Debt | Debt The following table presents the Company's debt as of December 31, 2016 and 2015 : Carrying Amount Interest Rate as of December 31, 2016 Maturity Date December 31, 2016 December 31, 2015 Securitization loan 2.68 % (1) September 9, 2019 (2) 303,452 $ 304,966 Unamortized original issue discount (3) (786 ) (1,086 ) Unamortized deferred financing costs (5,884 ) (8,139 ) Securitization loan, net 296,782 295,741 Revolving credit facility 4.04 % (4) February 18, 2018 (5) 352,799 326,472 Total $ 649,581 $ 622,213 (1) The securitization loan provides for monthly payments at a blended rate equal to the one-month LIBOR plus 1.84% and a monthly servicing fee of 0.1355% (excluding the amortization of the original issue discount and deferred financing costs). (2) The securitization loan had an initial term of two years, with three , 12 -month extension options, which management intends to exercise, resulting in a fully extended maturity date of September 9, 2019. The extension options may be executed provided there is no event of default under the securitization loan, a replacement interest rate cap agreement is obtained in a form reasonably acceptable to the lender and the borrower complies with other terms set forth in the loan agreement. During the twelve months ended December 31, 2016, the Company executed the first 12-month extension option. (3) The original issue discount will be accreted and recognized to interest expense through the fully extended maturity date of September 9, 2019. (4) As amended, the revolving credit facility bears interest at a varying rate of three-month LIBOR plus 3.0% , subject to a LIBOR floor of 0.0% and includes an unused fee as further described below. (5) The revolving credit facility had a borrowing capacity of up to $400,000 and a maturity date of February 18, 2018. The revolving period ended on February 18, 2017 and the Company is no longer able to draw additional amounts under the revolving credit facility. Beginning August 18, 2017, pursuant to a recent amendment, all net cash generated by the properties in the Pledged Subsidiaries (as defined below) (after paying associated property-level expenses) is directed towards principal repayment rather than being distributed to the Company. Securitization Loan On August 12, 2014, the Company completed a securitization transaction (the "Securitization Transaction") in which a newly-formed special purpose entity (the "Borrower") entered into a loan with a third-party lender for $312,667 represented by a promissory note (the "Securitization Loan"). The Borrower is wholly-owned by another special purpose entity (the "Equity Owner"), and the Equity Owner is wholly-owned by the Operating Partnership. The Borrower and Equity Owner are separate legal entities, but continue to be reported in the Company’s consolidated financial statements. The Securitization Loan provides for monthly payments comprised of six floating rate components computed based on one-month LIBOR for each interest period plus a fixed component spread for each of the six components, resulting in a blended rate equal to the one-month LIBOR plus 1.84% and a monthly servicing fee of 0.1355% (excluding the amortization of the original issue discount and deferred financing costs). The Securitization Loan has a blended effective rate of one-month LIBOR plus 1.95% , including the amortization of the original issue discount, plus monthly servicing fees of 0.1355% . The Securitization Loan was issued at a discount of $1,503 , which will be accreted and recognized to interest expense through the fully extended maturity date of September 9, 2019. The principal amount of each component of the loan corresponds to the respective class of certificates which were issued in connection with the Securitization Transaction. In the years ended December 31, 2016 , 2015 and 2014 , the Company incurred gross interest expense of $7,584 , $6,791 and $2,594 , respectively, excluding amortization of the discount, deferred financing costs, other fees, the effect of any hedging derivatives and before the effect of capitalizing interest related to property renovations. As of December 31, 2016 and 2015 , the loan had a weighted-average interest rate of 2.68% and 2.30% respectively, which is inclusive of the monthly servicing fees, but excludes amortization of the original issue discount, deferred financing costs and interest rate cap accretion. During the years ended December 31, 2016 and 2015 , the Company paid down $1,514 and $7,085 , respectively, on the Securitization Loan to effect the release of certain properties from the first priority mortgages securing the Securitization Loan, including certain properties sold from the Southeast Florida and Houston, TX markets as described in Note 3. The Securitization Loan has an initial term of two years, with three , 12 -month extension options, resulting in a fully extended maturity date of September 9, 2019. The Borrower may execute the extension options provided there is no event of default under the Securitization Loan, the Borrower obtains a replacement interest rate cap agreement in a form reasonably acceptable to the lender and the Borrower complies with the other terms set forth in the loan agreement. During the twelve months ended December 31, 2016, the Company executed the first 12-month extension option. As part of the Securitization Transaction, the Securitization Loan (including the related promissory note) was transferred by the third-party lender to one of the Company's subsidiaries and subsequently deposited into a REMIC trust in exchange for pass-through certificates. The pass-through certificates represent the entire beneficial interest in the trust and were sold to investors in a private offering through the placement agents retained for the transaction for gross proceeds of $311,164 , net of the original issue discount of $1,503 . At closing, the Company transferred the Securitization Properties (as defined below) to the Borrower. The Securitization Properties are substantially similar to the other properties owned by the Company and were leased to residents underwritten on substantially the same basis as the Company's other properties. During the duration of the Securitization Loan, the Company can substitute properties only if a property owned by the Borrower becomes a disqualified property under the terms of the Securitization Loan. The lender immediately transferred the Securitization Loan, upon closing, to a subsidiary of the Company and then to a trust in exchange for the certificates. The Company accounted for the transfer of the Securitization Loan from its subsidiary to the trust as a sale under Codification Topic, Transfers and Servicing ("ASC 860"), with no resulting gain or loss as the Securitization Loan was both originated by the lender and immediately transferred at the same fair market value. The Company has also evaluated and not identified any variable interests in the trust. All amounts outstanding under the Securitization Loan are secured by first priority mortgages on the securitization properties (the "Securitization Properties"), a pool of 2,975 properties excluding properties recorded as assets held for sale, in addition to the equity interests in, and certain assets of, the Borrower. The amounts outstanding under the Securitization Loan and certain obligations contained therein are guaranteed by the Operating Partnership only in the case of certain bad acts (including bankruptcy) as outlined in the transaction documents. The Borrower and Equity Owner are separate legal entities, but continue to be reported in the Company’s consolidated financial statements. As long as the Securitization Loan is outstanding, the assets of the Borrower and Equity Owner are not available to satisfy the debts and obligations of the Company or its other consolidated subsidiaries and the liabilities of the Borrower and Equity Owner are not liabilities of the Company (excluding, for this purpose, the Borrower and Equity Owner) or its other consolidated subsidiaries. The Company is permitted to receive distributions from the Borrower out of unrestricted cash as long as the Borrower is current with all payments and in compliance with all other obligations under the Securitization Loan. The Company used $235,160 of the Securitization Loan proceeds in 2014 to pay down the full balance of the Company's revolving credit facility at closing and the remaining proceeds were used for working capital and other corporate purposes, including the acquisition, financing and renovation of properties and the repurchase of common stock. Simultaneously, the Company reduced the size of the revolving credit facility from $350,000 to $200,000 . As a result, the Company wrote off $1,058 of deferred financing fees and reclassified $480 from accumulated other comprehensive income (loss) to earnings due to hedge ineffectiveness in the associated interest rate cap agreements for the year ended December 31, 2014. The Securitization Loan provides for the restriction of cash whereby the Company must set aside funds for payment of real estate taxes, capital expenditures and other reserves associated with the Securitization Properties. There is also a cash management account controlled by the lender for the collection of all rents and cash generated by the Borrower's properties. In the event of default, the lender may apply funds, as the lender elects, from the cash management account, foreclose on its security interests, appoint a new property manager, and in limited circumstances, enforce the Company's guaranty. As of December 31, 2016 and 2015 , the Company had $3,715 and $5,139 , respectively, included in escrow deposits associated with the required reserves on the consolidated balance sheets. The Securitization Loan does not contractually restrict the Company's ability to pay dividends but certain covenants contained therein may limit the amount of cash available for distribution. The Securitization Loan documents require the Company to maintain certain covenants, including a minimum debt yield on the Securitization Properties, and contain customary events of default for a loan of this type, including payment defaults, covenant defaults, breaches of representations and warranties, bankruptcy and insolvency, judgments and cross-default with certain other indebtedness. As of December 31, 2016 and 2015 , the Company believes it was in compliance with all financial covenants. Revolving Credit Facility Certain of the Company's subsidiaries have a revolving credit facility (the "revolving credit facility") with a syndicate of banks. On February 18, 2015, the Company amended and restated the revolving credit facility to increase the borrowing capacity to $400,000 from $200,000 and subsequently amended the revolving credit facility