Description
Recommendation
Digital Realty Trust (DLR) is a fast growing REIT with a niche focus on the attractive datacenter development space. Since its IPO, the Company has demonstrated strong growth by consistently increasing its FFO year-over-year and raising its dividend on eight occasions to reward shareholders. DLR is also uniquely positioned to benefit from the next M&A cycle...we recommend DLR as a short.
Closer examination of the financials, insider selling practices, certain related-party contractual arrangements, and pattern of dilutive equity capital raises (effectively, looking beyond the surface), will highlight why DLR is a compelling short. Below are the key catalysts that will cause the stock to reach its appropriate fair value of $38:
- Focus by investment community on the non-arms length transactions between DLR, GI Partners, and TelX
- Recognition by shareholder base of continued and consistent equity raises and dilution
- Examination and discovery of affiliations of certain member of the board of directors
- Inability to raise additional capital to fund dividend payments and growth
- Termination of leases entered into during the bull market (2006-2008)
- Continued shift and acceleration of cloud computing leading to a broken growth story
Thesis Summary
DLR has positioned itself as a growth company, but the growth is entirely tied to a strong and robust capital market environment. The company has a consistent record of share dilution through common stock and preferred stock offerings to fund both its growth strategy and its dividend payout. Without consistent capital market access, the dividend is unsustainable. If valued as a free cash flow story, the valuation range is materially less than the current equity value. In addition, there are several related-party red flags that, when taken together, should give investors further pause when evaluating the risk associated with the business. These include:
- Massive insider selling (insiders have rarely purchased any stock, dating back to the IPO)
- DLR's sixth largest customer, TelX, is controlled by a private investment vehicle owned by the company's CEO and Chairman.
- "Independent" board members work for companies that have been accused of fraud over the last few years
- Sell-side has turned a blind-eye on the fundamentals and is enamored by a "growth" REIT that pays a dividend (currently yielding 3.2%)
- Complex and questionable accounting that has confused the Street
DLR has a consistent strategy of raising capital at the cost of equity shareholders. The table below depicts the consistent record of capital raises that have supported DLR's "growth" since being a public company in 2004.
| |
% Share |
% Debt |
% Asset |
| |
Increase |
Increase |
Increase |
| 2005 |
28% |
40% |
50.9% |
| 2006 |
103% |
49% |
43.0% |
| 2007 |
18% |
20% |
28.5% |
| 2008 |
12% |
-6% |
16.7% |
| 2009 |
-97% |
19% |
0.0% |
This pattern of regular equity capital raises has raised some concerns by investors with management often fielding questions on the timing of equity raises, particularly in the context of no major acquisition announcement. To avoid this past scrutiny, on DLR's first quarter 2010 earnings release, management disclosed its new strategy to raise capital: the less obvious ATM strategy. The ATM disclosure was made after management had already issued $55 million of common stock (or approximately 1.3% of the shares outstanding). Given the large authorization amount ($400 million), management apparently anticipates much larger and more significant equity raises through its newly authorized ATM program. See the below language from the release:
"In December 2009 and January 2010, the Company entered into equity distribution agreements referred to as its At-the-Market equity distribution program under which it can, subject to market conditions, issue and sell up to $400.0 million of its common stock. For the quarter ended March 31, 2010, the Company generated net proceeds of approximately $54.8 million after payment of approximately $0.8 million of commissions to the sales agents from the issuance of approximately 1.1 million shares of common stock at an average price of $50.56 per share."
Business Description:
DLR owns, acquires, develops, redevelops and manages technology-related real estate. The Company provides "Turn-Key Datacenter(TM) and Powered Base Building(TM) datacenter solutions for domestic and international tenants across a variety of industry verticals ranging from information technology and internet enterprises, to manufacturing and financial services. DLR has 81 properties and 14.4 million of rentable square feet.
History:
DLR priced its initial public offering on October 28, 2004 at $12.00 per share. The Company raised approximately $257 million in gross proceeds through the sale of 21.4 million shares of common stock. The IPO was co-led by Citigroup and Merrill Lynch.
Sustainable Common Stock Dividend Growth (source DLR website):
DLR has a record of sustainable dividend growth, as outlined in the table below:
|
Date Declared
|
Record Date
|
Payment Date
|
Amount per share
|
|
April 27, 2010
February 24, 2010
October 27, 2009
July 28, 2009
April 28, 2009
February 25, 2009
|
June 15, 2010
March 15, 2010
December 15, 2009
September 15, 2009
June 15, 2009
March 16, 2009
|
June 30, 2010
March 31, 2010
January 15, 2010
September 30, 2009
June 30, 2009
March 31, 2009
|
$0.48
$0.48
$0.45
$0.36
$0.33
$0.33
|
|
November 4, 2008
|
December 15, 2008
|
January 7, 2009
|
$0.33
|
|
August 4, 2008
|
September 15, 2008
|
September 30, 2008
|
$0.31
|
|
May 6, 2008
|
June 16, 2008
|
June 30, 2008
|
$0.31
|
|
February 25, 2008
|
March 17, 2008
|
March 31, 2008
|
$0.31
|
|
November 1, 2007
|
December 31, 2007
|
January 14, 2008
|
$0.31
|
|
August 1, 2007
|
September 17, 2007
|
October 1, 2007
|
$0.28625
|
|
May 2, 2007
|
June 15, 2007
|
July 2, 2007
|
$0.28625
|
|
February 16, 2007
|
March 15, 2007
|
April 2, 2007
|
$0.28625
|
|
November 1, 2006
|
December 29, 2006
|
January 15, 2007
|
$0.28625
|
|
July 31, 2006
|
September 15, 2006
|
October 2, 2006
|
$0.26500
|
|
May 1, 2006
|
June 15, 2006
|
June 30, 2006
|
$0.26500
|
|
February 27, 2006
|
March 15, 2006
|
March 31, 2006
|
$0.26500
|
|
November 8, 2005
|
December 30, 2005
|
January 13, 2006
|
$0.26500
|
|
August 9, 2005
|
September 15, 2005
|
September 30, 2005
|
$0.243750
|
|
May 16, 2005
|
June 15, 2005
|
June 30, 2005
|
$0.243750
|
|
February 14, 2005
|
March 15, 2005
|
March 31, 2005
|
$0.243750
|
|
December 14, 2004
|
December 31, 2004
|
January 14, 2005
|
$0.156318
|
However, company filings indicate that DLR may start to pay all or part of it's dividend in stock, rather than cash. We have seen REITS begin to issue stock dividends, especially in cases where payout ratios are high. DLR's dividend yield is only 3.25% and an announcement of a dividend payment with a stock component would be a significant negative surprise.
Sell-side analysts like the DLR story:
DLR is rated the equivalent of a buy at nine of the twelve brokerage firms that cover the company. The chart below highlights the overall positive sentiment form the sell-side:
| |
|
Broker |
|
Rating |
|
PT |
|
| 1 |
|
BAC-ML |
|
Buy |
|
$60 |
|
| 2 |
|
Citi |
|
Hold |
|
$52 |
|
| 3 |
|
Credit Suisse |
|
Outperform |
|
$51 |
|
| 4 |
|
Deutsche Bank |
|
Buy |
|
$58 |
|
| 5 |
|
ISI Group |
|
Buy |
|
$66 |
|
| 6 |
|
JMP Securities |
|
Market outperform |
|
$57 |
|
| 7 |
|
Oppenheimer |
|
Market perform |
|
|
|
| 8 |
|
Raymond James |
|
Strong buy |
|
$57 |
|
| 9 |
|
RBC Capital |
|
Outperform |
|
$67 |
|
| 10 |
|
Robert Baird |
|
Outperform |
|
$55 |
|
| 11 |
|
Stifel Nicolaus |
|
Buy |
|
$70 |
|
| 12 |
|
UBS |
|
Neutral |
|
$56 |
|
The sell-side cannot get enough of DLR. Why would they with DLR tapping the capital markets (while generating investment banking fees for the sell-side) on a consistent basis?
