Debt

9 Months Ended

Sep. 30, 2011

5. Debt

A summary of outstanding indebtedness as of September 30, 2011 and December 31, 2010 is as follows (in thousands):


		Maturity		September 30,		December 31,
	Interest Rate	Date		2011		2010
Senior secured credit facility	(1)	September 28, 2013		$	—	$	—
427 S. LaSalle - Senior mortgage loan	LIBOR plus 0.60% (0.83% and 0.86% at September 30, 2011 and December 31, 2010)	March 9, 2012			25,000		25,000
427 S. LaSalle — Subordinate mortgage loan	LIBOR plus 2.95% (3.21% at December 31, 2010)	N/A			—		5,000
427 S. LaSalle - Mezzanine loan	LIBOR plus 4.83% (5.09% at December 31, 2010)	N/A			—		10,000
55 S. Market	LIBOR plus 3.50% (3.73% and 3.76% at September 30, 2011 and December 31, 2010) ⁽²⁾	October 9, 2012	⁽³⁾		60,000		60,000
12100 Sunrise Valley	LIBOR plus 2.75% (2.98% and 3.01% at September 30, 2011 and December 31, 2010) ⁽²⁾	June 1, 2013			25,501		25,560

Total principal outstanding					110,501		125,560

Unamortized acquired below-market debt adjustment on 427 S. LaSalle mortgage loans					—		(687	)

Total indebtedness				$	110,501	$	124,873


(1)		At the Company’s election, borrowings under the credit facility bear interest at a rate per annum equal to either (i) LIBOR plus 350 basis points to 400 basis points, depending on our leverage ratio, or (ii) a base rate plus 250 basis points to 300 basis points.

(2)		In October 2010, we entered into an interest rate swap agreement with respect to 55 S. Market and an interest rate cap agreement with respect to 12100 Sunrise Valley, each as a cash flow hedge for interest incurred by these LIBOR based loans.

(3)		The mortgage contains one two-year extension option subject to the Company meeting certain financial and other customary conditions and the payment of an extension fee equal to 60 basis points.

Senior Secured Credit Facility

In conjunction with our IPO and formation transactions, our Operating Partnership entered into a $110.0 million senior secured revolving credit facility with a group of lenders for which KeyBank National Association acts as the administrative agent. The revolving credit facility is unconditionally guaranteed on an unsecured basis by CoreSite Realty Corporation. CoreSite, L.P. acts as the parent borrower and its subsidiaries that own the real estate properties known as 1656 McCarthy, 70 Innerbelt, 2901 Coronado and 900 N. Alameda are co-borrowers under the facility, and such real estate properties provide security for the facility. Each of the parent borrower and the subsidiary borrowers are liable under the facility on a joint and several basis. The facility has an initial maturity date of September 28, 2013 with a one-time extension option, which, if exercised, would extend the maturity date to March 28, 2014. The exercise of the extension option is subject to the payment of an extension fee equal to 25 basis points of the $110.0 million facility and certain other customary conditions. As of September 30, 2011, the Company has not drawn any funds under the facility.

The Company can elect to have borrowings under the credit facility bear interest at a rate per annum equal to (i) LIBOR plus 350 basis points to 400 basis points, depending on our leverage ratio, or (ii) a base rate plus 250 basis points to 300 basis points, depending on our leverage ratio. The secured revolving credit facility contains an accordion feature that allows us to increase the total commitment by $90.0 million, to $200.0 million, under specified circumstances.

The total amount available for us to borrow under the facility will be subject to the lesser of a percentage of the appraised value of our properties that form the designated borrowing base properties of the facility, a minimum borrowing base debt service coverage ratio and a minimum borrowing base debt yield. As of September 30, 2011, $101.3 million was available for us to borrow under the facility. Our ability to borrow under the facility is subject to ongoing compliance with a number of customary restrictive covenants, including:

• a maximum leverage ratio (defined as consolidated total indebtedness to total gross asset value) of 55%;

• a minimum fixed charge coverage ratio (defined as adjusted consolidated earnings before interest, taxes, depreciation and amortization to consolidated fixed charges) of 1.75 times;

• a maximum unhedged variable rate debt ratio (defined as unhedged variable rate indebtedness to gross asset value) of 30%;

• a maximum recourse debt ratio (defined as recourse indebtedness other than indebtedness under the revolving credit facility to gross asset value) of 30%; and

• a minimum tangible net worth equal to at least 75% of our tangible net worth at the closing of our IPO plus 80% of the net proceeds of any additional equity issuances.

427 S. LaSalle

As of September 30, 2011, the 427 S. LaSalle property had a senior mortgage loan payable of $25.0 million which matures on March 9, 2012. This loan is secured by deeds of trust on the property and requires payments of interest only until maturity. The mortgage requires ongoing compliance by us with various nonfinancial covenants. As of September 30, 2011, the Company was in compliance with the covenants.

On April 29, 2011, the Company repaid the $10.0 million mezzanine loan on the 427 S. LaSalle property at a discount. As a result of this discounted payoff, we reduced our debt by $10.0 million, paying $9.5 million in cash and recognizing a $0.5 million gain, net of fees on the transaction.

On June 3, 2011, the Company repaid the $5.0 million subordinate loan on the 427 S. LaSalle property at a discount. As a result of this discounted payoff, we reduced our debt by $5.0 million, paying $4.6 million in cash and recognizing a $0.4 million gain, net of fees on the transaction.

55 S. Market

As of September 30, 2011, the 55 S. Market property had a $60.0 million mortgage loan, which matures on October 9, 2012. The mortgage payable contains one two-year extension option provided the Company meets certain financial and other customary conditions and subject to the payment of an extension fee equal to 60 basis points. The loan bears interest at LIBOR plus 350 basis points and requires the payment of interest only until maturity. The mortgage requires ongoing compliance by us with various covenants including liquidity and net operating income covenants. As of September 30, 2011, the Company was in compliance with the covenants.

On October 7, 2010, the Company entered into a $60.0 million interest rate swap agreement to protect against adverse fluctuations in interest rates by reducing its exposure to variability in cash flows relating to interest payments on the $60.0 million 55 S. Market mortgage. The interest rate swap matures on October 9, 2012 and effectively fixes the interest rate at 4.01%.

12100 Sunrise Valley

As of September 30, 2011, the 12100 Sunrise Valley property had a mortgage loan payable of $25.5 million. We may make additional draws of up to $6.4 million to fund specified construction under the loan agreement for a maximum total borrowing of $31.9 million. On October 24, 2011, the Company drew the remaining $6.4 million to fund construction activities at 12100 Sunrise Valley. The mortgage loan payable is secured by the 12100 Sunrise Valley property and required payments of interest only until the “amortization commencement date” on July 1, 2011. The loan matures on June 1, 2013 and we may exercise the one remaining one-year extension option provided the Company meets certain financial and other customary conditions and subject to the payment of an extension fee equal to 50 basis points. The mortgage loan payable contains certain financial and nonfinancial covenants. As of September 30, 2011, the Company was in compliance with the covenants.

On October 8, 2010, the Company purchased an interest rate cap to hedge $25.0 million of the indebtedness secured by our 12100 Sunrise Valley property. The interest rate cap matures on October 1, 2012 and hedges against LIBOR interest rate increases above 2.0%.

Debt Maturities

The following table summarizes our debt maturities as of September 30, 2011 (in thousands):


Year
Remainder of 2011	$	63
2012		85,249
2013		25,189

Total	$	110,501