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Notes and Bonds Payable

12 Months Ended

Dec. 31, 2019



	DECEMBER 31,				MATURITY DATES	CONTRACTUAL INTEREST RATES		PRINCIPAL PAYMENTS	INTEREST PAYMENTS
Dollars in thousands	2019		2018		MATURITY DATES	CONTRACTUAL INTEREST RATES		PRINCIPAL PAYMENTS	INTEREST PAYMENTS
Unsecured Credit Facility	$	293,000	$	262,000	5/23	LIBOR + .90%		At maturity	Monthly
Unsecured Term Loan due 2024 ¹	199,013		149,183		5/24	LIBOR + 1.00%		At maturity	Monthly
Unsecured Term Loan due 2026 ²	—		—		6/26	LIBOR + 1.60%		At maturity	Monthly
Senior Notes due 2023 ¹	248,540		248,117		4/23	3.75	%	At maturity	Semi-Annual
Senior Notes due 2025 ¹	248,522		248,278		5/25	3.88	%	At maturity	Semi-Annual
Senior Notes due 2028 ¹	295,651		295,198		1/28	3.63	%	At maturity	Semi-Annual
Mortgage notes payable ³	129,343		143,208		7/20-5/40	3.31%-6.88%		Monthly	Monthly
	$	1,414,069	$	1,345,984


1	Balances are shown net of discounts and unamortized issuance costs.


2	As of December 31, 2019, there are no outstanding loans under the Unsecured Term Loan 2026. This term loan has a delayed draw feature that allows the Company up to February 2020 to draw against the $150 million commitments.


3	Balances are shown net of discounts and unamortized issuance costs and include 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, 2019, the Company was in compliance with its financial covenant provisions under its various debt instruments.

Unsecured Credit Facility

On October 14, 2011, the Company entered into a $700.0 million unsecured credit facility with a syndicate of lenders. On May 31, 2019, the Company entered into an amended and restated Unsecured Credit Facility to extend the maturity date to May 2023. The credit facility agreement provides the Company with two six-month extension options that could extend the maturity date to May 2024. Each option is subject to an extension fee of 0.0625% 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 0.775% to 1.45% (0.90% as of December 31, 2019). In addition, the Company pays a facility fee per annum on the aggregate amount of commitments ranging from 0.125% to 0.30% (0.20% as of December 31, 2019). In connection with the amendment, the Company paid up-front fees to the lenders of approximately $3.5 million, which will be amortized over the term of the facility. As of December 31, 2019, the Company had $293.0 million outstanding under the Unsecured Credit Facility with an effective interest rate of approximately 2.66% and had a remaining borrowing capacity of approximately $407.0 million.

Unsecured Term Loan due 2024

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 May 31, 2019, the Company entered into an amendment to the unsecured term loan due 2022 with a syndicate of nine lenders to extend the maturity date to May 2024 and to increase the loan amount from $150.0 million to $200 million. The Unsecured Term Loan due 2024 bears interest at a rate equal to (x) LIBOR plus (y) a margin ranging from 0.85% to 1.65% (1.00% as of December 31, 2019) based upon the Company's unsecured debt ratings. Payments under the Unsecured Term Loan due 2024 are interest only, with the full amount of the principal due at maturity. The Unsecured Term Loan due 2024 may be prepaid at any time, without penalty. The Unsecured Term Loan due 2024 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. As of December 31, 2019, the Company had interest rate swaps totaling $175.0 million to hedge the 1-month LIBOR portion of the cost of borrowing under the Unsecured Term Loan due 2024 at a weighted average rate of 2.29%. The outstanding balance on the Unsecured Term Loan due 2024 was $200.0 million as of December 31, 2019 with an effective interest rate of approximately 3.27% including the impact of the interest rate swaps. In connection

with the amendment, the Company paid up-front fees to the lenders of approximately $0.7 million, of which $0.4 million was capitalized and will be amortized over the term of the loan, and $0.3 million was expensed during the second quarter of 2019. For each of the years ended December 31, 2019, 2018, and 2017 the Company amortized approximately $0.2 million of the debt issuance costs which is included in interest expense on the Company's Consolidated Statements of Income. The following table reconciles the balance of the Unsecured Term Loan due 2024 on the Company’s Consolidated Balance Sheets as of December 31, 2019 and 2018:



	DECEMBER 31,
Dollars in thousands	2019			2018
Unsecured Term Loan due 2024 principal balance	$	200,000		$	150,000
Debt issuance costs	(987		)	(817		)
Unsecured Term Loan due 2024 carrying amount	$	199,013		$	149,183

