Notes and Bonds Payable

6 Months Ended

Jun. 30, 2011

Note 4. Notes and Bonds Payable

The table below details the Company’s notes and bonds payable as of June 30, 2011 and December 31, 2010.


	June 30,		Dec. 31,		Maturity		Contractual			Principal	Interest
(Dollars in thousands)	2011		2010		Dates		Interest Rates			Payments	Payments

Unsecured Credit Facility due 2012	$	123,000	$	—		9/12	LIBOR + 2.80%			At maturity	Quarterly
Senior Notes due 2011, including premium		—		278,311		—		8.125	%	At maturity	Semi-Annual
Senior Notes due 2014, net of discount		264,298		264,227		4/14		5.125	%	At maturity	Semi-Annual
Senior Notes due 2017, net of discount		298,340		298,218		1/17		6.500	%	At maturity	Semi-Annual
Senior Notes due 2021, net of discount		396,930		396,812		1/21		5.750	%	At maturity	Semi-Annual
Mortgage notes payable, net of discount and including premiums		169,061		170,287		4/13-10/30		5.000%-7.625	%	Monthly	Monthly

	$	1,251,629	$	1,407,855

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 minimum tangible net worth and impose certain limits on the Company’s ability to incur indebtedness and create liens or encumbrances. At June 30, 2011, the Company was in compliance with the financial covenant provisions under all of its various debt instruments.

Unsecured Credit Facility due 2012

In 2009, the Company entered into an amended and restated $550.0 million unsecured credit facility (the “Unsecured Credit Facility”) with a syndicate of 16 lenders that matures on September 30, 2012. Amounts outstanding under the Unsecured Credit Facility bear interest at a rate equal to (x) LIBOR or the base rate (defined as the highest of (i) the Federal Funds Rate plus 0.5%; (ii) the Bank of America prime rate and (iii) LIBOR) plus (y) a margin ranging from 2.15% to 3.20% (2.80% at June 30, 2011) for LIBOR-based loans and 0.90% to 1.95% for base rate loans (1.55% at June 30, 2011), based upon the Company’s unsecured debt ratings. In addition, the Company pays a facility fee per annum on the aggregate amount of commitments. The facility fee is 0.40% per annum, unless the Company’s credit rating falls below a BBB-/Baa3, at which point the facility fee would be 0.50%. At June 30, 2011, the Company had $123.0 million outstanding under the Unsecured Credit Facility with a weighted average interest rate of approximately 2.99% and had borrowing capacity remaining, under its financial covenants, of approximately $427.0 million.

Senior Notes due 2011

On March 28, 2011, the Company redeemed its unsecured senior notes due 2011 (the “Senior Notes due 2011”) at a redemption price equal to an aggregate of $289.4 million, consisting of outstanding principal of $278.2 million, accrued interest as of the redemption date of $9.2 million, and a “make-whole” amount of approximately $2.0 million for the early extinguishment of the debt, which was approximately equal to the interest that would have been paid between the redemption date and the maturity date. The Senior Notes due 2011, issued in 2001, bore interest at 8.125% per annum, payable semi-annually on May 1 and November 1, and were due to mature on May 1, 2011. The unamortized net gain on these notes was fully amortized upon redemption.

Senior Notes due 2014

In 2004, the Company issued $300.0 million of unsecured senior notes due 2014 (the “Senior Notes due 2014”) that bear interest at 5.125% per annum, payable semi-annually on April 1 and October 1, and are due on April 1, 2014, unless redeemed earlier by the Company. The Senior Notes due 2014 were issued at a discount of approximately $1.5 million, yielding an effective interest rate of 5.19% per annum. In previous years, the Company repurchased approximately $35.3 million of the Senior Notes due 2014 and amortized a pro-rata portion of the discount upon the repurchases. The following table reconciles the balance of the Senior Notes due 2014 on the Company’s Condensed Consolidated Balance Sheets.


	June 30,			December 31,
(Dollars in thousands)	2011			2010

Senior Notes due 2014 face value	$	264,737		$	264,737
Unaccreted discount		(439	)		(510	)

Senior Notes due 2014 carrying amount	$	264,298		$	264,227

Senior Notes due 2017

In 2009, the Company issued $300.0 million of unsecured senior notes due 2017 (the “Senior Notes due 2017”) that bear interest at 6.50% per annum, payable semi-annually on January 17 and July 17, and are due on January 17, 2017, unless redeemed earlier by the Company. The Senior Notes due 2017 were issued at a discount of approximately $2.0 million, yielding an effective interest rate of 6.618% per annum. For the quarter ended June 30, 2011, the Company amortized approximately $0.1 million of the discount which is included in interest expense on the Company’s Condensed Consolidated Statements of Operations. The following table reconciles the balance of the Senior Notes due 2017 on the Company’s Condensed Consolidated Balance Sheets.


	June 30,			December 31,
(Dollars in thousands)	2011			2010

Senior Notes due 2017 face value	$	300,000		$	300,000
Unaccreted discount		(1,660	)		(1,782	)

Senior Notes due 2017 carrying amount	$	298,340		$	298,218

Senior Notes due 2021

In December 2010, the Company issued $400.0 million of unsecured senior notes due 2021 (the “Senior Notes due 2021”) that bear interest at 5.75%, payable semi-annually on January 15 and July 15, beginning July 15, 2011, and are due on January 15, 2021, unless redeemed earlier by the Company. The Senior Notes due 2021 were issued at a discount of approximately $3.2 million, which yielded a 5.855% interest rate per annum upon issuance. For the quarter ended June 30, 2011, the Company amortized approximately $0.1 million of the discount which is included in interest expense on the Company’s Condensed Consolidated Statements of Operations. The following table reconciles the balance of the Senior Notes due 2021 on the Company’s Condensed Consolidated Balance Sheets.


