Mortgages and Notes Payable

12 Months Ended

Dec. 31, 2023

Debt Disclosure [Abstract]

Mortgages and Notes Payable

Mortgages and Notes Payable

Our mortgages and notes payable consisted of the following:

	December 31,
	2023		2022
Secured indebtedness (1):
5.69% mortgage loan due 2028	$	200,000	$	—
7.29% mortgage loan due 2028 (2)	45,000		—
4.27% (3.61% effective rate) mortgage loan due 2028 (3)	110,391		113,105
4.00% mortgage loan due 2029	87,003		89,204
3.61% (3.19% effective rate) mortgage loan due 2029 (4)	84,360		84,666
3.40% (3.50% effective rate) mortgage loan due 2033 (5)	69,524		69,473
4.60% (3.73% effective rate) mortgage loan due 2037 (6)	124,474		127,540
	720,752		483,988
Unsecured indebtedness:
3.875% (4.038% effective rate) notes due 2027 (7)	298,734		298,334
4.125% (4.271% effective rate) notes due 2028 (8)	348,276		347,863
4.200% (4.234% effective rate) notes due 2029 (9)	349,484		349,386
3.050% (3.079% effective rate) notes due 2030 (10)	399,400		399,302
2.600% (2.645% effective rate) notes due 2031 (11)	398,892		398,735
7.650% (7.836% effective rate) notes due 2034 (12)	345,407		—
Variable rate term loan due 2026 (13)	200,000		200,000
Variable rate term loan due 2027 (13)	150,000		150,000
Variable rate term loan due 2024 (14)	—		200,000
Revolving credit facility due 2025 (15)	20,000		386,000
	2,510,193		2,729,620
Less-unamortized debt issuance costs	(17,739)		(16,393)
Total mortgages and notes payable, net	$	3,213,206	$	3,197,215

__________

(1)Our secured mortgage loans were collateralized by real estate assets with an undepreciated book value of $1,237.6 million as of December 31, 2023. We paid down $6.7 million of secured loan balances through principal amortization during 2023.

(2)The borrower under this loan is our Midtown West joint venture, a consolidated 80.0% owned joint venture. See Note 4.

(3)Net of unamortized fair market value premium of $2.7 million and $3.3 million as of December 31, 2023 and 2022, respectively.

(4)Net of unamortized fair market value premium of $1.7 million and $2.0 million as of December 31, 2023 and 2022, respectively.

(5)Net of unamortized fair market value discount of $0.5 million as of both December 31, 2023 and 2022.

(6)Net of unamortized fair market value premium of $8.6 million and $9.3 million as of December 31, 2023 and 2022, respectively.

(7)Net of unamortized original issuance discount of $1.3 million and $1.7 million as of December 31, 2023 and 2022, respectively.

(8)Net of unamortized original issuance discount of $1.7 million and $2.1 million as of December 31, 2023 and 2022, respectively.

(9)Net of unamortized original issuance discount of $0.5 million and $0.6 million as of December 31, 2023 and 2022, respectively.

(10)Net of unamortized original issuance discount of $0.6 million and $0.7 million as of December 31, 2023 and 2022, respectively.

(11)Net of unamortized original issuance discount of $1.1 million and $1.3 million as of December 31, 2023 and 2022, respectively.

(12)Net of unamortized original issuance discount of $4.6 million as of December 31, 2023.

(13)The interest rate was 6.35% as of December 31, 2023.

(14)This loan was repaid in full as of December 31, 2023.

(15)The interest rate was 6.25% as of December 31, 2023.

The following table sets forth scheduled future principal payments, including amortization, due on our mortgages and notes payable as of December 31, 2023:

Years Ending December 31,	Amount
2024	$	6,944
2025	27,156
2026	206,922
2027	458,976
2028	699,168
Thereafter	1,831,779
Less-unamortized debt issuance costs	(17,739)
	$	3,213,206

As of December 31, 2023,our $750.0 million unsecured revolving credit facility was scheduled to mature in March 2025. The interest rate on our revolving credit facility was SOFR plus a related spread adjustment of 10 basis points and a borrowing spread of 85 basis points, based on current credit ratings. The annual facility fee was 20 basis points. The interest rate and facility fee were based on the higher of the publicly announced ratings from Moody’s Investors Service or Standard & Poor’s Ratings Services. We were entitled to a temporary reduction in the interest rate of one basis point provided we meet certain sustainability goals with respect to the ongoing reduction of greenhouse gas emissions. As of December 31, 2023, there was $20.0 million outstanding under our revolving credit facility and $0.9 million of outstanding letters of credit, which reduces the availability on our revolving credit facility. As a result, the unused capacity of our revolving credit facility as of December 31, 2023 was $729.1 million.

During 2023, the Operating Partnership issued $350.0 million aggregate principal amount of 7.650% notes due February 2034, less original issuance discount of $4.6 million. These notes were priced to yield 7.836%. Previously during 2023, we obtained an aggregate of $200.0 million notional amount of forward-starting swaps that effectively locked the underlying 10-year treasury rate at 4.498%. Upon the subsequent issuance of the notes, we terminated the forward-starting swaps and paid cash upon settlement. The unrealized loss of $0.5 million will be classified to interest expense as interest payments are made on the debt. Underwriting fees and other expenses totaled $3.2 million and will be amortized over the term of the notes. The net proceeds from the issuance were used: (1) to prepay, without penalty, a $200.0 million unsecured bank term loan that was scheduled to mature in October 2024; (2) to repay amounts outstanding under our revolving credit facility; and (3) for general corporate purposes. We recorded $0.6 million of loss on debt extinguishment related to the term loan prepayment.