to address certain interest calculation mechanics. The revolving period ended February 18, 2017 and the Company is no longer able to draw additional amounts under the revolving credit facility. As amended, the revolving credit facility bears interest at a varying rate of three-month LIBOR plus 3.0%, subject to a LIBOR floor of 0.0% . Prior to the amendment, the revolving credit facility bore interest at varying rates of LIBOR plus 3.5% subject to a LIBOR floor of 0.5% , payable monthly. The Company is also required to pay a monthly fee on the unused portion of the revolving credit facility at a rate of 0.5% per annum, when the balance outstanding is less than $200,000 , or 0.3% per annum when the balance outstanding is equal to or greater than $200,000 . As part of the amendment, the term of the revolving credit facility was extended to February 18, 2018 and the advance rate for borrowings was increased to 65% from 55% . The advance rate is based on the aggregate value of the eligible properties which value is calculated as the lesser of (a) the third-party broker price opinion value or (b) the original purchase price plus certain renovation and other capitalized costs of the properties. The Company used proceeds from the revolving credit facility to fund the Portfolio Acquisition and other acquisitions of properties as referenced in Note 3. The remaining proceeds were used for working capital and other corporate purposes, including the acquisition, financing and renovation of properties. As of December 31, 2016 and 2015 , $352,799 and $326,472 , respectively, was outstanding under the revolving credit facility. As of December 31, 2016 and 2015 , the interest rate on the revolving credit facility was 4.04% and 3.68% , respectively, inclusive of the unused fee. In the years ended December 31, 2016 , 2015 and 2014 , the Company incurred $13,020 , $9,843 and $6,073 , respectively, in gross interest expense on the revolving credit facility, excluding amortization of deferred financing costs, interest rate cap accretion and before the effect of capitalizing interest related to property renovations. All amounts outstanding under the revolving credit facility are collateralized by the equity interests and assets of certain of the Company’s subsidiaries ("Pledged Subsidiaries"), which exclude the owners of the Securitization Properties. The amounts outstanding under the revolving credit facility and certain obligations contained therein are guaranteed by the Company and the Operating Partnership only in the case of certain bad acts (including bankruptcy) and up to $20,000 for completion of certain property renovations, as outlined in the credit documents. As of December 31, 2016 , there were approximately 5,840 properties pledged as collateral under the revolving credit facility, excluding properties recorded as held for sale. The revolving credit facility provides for the restriction of cash whereby the Company must set aside funds for payment of insurance, real estate taxes and certain property operating and maintenance expenses associated with properties in the Pledged Subsidiaries' portfolios. As of December 31, 2016 and 2015 , the Company had $11,037 and $10,101 , respectively, included in escrow deposits associated with the required reserves. The Pledged Subsidiaries are separate legal entities, but continue to be reported in the Company’s consolidated financial statements. As long as the revolving credit facility is outstanding, the assets of the Pledged Subsidiaries are not available to satisfy the other debts and obligations of the other Pledged Subsidiaries or the Company. The revolving credit facility does not contractually restrict the Company’s ability to pay dividends. The Company is permitted to receive distributions from the Pledged Subsidiaries as long as the Company and the Pledged Subsidiaries are current with all payments and in compliance with all other obligations under the revolving credit facility, however certain covenants contained therein may limit the amount of cash available for distribution. For example, beginning on August 18, 2017, pursuant to a recent amendment, all net cash generated by the properties in the Pledged Subsidiaries (after paying associated property-level expenses) is directed towards principal repayment rather than being distributed to the Company. The revolving credit facility agreement requires the Company to meet certain quarterly financial tests pertaining to net worth, total liquidity, debt yield and debt service coverage ratios. The Company must maintain total liquidity of $25,000 and a net worth of at least $125,000 , as determined in accordance with the revolving credit facility agreement. The revolving credit facility also contains customary events of default for a facility of this type, including payment defaults, covenant defaults, breaches of representations and warranties, bankruptcy and insolvency, judgments, change of control and cross-default with certain other indebtedness. The Company believes it was in compliance with all financial covenants under the revolving credit facility as of December 31, 2016 and 2015 . Total Borrowings As of December 31, 2016 , the Company had total outstanding borrowings of $656,251 , of which borrowings under the Securitization Loan were $303,452 and borrowings under the revolving credit facility were $352,799 . The following table summarizes the Company's contractual maturities of debt as of December 31, 2016 (in thousands): 2017 $ — 2018 352,799 2019 303,452 2020 — Thereafter — Total $ 656,251 The revolving credit facility was amended and restated on February 18, 2015 and has a maturity date of February 18, 2018. The Securitization Loan has an initial maturity date of September 9, 2016 and three , 12 -month extension options resulting in a fully extended maturity date of September 9, 2019; this table assumes the exercise of the three extension options, which is the Company's intent. During the twelve months ended December 31, 2016, the Company executed the first 12-month extension option. Deferred Financing Costs Costs incurred in the placement of the Company’s debt are being amortized using the straight-line method, which approximates the effective interest method, over the terms of the related debt. Amortization of deferred financing costs is recorded as interest expense in the accompanying consolidated statements of operations and comprehensive income (loss). In connection with its Securitization Loan, the Company incurred deferred financing costs of $19 , $460 and $11,040 for the years ended December 31, 2016 , 2015 and 2014 , respectively. The costs are being amortized through September 9, 2019, the fully extended maturity date of the Securitization Loan. Amortization of the deferred financing costs was $2,260 , $2,321 and $865 for the years ended December 31, 2016 , 2015 and 2014 , respectively. In conjunction with the paydown of the Securitization Loan related to the sale of the Houston portfolio, the Company wrote off $174 in deferred financing costs for the year ended December 31, 2015, which has been included in net gain on disposition of real estate in the consolidated statements of operations and comprehensive income (loss). In connection with its revolving credit facility, the Company incurred deferred financing costs of $29 , $5,323 and $1,852 , respectively, for the years ended December 31, 2016 , 2015 and 2014 . Amortization of the deferred financing costs was $2,337 , $2,141 and $1,691 , respectively, for the years ended December 31, 2016 , 2015 and 2014 . Interest Expense The following table presents the Company's total interest expense for the years ended December 31, 2016 , 2015 and 2014 : Year Ended December 31, 2016 2015 2014 Gross interest expense (1) $ 20,604 $ 16,634 $ 8,667 Amortization of discount on Securitization Loan 301 301 116 Amortization and write-off of deferred financing costs (2) 4,597 4,494 3,613 Other interest (3) 611 157 48 Capitalized interest (4) — (311 ) (858 ) Total interest expense $ 26,113 $ 21,275 $ 11,586 (1) Includes the Securitization Loan's monthly servicing fees. (2) For 2015, excludes deferred financing fees written-off in conjunction with the paydown of the Securitization Loan related to the sale of the Houston portfolio. (3) Includes monitoring service fees and interest related to the Company's designated derivative financial instruments (see Note 11). (4) The Company capitalizes interest for properties undergoing renovation activities and purchased subsequent to the Company obtaining debt in May 2013. Derivative Financial Instruments The variable rate of interest on the Company's debt exposes the Company to interest rate risk. Currently, the Company uses interest rate cap agreements and interest rate swap transactions (collectively "Hedging Derivatives") to manage this interest rate risk. These instruments are carried at fair value in the Company’s financial statements (see Note 11). Changes in the fair value of the designated portion of the Company's Hedging Derivatives that qualify for hedge accounting are recognized through other comprehensive income (loss) (see Note 11). Non-designated hedges are derivatives that do not meet the criteria for hedge accounting or for which the Company did not elect to designate as accounting hedges. The Company does not enter into derivative transactions for speculative or trading purposes, but may enter into derivatives to manage the economic risk of changes in interest rates. The following table summarizes the consolidated derivative positions at December 31, 2016 : Non-designated Hedged Interest Rate Caps (1) Cash Flow Hedges Interest Rate Caps Cash Flow Hedges Interest Rate Swaps Notional balance $ 304,367 $ 370,100 $ 296,000 Weighted average interest rate (2) 2.68 % 4.04 % N/A Weighted average capped/swapped interest rate (3)(4) 5.08 % 6.00 % 2.63 % Earliest maturity date September 15, 2017 February 17, 2018 August 15, 2017 Latest maturity date September 15, 2019 February 18, 2018 September 15, 2019 (1) The full notional balance is hedged through September 15, 2017 after which $200,000 is hedged through September 15, 2019. (2) For interest rate caps, represents the weighted average interest rate on the hedged debt as of December 31, 2016 . (3) For interest rate caps, represents the capped interest rate, which is inclusive of the monthly servicing fees, but excludes amortization of the original issue discount, deferred financing costs and interest rate cap accretion. (4) The swap transactions are structured with a fixed rate that steps up over the three-year term locking in the forward LIBOR curve at the time of execution. This structure resulted in an average effective rate of 2.77% over the three -year term. As of December 31, 2015, the Company held four interest rate cap agreements, which