Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
The Company is exposed to market risk in the form of changing interest rates on its debt. Management uses regular monitoring of market conditions and analysis techniques to manage this risk.
As of December 31, 2022, $3.5 billion of the Company’s $5.4 billion of outstanding debt bore interest at fixed rates.
The following table provides information regarding the sensitivity of certain of the Company’s financial instruments, as described above, to market conditions and changes resulting from changes in interest rates. For purposes of this analysis, sensitivity is demonstrated based on hypothetical 10% changes in the underlying market interest rates.
IMPACT ON EARNINGS AND CASH FLOW
Dollars in thousands OUTSTANDING
PRINCIPAL BALANCE
as of Dec. 31, 2022 CALCULATED
ANNUAL INTEREST ASSUMING 10%
INCREASE
in market interest rates ASSUMING 10%
DECREASE
in market interest rates
Variable Rate Debt
Unsecured Credit Facility $ 385,000 $ 20,290 $ (2,029) $ 2,029
Unsecured Term Loan due 2025 350,000 18,095 (1,810) 1,810
Unsecured Term Loan due 2026 200,000 10,340 (1,034) 1,034
Unsecured Term Loan due 2026 300,000 15,510 (1,551) 1,551
Unsecured Term Loan due 2026 150,000 7,755 (776) 776
Unsecured Term Loan due 2027 200,000 10,340 (1,034) 1,034
Unsecured Term Loan due 2028 300,000 15,510 (1,551) 1,551
$ 1,885,000 $ 97,840 $ (9,785) $ 9,785
The Company has outstanding interest rate swaps to help mitigate its risk related to variable rate debt. As of December 31, 2022, the Company had $1.2 billion of interest rate swaps at a weighted average rate of 2.63%. See Note 11 to the Consolidated Financial Statements for more information regarding the Company's interest rate swaps.
FAIR VALUE
Dollars in thousands CARRYING VALUE
as of Dec. 31, 2022 2
DEC. 31, 2022 ASSUMING 10%
INCREASE
in market interest rates ASSUMING 10%
DECREASE
in market interest rates DEC. 31, 2021 1
Fixed Rate Debt
Senior Notes due 2025 $ 249,115 $ 241,413 $ 240,866 $ 241,916 $ 253,110
Senior Notes due 2026 571,587 570,139 568,234 571,940 —
Senior Notes due 2027 479,553 473,450 471,535 475,298 —
Senior Notes due 2028 296,852 271,058 272,142 269,914 311,594
Senior Notes due 2030 565,402 560,723 549,682 556,431 —
Senior Notes due 2030 296,385 236,219 234,692 237,675 288,886
Senior Notes due 2031 295,547 219,321 226,475 220,856 275,696
Senior Notes due 2031 632,693 611,392 606,887 615,727 —
Mortgage Notes Payable 84,247 80,913 80,734 81,041 104,634
Total Fixed Rate Debt $ 3,471,381 $ 3,264,628 $ 3,251,247 $ 3,270,798 $ 1,233,920
1 Fair values as of December 31, 2021 represent fair values of obligations that were outstanding as of that date, and do not reflect the effect of any subsequent changes in principal balances and/or additions or extinguishments of instruments.
2 Balances are presented net of discounts and debt issuance costs and including premiums. The fair value presented is based on Level 2 inputs defined as model-derived valuations in which significant inputs and significant value drivers are observable in active markets.
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