Sell-Side Commentary Highlights:
Credit Suisse: "Digital has taken a number of steps to bolster its liquidity position, including $198 million of secured financing, the closing of a $200 million credit facility, and a $25 million increase in the commitments under its existing credit facility."
JMP Securities: "Peer multiples are within a broad range, but DLR is certainly near the high end. We believe that some premium for DLR is justified given stronger supply/demand fundamentals than the average REIT."
Raymond James: "We expect the company's focus on the data center market to continue to drive outsized returns for the near to intermediate term as supply appears in check and the strong demand appears essentially unaffected by the current economic slowdown"
Robert Baird: "We have revised our estimates in light of DLR's conservative '09 outlook and an anticipated economic slowdown that may marginally impact capital investment. Nonetheless, we believe DLR offers one of the few REIT growth stories in our group at an attractive valuation."
Oddly enough, a sell-side analyst at Piper Jaffray who presented management with some of the more difficult questions on TelX, GI Partners, and insider selling was shortly thereafter dismissed from Piper Jaffray. Credit Suisse also dismissed the analyst who covered this stock in early 2009 and was starting to examine the GI Partners relationship and history.
Massive Equity Dilution:
Since the IPO, DLR has increased its share count from 20 million shares to 78 million shares as the end of 2009. Additionally, the company has tapped the preferred stock market to further fund its operations and dividend. The table below outlines the size of the combined equity and preferred offerings since the IPO.
Year Total Issuance of Preferred and Common Stock
2005 $271 million
2006 $378 million
2007 $333 million
2008 $555 million
2009 $85 million
2010 $55 million (ATM raise)
Debt issuance net of repayments ($):
DLR depends on capital markets. The table below is illustrates the company's waning ability to issue debt.
Year Total Issuance Net of Repayments
2005 $210 million
2006 $370 million
2007 $222 million
2008(q3) ($79) million Partial debt pay down was funded through highly dilutive $221 million common plus $335 million preferred raise during 2008)
2009 $260 million
Questionable Credibility of Independent Director:
An independent DLR director works for a company named in a fraud lawsuit:
TAMPA -- A locally headquartered telecom company seems to have its wires crossed with its landlords.
In Florida, Switch & Data Facilities Co. is facing a lawsuit accusing the company of breaching contracts and committing fraud by using undercapitalized shell companies to secure a 10-year lease worth $6 million.
DLR's website does not indicate that this director is on the board of Switch & Data, a customer of DLR. We find it strange that the relationship is not disclosed on DLR's profile of the director.
Complicated Unexplained Accounting:
On previous earnings calls, management has been less than clear on what appear to be simple explanations for how DLR accounts for items in its financial statements. Responses such as "that would be very difficult" and "it's a very complex model" from the CFO do not provide much comfort. Below is an odd exchange between Bill Stein, CFO of DLR, and a sell-side analyst:
<Q - Omotayo Okusanya>: Okay. That's helpful. And then how do I go about thinking of your taxable earnings
versus FFO in '09? Is there a way you can give us a sense of what the two, what the big difference is between the two
numbers, so at least from that end we have a better sense of how to model dividends?
<A - A. William Stein>: That would be very difficult.
<Q - Omotayo Okusanya>: Then I would like one or two major line items that are just helpful in regards to
differences that recur every quarter?
<A - A. William Stein>: Well, I mean, it's basically depreciation.
<Q - Omotayo Okusanya>: Okay. So - so that's helpful.
<A - A. William Stein>: It's a very complex model, I will tell you that.
Furthermore, when we have noted to analysts the nature of the lease with Telx (long maturity, high margin, etc.), analysts have called management to follow-up and management has failed to disclose that Telx is a related party through the GI Partners connection. The lack of disclosure to the analyst community is astonishing given the significance of the customer (6thlargest). See the analysis below regarding Telx/GI Partners relationship.
Credentialed Management Team (source DLR website):
As our Chairman, Rick Magnuson is responsible for defining Digital Realty's overall business strategy. In 2001, Mr. Magnuson co-founded the advisor to GI Partners and has served as its Chief Executive Officer since that time. Since November 1999, Mr. Magnuson has also served as Executive Managing Director of CB Richard Ellis Investors, where he formed, and continues to manage, the investments and activities of GI Partners. From 1994 through 1999, Mr. Magnuson held various positions with Nomura Securities, most recently as Deputy Managing Director of Nomura's London-based Principal Finance Group. Prior to that, he was a Director in the Investment Banking division of Merrill Lynch, and before that was with Digital Research, the company that developed the personal computer operating system. Mr. Magnuson also founded, and later sold, InterActive Software, a software services company. He serves as a director for NYSE-listed Glenborough Realty Trust and for two private companies. Mr. Magnuson holds a B.A. degree from Dartmouth College and an M.B.A. from Stanford University Graduate School of Business.
Mr. Foust has served as Chief Executive Officer and as a Director of Digital Realty Trust (NYSE: DLR) since its IPO in October 2004. Mike co-founded the predecessor private equity fund, GI Partners, in 2001 and served as its Managing Director since that time.During his tenure at GI Partners, Mr. Foust directed the acquisition of technology-related properties and portfolio management. He has over 23 years of experience. Mr. Foust was a Senior Vice President at CB Richard Ellis, where he managed regional asset services operations, and he was a Senior Director at CB Richard Ellis Investors. Prior to CBRE, Mr. Foust held senior portfolio management and investment positions at UBS Asset Management, Karsten Realty Advisors and Trammell Crow Company. Prior to his real estate career, he participated in the origination of two related international telecom companies operating in New York and London. Mr. Foust received an AB degree magna cum laude from Harvard University and an MBA from Harvard Business School.
Mr. Stein has served as CFO and CIO for Digital Realty Trust since July 2004. With more than 25 years experience, his previous positions include Co-Head of VentureBank@PNC and Media and Communications Finance and Managing Director at The PNC Financial Services Group; President/COO and EVP/CFO of TriNet Corporate Realty Trust, now part of Starwood Capital; and several senior financial and investment management positions at Westinghouse Electric, Westinghouse Financial Services, and Duquesne Light Company. In addition, Mr. Stein practiced law for eight years specializing in both litigation and securities and finance. Mr. Stein received an AB degree in Classics from Princeton University, a JD degree from the University of Pittsburgh, and an MBA degree with Distinction from Carnegie Mellon University.
Scott E. Peterson is Digital Realty Trust's Senior Vice President responsible for our acquisition activities. From 2002 until our initial public offering in October 2004, Mr. Peterson was a Managing Director of GI Partners where he was responsible for property acquisitions with an emphasis on technology-related properties. Mr. Peterson has more than 17 years of real estate experience and was most recently a Senior Vice President with GIC Real Estate, the real estate investment entity for the Government of Singapore Investment Corporation. Previously, Mr. Peterson was active in investments, development and asset management with LaSalle Partners, a real estate services company, and Trammell Crow Company, a real estate developer. Mr. Peterson received a B.A. degree and an M.B.A. from Northwestern University.
Chris J. Crosby has served as Senior Vice President of Corporate Development since August 2009. Prior to this role, he served and Senior Vice President Sales and Technical Services since October 2005. He joined Digital Realty Trust as Vice President of our sales and technical services activities at the completion of our initial public offering in October 2004. Since 2003, Mr. Crosby was Managing Director of Proferian, an operating partner of GI Partners.While at Proferian, Mr. Crosby was responsible for leasing and sales within the GI Partners portfolio with an emphasis on technology-related leasing including turn-key datacenter space. Mr. Crosby has more than 17 years of technology experience and was most recently a consultant for CRG West, an operating partner of The Carlyle Group, formed in 2001 to oversee and enhance strategic telecom assets managed by Carlyle Realty Group. Previously, Mr. Crosby was active in sales, sales management and product development at Nortel Networks, a leading supplier of products and services that support the Internet and other public and private data, voice and multimedia communications networks. Mr. Crosby received a B.S. degree from the University of Texas at Austin.