	June 30,			December 31,
(Dollars in thousands)	2011			2010

Senior Notes due 2021 face value	$	400,000		$	400,000
Unaccreted discount		(3,070	)		(3,188	)

Senior Notes due 2021 carrying amount	$	396,930		$	396,812

Mortgage Notes Payable

The following table reconciles the Company’s aggregate mortgage notes principal balance with the Company’s Condensed Consolidated Balance Sheets.


	June 30,			December 31,
(Dollars in thousands)	2011			2010

Mortgage notes payable principal balance	$	175,023		$	176,638
Unaccreted discount, net of premium		(5,962	)		(6,351	)

Mortgage notes payable carrying amount	$	169,061		$	170,287

The following table further details the Company’s mortgage notes payable, with related collateral, at June 30, 2011.


									Investment in
			Effective						Collateral at		Balance at
	Original		Interest			Maturity			June 30,		June 30,		Dec. 31,
(Dollars in millions)	Balance		Rate (13)			Date		Collateral (14)	2011		2011		2010

Life Insurance Co. (1)	$	4.7		7.765	%		1/17	MOB	$	11.5	$	2.1	$	2.2
Commercial Bank (2)		1.8		5.550	%		10/30	OTH		7.9		1.7		1.7
Life Insurance Co. (3)		15.1		5.490	%		1/16	MOB		32.7		13.3		13.5
Commercial Bank (4)		17.4		6.480	%		5/15	MOB		19.9		14.5		14.5
Commercial Bank (5)		12.0		6.110	%		7/15	2 MOBs		19.4		9.8		9.7
Commercial Bank (6)		15.2		7.650	%		7/20	MOB		20.2		12.8		12.8
Life Insurance Co. (7)		1.5		6.810	%		7/16	MOB		2.2		1.1		1.2
Commercial Bank (8)		12.9		6.430	%		2/21	MOB		20.5		11.4		11.5
Investment Fund (9)		80.0		7.250	%		12/16	15 MOBs		154.0		78.8		79.2
Life Insurance Co. (10)		7.0		5.530	%		1/18	MOB		14.5		3.8		4.0
Investment Co. (11)		15.9		6.550	%		4/13	MOB		23.3		15.4		15.6
Investment Co. (12)		4.6		5.250	%		9/15	MOB		6.9		4.4		4.4

									$	333.0	$	169.1	$	170.3


(1)		Payable in monthly installments of principal and interest based on a 20-year amortization with the final payment due at maturity.

(2)		Payable in monthly installments of principal and interest based on a 27-year amortization with the final payment due at maturity.

(3)		Payable in monthly installments of principal and interest based on a 10-year amortization with the final payment due at maturity.

(4)		Payable in monthly installments of principal and interest based on a 10-year amortization with the final payment due at maturity. The unaccreted portion of the $2.7 million discount recorded on this note upon acquisition is included in the balance above.

(5)		Payable in monthly installments of principal and interest based on a 10-year amortization with the final payment due at maturity. The unaccreted portion of the $2.1 million discount recorded on this note upon acquisition is included in the balance above.

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

(7)		Payable in monthly installments of principal and interest based on a 9-year amortization with the final payment due at maturity. The unaccreted portion of the $0.2 million discount recorded on this note upon acquisition is included in the balance above.

(8)		Payable in monthly installments of principal and interest based on a 12-year amortization with the final payment due at maturity. The unaccreted portion of the $1.0 million discount recorded on this note upon acquisition is included in the balance above.

(9)		Payable in monthly installments of principal and interest based on a 30-year amortization with a 7-year initial term (maturity 12/01/16) and the option to extend the initial term for two, one-year floating rate extension terms.

(10)		Payable in monthly installments of principal and interest based on a 15-year amortization with the final payment due at maturity. The Company acquired this mortgage note in an acquisition during the third quarter 2010.

(11)		Payable in monthly installments of principal and interest based on a 30-year amortization with the option to extend for three years at a fixed rate of 6.75%. The unamortized portion of the $0.5 million premium recorded on this note upon acquisition is included in the balance above.

(12)		Payable in monthly installments of principal and interest with a balloon payment of $4.0 million due at maturity.

(13)		The contractual interest rates ranged from 5.00% to 7.625% at June 30, 2011.

(14)		MOB-Medical office building; OTH-Other.

Long-Term Debt Maturities

Future maturities of the Company’s notes and bonds payable as of June 30, 2011 were:


	Principal		Net Accretion/			Notes and
(Dollars in thousands)	Maturities		Amortization (1)			Bonds Payable		%

2011 (remaining)	$	1,665	$	(720	)	$	945		0.1	%
2012 (2)		126,491		(1,508	)		124,983		10.0	%
2013		18,284		(1,738	)		16,546		1.3	%
2014		268,460		(1,786	)		266,674		21.3	%
2015		32,632		(1,443	)		31,189		2.5	%
2016 and thereafter		815,228		(3,936	)		811,292		64.8	%

	$	1,262,760	$	(11,131	)	$	1,251,629		100.0	%


(1)		Includes discount accretion and premium amortization related to the Company’s Senior Notes due 2014, Senior Notes due 2017, Senior Notes due 2021 and six mortgage notes payable.

(2)		Includes $123.0 million outstanding on the Company’s Unsecured Credit Facility.

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

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