Beneficial Interest in Debt and Interest Expense

6 Months Ended

Jun. 30, 2020

Beneficial interest in Debt and Interest Expense

Beneficial Interest in Debt and Interest Expense

TRG's beneficial interest in the debt, capitalized interest, and interest expense of our consolidated subsidiaries and our UJVs is summarized in the following table. TRG's beneficial interest in the consolidated subsidiaries excludes debt and interest related to the noncontrolling interest in Cherry Creek Shopping Center (50%) and International Market Place (6.5%).



	At 100%						At Beneficial Interest
	Consolidated Subsidiaries			UJVs			Consolidated Subsidiaries			UJVs
Debt as of:
June 30, 2020	$	3,900,937		$	3,220,530		$	3,610,188		$	1,537,723
December 31, 2019	3,710,327			3,049,737			3,419,625			1,508,506

Capitalized interest:
Six Months Ended June 30, 2020	$	3,218	⁽¹⁾	$	743	⁽²⁾	$	3,154	⁽¹⁾	$	582	⁽²⁾
Six Months Ended June 30, 2019	4,354		⁽¹⁾	85			4,345		⁽¹⁾	47

Interest expense:
Six Months Ended June 30, 2020	$	68,202		$	69,174		$	62,658		$	32,360
Six Months Ended June 30, 2019	74,895			68,183			68,841			34,781


(1)	We capitalize interest costs incurred in funding our equity contributions to development projects accounted for as UJVs. The capitalized interest cost is included at our basis in our investment in UJVs. Such capitalized interest reduces interest expense on our Consolidated Statement of Operations and Comprehensive Income (Loss) and in the table above is included within Consolidated Subsidiaries.


(2)	Capitalized interest on the Asia UJV construction financing is presented at our beneficial interest in both the UJVs (at 100%) and UJVs (at Beneficial Interest Columns).

Upcoming Maturities

In August 2020, we extended the maturity date on the $150 million loan for The Mall at Green Hills to December 2021. The loan was previously scheduled to mature in December 2020 and commencing December 2020, the interest rate will be a variable rate equal to the greater of LIBOR plus 2.75% or 3.25%.

The $250 million loan for International Market Place matures in August 2021 and has two, one year extension options available. We are currently evaluating our options related to extending or refinancing this loan.

Revolving Lines of Credit

In late March 2020, we borrowed an additional $350 million on our $1.1 billion primary unsecured revolving line of credit as a precautionary measure to increase liquidity, preserve financial flexibility, and fund temporary working capital needs due to uncertainty resulting from the COVID-19 pandemic. In June 2020, we repaid $100 million, reducing the balance on our $1.1 billion primary unsecured revolving line of credit to $870 million as of June 30, 2020. We also have a secured revolving line of credit of $65 million. The availability under these facilities as of June 30, 2020, after considering the outstanding balances, the outstanding letters of credit, and value of the unencumbered asset pool as of June 30, 2020, was $118.5 million.

Debt Covenants and Guarantees

Certain loan agreements contain various restrictive covenants, including the following corporate covenants on our primary unsecured revolving line of credit, as well as our unsecured term loans and the loan on International Market Place: a minimum net worth requirement, a maximum total leverage ratio, a maximum secured leverage ratio, a minimum fixed charge coverage ratio, a maximum recourse secured debt ratio, and a maximum payout ratio. In addition, our primary unsecured revolving line of credit and unsecured term loans have unencumbered pool covenants which currently apply to Beverly Center, Dolphin Mall, and The Gardens on El Paseo on a combined basis. These covenants include a minimum number and minimum value of eligible unencumbered assets, a maximum unencumbered leverage ratio, a minimum unencumbered interest coverage ratio and a minimum unencumbered asset occupancy ratio. As of June 30, 2020, the unencumbered leverage ratio and the corporate total leverage ratio were the most restrictive covenants. We were in compliance with all of our covenants and loan obligations as of June 30, 2020. Failure to meet certain of these financial covenants could cause an event of default under and/or accelerate some or all of such indebtedness, which could have an adverse effect on us. The maximum payout ratio covenant limits the payment of distributions generally to 95% of funds from operations, as defined in the loan agreements, except as required to maintain our tax status, pay preferred distributions, and for distributions related to the sale of certain assets.

In August 2020, we entered into amendments to waive all of our existing financial covenants related to our primary unsecured revolving line of credit, $275 million unsecured term loan, and $250 million unsecured term loan for the quarter ending September 30, 2020 through and including the quarter ending June 30, 2021. The amendments also added a liquidity covenant, which will remain in effect through the earlier of the end of the covenant waiver period or until the financial covenants are in compliance using the definitions and requirements prior to the amendments. The amendments impose limitations during the waiver period on acquisitions, additional indebtedness, share repurchases, as well as certain required prepayments following dispositions, equity or debt issuances. Additionally, the lenders have received a secured interest in certain unencumbered assets through the waiver period. The amendments provide for flexibility to complete planned capital spending, including spending for tenant allowances and redevelopment projects. In relation to distributions, the amendments permit distributions of taxable income in accordance with our partnership agreement and REIT qualification requirements and the ability to continue dividend payments for our 6.5% Series J Preferred Stock and 6.25% Series K Preferred Stock. The financial covenants for our loan on International Market Place mirror the requirements under our primary unsecured revolving line of credit so therefore, the waiver of our financial covenants also applies to the International Market Place loan.

Through the covenant compliance date, our primary unsecured revolving line of credit will bear interest at the maximum total leverage ratio level of LIBOR, subject to a 0.5% floor on the unhedged balance, plus 1.60% with a 0.25% facility fee; our $275 million unsecured term loan will bear interest at the maximum total leverage ratio level of LIBOR plus 1.80%; and our $250 million unsecured term loan will bear interest at the maximum total leverage ratio level of LIBOR plus 1.90%.

In connection with the August 2018 financing at International Market Place, TRG provided an unconditional guarantee of the loan principal balance and all accrued but unpaid interest during the term of the loan. The $250 million loan is interest only during the initial three year term with principal amortization required during the extension periods, if exercised. Accrued but unpaid interest as of June 30, 2020 was $0.5 million. We believe the likelihood of a repayment under the guarantee to be remote.

In connection with the $175 million additional financing at International Plaza, which is owned by a UJV, TRG provided an unconditional and several guarantee of 50.1% of all obligations and liabilities related to an interest rate swap that was required on the debt for the term of the loan. As of June 30, 2020, the interest rate swap was a $3.7 million liability and accrued but unpaid interest was $0.2 million. We believe the likelihood of a payment under the guarantee to be remote.