AUSTIN, Texas - Digital Realty Trust, Inc. (NYSE:DLR), a leading global provider of data center solutions, has announced its intention to offer $1 billion in exchangeable senior notes through its subsidiary, Digital Realty Trust, L.P. The offering targets qualified institutional buyers and is contingent on market conditions.
The notes, due November 15, 2029, are senior, unsecured obligations and will be guaranteed by Digital Realty. They will accrue interest paid semi-annually and can be exchanged under certain conditions. Digital Realty L.P. may redeem the notes for cash after November 22, 2027, and prior to the 40th scheduled trading day before their maturity date, subject to specific terms.
Noteholders are entitled to certain rights, including the right to have Digital Realty L.P. repurchase their notes in the event of a "fundamental change." Additionally, a registration rights agreement is expected to be part of the offering, allowing the resale of Digital Realty's common stock that may be issued upon exchange of the notes.
The interest rate and initial exchange rate for the notes will be set at the time of the offering's pricing. Digital Realty L.P. aims to use the proceeds to repay borrowings, invest in property and business acquisitions, fund development, and for general corporate purposes, which may include debt repayment or repurchase of outstanding securities.
The notes and any shares of Digital Realty's common stock issued upon their exchange have not been registered under the Securities Act or any other securities laws. They will only be available through specific exemptions or transactions not subject to registration requirements.
This announcement follows Digital Realty's commitment to connecting firms and data through its global data center platform, PlatformDIGITAL®, which operates over 300 facilities worldwide.
The offering details remain subject to change, and there is no guarantee regarding the final terms or the successful application of the net proceeds. The information in this article is based on a press release statement from Digital Realty Trust.
In other recent news, Digital Realty Trust's financial performance has been noteworthy, with several firms adjusting their outlook on the company. Citi maintained a Buy rating and increased the price target to $212, citing the company's impressive third-quarter performance and potential for accelerated financial growth. Deutsche Bank (ETR:DBKGn), while maintaining a Hold rating, lowered its price target to $159, reflecting a recalibration of valuation metrics. Meanwhile, Mizuho (NYSE:MFG) reaffirmed its Outperform rating on Digital Realty, with a steady price target of $170, following the company's strong financial performance. RBC Capital Markets also increased its price target for the company to $207, maintaining an Outperform rating due to the company's strong results.
Digital Realty's record-breaking third quarter of 2024 was highlighted by new leasing volume reaching $521 million and a backlog of leases set to commence increasing to nearly $860 million. The company's Funds From Operations (FFO) of $1.67 slightly surpassed the consensus estimate of $1.66. In response to these results, Digital Realty raised its guidance midpoint to $6.70, slightly above the Street's expectation of $6.66. The firm's projections for 2024 include revenues at $5.58 billion, EBITDA at $2.95 billion, capital expenditures at $2.30 billion, and core FFO per share at $6.70.
These recent developments underscore the growing confidence in Digital Realty's strategic direction and future growth prospects. The company's strong performance and positive outlook are attributed to sustained industry demand for IT load, favorable market conditions, and strategic global presence.
InvestingPro Insights
Digital Realty Trust's recent announcement of a $1 billion note offering comes at a time when the company is experiencing strong market performance. According to InvestingPro data, Digital Realty has seen impressive price returns, with a 15.3% increase over the past month and a substantial 44.53% gain over the last year. This positive momentum is further reflected in the stock trading at 93.37% of its 52-week high, suggesting investor confidence in the company's strategy and market position.
An InvestingPro Tip highlights that Digital Realty is a "prominent player in the Specialized REITs industry," which aligns with the company's global leadership in data center solutions. This industry positioning may contribute to the attractiveness of the new note offering to institutional investors.
Another relevant InvestingPro Tip notes that Digital Realty "has maintained dividend payments for 21 consecutive years." This track record of consistent dividends, coupled with the current dividend yield of 2.7%, may appeal to income-focused investors and potentially support the company's ability to raise capital through debt offerings like the one announced.
It's worth noting that InvestingPro has 13 additional tips available for Digital Realty Trust, which could provide further insights into the company's financial health and market position. Investors interested in a more comprehensive analysis may find value in exploring these additional tips on the InvestingPro platform.
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