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Our primary market risk exposure is interest rate risk with respect to our variable rate indebtedness.
−Removed: Our Second Amended Credit Agreement provides for revolving commitments in an aggregate principal amount of $600.0 million and an unsecured term loan facility in an aggregate principal amount of $200.0 million from a syndicate of banks and other financial institutions.
+Added: Our Second Amended Credit Agreement provides for revolving commitments in an aggregate principal amount of $600.0 million from a syndicate of banks and other financial institutions.
The interest rates applicable to loans under the Revolving Facility are, at the Company’s option, equal to either a base rate plus a margin ranging from 0.10% to 0.55% per annum or Adjusted Term SOFR or Adjusted Daily Simple SOFR (each as defined in the Second Amended Credit Agreement) plus a margin ranging from 1.10% to 1.55% per annum based on the debt to asset value ratio of the Company and its consolidated subsidiaries (subject to decrease at the Operating Partnership’s election if the Company obtains certain specified i nvestment grade ratings on its senior long-term unsecured debt).
−Removed: The interest rates applicable to loans under the Term Loan are, at the Operating Partnership’s option, equal to either a base rate plus a margin ranging from 0.50% to 1.20% per annum or Adjusted Term SOFR or Adjusted Daily Simple SOFR plus a margin ranging from 1.50% to 2.20% per annum based on the debt to asset value ratio of the Company and its consolidated subsidiaries (subject to decrease at the Operating Partnership’s election if the Company obtains certain specified investment grade ratings on its senior long-term unsecured debt).
−Removed: As of June 30, 2024, we had a $200.0 million Term Loan outstanding and had no borrowings outstanding under the Revolving Facility.
+Added: As of September 30, 2024 , we had no bor rowings outstanding under the Revolving Facility and the Term Loan was prepaid.
An increase in interest rates could make the financing of any acquis ition by us more costly as well as increase the costs of our variable rate debt obligations.
Rising interest rates could also limit our ability to refinance our debt when it matures or cause us to pay higher interest rates upon refinancing and increase interest expense on refinanced indebtedness.
−Removed: Increased inflation may also have a pronounced negative impact on the interest expense we pay in connection with our outstanding indebtedness, as these costs could increase at a rate higher than our rents.
−Removed: Based on our outstanding debt balance as of June 30, 2024 described above and the interest rates applicable to our outstanding debt at June 30, 2024, assuming a 100 basis point increase in the interest rates related to our variable rate debt, interest expense would have increased approximately $1.4 million for the six months ended June 30, 2024.
+Added: inflation may also have a pronounced negative impact on the interest expense we pay in connection with our outstanding indebtedness, as these costs could increase at a rate higher than our rents.
We may, in the future, manage, or hedge, interest rate risks related to our borrowings by means of interest rate swap agreements.
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See “Risk Factors — Risks Related to Our Status as a REIT — Complying with REIT requirements may limit our ability to hedge effectively and may cause us to incur tax liabilities,” which is included in our Annual Report on Form 10-K for the year ended December 31, 2023.
−Removed: As of June 30, 2024, we had no swap agreements to hedge our interest rate risks.
+Added: As of September 30, 2024, we had no swap agreements to hedge our interest rate risks.
We also expect to manage our exposure to interest rate risk by maintaining a mix of fixed and variable rates for our indebtedness.
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.