Back to top

Image: Bigstock

Digital Realty Prices Senior Notes Offering, To Raise 500M Euro

Read MoreHide Full Article

Digital Realty (DLR - Free Report) recently announced the pricing of senior unsecured Euro denominated notes worth €500 million. The company priced this offering through Digital Dutch Finco B.V., an indirect wholly-owned finance subsidiary of its operating partnership Digital Realty Trust, L.P.

The notes will mature on Feb 1, 2031, and an interest of 1.250% will be payable annually in arrears. The offer is expected to close on Jun 26, 2020, subject to customary closing conditions.

The latest move will further boost the company’s flexibility. Specifically, the proceeds from this offering will be used by Digital Realty to temporarily repay borrowings under the operating partnership’s global revolving credit facilities, fund acquisition and development opportunities, enhance its working capital capabilities and invest in interest-bearing accounts.

Over the past few years, Digital Realty has been enhancing its global prowess as with growth in cloud computing, Internet of Things and big data, and an increasing number of companies opting for third-party IT infrastructure, data-center REITs are witnessing a market boom worldwide.

Furthermore, the estimated growth rates for the artificial intelligence, autonomous vehicle and virtual/augmented reality markets will remain robust over the next five to six years. Apart from these, data centers are poised to benefit from the heightening reliance on technology in wake of the coronavirus pandemic. Thus, data-center REITs, including Digital Realty, Equinix, Inc. (EQIX - Free Report) , CyrusOne Inc. and CoreSite Realty Corporation (COR - Free Report) , have opportunities to excel.

Digital Realty is banking on the healthy market fundamentals through accretive acquisitions, development and expansion efforts. During the first quarter, the company completed the acquisition of Interxion, a European provider of carrier and cloud-neutral colocation data-center services, for a total consideration of $8.4 billion, including debt. The combined entity enjoys solid presence in major European metro areas, and its size and scale is likely to result in an efficient cost structure and solid EBITDA margins.

In addition, Digital Realty recently announced the ground breaking for its first facility in South Korea. The data center — Digital Seoul 1 (ICN10) — which will accommodate 12 megawatts of IT load will be the first global, carrier-neutral facility in Korea following planned completion in 2021. The company has also announced its entry into the Mexico market in association with Ascenty, a Latin American data-center service provider and Digital Realty’s joint-venture (JV) company with Brookfield Infrastructure.

Such encouraging factors have helped Digital Realty’s shares gain 21.5%, so far this year, as against the industry's decline of 5.9%.

However, Digital Realty faces stiff competition from several data-center developers, owners and operators, many of which enjoy ownership of similar assets in locations same as the company. As the data-center market has the potential of further growth, these REITs remain under aggressive pricing pressure.

Currently, the company carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Zacks’ Single Best Pick to Double

From thousands of stocks, 5 Zacks experts each picked their favorite to gain +100% or more in months to come. From those 5, Zacks Director of Research, Sheraz Mian hand-picks one to have the most explosive upside of all.

This young company’s gigantic growth was hidden by low-volume trading, then cut short by the coronavirus. But its digital products stand out in a region where the internet economy has tripled since 2015 and looks to triple again by 2025.

Its stock price is already starting to resume its upward arc. The sky’s the limit! And the earlier you get in, the greater your potential gain.

Click Here, See It Free >>


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


Equinix, Inc. (EQIX) - free report >>

Digital Realty Trust, Inc. (DLR) - free report >>

Cencora, Inc. (COR) - free report >>

Published in