DEBT OBLIGATIONS

9 Months Ended

Sep. 30, 2023

Debt Disclosure [Abstract]

DEBT OBLIGATIONS

7. DEBT OBLIGATIONS

The following table sets forth information regarding the Company’s consolidated debt obligations outstanding as of September 30, 2023 and December 31, 2022 (in thousands):

	September 30, 2023		December 31, 2022		Effective Interest Rate		Maturity Date
SECURED DEBT:
$245.0M 5.88% Secured Term Loan due 2028	$	245,000	—		5.88%		February 2028
$50.0M Construction Loan due 2026	—		—		SOFR + 2.50%		August 2026
Principal balance outstanding	245,000		—
Less: deferred financing costs	(3,346)		—
Total Secured indebtedness	$	241,654	$	—
UNSECURED DEBT
$600 million Unsecured Credit Facility	$	—	$	88,500	SOFR + 1.15%		June 2026	(a)
Term Loan - Swapped to fixed	250,000		250,000		SOFR + 1.30%		June 2027	(b)
$70.0 million Term Loan	70,000		—		SOFR + 1.85%		February 2024	(a)(c)
$350.0M 3.95% Guaranteed Notes due 2023	—		54,301		3.87%		February 2023	(d)
$350.0M 4.10% Guaranteed Notes due 2024	350,000		350,000		3.78%		October 2024
$450.0M 3.95% Guaranteed Notes due 2027	450,000		450,000		4.03%		November 2027
$350.0M 7.55% Guaranteed Notes due 2028	350,000		350,000		7.73%	(f)	March 2028
$350.0M 4.55% Guaranteed Notes due 2029	350,000		350,000		4.30%		October 2029
Indenture IA (Preferred Trust I)	27,062		27,062		SOFR + 1.51	(e)	March 2035
Indenture IB (Preferred Trust I)	25,774		25,774		SOFR + 1.51	(e)	April 2035
Indenture II (Preferred Trust II)	25,774		25,774		SOFR + 1.51	(e)	July 2035
Principal balance outstanding	1,898,610		1,971,411
Plus: original issue premium (discount), net	2,159		2,934
Less: deferred financing costs	(7,963)		(9,307)
Total unsecured indebtedness	$	1,892,806	$	1,965,038
Total Debt Obligations	$	2,134,460	$	1,965,038

(a)Spread includes a 10 basis point daily SOFR adjustment.

(b)On November 23, 2022, the $250.0 million unsecured term loan was swapped to a fixed rate of 5.01% and matures on June 30, 2027. The effective date of the swap was January 31, 2023.

(c)The maturity date of the $70.0 million unsecured term loan is subject to a 12 month optional extension upon customary terms and conditions.

(d)On January 20, 2023, the Company redeemed in full its then outstanding 3.95% Guaranteed Notes due 2023 (the “2023 Notes”). The aggregate redemption price of the 2023 Notes was approximately $55.2 million (approximately $54.3 million in principal and approximately $0.92 million of accrued and unpaid interest).

(e)On July 1, 2023, the stated rate of interest was replaced with 3-month CME Term SOFR + 1.51%. The rate will be in effect as the existing 3-month LIBOR interest periods expire over the next three months.

(f)During the third quarter of 2023, Moody’s downgraded our senior unsecured credit rating from Baa3 to Ba1. As a result of the downgrade, the interest rate on our 7.55% note due 2028 increased 25 basis points in September 2023 due to the coupon adjustment provisions within the note.

The Company utilizes borrowings under its unsecured credit facility (the “Unsecured Credit Facility”) for general business purposes, including to fund costs of acquisitions, developments and redevelopments of properties, fund share repurchases and repay other debt. The Unsecured Credit Facility provides for borrowings of up to $600.0 million and the per annum variable interest rate on borrowings is SOFR plus 1.05% plus a spread adjustment of 0.10%. The interest rate and facility fee are subject to adjustment upon a change in the Company’s unsecured debt ratings. During the nine months ended September 30, 2023, the weighted-average interest rate on Unsecured Credit Facility borrowings was 5.13%, resulting in $0.5 million of interest expense for such period.

Secured Facility due 2028

On January 19, 2023, seven indirect wholly-owned subsidiaries of the Company entered into a term loan agreement secured by seven operating properties in the aggregate principal amount of $245.0 million (the “Secured Facility”). The Secured Facility has a scheduled maturity date of February 6, 2028 and may be prepaid in full on or after March 6, 2025, subject to a prepayment premium, and may be prepaid in full on or after August 6, 2027 without any prepayment premium. The Secured Facility bears interest at 5.88% per year through the maturity date and is interest-only (payable monthly) through the maturity date.

2023 Unsecured Term Loan

On March 1, 2023, the Company entered into an unsecured one-year term loan agreement in the aggregate principal amount of $70.0 million (the “2023 Term Loan”). The 2023 Term Loan has a scheduled maturity date of February 28, 2024 with an option to extend for an additional twelve months upon customary terms and conditions. The 2023 Term Loan bears interest at Daily Simple SOFR plus 1.75%, with a 0.10% SOFR adjustment per year through the maturity date and is interest-only (payable monthly) through the maturity date.

Secured Construction Loan due 2026

On August 15, 2023, the Company entered into a construction loan agreement secured by the development project at 155 King of Prussia Road in Radnor, Pennsylvania in the aggregate principal amount of $50.0 million (the “Construction Loan”). The Construction Loan has a scheduled maturity date of August 16, 2026 with an option to prepay at any time without a fee, premium or penalty. The Construction Loan bears interest at SOFR plus 2.5%.

In connection with the Construction Loan, the Company has provided a completion guaranty, carry guaranty, and limited payment guarantee up to 20% of the loan commitment, as well as customary environmental indemnities and guaranty of customary exceptions to non-recourse provisions in the loan documents.

Additional Information on Unsecured and Secured Consolidated Debt

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.

The Company was in compliance with all financial covenants as of September 30, 2023. Certain of the covenants restrict the Company’s ability to obtain alternative sources of capital.

As of September 30, 2023, the aggregate scheduled principal payments on the Company’s consolidated debt obligations (secured and unsecured) were as follows (in thousands):

2023 (three months remaining)	$	—
2024	350,000
2025	70,000
2026	—
2027	700,000
Thereafter	1,023,610
Total principal payments	2,143,610
Net unamortized premiums/(discounts)	2,159
Net deferred financing costs	(11,309)
Outstanding indebtedness	$	2,134,460