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Digital Realty Prices Notes

DLR DFT

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Digital Realty Trust, Inc. (DLR - Snapshot Report) recently priced a private placement offering of guaranteed notes worth $400 million.  The notes, which are scheduled to mature in 2025, will feature semi-annual interest payment at a rate of 4.250% per annum. The company made the offering through one of its operating partnership entity – Digital Realty Trust, L.P.

With the cash generated from this offering, this real estate investment trust (REIT) plans to pay back its debt outstanding under the existing revolving credit facility, fund acquisitions, use for development and redevelopment activities as well as for other corporate purposes. Scheduled to close on Jan 18, 2013, this offering is subject to the execution of the notes’ subscription agreement and customary closing conditions.  

For Digital Realty, the offering would provide the company financial flexibility. Moreover, the use of funds for strategic acquisitions would help the company enhance its portfolio quality, which in turn could be accretive to its earnings going forward. Noteworthy acquisitions of Digital Realty in recent months include an established data center at Macquarie Park in New South Wales and a sprawling redevelopment property in New Jersey.

Digital Realty is scheduled to release its fourth-quarter 2012 results on Feb 15, 2013, prior to the opening bell. The Zacks Consensus Estimate for the company’s fourth-quarter FFO (funds from operations) is currently pegged at $1.16 per share.

The Earnings ESP (Expected Surprise Prediction), the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate, for Digital Realty is +2.59%. This, combined with its Zacks Rank #3, reflects that the company will definitely beat the Zacks Consensus Estimate in the fourth quarter.

One of Digital Realty’s peers, DuPont Fabros Technology, Inc (DFT - Snapshot Report) currently holds a Zacks Rank #2 (Buy).

Note: FFO, a widely accepted and reported measure of the performance of REITs is derived by adding depreciation, amortization and other non-cash expenses to net income.

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