Debt

12 Months Ended

Dec. 31, 2016

8. Debt

Unsecured Revolving Credit Facility

On November 7, 2016, we extended one of our two $1.25 billion unsecured revolving credit facilities from June 2017 to February 2021 with two six-month extension options. The interest rate on the extended facility was lowered from LIBOR plus 115 basis points to LIBOR plus 100 basis points. The facility fee remains unchanged at 20 basis points.

Secured Debt

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% (2.40% at December 31, 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 3,652,000 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.

On December 2, 2016, we completed a $400,000,000 refinancing of 350 Park Avenue, a 571,000 square foot Manhattan office building. The ten-year loan is interest only and has a fixed rate of 3.92%. The Company realized net proceeds of approximately $111,000,000. The property was previously encumbered by a 3.75%, $284,000,000 mortgage which was scheduled to mature in January 2017.

On March 15, 2016, we notified the servicer of the $678,000,000 non-recourse mortgage loan on the Skyline properties located in Fairfax, 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 was transferred to the special servicer. Consequently, based on the shortened 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 was in default, and was 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 year ended December 31, 2016, we recognized $7,823,000 of default interest expense. On August 24, 2016, the Skyline properties were placed in receivership. On December 21, 2016, the disposition of the Skyline properties was completed by the receiver. In connection therewith, the Skyline properties’ assets (approximately $236,535,000) and liabilities (approximately aggregating $724,412,000), were removed from our consolidated balance sheet which resulted in a net gain of $487,877,000. There was no taxable income related to this transaction.

The following is a summary of our debt:

(Amounts in thousands)			Weighted Average
			Interest Rate at			Balance at December 31,
			December 31, 2016			2016		2015
Mortgages Payable:
	Fixed rate			3.84%	$	6,099,873	$	6,356,634
	Variable rate			2.49%		3,274,424		3,258,204
		Total		3.37%		9,374,297		9,614,838
	Deferred financing costs, net and other					(96,034)		(101,125)
		Total, net			$	9,278,263	$	9,513,713

Unsecured Debt:
	Senior unsecured notes			3.68%	$	850,000	$	850,000
	Deferred financing costs, net and other					(4,423)		(5,841)
		Senior unsecured notes, net				845,577		844,159

	Unsecured term loan			1.88%		375,000		187,500
	Deferred financing costs, net and other					(2,785)		(4,362)
		Unsecured term loan, net				372,215		183,138

	Unsecured revolving credit facilities			1.68%		115,630		550,000

		Total, net			$	1,333,422	$	1,577,297

The net carrying amount of properties collateralizing the mortgages payable amounted to $10.7 billion at December 31, 2016. As of December 31, 2016, the principal repayments required for the next five years and thereafter are as follows:

(Amounts in thousands)				Senior Unsecured
				Debt and Unsecured
				Revolving Credit
		Mortgages Payable		Facilities
Year Ending December 31,
2017	$	156,702	$	-
2018		1,389,341		490,630
2019		399,661		450,000
2020		1,882,443		-
2021		3,173,705		-
Thereafter		2,372,445		400,000