Digital Realty Trust, Inc. (NYSE:DLR), a leading global provider of data center, colocation, and interconnection solutions, announced today the issuance of €850 million in senior unsecured notes by its finance subsidiary, Digital Dutch Finco B.V. The 3.8% Guaranteed Notes, due 2033, are backed by full and unconditional guarantees from Digital Realty Trust, Inc. and Digital Realty Trust, L.P.
The notes were sold on Friday, September 13, 2024, under Regulation S of the Securities Act of 1933, targeting international investors outside the United States. The offering was not registered in the U.S., and the securities may not be offered or sold stateside without registration or an applicable exemption.
The indenture governing the notes includes restrictive covenants, such as limitations on incurring additional debt and requirements to maintain a pool of unencumbered assets. Digital Dutch Finco B.V. may redeem the notes, in whole or in part, at a price that includes the principal amount plus accrued interest and a make-whole premium, except when redeemed 90 days prior to the maturity date.
Digital Realty intends to allocate the net proceeds, approximately €842.7 million after discounts and expenses, to Eligible Green Projects. These projects focus on renewable energy, energy efficiency, and other environmentally sustainable initiatives.
Until these allocations are made, the funds may temporarily repay outstanding borrowings, acquire properties, fund development, or for general corporate purposes, which may include debt repayment or securities redemption.
The notes carry a provision for additional amounts to ensure payment to non-U.S. persons is not reduced by U.S. taxes or governmental charges, unless required by law. Under certain conditions, including tax law changes, Digital Dutch Finco B.V. reserves the right to redeem the notes in whole, but not in part, if obligated to pay such additional amounts.
The Euro Notes are set to mature on September 13, 2033, with an interest rate of 3.875% per annum, payable annually starting September 13, 2025. The notes rank equally with all other senior unsecured and unsubordinated indebtedness of Digital Dutch Finco B.V.
This financial move highlights Digital Realty's commitment to sustainability and green initiatives, aligning with the broader trend in corporate finance towards environmentally responsible investments.
In other recent news, Digital Realty Trust has embarked on an offering of Euro-denominated Guaranteed Notes through its finance subsidiary, Digital Dutch Finco B.V., with the intent to finance or refinance Eligible Green Projects. The terms of the Euro Notes will be determined at the time of pricing.
Analysts from Truist Securities and TD Cowen have revised their price targets for the company, with Truist Securities increasing the target to $168.00 and maintaining a Buy rating, while TD Cowen trimmed its target to $120, retaining a Hold rating.
Digital Realty Trust also reported a robust Q2 performance, securing $164 million in new contracts, one of its most successful leasing quarters. The company expanded its European presence with the acquisition of a London data center campus and launched new product offerings. A successful private capital drive brought in over $10 billion, further strengthening the company's financial position.
InvestingPro Insights
Digital Realty Trust, Inc. (NYSE:DLR) has showcased a significant return over the last week, reflecting a positive investor sentiment that may be buoyed by the company's recent issuance of senior unsecured notes for green projects. According to InvestingPro data, the company has experienced a 1 Week Price Total Return of 8.28%, which aligns with its standing as a prominent player in the Specialized REITs industry. This financial maneuvering could be seen as reinforcing Digital Realty's strategic position, which is further emphasized by its solid track record of maintaining dividend payments for 21 consecutive years, offering a dividend yield of 3.06% as of the last recorded date.
The company's commitment to sustainability through Eligible Green Projects could appeal to environmentally conscious investors. Furthermore, Digital Realty's market capitalization stands at a robust $53.19 billion, and it's trading near its 52-week high with prices at 97.75% of this peak. These metrics, coupled with a P/E ratio of 45.36, may suggest a stable investment, although the adjusted P/E ratio for the last twelve months indicates a higher earnings multiple, which could be a point of consideration for potential investors. For those interested in a deeper dive into Digital Realty's financial health and future prospects, additional InvestingPro Tips are available, offering a comprehensive analysis of the company's market position.
Investors looking to understand the potential of Digital Realty Trust in the context of its recent financial activities and industry standing can access further insights and tips on InvestingPro, which includes a total of 12 additional tips for a more informed investment strategy.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.