Unsecured Term Loan due 2026

On May 31, 2019, the Company amended and restated its term loan agreement with a syndicate of lenders. The Unsecured Term Loan due 2026 has a delayed draw feature that allows the Company up to nine months to draw against the $150.0 million commitments. Loans outstanding under the Unsecured Term Loan due 2026 will bear interest at a rate equal to LIBOR plus a margin ranging from 1.45% to 2.40% (1.60% at December 31, 2019). As of December 31, 2019, no loans were outstanding under the Unsecured Term Loan due 2026. Committed amounts that remain undrawn are subject to a ticking fee ranging from 0.125% to 0.30% per annum (0.20% at December 31, 2019). In connection with the amendment, the Company paid up-front fees to the lenders of approximately $1.1 million, of which $0.7 million was capitalized and will be amortized over the term of the loan, and $0.4 million was expensed during the second quarter of 2019.

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, 2019, 2018 and 2017, 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, 2019 and 2018:



	DECEMBER 31,
Dollars in thousands	2019			2018
Senior Notes due 2023 face value	$	250,000		$	250,000
Unaccreted discount	(761		)	(974		)
Debt issuance costs	(699		)	(909		)
Senior Notes due 2023 carrying amount	$	248,540		$	248,117

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 each of the years ended December 31, 2019 , 2018, and 2017 the Company amortized approximately $0.2 million 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, 2019 and 2018:



	DECEMBER 31,
Dollars in thousands	2019			2018
Senior Notes due 2025 face value	$	250,000		$	250,000
Unaccreted discount	(121		)	(141		)
Debt issuance costs	(1,357		)	(1,581		)
Senior Notes due 2028 carrying amount	$	248,522		$	248,278

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. For the year ended December 31, 2019, the Company amortized approximately $0.2 million of the discount and $0.2 million of the debt issuance costs which are included in interest expense on the Company's Consolidated Statements of Income. 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, 2019:



	DECEMBER 31,
Dollars in thousands	2019			2018
Senior Notes due 2028 face value	$	300,000		$	300,000
Unaccreted discount	(2,100		)	(2,319		)
Debt issuance costs	(2,249		)	(2,483		)
Senior Notes due 2028 carrying amount	$	295,651		$	295,198

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, 2019 and 2018. For the years ended December 31, 2019, 2018 and 2017, the Company amortized approximately $0.6 million, $0.4 million and $0.3 million of the discount and $0.4 million, $0.8 million, and $0.7 million of the premium. For the years ended December 31, 2019, 2018 and 2017, the Company also amortized approximately $0.2 million, $0.1 million, and $0.1 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	2019			2018
Mortgage notes payable principal balance	$	129,258		$	143,115
Unamortized premium	1,162			1,805
Unaccreted discount	(528		)	(968		)
Debt issuance costs	(549		)	(744		)
Mortgage notes payable carrying amount	$	129,343		$	143,208

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



	ORIGINAL BALANCE		EFFECTIVE INTEREST RATE ²⁰		MATURITY DATE	COLLATERAL ²¹	PRINCIPAL AND INTEREST PAYMENTS ¹⁹	INVESTMENT IN COLLATERAL at December 31,		BALANCE at December 31,
Dollars in millions	ORIGINAL BALANCE		EFFECTIVE INTEREST RATE ²⁰		MATURITY DATE	COLLATERAL ²¹	PRINCIPAL AND INTEREST PAYMENTS ¹⁹	2019		2019		2018
Commercial Bank ¹	$	9.4	4.55	%	7/19	MOB	Monthly/8-yr amort	$	—	$	—	$	9.0
Commercial Bank ²	15.2		7.65	%	7/20	MOB	¹⁸	18.6		12.5		12.5
Life Insurance Co. ³	7.9		4.00	%	8/20	MOB	Monthly/15-yr amort.	20.7		0.5		1.3
Life Insurance Co. ⁴	7.3		5.25	%	8/20	MOB	Monthly/27-yr amort.	18.1		6.0		6.2
Life Insurance Co. ⁵	5.6		4.30	%	1/21	MOB	Monthly/10-yr amort.	15.8		4.5		4.6
Commercial Bank ⁶	12.9		6.43	%	2/21	MOB	Monthly/12-yr amort.	55.2		10.1		10.3
Life Insurance Co. ⁷	11.0		3.87	%	11/22	MOB	Monthly/7-yr amort.	22.0		10.0		10.2
Life Insurance Co. ⁸	12.3		3.86	%	8/23	MOB	Monthly/7-yr amort.	25.4		10.9		11.2
Financial Services ⁹	12.4		4.27	%	10/23	MOB	Monthly/10-yr amort.	22.6		11.7		12.0
Life Insurance Co. ¹⁰	9.0		4.84	%	12/23	MOB,OFC	Monthly/10-yr amort.	25.7		7.6		7.8
Life Insurance Co. ¹¹	13.3		4.13	%	1/24	MOB	Monthly/10-yr amort.	20.8		12.7		13.0
Life Insurance Co. ¹²	6.8		3.96	%	2/24	MOB	Monthly/7-yr amort.	14.6		6.4		6.6
Financial Services ¹³	9.7		4.32	%	9/24	MOB	Monthly/10-yr amort.	17.0		8.3		8.6
Commercial Bank	11.5		3.71	%	1/26	MOB	Monthly/10-yr amort.	38.6		9.6		10.1
Commercial Bank ¹⁴	15.0		5.25	%	4/27	MOB	Monthly/20-yr amort.	33.5		7.9		8.8
Municipal Government ^{15, 16}	11.0		4.79	%	¹⁷	MOB	Semi-Annual ¹⁷	21.0		10.6		11.0
								$	369.6	$	129.3	$	143.2


