Digital Realty (NYSE:DLR) Trust, L.P., a subsidiary of Digital Realty Trust, Inc., has issued $1.15 billion in 1.875% Exchangeable Senior Notes due in 2029, as stated in a recent filing with the U.S. Securities and Exchange Commission. The notes, issued on Monday, were part of an agreement including Digital Realty Trust, Inc. and U.S. Bank Trust Company, National Association, as trustee.
The notes, which mature on November 15, 2029, will pay interest semi-annually and can be exchanged under certain conditions. The initial exchange rate is set at 4.7998 shares of Digital Realty Trust, Inc.'s common stock per $1,000 principal amount of Notes, subject to adjustments.
Digital Realty Trust, Inc. has guaranteed the notes, which rank equally with other senior unsecured debt and are senior to any subordinated debt. However, they are structurally subordinated to liabilities of the issuer's subsidiaries other than Digital Realty Trust, L.P.
The company has also entered into a registration rights agreement with the initial purchasers, committing to file a registration statement with the SEC for the resale of shares of the company's common stock that may be issued upon exchange of the notes.
The notes were offered to qualified institutional buyers according to Rule 144A of the Securities Act and were not registered under the Securities Act. The maximum number of shares initially available for issuance upon exchange of the notes is approximately 6.6 million, based on the initial exchange rate.
This financial move, as reported in the SEC filing, is part of Digital Realty Trust's broader financial strategy and reflects the company's efforts to manage its capital structure. The information is based on a press release statement.
In other recent news, Digital Realty Trust has made significant financial moves, including the issuance of $1.15 billion in 1.875% exchangeable senior notes due 2029 and a planned offering of $1 billion in exchangeable senior notes through its subsidiary. These strategic steps aim to manage the company's capital structure efficiently and fund future investments. Analysts have responded to these developments with varied outlooks. Citi, for instance, maintained a Buy rating and increased the price target to $212, while Deutsche Bank (ETR:DBKGn) maintained a Hold rating but lowered its price target to $159. Mizuho (NYSE:MFG) reaffirmed its Outperform rating with a steady price target of $170, and RBC Capital Markets increased its price target to $207.
Digital Realty's recent financial performance has been commendable. The third quarter of 2024 saw 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, the company raised its guidance midpoint to $6.70, slightly above the Street's expectation of $6.66. The company'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.
InvestingPro Insights
Digital Realty Trust's recent issuance of $1.15 billion in exchangeable senior notes aligns with its financial strategy and capital structure management. InvestingPro data provides additional context to this move. The company's market capitalization stands at $61.17 billion, indicating its significant presence in the market.
An InvestingPro Tip highlights that Digital Realty Trust is a prominent player in the Specialized REITs industry, which supports its ability to raise substantial capital through note issuances. Additionally, the company has maintained dividend payments for 21 consecutive years, demonstrating a consistent track record of returning value to shareholders.
The company's revenue for the last twelve months as of Q3 2024 was $5.37 billion, with a modest growth of 1.17%. This steady revenue stream likely contributes to investor confidence in the company's debt offerings.
For investors seeking more comprehensive analysis, InvestingPro offers 13 additional tips for Digital Realty Trust, providing deeper insights into the company's financial health and market position.
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