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HG bonds: Public Storage prints $500M of 0.875% notes due 2026; terms

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HG bonds: Public Storage prints $500M of 0.875% notes due 2026; terms

Public Storage today completed a $500 million public offering of 0.875% five-year senior notes due Feb. 15, 2026, at T+43, or 17 basis points, through early whispers.

The issuer, a self-storage facilities real estate investment trust, plans to use the proceeds of the offering to make investments in self-storage facilities and in entities that own self-storage facilities, for the development of self-storage facilities, and for general corporate purposes, including repurchases of outstanding preferred shares, according to regulatory filings.

Expected ratings are A/A2, reflecting stable outlooks on both sides. S&P Global Ratings in December noted its expectation for Public Storage to continue to generate "solid cash flow" and maintain "credit-protection measures remaining among the strongest in the real estate sector." It added that the storage industry "has proven more resilient to the effects of the pandemic than other REIT subsectors."

Covenants governing the issue include limitations of total debt to 65% or less of total assets and secured debt to 50% or less of total assets, adjusted EBITDA of at least 1.5x interest expense and unencumbered assets of at least 125% of unsecured debt.

Today's offering is the first for the issuer on the U.S. markets since April 2019, when it completed a $500 million offering of 3.385% 10-year notes due May 1, 2029, at T+92. The issue changed hands yesterday in the area of 69 bps over the interpolated yield curve, according to MarketAxess.

In the interim period, Public Storage last January placed €500 million of 0.875% notes due Jan. 24, 2032. Terms:

Issuer Public Storage
Ratings A/A2
Amount $500 million
Issue SEC-registered senior notes
Coupon 0.875%
Price 99.817
Yield 0.912%
Spread T+43
Maturity Feb. 15, 2026
Call Make-whole T+10 until notes are callable at par from one month prior to maturity
Trade (date) Jan. 14, 2021
Settle Jan. 19, 2021
Bookrunners BofA/JPM(B&D)/WFC
Price talk IPT T+60 area
Notes Proceeds to be used to make investments in self-storage facilities and in entities that own self-storage facilities, for the development of self-storage facilities, and for general corporate purposes, including repurchases of outstanding preferred shares