Appearance of a Shareholder-Friendly Corporate Governance:
- Board members elected annually based on shareholder approval
- Two-thirds of board members are independent directors
- No stockholders rights plan
- Separated the roles of Chairman and Chief Executive Officer
Management/Board Overlap and GI Partners - Conflict of Interest / Related Parties:
Michael Foust, CEO and director of DLR, co-founded the predecessor private equity fund GI Partners.
Rick Magnuson, Chairman of the board of DLR, co-founded GI Partners and is currently a managing director at GI Partners.
Scott Peterson, Sr VP of Acquisition Activities of DLR, was a managing director of GI Partners until 2004 (IPO of DLR).
James Trout, Sr VP of Portfolio and Technical Operations of DLR, was formerly a managing director of Proferian, an operating partner of GI Partners.
Disclosure on Potential Conflicts of Interest from 10-K:
DLR's counsel has clearly highlighted the risks of the DLR/TelX/GI Partners relationship. Below is the risk factor disclosure that clearly underscores the conflict of interest and the potential issues that could arise in the context of this relationship.
We may pursue less vigorous enforcement of terms of certain agreements because of conflicts of interest with GI Partners.GI Partners and its related fund, own a property on which we have a right of first offer. GI Partners Fund II, LLP, or GI Partners II, owns The tel(x) Group, an operator of "Meet-Me-Room" network interconnection facilities that leases 87,305 square feet from us under ten lease agreements. Richard Magnuson, the Chairman of our board of directors, is and will continue to be, the chief executive officer of the advisor to GI Partners and GI Partners II. In the future, we may enter into additional agreements with The tel(x) Group or other companies owned by GI Partners or GI Partners II or other GI Partners funds. We may choose not to enforce, or to enforce less vigorously, our rights under theses agreements because of our desire to maintain our ongoing relationship with GI Partners and Mr. Magnuson.
We would think that there will not be a conflict of interest between DLR and GI Partners, given they are one and the same.
Sixth Largest Customer is controlled by GI Partners:
Telx Group: acquired by GI Partners on November 20, 2006. Six days later DLR signed agreements with Telx Group to lease 10 facilities in the US.
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|
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|
|
Tenant
|
|
Number
of
Locations
|
|
Total
Occupied
Square
Feet(1)
|
|
Percentage
of Net
Rentable
Square
Feet
|
|
|
Annualized
Rent(2)
|
|
Percentage
of
Annualized
Rent
|
|
|
Weighted
Average
Remaining
Lease
Term in
Months
|
|
1
|
|
Savvis Communications
|
|
18
|
|
1,868,799
|
|
14.9
|
%
|
|
$
|
48,792
|
|
9.8
|
%
|
|
112
|
|
2
|
|
Equinix Operating Company, Inc.
|
|
4
|
|
607,401
|
|
4.8
|
%
|
|
|
24,975
|
|
5.0
|
%
|
|
95
|
|
3
|
|
Qwest Communications International, Inc.
|
|
15
|
|
637,712
|
|
5.1
|
%
|
|
|
20,402
|
|
4.1
|
%
|
|
70
|
|
4
|
|
Facebook, Inc.
|
|
3
|
|
134,999
|
|
1.1
|
%
|
|
|
17,809
|
|
3.6
|
%
|
|
89
|
|
5
|
|
NTT Communications Company
|
|
4
|
|
295,339
|
|
2.3
|
%
|
|
|
16,820
|
|
3.4
|
%
|
|
63
|
|
6
|
|
TelX Group, Inc.
|
|
10
|
|
126,130
|
|
1.0
|
%
|
|
|
16,148
|
|
3.2
|
%
|
|
203
|
|
7
|
|
AT & T
|
|
14
|
|
553,828
|
|
4.4
|
%
|
|
|
14,533
|
|
2.9
|
%
|
|
106
|
|
8
|
|
JPMorgan Chase & Co.
|
|
3
|
|
149,935
|
|
1.2
|
%
|
|
|
14,437
|
|
2.9
|
%
|
|
120
|
|
9
|
|
Morgan Stanley
|
|
2
|
|
92,451
|
|
0.7
|
%
|
|
|
13,689
|
|
2.7
|
%
|
|
49
|
|
10
|
|
Level 3 Communications, LLC(3)
|
|
20
|
|
318,656
|
|
2.5
|
%
|
|
|
11,537
|
|
2.3
|
%
|
|
107
|
|
11
|
|
Yahoo! Inc.
|
|
2
|
|
110,847
|
|
0.9
|
%
|
|
|
9,763
|
|
1.9
|
%
|
|
94
|
|
12
|
|
eircom Limited
|
|
1
|
|
124,500
|
|
1.0
|
%
|
|
|
9,206
|
|
1.8
|
%
|
|
115
|
|
13
|
|
BT Americas, Inc.
|
|
3
|
|
47,286
|
|
0.4
|
%
|
|
|
8,981
|
|
1.8
|
%
|
|
96
|
|
14
|
|
Sprint Communications Co., LP
|
|
6
|
|
173,319
|
|
1.4
|
%
|
|
|
8,891
|
|
1.8
|
%
|
|
57
|
|
15
|
|
T-Systems North America, Inc.
|
|
3
|
|
82,610
|
|
0.7
|
%
|
|
|
8,826
|
|
1.8
|
%
|
|
48
|
|
16
|
|
Microsoft Corporation
|
|
2
|
|
313,485
|
|
2.5
|
%
|
|
|
8,178
|
|
1.6
|
%
|
|
67
|
|
17
|
|
TATA Communications (UK)
|
|
2
|
|
105,366
|
|
0.8
|
%
|
|
|
7,895
|
|
1.6
|
%
|
|
99
|
|
18
|
|
Carpathia Hosting
|
|
3
|
|
51,784
|
|
0.4
|
%
|
|
|
7,832
|
|
1.6
|
%
|
|
89
|
|
19
|
|
HSBC Bank PLC
|
|
1
|
|
113,464
|
|
0.9
|
%
|
|
|
7,316
|
|
1.5
|
%
|
|
168
|
|
20
|
|
Comverse Technology, Inc.
|
|
1
|
|
367,033
|
|
2.9
|
%
|
|
|
7,222
|
|
1.4
|
%
|
|
13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total/Weighted Average
|
|
|
|
6,274,944
|
|
49.9
|
%
|
|
$
|
283,252
|
|
56.7
|
%
|
|
93
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Telx Group, controlled by GI Partners, the company founded by DLR's CEO and Chairman, is the sixth largest customer of DLR. In addition, it is important to note that Telx represents 1.0% of the percentage of net rentable square feet, but surprisingly represents 3.2% of the annualized rent. This would imply that this particular customer pays a higher price than other tenants. By contrast, the top three customers have higher shares of net rentable square feet than of annualized rent. One would think that, given Telx pays a higher price to lease space, that it would have a lease life that would be shorter in duration. Surprisingly, Telx has the longest lease life of the top 20 customers at 17 years.
