Public Storage closes $3.5B credit facilities, lowers borrowing costs
Public Storage has finalized a $3.0 billion revolving credit facility and a $500 million term loan, alongside a new $1.0 billion commercial paper program, effectively replacing its earlier $1.5 billion revolver. The new facilities offer reduced borrowing costs, with the revolver rate dropping by 15 basis points to SOFR plus 0.650%, and provide greater financial flexibility through an accordion feature allowing for an additional $2 billion in commitments.
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Public Storage has closed a new $3.0 billion unsecured revolving credit facility and a $500 million delayed draw term loan facility, while establishing a $1.0 billion unsecured commercial paper program. The new revolving credit facility replaces the company’s previous $1.5 billion revolving credit facility, which was scheduled to mature on June 12, 2027. These actions are intended to strengthen the company’s balance sheet, enhance liquidity, and lower the effective cost of capital.
The revolving credit facility matures on June 25, 2030, with extension options available through June 25, 2031. Borrowings under this facility bear interest at SOFR plus 0.650% based on the company’s current credit ratings, a reduction of 15 basis points compared to the prior facility. The term loan is available to be drawn in up to four advances on or prior to December 22, 2026, and matures on June 25, 2031. Once drawn, the term loan will bear interest at SOFR plus 0.700%.
The credit facility documentation includes an accordion feature that permits Public Storage to increase total commitments under the revolver or incur additional term loans by up to $2 billion, subject to obtaining additional lender commitments. The interest rate spreads applicable to both the revolver and the term loan may fluctuate in the future based on changes to Public Storage’s credit ratings.
Commercial paper notes issued under the Commercial Paper Program will rank pari passu with all of Public Storage’s other senior unsecured debt. These notes will be fully and unconditionally guaranteed by Public Storage. Wells Fargo Bank, National Association is serving as Agent for the Credit Facility, while Wells Fargo Securities, LLC, BofA Securities, Inc., and JPMorgan Chase Bank, N.A. acted as joint bookrunners.
Key Financial Details
| Facility | Amount | Maturity Date | Interest Rate |
|---|---|---|---|
| Revolving Credit Facility | $3.0 billion | June 25, 2030 | SOFR + 0.650% |
| Delayed Draw Term Loan | $500 million | June 25, 2031 | SOFR + 0.700% |
| Commercial Paper Program | $1.0 billion | N/A | N/A |
How does Public Storage plan to utilize the increased liquidity from the new credit facilities to support growth or acquisitions?
What impact will the lower cost of capital have on Public Storage's future dividend policy or share buyback programs?
How might changes in SOFR rates affect the company's interest expenses over the life of these facilities?
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