During 2023, we obtained a $200.0 million, five-year secured mortgage loan from a third party lender, with an effective fixed interest rate of 5.69%. This loan is scheduled to mature in April 2028. We incurred $1.3 million of debt issuance costs, which will be amortized over the term of the loan.

During 2022, we obtained a $200.0 million, two-year unsecured bank term loan that was originally scheduled to mature in October 2024. This loan was prepaid in full without penalty during the fourth quarter of 2023. The interest rate, based on current credit ratings, was SOFR plus a related spread adjustment of 10 basis points and a borrowing spread of 95 basis points. The interest rate was based on the higher of the publicly announced ratings from Moody’s Investors Service or Standard & Poor’s Ratings Services. We were entitled to a temporary reduction in the interest rate of one basis point provided we met certain sustainability goals with respect to the ongoing reduction of greenhouse gas emissions. We used the additional $200.0 million of borrowings, together with available cash and borrowings under our revolving credit facility, to prepay without penalty $250.0 million principal amount of 3.625% unsecured notes that were scheduled to mature in January 2023.

During 2022, we modified our other $200.0 million unsecured bank term loan to extend the maturity date from November 2022 to May 2026. As part of this modification, we also obtained a $150.0 million delayed-draw term loan, which was drawn in its entirety in the third quarter of 2022, that is scheduled to mature in May 2027. The interest rate, based on current credit ratings, is SOFR plus a related spread adjustment of 10 basis points and a borrowing spread of 95 basis points. The interest rate is based on the higher of the publicly announced ratings from Moody’s Investors Service or Standard & Poor’s Ratings Services. Subject to written consent of the lenders, we may elect to amend this term loan no later than May 15, 2024 to provide that the interest rate may be adjusted upward or downward by up to 2.5 basis points subject to satisfaction of certain to-be-determined sustainability goals with respect to the ongoing reduction of greenhouse gas emissions. We incurred $2.7 million of debt issuance costs, which are being amortized along with certain existing unamortized debt issuance costs over the remaining term of our modified term loan.

During 2021, in conjunction with the acquisition of real estate assets from PAC, we assumed four secured mortgage loans recorded at fair value of $403 million in the aggregate, with a weighted average effective interest rate of 3.54% and a weighted average maturity of 10.7 years. We incurred $3.5 million of debt issuance costs related to these assumptions, which will be amortized over the remaining terms of the loans.

During 2021, we also obtained a $200.0 million, six-month unsecured bridge facility. The bridge facility was originally scheduled to mature in January 2022. The bridge facility bore interest at LIBOR plus 85 basis points, had a commitment fee of 20 basis points. We incurred $1.0 million of debt issuance costs related to this bridge facility which were being amortized over the six-month term. This bridge facility was prepaid in full without penalty prior to December 31, 2021. We recorded $0.2 million of loss on debt extinguishment related to this prepayment.

During 2021, we prepaid without penalty the remaining $150.0 million principal amount of 3.20% unsecured notes that was scheduled to mature in June 2021. We recorded $0.1 million of loss on debt extinguishment related to this prepayment.

We previously entered into floating-to-fixed interest rate swaps through January 2022 with respect to an aggregate of $50.0 million LIBOR-based borrowings. These swaps effectively fixed the underlying one-month LIBOR rate at a weighted average rate of 1.693%. During 2022, these interest rate swaps expired.

We are currently in compliance with financial covenants with respect to our consolidated debt.

Our revolving credit facility and bank term loans require us to comply with customary operating covenants and various financial requirements. Upon an event of default on the revolving credit facility, the lenders having at least 51.0% of the total commitments under the revolving credit facility can accelerate all borrowings then outstanding, and we could be prohibited from borrowing any further amounts under our revolving credit facility, which would adversely affect our ability to fund our operations. In addition, certain of our unsecured debt agreements contain cross-default provisions giving the unsecured lenders the right to declare a default if we are in default under more than $35.0 million with respect to other loans in some circumstances.

The Operating Partnership has $2,140.2 million carrying amount of various notes outstanding as detailed in the table above. The indenture that governs these outstanding notes requires us to comply with customary operating covenants and various financial ratios. The trustee or the holders of at least 25.0% in principal amount of any series of notes can accelerate the principal amount of such series upon written notice of a default that remains uncured after 60 days.

We have considered our short-term liquidity needs within one year from February 6, 2024 (the date of issuance of the annual financial statements) and the adequacy of our estimated cash flows from operating activities and other available financing sources to meet these needs. Importantly, we have no scheduled debt maturities during such one-year period. We have concluded it is probable we will meet these short-term liquidity requirements through a combination of the following:

•available cash and cash equivalents;

•cash flows from operating activities;

•issuance of debt securities by the Operating Partnership;

•issuance of secured debt;

•bank term loans;

•borrowings under our revolving credit facility;

•issuance of equity securities by the Company or the Operating Partnership; and

•the disposition of non-core assets.

Capitalized Interest

Total interest capitalized to wholly-owned and joint venture development and significant building and tenant improvement projects was $9.0 million, $4.0 million and $9.6 million for the years ended December 31, 2023, 2022 and 2021, respectively.