Valuation:
The valuation story for DLR is significantly less compelling when you consider the over-dependence on the capital markets. Below is a DCF valuation analysis that supports that DLR is overvalued. Our analysis takes a conservative approach to capital expenditures consistent with the sell-side sentiment that maintenance capex is a small portion of DLR's capital expenditures. Additionally, this fundamental analysis does not account for the risks associated with DLR's insider transactions and less than arms-length transactions that are highlighted above. We have not included a DCF excluding the Telx cash flows.
| Digital Realty Trust DCF ($000's) |
2010E |
2011E |
2012E |
2013E |
2014E |
2015E |
2016E |
2017E |
| Revenue |
$842,328 |
$995,142 |
$1,161,524 |
$1,351,856 |
$1,419,448 |
$1,490,421 |
$1,564,942 |
$1,643,189 |
| EBITDA |
$543,844 |
$638,887 |
$737,857 |
$859,322 |
$919,475 |
$983,838 |
$1,052,707 |
$1,126,396 |
| Depreciation and Amortization |
$211,200 |
$217,607 |
$224,210 |
$231,012 |
$247,183 |
$264,485 |
$282,999 |
$302,809 |
| Other |
($56,540) |
($63,525) |
($60,500) |
($57,619) |
($54,875) |
($52,262) |
($49,773) |
($47,403) |
| Net Income |
$24,428 |
$357,755 |
$453,147 |
$570,691 |
$617,417 |
$667,090 |
$719,934 |
$776,183 |
| |
|
|
|
|
|
|
|
|
| Adjustments: |
|
|
|
|
|
|
|
|
| (+) Depreciation & Amorization |
$211,200 |
$217,607 |
$224,210 |
$231,012 |
$247,183 |
$264,485 |
$282,999 |
$302,809 |
| (+) Other |
($56,540) |
($63,525) |
($60,500) |
($57,619) |
($54,875) |
($52,262) |
($49,773) |
($47,403) |
| (-) Capital Expenditures |
($40,107) |
($46,300) |
($52,576) |
($58,607) |
($65,161) |
($44,931) |
($47,177) |
($49,536) |
| (-) Change in Working Capital |
$9,282 |
$11,066 |
$0 |
$0 |
$0 |
$0 |
$0 |
$0 |
| Unlevered Free Cash Flow |
148,263 |
476,603 |
564,280 |
685,477 |
744,563 |
834,383 |
905,982 |
982,053 |
| |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
| PV of Free Cash Flow |
3,427,151 |
|
WACC |
9.0% |
|
|
|
|
| Terminal Value |
4,505,584 |
|
Beta |
|
|
1.1 |
|
|
| PV of Terminal Value |
2,463,443 |
|
10-year tsry rate |
|
2.0% |
|
|
| Enterprise Value |
5,890,593 |
|
Equity Risk Premium |
|
8.0% |
|
|
| Cash & ST Investments |
72,320 |
|
Avg cost of debt (pre tax) |
|
5.8% |
|
|
| Debt |
2,372,110 |
|
Tax rate |
|
|
0.0% |
|
|
| Net debt (+ pref stock) |
2,299,790 |
|
Perpetual Growth rate |
|
2.0% |
|
|
| Equity Value |
3,590,803 |
|
Debt to Cap |
|
|
30.0% |
|
|
| |
|
|
Terminal multiple |
|
4.0x |
|
|
| 12-month share price target |
$ 38 |
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
So we have a stock with a fair value of $38. The $38, however, does not account for the various red flags highlighted above. When dealing with risks such as potential conflicts of interests/insider dealings, a normalized discount rate is inappropriate. $38, then, represents a best case scenario. The stock could trade materially lower when some of issues discussed above surface.
Risk to Impairment:
From an accounting perspective, impairment to DLR's asset basis is unlikely to be realized unless the potential cash flow is impaired and DLR's accounting firm then examines the underlying market value of the asset basis. While currently a remote risk, if tenants default and DLR is unable to replace those tenants, the impairments to the underlying real estate properties will be material, particularly because DLR has acquired a significant portion of its real estate portfolio during the height of the real estate bubble (2005-2007). See the table below.
Disclosure on Property from 10-K:
|
Year Ended December 31:
|
|
Properties
Acquired(1)
|
|
Net Rentable
Square Feet(2)
|
|
Square Feet of Space Held
for Redevelopment as of
December 31, 2009(3)
|
|
2002
|
|
5
|
|
1,125,292
|
|
19,890
|
|
2003
|
|
6
|
|
1,028,185
|
|
30,175
|
|
2004
|
|
10
|
|
2,587,455
|
|
99,014
|
|
2005
|
|
20
|
|
3,314,225
|
|
196,072
|
|
2006
|
|
16
|
|
2,104,209
|
|
117,389
|
|
2007
|
|
13
|
|
1,603,259
|
|
171,300
|
|
2008
|
|
5
|
|
209,928
|
|
354,320
|
|
2009
|
|
6
|
|
601,081
|
|
796,226
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market Concentration of Property from 10-K:
|
|
Metropolitan Market
|
|
Percentage of
12/31/09 total annualized rent(1)
|
|
|
Silicon Valley
|
|
17.9
|
%
|
|
Chicago
|
|
11.8
|
%
|
|
New York/New Jersey
|
|
10.3
|
%
|
|
Northern Virginia
|
|
9.8
|
%
|
|
Dallas
|
|
9.5
|
%
|
|
Phoenix
|
|
6.4
|
%
|
|
San Francisco
|
|
4.8
|
%
|
|
Los Angeles
|
|
4.5
|
%
|
|
London, England
|
|
4.2
|
%
|
|
Dublin, Ireland
|
|
3.9
|
%
|
|
Paris, France
|
|
3.2
|
%
|
|
Other
|
|
13.7
|
%
|
|
|
|
|
|
|
|
|
100.0
|
%
|
|
Systematic Insider Selling:
Since the IPO of DLR (2004), insiders have consistently sold their stock. The selling is not limited to small regular blocks. For example, the Chairman has sold large blocks of stock repeatedly, irrespective of price. Below is a quick summary of insider selling over the last two years (and an itemized catalogue of insider activity is provided at the end of this write-up).
| Total sales (last 2 years) |
1,633,631 |
| Shares outstanding |
77,881,924 |
| % of sales of s/o |
2.1% |
| IPO shares (2004) |
20,000,000 |
| % of sales of s/o |
8.2% |
Summary:
At first blush, DLR appears to be a REIT with a focus (datacenters) that has shown strong relative growth and favorable near-term secular trends. The investment story, however, raises concerns and in fact provides a compelling short thesis, after closer examination of the financials and relative valuation, management team, certain contractual arrangements, and pattern of dilutive capital raises. Below are the key catalysts that will cause the stock to reach its appropriate fair value:
- Focus by investment community on the non-arms length transactions between DLR, GI Partners, and TelX
- Recognition by shareholder base of continued and consistent equity raises and dilution
- Examination and discovery of affiliations of certain member of the board of directors
- Inability to raise additional capital to fund dividend payments and growth
- Termination of leases entered into during the bull market (2006-2008)
- Continued shift and acceleration of cloud computing leading to a broken growth story
|
INSIDER TRANSACTIONS REPORTED - LAST TWO YEARS
|
|
Date
|
Insider
|
Shares
|
Type
|
Transaction
|
Value*
|
|
5-Apr-10
|
MILLS JOSHUA ANANDA
Officer
|
120
|
Direct
|
Option Exercise
|
N/A
|
|
5-Apr-10
|
MILLS JOSHUA ANANDA
Officer
|
120
|
Direct
|
Automatic Sale at $54.77 per share.
|
$6,572
|
|
1-Apr-10
|
MILLS JOSHUA ANANDA
Officer
|
97
|
Direct
|
Option Exercise
|
N/A
|
|
1-Apr-10
|
MILLS JOSHUA ANANDA
Officer
|
97
|
Direct
|
Automatic Sale at $54.44 per share.
|
$5,280
|
|
16-Mar-10
|
STEIN A WILLIAM
Officer
|
6,540
|
Direct
|
Option Exercise
|
N/A
|
|
16-Mar-10
|
STEIN A WILLIAM
Officer
|
6,540
|
Direct
|
Sale at $55.66 per share.
