Jernigan Capital, Inc. (NYSE: JCAP) (the “Company”) today announced that it has executed term sheets with two commercial banks for the sale of senior participations/A notes (“A notes”) on 5 of the Company’s self-storage development investments. The development projects involved include newly constructed and opened self-storage facilities in the Atlanta (2 facilities), Orlando and Tampa metropolitan statistical areas (“MSAs”) and a new self-storage facility expected to open in the Charlotte MSA within the next week.
Proceeds to the Company from the A note sales will be approximately $18.6 million. The A note proceeds equal approximately 58% of the Company’s aggregate investment in the projects. The A notes will bear interest to the Company at a floating rate of 30-day LIBOR plus 3.5%, or a current rate of 3.95% per annum. Each A note will have a term of 3 years from initial issuance. The Company expects to close the sale of the A notes on the Atlanta, Orlando and Tampa investments by August 1 and the A note on the Charlotte facility by August 15, subject to execution of definitive documentation and satisfaction of closing conditions. Upon closing the five A note sales, the Company will have sold eight A notes for aggregate proceeds (advanced and committed) of $33.6 million and a weighted average current interest rate of approximately 3.9%.
“We are very pleased to have arranged A note sales on 100% of our newly-opened facilities very shortly following the issuance of certificates of occupancy,” stated John Good, the Company’s President and Chief Operating Officer. “We believe our quick execution of these A note sales demonstrates a robust and deep market for A notes after projects have opened and entered lease-up and a high degree of confidence among banks in Jernigan Capital as an underwriter and servicer of these investments. We are excited about bringing bank partners into our capital structure at a very compelling cost to the Company.”
In addition, Jernigan Capital announced the leasing progress on the recently opened facilities in Atlanta, Orlando and Tampa. The following table reflects the date each facility opened and the physical occupancy of each facilities as of July 22, 2016, as well as the average number of days these four facilities have been open and the average occupancy of the 4 facilities.
Location | Date | # Days | Occupancy | ||||||
| Riverview Florida (Tampa) | April 11, 2016 | 103 | 32.6% | ||||||
| Ocoee Florida (Orlando) | May 1, 2016 | 83 | 39.8% | ||||||
| Alpharetta Georgia (Atlanta) | May 24, 2016 | 60 | 17.8% | ||||||
| Marietta Georgia (Atlanta) | May 25, 2016 | 59 | 18.7% | ||||||
| Average | 76 | 27.2% |
Dean Jernigan, Chairman and Chief Executive Officer of the Company commented: “We could not be more optimistic about the future success of and value-creation opportunity presented by the state-of-the-art projects represented in this initial group. In our conservative underwriting, we model each of our development investments based on 40% occupancy at the end of the first year of operation of the facility and stabilization at 85% occupancy at the end of the third year of operation. Our leasing statistics to date indicate a high likelihood of significantly outperforming our underwriting models. Combined with continued strong rate trends indicated by the self-storage REITs, we believe our development projects are positioned to deliver substantial appreciation in book value over the next few quarters.”
About Jernigan Capital
Jernigan Capital, Inc. 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. Our mission is to be the preeminent capital partner for self-storage entrepreneurs nationwide by offering creative solutions through and experienced team demonstrating the highest levels of integrity, dedication, excellence and community, while maximizing shareholder value. The Jernigan Capital team has extensive experience in over 100 U.S. markets—from acquiring and managing self-storage properties to new self-storage development—providing JCAP with knowledge unmatched by any lender, broker or advisor to the sector. Jernigan Capital is the only source of construction and development capital focused solely on the self-storage sector.
Forward-Looking Statements
This press release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. The words “should,” “expects” and “intends” and similar terms and phrases are used in this press release to identify forward-looking statements. The ultimate occurrence of events and results referenced in these forward-looking statements is subject to known and unknown risks and uncertainties, many of which are beyond our control. 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 risks facing our business, see the information under the heading “Risk Factors” in our Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”), which is accessible on the SEC’s website at www.sec.gov.
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Contacts:
John A. Good, 901-567-5917
