National Storage Affiliates Trust Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

DEBT FINANCING

DEBT FINANCING

3 Months Ended

Mar. 31, 2015

The Company's debt is summarized as follows (dollars in thousands):



	Interest	March 31,		December 31,
	Rate ⁽¹⁾	2015		2014
Credit Facility:
Revolving line of credit	2.78%	$	182,217	$	166,217
Term loan	3.65%	144,558		144,558
Unsecured term loan	5.18%	50,000		50,000
Related Party Note	3.30%	4,054		—
Fixed rate mortgages payable	4.07%	153,961		153,416
Variable rate mortgages payable	4.69%	83,500		83,500
Total		$	618,290	$	597,691


⁽¹⁾	^{Represents the effective interest rate as of}^{March 31, 2015}^{. Effective interest rate incorporates the stated rate plus the impact of interest rate swaps and discount and premium amortization, if applicable. For the revolving line of credit, the effective interest rate also includes fees for unused borrowings.}

Credit Facility

On April 1, 2014 (as amended in July 2014), the Company entered into a $425.0 million senior secured credit facility (the "credit facility") with a syndicated group of lenders consisting of seven financial institutions. Borrowings under the credit facility are collateralized by first priority security interests in certain self storage properties. The credit facility consists of two components:

•

A senior secured revolving credit facility (the "revolving line of credit"), which provides for a total borrowing commitment up to $280.4 million, whereby the Company may borrow, repay and re-borrow amounts under the revolving line of credit. The borrowing commitment is subject to a borrowing base calculation, which only includes self storage properties with an occupancy rate of at least 75% on a combined basis. As of March 31, 2015, the borrowing base supported borrowings up to a maximum of $198.7 million under the revolving line of credit. The Company is required to pay a fee which ranges from 0.20% to 0.30% of unused borrowings under the revolving line of credit. As of March 31, 2015, the pricing grid under the revolving line of credit provides for an interest rate equal to one-month London Interbank Offered Rate ("LIBOR") plus 2.50%. The revolving line of credit matures in March 2017 and the Company may elect an extension of the maturity date until March 2018 by paying an extension fee equal to 0.20% of the total borrowing commitment at the time of the extension.


•	A $144.6 million senior secured term loan (the "term loan") which provides that amounts borrowed may be repaid at any time but not re-borrowed. As of March 31, 2015, the pricing grid under the term loan provides for an interest rate equal to one-month LIBOR plus 2.40%. No principal payments are required under the term loan until the maturity date in March 2018.

The credit facility is a full-recourse loan, meaning that the Company's obligations for repayment extend beyond the assets that collateralize the loan. The terms of the credit facility limit the Company's ability to make distributions, incur additional debt, and acquire or sell significant assets. The credit facility requires compliance with certain financial and nonfinancial covenants, including a maximum total leverage ratio, a minimum fixed charge coverage ratio, and minimum net worth. At March 31, 2015, we were in compliance with all such covenants.

As discussed in Note 12, upon completion of our initial public offering, our secured credit facility became unsecured. In addition, we used a portion of the proceeds received from our initial public offering to pay down $96.3 million of the outstanding balance of the revolving line of credit.

Unsecured Term Loan

On April 1, 2014, the Company entered into a senior unsecured term loan (the "unsecured term loan") with a syndicated group of lenders consisting of three financial institutions. The unsecured term loan provides for maximum borrowings of $50.0 million. Under the unsecured term loan, the Company must comply with restrictions on its tangible net worth, as defined in the loan agreement. Amounts borrowed may be repaid but not re-borrowed. The loan originally matured on April 1, 2015 but was extended until October 1, 2015 in exchange for a prescribed fee of $250,000. Payments are limited to interest only, to be paid on a monthly basis. The outstanding principal balance bears interest at one-month LIBOR plus 5.00% or the base rate plus 4.00%. As of March 31, 2015, the Company had borrowed $50.0 million and elected the alternative of an interest rate of one-month LIBOR plus 5.00%. Financial covenants under the unsecured term loan match those contained in the credit facility. There is a mandatory repayment of this loan upon the occurrence of a capital event (such as completion of the Company's initial public offering) as defined in the loan agreement, and following the completion of our initial public offering, we used a portion of the proceeds received to repay the $50.0 million unsecured term loan, as discussed in Note 12.

Related Party Note

During the three months ended March 31, 2015, in connection with the acquisition of a self storage property owned in a DownREIT partnership, the Company entered into a bridge loan agreement for $4.1 million payable to principals of the PRO that contributed the property. The note bears interest at a fixed rate of 3.30%, and matures 30 days following the completion of certain administrative matters that will permit the inclusion of the property in the Company's credit facility borrowing base calculation.

Fixed Rate Mortgages Payable

Fixed rate mortgages mature at various dates through November 2024, and have effective interest rates that range from 2.20% to 5.15%. Principal and interest are generally payable monthly or in monthly interest-only payments with balloon payments due at maturity. As discussed in Note 12, we assumed fixed rate mortgages with $28.6 million of outstanding principal balances at the time of acquisition in connection with 11 of the properties acquired as part of the formation transactions.

Variable Rate Mortgages Payable

Variable rate mortgages mature at various dates through October 2015, and have effective interest rates that range from 2.43% to 9.65%. Principal and interest on this debt is generally payable in monthly interest-only payments with balloon payments due at maturity. As discussed in Note 12, following the completion of our initial public offering, we used a portion of the net proceeds from our initial public offering to repay all $83.5 million of the variable rate mortgages outstanding as of March 31, 2015.