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: July 11, 2012
Event: Completion of the acquisition of the "Sentrum Portfolio," a three-property data center portfolio located in the United Kingdom.
Key Financial Metrics and Transaction Details
- Purchase Price: £715.9 million (approximately $1.1 billion based on the July 11, 2012 exchange rate of £1.00 to $1.55).
- Debt Repayment: Approximately £370 million (approximately $573.5 million) of indebtedness was repaid at closing.
- Funding Sources: Cash funded by net proceeds from the sale of 11,500,000 shares of common stock (closed July 2, 2012) and borrowings under the global revolving credit facility.
- Asset Size: Approximately 761,000 square feet across three data centers in Croydon, Woking, and Watford.
- Ownership Structure: Freehold interests in Woking and Croydon; 125-year leasehold interest in Watford (expiring 2108).
Material Changes and Unusual Items
The primary material change is the expansion of the company's international footprint through the acquisition of the Sentrum Portfolio. The transaction includes potential additional earn-out payments based on a multiple of the net operating income from the lease-up of currently vacant space over the next three years. The filing does not provide specific revenue, profit, or cash flow metrics for the company's ongoing operations, as this report focuses solely on the asset acquisition.
Guidance, Outlook, and Risks
- Financial Statements: Financial statements for the acquired Sentrum Portfolio and pro forma financial information are not included in this filing. They will be filed by amendment within 71 calendar days of the report date.
- Contingencies: The purchase price is subject to adjustment in limited circumstances and contingent earn-out payments tied to future lease-up performance.
- Risks: The summary of the purchase agreement is qualified by the full text of the agreement, which will be filed as an exhibit to the Form 10-Q for the quarter ended June 30, 2012.
Investor Verification Checklist
- Verify the final purchase price adjustments and any earn-out payments triggered by the lease-up of vacant space.
- Review the pro forma financial information to be filed within 71 days to assess the impact on leverage and liquidity.
- Confirm the specific terms of the indebtedness repaid at closing and the remaining balance on the global revolving credit facility.
- Examine the full Purchase Agreement filed as an exhibit to the Q2 2012 Form 10-Q for detailed covenants and conditions.