1	The Company repaid this mortgage note in April 2019. The Company's unencumbered gross investment was $27.8 million at December 31, 2019.


2	The unaccreted portion of the $2.4 million discount recorded on this note upon acquisition is included in the balance above.


3	The unamortized portion of the $0.3 million premium recorded on this note upon acquisition is included in the balance above.


4	The unamortized portion of the $0.4 million premium recorded on this note upon acquisition is included in the balance above. This mortgage note payable was repaid in full on February 3, 2020.


5	The unamortized portion of the $0.2 million premium recorded on this note upon acquisition is included in the balance above.


6	The unaccreted portion of the $1.0 million discount recorded on this note upon acquisition is included in the balance above.


7	The unaccreted portion of the $0.1 million discount recorded on this note upon acquisition is included in the balance above.


8	The unaccreted portion of the $0.2 million discount recorded on this note upon acquisition is included in the balance above.


9	The unamortized portion of the $0.4 million premium recorded on this note upon acquisition is included in the balance above.


10	The unamortized portion of the $0.1 million premium recorded on this note upon acquisition is included in the balance above.


11	The unamortized portion of the $0.8 million premium recorded on this note upon acquisition is included in the balance above.


12	The unamortized portion of the $0.2 million premium recorded on this note upon acquisition is included in the balance above.


13	The unamortized portion of the $0.1 million premium recorded on this note upon acquisition is included in the balance above.


14	The unamortized portion of the $0.7 million premium recorded on this note upon acquisition is included in the balance above.


15	Balance consists of three notes secured by the same building.


16	The unamortized portion of the $1.0 million premium recorded on the three notes upon acquisition is included in the balance above.

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.


18	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.


19	Payable in monthly installments of principal and interest with the final payment due at maturity (unless otherwise noted).


20	The contractual interest rates for the 17 outstanding mortgage notes ranged from 3.3% to 6.9% as of December 31, 2019.


21	MOB-Medical office building. OFC-Office

Other Long-Term Debt Information

Future maturities of the Company’s notes and bonds payable as of December 31, 2019 were as follows:



Dollars in thousands	PRINCIPAL MATURITIES		NET ACCRETION/ AMORTIZATION ¹			DEBT ISSUANCE COSTS ²			NOTES AND BONDS PAYABLE		%
2020	$	23,064	$	(392	)	$	(1,081	)	$	21,591	1.5	%
2021	17,594		(326		)	(1,065		)	16,203		1.1	%
2022	12,977		(336		)	(1,077		)	11,564		0.8	%
2023	573,230		(183		)	(921		)	572,126		40.5	%
2024	225,966		(262		)	(667		)	225,037		15.9	%
2025 and thereafter	569,427		(849		)	(1,030		)	567,548		40.2	%
	$	1,422,258	$	(2,348	)	$	(5,841	)	$	1,414,069	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 16 mortgage notes payable.

Excludes approximately $5.0 million in debt issuance costs related to the Company's Unsecured Credit Facility and Unsecured Term Loan due 2026 included in other assets, net.