| Item 1.01 | Entry Into a Material Definitive Agreement |
On June 12, 2023, Public Storage (the “Company”) entered into a Third Amended and Restated Credit Agreement (the “Credit Agreement”) with Wells Fargo Bank, National Association, as Agent, Bank of America, N.A. and JPMorgan Chase Bank, N.A., as Co-Syndication Agents and the other lenders and agents, arrangers and bookrunners party thereto. The Credit Agreement provides the Company with a $1.5 billion unsecured revolving credit facility (the “Credit Facility”) that replaces in its entirety the revolving credit facility provided for under the Company’s Second Amended and Restated Credit Agreement dated April 19, 2019. No subsidiaries of the Company are required to guarantee the Company’s obligations under the Credit Agreement.
The Credit Facility has an initial maturity date of June 12, 2027, and may be extended by up to one additional year either through the exercise of a one-year extension option and the payment of a 0.125% extension fee on the amount of the extended commitments or the exercise of one or both of two six-month extension options, each of which is subject to the payment of a 0.0625% extension fee on the amount of the extended commitments.
Under the terms of the Credit Agreement, the Company has the ability to borrow up to $1.5 billion, with an option to increase commitments under the Credit Facility or incur one or more term loans at any time in an aggregate amount of up to an additional $1.0 billion, subject to obtaining additional commitments from lenders and the satisfaction of certain customary conditions. The Credit Facility includes borrowing capacity for letters of credit and for borrowings on same-day notice.
Loans under the Credit Agreement bear interest at variable interest rates. Interest rates applicable to such Loans are determined according to, at the Company’s election, SOFR plus an applicable margin ranging from 0.65% to 1.40% or a base rate plus an applicable margin ranging from 0% to 0.40%, in each case, with such applicable margin determined on the basis of the Company’s credit rating in effect from time to time. In addition, at the Company’s election and subject to the agreement of one or more lenders under the Credit Facility, the interest rate on any loan may also be determined by competitive bid process.
The Credit Agreement requires that the Company comply on a quarterly basis with certain financial covenants, including a maximum consolidated total leverage ratio test, a maximum consolidated secured leverage ratio test, a maximum consolidated unsecured asset coverage ratio test and a minimum consolidated debt service coverage ratio test. The Credit Agreement also contains customary representations, affirmative covenants and negative covenants. Such covenants include furnishing the lenders periodic financial information about the Company; paying and discharging certain material obligations and liabilities; maintenance of corporate existence and REIT status; and certain limitations on the ability to consolidate, merge or sell, lease or otherwise transfer all or substantially all assets.
The Credit Agreement also contains customary events of default (subject to certain grace periods), including nonpayment of principal, interest, fees or other amounts when due; material inaccuracies of representations or warranties; cross-default to other material indebtedness, the occurrence of certain bankruptcy events; undischarged material judgments; certain ERISA events; and certain changes of control. Upon the occurrence of an event of default, any outstanding loans may be accelerated and/or the revolving commitments of the lenders may be terminated.
Borrowings under the Credit Agreement may be used, among other things, for property development costs, capital expenditures, repayment of indebtedness, general working capital needs and other general corporate purposes, including payment of dividends, acquisitions, and repurchases and redemptions of securities otherwise permitted under the Credit Agreement. As of June 12, 2023, the Company had no outstanding borrowings under the Credit Agreement.
In the ordinary course of their respective businesses, many of the lenders or their affiliates have in the past performed, and may in the future from time to time perform, investment banking, advisory, lending and/or commercial banking or other financial services for the Company and its subsidiaries for which they received, or may receive, customary fees and reimbursement of expenses.
