Digital Realty Trust’s (DLR - Free Report) , Brazilian subsidiary, Stellar Participações Ltda., recently completed the previously-announced buyout of a Brazilian data center provider — Ascenty from Great Hill Partners — for nearly $1.8 billion.
Earlier Digital Realty had entered into a separate bilateral equity commitment letter with Brookfield Asset Management’s (BAM - Free Report) affiliate — Brookfield Infrastructure — per which Brookfield will fund half of the equity investment amounting to around $613 million. In exchange, Brookfield will own 49% of the joint-venture entity which is likely to own Ascenty.
This agreement with Brookfield, subject to certain closing norms, will likely close in first-quarter 2019.
Initially, the transaction was funded with $600 million from a non-recourse term loan with maturity of five years, the roll-forward of equity interests of Ascenty management in exchange for Digital Realty’s Operating Partnership Units worth $300 million. Further, approximately $1 billion was borrowed as unsecured corporate debt.
Nonetheless, the permanent capital structure for Ascenty will be finalized in first-quarter 2019.
Per management, the acquisition will enable Digital Realty to cement its position as a major data-center provider in Latin America. Particularly, its efforts to expand in Latin America region is a strategic fit as the company views it as a hub of future technological transformation.
Management also believes the deal will boost the company’s global platform, aiding it to become a premier global data-center solutions provider. In addition, it adds proprietary fiber network and strategic high value assets to the company’s portfolio.
Admittedly, with growing popularity of cloud computing, Internet of Things and big data, as well as the use of third-party IT infrastructure by several companies, data-center REITs are experiencing a boom. Additionally, the estimated growth rates for the artificial intelligence, autonomous vehicle and virtual/augmented reality markets will remain robust over the next five to eight years. This, along with improved outlook for economic growth, will significantly propel growth of data-center REITs, such as Digital Realty, Equinix, Inc. (EQIX - Free Report) , CoreSite Realty Corp. (COR - Free Report) and others.
Digital Realty currently has a Zacks Rank #3 (Hold). Shares of the company have declined 1.7%, which is narrower than the industry’s loss of 3.6%, in the past six months.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Digital Realty Trust’s (DLR - Free Report) , Brazilian subsidiary, Stellar Participações Ltda., recently completed the previously-announced buyout of a Brazilian data center provider — Ascenty from Great Hill Partners — for nearly $1.8 billion.
Earlier Digital Realty had entered into a separate bilateral equity commitment letter with Brookfield Asset Management’s (BAM - Free Report) affiliate — Brookfield Infrastructure — per which Brookfield will fund half of the equity investment amounting to around $613 million. In exchange, Brookfield will own 49% of the joint-venture entity which is likely to own Ascenty.
This agreement with Brookfield, subject to certain closing norms, will likely close in first-quarter 2019.
Initially, the transaction was funded with $600 million from a non-recourse term loan with maturity of five years, the roll-forward of equity interests of Ascenty management in exchange for Digital Realty’s Operating Partnership Units worth $300 million. Further, approximately $1 billion was borrowed as unsecured corporate debt.
Nonetheless, the permanent capital structure for Ascenty will be finalized in first-quarter 2019.
Per management, the acquisition will enable Digital Realty to cement its position as a major data-center provider in Latin America. Particularly, its efforts to expand in Latin America region is a strategic fit as the company views it as a hub of future technological transformation.
Management also believes the deal will boost the company’s global platform, aiding it to become a premier global data-center solutions provider. In addition, it adds proprietary fiber network and strategic high value assets to the company’s portfolio.
Admittedly, with growing popularity of cloud computing, Internet of Things and big data, as well as the use of third-party IT infrastructure by several companies, data-center REITs are experiencing a boom. Additionally, the estimated growth rates for the artificial intelligence, autonomous vehicle and virtual/augmented reality markets will remain robust over the next five to eight years. This, along with improved outlook for economic growth, will significantly propel growth of data-center REITs, such as Digital Realty, Equinix, Inc. (EQIX - Free Report) , CoreSite Realty Corp. (COR - Free Report) and others.
Digital Realty currently has a Zacks Rank #3 (Hold). Shares of the company have declined 1.7%, which is narrower than the industry’s loss of 3.6%, in the past six months.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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