|
$364,016
|
|
16-Mar-10
|
FOUST MICHAEL F
Officer
|
9,000
|
Direct
|
Option Exercise
|
N/A
|
|
16-Mar-10
|
FOUST MICHAEL F
Officer
|
9,000
|
Direct
|
Sale at $55.70 per share.
|
$501,300
|
|
11-Mar-10
|
GEOGHEGAN BERNARD
Officer
|
675
|
Direct
|
Option Exercise at $41.73 per share.
|
$28,167
|
|
11-Mar-10
|
GEOGHEGAN BERNARD
Officer
|
4,264
|
Direct
|
Sale at $54.53 - $54.61 per share.
|
$233,0002
|
|
9-Mar-10
|
CROSBY CHRISTOPHER JAMES JR
Officer
|
15,800
|
Direct
|
Option Exercise at $20.37 - $41.73 per share.
|
N/A
|
|
9-Mar-10
|
CROSBY CHRISTOPHER JAMES JR
Officer
|
15,800
|
Direct
|
Sale at $55.14 - $55.39 per share.
|
$873,0002
|
|
9-Mar-10
|
EARLEY KATHLEEN
Director
|
1,000
|
Direct
|
Purchase at $55.45 per share.
|
$55,450
|
|
2-Mar-10
|
MILLS JOSHUA ANANDA
Officer
|
119
|
Direct
|
Option Exercise
|
N/A
|
|
2-Mar-10
|
MILLS JOSHUA ANANDA
Officer
|
119
|
Direct
|
Automatic Sale at $52.42 per share.
|
$6,237
|
|
1-Mar-10
|
MILLS JOSHUA ANANDA
Officer
|
97
|
Direct
|
Option Exercise
|
N/A
|
|
1-Mar-10
|
MILLS JOSHUA ANANDA
Officer
|
97
|
Direct
|
Automatic Sale at $51.65 per share.
|
$5,010
|
|
25-Feb-10
|
MILLS JOSHUA ANANDA
Officer
|
2,102
|
Direct
|
Option Exercise at $0 per share.
|
N/A
|
|
25-Feb-10
|
MILLS JOSHUA ANANDA
Officer
|
2,102
|
Direct
|
Automatic Sale at $50.22 per share.
|
$105,562
|
|
23-Feb-10
|
GEOGHEGAN BERNARD
Officer
|
9,252
|
Direct
|
Acquisition (Non Open Market) at $0 per share.
|
N/A
|
|
2-Feb-10
|
MILLS JOSHUA ANANDA
Officer
|
120
|
Direct
|
Option Exercise
|
N/A
|
|
2-Feb-10
|
MILLS JOSHUA ANANDA
Officer
|
120
|
Direct
|
Automatic Sale at $48.56 per share.
|
$5,827
|
|
1-Feb-10
|
MILLS JOSHUA ANANDA
Officer
|
96
|
Direct
|
Option Exercise
|
N/A
|
|
1-Feb-10
|
MILLS JOSHUA ANANDA
Officer
|
96
|
Direct
|
Automatic Sale at $48.35 per share.
|
$4,641
|
|
4-Jan-10
|
MILLS JOSHUA ANANDA
Officer
|
217
|
Direct
|
Option Exercise
|
N/A
|
|
4-Jan-10
|
MILLS JOSHUA ANANDA
Officer
|
217
|
Direct
|
Automatic Sale at $50.54 per share.
|
$10,967
|
|
28-Dec-09
|
JACOBS ELLEN A
Officer
|
3,933
|
Direct
|
Option Exercise
|
N/A
|
|
28-Dec-09
|
JACOBS ELLEN A
Officer
|
3,933
|
Direct
|
Automatic Sale at $50 per share.
|
$196,650
|
|
16-Dec-09
|
STEIN A WILLIAM
Officer
|
5,407
|
Direct
|
Option Exercise
|
N/A
|
|
16-Dec-09
|
STEIN A WILLIAM
Officer
|
5,407
|
Direct
|
Sale at $49.18 per share.
|
$265,916
|
|
14-Dec-09
|
CHAPMAN LAURENCE A
Director
|
716
|
Direct
|
Option Exercise
|
N/A
|
|
11-Dec-09
|
FOUST MICHAEL F
Officer
|
17,144
|
Direct
|
Option Exercise
|
N/A
|
|
11-Dec-09
|
FOUST MICHAEL F
Officer
|
3,900
|
Direct
|
Sale at $47.71 per share.
|
$186,069
|
|
4-Dec-09
|
JACOBS ELLEN A
Officer
|
67
|
Direct
|
Option Exercise
|
N/A
|
|
4-Dec-09
|
JACOBS ELLEN A
Officer
|
67
|
Direct
|
Automatic Sale at $50 per share.
|
$3,350
|
|
2-Dec-09
|
MILLS JOSHUA ANANDA
Officer
|
120
|
Direct
|
Option Exercise
|
N/A
|
|
2-Dec-09
|
MILLS JOSHUA ANANDA
Officer
|
120
|
Direct
|
Automatic Sale at $48.40 per share.
|
$5,808
|
|
1-Dec-09
|
MILLS JOSHUA ANANDA
Officer
|
97
|
Direct
|
Option Exercise
|
N/A
|
|
1-Dec-09
|
MILLS JOSHUA ANANDA
Officer
|
97
|
Direct
|
Automatic Sale at $48.49 per share.
|
$4,703
|
|
1-Dec-09
|
STEIN A WILLIAM
Officer
|
377
|
Direct
|
Option Exercise
|
N/A
|
|
1-Dec-09
|
STEIN A WILLIAM
Officer
|
377
|
Direct
|
Automatic Sale at $48.89 per share.
|
$18,431
|
|
13-Nov-09
|
CROSBY CHRISTOPHER JAMES JR
Officer
|
1,739
|
Direct
|
Disposition (Non Open Market) at $0 per share.
|
N/A
|
|
13-Nov-09
|
PETERSON SCOTT E
Officer
|
6,884
|
Direct
|
Option Exercise
|
N/A
|
|
13-Nov-09
|
PETERSON SCOTT E
Officer
|
6,884
|
Direct
|
Sale at $47.50 per share.
|
$326,990
|
|
13-Nov-09
|
MAGNUSON RICHARD A
Director
|
30,622
|
Direct
|
Option Exercise
|
N/A
|
|
13-Nov-09
|
MAGNUSON RICHARD A
Director
|
30,622
|
Direct
|
Sale at $47 per share.
|
$1,439,234
|
|
12-Nov-09
|
CROSBY CHRISTOPHER JAMES JR
Officer
|
5,000
|
Direct
|
Option Exercise at $20.37 per share.
|
$101,850
|
|
12-Nov-09
|
CROSBY CHRISTOPHER JAMES JR
Officer
|
11,952
|
Direct
|
Sale at $48 per share.
|
$573,696
|
|
12-Nov-09
|
MAGNUSON RICHARD A
Director
|
169,378
|
Direct
|
Option Exercise
|
N/A
|
|
12-Nov-09
|
MAGNUSON RICHARD A
Director
|
169,378
|
Direct
|
Sale at $47.44 per share.
|
$8,035,292
|
|
2-Nov-09
|
MILLS JOSHUA ANANDA
Officer
|
217
|
Direct
|
Option Exercise
|
N/A
|
|
2-Nov-09
|
MILLS JOSHUA ANANDA
Officer
|
217
|
Direct
|
Automatic Sale at $45.60 per share.
|
$9,895
|
|
2-Nov-09
|
STEIN A WILLIAM
Officer
|
377
|
Direct
|
Option Exercise
|
N/A
|
|
2-Nov-09
|
STEIN A WILLIAM
Officer
|
377
|
Direct
|
Automatic Sale at $45.60 per share.
