DLR 3.6% 07/01/2029

Digital Realty Trust Inc.

Credit, TMT


Publicly traded companies mentioned herein: Blackstone Inc (BX), Digital Realty Trust Inc. (DLR), KKR & Co Inc (KKR), NVIDIA Corporation (NVDA), Uber Technologies Inc (UBER), Wells Fargo & Co (WFC)

Highlights

The presenter is short Digital Realty Trust’s (DLR) Bonds, in part because the company spends nearly all of its EBITDA on CapEx. This year, they are projected to generate $2.7B in EBITDA, with $2.6B allocated for CapEx. Additionally, they have to cover a $1.5B dividend and face current interest expenses of $400-500MM. Currently, they pay less than 3% on their debt, while long-term bonds yield 6.1%. As they need to reprice their debt at higher rates, the funding gap will continue to widen. Moreover, the company may need to issue more equity, which will increase the dividend payment further.

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Idea Discussion

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