included two interest rate cap agreements with an aggregate notional amount of $349,100 , LIBOR caps of 3.00% , and termination dates of February 17, 2018 and February 18, 2018 associated with the revolving credit facility, one interest rate cap agreement with a notional amount of $312,667 , a LIBOR cap of 3.1085% , and a termination date of September 15, 2016 associated with the Securitization Loan and one forward-starting interest rate cap agreement with a notional amount of $200,000 , a LIBOR cap of 3.1085% , and a termination date of September 15, 2019. The two interest rate cap agreements associated with the revolving credit facility with an aggregate notional amount of $349,100 , were purchased in the first quarter of 2015, at an aggregate purchase price of $867 . In August 2014, the Company entered into the first interest rate cap agreement associated with the Securitization Loan with a notional amount of $312,667 at a purchase price of $293 . In January 2015, the Company entered into a forward-starting interest rate cap agreement associated with the Securitization Loan at a purchase price of $1,383 . Portions of the purchase prices of the interest rate cap agreements, representing the premiums paid to enter into the contracts, were capitalized as deferred financing costs and are being amortized using the straight-line method over the terms of the related agreements. The Company determined that the interest rate caps qualified for hedge accounting and, therefore, were designated as cash flow hedges with future changes in fair value recognized through other comprehensive income (loss) (see Note 11). Ineffectiveness was calculated as the amount by which the change in fair value of the derivatives exceeds the change in the fair value of the anticipated cash flows related to the corresponding debt and is recorded in adjustments for derivative instruments, net in the consolidated statements of operations and comprehensive income (loss). In July 2016, the Company entered into one interest rate cap agreement at LIBOR of 3.1085% with a notional amount of $104,367 and a termination date of September 15, 2017 to hedge interest rate risk associated with its Securitization Loan. The Company determined that the interest rate cap agreement qualified for hedge accounting and, therefore, designated the derivative as a cash flow hedge. The interest rate cap agreement was subsequently de-designated as noted below. In August 2016, the Company, through its Operating Partnership, entered into interest rate swap transactions with two counterparties (the “Swaps”). The Company entered into the Swaps to effectively fix the interest rate on $296,000 of the Company’s floating rate indebtedness under the Securitization Loan for three years . The Swaps have an effective date and maturity date as reflected in the table below. From each respective effective date through the corresponding maturity date, the Company will be required to make monthly fixed rate payments at the fixed swap rate and on the notional amounts reflected in the table below, while the counterparty will be obligated to make monthly floating rate payments to the Company based on one-month LIBOR and referencing the same notional amount. In connection with the Swaps, the Company is required to maintain cash reserves of at least $15,000 . The Company determined that the Swaps qualified for hedge accounting and designated the derivatives as cash flow hedges. Concurrently, the Company de-designated three interest rate cap agreements also associated with the Securitization Loan and will reclassify the balance of deferred losses of $1,255 in accumulated other comprehensive income (loss) to earnings over the remaining life of the associated interest rate cap agreements. Notional Amount Fixed Swap Rate Effective Date Maturity Date $ 177,600 0.6495 % August 15, 2016 August 15, 2017 $ 177,600 0.8045 % August 15, 2017 August 15, 2018 $ 177,600 0.9200 % August 15, 2018 September 15, 2019 $ 118,400 0.6600 % August 15, 2016 August 15, 2017 $ 118,400 0.8030 % August 15, 2017 August 15, 2018 $ 118,400 0.9300 % August 15, 2018 September 15, 2019 In connection with the financing of the October 1, 2016 acquisition (see Note 3), effective September 29, 2016, the Company modified an existing interest rate cap agreement originally entered into on March 31, 2015 to increase the notional amount from $266,100 to $287,100 to hedge interest rate risk associated with its revolving credit facility. The Company determined that the interest rate cap agreement qualified for hedge accounting and, therefore, continued its designation of the derivative as a cash flow hedge. Ineffectiveness was calculated as the amount by which the change in fair value of the derivatives exceeds the change in the fair value of the anticipated cash flows related to the corresponding debt. During the years ended December 31, 2016 and 2015 , the Company paid $30 and $2,250 , respectively, in connection with the purchase of interest rate cap agreements which are included in other assets on the consolidated balance sheets and recorded at fair value (see Note 11). Capitalized Interest The Company capitalizes interest for properties undergoing renovation activities and purchased subsequent to the Company obtaining debt in May 2013. Capitalized interest totaled $0 , $311 and $858 , respectively, for the years ended December 31, 2016 , 2015 and 2014 . |