Indebtedness | Indebtedness Mortgage Debt Total mortgage indebtedness at June 30, 2019 and December 31, 2018 was as follows: June 30, December 31, Face amount of mortgage loans $ 1,151,630 $ 980,276 Fair value adjustments, net 4,614 5,764 Debt issuance cost, net (4,126 ) (2,771 ) Carrying value of mortgage loans $ 1,152,118 $ 983,269 A roll forward of mortgage indebtedness from December 31, 2018 to June 30, 2019 is summarized as follows: Balance at December 31, 2018 $ 983,269 Debt borrowings, net of issuance costs 178,095 Debt amortization payments (8,646 ) Amortization of fair value and other adjustments (1,150 ) Amortization of debt issuance costs 550 Balance at June 30, 2019 $ 1,152,118 On April 16, 2019 , an affiliate of WPG Inc. closed on a $180.0 million non-recourse mortgage note payable with a ten -year term and a fixed rate of 4.86% secured by Waterford Lakes Town Center, located in Orlando, Florida. The mortgage note payable requires monthly principal and interest payments and will mature on May 6, 2029. The net proceeds were primarily used to reduce corporate debt. On April 8, 2019 , the Company exercised the second of three options to extend the maturity date of the $65.0 million term loan secured by Weberstown Mall, located in Stockton, California, for one year. The extended maturity date is June 8, 2020, subject to a one -year extension available at our option subject to compliance with the terms of the underlying loan agreement and payment of customary extension fees. During the six months ended June 30, 2019 , the Company exercised the first of two options to extend the maturity of the $52.0 million mortgage note payable on Town Center at Aurora for one year . The extended maturity date is April 1, 2020, subject to a one-year extension available at our option subject to compliance with the terms of the underlying loan agreement and payment of customary extension fees. Pursuant to the terms of the extension option, the Company entered into a derivative swap agreement to fix the interest rate of the note payable at one-month LIBOR plus 2.27% per annum through both extension periods. At June 30, 2019 , the interest rate on the note payable was 4.67% . Unsecured Debt During the six months ended June 30, 2019 , Fitch Ratings, Moody's Investor Service, and S&P Global Ratings lowered their credit rating on WPG L.P.'s unsecured long-term indebtedness, which increased interest rates on our Facility, December 2015 Term Loan, and Senior Notes due 2024 (see below definitions to these for capitalized terms). Due to the downgrade and based upon current leverage levels, as of June 30, 2019 , our Revolver bears interest at LIBOR plus 1.80% (an increase of 55 basis points), our Term Loan bears interest at LIBOR plus 2.10% (an increase of 55 basis points), and our December 2015 Term Loan bears interest at LIBOR plus 2.35% (an increase of 55 basis points). Our Senior Notes due 2024 will bear interest at 6.450% , effective August 15, 2019 (an increase of 50 basis points). The following table identifies our total unsecured debt outstanding at June 30, 2019 and December 31, 2018 : June 30, December 31, Notes payable: Face amount - the Exchange Notes (1) $ 250,000 $ 250,000 Face amount - Senior Notes due 2024 (2) 750,000 750,000 Debt discount, net (8,944 ) (9,680 ) Debt issuance costs, net (6,664 ) (7,623 ) Total carrying value of notes payable $ 984,392 $ 982,697 Unsecured term loans: (7) Face amount - Term Loan (3)(4) $ 350,000 $ 350,000 Face amount - December 2015 Term Loan (5) 340,000 340,000 Debt issuance costs, net (3,924 ) (4,491 ) Total carrying value of unsecured term loans $ 686,076 $ 685,509 Revolving credit facility: (3)(6) Face amount $ 222,000 $ 290,000 Debt issuance costs, net (3,427 ) (3,998 ) Total carrying value of revolving credit facility $ 218,573 $ 286,002 (1) The Exchange Notes were issued at a 0.028% discount, bear interest at 3.850% per annum and mature on April 1, 2020 . (2) The Senior Notes due 2024 were issued at a 1.533% discount, bear interest at 5.950% per annum through August 14, 2019, at which time the interest rate will increase to 6.450% per annum due to the credit downgrade. The Senior Notes due 2024 mature on August 15, 2024 . The interest rate could vary in the future based upon changes to the Company's credit ratings. (3) The unsecured revolving credit facility, or "Revolver" and unsecured term loan, or "Term Loan" are collectively known as the "Facility." (4) The Term Loan bears interest at one-month LIBOR plus 2.10% per annum and will mature on December 30, 2022 . We have interest rate swap agreements totaling $250.0 million , which effectively fix the interest rate on a portion of the Term Loan at 4.86% through June 30, 2021 . At June 30, 2019 , the applicable interest rate on the unhedged portion of the Term Loan was one-month LIBOR plus 2.10% or 4.50% . (5) The December 2015 Term Loan bears interest at one-month LIBOR plus 2.35% per annum and will mature on January 10, 2023 . We have interest rate swap agreements totaling $340.0 million which effectively fix the interest rate at 4.06% per annum through maturity. (6) The Revolver provides borrowings on a revolving basis up to $650.0 million , bears interest at one-month LIBOR plus 1.80% , and will initially mature on December 30, 2021 , subject to two six month extensions available at our option subject to compliance with terms of the Facility and payment of a customary extension fee. At June 30, 2019 , we had an aggregate available borrowing capacity of $427.8 million under the Revolver, net of $0.2 million reserved for outstanding letters of credit. At June 30, 2019 , the applicable