|
$17,191
|
|
27-Oct-09
|
ZERBST ROBERT H
Director
|
N/A
|
Direct
|
Statement of Ownership
|
N/A
|
|
2-Oct-09
|
MILLS JOSHUA ANANDA
Officer
|
120
|
Direct
|
Option Exercise
|
N/A
|
|
2-Oct-09
|
MILLS JOSHUA ANANDA
Officer
|
120
|
Direct
|
Automatic Sale at $45 per share.
|
$5,400
|
|
1-Oct-09
|
MILLS JOSHUA ANANDA
Officer
|
97
|
Direct
|
Option Exercise
|
N/A
|
|
1-Oct-09
|
MILLS JOSHUA ANANDA
Officer
|
97
|
Direct
|
Automatic Sale at $45.82 per share.
|
$4,444
|
|
1-Oct-09
|
STEIN A WILLIAM
Officer
|
376
|
Direct
|
Option Exercise
|
N/A
|
|
1-Oct-09
|
STEIN A WILLIAM
Officer
|
376
|
Direct
|
Automatic Sale at $45.82 per share.
|
$17,228
|
|
22-Sep-09
|
MILLS JOSHUA ANANDA
Officer
|
119
|
Direct
|
Option Exercise
|
N/A
|
|
22-Sep-09
|
MILLS JOSHUA ANANDA
Officer
|
119
|
Direct
|
Automatic Sale at $45 per share.
|
$5,355
|
|
16-Sep-09
|
GEOGHEGAN BERNARD
Officer
|
3,149
|
Direct
|
Option Exercise at $41.73 per share.
|
$131,407
|
|
16-Sep-09
|
GEOGHEGAN BERNARD
Officer
|
4,650
|
Direct
|
Sale at $46.56 - $46.59 per share.
|
$217,0002
|
|
15-Sep-09
|
SHAM EDWARD F
Officer
|
3,444
|
Direct
|
Option Exercise
|
N/A
|
|
15-Sep-09
|
SHAM EDWARD F
Officer
|
3,444
|
Direct
|
Sale at $46.09 per share.
|
$158,733
|
|
8-Sep-09
|
STEIN A WILLIAM
Officer
|
376
|
Direct
|
Option Exercise
|
N/A
|
|
8-Sep-09
|
STEIN A WILLIAM
Officer
|
376
|
Direct
|
Automatic Sale at $44 per share.
|
$16,544
|
|
7-Aug-09
|
MILLS JOSHUA ANANDA
Officer
|
2,600
|
Direct
|
Option Exercise
|
N/A
|
|
7-Aug-09
|
MILLS JOSHUA ANANDA
Officer
|
2,600
|
Direct
|
Sale at $45.82 per share.
|
$119,132
|
|
7-Aug-09
|
FOUST MICHAEL F
Officer
|
31,316
|
Direct
|
Option Exercise at $12 per share.
|
$375,792
|
|
7-Aug-09
|
FOUST MICHAEL F
Officer
|
31,316
|
Direct
|
Sale at $44.55 per share.
|
$1,395,127
|
|
7-Aug-09
|
SHAM EDWARD F
Officer
|
7,576
|
Direct
|
Option Exercise
|
N/A
|
|
7-Aug-09
|
SHAM EDWARD F
Officer
|
7,576
|
Direct
|
Sale at $43.50 per share.
|
$329,556
|
|
5-Aug-09
|
STEIN A WILLIAM
Officer
|
37,813
|
Direct
|
Option Exercise at $12 per share.
|
$453,756
|
|
5-Aug-09
|
STEIN A WILLIAM
Officer
|
37,813
|
Direct
|
Automatic Sale at $44 per share.
|
$1,663,772
|
|
4-Aug-09
|
STEIN A WILLIAM
Officer
|
36,000
|
Direct
|
Option Exercise at $12 per share.
|
$432,000
|
|
4-Aug-09
|
STEIN A WILLIAM
Officer
|
36,000
|
Direct
|
Automatic Sale at $42 per share.
|
$1,512,000
|
|
30-Jul-09
|
STEIN A WILLIAM
Officer
|
36,000
|
Direct
|
Option Exercise at $12 per share.
|
$432,000
|
|
30-Jul-09
|
STEIN A WILLIAM
Officer
|
36,000
|
Direct
|
Sale at $40 per share.
|
$1,440,000
|
|
12-May-09
|
CROSBY CHRISTOPHER JAMES JR
Officer
|
24,319
|
Direct
|
Option Exercise at $12 - $20.37 per share.
|
N/A
|
|
12-May-09
|
CROSBY CHRISTOPHER JAMES JR
Officer
|
24,319
|
Direct
|
Sale at $36 per share.
|
$875,484
|
|
6-May-09
|
EARLEY KATHLEEN
Director
|
1,000
|
Direct
|
Purchase at $37.26 per share.
|
$37,260
|
|
28-Apr-09
|
CHAPMAN LAURENCE A
Director
|
1,000
|
Direct
|
Acquisition (Non Open Market) at $0 per share.
|
N/A
|
|
3-Apr-09
|
PETERSON SCOTT E
Officer
|
64,935
|
Direct
|
Option Exercise
|
N/A
|
|
3-Apr-09
|
PETERSON SCOTT E
Officer
|
64,935
|
Direct
|
Automatic Sale at $37 per share.
|
$2,402,595
|
|
2-Mar-09
|
GEOGHEGAN BERNARD
Officer
|
4,637
|
Direct
|
Acquisition (Non Open Market) at $0 per share.
|
N/A
|
|
2-Mar-09
|
TROUT JAMES
Officer
|
312
|
Direct
|
Option Exercise
|
N/A
|
|
2-Mar-09
|
TROUT JAMES
Officer
|
312
|
Direct
|
Automatic Sale at $29.17 per share.
|
$9,101
|
|
25-Feb-09
|
TROUT JAMES
Officer
|
1,335
|
Direct
|
Option Exercise
|
N/A
|
|
25-Feb-09
|
TROUT JAMES
Officer
|
1,335
|
Direct
|
Automatic Sale at $28.35 per share.
|
$37,847
|
|
24-Feb-09
|
GEOGHEGAN BERNARD
Officer
|
4,173
|
Direct
|
Acquisition (Non Open Market) at $0 per share.
|
N/A
|
|
2-Feb-09
|
TROUT JAMES
Officer
|
313
|
Direct
|
Option Exercise
|
N/A
|
|
2-Feb-09
|
TROUT JAMES
Officer
|
313
|
Direct
|
Automatic Sale at $31.15 per share.
|
$9,749
|
|
28-Jan-09
|
MILLS JOSHUA ANANDA
Officer
|
5,396
|
Direct
|
Option Exercise
|
N/A
|
|
28-Jan-09
|
MILLS JOSHUA ANANDA
Officer
|
5,396
|
Direct
|
Automatic Sale at $34 per share.
|
$183,464
|
|
28-Jan-09
|
PETERSON SCOTT E
Officer
|
43,290
|
Direct
|
Option Exercise
|
N/A
|
|
28-Jan-09
|
PETERSON SCOTT E
Officer
|
43,290
|
Direct
|
Automatic Sale at $34.50 per share.
|
$1,493,505
|
|
2-Jan-09
|
TROUT JAMES
Officer
|
313
|
Direct
|
Option Exercise
|
N/A
|
|
2-Jan-09
|
TROUT JAMES
Officer
|
313
|
Direct
|
Automatic Sale at $33.19 per share.
|
$10,388
|
|
29-Dec-08
|
FOUST MICHAEL F
Officer
|
30,081
|
Direct
|
Option Exercise
|
N/A
|
|
17-Dec-08
|
FOUST MICHAEL F
Officer
|
25,000
|
Direct
|
Option Exercise
|
N/A
|
|
17-Dec-08
|
FOUST MICHAEL F
Officer
|
25,000
|
Direct
|
Sale at $32.12 per share.
