8-KMaterial AgreementsFinancial EventsExhibits & Filings

DIGITAL REALTY TRUST, INC. 8-K Report, Material Agreement (Jan 13, 2023)

Filed January 13, 2023For Securities:DLRDLR-PJDLR-PKDLR-PL

Summary

Digital Realty Trust, Inc. (DLR) announced the effectiveness of a new $740 million senior unsecured term loan facility on January 9, 2023. This facility matures on March 31, 2025, with an option for a twelve-month extension subject to a fee. The interest rate is variable, based on SOFR or a base rate, plus an applicable margin that fluctuates with DLR's corporate credit rating. The initial applicable margin for SOFR-based loans is 0.95% per annum. This new term loan is guaranteed by DLR and certain subsidiaries and includes customary restrictive covenants related to investments, mergers, financial ratios, and distributions. Notably, distributions to stockholders may be restricted during an event of default, except as necessary for REIT qualification or to avoid taxes. The agreement also outlines events of default, including non-payment, covenant breaches, cross-defaults, and change of control, which could lead to acceleration of the loan.

Key Highlights

  • 1Effective January 9, 2023, DLR entered into a $740 million senior unsecured term loan facility.
  • 2The Term Loan Facility matures on March 31, 2025, with a one-year extension option for the borrower.
  • 3Interest rates are variable, tied to SOFR or a base rate, with margins dependent on DLR's corporate credit rating.
  • 4The initial applicable margin for SOFR-based loans is 0.95% per annum.
  • 5Borrowings are guaranteed by Digital Realty Trust, Inc. and certain subsidiaries.
  • 6The agreement contains restrictive covenants regarding investments, mergers, financial ratios, and distributions.
  • 7Events of default, including non-payment and change of control, can lead to loan acceleration.

Frequently Asked Questions

The new senior unsecured term loan facility is for $740 million and matures on March 31, 2025. It includes a one-year extension option exercisable by the borrower.

The interest rate is variable. Borrowers can choose between a SOFR-based floating rate or a base rate option. The applicable margin is based on DLR's corporate credit rating for its long-term senior unsecured debt, with the initial SOFR-based margin set at 0.95% per annum.

Yes, the Term Loan Agreement includes restrictive covenants that limit investments and mergers, require the maintenance of specific financial coverage ratios, and restrict distributions to stockholders during an event of default, except for purposes of maintaining REIT qualification or avoiding taxes.

Events of default include non-payment, material breaches of warranties or covenants, cross-defaults or cross-accelerations under other material debt, and a change of control. Certain defaults may be cured within specified periods, while others, like bankruptcy, lead to automatic acceleration.