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Notes and Bonds Payable
 12 Months Ended
Dec. 31, 2017
Debt Disclosure [Abstract]  
Notes and Bonds Payable
Notes and Bonds Payable
 
December 31,
Maturity
Dates
 
Contractual
Interest Rates

 
Principal
Payments
 
Interest
Payments
(Dollars in thousands)
2017

 
2016

 
 
Unsecured Credit Facility
$
189,000

 
$
107,000

7/20
 
LIBOR + 1.00%

 
At maturity
 
Monthly
Unsecured Term Loan due 2022 (1)
148,994

 
149,491

12/22
 
LIBOR + 1.10%

 
At maturity
 
Monthly
Senior Notes due 2021 (1)
—

 
397,147

1/21
 
5.75
%
 
At maturity
 
Semi-Annual
Senior Notes due 2023 (1)
247,703

 
247,296

4/23
 
3.75
%
 
At maturity
 
Semi-Annual
Senior Notes due 2025 (1)
248,044

 
247,819

5/25
 
3.88
%
 
At maturity
 
Semi-Annual
Senior Notes due 2028 (1)
294,757

 
—

1/28
 
3.63
%
 
At maturity
 
Semi-Annual
Mortgage notes payable (2)
155,382

 
115,617

12/18-5/40
 
     3.31%-6.88%

 
Monthly
 
Monthly

$
1,283,880

 
$
1,264,370

 
 
 
 
 
 
 

______
(1)
Balances are shown net of discounts and unamortized issuance costs.
(2)
Balances are shown net of discounts and unamortized issuance costs and including premiums.
The Company’s various debt agreements contain certain representations, warranties, and financial and other covenants customary in such loan agreements. Among other things, these provisions require the Company to maintain certain financial ratios and impose certain limits on the Company’s ability to incur indebtedness and create liens or encumbrances. As of December 31, 2017, the Company was in compliance with its financial covenant provisions under its various debt instruments.
Unsecured Credit Facility due 2020
On October 14, 2011, the Company entered into a $700.0 million unsecured credit facility with a syndicate of lenders (the "Unsecured Credit Facility"). On July 29, 2016, the Company entered into the third amendment to the Unsecured Credit Facility to extend the maturity date to July 2020. The credit facility agreement provides the Company with two six-month extension options that could extend the maturity date to July 2021. Each option is subject to an extension fee of 0.075% of the aggregate commitments. Amounts outstanding under the Unsecured Credit Facility bear interest at LIBOR plus an applicable margin rate. The margin rate, which depends on the Company's credit ratings, ranges from 0.83% to 1.55% (1.00% as of December 31, 2017). In addition, the Company pays a facility fee per annum on the aggregate amount of commitments ranging from 0.13% to 0.30% (0.20% as of December 31, 2017). As of December 31, 2017, the Company had $189.0 million outstanding under the Unsecured Credit Facility with an effective interest rate of approximately 2.56% and had a remaining borrowing capacity of approximately $511.0 million.
Unsecured Term Loan due 2022
In February 2014, the Company entered into a $200.0 million unsecured term loan with a syndicate of nine lenders. On July 5, 2016, the Company repaid $50.0 million of the outstanding principal. On December 18, 2017, the Company entered into an amendment to the unsecured term loan due 2022 (the "Unsecured Term Loan due 2022") with a syndicate of nine lenders to extend the maturity date to December 2022. The Unsecured Term Loan due 2022 bears interest at a rate equal to (x) LIBOR plus (y) a margin ranging from 0.90% to 1.75% (1.10% as of December 31, 2017) based upon the Company's unsecured debt ratings. Payments under the Unsecured Term Loan due 2022 are interest only, with the full amount of the principal due at maturity. The Unsecured Term Loan due 2022 may be prepaid at any time, without penalty. The proceeds from the Unsecured Term Loan due 2022 were used by the Company to repay borrowings on the Unsecured Credit Facility. The Unsecured Term Loan due 2022 has various financial covenant provisions that are required to be met on a quarterly and annual basis that are equivalent to those of the Unsecured Credit Facility. On December 20, 2017, the Company entered into two interest rate swaps totaling $25.0 million to hedge the 1-month LIBOR portion of the cost of borrowing under the Unsecured Term Loan due 2022 to a fixed interest rate of 2.18% (plus the applicable margin rate) through December 2022. On January 30, 2018, the Company entered into two additional interest rate swaps totaling $50.0 million to hedge the 1-month LIBOR portion of the cost of borrowing under the Unsecured Term Loan due 2022 to a fixed interest rate of 2.46% (plus the applicable margin rate) through December 2022. The outstanding balance on the Unsecured Term Loan due 2022 was $150.0 million as of December 31, 2017 with an effective interest rate of approximately 2.77% including the impact of the interest rate swaps.
Senior Notes due 2021 Redemption
During the fourth quarter of 2017, the Company redeemed the outstanding principal of $400.0 million on its Senior Notes due 2021 in two transactions. On November 1, 2017 and December 27, 2017, the Company redeemed $100.0 million and $300.0 million, respectively. The aggregate redemption price of $452.3 million, consisting of outstanding principal of $400.0 million, accrued interest of $9.5 million, and a "make-whole" amount of approximately $42.8 million for the early extinguishment of debt. The unaccreted discount and unamortized costs on these notes of $2.2 million was written off upon redemption. The Company recognized a loss on early extinguishment of debt of approximately $45.0 million related to this redemption.
The following table reconciles the balance of the Senior Notes due 2021 on the Company’s Consolidated Balance Sheets as of December 31, 2017 and 2016:  
 
