Digital Realty datacenter

SAN FRANCISCO-Datacenter REIT Digital Realty Trust Inc. is commencing an underwritten public offering of 12 million shares of Series D Cumulative Convertible Preferred Stock for estimated gross proceeds of $300,000,000, which roughly equates to $25 per share. The shares will be convertible for shares of Digital Realty Trust common stock, which closed the trading day Thursday at $35.76, down 3%.

Citi and Credit Suisse Securities (USA) LLC will be the joint book-running managers and the underwriters for the offering. The dividend rate, conversion rate and offering price are being negotiated with the underwriters and had not been announced as of Thursday evening. The underwriters hold an option for an additional 1.8 million shares to cover over-allotments.

Digital Realty says the proceeds will be used to repay borrowings under its credit facility. It will then use the freed-up credit to for upcoming acquisitions, developments and redevelopment. The company says it is “actively pursuing multiple opportunities for potential acquisitions, with due diligence and negotiations at different stages of advancement.”

At December 31, 2007, Digital Realty’s revolving credit facility had a total outstanding balance of $299.7 million, excluding committed letters of credit, consisting of $111.0 million bearing interest at LIBOR plus 1.2% per annum, which equaled a rate of 6.12%; €57.7 million bearing interest at EURIBOR plus 1.2% per annum, which equaled a rate of 5.86%; and £51.5 million bearing interest at GBP LIBOR plus 1.2% per annum, which equaled a rate of 7.55%.

Earlier this week, the company said it has begun construction for a custom datacenter for HSBC, which signed a long-term lease for the building, the size of which has not yet been disclosed. Rising on a site in suburban London that Digital Realty acquired in April, the facility will be used for the banking and financial services institution’s global computing infrastructure. In November, HSBC postponed plans for a 200,000-sf datacenter in upstate New York, according to published reports at that time. The London project is expected to be completed in late 2008.