Digital Realty Trust Inc.
), a niche real estate investment trust (REIT), concluded the
offering of 5.875% Series G cumulative redeemable preferred
stock. The move comes as part of its effort to infuse capital and
increase financial flexibility.
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Specifically, Digital Realty closed an underwritten public
offering of 10.0 million shares of 5.875% Series G cumulative
redeemable preferred stock at a price of $25.00 per share. The
gross proceeds from this offering is $250.0 million
(incorporating 1.0 million shares pursuant to the partial
exercise of the underwriters' over-allotment option).
The proceeds generated from this offering would help its
operating partnership, Digital Realty Trust L.P. to pay back debt
as well as finance acquisitions and development opportunities.
Moreover, the proceeds could be used for other general corporate
A host of companies acted as joint book-running managers for the
offering including Morgan Stanley & Co. LLC of
) and Wells Fargo Securities, LLC, a unit of
Wells Fargo & Company
Digital Realty operates data centers and digital storage
facilities, which are primarily used by companies to maintain
their Internet presence or augment their data networks. Data
centers usually incur high costs for building and maintenance,
and as such the supply is relatively inelastic.
Digital Realty is also capitalizing on acquisition opportunities.
Recently, it closed the acquisition of 1500 Towerview Road in
Eagan, Minn. The company shelled out $37 million for this data
center facility, which is fully leased to
Delta Air Lines Inc.
). Such strategic acquisitions are expected to add to the
company's top line going forward.
With the rise in demand for digital storage facilities in recent
years, Digital Realty has benefited greatly by negotiating
favorable lease terms and maintaining strong occupancy rates. The
long-term lease agreements have insulated the company from
short-term volatility and unfavorable market swings experienced
during the recession.
Digital Realty currently has a Zacks Rank #3 (Hold).