Jernigan Capital, Inc. (NYSE: JCAP) (the "Company") announced that on March 26, 2020, it entered into an amended and restated senior secured revolving credit facility of up to $375 million with a syndicate of banks led by KeyBank National Association and BMO Harris Bank N.A. The $375 million credit facility, which has an accordion feature permitting expansion up to $750 million, subject to certain conditions including obtaining additional commitments from lenders, has a three-year term that expires March 24, 2023 and two one-year extension options.
The primary highlights of the new facility include:
- Upsized to $375 million from $235 million
- Credit spreads lowered by 15-25 basis points with no LIBOR floor
- Maturity extended by approximately 1 ¼ years to March 24, 2023, plus extensions
- Financial covenant package updated to support the Company’s growth plan
- Added three new banks including Truist Bank, Synovus Bank and IberiaBank
Borrowings under the credit facility are secured by three separate pools of collateral: one consisting of the Company’s development property investments, one consisting of non-stabilized self-storage properties wholly-owned by the Company, and the last consisting of stabilized self-storage properties wholly-owned by the Company. Advances under the credit agreement bear interest at rates between 210 and 300 basis points over 30-day LIBOR. These spreads are 15 to 25 basis points lower than the spreads under the previous credit facility, which were 225 and 325 basis points, respectively. There is no LIBOR floor.
"This new facility marks another major milestone for JCAP," said John Good, Chairman and Chief Executive Officer of the Company. "With the amendment and restatement of our credit facility, we have significantly increased our access to and lowered the cost of debt capital at a time of unprecedented market volatility and economic uncertainty. Our existing banking syndicate, plus the three new banks who are entering the line with this upsizing, by their commitments have expressed confidence in our ability to continue the solid execution of our long-standing plan to build a best-of-class self-storage portfolio in some of the top markets in the United States."
KeyBanc Capital Markets, Inc. and BMO Capital Markets Corp. acted as joint lead arrangers and syndication agents for the credit facility. KeyBank National Association acted as the Administrative Agent for the credit facility. Raymond James Bank, N.A. served as documentation agent. Other banks participating in the credit facility are Pinnacle Bank, Trustmark National Bank, Truist Bank, Synovus Bank, IberiaBank, FirstBank, Renasant Bank, and Triumph Bank.
"With our upsized $375 million credit facility and already low leverage, we believe JCAP is very well positioned to fund our existing development commitments, opportunistically acquire developers’ interests and operate our core business as planned," added Mr. Good. "Our contractual investment commitments in our development pipeline are now fully-covered at conservative leverage levels for the foreseeable future, and we have created dry powder to continue to execute developer buy-outs opportunistically. Because of the current market dislocation and the social and economic impact being felt all over the country, we have lowered our estimate of funds required in 2020 for development property investments to a range of $60 million to $70 million, down from an estimated $75 million to $85 million. Upon closing the upsizing, we have approximately $52 million of availability under the line, with $250 million of borrowing base capacity and $198 million drawn. By the end of the year, management expects borrowing base availability to be between $300 million and $330 million. We continue to monitor the effect of the current pandemic on our business, operations and liquidity during these unprecedented times."
"At JCAP, our first priority is the health and safety of our teammates, our customers, our developer partners and the employees staffing our stores for our operating partners," said Jonathan Perry, President and Chief Investment Officer of Jernigan Capital. "We are carefully monitoring the impact of the COVID-19 pandemic, and the outstanding efforts of our third-party operating partners to safely and effectively operate each of our facilities and the initiatives in-place to promote social distancing and the well-being of the communities in which we operate. Since the COVID-19 outbreak expanded, all of our stores have remained open, and are actively fulfilling the needs of both new and existing tenants. While it is too early to project the ultimate effect of the pandemic on our operations, we believe year-to-date self-storage fundamentals have not to date been materially adversely affected."
About Jernigan Capital, Inc.
Jernigan Capital is a New York Stock Exchange-listed real estate investment trust (NYSE: JCAP) that provides debt and equity capital to private developers, owners and operators of self-storage facilities with a view to eventual outright ownership of facilities we finance. Our mission is to maximize shareholder value by accumulating a multi-billion-dollar investment portfolio consisting of the newest, most attractive and best located self-storage facilities in the United States through a talented and experienced team demonstrating the highest levels of integrity, dedication, excellence and community.
This press release includes "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, including statements related to our ability to increase the borrowing base availability under our credit facility, our expectations regarding development property investments, our ability to meet our investment commitments and the potential impact of the current COVID-19 pandemic and the related economic fallout on our business, results of operations and previously issued guidance. The ultimate occurrence of events and results referenced in these forward-looking statements and in our prior disclosure and press releases regarding our financial guidance and related assumptions is subject to known and unknown risks and uncertainties, many of which are beyond our control, including, without limitation, risks related to the current economic crisis resulting from the COVID-19 pandemic and its impact on our developers, our access to capital, our ability to or desire to make further acquisitions, our ability to continue to pay dividends to our stockholders at current rates or at all, and other issues impacting our liquidity position and results of operations. These forward-looking statements are based upon the Company's present intentions and expectations, but the events and results referenced in these statements are not guaranteed to occur. Investors should not place undue reliance upon forward-looking statements. For a discussion of these and other risks facing our business, see the information under the heading "Risk Factors" in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, and those set forth in the Company’s other reports and information filed with the Securities and Exchange Commission ("SEC"), which are accessible on the SEC’s website at www.sec.gov.
Jernigan Capital, Inc.
David Corak, 901-567-9580