|
$802,999
|
|
17-Dec-08
|
PETERSON SCOTT E
Officer
|
20,204
|
Direct
|
Option Exercise at $12 per share.
|
$242,448
|
|
17-Dec-08
|
PETERSON SCOTT E
Officer
|
20,204
|
Direct
|
Sale at $32 per share.
|
$646,528
|
|
17-Dec-08
|
EARLEY KATHLEEN
Director
|
6,764
|
Direct
|
Option Exercise
|
N/A
|
|
16-Dec-08
|
MILLS JOSHUA ANANDA
Officer
|
10,000
|
Direct
|
Option Exercise
|
N/A
|
|
16-Dec-08
|
MILLS JOSHUA ANANDA
Officer
|
10,000
|
Direct
|
Sale at $31.64 per share.
|
$316,400
|
|
16-Dec-08
|
STEIN A WILLIAM
Officer
|
30,000
|
Direct
|
Option Exercise
|
N/A
|
|
16-Dec-08
|
STEIN A WILLIAM
Officer
|
30,000
|
Direct
|
Sale at $30.51 per share.
|
$915,300
|
|
16-Dec-08
|
FOUST MICHAEL F
Officer
|
17,000
|
Direct
|
Option Exercise
|
N/A
|
|
16-Dec-08
|
FOUST MICHAEL F
Officer
|
17,000
|
Direct
|
Sale at $30.15 per share.
|
$512,550
|
|
5-Dec-08
|
MILLS JOSHUA ANANDA
Officer
|
1,250
|
Direct
|
Option Exercise
|
N/A
|
|
5-Dec-08
|
MILLS JOSHUA ANANDA
Officer
|
1,250
|
Direct
|
Sale at $29.93 per share.
|
$37,412
|
|
2-Dec-08
|
TROUT JAMES
Officer
|
120
|
Direct
|
Option Exercise
|
N/A
|
|
2-Dec-08
|
TROUT JAMES
Officer
|
120
|
Direct
|
Automatic Sale at $24.52 per share.
|
$2,942
|
|
1-Dec-08
|
TROUT JAMES
Officer
|
193
|
Direct
|
Option Exercise
|
N/A
|
|
1-Dec-08
|
TROUT JAMES
Officer
|
193
|
Direct
|
Automatic Sale at $27.36 per share.
|
$5,280
|
|
25-Nov-08
|
FOUST MICHAEL F
Officer
|
20,000
|
Direct
|
Option Exercise
|
N/A
|
|
25-Nov-08
|
FOUST MICHAEL F
Officer
|
20,000
|
Direct
|
Sale at $27.08 per share.
|
$541,600
|
|
21-Nov-08
|
MILLS JOSHUA ANANDA
Officer
|
5,000
|
Direct
|
Option Exercise
|
N/A
|
|
21-Nov-08
|
MILLS JOSHUA ANANDA
Officer
|
5,000
|
Direct
|
Sale at $21.37 per share.
|
$106,850
|
|
20-Nov-08
|
FOUST MICHAEL F
Officer
|
75,000
|
Direct
|
Option Exercise
|
N/A
|
|
20-Nov-08
|
FOUST MICHAEL F
Officer
|
75,000
|
Direct
|
Sale at $23.23 per share.
|
$1,742,250
|
|
20-Nov-08
|
ERNST RUANN FAYE
Director
|
6,448
|
Direct
|
Option Exercise
|
N/A
|
|
3-Nov-08
|
TROUT JAMES
Officer
|
313
|
Direct
|
Option Exercise
|
N/A
|
|
3-Nov-08
|
TROUT JAMES
Officer
|
313
|
Direct
|
Automatic Sale at $33.48 per share.
|
$10,479
|
|
28-Oct-08
|
TROUT JAMES
Officer
|
12,153
|
Direct
|
Option Exercise at $12 per share.
|
$145,836
|
|
28-Oct-08
|
TROUT JAMES
Officer
|
12,153
|
Direct
|
Automatic Sale at $27.52 per share.
|
$334,450
|
|
9-Oct-08
|
TROUT JAMES
Officer
|
17,317
|
Direct
|
Option Exercise
|
N/A
|
|
9-Oct-08
|
TROUT JAMES
Officer
|
17,317
|
Direct
|
Automatic Sale at $38.84 per share.
|
$672,592
|
|
7-Oct-08
|
TROUT JAMES
Officer
|
12,987
|
Direct
|
Option Exercise
|
N/A
|
|
7-Oct-08
|
TROUT JAMES
Officer
|
12,987
|
Direct
|
Automatic Sale at $39.31 per share.
|
$510,518
|
|
2-Oct-08
|
TROUT JAMES
Officer
|
119
|
Direct
|
Option Exercise
|
N/A
|
|
2-Oct-08
|
TROUT JAMES
Officer
|
119
|
Direct
|
Automatic Sale at $44.01 per share.
|
$5,237
|
|
2-Oct-08
|
TROUT JAMES
Officer
|
12,987
|
Direct
|
Option Exercise
|
N/A
|
|
2-Oct-08
|
TROUT JAMES
Officer
|
12,987
|
Direct
|
Automatic Sale at $43.99 per share.
|
$571,298
|
|
2-Oct-08
|
CROSBY CHRISTOPHER JAMES JR
Officer
|
51,949
|
Direct
|
Option Exercise
|
N/A
|
|
2-Oct-08
|
CROSBY CHRISTOPHER JAMES JR
Officer
|
51,949
|
Direct
|
Automatic Sale at $44 per share.
|
$2,285,756
|
|
2-Oct-08
|
SHAM EDWARD F
Officer
|
7,577
|
Direct
|
Option Exercise
|
N/A
|
|
2-Oct-08
|
SHAM EDWARD F
Officer
|
7,577
|
Direct
|
Automatic Sale at $44.01 per share.
|
$333,463
|
|
1-Oct-08
|
TROUT JAMES
Officer
|
193
|
Direct
|
Option Exercise
|
N/A
|
|
1-Oct-08
|
TROUT JAMES
Officer
|
193
|
Direct
|
Automatic Sale at $46.40 per share.
|
$8,955
|
|
1-Oct-08
|
STEIN A WILLIAM
Officer
|
373
|
Direct
|
Option Exercise
|
N/A
|
|
1-Oct-08
|
STEIN A WILLIAM
Officer
|
373
|
Direct
|
Automatic Sale at $46.40 per share.
|
$17,307
|
|
1-Oct-08
|
GEOGHEGAN BERNARD
Officer
|
3,339
|
Direct
|
Statement of Ownership
|
N/A
|
|
19-Sep-08
|
CHAPMAN LAURENCE A
Director
|
200
|
Direct
|
Automatic Sale at $50 per share.
|
$10,000
|
|
18-Sep-08
|
CHAPMAN LAURENCE A
Director
|
5,000
|
Direct
|
Automatic Sale at $48 per share.
|
$240,000
|
|
11-Sep-08
|
CROSBY CHRISTOPHER JAMES JR
Officer
|
8,691
|
Direct
|
Option Exercise
|
N/A
|
|
9-Sep-08
|
MAGNUSON RICHARD A
Director
|
21,578
|
Direct
|
Option Exercise
|
N/A
|
|
9-Sep-08
|
MAGNUSON RICHARD A
Director
|
21,578
|
Direct
|
Sale at $46.06 per share.
|
$993,882
|
|
8-Sep-08
|
MAGNUSON RICHARD A
Director
|
179,860
|
Direct
|
Option Exercise
|
N/A
|
|
8-Sep-08
|
MAGNUSON RICHARD A
Director
|
179,860
|
Direct
|
Sale at $46.06 per share.
|
$8,284,351
|
|
2-Sep-08
|
TROUT JAMES
Officer
|
313
|
Direct
|
Option Exercise
|
N/A
|
|
2-Sep-08
|
TROUT JAMES
Officer
|
313
|
Direct
|
Automatic Sale at $46.40 per share.
