Debt

9 Months Ended

Sep. 30, 2016

10. Debt

The following is a summary of our debt:

(Amounts in thousands)			Interest Rate at		Balance at
			September 30, 2016		September 30, 2016		December 31, 2015
Mortgages Payable:
	Fixed rate			3.90%	$	6,685,606	$	6,356,634
	Variable rate			2.34%		3,282,893		3,258,204
		Total		3.39%		9,968,499		9,614,838
	Deferred financing costs, net and other					(100,949)		(101,125)
		Total, net			$	9,867,550	$	9,513,713

Unsecured Debt:
	Senior unsecured notes			3.68%	$	850,000	$	850,000
	Deferred financing costs, net and other					(4,777)		(5,841)
		Senior unsecured notes, net				845,223		844,159

	Unsecured term loan			1.67%		375,000		187,500
	Deferred financing costs, net and other					(3,165)		(4,362)
		Unsecured term loan, net				371,835		183,138

	Unsecured revolving credit facilities			1.57%		115,630		550,000

		Total, net			$	1,332,688	$	1,577,297

On February 8, 2016, we completed a $700,000,000 refinancing of 770 Broadway, a 1,158,000 square foot Manhattan office building. The five-year loan is interest only at LIBOR plus 1.75%, (2.28% at September 30, 2016) which was swapped for four and a half years to a fixed rate of 2.56%. The Company realized net proceeds of approximately $330,000,000. The property was previously encumbered by a 5.65%, $353,000,000 mortgage which was scheduled to mature in March 2016.

On September 6, 2016, we completed a $675,000,000 refinancing of theMART, a 3,644,000 square foot commercial building in Chicago. The five-year loan is interest only and has a fixed rate of 2.70%. The Company realized net proceeds of approximately $124,000,000. The property was previously encumbered by a 5.57%, $550,000,000 mortgage which was scheduled to mature in December 2016.

Skyline Properties

On March 15, 2016, we notified the servicer of the $678,000,000 non-recourse mortgage loan on the Skyline properties in Virginia that cash flow will be insufficient to service the debt and pay other property related costs and expenses and that we were not willing to fund additional cash shortfalls. Accordingly, at our request, the loan has been transferred to the special servicer. Consequently, based on our shortened estimated holding period for the underlying assets, we concluded that the excess of carrying amount over our estimate of fair value was not recoverable and recognized a $160,700,000 non-cash impairment loss in the first quarter of 2016. The Company’s estimate of fair value was derived from a discounted cash flow model based upon market conditions and expectations of growth and utilized unobservable quantitative inputs including a capitalization rate of 8.0% and a discount rate of 8.2%. In the second quarter of 2016, cash flow became insufficient to service the debt and we ceased making debt service payments. Pursuant to the loan agreement, the loan is in default, causing the loan to be immediately due and payable, and is subject to incremental default interest which increased the weighted average interest rate from 2.97% to 4.51% while the outstanding balance remains unpaid. For the three and nine months ended September 30, 2016, we accrued $2,632,000 and $5,343,000 of default interest expense, respectively. We continue to negotiate with the special servicer. There can be no assurance as to the timing or ultimate resolution of this matter.