Digital Realty Prices Fixed Rate Preferred

Data center REIT Digital Realty (DLR) has priced their new fixed rate preferred with a meager coupon of 5.20%.

The company may redeem their DLR-G 5.875% issue that is currently outstanding with the proceeds of this offering. This is the only currently outstanding issue that is redeemable.

We have no interest in an issue which is split investment grade at this 5.20% coupon. This doesn’t mean the issue is bad, but for myself the risk/reward is inadequate.

The pricing term sheet can be read here.

5 thoughts on “Digital Realty Prices Fixed Rate Preferred”

  1. Has anyone looked at ACGLO and ACGLP – two preferreds from bermuda based ACGL mortgage ins? callable 2021 ish . Any reason why it is trading lower than similar? Thank you!

  2. The Euro offering priced at 1.125%, so be grateful for 5.2%.

    This is a company for which I’d rather own the common. And do. And would add on a meaningful pull back.

    The preferred is a flip for me.

  3. Digital Realty is a highly rated REIT and has performed well. DLR-J at 5.25% is currently at $25.70 and has hit $26.00. At 5.2%, I believe DLRTP could be a good short term flip opportunity. As such, I am looking to buy a full position and flip 1/2 of the position.

  4. Thanks Tim, My initial under par holding of DLR-G is 3 years 6 months doubling down a couple weeks ago for a dividend play paying .40 over par for the 2nd lot. Although no news on redemption, my thinking is the same on it happening. Funny, before my double down purchase the redemption of G thought crossed my mind but I went for it anyway figuring I break even worse case on 2nd lot if called soon after. Although, the data center space can be challenging but I do like that space. Being an IBMer for 40 years I suppose a part of me still thinks I’m on the IBM mainframe raised floors.. (long time ago and now retired). If G is called I will miss this security as it has been a steady payer for me. Unsure if I would be interested in this newer 5.20% coupon unless the price drops well below par..

    1. BlueClaw–certainly hate to kiss these types of issues (DLR-G) goodbye, but the company is also doing a Euronote issue with the same language as this new issue “may redeem preferreds”–and it is likeley this note issue will be at rock bottom rates.

      https://www.sec.gov/ix?doc=/Archives/edgar/data/1297996/000119312519260308/d808684d8k.htm

      Given the current pricing on DLR-G no one needs to worry about much call risk so I would just let it play out.

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