Business Context and Reporting Period
Company: Digital Realty Trust, Inc. and Digital Realty Trust, L.P.
Filing Type: Form 8-K (Current Report)
Date of Report: September 13, 2011
Item Reported: Regulation FD Disclosure regarding adjustments to conversion rates for convertible preferred stock.
Key Financial Metrics
This filing does not report revenue, profit, cash flow, margins, debt, or liquidity figures. The document focuses exclusively on the adjustment of conversion rates for specific securities triggered by dividend payments.
Material Changes
Effective September 13, 2011, the company adjusted the conversion rates for its Series C and Series D Cumulative Convertible Preferred Stock. These adjustments were triggered by the declaration and payment of common stock dividends in excess of the "reference dividend" for the quarters ended June 30, 2011, and September 30, 2011.
- 4.375% Series C Cumulative Convertible Preferred Stock: Conversion rate adjusted to 0.5420 shares of common stock per $25.00 liquidation preference.
- 5.500% Series D Cumulative Convertible Preferred Stock: Conversion rate adjusted to 0.6200 shares of common stock per $25.00 liquidation preference.
The filing notes that adjustments are only required when the change equals or exceeds 1% of the conversion rate; otherwise, adjustments are carried forward.
Guidance, Outlook, and Risks
The filing contains forward-looking statements regarding expected dividend payments and conversion rate adjustments. Management highlighted significant risks and uncertainties, including:
- Deterioration in global economic, credit, and market conditions, including the downgrading of the U.S. government's credit rating.
- Decreases in information technology spending due to economic slowdowns.
- Dependence on significant tenants and risks of tenant bankruptcy or lease non-renewal.
- Challenges in obtaining debt and equity financing, refinancing risks, and interest rate fluctuations.
- Operational risks related to foreign jurisdictions, joint ventures, and property development.
- Regulatory risks, including the potential failure to maintain REIT status.
Investor Verification Checklist
- Verify the exact dividend amounts declared for the quarters ended June 30, 2011, and September 30, 2011, to confirm the trigger for the conversion rate adjustments.
- Review the Articles Supplementary dated April 9, 2007, and February 5, 2008, to understand the specific mechanics of the "reference dividend" and future adjustment thresholds.
- Confirm the current outstanding volume of Series C and Series D Preferred Stock to assess the potential dilution impact of the new conversion rates.
- Check subsequent filings for any further dividend declarations that may trigger additional conversion rate adjustments.