The board said after the close on Monday that it named CFO William Stein to temporarily replace CEO Michael Foust, while it seeks a new top executive who can lead the company to "the next level and scale of operational sophistication."
Shares of the San Francisco REIT fell as low as $50.10 on Tuesday morning, a 5% decline. By the afternoon, the stock had recovered some losses, and was down 1.26 cents, or 2.4%, to $51.51. It closed at $51.91. By midday Wednesday, the stock had hit a high of $52.95.
"We find the announcement surprising as it is sudden and effective immediately-and at the same time, not surprising as the company has struggled with weak stock performance for nearly two years," Jonathan Schildkraut of Evercore Partners Inc. wrote in a report.
Digital Realty is not the only data center operator with management in flux.
Large data center REIT DuPont Fabros Technology (DFT) is seeking a replacement for co-founder and CEO Hossein Fateh.
Rackspace Hosting (RAX), which is not a REIT, announced unexpectedly in February that CEO Lanham Napier would retire. Chairman and founder Graham Weston is interim CEO while the company seeks a long-term top executive.
Following Tuesday's losses, Digital Realty's market cap is about $6.6 billion. The company has close to $5 billion in long-term debt. UBS analyst Gabriel Hilmoe noted that Digital Realty has been down 21% over the past 12 months, while the MSCI Inc. index of U.S. REITs, which trades as RMZ, has been essentially flat.