Debt Obligations

9 Months Ended

Sep. 30, 2022

Debt Obligations

Debt Obligations

6. Debt Obligations

Unsecured Credit Facility. We have an unsecured credit agreement (the “Credit Agreement”) that provides for an aggregate commitment of the lenders of up to $500,000,000 comprising of a $400,000,000 revolving credit facility (the “Revolving Line of Credit”) and two $50,000,000 term loans (the “Term Loans”). The Credit Agreement permits us to request increases to the Revolving Line of Credit and Term Loans commitments up to a total of $1,000,000,000. The Revolving Line of Credit matures November 19, 2025 and provides for a one-year extension option at our discretion, subject to customary conditions. The Term Loans mature on November 19, 2025 and November 19, 2026.

Based on our leverage at September 30, 2022, the facility provides for interest annually at LIBOR plus 115 basis points and a facility fee of 20 basis points. At September 30, 2022, we were in compliance with all covenants.

Interest Rate Swap Agreements. In connection with entering into the Term Loans described above, we entered into two receive variable/pay fixed interest rate swap agreements (the “Interest Rate Swaps”) with maturities of November 19, 2025 and November 19, 2026, respectively, that serve to lock-in the forecasted interest payments on the borrowings under the Term Loans over their four and five year terms. The Interest Rate Swaps are considered cash flow hedges and are recorded on our Consolidated Balance Sheets at fair value in prepaid expenses and other assets, with cumulative changes in the fair value of these instruments recognized in Accumulated other comprehensive income (loss) on our Consolidated Balance Sheets. During the three and nine months ended September 30, 2022, we recorded increase in fair value of Interest Rate Swaps of $3,306,000 and $9,617,000, respectively. During the three and nine months ended September 30, 2021, we did not record an adjustment to the fair value of Interest Rate Swaps.

As of September 30, 2022 and December 31, 2021, the terms of the Interest Rate Swaps are as follows (dollar amounts in thousands):

						Notional	Fair Value at
Date Entered	Maturity Date	Swap Rate		Rate Index		Amount		September 30, 2022		December 31, 2021
November 2021	November 19, 2025	2.56	%	1-month LIBOR	$	50,000	$	4,300	$	(38)
November 2021	November 19, 2026	2.69	%	1-month LIBOR		50,000		5,145		(134)
					$	100,000	$	9,445	$	(172)

Senior Unsecured Notes. We have senior unsecured notes held by institutional investors with interest rates ranging from 3.66% to 5.03%. The senior unsecured notes mature between 2024 and 2033. During the nine months ended September 30, 2022, we sold $75,000,000 aggregate principal amount of 3.66% senior unsecured notes. The notes have an average 10-year life, scheduled principal payments and mature in May 2033.

The senior unsecured notes and the Credit Agreement, including the Revolving Line of Credit and the Term Loans, contain financial covenants, which are measured quarterly, that require us to maintain, among other things:

● a ratio of total indebtedness to total asset value not greater than 0.6 to 1.0;

● a ratio of secured debt to total asset value not greater than 0.35 to 1.0;

● a ratio of unsecured debt to the value of the unencumbered asset value not greater than 0.6 to 1.0; and

● a ratio of EBITDA, as calculated in the debt obligation, to fixed charges not less than 1.50 to 1.0.

At September 30, 2022, we were in compliance with all applicable financial covenants. These debt obligations also contain additional customary covenants and events of default that are subject to a number of important and significant limitations, qualifications and exceptions.

The following table sets forth information regarding debt obligations by component as of September 30, 2022 and December 31, 2021 (dollar amounts in thousands):

		At September 30, 2022				At December 31, 2021
	Applicable			Available				Available
	Interest	Outstanding		for		Outstanding		for
Debt Obligations	Rate (1)	Balance		Borrowing		Balance		Borrowing
Revolving line of credit	4.21%	$	151,000	$	249,000	$	110,900	$	289,100
Term loans, net of debt issue costs	2.63%		99,474		—		99,363		—
Senior unsecured notes, net of debt issue costs	4.25%		543,287		—		512,456		—
Total	4.04%	$	793,761	$	249,000	$	722,719	$	289,100

(1) Represents weighted average of interest rate as of September 30, 2022.

Our borrowings and repayments are as follows (in thousands):

	Nine Months Ended September 30,
	2022				2021
Debt Obligations		Borrowings		Repayments	Borrowings		Repayments
Revolving line of credit	$	194,000	$	(153,900)	$	92,500	$	(48,000)
Term loans		—		—		—		—
Senior unsecured notes		75,000		(43,160)		—		(32,160)
Total	$	269,000	$	(197,060)	$	92,500	$	(80,160)