QualityTech gets $650 million five-year term loan, four-year revolver

By Susanna Moon

Chicago, Dec. 22 – QTS Realty Trust, Inc. operating partnership QualityTech, LP obtained a $100 million five-year term loan and $550 million four-year unsecured revolving credit facility, according to an 8-K filing with the Securities and Exchange Commission.

The company entered into an amended and restated credit agreement on Dec. 17 with KeyBanc Capital Markets Inc. as lead arranger and book manager.

KeyBank NA is the agent; Bank of America, NA is the co-syndication agent; Deutsche Bank AG New York Branch is the co-syndication agent; and Regions Bank is the co-syndication agent.

Interest initially will be Libor plus 170 basis points for the revolving loans, with a spread of Libor plus 170 bps to 225 bps based on leverage.

For the term loan, interest initially will be Libor plus 165 bps, with the margin ranging from Libor plus 165 bps to 220 bps.

As of Dec. 17, the weighted average interest rate was 1.86% for revolving credit loans and 1.81% for term loans.

The term loan matures on Dec. 17, 2019, and the revolver matures on Dec. 17, 2018, with the option to extend until Dec. 17, 2019.

The unsecured facility may be increased to up to $850 million with lender commitments. The lenders may issue up to $30 million in letters of credit.

As of Dec. 17, the term loan was fully funded and $139.8 million was outstanding under the revolver.

Additional loan terms

The availability under the revolver is the lesser of (a) $550 million; (b) 60% of the unencumbered asset pool capitalized value; (c) the amount resulting in an unencumbered asset pool debt service ratio of 1.7 times; and (d) the amount resulting in an unencumbered asset pool debt yield of 14%.

The outstanding principal balance of the loans and letter of credit liabilities cannot exceed the unencumbered asset pool availability.

In addition, the covenants require:

• A minimum fixed-charge coverage ratio of 1.7 times for the prior two most recently ended calendar quarters;

• A maximum debt to gross asset value ratio of 60%;

• Tangible net worth cannot be less than the sum of $645 million plus 85% of the net proceeds from any future equity offerings;

• Unhedged variable-rate debt cannot exceed 35% of gross asset value; and

• A maximum distribution payout ratio of the greater of (a) 95% of the company’s funds from operations; and (b) the amount required for the company to qualify as a REIT.

QTS is a provider of data center solutions and fully managed services for enterprise businesses and is based in Overland Park, Kan.

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