CubeSmart enters $300 million revolver, $300 million term loans

By Susanna Moon

Chicago, Dec. 12 - CubeSmart said it obtained a $600 million unsecured credit facility, consisting of a $100 million term loan due December 2014, a $200 million term loan due March 2017 and a $300 million revolver due December 2015 with an option to extend the term of the revolver for one year.

Interest on the revolver will be Libor plus 180 basis points, based on the company's credit rating, and interest on the term loans will be Libor plus 175 bps.

The company also entered into interest rate swaps to fix Libor on the $200 million term loan used to complete the funding requirements of the Storage Deluxe acquisition at 1.34% through March 31, 2017. As a result, the term loan will have an effective fixed interest rate of 3.09%, according to a company press release.

At closing, the company drew $100 million of the $200 million term loan maturing in 2017. Proceeds were used to repay drawdowns on its line of credit used to fund the first closing of the Storage Deluxe deal in November.

The company expects to draw the remaining $100 million of the term loan due 2017 for the second closing of the Storage Deluxe transaction in the first quarter of 2012.

The $100 million three-year term loan was fully drawn at closing. Proceeds from the term loan were used to repay the company's $100 million term loan maturing in December 2013.

The $300 million revolving line of credit was undrawn at closing.

"This new financing, along with our common share and debut preferred equity offerings in October, completes the funding for the $560 million Storage Deluxe transaction we announced earlier this quarter," Timothy Martin, chief financial officer, said in a press release.

Martin said the company raised more than $1.1 billion of capital this year to fund growth, to extend its debt maturity profile and to refinance debt "at more favorable terms."

"The increased size of the revolver recognizes the company's growth, and our expected free cash flow and revolver capacity provide sufficient in-place capital to address our debt maturities through 2014," Martin added in the release.

Bridge loan for acquisition

Cubesmart said on Oct. 24 that it received a $100 million loan as part of $300 million of combined bridge financing from affiliates of Wells Fargo Securities LLC.

As previously noted, proceeds were to help fund the company's acquisition of 22 self storage facilities from Storage Deluxe for $560 million.

The purchase price consisted of about $472 million payable in cash and $88 million of existing fixed-rate debt.

The Wells Fargo affiliates provided Cubesmart with a new $100 million unsecured term loan facility and at least $175 million in equity capital via a preferred stock line of credit.

The term loan maturity was six months, but the company could extend the facility for an additional five years.

Pricing on the facility ranged from Libor plus 120 basis points to 225 bps, based on the company's credit rating.

Cubesmart is a Wayne, Penn.-based real estate company, focused on the ownership and operation of self storage facilities.

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