8-KSecurities & ListingOther EventsExhibits & Filings

DIGITAL REALTY TRUST, INC. 8-K Report, Unregistered Securities Sale (Sep 24, 2010)

Filed September 24, 2010For Securities:DLRDLR-PJDLR-PKDLR-PL

Summary

This 8-K filing from Digital Realty Trust, Inc. (DLR) reports on an unregistered sale of equity securities and related events on September 24, 2010. DLR exchanged $3,000,000 aggregate principal amount of its operating partnership's 4.125% Exchangeable Senior Debentures due 2026, held by AG Ofcon, Ltd., for 94,990 restricted shares of DLR common stock. This transaction was conducted under Section 4(2) of the Securities Act of 1933 and Rule 506 of Regulation D, indicating it was a private placement not involving public solicitation. In connection with this exchange, DLR also filed a prospectus supplement and related prospectus with the SEC to register the resale of these newly issued shares by AG Ofcon, Ltd. This move suggests DLR is facilitating the liquidity of these shares for the investor, while providing them with shares in exchange for debt. The filing also includes an opinion from Venable LLP regarding the validity of the shares.

Key Highlights

  • 1Digital Realty Trust (DLR) issued 94,990 restricted shares of common stock.
  • 2The shares were issued in exchange for $3,000,000 of the company's operating partnership's 4.125% Exchangeable Senior Debentures due 2026.
  • 3The debentures were held by AG Ofcon, Ltd., a Cayman Islands corporation.
  • 4The issuance of shares was conducted as a private placement exempt from registration under Section 4(2) of the Securities Act of 1933 and Rule 506 of Regulation D.
  • 5DLR has agreed to register the resale of these shares by AG Ofcon, Ltd.
  • 6A prospectus supplement and related prospectus were filed with the SEC to register the resale of the shares.
  • 7An opinion from Venable LLP concerning the validity of the shares was filed as an exhibit.

Frequently Asked Questions

The main purpose of this 8-K filing was to report an unregistered sale of Digital Realty Trust's (DLR) common stock. DLR issued shares to AG Ofcon, Ltd. in exchange for the retirement of $3,000,000 of its operating partnership's exchangeable senior debentures.

The shares were issued in a private placement exempt from registration under Section 4(2) of the Securities Act of 1933 and Rule 506 of Regulation D. This exemption is typically used for transactions that do not involve a public offering and are made to sophisticated investors who are capable of evaluating the risks involved, such as AG Ofcon, Ltd., which was identified as a 'qualified institutional buyer'.

This specific transaction does not represent new capital raising in the traditional sense. Instead, DLR is retiring existing debt (the exchangeable senior debentures) by issuing equity. This effectively reduces the company's debt obligations in exchange for increasing its outstanding share count.

Filing a prospectus supplement indicates that DLR has agreed to help AG Ofcon, Ltd. sell the newly acquired shares to the public in the future. This registration process allows AG Ofcon, Ltd. to sell the shares without violating securities laws, potentially providing liquidity for their investment.