Debt Obligations

9 Months Ended

Sep. 30, 2013

Debt Obligations

Debt Obligations

5. Debt Obligations

Bank Borrowings. During 2012, we amended our Unsecured Credit Agreement increasing the commitment to $240,000,000 with the opportunity to increase the credit amount up to a total of $350,000,000. Additionally, the drawn pricing was decreased by 25 basis points, the undrawn pricing was decreased by 10 basis points and the maturity of the facility was extended for one additional year to May 25, 2016. The amendment also provides for a one-year extension option at our discretion, subject to customary conditions.  Based on our leverage at September 30, 2013, the amended facility provides for interest annually at LIBOR plus 125 basis points and the unused commitment fee was 25 basis points.

During the nine months ended September 30, 2013, we borrowed $2,000,000 and repaid $117,500,000 under our Unsecured Credit Agreement.  At September 30, 2013, we had no outstanding balances under our Unsecured Credit Agreement and we were in compliance with all our covenants.  In October, we borrowed $86,000,000 under our unsecured line of credit and used cash on hand to fund a mortgage loan secured by 15 skilled nursing properties in Michigan, as previously discussed. Accordingly, we currently have $86,000,000 outstanding under our Unsecured Credit Agreement with $154,000,000 available for borrowing. See Note 2. Real Estate Investments for further discussion on the mortgage loan funding.

Senior Unsecured Notes.  At September 30, 2013 and December 31, 2012, we had $185,800,000 outstanding under our Senior Unsecured Notes with a weighted average interest rate of 5.2% and $100,000,000 available under an Amended and Restated Note Purchase and Private Shelf agreement which provides for the possible issuance of senior unsecured fixed-rate term notes through October 19, 2014.

On October 30, 2013, we entered into an amended and restated note purchase and private shelf agreement with Prudential Investment Management, Inc. (or Prudential).  The shelf agreement with Prudential, as amended, conforms the definitions and financial covenants contained therein and previously issued senior unsecured promissory notes outstanding to Prudential and certain of its affiliates and managed accounts to those contained in our unsecured credit facility and to covenants contained in the senior unsecured notes sold in July 2012.  Any notes sold by us to Prudential under the shelf agreement will be in amounts at fixed interest rates and have maturity dates (each note to have a final maturity not greater than 12 years and an average life not greater than 10 years from the date of issuance) subject to further agreement by us and Prudential.

The shelf agreement with Prudential contains standard covenants including requirements to maintain financial ratios such as debt to asset value ratios.  Under the shelf agreement, maximum total indebtedness shall not exceed 50% of total asset value as defined in the shelf agreement, as amended.  Borrowings under the shelf agreement are limited by reference to the value of unencumbered assets.  Under the shelf agreement, maximum unsecured debt shall not exceed 60% of the value of the unencumbered asset pool as defined in the shelf agreement.  As of November 4, 2013, we had $50,000,000 outstanding in senior unsecured notes sold by us to Prudential in July 2010 and $50,000,000 outstanding in senior unsecured notes sold by us to Prudential in July 2011.

Bonds Payable.  At September 30, 2013 and December 31, 2012, we had outstanding principal of $2,035,000 and $2,635,000 respectively, on multifamily tax-exempt revenue bonds that are secured by five assisted living properties in Washington.  These bonds bear interest at a variable rate that is reset weekly and mature during 2015.  For the nine months ended September 30, 2013, the weighted average interest rate, including letter of credit fees, on the outstanding bonds was 2.9%.  During the nine months ended September 30, 2013 and 2012, we paid $600,000 and $565,000, respectively, in regularly scheduled principal payments.  As of September 30, 2013 and December 31, 2012, the aggregate carrying value of real estate properties securing our bonds payable was $6,452,000 and $6,650,000, respectively.