v3.20.2
Indebtedness
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6 Months Ended |
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| Debt Disclosure [Abstract] |
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| Indebtedness |
Indebtedness
In June 2019, we entered into a second amended and restated credit agreement with Citibank, N.A., as administrative agent and lender, and a syndicate of other lenders pursuant to which we obtained a $65,000 secured revolving credit facility, or our credit facility, scheduled to mature on June 12, 2021. At our option, we may extend the maturity date for a one-year period, which is subject to payment of an extension fee and other conditions.
We paid fees of $1,271 in 2019 in connection with the closing of our credit facility, which were deferred and are being amortized over the initial term of our credit facility. Our credit facility is available for general business purposes, including acquisitions, and provides for the issuance of letters of credit. We are required to pay interest at a rate of LIBOR plus a premium of 250 basis points per annum, or at a base rate, as defined in our credit agreement, plus 150 basis points per annum, on borrowings under our credit facility; the effective annual interest rates, as of June 30, 2020, were 2.66% and 4.75%, respectively. We are also required to pay a quarterly commitment fee of 0.35% per annum on the unused portion of the available capacity under our credit facility. The weighted average annual interest rate for borrowings under our credit facility was 4.99% for the six months ended June 30, 2019. As of June 30, 2020, we had no borrowings outstanding under our credit facility. As of June 30, 2020, we had letters of credit issued in an aggregate amount of $2,442 and $51,804 available for borrowings under our credit facility. We incurred aggregate interest expense and other associated costs related to our credit facilities of $275 and $775 for the three months ended June 30, 2020 and 2019 respectively, and $539 and $1,547 for the six months ended June 30, 2020 and 2019 respectively.
Our credit facility is secured by real estate mortgages on 11 senior living communities with a combined 1,245 living units owned by certain of our subsidiaries that guarantee our obligations under our credit facility. Our credit facility is also secured by these subsidiaries’ accounts receivable and related collateral. The amount of available borrowings under our credit facility is subject to our having qualified collateral, which is primarily based on the value of the communities securing our obligations under our credit facility. Our credit facility provides for acceleration of payment of all amounts outstanding under our credit facility upon the occurrence and continuation of certain events of default, including a change of control of us, as defined in our credit agreement. Our credit agreement contains financial and other covenants, including those that restrict our ability to pay dividends or make other distributions to our shareholders in certain circumstances.
At June 30, 2020, we had seven irrevocable standby letters of credit outstanding, totaling $29,292. One of these letters of credit in the amount of $26,850, which secures our workers' compensation insurance program, is collateralized by approximately $21,543 of cash equivalents and $6,921 of debt and equity investments. This letter of credit expires in June 2021 and is automatically extended for one-year terms unless notice of nonrenewal is provided prior to the end of the applicable term. At June 30, 2020, the cash equivalents collateralizing this letter of credit, including accumulated interest, were classified as short-term restricted cash and cash equivalents in our condensed consolidated balance sheets, and the debt and equity investments collateralizing this letter of credit are classified as short-term restricted investments in our condensed consolidated balance sheets. The remaining six irrevocable standby letters of credit outstanding at June 30, 2020, totaling $2,442, secure certain of our other obligations. As of June 30, 2020, these letters of credit are scheduled to mature between October 2020 and September 2021 and are required by the beneficiaries to be renewed annually. As of June 30, 2020, our obligations under these six letters of credit, totaling $2,442, remain issued and outstanding under our credit facility.
At June 30, 2020, one of our senior living communities was encumbered by a mortgage that secured a note. This mortgage note contains standard mortgage covenants. We recorded a discount in connection with the assumption of this mortgage note as part of our acquisition of the community secured by this mortgage in order to record this mortgage note at its estimated fair value. We amortize this discount as an increase in interest expense until the maturity of this mortgage note. This mortgage note requires payments of principal and interest monthly until maturity. The following table is a summary of this mortgage note as of June 30, 2020: | | | | | | | | | | | | | | | | | | | | | | | | Balance as of | | Contractual Stated Interest Rate | | Effective Interest Rate | | Maturity Date | | Monthly Payment | | Lender Type | $ | 7,355 | | (1) | 6.20 | % | | 6.70 | % | | September 2032 | | $ | 72 | | | Federal Home Loan Mortgage Corporation |
| | (1) | Contractual principal payment excluding unamortized discount and debt issuance costs of $241. |
We incurred interest expense, net of discount amortization, of $125 and $131 with respect to the mortgage note for the three months ended June 30, 2020 and 2019, respectively, and $253 and $265 for the six months ended June 30, 2020 and 2019, respectively. Our mortgage note requires monthly payments into escrows for taxes, insurance and property replacement funds; certain withdrawals from escrows require Federal Home Loan Mortgage Corporation approval. As of June 30, 2020, we believe we were in compliance with all applicable covenants under our credit facility and mortgage note.
On April 1, 2019, we obtained from DHC a $25,000 credit facility in connection with the Restructuring Transactions. The DHC credit facility matured and was terminated on January 1, 2020, in connection with the completion of the Restructuring Transactions. There were no borrowings outstanding under the DHC credit facility at the time of such termination and we did not borrow any funds under the DHC credit facility during its term.
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- DefinitionThe 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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