Life Storage, Inc. (LSI - Free Report) announced the pricing of a public offering of $400 million aggregate principal amount of 2.200% senior unsecured notes through its operating partnership, Life Storage LP.
The notes will mature on Oct 15, 2030, and will be issued at 99.524% of par value. The offering is anticipated to close on Sep 23, 2020, subject to the satisfaction of customary closing norms.
The debt obligations will pay a coupon of 2.200% semi-annually on Apr 15 and Oct 15 of each year, starting from 2021.
The company intends to use the proceeds from the offering to address near-term debt maturities and future growth endeavors. Specifically, it is likely to allocate net proceeds to repay its $100-million unsecured term note due Aug 5, 2021, in full, along with accrued interest and prepayment fees related thereto.
Moreover, the company will pay down any balance outstanding under its unsecured line of credit. Any remaining proceeds will be used for future buyouts of self-storage properties and general corporate needs.
Notably, the company’s efforts to strengthen its liquidity in these testing times and tap the debt market amid a low interest-rate environment are strategic fits. Additionally, the self-storage industry continues to benefit from favorable demographic changes. Specifically, migration and downsizing trends, and an increase in the number of people renting homes have escalated the needs of consumers to rent space at a storage facility to park their possessions. Hence, the company’s focus to benefit from these factors on the back of acquisitions is a strategic fit.
However, the note offering increases the company’s long-term financial obligation.
Shares of this Zacks Rank #3 (Hold) company have rallied 14.7% over the past three months against the industry’s 4% decline.
Stocks to Consider
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Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
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