U-Store-It Trust Inc., a real estate investment trust, completed the closing of a $200 million unsecured term loan facility on June 20. The unsecured term loan facility consists of a $100 million term loan with a five-year maturity, and a $100 million term loan with a seven-year maturity. At closing, the effective fixed-interest rate on the five-year term loan was 3.70 percent, and the effective fixed interest rate on the seven-year term loan was 4.52 percent.
"This transaction strengthens our balance sheet position by extending our maturity profile, un-encumbering additional assets and locking in attractive interest rates. With limited debt maturities in 2016 and 2018, the five- and seven-year term loans fit nicely into our improved maturity profile, and reduces the amount of interest rate and refinancing risk we have in any one year," said CFO Timothy Martin. "The term loans demonstrate the strength of our lender relationships and their confidence in our business plan execution."
Proceeds from the term loans will be used to repay $100 million of the existing unsecured term loan scheduled to mature in 2013, approximately $31 million of various secured loans having a weighted average interest rate of 7.25 percent, amounts drawn on the company's unsecured revolving line of credit and for general corporate purposes. The term loans were arranged by Wells Fargo Securities LLC and PNC Capital Markets LLC.
Pricing on the term loan facility is based on a borrowing spread over London Interbank Offered Rate (LIBOR). The borrowing spread is determined by the company’s leverage levels or investment grade credit rating once received. The term loan facility contains customary affirmative and negative covenants that, among other things, require the U-Store-It to comply with leverage, liquidity and net worth tests. The company entered into interest-rate swap agreements effective on the closing date that fix LIBOR on both the $100 million five-year term loan and the $100 million seven-year term loan through its respective maturity dates.
Based in Wayne, Pa., U-Store-It owns or manages 456 facilities across the United States and operates the U-Store-It Network, which consists of approximately 714 additional self-storage facilities.