Item 1.01. Entry into a Material Definitive Agreement.
Third Amended and Restated KeyBank Credit Facility
On January 3, 2023, NSA OP, LP (the "Operating Partnership"), as borrower,
National Storage Affiliates Trust (the "Company"), and certain of the Operating
Partnership's subsidiaries, as subsidiary guarantors, entered into a third
amended and restated credit agreement with KeyBank National Association, as
administrative agent, and a syndicated group of lenders party thereto. The
amendment increased the credit facility's total borrowing capacity, extended the
revolving line maturity date, provided an option to extend one of the tranche
term loan facilities, eliminated the $125.0 million tranche A term loan
facility, and made certain other amendments.
The amendment increased the borrowing capacity of the credit facility by $405.0
million for a total credit facility of $1.955 billion, consisting of the
following components: (i) a revolving line of credit which provides for a total
borrowing commitment up to $950.0 million (the "Revolver"), whereby the
Operating Partnership may borrow, repay and re-borrow amounts under the
Revolver, (ii) a $275.0 million tranche B term loan facility (the "Term Loan
B"), (iii) a $325.0 million tranche C term loan facility (the "Term Loan C"),
(iv) a $275.0 million tranche D term loan facility ("Term Loan D"), and (v) a
$130.0 million tranche E term loan facility (the "Term Loan E") (collectively,
the "amended credit facility"). The Operating Partnership has an expansion
option under the amended credit facility, which if exercised in full, would
provide for a total borrowing capacity under the amended credit facility of $2.5
billion.
The Revolver matures in January 2027, provided that the Operating Partnership
may elect up to two times to extend the maturity by six months each to up to
January 2028 by paying an extension fee for each such election of 0.0625% of the
total borrowing commitment thereunder at the time of extension and meeting other
customary conditions with respect to compliance. The Term Loan B matures in July
2024, provided that the Operating Partnership may elect to extend the maturity
to January 2025 subject to certain conditions being met and payment of an
extension fee of 0.0625% of the amount of the Term Loan B. The Term Loan C
matures in January 2025, the Term Loan D matures in July 2026, and the Term Loan
E matures in March 2027. The amended credit facility is not subject to any
scheduled reduction or amortization payments prior to maturity.
Interest rates applicable to loans under the amended credit facility are, as
elected by the Operating Partnership at the beginning of any applicable interest
period, determined based on (i) a 1, 3 or 6 month Term SOFR period ("Term SOFR
Loans") plus an applicable margin, (ii) an adjusted daily simple SOFR rate
("Daily Simple SOFR Loans", and together with Term SOFR Loans, "SOFR Loans")
plus an applicable margin, or (iii) a base rate determined by the greatest of
the Key Bank prime rate, the federal funds rate plus 0.50%, one month Term SOFR
plus 1.00%, and 1.00% ("base rate loans"), plus an applicable margin, The
applicable margins for the amended credit facility are leverage based and range
from 1.10% to 1.80% for SOFR Loans and 0.10% to 0.80% for base rate loans;
provided that after such time as the Operating Partnership achieves an
investment grade rating as defined in the amended credit facility, the Operating
Partnership may elect (but is not required to elect) (a "credit rating pricing
election") that the amended credit facility be subject to applicable margins
ranging from 0.725% to 1.65% for SOFR Loans and 0.00% to 0.65% for base rate
loans. The Operating Partnership is also required to pay usage based fees
ranging from 0.15% to 0.20% with respect to the unused portion of the Revolver;
provided that if the Operating Partnership makes a credit rating pricing
election, the Operating Partnership 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.
The Operating Partnership is required to comply with the following financial
covenants under the amended credit facility:
•Maximum total leverage ratio not to exceed 60%; provided, however, the
Operating Partnership shall be permitted to maintain a ratio of up to 65%
following a material acquisition and for two consecutive quarters thereafter
•Minimum fixed charge coverage ratio of at least 1.5x
•Maximum secured indebtedness not to exceed 40% of gross asset value
•Maximum unsecured debt to unencumbered asset value ratio not to exceed 60%;
provided, however, the Operating Partnership shall be permitted to maintain a
ratio of up to 65% following a material acquisition and for two consecutive
quarters thereafter
•Unencumbered adjusted net operating income to unsecured interest expense of at
least 2.0x
The capitalization rate utilized in the calculation of our gross asset value was
reduced from 6.75% to 6.5%.
In addition, the terms of the amended credit facility contain customary
affirmative and negative covenants that, among other things, limit the Operating
Partnership's ability to make distributions or certain investments, incur debt,
incur liens and enter into certain transactions.
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In the event that the Operating Partnership fails to satisfy its covenants, the
Operating Partnership would be in default under the amended credit facility and
may be required to repay such debt with capital from other sources.
General
The description above is only a summary of the material provisions of the
amended credit facility and is qualified in its entirety by reference to a copy
of the credit agreement governing the amended credit facility, which will be
filed with the Company's annual report on Form 10-K for the year ended December
31, 2022.
Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
The information set forth in Item 1.01 under the heading "Third Amended and
Restated KeyBank Credit Facility" above is incorporated herein by reference.
Item 8.01. Other Events.
On January 3, 2023, the financial covenants and certain other terms of each of
the Operating Partnership's other term loan facilities and Note Purchase
Agreements were amended to make such terms substantially similar to those in the
amended credit facility.
The Operating Partnership repaid the $175.0 million outstanding under its credit
agreement among Capital One, National Association, as administrative agent, the
Operating Partnership, as borrower, the Company, certain of the Operating
Partnership's subsidiaries, as subsidiary guarantors, and a syndicated group of
lenders party thereto that was set to mature in June 2023.
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