Item
1.01
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Entry
into a Material Definitive Agreement.
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Term Loan Agreement
On October 16, 2020, QualityTech, LP (the
"Operating Partnership"), the operating partnership of QTS Realty Trust, Inc. (the "Company"), entered into
an unsecured Term Loan Agreement (the "Term Loan Agreement") with KeyBank National Association, as agent, the lenders
party thereto, KeyBanc Capital Markets, Inc., BMO Capital Markets, Inc. and PNC Capital Markets LLC, as joint lead arrangers and
joint book runners, and TD Securities (USA) LLC and Truist Bank, as co-documentation agents.
The Term Loan Agreement provides for
commitments to make a single term loan borrowing of up to $250 million on or before November 16, 2020, subject to
satisfaction of certain conditions (the “Term Loan”). Any commitments that that are not drawn on or before that
date will expire. The Operating Partnership currently intends to draw the entire $250 million on or before November 16, 2020.
The Term Loan will mature on January 15, 2026. The term loans under the Term Loan Agreement may be increased to up to $500
million, subject to certain conditions, including the consent of the agent and obtaining necessary commitments.
Amounts outstanding under the Term Loan
Agreement bear interest at a variable rate equal to, at the Operating Partnership's election, LIBOR or a base rate, plus a spread
that will vary depending upon the Company's leverage ratio. The spread ranges from 1.20% to 1.80% for LIBOR loans and 0.20% to
0.80% for base rate loans.
The Term Loan Agreement has customary representations
and warranties, and affirmative and negative covenants, including limitations on liens, mergers, consolidations, investments, asset
sales and affiliate transactions, as well as financial covenants, including the following:
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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 for which the Operating Partnership has provided written notice to the agent);
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the unencumbered asset pool debt yield cannot be less than 10.5%;
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a minimum fixed charge coverage ratio (defined as the ratio of consolidated EBITDA, subject to certain adjustments, to consolidated fixed charges) for the prior two most recently-ended calendar quarters of 1.50 to 1.00;
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a maximum debt to gross asset value (as defined in the Term Loan Agreement) ratio of 60% (or 65% for one or more periods of up to four consecutive fiscal quarters immediately following a material acquisition for which the Operating Partnership has provided written notice to the agent);
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tangible net worth (as defined in the Term Loan Agreement) cannot be less than the sum of $1,975,000,000 plus 75% of the net proceeds from any equity offerings after September 30, 2020;
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The Term Loan Agreement includes customary
events of default, and the occurrence of an event of default will permit the lenders to terminate commitments to lend under the
Term Loan Agreement and accelerate payment of all amounts outstanding thereunder.
A copy of the Term Loan Agreement is attached
to this Current Report on Form 8-K as Exhibit 10.1 and incorporated herein by reference. The summary set forth above is qualified
in its entirety by reference to Exhibit 10.1.
Unsecured Springing Guaranty
In connection with the Term Loan Agreement,
the Company entered into an Unconditional Guaranty of Payment and Performance dated as of October 16, 2020 (the "Unsecured
Springing Guaranty"). Under the terms of the Unsecured Springing Guaranty, if (a) the Company fails to comply with the covenants
contained in the Term Loan Agreement that generally limit the Company’s activities to the ownership of equity interests in
the Operating Partnership, managing the business of the Operating Partnership and activities incidental thereto, (b) the Company
guarantees or otherwise becomes obligated in respect of indebtedness for borrowed money or certain other types of indebtedness,
or (c) certain events of bankruptcy, reorganization, insolvency, dissolution or liquidation involving the Company occur, then the
Company will automatically guarantee all of the obligations of the Operating Partnership under the Term Loan Agreement.
A copy of the Unsecured Springing Guaranty
is attached to this Current Report on Form 8-K as Exhibit 10.2 and incorporated herein by reference. The summary set forth above
is qualified in its entirety by reference to Exhibit 10.2.