Question-and-Answer Session
(Operator Instructions) Your first question comes from Irwin Guzman - Citi.
Irwin Guzman - Citi
You talked about the $300 million mortgage that you closed on at the end of the first quarter. Can you remind us how much more capacity there it is in the system for additional secured debt without coming up against any covenants and how much more in mortgage financing you’re targeting over the next 12 to 18 months and sort of where you are in that process?
Bill Hankowsky
I’m going to have George answer the first part and I will answer the second part about our goals.
George Alburger
Let me answer the first part, which was the line and the credit facility have a variety of covenants, probably the most restrictive of which is limitations on secured debt and as of December 31 we had under 8% of our assets were secured. After this financing that we just completed of $317 million, we have under 15% of our assets are secured, so we can go up to 40%.
We did a calculation of how much more debt we could layer on and we could layer on in excess of $700 million more debt, without breeching a covenant. I think covenants might change on a going forward basis, so certainly you wouldn’t take one of those covenants up to the threshold, but that’s the capacity we have.
Bill Hankowsky
Irwin, with regard to our intent, I think our intent is relatively clear from how we laid out our capital situation and let me just recap it for you. I mean, basically looking this year and next year, we’ve got about $190 million of debt that we have to pay off over the next two years, that we haven’t addressed already and about $120 million for the pipeline. So you need about $310 million.
We are looking to do $300 million of asset sales, 100 this year and 200 next year and as I indicated, we have expanded our continuous equity offering program by another 150 million and given the 15 we had available from the first program and that 150, that’s 165 million. So really we at the moment think that somewhere within that $465 million of activity we would cover the $310 million of obligations.
So our intent right now is not necessarily to access more secured debt, but as George points out, we clearly have the capacity to do it, we have the portfolio that we could do it on, so it remains a weapon in our arsenal if in fact we think it would be necessary.
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