Summary
Extra Space Storage Inc. (EXR) announced on October 17, 2016, the execution of a new Credit Agreement by its operating partnership, Extra Space Storage LP. This agreement significantly enhances the company's financial flexibility by establishing a substantial credit facility totaling up to $1.15 billion. The facility comprises a senior unsecured revolving credit facility of $500 million, a $430 million five-year term loan, and a $220 million seven-year term loan. The company also has the option to increase the total credit facility up to $1.5 billion, indicating a strong capacity for future growth and strategic initiatives.
Key Highlights
- 1New Credit Agreement established for Extra Space Storage LP totaling up to $1.15 billion.
- 2The credit facility includes a $500 million revolving credit facility and two term loan facilities ($430 million for five years and $220 million for seven years).
- 3The company has the flexibility to increase the total credit facility to $1.5 billion.
- 4The credit facility is senior unsecured and not secured by any assets of the company or its subsidiaries.
- 5Interest rates are variable, based on LIBOR or a base rate, with margins dependent on the Company's Consolidated Leverage Ratio.
- 6The agreement includes financial covenants such as limits on total indebtedness to total asset value (not exceeding 60%) and adjusted EBITDA to fixed charges (at least 1.50:1.0).
- 7The Company and its operating partnership have significant borrowing capacity for operational needs, acquisitions, or refinancing.
Frequently Asked Questions
The primary purpose of this Credit Agreement is to provide Extra Space Storage LP with significant financial flexibility and borrowing capacity. It allows for up to $1.15 billion in aggregate borrowings, which can be used for general corporate purposes, potential acquisitions, refinancing existing debt, or supporting operational needs.
The credit facility consists of three main components: a $500 million senior unsecured four-year revolving credit facility, a $430 million senior unsecured five-year term loan facility, and a $220 million senior unsecured seven-year term loan facility.
No, the Credit Agreement is not secured by any assets of Extra Space Storage Inc. or its subsidiaries, making it a senior unsecured credit facility.
The company and its operating partnership must maintain several financial covenants, including keeping the ratio of total indebtedness to total asset value at or below 60% (with exceptions for acquisitions), a ratio of total secured debt to total asset value not exceeding 40%, and a ratio of adjusted EBITDA to fixed charges of at least 1.50 to 1.0.