December 31,
(Dollars in thousands)
2017

 
2016

Senior Notes due 2021 face value
$
—

 
$
400,000

Unaccreted discount
—

 
(1,510
)
          Issuance costs
—

 
(1,343
)
Senior Notes due 2021 carrying amount
$
—

 
$
397,147


Senior Notes due 2023
On March 26, 2013, the Company issued $250.0 million of unsecured senior notes due 2023 (the "Senior Notes due 2023") in a registered public offering. The Senior Notes due 2023 bear interest at 3.75%, payable semi-annually on April 15 and October 15, beginning October 15, 2013, and are due on April 15, 2023, unless redeemed earlier by the Company. The notes were issued at a discount of approximately $2.1 million and the Company incurred debt issuance cost of $2.1 million, which yielded a 3.95% interest rate per annum upon issuance. For each of the years ended December 31, 2017, 2016 and 2015, the Company amortized approximately $0.2 million of the discount and $0.2 million of the debt issuance cost which are included in interest expense on the Company’s Consolidated Statements of Income. The following table reconciles the balance of the Senior Notes due 2023 on the Company’s Consolidated Balance Sheets as of December 31, 2017 and 2016:  
 
December 31,
(Dollars in thousands)
2017

 
2016

Senior Notes due 2023 face value
$
250,000

 
$
250,000

Unaccreted discount
(1,178
)
 
(1,375
)
          Issuance costs
(1,119
)
 
(1,329
)
Senior Notes due 2023 carrying amount
$
247,703

 
$
247,296


Senior Notes due 2025
On April 24, 2015, the Company issued $250.0 million of unsecured senior notes due 2025 (the "Senior Notes due 2025") in a registered public offering. The Senior Notes due 2025 bear interest at 3.875%, payable semi-annually on May 1 and November 1, beginning November 1, 2015, and are due on May 1, 2025, unless redeemed earlier by the Company. The notes were issued at a discount of approximately $0.2 million and the Company incurred approximately $2.3 million in debt issuance costs which yielded a 4.08% interest rate per annum upon issuance. For the years ended December 31, 2017 , 2016, and 2015 the Company amortized approximately $0.2 million, $0.2 million, and $0.1 million, respectively, of the debt issuance costs which is included in interest expense on the Company's Consolidated Statements of Income. Concurrent with this transaction, the Company settled four forward starting swap agreements for $1.7 million. The Senior Notes due 2025 have various financial covenants that are required to be met on a quarterly and annual basis. The following table reconciles the balance of the Senior Notes due 2025 on the Company’s Consolidated Balance Sheets as of December 31, 2017 and 2016:
 
 
December 31,
(Dollars in thousands)
2017

 
2016

Senior Notes due 2025 face value
$
250,000

 
$
250,000

Unaccreted discount
(160
)
 
(178
)
          Issuance costs
(1,796
)
 
(2,003
)
Senior Notes due 2025 carrying amount
$
248,044

 
$
247,819


Senior Notes due 2028
On December 11, 2017, the Company issued $300.0 million of unsecured Senior Notes due 2028 (the "Senior Notes due 2028") in a registered public offering. The Senior Notes due 2028 bear interest at 3.625%, payable semi-annually on January 15 and July 15, beginning July 15, 2018, and are due on January 15, 2028, unless redeemed earlier by the Company. The notes were issued at a discount of approximately $2.5 million and the Company incurred approximately $2.7 million in debt issuance costs which yielded a 3.84% interest rate per annum upon issuance. The Senior Notes due 2028 have various financial covenants that are required to be met on a quarterly and annual basis. The following table reconciles the balance of the Senior Notes due 2028 on the Company’s Consolidated Balance Sheets as of December 31, 2017:
(Dollars in thousands)
December 31, 2017
Senior Notes due 2028 face value
$
300,000

