Summary
Digital Realty Trust, Inc. (DLR) announced significant updates to its debt financing structure through the execution of a new Global Senior Credit Agreement and a Term Loan Agreement on January 15, 2016. These agreements replace existing credit facilities and provide DLR with substantial liquidity and flexibility. The new $2.0 billion global revolving credit facility matures in January 2020 with extension options and allows for borrowings in multiple currencies, enhancing its international operational capabilities. Furthermore, DLR has secured a $1.55 billion term loan facility, comprising a $1.25 billion 5-year loan and a $300 million 7-year loan, maturing in 2021 and 2023, respectively. These new credit facilities offer DLR enhanced borrowing capacity, with the ability to increase the revolving credit facility up to $2.5 billion and the term loan facility up to $1.8 billion. The interest rates are variable, tied to the company's credit rating, and include provisions for competitive bid borrowings. Importantly, the company has hedged approximately 75% of its term loan balance to a fixed rate, mitigating interest rate risk. The agreements include standard covenants and events of default, with provisions designed to ensure DLR maintains its REIT status.
Key Highlights
- 1Digital Realty Trust, Inc. (DLR) entered into a new $2.0 billion senior unsecured revolving credit facility maturing January 15, 2020, with two six-month extension options.
- 2The new revolving credit facility replaces a previous $2.0 billion facility and allows for borrowings in multiple foreign currencies, enhancing global operational flexibility.
- 3DLR also secured a $1.55 billion senior unsecured term loan facility, split into a $1.25 billion 5-year term loan (maturing Jan 2021) and a $300 million 7-year term loan (maturing Jan 2023).
- 4Both credit facilities provide DLR the ability to increase the total loan size, with the revolving credit facility expandable to $2.5 billion and the term loan to $1.8 billion, subject to lender commitments.
- 5Interest rates on the new facilities are variable, based on the company's credit rating, plus a margin. Competitive bid borrowings are also available.
- 6Approximately 75% of the term loan balance has been fixed through interest rate swaps, providing rate certainty and mitigating interest rate risk.
- 7The new agreements contain restrictive covenants and events of default, including provisions to maintain DLR's REIT qualification and avoid excise taxes.