Item 1.01 Entry into a Material Definitive Agreement.
On November 30, 2021, CubeSmart, L.P. (the "Operating Partnership") and
CubeSmart (the "Company") completed the issuance and sale of $550 million in
aggregate principal amount of the Operating Partnership's 2.25% senior notes due
December 15, 2028 (the "2028 Notes"), $500 million in aggregate principal amount
of the Operating Partnership's 2.50% senior notes due February 15, 2032 (the
"2032 Notes" and together with the 2028 Notes, the "Notes") and the Company's
related full and unconditional guarantees of the payment of principal, the
make-whole premium, if any, and interest on the Notes (the "Guarantees").
The net proceeds to the Operating Partnership from the sale of the Notes, after
deducting the underwriters' discount and estimated transaction expenses payable
by the Company, are approximately $1.035 billion. The Operating Partnership
expects to use all of the net proceeds of the offering to fund a portion of the
approximately $1.648 billion cash purchase price, plus the payoff of
approximately $40.9 million of existing indebtedness of LAACO, Ltd. ("LAACO"),
for its pending acquisition of LAACO, including its portfolio of 59 open and
operating self-storage properties that contain an aggregate of approximately 4.4
million rentable square feet, which includes two self-storage properties owned
and operated by two joint ventures owned fifty percent by LAACO (the "Storage
West Portfolio Acquisition"), which was announced on November 15, 2021 and to
pay transaction expenses related thereto. If the Storage West Portfolio
Acquisition is not consummated or if the net proceeds from the offering exceed
the amount necessary to fund a portion of the cash purchase price for the
Storage West Portfolio Acquisition, the Operating Partnership expects to use the
net proceeds from the offering for general corporate purposes, which may include
funding acquisitions and other investment opportunities and the repayment or
repurchase of existing indebtedness.
The Notes and the Guarantees were issued pursuant to the indenture, dated as of
September 16, 2011 (the "Indenture"), among the Company, the Operating
Partnership and U.S. Bank National Association, as trustee (the "Trustee"), as
supplemented by the Ninth Supplemental Indenture, dated as of November 30, 2021
(the "Ninth Supplemental Indenture"), among the Company, the Operating
Partnership and the Trustee. Copies of the forms of the Notes and a copy of the
form of the Guarantee are filed herewith as Exhibits 4.1 and 4.2 and
Exhibit 4.3, respectively, and incorporated into this Item 1.01 by reference.
The Operating Partnership, the Company and the Trustee also entered into a Tenth
Supplemental Indenture, dated as of November 30, 2021 (the "Tenth Supplemental
Indenture"), which addresses the situation in which the Trustee becomes an
entity other than a corporation for purposes of Section 612 of the Indenture
(Merger, Conversion, Consolidation or Succession to Business).
The 2028 Notes accrue interest at the rate of 2.25% per annum, with interest
payable in cash semi-annually in arrears on June 15 and December 15 of each
year. The 2032 Notes accrue interest at the rate of 2.50% per annum, with
interest payable in cash semi-annually in arrears on February 15 and August 15
of each year. The 2028 Notes accrue interest from and including November 30,
2021, and will be payable beginning June 15, 2022. The 2032 Notes accrue
interest from and including November 30, 2021, and will be payable beginning
August 15, 2022.
The Notes are senior unsecured indebtedness of the Operating Partnership,
ranking equally in right of payment with all of the Operating Partnership's
other unsecured unsubordinated indebtedness from time to time outstanding. The
Notes are effectively subordinated to the Operating Partnership's secured
indebtedness and to the indebtedness and other liabilities of the consolidated
subsidiaries of the Operating Partnership.
The Operating Partnership may redeem the 2028 Notes, at any time and from time
to time, prior to October 15, 2028 (the "2028 Par Call Date"), in whole or in
part, at a make-whole redemption price equal to the greater of (i) 100% of the
principal amount of the 2028 Notes then outstanding to be redeemed and (ii) the
sum of the present values of the remaining scheduled payments of principal and
interest on the 2028 Notes to be redeemed (not including any accrued and unpaid
interest to the redemption date), assuming that such 2028 Notes matured on the
2028 Par Call Date, discounted to the redemption date on a semi-annual basis at
a rate equal to the Treasury Rate (defined in the Ninth Supplemental Indenture)
plus 15 basis points, plus accrued and unpaid interest to, but not including,
the redemption date.
On or after the 2028 Par Call Date, the Operating Partnership may redeem the
2028 Notes at any time in whole or in part and from time to time at a redemption
price equal to 100% of the principal amount of the 2028 Notes to be redeemed,
plus accrued and unpaid interest on the principal amount of the 2028 Notes being
redeemed to, but not including, the redemption date.
