4. Borrowings |
4. Borrowings
Long-Term Debt
Long-term debt was as follows:
December 31,
March 31,
2023 Rates
Maturities
2022
2022
(Unaudited)
(In thousands)
Real estate loan (amortizing term) (a)
4.29
%
-
5.60
%
2027
-
2037
$
292,617
$
50,259
Senior mortgages
2.70
%
-
5.50
%
2024
-
2042
2,389,419
2,206,268
Real estate loans (revolving credit)
–
%
-
–
%
2027
–
535,000
Fleet loans (amortizing term)
1.61
%
-
5.68
%
2023
-
2029
123,986
124,651
Fleet loans (revolving credit)
2.36
%
-
5.44
%
2025
-
2027
615,000
560,000
Finance leases (rental equipment)
2.16
%
-
5.04
%
2023
-
2026
252,102
347,393
Finance liabilities (rental equipment)
1.60
%
-
5.98
%
2024
-
2030
1,286,299
949,936
Private placements
2.43
%
-
2.88
%
2029
-
2035
1,200,000
1,200,000
Other obligations
1.50
%
-
8.00
%
2023
-
2049
77,399
86,206
Notes, loans and finance leases payable
6,236,822
6,059,713
Less: Debt issuance costs
(36,425)
(37,216)
Total notes, loans and finance leases payable, net
$
6,200,397
$
6,022,497
(a) Certain loans have interest rate swaps fixing the rates between 2.72% and 2.86% based on current margins.
Real Estate Backed Loans
Real Estate Loans
Certain subsidiaries of Real Estate and U-Haul Company of Florida are borrowers under real estate loans. These loans require monthly or quarterly principal and interest payments, with the unpaid loan balance and accrued and unpaid interest due at maturity. These loans are secured by various properties owned by the borrowers. The interest rates, per the provisions of $
208.5
million of these loans, are the applicable Secured Overnight Funding Rate (“SOFR”) plus the applicable margins and a credit spread adjustment of
0.10
%. As of December 31, 2022, the applicable SOFR was between
3.79
% and
4.12
% and applicable margin was between
0.65
% and
1.38
%, the sum of which, including the credit spread, was between
4.54
% and
5.60
%. The remaining $
84.2
million of these loans was fixed with an interest rate of
4.29
%. The default provisions of these real estate loans include non-payment of principal or interest and other standard reporting and change-in-control covenants.
Senior Mortgages
Various subsidiaries of Real Estate and U-Haul are borrowers under certain senior mortgages. The senior mortgages require monthly principal and interest payments. The senior mortgages are secured by certain properties owned by the borrowers. The fixed interest rates, per the provisions of the senior mortgages, range between 2.70% and 5.50%. The weighted average interest rate of these loans as of December 31, 2022 was 4.09%. Certain senior mortgages have an anticipated repayment date and a maturity date. If these senior mortgages are not repaid by the anticipated repayment date, the interest rate on these mortgages would increase from the current fixed rate. We are using the anticipated repayment date for our maturity schedule. Real Estate and U-Haul have provided limited guarantees of the senior mortgages. The default provisions of the senior mortgages include non-payment of principal or interest and other standard reporting and change-in-control covenants. There are limited restrictions regarding our use of the funds.
Real Estate Loan (Revolving Credit)
U-Haul Holding Company is a borrower under a real estate loan. As of December 31, 2022, the maximum credit commitment is $
465.0
million. As of December 31, 2022, the full capacity was available to borrow. This loan agreement provides for revolving loans, subject to the terms of the loan agreement. This loan requires monthly interest payments with the unpaid loan balance and accrued and unpaid interest due at maturity. The default provisions of the loan include non-payment of principal or interest and other standard reporting and change-in-control covenants. There is a
0.30
% fee charged for unused capacity. This loan was amended in October 2022 and the maximum credit limit was increased from $
150
million to $
465
million, the maturity extended to October 2027 and LIBOR based rates were replaced with SOFR based rates.
Fleet Loans
Rental Truck Amortizing Loans
The amortizing loans require monthly principal and interest payments, with the unpaid loan balance and accrued and unpaid interest due at maturity. These loans were used to purchase new trucks. The interest rates, per the provision of the loan agreements, are carried at fixed rates ranging between
1.61
% and
5.68
%.
All of our rental truck amortizing loans are collateralized by the rental equipment purchased.
The majority of these loans are funded at 70%, but some may be funded at 100%.
U-Haul Holding Company, and in some cases U-Haul, is guarantor of these loans. The default provisions of these loans include non-payment of principal or interest and other standard reporting and change-in-control covenants.
Rental Truck Revolvers
Various subsidiaries of U-Haul entered into three revolving fleet loans with an aggregate borrowing capacity of $
615.0
million. The aggregate outstanding balance for these revolvers as of December 31, 2022 was $
615.0
million. The interest rates, per the provision of the loan agreements, are SOFR plus the applicable margin and a credit spread adjustment of
0.10
%. As of December 31, 2022,
SOFR was between
3.70
% and
4.12
% and the margin was between
1.15
% and
1.25
%, the sum of which, including the credit spread, was between
4.95
% and
5.44
%. Of the $
615.0
million outstanding, $
100.0
million was fixed with an interest rate of
2.36
%. Only interest is paid on the loans until the last nine months of the respective loan terms when principal becomes due monthly.
Finance Leases
The Finance Lease balance represents our sale-leaseback transactions of rental equipment. The agreements are generally
seven (7) year terms
with interest rates ranging from
2.16
% to
5.04
%.
All of our finance leases are collateralized by our rental fleet. The net book value of the corresponding rental equipment was $
504.6
million and $
620.8
million as of December 31, 2022 and March 31, 2022, respectively. There were no new financing leases, as assessed under the new leasing guidance, entered into during the first nine months of fiscal 2023.
