Digital Realty to buy Rockwood Capital portfolio

(Reuters) - Digital Realty Trust Inc (DLR.N) agreed to buy a five-property data center portfolio for $725 million, and said it expects the deal to add to its fiscal 2010 funds from operations.

The San Francisco-based real estate investment trust, which has been on an acquisition spree in recent times, bought the Rockwood Capital/365 Main portfolio from a collection of joint ventures majority-owned by affiliates of Rockwood Capital and managed by 365 Main Inc.

The deal comes days after Digital Realty acquired two shell buildings in Santa Clara, California last month.

In January, it completed its acquisition of a three-property data center portfolio in Massachusetts and Connecticut for $375 million.

Digital Realty said it expects to fund the deal, expected to close on or about July 2, using a combination of available cash, borrowings under its revolving credit facility and sale of debt or equity release.

Separately, the data center provider announced that it plans an offering of 4.3 million shares to fund a portion of the Rockwood Capital deal.

The company plans to grant underwriters up to additional 637,500 shares to cover any over-allotments.

Despite a weak commercial real estate market, demand for data center space has remained steady throughout the economic downturn. Tight credit markets and steady demand are expected to extend the demand/supply imbalance into 2012.

Shares of the company were trading down more than 1 percent at $55.56 Wednesday on the New York Stock Exchange.

(Reporting by Biswarup Gooptu in Bangalore; Editing by Don Sebastian)