The Operating Partnership may redeem the 2032 Notes, at any time and from time
to time, prior to November 15, 2031 (the "2032 Par Call Date"), in whole or in
part, at a make-whole redemption price equal to the greater of (i) 100% of the
principal amount of the 2032 Notes then outstanding to be redeemed and (ii) the
sum of the present values of the remaining scheduled payments of principal and
interest on the 2032 Notes to be redeemed (not including any accrued and unpaid
interest to the redemption date), assuming that such 2032 Notes matured on the
2032 Par Call Date, discounted to the redemption date on a semi-annual basis at
a rate equal to the Treasury Rate (defined in the Ninth Supplemental Indenture)
plus 15 basis points, plus accrued and unpaid interest to, but not including,
the redemption date.
On or after the 2032 Par Call Date, the Operating Partnership may redeem the
2032 Notes at any time in whole or in part and from time to time at a redemption
price equal to 100% of the principal amount of the 2032 Notes to be redeemed,
plus accrued and unpaid interest on the principal amount of the 2032 Notes being
redeemed to, but not including, the redemption date.
The Indenture and the Ninth Supplemental Indenture contain covenants that, among
other things, (i) restrict the ability of the Operating Partnership and its
subsidiaries to, subject to certain exceptions, incur additional debt and incur
debt secured by liens, and (ii) restrict the Operating Partnership and its
subsidiaries from owning unencumbered assets representing less than 150% of the
outstanding principal amount of unsecured debt.
The material terms of the Notes and the Guarantees are described in a prospectus
supplement, dated November 18, 2021, as filed with the Securities and Exchange
Commission (the "Commission") on November 22, 2021 pursuant to Rule 424(b)(5) of
the Securities Act of 1933, as amended (the "Securities Act"), which relates to
the offer and sale of the Notes and the Guarantees and supplements the Company's
and the Operating Partnership's prospectus, as filed with the Commission on
March 4, 2020, contained in the Company's and the Operating Partnership's
registration statement on Form S-3ASR (File No. 333-236886) under the Securities
Act.
The Indenture previously was filed with the Commission on September 16, 2011 as
Exhibit 4.5 to the Company's and the Operating Partnership's registration
statement on Form S-3 (File No. 333-176885) under the Securities Act, and is
incorporated into this Item 1.01 by reference. The Ninth Supplemental Indenture
is being filed with the Commission as Exhibit 4.4 to this Current Report on
Form 8-K and is incorporated into this Item 1.01 by reference. The Tenth
Supplemental Indenture is being filed with the Commission as Exhibit 4.6 to this
Current Report on Form 8-K and is incorporated into this Item 1.01 by reference.
The foregoing is not a complete description of the Indenture, the Ninth
Supplemental Indenture, the Tenth Supplemental Indenture, the Notes or the
Guarantees and is qualified in its entirety by reference to the full text of
those documents, each of which is incorporated herein by reference.
In connection with the foregoing, the Company and the Operating Partnership are
filing as Exhibit 5.1 to this Current Report on Form 8-K the opinion of their
counsel with respect to the validity of the Notes and the Guarantees.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of the Registrant.
The information provided in Item 1.01 of this Current Report on Form 8-K
pertaining to the Notes and the Guarantees is incorporated by reference into
this Item 2.03.
Item 9.01 Financial Statements and Exhibits.
Exhibit
Number Description
4.1 Form of the Operating Partnership's 2.25% senior notes due 2028.
4.2 Form of the Operating Partnership's 2.50% senior notes due 2032.
4.3 Form of CubeSmart Guarantee (included in Exhibit 4.1 and
Exhibit 4.2 ).
4.4 Ninth Supplemental Indenture, dated as of November 30, 2021, among
CubeSmart, CubeSmart, L.P. and U.S. Bank National Association.
4.5* Indenture, dated as of September 16, 2011, among CubeSmart,
CubeSmart, L.P. and U.S. Bank National Association, incorporated by
reference to Exhibit 4.5 to the Company's Registration Statement on
Form S-3, filed with the Commission on September 16, 2011.
4.6 Tenth Supplemental Indenture, dated as of November 30, 2021, among
CubeSmart, CubeSmart, L.P. and U.S. Bank National Association.
5.1 Opinion of Troutman Pepper Hamilton Sanders LLP as to the legality of
the Notes.
23.1 Consent of Troutman Pepper Hamilton Sanders LLP (included in
Exhibit 5.1 and incorporated herein by reference).
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* Incorporated herein by reference as above indicated.
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