Quarterly report pursuant to Section 13 or 15(d)

Debt of the Operating Partnership

v3.20.2
Debt of the Operating Partnership
6 Months Ended
Jun. 30, 2020
Tanger Properties Limited Partnership [Member]  
Debt of the Operating Partnership Debt of the Operating Partnership

The debt of the Operating Partnership consisted of the following (in thousands):
 
 
 
 
 
 
 
 
As of
 
As of
 
 
 
 
 
 
 
 
June 30, 2020
 
December 31, 2019
 
 
Stated Interest Rate(s)
 
Maturity Date
 
Principal
 
Book Value(1)
 
Principal
 
Book Value(1)
Senior, unsecured notes:
 
 
 
 
 
 

 
 
 
 
 
 
Senior notes
 
3.875
%
 
 
 
December 2023
 
$
250,000

 
$
247,635

 
$
250,000

 
$
247,308

Senior notes
 
3.750
%
 
 
 
December 2024
 
250,000

 
248,309

 
250,000

 
248,127

Senior notes
 
3.125
%
 
 
 
September 2026
 
350,000

 
346,492

 
350,000

 
346,215

Senior notes
 
3.875
%
 
 
 
July 2027
 
300,000

 
297,149

 
300,000

 
296,953

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mortgages payable:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Atlantic City (2)(3)
 
5.14
%
-
7.65%
 
November 2021- December 2026
 
29,151

 
30,575

 
30,909

 
32,531

     Southaven
 
LIBOR

+
1.80%
 
April 2021
 
51,400

 
51,322

 
51,400

 
51,272

Unsecured term loan
 
LIBOR(4)

+
1.00%
 
April 2024
 
350,000

 
347,003

 
350,000

 
347,367

Unsecured lines of credit
 
LIBOR(4)

+
1.00%
 
October 2021 (5)
 
399,830

 
397,407

 

 

 
 
 
 
 
 
 
 
$
1,980,381

 
$
1,965,892

 
$
1,582,309

 
$
1,569,773

(1)
Including premiums and net of debt discount and debt origination costs.
(2)
The effective interest rate assigned during the purchase price allocation to the Atlantic City mortgages assumed during the acquisition in 2011 was 5.05%.
(3)
Principal and interest due monthly with remaining principal due at maturity.
(4)
If the LIBOR is less than 0.25% per annum, the rate will be deemed to be 0.25%.
(5)
Unsecured lines of credit have a one-year extension option to extend maturity to October 2022.

Certain of our properties, which had a net book value of approximately $169.5 million at June 30, 2020, serve as collateral for mortgages payable. We maintain unsecured lines of credit that provide for borrowings of up to $600.0 million. The unsecured lines of credit include a $20.0 million liquidity line and a $580.0 million syndicated line. The syndicated line may be increased up to $1.2 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 or reduction based upon satisfactory completion of construction and performance targets including occupancy thresholds and minimum debt service coverage tests. As of June 30, 2020, the maximum amount of unconsolidated joint venture debt guaranteed by the Company was $16.4 million.

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 June 30, 2020, we believe we were in compliance with all of our debt covenants.

Lines of credit and Term Loan Covenant Modifications
In June 2020, we amended the debt agreements for our lines of credit and bank term loan, primarily to improve future covenant flexibility. The amendments, among other things, allow us to access the existing surge leverage provision, which provides for an increase to the maximum thresholds to 65% from 60% for total leverage and unsecured leverage, for twelve months starting July 1, 2020, during which time share repurchases are prohibited. Additionally, the leverage covenants are determined based on the calculation period which is modified to be based on the immediately preceding three calendar month period annualized for the calculation date occurring on December 31, 2020; the immediately preceding six calendar month period annualized for the calculation date occurring on March 31, 2021; the immediately preceding nine calendar month period annualized for the calculation date occurring on June 30, 2021; and for all other calculation dates occurring during the term on the agreement, the immediately preceding twelve calendar month period. Some definitional modifications related to the calculation of certain covenants are permanent, including the netting of cash balances in excess of $30.0 million (or debt maturing in the next 24 months, if less) as well as using adjusted EBITDA, which adds back general and administrative expenses not attributable to the subsidiaries or properties and deducts a management fee of 3% of rental revenues in liability and asset calculations for certain covenants. The amendments revised the interest rate to provide a LIBOR floor of 0.25% for the portions of the lines of credit and bank term loan that are not fixed with an interest rate swap. Although the amended covenants provide additional flexibility and we expect to remain in compliance with such covenants, the potential impacts from COVID 19 are highly uncertain and therefore could impact covenant compliance in the future.

Unsecured Lines of Credit
In March 2020, in response to the COVID-19 pandemic, we drew down approximately $599.8 million under our unsecured lines of credit to increase liquidity and preserve financial flexibility to help ensure that we are able to meet our obligations for a sustained period. In June 2020, we repaid $200.0 million of the outstanding balances bringing the outstanding balance to $399.8 million. Additionally, subsequent to June 30, 2020 through July 31, 2020, we repaid an additional $320.0 million.

Interest Rate Spread over LIBOR
In February 2020, due to a change in our credit rating, our interest rate spread over LIBOR on our $600.0 million unsecured line of credit facility increased from 0.875% to 1.0% and our annual facility fee increased from 0.15% to 0.20%. In addition, our interest rate spread over LIBOR on our $350.0 million unsecured term loan increased from 0.90% to 1.0%.

Debt Maturities

Maturities of the existing long-term debt as of June 30, 2020 for the next five years and thereafter are as follows (in thousands):
Calendar Year
 
Amount

For the remainder of 2020
 
$
1,808

2021
 
457,023

2022
 
4,436

2023
 
254,768

2024
 
605,140

Thereafter
 
657,206

Subtotal
 
1,980,381

Net discount and debt origination costs
 
(14,489
)
Total
 
$
1,965,892


Given the financial implications of COVID-19, we have considered our short-term (one year or less from the date of filing these financial statements) liquidity needs and the adequacy of our estimated cash flows from operating activities and other financing sources to meet these needs. These other sources include but are not limited to: existing cash, ongoing relationships with certain financial institutions, our ability to sell debt or issue equity subject to market conditions and proceeds from the potential sale of non-core assets. We believe that we have access to the necessary financing to fund our short-term liquidity needs.