Digital Realty Trust Inc.
(
DLR
), a niche real estate investment trust (REIT), has recently
obtained a new multicurrency unsecured term loan worth $750 million
to increase its liquidity. The loan is scheduled to mature in April
2017, and includes an accordion feature by virtue of which the
company can increase the borrowing capacity to $850 million at its
own discretion.
In tune with its international presence, the term loan would
enable Digital Realty to withdraw funds in U.S, Singapore and
Australian dollars, along with the Euro and Pound Sterling
denominations. The term loan also provides the company with the
option to add Hong Kong dollars and Yen currency denominations to
it.
The term loan bears an annualized interest rate at 145 basis
points over the applicable index for floating rate advances. The
company expects to utilize the proceeds from the loan to fund both
domestic and international acquisitions that are in sync with its
long-term investment objectives.
Digital Realty operates data centers and digital storage
facilities, which are primarily used by telecommunication companies
to maintain their Internet presence or augment their data networks.
Data centers usually incur high costs for building and maintenance,
and as such supply is relatively inelastic.
Digital Realty primarily focuses on investing in institutional
quality data center facilities in high barriers-to-entry markets
with significant potential to generate attractive risk-adjusted
return on investments (
ROI
).
The company provides flexible and cost effective data center
facilities to a wide range of customers, including domestic and
international companies across multiple industry verticals. Its
portfolio includes 102 properties throughout Europe, North America,
Singapore and Australia spanning approximately 19.1 million square
feet of space (including 2.4 million square feet of redevelopment
space).
With demand for digital storage facilities increasing in recent
years, Digital Realty has benefited greatly by negotiating
favorable lease terms and maintaining strong occupancy rates. The
long-term lease agreements have also insulated the company from
short-term volatility and unfavorable market swings experienced
during the recession. This has enabled Digital Realty to continue
paying out solid dividends to its shareholders.
We presently have a Neutral recommendation for Digital Realty,
which currently has a Zacks #3 Rank, translating into a short-term
Hold rating. We also have a Neutral recommendation and a Zacks #3
Rank for
Brandywine Realty Trust
(
BDN
), one of the competitors of Digital Realty.
BRANDYWINE RT (
BDN
): Free Stock Analysis Report
DIGITAL RLTY TR (
DLR
): Free Stock Analysis Report
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