Digital Realty Sells $100M of Debt to Prudential

A. William Stein, CFO and chief investment officer of Digital Realty, said in a statement that proceeds of the note sale, which is scheduled to close on Jan. 20, will be used for acquisitions and for working capital. Digital Realty's recently announced acquisitions include a portfolio of 550,290 square feet of data centers in New England that it is buying for $375 million. The properties are 55 Middlesex Tpke. in Bedford, MA; 128 First Ave. in Needham, MA; and 60-80 Merritt Blvd. in Trumbull, CT.

Digital Realty's note sale to Prudential is one of the latest examples of how REITs and other publicly held companies in the commercial real estate industry have been raising capital of late despite the lingering stagnation in the credit markets. REITs and other publicly held companies issued new stock and debt throughout 2009 despite the credit market challenges.

Stein said that accessing "attractively priced capital from a variety of sources" has been the cornerstone of Digital Realty's funding strategy and continues to support the growth of the company. Upon closing, the deal with Prudential will represent the fourth draw from a three-year, multi-currency, $200 million unsecured Prudential shelf facility that Digital Realty established in July 2008.

The $100 million of notes will be issued in two series referred to as the series D and series E notes. The series D notes will have a principal amount of $50 million, an interest-only rate of 4.57% per year and a five-year maturity; the series E notes will have a principal amount of $50 million, an interest-only rate of 5.73% per year and a seven-year maturity.