Unless otherwise indicated or unless the context requires otherwise, all references in this report to “we,” “us,” “our,” “our company,” “the company” or “Digital Realty” refer to Digital Realty Trust, Inc., together with its consolidated subsidiaries, including Digital Realty Trust, L.P., our “operating partnership.”
| Entry into a Material Definitive Agreement. |
As previously disclosed, on October 25, 2022, the company, the operating partnership, and certain of the operating partnership’s subsidiaries entered into an escrow agreement (the “Escrow Agreement”) with Bank of America, N.A., as administrative agent (the “Administrative Agent”), certain lenders (the “Lenders”), and Arnold & Porter Kaye Scholer LLP, as escrow agent (the “Escrow Agent”), pursuant to which the operating partnership, the company, the Administrative Agent and the Lenders delivered executed signature pages to a new term loan agreement among the operating partnership, the company, the Lenders and the Administrative Agent (the “Term Loan Agreement”) to be held in escrow by the Escrow Agent and released by the Escrow Agent upon satisfaction of the terms described therein as further described below.
On January 9, 2023, the terms and conditions of the Escrow Agreement were satisfied, and, on such date, the Term Loan was deemed executed and became effective.
The Term Loan Agreement provides for a $740 million senior unsecured term loan facility (the “Term Loan Facility”). The Term Loan Facility provides for borrowings in U.S. dollars. The Term Loan Facility will mature on March 31, 2025, subject to one twelve-month extension option at the operating partnership’s option; provided, that the operating partnership must pay a 0.1875% extension fee based on the then-outstanding principal amount of the term loans under the Term Loan Facility.
The Term Loan Facility provides that the term loans thereunder bear interest, at the operating partnership’s option, at a rate of (x) from the closing date through the initial maturity date, (i) a term SOFR-based or daily simple SOFR floating interest rate option plus an applicable margin based on the corporate credit rating of our long-term senior unsecured debt of between 0.80% and 1.60% per annum plus a credit spread adjustment of 0.10%, 0.15% or 0.25% (depending on the applicable term SOFR-based interest period) or 0.10% (for daily simple SOFR) or (ii) a base rate interest rate option plus an applicable margin based on the corporate credit rating of our long-term senior unsecured debt of between 0.00% and 0.60% or (y) following the extension of the maturity date, (i) a term SOFR-based or daily simple SOFR floating interest rate option plus an applicable margin based on the corporate credit rating of our long-term senior unsecured debt of between 0.95% and 1.75% per annum plus a credit spread adjustment of 0.10%, 0.15% or 0.25% (depending on the applicable term SOFR-based interest period) or 0.10% (for daily simple SOFR) or (ii) a base rate interest rate option plus an applicable margin based on the corporate credit rating of our long-term senior unsecured debt of between 0.00% and 0.75%. The applicable margin at closing applicable to the term loans under the Term Loan Facility based on a term SOFR-based floating interest rate is 0.95% per annum. We are also required to pay certain fees to the administrative agent under the Term Loan Facility. The Term Loan Facility may be voluntarily prepaid in whole or in part at any time without premium or penalty. Amounts borrowed under the Term Loan Facility and repaid or prepaid may not be reborrowed.
Borrowings under the Term Loan Agreement
guaranteed by Digital Realty Trust, Inc., Digital Euro Finco, LLC and Digital Dutch Finco B.V. In specified circumstances, additional guarantors are required to be added. The Term Loan Agreement
contains
various restrictive covenants, including limitations on our ability to make certain investments or merge with another company, and requirements to maintain financial coverage ratios, including with respect to unencumbered assets. In addition, the Term Loan Agreement restricts Digital Realty Trust, Inc. from making distributions to its stockholders, or redeeming or otherwise repurchasing shares of its capital stock, after the occurrence and during the continuance of an event of default, except in limited circumstances including as necessary to enable Digital Realty Trust, Inc. to maintain its qualification as a REIT and to avoid the payment of income or excise tax. In addition, the Term Loan Agreement
includes
events (including, without limitation, a
non-payment
under the loans, a breach of warranties and representations in any material respect,
non-compliance
with covenants by a borrower, cross-default for payment defaults and cross-acceleration for other defaults under material debt or a change of control) which, if not cured within the time period, if any, specified in the Term Loan Agreement would constitute an event of default.
