"). The additional 2024 Notes were priced at 106.315% of their face amount and the additional 2029 Notes were priced at 110.058% of their face amount. The additional 2024 Notes and additional 2029 Notes have been reflected net of premiums of $5.3 million and $8.5 million, respectively, in the consolidated balance sheet as of December 31, 2019.

On December 13, 2018, the Company amended and restated its $250.0 million seven-year term loan maturing October 8, 2022. In connection with the terms of the amendment, the credit spread on the term loan decreased from LIBOR plus 1.80% to LIBOR plus 1.25%, reducing the Company’s effective interest rate by 0.55%. Through a series of interest rate swaps, the $250.0 million outstanding balance of the term loan has a fixed interest rate of 2.87%.

On July 17, 2018, the Company amended and restated its revolving credit agreement (as amended and restated, the “Unsecured Credit Facility”). The amendment and restatement, among other things: (i) maintained the total commitment of the revolving line of credit of $600.0 million; (ii) extended the maturity date from May 15, 2019 to July 15, 2022, with two six-month extensions at the Company’s election subject to specified conditions and subject to payment of an extension fee; (iii) reduced the interest rate margins applicable to Eurodollar loans; (iv) provided for an additional interest rate option based on a floating LIBOR rate;

and (v) removed the covenant requiring the Company to maintain a minimum net worth. In connection with the amendments, the Company capitalized $2.7 million in financing costs, which will be amortized through the July 15, 2022 maturity date.

At the Company's option, loans outstanding under the Unsecured Credit Facility will bear interest at a rate per annum equal to (1) LIBOR plus between 0.775% and 1.45%, based on the Company's credit rating, or (2) a base rate equal to the greatest of (a) the Administrative Agent's prime rate, (b) the Federal Funds rate plus 0.5% or (c) LIBOR for a one month period plus 1.00%, in each case, plus a margin ranging from 0.0% to 0.45% based on the Company's credit rating. The Unsecured Credit Facility also contains a competitive bid option that allows banks that are part of the lender consortium to bid to make loan advances to the Company at a reduced interest rate. In addition, the Company is also obligated to pay (1) in quarterly installments a facility fee on the total commitment at a rate per annum ranging from 0.125% to 0.30% based on the Company's credit rating and (2) an annual fee on the undrawn amount of each letter or credit equal to the LIBOR Margin. Based on the Company's current credit rating, the LIBOR margin is 1.10% and the facility fee is 0.25%.

The terms of the Unsecured Credit Facility require that the Company maintain customary financial and other covenants, including: (i) a fixed charge coverage ratio greater than or equal to 1.5 to 1.00; (ii) a leverage ratio less than or equal to 0.60 to 1.00, subject to specified exceptions; (iii) a ratio of unsecured indebtedness to unencumbered asset value less than or equal to 0.60 to 1.00, subject to specified exceptions; (iv) a ratio of secured indebtedness to total asset value less than or equal to 0.40 to 1.00; and (v) a ratio of unencumbered cash flow to interest expense on unsecured debt greater than 1.75 to 1.00. In addition, the Unsecured Credit Facility restricts payments of dividends and distributions on shares in excess of 95% of the Company's funds from operations (FFO) except to the extent necessary to enable the Company to continue to qualify as a REIT for Federal income tax purposes.

The Company had no borrowings under the Unsecured Credit Facility as of December 31, 2019. During the twelve months ended December 31, 2019, the weighted-average interest rate on Unsecured Credit Facility borrowings was 3.52% resulting in $4.4 million of interest expense. As of December 31, 2018, the Company had $92.5 million borrowings under the Credit Facility. During the twelve months ended December 31, 2018, the weighted-average interest rate on Unsecured Credit Facility borrowings was 3.24% resulting in $1.0 million of interest expense.

The Company was in compliance with all financial covenants as of December 31, 2019 and 2018. Management continuously monitors the Company’s compliance with and anticipated compliance with the covenants. Certain of the covenants restrict the Company’s ability to obtain alternative sources of capital. While the Company currently believes it will remain in compliance with its covenants, in the event that the economy deteriorates in the future, the Company may not be able to remain in compliance with such covenants, in which case a default would result absent a lender waiver.

As of December 31, 2019, the Company’s aggregate scheduled principal payments of debt obligations, excluding amortization of discounts and premiums, are as follows (in thousands):



2020	$	87,226
2021	15,143
2022	256,332
2023	556,736
2024	350,000
Thereafter	878,610
Total principal payments	2,144,047
Net unamortized premiums/(discounts)	10,707
Net deferred financing costs	(10,336		)
Outstanding indebtedness	$	2,144,418