Digital Realty Sells $260M in Convertible Debt

April 15th, 2009 by · Leave a Comment

Digital Realty Trust (NYSE:DLR, news, filings), which specializes in datacenter facilities, design, and management, raised $260M today.  The notes will pay 5.5% interest and are convertible at $43, 20% above where the stock currently trades.  As pricing goes it's not like a few years ago where money was growing on trees, but neither is it terribly bad.  This follows unexpectedly successful money moves by Level 3, Qwest, and Frontier over the last few weeks, and it implies that indeed the credit markets have melted a bit at the edges.

Digital Realty will use the proceeds to keep doing what they always do - buy properties and develop them into datacenters.  The idea that datacenter construction would have such access to the credit markets early in a recovery is not surprising, the economics behind them are much more solid than most sectors and the banks feel much safer with assets that have such visibility.  While the recession will slow down sales growth in the sector this year, those sales are still growing.  It is the cutoff of funding for expansion has been the major early effect.  What that means now is that those who have the dollars to expand will have an easy time of it.

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Categories: Datacenter · Financials

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