Digital Realty Trust Undertakes $291M Public Offering

Digital Realty Trust Inc., a specialty REIT that owns corporate datacenters and Internet gateways, has undertaken a public offering of 12 million shares of Series D Cumulative Convertible Preferred Stock at $24.25 per share. All together, Digital Realty estimates that net proceeds of the underwritten public offering will be about $291 million, or $333.6 million if the overallotment option is exercised in full.Digital Realty plans to use the net proceeds to pay down debt from its revolving credit facility, and to fund acquisitions and redevelopment activities. Currently the company owns 70 properties in North America and Europe comprising about 12.3 million square feet, including 1.8 million square feet of space held for redevelopment.”Like with any asset class, it’s a good time to buy in our niche, if you have access to capital,” A. William Stein, Digital Realty’s CFO and chief investment officer, told CPN this afternoon. “The highly leveraged buyers aren’t in the game much anymore.”Recently the REIT has been expanding rapidly in European markets. In December, for example, Digital Realty acquired a suburban London property, the 51,000-square-foot Cressex 1 property, as well as the 63,000-square-foot Naritaweg 52 property in Amsterdam. In January, it bought another suburban London property, the Foxboro Business Park, a three-building complex totaling about 147,000 square feet.The preferred stock of the new offering will pay dividends quarterly at a rate of 5.5 percent. The shares will be convertible, at the holder’s option, at an initial conversion price of $41.98 per common share, representing a premium over the closing price of the company’s common shares as of yesterday, which was $35.73 per share.