Business Context and Reporting Period
This Form 8-K Current Report, dated April 8, 2013, covers events occurring on April 8 and April 9, 2013, for Digital Realty Trust, Inc. and its operating partnership, Digital Realty Trust, L.P. The filing primarily documents the completion of an underwritten public offering of 5.875% Series G Cumulative Redeemable Preferred Stock and the corresponding amendments to the company's charter and partnership agreement.
Key Financial Metrics and Capital Structure
- Preferred Stock Offering: Issuance of 10,000,000 shares of 5.875% Series G Cumulative Redeemable Preferred Stock.
- Liquidation Preference: $25.00 per share.
- Dividend Rate: 5.875% per annum ($1.46875 per share), payable quarterly in arrears beginning June 28, 2013.
- Accrual Start Date: April 9, 2013.
- Operating Partnership Units: 10,000,000 Series G Preferred Units issued to the parent company in exchange for net proceeds from the offering.
- Authorization: Up to 10,350,000 shares of Series G Preferred Stock authorized.
- Company Assets: The filing notes the company has over $8 billion in total consolidated assets.
Material Changes Versus Prior Period
The filing does not provide comparative financial performance data (revenue, profit, or cash flow) against prior periods. The material changes reported are structural and capital-related:
- Capital Structure: Addition of a new class of preferred stock (Series G) ranking senior to common stock and on parity with Series E and Series F preferred stock.
- Governance Documents: Execution of the Eleventh Amended and Restated Agreement of Limited Partnership and filing of Articles Supplementary to the charter to designate the Series G Preferred Stock.
Guidance, Outlook, and Material Terms
The filing contains no forward-looking guidance regarding revenue or earnings. However, it details specific terms and contingencies regarding the new security:
- Redemption: The company generally cannot redeem the stock prior to April 9, 2018, except in limited circumstances to preserve REIT status. On or after April 9, 2018, the company may redeem shares at $25.00 per share plus accrued dividends.
- Change of Control: Upon a Change of Control, the company may redeem the stock within 120 days. Alternatively, holders have the right to convert shares into common stock.
- Conversion Cap: In a Change of Control, conversion is capped at 0.7532 shares of common stock per preferred share (the "Share Cap"). If the common stock price is below $33.19, holders may receive a value less than the liquidation preference.
- Unregistered Sales: The issuance of Series G Preferred Units to the parent company relied on the Section 4(2) exemption from registration under the Securities Act of 1933.
Investor Verification Checklist
- Verify the total net proceeds received from the Series G Preferred Stock offering (not explicitly stated in this text).
- Confirm the exact date of the first dividend payment (stated as June 28, 2013).
- Review the full text of the Articles Supplementary (Exhibit 3.2) for complete details on the Change of Control definition and conversion mechanics.
- Check the impact of the new preferred stock issuance on the company's debt-to-equity ratio and REIT compliance status.
- Monitor the company's ability to maintain the required listing status on the NYSE to avoid triggering specific redemption or conversion clauses.