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Digital Realty (DLR) Taps Debt Markets, Prices Notes Offering

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Digital Realty Trust, Inc. (DLR - Free Report) announced the pricing of public offerings of €750 million of Euro-denominated 1.00% Guaranteed Notes due 2032 and €300 million Floating Rate Guaranteed Notes due 2022. This is being executed through Digital Dutch Finco B.V, an indirect wholly-owned finance subsidiary of the company’s operating partnership, Digital Realty Trust, L.P.

The 2032 notes will mature on Jan 15, 2032, while the 2022 notes will mature on Sep 23, 2022. Both offerings are anticipated to close on Sep 23, 2020, subject to the satisfaction of customary closing norms.

The company intends to use the proceeds from the 2032 notes offering to finance or refinance recently completed or future green building, energy and resource efficiency and renewable energy projects, including the development and redevelopment of such projects. Further, the company intends to use the proceeds from the 2022 notes offering to fully fund the potential redemption of Digital Stout Holding LLC's 4.750% Guaranteed Notes due 2023.

Moreover, the company intends to use the net proceeds from both offerings to repay any outstanding borrowings under the operating partnership’s global revolving credit facilities, acquire properties, fund new developments and for any other general corporate needs.

Notably, the company’s efforts to fortifying its balance sheet in these testing times and tap the debt market amid a low interest-rate environment are strategic fits.

Data-center REITs are witnessing a market boom with growth in cloud computing, IoT and big data, and an increasing number of companies opting for third-party IT infrastructure. The estimated growth rates for the AI, autonomous vehicle and virtual/augmented reality markets will remain robust over the next five to six years. Hence, the company’s focus on improving its balance-sheet strength and flexibility and capitalize on favorable fundamentals through acquisitions and development efforts are a strategic fit.

However, the note offerings increase the company’s long-term financial obligation.

Shares of this Zacks Rank #3 (Hold) company have rallied 1.3% over the past three months against the industry's marginal decline.

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Alpine Income Property Trust, Inc.’s (PINE - Free Report) Zacks Consensus Estimate for the ongoing-year funds from operations (FFO) per share moved 13.5% north to $1.18 in the past two months. The stock currently carries a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Sabra Healthcare REIT, Inc.’s (SBRA - Free Report) FFO per share estimate 2020 has been revised 4.9% upward to $1.72 over the past two months. The company currently carries a Zacks Rank of 2.

Industrial Logistics Properties Trust’s (ILPT - Free Report) FFO per share estimate for the current year has been revised 4.5% upward to $1.87 over the past two months. The company currently carries a Zacks Rank of 2.

Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.

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