Debt Obligations, Net

9 Months Ended

Sep. 30, 2018

7. DEBT OBLIGATIONS, NET

The following is a summary of the outstanding principal balances and interest rates, which include the effect of derivative financial instruments, of our debt obligations as of September 30, 2018 and December 31, 2017 (dollars in thousands):



	Interest Rate	September 30, 2018			December 31, 2017
Revolving credit facility⁽¹⁾	3.73%	$	122,357		$	57,357
Term loans⁽²⁾	2.24% - 4.09%	570,000			570,000
Mortgages payable⁽³⁾	3.45% - 6.00%	119,777			149,081
Assumed below-market debt adjustments, net⁽⁴⁾		3,115			4,107
Deferred financing costs, net⁽⁵⁾		(3,913		)	(5,270		)
Total		$	811,336		$	775,275

⁽¹⁾

The revolving credit facility matures in January 2019, with an option to extend the maturity date to July 2019. Gross borrowings under our revolving credit facility were $114.0 million and gross payments on our revolving credit facility were $49.0 million during the nine months ended September 30, 2018. The revolving credit facility has a maximum capacity of $350 million. The revolving credit facility is expected to be paid in full at closing of the proposed Merger.

⁽²⁾

Of the outstanding Term Loans balance, $185 million matures in July 2019 with options to extend to 2021, $185 million matures in June 2020 with an option to extend to 2021, and $200 million matures in 2024. A maturity date extension requires the payment of an extension fee of 0.15% of the outstanding principal amount of the corresponding tranche. Our outstanding Term Loans are expected to be refinanced or assumed by PECO at closing of the proposed Merger.


⁽³⁾	Due to the non-recourse nature of our fixed-rate mortgages, the assets and liabilities of the properties securing such mortgages are neither available to pay the debts of the consolidated property-holding limited liability companies, nor do they constitute obligations of such consolidated limited liability companies as of September 30, 2018 and December 31, 2017.


⁽⁴⁾	Net of accumulated amortization of $2.0 million as of September 30, 2018 and December 31, 2017.


⁽⁵⁾	Net of accumulated amortization of $3.5 million and $2.6 million as of September 30, 2018 and December 31, 2017, respectively.

As of September 30, 2018 and December 31, 2017, the weighted-average interest rate, including the effect of derivative financial instruments, for all of our debt obligations was 3.4% and 3.5%, respectively.

The allocation of total debt between fixed and variable-rate and between secured and unsecured, excluding market debt adjustments and deferred financing costs, as of September 30, 2018 and December 31, 2017, is summarized below (in thousands):



	September 30, 2018		December 31, 2017
As to interest rate:⁽¹⁾
Fixed-rate debt	$	689,777	$	719,081
Variable-rate debt	122,357		57,357
Total	$	812,134	$	776,438
As to collateralization:
Unsecured debt	$	692,357	$	627,357
Secured debt	119,777		149,081
Total	$	812,134	$	776,438


⁽¹⁾	Includes the effects of derivative financial instruments (see Notes 4 and 9).

PHILLIPS EDISON GROCERY CENTER REIT II, INC. 10-Q