Business Context and Reporting Period
This Form 8-K filing by Public Storage, dated March 21, 2012, reports the entry into a new material definitive agreement and the termination of a prior credit facility. The filing was signed on March 27, 2012.
Key Financial Metrics and Debt Structure
- New Credit Facility: A five-year Amended and Restated Credit Agreement with a revolving capacity of up to $300 million.
- Expansion Option: The Company may request an additional $300 million increase in the facility, subject to conditions.
- Interest Rates: Variable rates based on competitive bids, LIBOR, or the Federal funds rate plus an applicable margin tied to senior debt credit ratings.
- Outstanding Borrowings: As of March 27, 2012, there were no outstanding borrowings under the new agreement.
- Permitted Uses: Property development, capital expenditures, debt repayment, working capital, dividends, acquisitions, and share repurchases.
Material Changes Versus Prior Period
The new Credit Agreement replaces in its entirety the revolving credit facility provided under the 2007 Credit Agreement dated March 27, 2007. The 2007 agreement was formally terminated on March 21, 2012.
Covenants, Risks, and Management Commentary
- Financial Covenants: The agreement requires quarterly compliance with a maximum leverage ratio test and a minimum interest coverage ratio test.
- Operational Covenants: Includes maintenance of corporate existence and REIT status, limitations on asset transfers, and restrictions on affiliate transactions.
- Events of Default: Includes nonpayment, material inaccuracies in representations, bankruptcy events, material judgments, and certain changes of control. Insolvency events trigger automatic acceleration of all amounts due.
- Guarantees: Obligations are guaranteed by certain subsidiaries of the Company.
Key Facts for Investor Verification
- Verify the Company's current senior debt credit ratings with Standard & Poor's and Moody's to determine the applicable interest rate margin.
- Confirm the Company's compliance with the new leverage and interest coverage covenants in the most recent quarterly report.
- Review the specific terms of the expansion option to understand conditions required to access the additional $300 million.
- Monitor future filings for any utilization of the $300 million revolving facility.