Unaccreted discount
(2,529
)
          Issuance costs
$
(2,714
)
Senior Notes due 2028 carrying amount
$
294,757


Mortgage Notes Payable
The following table reconciles the Company’s aggregate mortgage notes principal balance with the Company’s Consolidated Balance Sheets as of December 31, 2017 and 2016. For the years ended December 31, 2017, 2016 and 2015, the Company amortized approximately $0.3 million, $0.3 million and $0.8 million of the discount and $0.7 million, $0.9 million, and $1.0 million of the premium. For the years ended December 31, 2017, 2016 and 2015, the Company also amortized approximately $0.1 million, $0.2 million, and $0.2 million of the debt issuance costs, respectively, on the mortgage notes payable which is included in interest expense on the Company’s Consolidated Statements of Income.
 
December 31,
(Dollars in thousands)
2017

 
2016

Mortgage notes payable principal balance
$
154,916

 
$
114,934

Unamortized premium
2,651

 
2,569

Unaccreted discount
(1,332
)
 
(1,450
)
          Issuance costs
(853
)
 
(436
)
Mortgage notes payable carrying amount
$
155,382

 
$
115,617



The following table details the Company’s mortgage notes payable, with related collateral.
 
Original Balance

 
Effective Interest Rate (23)

 
Maturity
Date
 
Collateral (24)
 
Principal and Interest Payments (22)
 
Investment in Collateral at December 31,

 
Balance at December 31,
(Dollars in millions)
 
 
 
 
 
2017

 
2017

 
2016

Life Insurance Co. (1)
7.0

 
5.53
%
 
1/18
 
MOB
 
Monthly/15-yr amort.
 
$
—

 
$
—

 
$
0.7

Commercial Bank (2)
1.8

 
5.55
%
 
10/30
 
OTH
 
Monthly/27-yr amort.
 
—

 
—

 
1.3

Insurance Co. (3)
7.3

 
5.54
%
 
12/18
 
MOB
 
Monthly/25-yr amort.
 
14.3

 
6.0

 
6.2

Commercial Bank (4)
9.5

 
5.07
%
 
3/19
 
MOB
 
Monthly/5-yr amort.
 
13.9

 
9.3

 
9.5

Commercial Bank (5)
9.4

 
4.55
%
 
7/19
 
MOB
 
Monthly/8-yr amort
 
27.8

 
9.2

 
9.3

Commercial Bank (6)
15.2

 
7.65
%
 
7/20
 
MOB
 
(21)
 
20.2

 
12.7

 
12.7

Life Insurance Co. (7)
7.9

 
4.00
%
 
8/20
 
MOB
 
Monthly/15-yr amort.
 
20.7

 
2.0

 
2.7

Life Insurance Co. (8)
7.3

 
5.25
%
 
8/20
 
MOB
 
Monthly/27-yr amort.
 
17.9

 
6.5

 
6.7

Life Insurance Co. (9)
5.6

 
4.27
%
 
1/21
 
MOB
 
Monthly/10-yr amort.
 
15.7

 
4.8

 
—

Commercial Bank (10)
12.9

 
6.43
%
 
2/21
 
MOB
 
Monthly/12-yr amort.
 
54.9

 
10.5

 
10.7

Life Insurance Co. (11)
11.0

 
3.85
%
 
11/22
 
MOB
 
Monthly/7-yr amort.
 
22.0

 
10.4

 
—

Life Insurance Co. (12)
12.3

 
3.85
%
 
8/23
 
MOB
 
Monthly/7-yr amort.
 
24.6

 
11.5

 
—

Financial Services (13)
12.4

 
4.27
%
 
10/23
 
MOB
 
Monthly/10-yr amort.
 
24.7

 
12.2

 
—

Life Insurance Co. (14)
13.3

 
4.13
%
 
1/24
 
MOB
 
Monthly/10-yr amort.
 
21.1

 
13.3

 
13.6

Life Insurance Co. (15)
6.8

 
3.94
%
 
2/24
 
MOB
 
Monthly/7-yr amort.
 
14.5

 
6.7

 
—

Financial Services (16)
9.7

 
4.32
%
 
9/24
 
MOB
 
Monthly/10-yr amort.
 
16.4

 
8.8

 
9.1

Commercial Bank
11.5

 
3.71
%
 
1/26
 
MOB
 
Monthly/10-yr amort.
 
