Digital Realty Sells $500 Million in Notes

Taking advantage of its strong credit rating and improving terms in the credit markets, Digital Realty Trust today said it had commenced a private debt placement of $500 million in senior unsecured notes. Digital Realty said it would use the money to repay borrowings under its revolving credit line, and acquire and develop additional properties.

The latest funding move comes just two weeks after Digital Realty sold $100 million in notes to Prudential. The company also positioned itself to sell up to $400 million in common stock through periodic “at the market” offerings, according to a Dec. 31 SEC filing.

In November Digital Realty Trust was awarded a BBB rating by both Standard & Poors and Fitch, and had previously recevied a Baa2 issuer ratings.

“Achieving an investment grade rating has been a important goal for the Company since our IPO five years ago and we believe represents an inflection point for Digital Realty Trust,” said William Stein, the company’s CFO and Chief Investment Officer. “Access to the investment grade unsecured debt market gives us a significant competitive advantage as we pursue opportunities to grow our business in an otherwise capital constrained environment.”

In the last three months, Digital Realty has been busy on the acquisitions front:

  • On Nov.3 it acquired two data center facilities in Santa Clara, Calif. (1350 Duane Avenue, and 3080 Raymond Street) for $90.5 million, the company said today. 
  • On Dec. 31 the company announced plans to acquire three data center properties in Massachusetts and Connecticut, paying $375 million for 550,000 square feet of buildings operated by Sentinel Data Centers.
  • On Jan. 4, Digital Realty bought two fully leased data centers in the  northern Virginia market, as well as a parcel of land in the heart of Ashburn’s “Data Center Alley” that can support future construction. Digital Realty paid $63.3 million to acquire properties at 21561 & 21571 Beaumeade Circle in Ashburn and 45901 & 45845 Nokes Boulevard in Sterling.

Are there more acquisitions in the pipeline? Stay tuned.

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About the Author

Rich Miller is the founder and editor at large of Data Center Knowledge, and has been reporting on the data center sector since 2000. He has tracked the growing impact of high-density computing on the power and cooling of data centers, and the resulting push for improved energy efficiency in these facilities.

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