(By Balaseshan) Digital Realty Trust Inc. (NYSE:DLR) said it has agreed to buy a three-property data center portfolio located in the greater London area, referred to as the Sentrum Portfolio, for about $1.1 billion. Following the news, its shares fell 2.10% in premarket.
Digital Realty expects this transaction to be accretive to its 2012 Core FFO on a diluted per share and unit basis upon closing, excluding one time acquisition and financing costs, and plans to provide updated guidance for the year in its second quarter earnings results.
The Sentrum Portfolio comprises about 761,000 square feet across three data centers located in Woking, Watford and Croydon. The purchase price of the portfolio would be about 715.9 million pounds Sterling -- equivalent to $1.1 billion based on the June 25, 2012 exchange rate of 1.00 pound to $1.56.
The purchase price is subject to adjustment in limited circumstances and to additional earn-out payments based on a multiple of the net operating income from the lease-up of currently vacant space in the portfolio in the next three years.
The company expects to fund the purchase price and related earn-out payments with available cash, borrowings under its global revolving credit facility, a bridge loan facility and/or the sale of debt or equity securities.
Subject to various closing conditions, the acquisition is expected to close on or about July 31 and may be shortened or deferred in limited circumstances.
The portfolio is about 80% leased to a diverse roster of 21 tenants, including leading multinational financial institutions and global network providers, with a weighted average remaining lease term of about 8 years.
Separately, the company said it intends to sell 8.25 million shares of its common stock in an underwritten public offering. Digital Realty also plans to grant the underwriters an option to purchase up to an additional 1.2 million shares of common stock.
Digital Realty plans to contribute the net proceeds from this offering to its operating partnership, Digital Realty Trust L.P., which plans to use the proceeds to fund a portion of the purchase price for the acquisition of Sentrum Portfolio, or to temporarily repay borrowings under its global revolving credit facility.
Digital Realty Trust L.P. may also plan to use the proceeds to acquire additional properties, to fund development and redevelopment opportunities, for general working capital purposes, including potentially for the repurchase, redemption or retirement of outstanding debt or preferred securities, or a combination of the foregoing.
DLR closed Monday's regular session down 0.66% at $73.25. The stock has been trading between $50.63 and $76.04 for the past 52 weeks.