37.9

 
10.5

 
11.0

Commercial Bank (17)
15.0

 
5.25
%
 
4/27
 
MOB
 
Monthly/20-yr amort.
 
33.4

 
9.6

 
10.4

Municipal Government (18) (19)
11.0

 
4.79
%
 
(20) 
 
MOB
 
Semi-Annual (20)
 
20.9

 
11.4

 
11.7

 
 
 
 
 
 
 
 
 
 
 
$
400.9

 
$
155.4

 
$
115.6

______ 
(1)
The Company repaid this mortgage note in October 2017. The Company's unencumbered gross investment was $14.3 million at December 31, 2017.
(2)
The Company repaid this mortgage note in September 2017. The Company's unencumbered gross investment was $8.0 million at December 31, 2017.
(3)
The unamortized portion of the $0.6 million premium recorded on this note upon acquisition is included in the balance above.
(4)
The unamortized portion of the $0.2 million premium recorded on this note upon acquisition is included in the balance above.
(5)
The unamortized portion of the $0.3 million premium recorded on this note upon acquisition is included in the balance above.
(6)
The unaccreted portion of the $2.4 million discount recorded on this note upon acquisition is included in the balance above.
(7)
The unamortized portion of the $0.3 million premium recorded on this note upon acquisition is included in the balance above.
(8)
The unamortized portion of the $0.4 million premium recorded on this note upon acquisition is included in the balance above.
(9)
The unamortized portion of the $0.2 million premium recorded on this note upon acquisition is included in the balance above.
(10)
The unaccreted portion of the $1.0 million discount recorded on this note upon acquisition is included in the balance above.
(11)
The unaccreted portion of the $0.1 million discount recorded on this note upon acquisition is included in the balance above.
(12)
The unaccreted portion of the $0.2 million discount recorded on this note upon acquisition is included in the balance above.
(13)
The unamortized portion of the $0.4 million premium recorded upon acquisition is included in the balance above.
(14)
The unamortized portion of the $0.8 million premium recorded on this note upon acquisition is included in the balance above.
(15)
The unamortized portion of the $0.2 million premium recorded on this note upon acquisition is included in the balance above.
(16)
The unamortized portion of the $0.1 million premium recorded on this note upon acquisition is included in the balance above.
(17)
The unamortized portion of the $0.7 million premium recorded on this note upon acquisition is included in the balance above.
(18)
Balance consists of three notes secured by the same building.
(19)
The unamortized portion of the $1.0 million premium recorded on the three notes upon acquisition is included in the balance above.
(20)
These three mortgage notes payable are series municipal bonds that have maturity dates ranging from from May 2022 to May 2040. One of the four original notes payable was repaid upon maturity in May 2017. The remaining three require interest only payments and have future maturity dates but allow repayment after May 2020 without penalty. The Company intends on repaying all three notes payable at that time.
(21)
Payable in monthly installments of interest only for 24 months and then installments of principal and interest based on an 11-year amortization with the final payment due at maturity.
(22)
Payable in monthly installments of principal and interest with the final payment due at maturity (unless otherwise noted).
(23)
The contractual interest rates for the 19 outstanding mortgage notes ranged from 3.3% to 6.9% as of December 31, 2017.
(24)
MOB-Medical office building; OTH-Other.

Other Long-Term Debt Information
Future maturities of the Company’s notes and bonds payable as of December 31, 2017 were as follows:
 
(Dollars in thousands)
Principal
Maturities

 
Net Accretion/
Amortization (1)

 
Debt Issuance Costs (2)

 
Notes and Bonds Payable

%

2018
$
10,605

 
$
(18
)
 
$
(1,051
)
 
9,536

0.7
%
2019
22,711

 
(224
)
 
(1,044
)
 
21,443

1.7
%
2020
211,803

 
(382
)
 
(1,039
)
 
210,382

16.4
%
2021
17,321

 
(312
)
 
(1,025
)
 
15,984

1.2
%
2022
162,692

 
(328
)
 
(1,037
)
 
161,327

12.6
%
2023 and thereafter
868,784

 
(1,284
)
 
(2,292
)
 
865,208

67.4
%
 
$
1,293,916

 
$
(2,548
)
 
$
(7,488
)
 
1,283,880

100.0
%
______ 
(1)
Includes discount accretion and premium amortization related to the Company’s Senior Notes due 2023, Senior Notes due 2025, Senior Notes due 2028 and 18 mortgage notes payable.
(2)
Excludes approximately $3.5 million in debt issuance costs related to the Company's Unsecured Credit Facility due 2020 included in other assets.