interest rate on the Revolver was one-month LIBOR plus 1.80% or 4.20% . The interest rate on the Revolver may vary in the future based upon the Company's credit rating and leveraged levels. (7) While we have interest rate swap agreements in place that fix the LIBOR portion of the rates as noted above, the spread over LIBOR could vary in the future based upon changes to the Company's credit ratings and leveraged levels. Covenants Our unsecured debt agreements contain financial and other covenants. If we were to fail to comply with these covenants, after the expiration of the applicable cure periods, the debt maturity could be accelerated or other remedies could be sought by the lender including adjustments to the applicable interest rate. As of June 30, 2019, management believes the Company is in compliance with all covenants of its unsecured debt. The total balance of mortgages was approximately $1.2 billion as of June 30, 2019 . At June 30, 2019 , certain of our consolidated subsidiaries were the borrowers under 22 non-recourse loans and two full-recourse loans secured by mortgages encumbering 27 properties, including one separate pool of cross-defaulted and cross-collateralized mortgages encumbering a total of four properties. Under these cross-default provisions, a default under any mortgage included in the cross-defaulted pool may constitute a default under all mortgages within that pool and may lead to acceleration of the indebtedness due on each property within the pool. Certain of our secured debt instruments contain financial and other non-financial covenants which are specific to the properties which serve as collateral for that debt. If the borrower fails to comply with these covenants, the lender could accelerate the debt and enforce its right against their collateral. Our existing non-recourse mortgage loans generally prohibit our subsidiaries that are borrowers thereunder from incurring additional indebtedness, subject to certain customary and limited exceptions. In addition, certain of these instruments limit the ability of the applicable borrower's parent entity from incurring mezzanine indebtedness unless certain conditions are satisfied, including compliance with maximum loan to value ratio and minimum debt service coverage ratio tests. Further, under certain of these existing agreements, if certain cash flow levels in respect of the applicable mortgaged property (as described in the applicable agreement) are not maintained for at least two consecutive quarters, the lender could accelerate the debt and enforce its right against its collateral. On November 19, 2018 , we received a notice of default letter, dated November 15, 2018 , from the special servicer to the borrower, a consolidated subsidiary of WPG L.P., concerning the $49.8 million mortgage loan secured by West Ridge Mall and West Ridge Plaza, located in Topeka, Kansas (collectively known as "West Ridge"). The notice was issued by the special servicer because the borrower did not make certain reserve repayments or deposits as required by the loan agreement for the aforementioned loan. On May 9, 2019, we received notification that a receiver had been appointed to manage and lease West Ridge. An affiliate of the Company still holds title to the property. On April 11, 2018 , we received a notice of default letter, dated April 6, 2018 , from the special servicer to the borrower, a consolidated subsidiary of WPG L.P., concerning the $45.2 million mortgage loan secured by Towne West Square, located in Wichita, Kansas. The notice was issued by the special servicer because the borrower did not make certain reserve payments or deposits as required by the loan agreement for the aforementioned loan. On July 1, 2019 , an affiliate of the Company transitioned the property to the lender (see Note 12 - "Subsequent Events"). At June 30, 2019 , management believes the applicable borrowers under our other non-recourse mortgage loans were in compliance with all covenants where non-compliance could individually, or giving effect to applicable cross-default provisions in the aggregate, have a material adverse effect on our financial condition, results of operations or cash flows. The Company has assessed each of the defaulted properties for impairment indicators and have concluded no impairment charges were warranted as of June 30, 2019. Fair Value of Debt The carrying values of our variable-rate loans approximate their fair values. We estimate the fair values of fixed-rate mortgages and fixed-rate unsecured debt (including variable-rate unsecured debt swapped to fixed-rate) using cash flows discounted at current borrowing rates or Level 2 inputs. We estimate the fair values of consolidated fixed-rate unsecured notes payable using quoted market prices, or, if no quoted market prices are available, we use quoted market prices for securities with similar terms and maturities or Level 1 inputs. The book value and fair value of these financial instruments and the related discount rate assumptions as of June 30, 2019 and December 31, 2018 are summarized as follows: June 30, 2019 December 31, 2018 Book value of fixed-rate mortgages (1) $1,086,630 $915,276 Fair value of fixed-rate mortgages $1,109,770 $928,129 Weighted average discount rates assumed in calculation of fair value for fixed-rate mortgages 4.41 % 4.57 % Book value of fixed-rate unsecured debt (1) $1,590,000 $1,590,000 Fair value of fixed-rate unsecured debt $1,538,812 $1,485,672 Weighted average discount rates assumed in calculation of fair value for fixed-rate unsecured debt 5.52 % 5.62 % (1) Excludes debt issuance costs and applicable debt discounts. |