|
$14,523
|
|
2-Sep-08
|
STEIN A WILLIAM
Officer
|
372
|
Direct
|
Option Exercise
|
N/A
|
|
2-Sep-08
|
STEIN A WILLIAM
Officer
|
372
|
Direct
|
Automatic Sale at $46.40 per share.
|
$17,260
|
|
2-Sep-08
|
SHAM EDWARD F
Officer
|
3,150
|
Direct
|
Option Exercise
|
N/A
|
|
2-Sep-08
|
SHAM EDWARD F
Officer
|
3,150
|
Direct
|
Sale at $45.62 per share.
|
$143,703
|
|
18-Aug-08
|
MILLS JOSHUA ANANDA
Officer
|
650
|
Direct
|
Option Exercise
|
N/A
|
|
18-Aug-08
|
MILLS JOSHUA ANANDA
Officer
|
650
|
Direct
|
Sale at $45 per share.
|
$29,250
|
|
14-Aug-08
|
FOUST MICHAEL F
Officer
|
31,316
|
Direct
|
Option Exercise at $12 per share.
|
$375,792
|
|
14-Aug-08
|
FOUST MICHAEL F
Officer
|
31,316
|
Direct
|
Sale at $45.41 per share.
|
$1,422,059
|
|
14-Aug-08
|
PETERSON SCOTT E
Officer
|
3,049
|
Direct
|
Option Exercise
|
N/A
|
|
14-Aug-08
|
PETERSON SCOTT E
Officer
|
3,049
|
Direct
|
Sale at $45.47 per share.
|
$138,638
|
|
14-Aug-08
|
MAGNUSON RICHARD A
Director
|
200,000
|
Direct
|
Option Exercise
|
N/A
|
|
14-Aug-08
|
MAGNUSON RICHARD A
Director
|
200,000
|
Direct
|
Sale at $45.63 per share.
|
$9,126,000
|
|
4-Aug-08
|
TROUT JAMES
Officer
|
120
|
Direct
|
Option Exercise
|
N/A
|
|
4-Aug-08
|
TROUT JAMES
Officer
|
120
|
Direct
|
Automatic Sale at $42.99 per share.
|
$5,158
|
|
1-Aug-08
|
TROUT JAMES
Officer
|
194
|
Direct
|
Option Exercise
|
N/A
|
|
1-Aug-08
|
TROUT JAMES
Officer
|
194
|
Direct
|
Automatic Sale at $43.28 per share.
|
$8,396
|
|
1-Aug-08
|
STEIN A WILLIAM
Officer
|
372
|
Direct
|
Option Exercise
|
N/A
|
|
1-Aug-08
|
STEIN A WILLIAM
Officer
|
372
|
Direct
|
Automatic Sale at $43.28 per share.
|
$16,100
|
|
2-Jul-08
|
TROUT JAMES
Officer
|
120
|
Direct
|
Option Exercise
|
N/A
|
|
2-Jul-08
|
TROUT JAMES
Officer
|
120
|
Direct
|
Automatic Sale at $42 per share.
|
$5,040
|
|
1-Jul-08
|
TROUT JAMES
Officer
|
193
|
Direct
|
Option Exercise
|
N/A
|
|
1-Jul-08
|
TROUT JAMES
Officer
|
193
|
Direct
|
Automatic Sale at $40.55 per share.
|
$7,826
|
|
1-Jul-08
|
STEIN A WILLIAM
Officer
|
371
|
Direct
|
Option Exercise
|
N/A
|
|
1-Jul-08
|
STEIN A WILLIAM
Officer
|
371
|
Direct
|
Automatic Sale at $40.55 per share.
|
$15,044
|
|
16-Jun-08
|
SHAM EDWARD F
Officer
|
2,350
|
Direct
|
Option Exercise
|
N/A
|
|
16-Jun-08
|
SHAM EDWARD F
Officer
|
2,350
|
Direct
|
Sale at $42.64 per share.
|
$100,204
|
|
11-Jun-08
|
CROSBY CHRISTOPHER JAMES JR
Officer
|
30,153
|
Direct
|
Option Exercise at $12 - $20.37 per share.
|
N/A
|
|
11-Jun-08
|
CROSBY CHRISTOPHER JAMES JR
Officer
|
30,153
|
Direct
|
Sale at $41.54 - $41.61 per share.
|
$1,254,0002
|
|
2-Jun-08
|
TROUT JAMES
Officer
|
314
|
Direct
|
Option Exercise
|
N/A
|
|
2-Jun-08
|
TROUT JAMES
Officer
|
314
|
Direct
|
Automatic Sale at $41.90 per share.
|
$13,156
|
|
2-Jun-08
|
STEIN A WILLIAM
Officer
|
371
|
Direct
|
Option Exercise
|
N/A
|
|
2-Jun-08
|
STEIN A WILLIAM
Officer
|
371
|
Direct
|
Automatic Sale at $41.90 per share.
|
$15,544
|
|
29-May-08
|
MILLS JOSHUA ANANDA
Officer
|
421
|
Direct
|
Sale at $42.90 per share.
|
$18,060
|
|
28-May-08
|
FOUST MICHAEL F
Officer
|
25,000
|
Direct
|
Sale at $41.95 per share.
|
$1,048,750
|
|
21-May-08
|
MILLS JOSHUA ANANDA
Officer
|
1,921
|
Direct
|
Option Exercise
|
N/A
|
|
21-May-08
|
MILLS JOSHUA ANANDA
Officer
|
1,500
|
Direct
|
Sale at $41.96 per share.
|
$62,940
|
|
15-May-08
|
FOUST MICHAEL F
Officer
|
21,002
|
Direct
|
Option Exercise
|
N/A
|
|
15-May-08
|
FOUST MICHAEL F
Officer
|
20,000
|
Direct
|
Sale at $42.09 per share.
|
$841,800
|
|
15-May-08
|
MAGNUSON RICHARD A
Director
|
200,000
|
Direct
|
Option Exercise
|
N/A
|
|
15-May-08
|
MAGNUSON RICHARD A
Director
|
200,000
|
Direct
|
Sale at $41.96 per share.
|
$8,392,000
|
|
8-May-08
|
STEIN A WILLIAM
Officer
|
370
|
Direct
|
Option Exercise
|
N/A
|
|
8-May-08
|
STEIN A WILLIAM
Officer
|
370
|
Direct
|
Automatic Sale at $40 per share.
|
$14,800
|
|
2-May-08
|
TROUT JAMES
Officer
|
1,437
|
Direct
|
Option Exercise
|
N/A
|
|
2-May-08
|
TROUT JAMES
Officer
|
1,437
|
Direct
|
Automatic Sale at $39.55 per share.
|
$56,833
|
|
1-May-08
|
TROUT JAMES
Officer
|
194
|
Direct
|
Option Exercise
|
N/A
|
|
1-May-08
|
TROUT JAMES
Officer
|
194
|
Direct
|
Automatic Sale at $38.59 per share.
|
$7,486
|
|
18-Apr-08
|
STEIN A WILLIAM
Officer
|
10,590
|
Direct
|
Option Exercise
|
N/A
|
|
18-Apr-08
|
STEIN A WILLIAM
Officer
|
10,590
|
Direct
|
Automatic Sale at $40 per share.
|
$423,600
|
|
Catalyst
- Focus by investment community on the non-arms length transactions between DLR, GI Partners, and TelX
- Recognition by shareholder base of continued and consistent equity raises and dilution
- Examination and discovery of affiliations of certain member of the board of directors
- Inability to raise additional capital to fund dividend payments and growth
- Termination of leases entered into during the bull market (2006-2008)
- Continued shift and acceleration of cloud computing leading to a broken growth story