Finance Liabilities
Finance liabilities represent our rental equipment financing transactions, and we assess if these sale-leaseback transactions qualify as a sale at initiation by determining if a transfer of ownership occurs. We have determined that our equipment sale-leasebacks do not qualify as a sale, as the buyer-lessors do not obtain control of the assets in our ongoing sale-leaseback arrangements. As a result, these sale-leasebacks are accounted for as a financial liability and the leased assets are capitalized at cost. Our finance liabilities have an average term of seven (7) years and interest rates ranging from 1.60% to 5.98%. These finance liabilities are collateralized by the related assets of our rental fleet. The net book value of the corresponding rental equipment was $1,399.5 million and $1,068.3 million as of December 31, 2022 and March 31, 2022, respectively.
Private Placements
In September 2021, U-Haul Holding Company entered into a note purchase agreement to issue $
600.0
million of fixed rate senior unsecured notes in a private placement offering.
These notes consist of four tranches each totaling $
150.0
million and funded in September 2021.
The fixed interest rates range between
2.43
% and
2.78
% with maturities between
2029
and
2033
.
Interest is payable semiannually.
In December 2021, U-Haul Holding Company entered into a note purchase agreement to issue $
600.0
million of fixed rate senior unsecured notes in a private placement offering. These notes consist of three tranches each totaling $
100.0
million and two tranches each totaling $
150.0
million.
The fixed interest rates range between
2.55
% and
2.88
% with maturities between
2030
and
2035
.
Interest is payable semiannually.
Other Obligations
In February 2011, U-Haul Holding Company and U.S. Bank Trust Company, NA, as successor in interest to U.S. Bank National Association (the “Trustee”), entered into the U-Haul Investors Club
®
Indenture.
U-Haul Holding Company and the Trustee entered into this indenture to provide for the issuance of notes by us directly to investors over our proprietary website, uhaulinvestorsclub.com (“U-Notes
®
”). The U-Notes
®
are secured by various types of collateral, including, but not limited to, certain rental equipment and real estate.
U-Notes
®
are issued in smaller series that vary as to principal amount, interest rate and maturity.
U-Notes
®
are obligations of the Company and secured by the associated collateral; they are not guaranteed by any of the Company’s affiliates or subsidiaries.
As of December 31, 2022, the aggregate outstanding principal balance of the U-Notes
®
issued was $
79.2
million, of which $
1.8
million is held by our insurance subsidiaries and eliminated in consolidation. Interest rates range between
1.50
% and
8.00
% and maturity dates range between
2023
and
2049
.
Oxford is a member of the Federal Home Loan Bank (“FHLB”) and, as such, the FHLB has made deposits with Oxford. As of September 30, 2022, the deposits had an aggregate balance of $
60.0
million, for which Oxford pays fixed interest rates between
0.69
% and
4.21
% with maturities between March 30, 2023 and September 30, 2027. As of September 30, 2022, available-for-sale investments held with the FHLB totaled $
88.9
million, of which $
62.8
million were pledged as collateral to secure the outstanding advances. The balances of these advances are included within Liabilities from investment contracts on the condensed consolidated balance sheets.
Annual Maturities of Notes, Loans and Finance Leases Payable
The annual maturities of our notes, loans and finance leases payable, before debt issuance costs, as of December 31, 2022 for the next five years and thereafter are as follows:
Year Ending December 31,
2023
2024
2025
2026
2027
Thereafter
Total
(Unaudited)
(In thousands)
Notes, loans and finance leases payable, secured
$
517,406
$
693,638
$
596,395
$
861,298
$
771,004
$
2,797,081
$
6,236,822
Interest on Borrowings
Interest Expense
Components of interest expense include the following:
Quarter Ended December 31,
2022
2021
(Unaudited)
(In thousands)
Interest expense
$
60,978
$
43,850
Capitalized interest
(3,818)
(2,222)
Amortization of transaction costs
2,336
1,407
Interest expense resulting from cash flow hedges
(455)
1,007
Total interest expense
$
59,041
$
44,042
Nine Months Ended December 31,
2022
2021
(Unaudited)
(In thousands)
Interest expense
$
168,987
$
122,589
Capitalized interest
(8,684)
(6,974)
Amortization of transaction costs
5,596
4,153
Interest expense resulting from cash flow hedges
134
2,997
Total interest expense
$
166,033
$
122,765
Interest paid in cash, including payments related to derivative contracts, amounted to $
51.3
million and $
41.1
million for the third quarter of fiscal 2023 and 2022, respectively, and $
156.8
million and $
122.8
million for the first nine months of fiscal 2023 and 2022, respectively.
Interest Rates
Interest rates and Company borrowings related to our revolving credit facilities were as follows:
Revolving Credit Activity
Quarter Ended December 31,
2022
2021
(Unaudited)
(In thousands, except interest rates)
Weighted average interest rate during the period
4.68
%
1.38
%
Interest rate at the end of the period
5.28
%
1.39
%
Maximum amount outstanding during the period
$
765,000
$
1,085,000
Average amount outstanding during the period
$
710,109
$
1,081,283
Facility fees
$
270
$
66
Revolving Credit Activity
Nine Months Ended December 31,
2022
2021
(Unaudited)
(In thousands, except interest rates)
Weighted average interest rate during the period
3.34
%
1.38
%
Interest rate at the end of the period
5.28
%
1.39
%
Maximum amount outstanding during the period
$
1,105,000
$
1,093,000
Average amount outstanding during the period
$
892,680
$
1,081,571
Facility fees
$
439
$
198
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