QTS Realty amends and extends $1.7 billion of credit facilities

By Sarah Lizee

Olympia, Wash., Oct. 22 – QTS Realty Trust announced an expansion and extension of its unsecured credit facility, with improved pricing and enhanced covenant flexibility.

The unsecured credit facility, as amended, is comprised of a $225 million five-year term loan A, a $225 million 5.5-year term loan B, a $250 million seven-year term loan C and a $1 billion four-year revolver.

QualityTech, LP is the borrower.

The revolver has a one-year extension option.

Interest rates can vary based on leverage levels. The current interest rate on term loans A and B is Libor plus 120 basis points, and the current rate on the revolver is Libor plus 125 bps. This pricing represents a 10-bps reduction from the interest rate on QTS’ credit facility prior to the amendment. The current interest rate on term loan C is Libor plus 150 bps, reflecting the seven-year maturity.

As of Friday, the weighted average interest rate for amounts outstanding under the amended and restated agreement was 3.26% for revolving credit loans and 3.34% for term loans.

Upon obtaining an investment grade rating, the amended and restated agreement permits the operating partnership to request dollar revolving loan borrowings with interest rates and terms that are to be set under competitive bid procedures. The sum of all outstanding bid loans may not exceed $350 million, or 50% of the total dollar revolving credit commitment. The bid loan sublimit is a part of, and not in addition to, the total revolving credit commitment.

The credit facility also provides for revolving credit borrowing capacity of up to $300 million in various foreign currencies and a $500 million accordion feature to increase the credit facility up to $2.2 billion, subject to obtaining additional loan commitments.

The lenders under the unsecured credit facility may issue up to $50 million of letters of credit subject to the satisfaction of some conditions. As of Friday, the term loans were fully funded and $276.8 million was outstanding under the revolver, according to an 8-K filing with the Securities and Exchange Commission.

The availability under the revolver is the lesser of $1 billion, 60% of the unencumbered asset pool capitalized value (or 65% of the unencumbered asset pool capitalized value for one or more periods of up to four consecutive fiscal quarters immediately following a material acquisition) and the amount resulting in an unencumbered asset pool debt yield of 10.5%.

The amended credit agreement contains some covenants, including a minimum fixed-charge coverage ratio for the prior two most recently-ended calendar quarters of 1.5x.

Joint lead arrangers and joint bookrunners for the amendment and extension for the revolver, term loan A and term loan B include KeyBanc Capital Markets, Inc., BofA Securities, Inc., Regions Capital Markets and TD Securities (USA) LLC. Joint lead arrangers and joint book runners for the amendment and extension on the term loan C include KeyBanc Capital Markets, Regions Capital Markets, TD Securities and SunTrust Robinson Humphrey, Inc.

KeyBank NA is the administrative agent and Bank of America, NA, Regions Bank and TD Securities are co-syndication agents on the revolver, term loan A and term loan B, and Regions Bank, TD Securities and SunTrust Bank as co-syndication agents on the term loan C. Co-documentation agents include SunTrust Bank, PNC Bank, NA, BMO Harris Bank NA and Capital One, NA.

Additionally, 15 other financial institutions participate in the credit facility.

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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