14 unchanged sentences
However, interest rate fluctuations may affect the fair value of our fixed rate debt instruments.
−Removed: At June 30, 2022, we had $1.41 billion of fixed rate debt outstanding with an estimated fair value of $1.32 billion.
−Removed: The carrying values of our revolving line of credit and term loan are deemed to be at fair value since the outstanding debt is directly tied to monthly LIBOR or SOFR contracts.
−Removed: If interest rates at June 30, 2022 had been 1.0% higher, the fair value of those debt instruments on that date would have decreased by approximately $50.3 million.
−Removed: If interest rates at June 30, 2022 had been 1.0% lower, the fair value of those debt instruments on that date would have increased by approximately $73.8 million.
−Removed: Additionally, we consider $250.0 million related to Term Loan A, Term Loan B and Term Loan C outstanding as of June 30, 2022 to be fixed rate debt as the rate is effectively fixed by an interest rate swap agreement.
+Added: At September 30, 2022, we had $1.38 billion of fixed rate debt outstanding with an estimated fair value of $1.24 billion.
+Added: The carrying values of our revolving line of credit and term loans are deemed to be at fair value since the outstanding debt is directly tied to monthly LIBOR or SOFR contracts.
+Added: If interest rates at September 30, 2022 had been 1.0% higher, the fair value of those debt instruments on that date would have decreased by approximately $51.2 million.
+Added: If interest rates at September 30, 2022 had been 1.0% lower, the fair value of those debt instruments on that date would have increased by approximately $66.5 million.
+Added: Additionally, we consider $250.0 million related to Term Loan A, Term Loan B and Term Loan C outstanding as of September 30, 2022 to be fixed rate debt as the rate is effectively fixed by an interest rate swap agreement.
Variable Interest Rate Debt
−Removed: At June 30, 2022, we had $250.0 million of variable rate debt outstanding.
+Added: At September 30, 2022, we had $250.0 million of variable rate debt outstanding.
We have historically entered into forward starting interest rate swaps in order to economically hedge against the risk of rising interest rates that would affect our interest expense related to our future anticipated debt issuances as part of its overall borrowing program.
See the discussion under Note 4 to the accompanying consolidated financial statements for certain quantitative details related to the interest rate swaps and for a discussion on how we value derivative financial instruments.
−Removed: Based upon this amount of variable rate debt and the specific terms, if market interest rates increased 1.0%, our annual interest expense would increase by approximately $0.0 million with a corresponding decrease in our net income and cash flows for the year.
−Removed: Conversely, if market rates decreased 1.0%, our annual interest expense would decrease by approximately $0.0 million with a corresponding increase in our net income and cash flows for the year.
−Removed: Prospective Mortgage Interest Rate Risk
+Added: Based upon this amount of variable rate debt and the specific terms, if market interest rates increased or decreased by 1.0%, our annual interest expense would not change and have no corresponding change in our net income and cash flows for the year, since this variable rate debt is effectively fixed by interest rate swap agreements.
+Added: Mortgage Interest Rate Risk
On July 25, 2022, we entered into an interest rate lock agreement with PNC Bank, National Association ("PNC"), in an original principal amount not to exceed $75 million and a fixed interest rate of 5.08%.
−Removed: In connection with the interest rate lock agreement, PNC hedged the fixed interest rate itself, which is intended to reduce the interest rate variability exposure of a prospective five-year non-recourse mortgage of our City Center Bellevue property, which we expect to close in the third or fourth quarter of 2022, subject to customary closing conditions.
−Removed: We intend for the net proceeds from the prospective mortgage of our City Center Bellevue property to be applied to pay off our expiring mortgage of our City Center Bellevue property.
−Removed: The prospective mortgage of our City Center Bellevue property is in lieu of a prospective $63 million mortgage of our Lomas Santa Fe Plaza property, which we terminated with no interest rate breakage fees associated therewith.
+Added: In connection with the interest rate lock agreement, PNC hedged the fixed interest rate itself, which is intended to reduce the interest rate variability exposure of a prospective five-year non-recourse mortgage of our City Center Bellevue property, which closed on September 16, 2022, as described in the notes to the consolidated financial statements.
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