Debt of the Operating Partnership |
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Debt of the Operating Partnership |
Debt of the Operating Partnership
Debt as of December 31, 2015 and 2014 consists of the following (in thousands):
Certain of our properties, which had a net book value of approximately $622.8 million at December 31, 2015, serve as collateral for mortgages payable. We maintain unsecured lines of credit that provide for borrowings of up to $520.0 million. The unsecured lines of credit include a $20.0 million liquidity line and a $500.0 million syndicated line. The syndicated line may be increased to$1.0 billion through an accordion feature in certain circumstances.
We provide guarantees to lenders for our joint ventures which include standard non-recourse carve out indemnifications for losses arising from items such as but not limited to fraud, physical waste, payment of taxes, environmental indemnities, misapplication of insurance proceeds or security deposits and failure to maintain required insurance. For construction and term loans, we may include a guaranty of completion as well as a principal guaranty ranging from 5% to 100% of principal. The principal guarantees include terms for release based upon satisfactory completion of construction and performance targets including occupancy thresholds and minimum debt service coverage tests.
The unsecured lines of credit and senior unsecured notes include covenants that require the maintenance of certain ratios, including debt service coverage and leverage, and limit the payment of dividends such that dividends and distributions will not exceed funds from operations, as defined in the agreements, for the prior fiscal year on an annual basis or 95% of funds from operations on a cumulative basis. As of December 31, 2015, we were in compliance with all of our debt covenants.
2015 Transactions
Southaven Mortgage
In April 2015, the consolidated joint venture closed on a mortgage loan with the ability to borrow up to $60.0 million at an interest rate of LIBOR +1.75%. The loan initially matures on April 29, 2018, with one two-year extension option.
Hershey Mortgage
May 2015, we repaid the mortgages associated with our Hershey outlet center, which were assumed as part of the acquisition of the property in 2011. The maturity date of the mortgages was August 1, 2015 and it had a principal balance at the date of extinguishment of $29.0 million.
Ocean City Mortgage
In July 2015, we repaid the mortgage associated with our Ocean City outlet center, which was assumed as part of the acquisition of the property in 2011. The maturity date of the mortgage was January 6, 2016 and had a principal balance at the date of extinguishment of $17.6 million.
Extension of Unsecured Lines of Credit
In October 2015, we closed on amendments to our unsecured lines of credit, extending the maturity and reducing our interest rate. The maturity date of these facilities was extended from October 2017 to October 2019 with the ability to further extend the maturity date for an additional year at our option. The interest rate was reduced from LIBOR + 1.00% to LIBOR + 0.90% based on our current credit rating and the maximum borrowings to which the syndicated line could be increased through an accordion feature in certain circumstances was increased from $750.0 million to $1.0 billion. Loan origination costs associated with the amendments totaled approximately $2.0 million.
2014 Transactions
Amendment of $250.0 Million Unsecured Term Loan
In July 2014, we entered into an amendment of our $250.0 million unsecured term loan which matures in February 2019. The amendment reduced the interest rate on the loan from LIBOR + 1.60% to LIBOR + 1.05%. No other material terms of the loan were amended.
$250.0 Million Unsecured Senior Notes
In November 2014, Tanger Properties Limited Partnership completed a public offering of $250.0 million in senior notes due 2024 in an underwritten public offering. The notes were priced at 99.429% of the principal amount to yield 3.819% to maturity. The notes will pay interest semi-annually at a rate of 3.750% per annum and mature on December 1, 2024. The net proceeds from the offering, after deducting the underwriting discount and offering expenses, were approximately $246.2 million. We used the net proceeds from the sale of the notes to redeem our $250.0 million 6.15% senior notes due November 2015. We recorded a charge of approximately $13.1 million for the make-whole premium related to the early redemption, which was completed in December 2014.
Foxwoods Mortgage
In December 2014, the consolidated joint venture closed on a mortgage loan with the ability to borrow up to $70.3 million at an interest rate of LIBOR + 1.65%. The loan initially matures in December 2017, with two one-year extension options.
2013 Transactions
Assumption of $150.0 Million Deer Park Mortgage
In August 2013, as part of the acquisition of a controlling ownership interest in Deer Park, we assumed an $150.0 million interest only mortgage loan, including a fair value discount of $1.6 million. The loan has a five year term and carries an interest rate of LIBOR + 1.50%.
Derivatives
In October 2013, to reduce our floating rate debt exposure, we entered into interest rate swap agreements on notional amounts totaling $150.0 million that fixed the base LIBOR rate at an average of 1.30% from November 2013 to August 2016.
Extension of Unsecured Lines of Credit
In October 2013, we amended our unsecured lines of credit, extending the maturity, and reducing the overall borrowing costs. The maturity of these facilities was extended from November 10, 2015 to October 24, 2017 with the ability to further extend the maturity for an additional year at our option. The annual commitment fee, which is payable on the full $520.0 million in loan commitments, was reduced from 0.175% to 0.15%, and the interest rate spread over LIBOR was reduced from 1.10% to 1.00% based on our current credit rating. Loan origination costs associated with the amendments totaled approximately $1.5 million. The lines of credit were further amended in October 2015 as discussed above.
$250.0 Million Unsecured Senior Notes
In November 2013, Tanger Properties Limited Partnership completed a public offering of $250.0 million in senior notes due 2023 in an underwritten public offering. The notes were priced at 98.360% of the principal amount to yield 4.076% to maturity. The notes will pay interest semi-annually at a rate of 3.875% per annum and mature on December 1, 2023. The net proceeds from the offering, after deducting the underwriting discount and offering expenses, were approximately $243.6 million. We used the net proceeds from the sale of the notes to repay borrowings under our unsecured lines of credit.
Debt Maturities
Maturities of the existing long-term debt as of December 31, 2015 for the next five years and thereafter are as follows (in thousands):
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