QTS Realty enters $250 million single-draw term loan agreement

By Taylor Fox and Marisa Wong

New York, Oct. 19 – QualityTech, LP, the operating partnership of QTS Realty Trust, Inc., entered into a new unsecured term loan agreement on Oct. 16. The agreement provides for commitments to make a single borrowing of up to $250 million on or before Nov. 16, according to an 8-K filing with the Securities and Exchange Commission

Any commitments that are not drawn on or before that date will expire. The operating partnership currently intends to draw the entire $250 million.

When combined with the company’s current $1.7 billion unsecured credit facility, the new term loan D increases its unsecured credit facility capacity to $1.95 billion, according to a press release.

KeyBank NA is agent, and KeyBanc Capital Markets, Inc., BMO Capital Markets, Inc. and PNC Capital Markets LLC are joint lead arrangers and joint bookrunners. TD Securities (USA) LLC and Truist Bank are co-documentation agents.

The term loan will mature on Jan. 15, 2026.

The term loans may be increased to up to $500 million under an accordion feature, subject to some conditions.

Amounts outstanding bear interest at Libor plus a spread based on the company’s leverage ratio. The spread ranges from 120 basis points to 180 bps and is initially 120 bps.

The loan agreement contains some financial covenants, including the following:

• The operating partnership’s and its subsidiaries’ consolidated total unsecured debt plus any capitalized lease obligations with respect to the unencumbered asset pool properties may not exceed 60% of the unencumbered asset pool value (or 65% of the unencumbered asset pool value for one or more periods of up to four consecutive fiscal quarters immediately following a material acquisition);

• The unencumbered asset pool debt yield cannot be less than 10.5%;

• A minimum fixed-charge coverage ratio for the prior two most recently ended calendar quarters of 1.50 to 1.00;

• A maximum debt to gross asset value ratio of 60% (or 65% for one or more periods of up to four consecutive fiscal quarters immediately following a material acquisition); and

• Tangible net worth cannot be less than the sum of $1,975,000,000 plus 75% of the net proceeds from any equity offerings after Sept. 30.

QTS is an Overland Park, Kan.-based data center operator.

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