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Related Companies Digital Realty Trust Inc. (DLR)

Related Documents Press Release (PR) Digital Realty Trust Inc. 11/3/2009, filed on 11/3/2009

Related Articles 10/29/2009 Moody's assigns rating to Digital Realty

Fitch Ratings said Nov. 3 that it assigned initial credit ratings to Digital Realty Trust Inc. and its operating partnership, Digital Realty Trust LP.

The rating agency assigned Digital Realty Trust Inc. an issuer default rating of BBB, rated its $159.8 million redeemable preferred stock BBB- and rated its $502.5 million convertible preferred stock BBB-.

Fitch assigned Digital Realty Trust LP an issuer default rating of BBB and gave BBB ratings to its $750 million unsecured revolving credit facility, $83 million senior unsecured notes and $438.9 million senior unsecured exchangeable debentures.

The rating outlook is stable.

Fitch said the company has a credit profile consistent with a BBB issuer default rating due to the size of its unencumbered property pool and unencumbered cash flow, its leverage levels as measured by net debt to recurring operating EBITDA and "demonstrated" access to various sources of capital that provide financial flexibility.

The rating agency called the company's unencumbered property pool sizable and its unencumbered cash flows robust, saying it views the company's unencumbered asset coverage ratio as strong for a BBB issuer default rating.

The ratings take into consideration certain offsetting factors including tenant concentration and tenant credit risk, the company's secured debt borrowing base and Fitch's expectation that fixed-charge coverage may moderate if the company executes a public unsecured bond offering.

Fitch said the one-notch differential between Digital Realty's BBB issuer default rating and the BBB- rating of the company's preferred stock is consistent with its criteria for corporate entities with an issuer default rating of BBB.

The stable outlook takes the company's liquidity position and management team into account.

Factors that may have a positive impact on the ratings include fixed-charge coverage remaining more than 3.0x, net debt to recurring operating EBITDA remaining less than 4.0x, further tenant diversification and growth in the unencumbered portfolio.

Factors that may negatively impact the company's ratings include fixed-charge coverage remaining less than 2.0x, net debt to recurring operating EBITDA remaining more than 6.0x, a liquidity shortfall, or unencumbered asset coverage of unsecured debt falling to less than 2.0x based on calculations under the company's credit agreements.