Sovran lines up $100 million seven-year delayed draw note; revolver, term notes extended

By Susanna Moon

Chicago, June 4 - Sovran Self Storage, Inc. said it obtained arrangements for $500 million of senior unsecured debt, including commitments for $100 million for a seven-year delayed draw note to provide funding for the company's repayment of term notes due in September.

The company also negotiated extensions and rate reductions on two other outstanding bank term notes, according to a press release.

The maturity dates on the company's $125 million and $100 million unsecured bank group term notes were extended to June 2020, and the interest rate was cut to Libor plus 165 basis points from Libor plus 200 bps.

Sovran said it also extended its $175 million revolving credit facility through June 2018 and cut interest to Libor plus 150 bps from Libor plus 200 bps. The new agreement provides for an increase to the facility of $75 million and extension options for two additional years.

M&T Bank was the lead arranger and bookrunner. SunTrust Bank and Wells Fargo Bank, NA were the co-syndication agents. HSBC Bank USA, NA, PNC Bank, NA and U.S. Bank, NA were the co-documentation agents. The syndication includes 11 lenders.

The company also entered into interest rate swap contracts, which effectively fix the interest rate on the $100 million delayed draw term note at 3.02% for five years beginning Sept. 4.

"This financing package extends our debt maturity dates, reduces our effective borrowing costs, and provides us with the capacity and flexibility we need to grow our business," Andrew J. Gregoire, the company's chief financial officer, noted in the press release.

Interest expense savings per year are expected to be about $4.1 million as a result of this transaction, the company said.

Sovran is a self storage real estate investment trust based in Buffalo, N.Y.

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