Lifetime Fitness 2013 Annual Report Download - page 70

LIFE TIME FITNESS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Table amounts in thousands, except share and per share data)
64
In connection with the purchase of six previously leased Life Time Fitness centers, in December 2011 a wholly
owned subsidiary assumed a securitized commercial mortgage-backed loan dated December 2006 in the original
principal amount of $80.0 million from the landlord. The assumed amount of the loan was $72.1 million and
matures in December 2016. Interest on the loan is 5.75% per annum, with a constant monthly debt service payment
of $0.5 million. The loan is secured by mortgages on the six properties purchased by the subsidiary and certain other
tangible and intangible property of the subsidiary. Also in connection with the purchase and financing, our wholly
owned subsidiary assumed the lease agreement previously executed in June of 2006 between the landlord and
another of our wholly owned subsidiaries as tenant of the six properties. Our subsidiaries may not terminate the
lease or transfer their interests in the properties except as permitted under the loan and lease agreements. We
guarantee the obligations of our subsidiary as tenant under the lease. As of December 31, 2013, $68.2 million
remained outstanding on the loan.
In August 2013, a wholly owned subsidiary obtained a mortgage loan in the original principal amount of $50.0
million from ING Life Insurance and Annuity Company pursuant to a promissory note and related agreements. The
mortgage financing is secured by three properties and matures in September 2026. Interest on the amounts borrowed
is 4.48% per annum, with a constant monthly debt service payment of $0.4 million. As of December 31, 2013, $49.3
million remained outstanding on the loan.
In May 2009, we financed one Minnesota center using an obligation bearing interest at a rate of 7.10%, to be reset in
May 2014 and May 2019 using the five-year LIBOR swap rate plus 4.50%, with a 6.00% floor, and amortized over a
20-year period. This obligation is due in full in May 2024. As security for the obligation, we have granted a
mortgage on this center. At December 31, 2013, $2.4 million was outstanding.
In November 2009, we financed one Minnesota center using an obligation bearing interest at a fixed rate of 6.95%
amortized over a 15-year period. This obligation was due in full in November 2014. As security for the obligation,
we granted a mortgage on this center. In April 2013, we prepaid the mortgage note payable using our revolving
credit facility. Concurrent with the prepayment, the mortgage was released on the related center.
In March 2009, we financed one Minnesota center using an obligation bearing interest at a fixed rate of 6.25%
amortized over a 15-year period. This obligation was due in full in March 2014. As security for the obligation, we
granted a mortgage on this center. In June 2013, we prepaid the mortgage note payable using our revolving credit
facility. Concurrent with the prepayment, the mortgage was released on the related center.
In November 2008, we financed one Minnesota center using an obligation bearing interest at a fixed rate of 6.54%
amortized over a 20-year period. This obligation was due in full November 2013. As security for the obligation, we
granted a mortgage on this center. In June 2013, we prepaid the mortgage note payable using our revolving credit
facility. Concurrent with the prepayment, the mortgage was released on the related center.
Variable Rate Demand Notes
In July 2008, a wholly owned subsidiary issued variable rate demand notes in the principal amount of $34.2 million,
the proceeds of which were used to provide permanent financing for our corporate headquarters and our Overland
Park, Kansas center. The notes, which mature in July 2033, bear interest at a variable rate that is adjusted weekly.
The interest rate at December 31, 2013 was 0.2%. The notes are backed by a letter of credit from General Electric
Capital Corporation ("GECC"), for which we will pay GECC an annual fee of 1.40% of the maximum amount
available under the letter of credit, as well as other drawing and reimbursement fees. In connection with the letter of
credit, which expires in June 2023, the borrower subsidiary entered into a reimbursement agreement with GECC.
Under the terms of the reimbursement agreement, if the notes are purchased with proceeds of a drawing under the
letter of credit, and cannot thereafter be remarketed, GECC is obligated to hold the notes and the indebtedness
evidenced by those notes will be amortized over a period ending June 2023. The subsidiary’s obligations under the
reimbursement agreement are secured by mortgages against the two aforementioned properties. We guaranteed the