Annual report pursuant to Section 13 and 15(d)

DEBT FINANCING

v3.8.0.1
DEBT FINANCING
12 Months Ended
Dec. 31, 2017
Debt Disclosure [Abstract]  
DEBT FINANCING
DEBT FINANCING
The Company's outstanding debt as of December 31, 2017 and 2016 is summarized as follows (dollars in thousands):
 
 
 
December 31,
 
Interest Rate(1)
 
2017
 
2016
Credit Facility:
 
 
 
 
 
Revolving line of credit
2.96%
 
$
88,500

 
$
246,500

Term loan A
2.63%
 
235,000

 
225,000

Term loan B
3.24%
 
155,000

 
100,000

Term loan C
3.71%
 
105,000

 

Term loan facility
3.08%
 
100,000

 
100,000

Fixed rate mortgages payable
4.15%
 
271,491

 
201,694

Total principal
 
 
954,991

 
873,194

Unamortized debt issuance costs and debt premium, net
 
 
3,106

 
5,760

Total debt
 
 
$
958,097

 
$
878,954


(1) 
Represents the effective interest rate as of December 31, 2017. 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. 
Credit Facility
The Company has an unsecured credit facility with a syndicated group of lenders, which, as of December 31, 2017, provided for total borrowings of $895.0 million consisting of four components: (i) a Revolver which provides for a total borrowing commitment up to $400.0 million, whereby the Company may borrow, repay and re-borrow amounts under the Revolver, (ii) a $235.0 million Term Loan A, (iii) a $155.0 million Term Loan B, and (iv) a $105.0 million Term Loan C.
The Revolver matures in May 2020; provided that the Company may elect to extend the maturity to May 2021 by paying an extension fee of 0.15% of the total borrowing commitment thereunder at the time of extension and meeting other customary conditions with respect to compliance. The Term Loan A matures in May 2021, the Term Loan B matures in May 2022 and the Term Loan C matures in February 2024. The Revolver, Term Loan A, Term Loan B and Term Loan C are not subject to any scheduled reduction or amortization payments prior to maturity.
Interest rates applicable to loans under the credit facility are determined based on a 1, 2, 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 credit facility are leverage based and range from 1.35% to 2.25% for LIBOR loans and 0.35% to 1.25% 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 credit facility is subject to the rating based on applicable margins ranging from 0.85% to 2.45% for LIBOR Loans and 0.00% to 1.45% for base rate loans. The Company is also required to pay the following usage based fees ranging from 0.15% to 0.25% with respect to the unused portion of the Revolver; provided that if the Company makes an investment grade pricing election as described in the preceding sentence, the Company will be required to pay rating based fees ranging from 0.125% to 0.300% with respect to the entire Revolver in lieu of any usage based fees.
As of December 31, 2017, the Company had outstanding letters of credit totaling $4.7 million and would have had the capacity to borrow remaining Revolver commitments of $306.8 million while remaining in compliance with the credit facility's financial covenants described in the following paragraph.
The Company is required to comply with the following financial covenants under the credit facility:
Maximum total leverage ratio not to exceed 60%
Minimum fixed charge coverage ratio of at least 1.5x
Minimum net worth of at least $682.6 million plus 75% of future equity issuances
Maximum unsecured debt to unencumbered asset value ratio not to exceed 60%
Unencumbered adjusted net operating income to unsecured interest expense of at least 2.0x
In addition, the terms of the credit facility 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. At December 31, 2017, the Company was in compliance with all such covenants.
As discussed in Note 15, on January 29, 2018, the Company entered into an increase agreement and amendment with a syndicated group of lenders to increase the total borrowing capacity under the credit facility by adding an additional five-year Term Loan D in an aggregate outstanding principal amount of $125.0 million, for a total credit facility of approximately $1.0 billion. The Company has an expansion option under the credit facility, which, if exercised in full, would provide for a total credit facility of $1.3 billion.
Term Loan Facility
On June 30, 2016, the Company entered into a credit agreement with a syndicated group of lenders to make available a term loan facility (the "Term Loan Facility") in an aggregate amount of $100.0 million. The Term Loan Facility matures in June 2023. The entire outstanding principal amount of, and all accrued but unpaid interest, is due on the maturity date. The Company has an expansion option under the Term Loan Facility, which, if exercised in full, would provide for a total Term Loan Facility in an aggregate amount of $200.0 million.
Interest rates applicable to loans under the Term Loan Facility are payable during such periods as such loans are LIBOR loans, at the applicable LIBOR based on a 1, 2, 3 or 6 month LIBOR period (as elected by the Company at the beginning of any applicable interest period) plus an applicable margin, and during the period that such loans are base rate loans, at the base rate under the Term Loan Facility in effect from time to time plus an applicable margin. The base rate under the Term Loan Facility is equal to the greatest of the Capital One prime rate, the federal funds rate plus 0.50% or one month LIBOR plus 1.00%. The applicable margin for the Term Loan Facility is leverage-based and ranges from 1.75% to 2.35% for LIBOR loans and 0.75% to 1.35% 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 Facility is subject to the rating based on applicable margins ranging from 1.50% to 2.45% for LIBOR Loans and 0.50% to 1.45% for base rate loans.
The Company is required to comply with the same financial covenants under the Term Loan Facility as it is with the credit facility. In addition, the terms of the Term Loan Facility 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 Mortgages Payable
Fixed rate mortgages have scheduled maturities at various dates through October 2031, and have effective interest rates that range from 2.55% to 5.00%. Principal and interest are generally payable monthly or in monthly interest-only payments with balloon payments due at maturity.
In August 2017, the Company entered into an agreement with a single lender for an $84.9 million debt financing secured by 22 of the Company's self storage properties. This interest-only loan matures in August 2027 and has a fixed interest rate of 4.14%.
The Company assumed fixed rate mortgages of $61.6 million in connection with 17 of the properties acquired during the year ended December 31, 2016. The Company repaid $12.2 million of these assumed mortgages during the year ended December 31, 2016.
Future Debt Maturities
Based on existing debt agreements in effect as of December 31, 2017, the scheduled principal and maturity payments for the Company's outstanding borrowings are presented in the table below (in thousands):
Year Ending December 31,
 
Scheduled Principal and Maturity Payments
 
Premium Amortization and Unamortized Debt Issuance Costs
 
Total
2018
 
$
10,617

 
$
187

 
$
10,804

2019
 
4,983

 
131

 
5,114

2020
 
127,745

 
(220
)
 
127,525

2021
 
242,509

 
(307
)
 
242,202

2022
 
159,205

 
(25
)
 
159,180

After 2023
 
409,932

 
3,340

 
413,272

 
 
$
954,991

 
$
3,106

 
$
958,097