|9 Months Ended|
Sep. 30, 2021
|Debt Disclosure [Abstract]|
|DEBT FINANCING||DEBT FINANCING
The Company's outstanding debt as of September 30, 2021 and December 31, 2020 is summarized as follows (dollars in thousands):
(1)Represents the effective interest rate as of September 30, 2021. Effective interest rate incorporates the stated rate plus the impact of interest rate cash flow hedges and discount and premium amortization, if applicable. For the revolving line of credit, the effective interest rate excludes fees for unused borrowings.
On September 21, 2021, pursuant to a partial exercise by the Company's operating partnership of its expansion option under its credit agreement dated as of July 29, 2019 (as amended), the Company's operating partnership, as borrower, certain of its subsidiaries that are party to the credit agreement, as subsidiary guarantors, and the Company entered into a first increase agreement and third amendment (the "Increase Agreement") with a syndicated group of lenders to increase the total borrowing capacity under the Company's credit agreement by adding an additional tranche E term loan facility in an aggregate outstanding principal amount of $125.0 million. After taking into account the increase in total borrowing capacity under the Increase Agreement, as of September 30, 2021, the unsecured credit facility provided for total borrowings of $1.4 billion (the "credit facility").
As of September 30, 2021, the credit facility consisted of the following components: (i) a revolving line of credit (the "Revolver") which provides for a total borrowing commitment up to $500.0 million, under which the Company may borrow, repay and re-borrow amounts, (ii) a $125.0 million tranche A term loan facility (the "Term Loan A"), (iii) a $250.0 million tranche B term loan facility (the "Term Loan B"), (iv) a $225.0 million tranche C term loan facility (the "Term Loan C"), (v) a $175.0 million tranche D term loan facility (the "Term Loan D") and (vi) a $125.0 million tranche E term loan facility (the "Term Loan E"). As of September 30, 2021, the Company had an expansion option under the credit facility, which, if exercised in full, would provide for a total credit facility of $1.750 billion.
The Term Loan E matures on March 21, 2027. It is not subject to any scheduled reduction or amortization payment prior to maturity. Interest rates applicable to loans under the Term Loan E are determined based on a 1, 3 or
6 month LIBOR period (as elected by the Company at the beginning of any applicable interest period) plus an applicable margin, or a base rate, determined by the greatest of the Key Bank prime rate, the federal funds rate plus 0.50% or one month LIBOR plus 1.00%, plus an applicable margin. The applicable margins for the Term Loan E are leverage based and range from 1.10% to 1.55% for LIBOR loans and 0.10% to 0.55% for base rate loans; provided that after such time as the Company achieves an investment grade rating from at least two rating agencies, the Company may elect (but is not required to elect) that the Term Loan E is subject to the rating based on applicable margins ranging from 0.80% to 1.60% for LIBOR Loans and 0.00% to 0.60% for base rate loans. The Term Loan E may be prepaid at any time without penalty.
Other than the increases and amendments related to the Term Loan E described above, the Increase Agreement did not impact or amend the credit facility's previously disclosed terms, including its covenants, events of default, or terms of payment.
On August 9, 2021, pursuant to its credit agreement dated as of July 29, 2019, the Company's operating partnership, as borrower, certain of its subsidiaries that are party to the credit agreement, as subsidiary guarantors, and the Company entered into a second amendment to credit agreement (the "Rate Agreement") with a syndicated group of lenders to reduce the applicable margins on the Term Loan D to a range of 1.10% to 1.55% for LIBOR loans and 0.10% to 0.55% for base rate loans; provided that after such time as the Company achieves an investment grade rating from at least two rating agencies, the Company may elect (but is not required to elect) that the Term Loan D is subject to the rating based on applicable margins ranging from 0.80% to 1.60% for LIBOR Loans and 0.00% to 0.60% for base rate loans.
Other than the amendment related to the Term Loan D described above, the Rate Agreement did not impact or amend the credit facility's previously disclosed terms, including its covenants, events of default, or terms of payment.
As of September 30, 2021, the Company had outstanding letters of credit totaling $5.7 million and would have had the capacity to borrow remaining Revolver commitments of $494.3 million while remaining in compliance with the credit facility's financial covenants. At September 30, 2021, the Company was in compliance with all such covenants.
2026, May 2031 and 2033 Senior Unsecured Notes
On May 3, 2021, the operating partnership as issuer, and the Company, entered into a Note Purchase Agreement (the "Note Purchase Agreement") which provides for the private placement of $35.0 million of 2.16% senior unsecured notes due May 4, 2026 (the "2026 Notes"), $90.0 million of 3.00% senior unsecured notes due May 4, 2031 (the "May 2031 Notes") and $55.0 million of 3.10% senior unsecured notes due May 4, 2033 (the "2033 Notes" and together with the 2026 Notes and May 2031 Notes the "Senior Unsecured Notes") to certain institutional investors. The Senior Unsecured Notes are governed by the Note Purchase Agreement. On May 26, 2021 the operating partnership issued the 2033 Notes and on July 26, 2021 the operating partnership issued the 2026 Notes and the May 2031 Notes.
Interest is paid semiannually, on May 31st and November 30th of each year, commencing on November 30, 2021. The Senior Unsecured Notes are senior unsecured obligations of the Company and are jointly and severally guaranteed by certain of the Company's subsidiaries, as subsidiary guarantors. The Senior Unsecured Notes rank pari passu with the credit facility, 2023 Term Loan Facility, 2028 Term Loan Facility, 2029 Term Loan Facility, 2029 Senior Unsecured Notes, 2030 Senior Unsecured Notes, August 2031 Senior Unsecured Notes and 2032 Senior Unsecured Notes. The Note Purchase Agreement contains financial covenants that are substantially similar to those of the Company's credit facility. In addition, the terms of the Note Purchase Agreement contain customary affirmative and negative covenants that, among other things, limit the Company's ability to make distributions or certain investments, incur debt, incur liens and enter into certain transactions.
Fixed Rate Mortgage Payable
On July 9, 2021, the Company entered into an agreement with a single lender for an $88.0 million debt financing secured by a first lien on eight of the Company's self storage properties. This interest-only loan matures in July 2028 and has a fixed interest rate of 2.77%.
Future Debt Obligations
Based on existing debt agreements in effect as of September 30, 2021, the scheduled principal and maturity payments for the Company's outstanding borrowings are presented in the table below (in thousands):
The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.
Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef