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Item 1.01
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Entry into a Material Definitive Agreement.
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On June 22, 2021, Extra Space Storage LP (the “Operating Partnership”), the operating partnership subsidiary of Extra Space Storage Inc. (the “Company”), entered into a second amended and restated credit agreement (the “Credit Agreement”) with (i) certain lenders named therein, (ii) U.S. Bank National Association, as administrative agent, (iii) the following co-syndication agents: Bank of America, N.A. and Wells Fargo Bank, National Association, with respect to the Revolving Credit Facility and the Tranche 1 Term Loan Facility (each as defined below), TD Bank, N.A., Wells Fargo Bank, National Association and PNC Bank, National Association, with respect to the Tranche 2 Term Loan Facility (as defined below), PNC Bank, National Association, with respect to the Tranche 3 Term Loan Facility (as defined below), TD Bank, N.A., with respect to the Tranche 4 Term Loan Facility (as defined below) and Bank of America, N.A. and Wells Fargo Bank, National Association, with respect to the Tranche 5 Term Loan Facility (as defined below), (iv) the following co-documentation agents: TD Bank, N.A., PNC Bank, National Association, Bank of the West, BMO Harris Bank N.A., JPMorgan Chase Bank, N.A., Regions Bank and Citibank, N.A., with respect to the Revolving Credit Facility, TD Bank, N.A., Bank of the West, BMO Harris Bank, N.A., JPMorgan Chase Bank, N.A. and Regions Bank, with respect to the Tranche 1 Term Loan Facility and Bank of the West, BMO Harris Bank, N.A. and Fifth Third Bank, National Association, with respect to the Tranche 5 Term Loan Facility and (v) the following joint lead arrangers and book runners: U.S. Bank National Association, BofA Securities, Inc. and Wells Fargo Securities, LLC, as joint lead arrangers and joint bookrunners with respect to the Revolving Credit Facility and the Tranche 1 Term Loan Facility, U.S. Bank National Association, Wells Fargo Securities, LLC, TD Bank, N.A. and PNC Capital Markets LLC, as joint lead arrangers with respect to the Tranche 2 Term Loan Facility and U.S. Bank National Association, Wells Fargo Securities, LLC and PNC Capital Markets LLC, as joint book runners with respect to the Tranche 2 Term Loan Facility, U.S. Bank National Association, PNC Capital Markets LLC and TD Bank, N.A., as joint lead arrangers with respect to the Tranche 3 Term Loan Facility and U.S. Bank National Association, as sole book runner with respect to the Tranche 3 Term Loan Facility, U.S. Bank National Association and TD Bank, N.A., as joint lead arrangers with respect to the Tranche 4 Term Loan Facility and U.S. Bank National Association as sole book runner with respect to the Tranche 4 Term Loan Facility, and U.S Bank National Association, BofA Securities, Inc., Wells Fargo Securities, LLC, Bank of the West, BMO Harris Bank N.A. and Fifth Third Bank, National Association, as joint lead arrangers with respect to the Tranche 5 Term Loan Facility and U.S. Bank National Association as sole book runner with respect to the Tranche 5 Term Loan Facility. The Company joined in the Credit Agreement for certain limited purposes as set forth therein. The Credit Agreement amended and restated in its entirety an existing credit agreement, dated as of December 7, 2018, as amended as of July 1, 2019, December 20, 2019 and February 12, 2021, by and among the Operating Partnership, U.S. Bank National Association, as administrative agent, and the lending institutions listed on the signature pages thereof and joined in by the Company for certain limited purposes as set forth therein.
The Credit Agreement provides for aggregate borrowings of up to $2.795 billion, consisting of a senior unsecured revolving credit facility of $1.25 billion, due June 20, 2025 (the “Revolving Credit Facility”), a senior unsecured term loan of $400.0 million, due January 31, 2027 (the “Tranche 1 Term Loan Facility”), a senior unsecured term loan of $220.0 million, due October 13, 2026 (the “Tranche 2 Term Loan Facility”), a senior unsecured term loan of $245.0 million, due January 30, 2025 (the “Tranche 3 Term Loan Facility”), a senior unsecured term loan of $255.0 million, due June 29, 2026 (the “Tranche 4 Term Loan Facility”), and a senior unsecured term loan of $425.0 million, due February 12, 2024 (the “Tranche 5 Term Loan Facility” and, together with the Tranche 1 Term Loan Facility, the Tranche 2 Term Loan Facility, the Tranche 3 Term Loan Facility and the Tranche 4 Term Loan Facility, the “Term Loan Facilities” and, together with the Revolving Credit Facility, the “Credit Facility”). The Operating Partnership may increase the amount of the commitments under the Credit Facility up to an aggregate of $3.795 billion and extend the term of the Revolving Credit Facility for up to two additional periods of six months each, after satisfying certain conditions.
Amounts outstanding under the Credit Facility will bear interest at floating rates, at the Operating Partnership’s option, equal to either (i) LIBOR plus the applicable Eurodollar rate margin or (ii) the applicable base rate which is the applicable margin plus the highest of (a) 0.00%, (b) the federal funds rate plus 0.50%, (c) U.S. Bank’s prime rate or (d) the Eurodollar rate plus 1.00%. The applicable Eurodollar rate margin for the Revolving Credit Facility will range from 0.700% to 1.400% per annum and the applicable base rate margin for the Revolving Credit Facility will range from 0.00% to 0.400% per annum, and the applicable Eurodollar rate margin for the Term Loan Facilities will range from 0.750% to 1.600% per annum and the applicable base rate margin for the Term Loan Facilities will range from 0.00% to 0.600% per annum, in each case depending on the Company’s credit ratings.
The Operating Partnership may voluntarily prepay loans under the Credit Agreement in whole or in part at any time, subject to certain notice requirements. Amounts borrowed under the Term Loan Facilities that are repaid or prepaid may not be reborrowed.
The Credit Agreement is guaranteed by the Company and by certain current and future subsidiaries of the Company that directly or indirectly own an equity interest in the Operating Partnership and certain current and future subsidiaries of the Operating Partnership that become a borrower or guarantor of, or otherwise become obligated to make any payment in respect of unsecured indebtedness (subject to certain exceptions). The Credit Agreement is not secured by any assets of the Company or its subsidiaries.
The Credit Agreement includes a series of financial and other covenants that the Company and the Operating Partnership must comply with, including:
•maintaining a ratio of total indebtedness to total asset value of not more than 60%, except during certain limited periods of time following a material acquisition, during which time such ratio shall not exceed 65%;
•maintaining a ratio of total secured debt to total asset value of not more than 40%;
•maintaining a ratio of adjusted EBITDA to fixed charges of at least 1.50 to 1.00; and
•maintaining a ratio of total unsecured debt to total unencumbered asset value of not more than 60%, except during certain limited periods of time following a material acquisition, during which time such ratio shall not exceed 65%.
The Credit Agreement contains usual and customary events of default including defaults in the payment of principal, interest or fees, defaults in compliance with the covenants set forth in the Credit Agreement and other loan documentation, cross-defaults to certain other indebtedness, and bankruptcy and other insolvency defaults. If an event of default occurs and is continuing under the Credit Agreement, all outstanding principal amounts, together with all accrued unpaid interest and other amounts owing in respect thereof, may be declared immediately due and payable.
Wells Fargo Bank N.A. is a lender under the Operating Partnership’s outstanding secured line of credit. JPMorgan Chase Bank, N.A., PNC Bank, National Association, BMO Harris Bank, N.A., TD Bank, N.A., Truist Bank, U.S. Bank, National Association, Wells Fargo Bank N.A., Zions Bancorporation, N.A. and an affiliate of BofA Securities, Inc. are lenders under certain of the Operating Partnership’s outstanding secured term loans. In addition, Wells Fargo Securities, LLC, BofA Securities, Inc., BMO Capital Markets Corp., BNP Paribas, JPMorgan Chase Bank, N.A., Regions Bank, TD Bank, N.A. and Truist Securities, act as sales agents in connection with certain equity distribution agreements pursuant to which the Company may sell shares of its common stock from time to time.
The foregoing summary of the Credit Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Credit Agreement, a copy of which is filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference.