Digital Realty Trust has closed a $1.5 billion senior credit facility, which will provide the data center developer with better credit terms and additional funding for expansion. The new credit line will double the size of the current $750 million facility that is scheduled to expire next August. The company said the expanded credit line will provides funding for acquisitions, redevelopment of existing properties, debt repayment, working capital and global expansion. The revolving credit facility matures in November 2015, has a one-year extension option, and can be increased to $2.25 billion.
The credit facility was oversubscribed, with commitments of more than $2.1 billion received from 28 financial institutions, including 15 new lenders, according to William Stein, CFO and Chief Investment Officer for Digital Realty Trust. "This increased borrowing capacity further enhances our financial flexibility and provides us with immediate liquidity for potential acquisitions and development opportunities in our core markets," said Stein.
"We initiated efforts to modify the facility this year in response to deteriorating market conditions emanating from the sovereign debt crisis in Europe," Stein said in last week's earnings call. "In addition, we sought to substantially increase the borrowing capacity to accommodate our growing global investment program and to provide immediate liquidity for potential acquisitions that may arise from the diminishing availability of capital for commercial real estate in general."
Asia has been the focus of some of Digital Realty's recent investments, including new facilities in Singapore, Sydney and Melbourne. The company is shopping for additional locations in the Asia/Pacific market, according to CEO Michael Foust.
"In terms of our plans to further expand in the Asia Pac region, we continue to explore development opportunities in Hong Kong where we see very attractive corporate demand from new and existing multinational customers of ours," said Foust. "While it remains a very challenging market to enter, we have interesting prospects that we're working diligently to secure."
Foust said the new credit facility will help Digital Realty Trust extend its market leadership in the data center development sector.
"We are incredibly well-positioned to continue our growth program and to continue to deliver our solution across multiple markets and multiple continents," said Foust. "We were in good shape before, and now we're in terrific shape now. And that is a very powerful competitive advantage for us in the marketplace, because we can provide these solutions very readily without financing contingencies, which is very, very powerful in the market today."