8-KSecurities & ListingOther EventsExhibits & Filings

DIGITAL REALTY TRUST, INC. 8-K Report, Unregistered Securities Sale (Nov 16, 2010)

Filed November 16, 2010For Securities:DLRDLR-PJDLR-PKDLR-PL

Summary

Digital Realty Trust, Inc. (DLR) filed an 8-K on November 16, 2010, to report on an unregistered sale of equity securities and other related events. The company exchanged $2,300,000 in aggregate principal amount of its operating partnership's 4.125% Exchangeable Senior Debentures due 2026, held by Stifel, Nicolaus & Co., Inc. (Stifel), for 72,826 restricted shares of DLR's common stock, an incentive fee, and accrued interest. This transaction was conducted under Section 4(2) of the Securities Act and Rule 506 of Regulation D, indicating it was a private placement not involving public solicitation. In conjunction with this exchange, DLR also filed a prospectus supplement and related prospectus with the SEC to register the resale of these shares by Stifel, pursuant to an existing shelf registration statement. This ensures that Stifel can eventually resell the acquired shares in the public market. The filing also includes legal opinions concerning the validity of the issued shares.

Key Highlights

  • 1Digital Realty Trust, Inc. (DLR) completed an exchange of its operating partnership's debentures for restricted common stock on November 16, 2010.
  • 2The company issued 72,826 restricted shares of common stock to Stifel, Nicolaus & Co., Inc. in exchange for $2,300,000 in principal amount of 4.125% Exchangeable Senior Debentures.
  • 3The transaction was conducted as a private placement, exempt from registration under Section 4(2) of the Securities Act and Rule 506 of Regulation D.
  • 4DLR filed a prospectus supplement and related prospectus to register the resale of these 72,826 shares by Stifel.
  • 5The issuance of shares to Stifel was part of an exchange agreement that also involved an incentive fee and accrued interest payment.
  • 6Legal opinions from Venable LLP regarding the validity of the issued shares were filed as part of the report.

Frequently Asked Questions

The primary purpose was to disclose an unregistered sale of equity securities where Digital Realty Trust, Inc. exchanged its operating partnership's debentures for shares of its common stock with Stifel, Nicolaus & Co., Inc. It also served to report the subsequent filing of a prospectus to register the resale of those shares.

The shares were issued in a transaction exempt from registration under Section 4(2) of the Securities Act and Rule 506 of Regulation D. This means it was a private placement made to an accredited investor (Stifel) who was capable of evaluating the risks and had access to necessary information, without involving general solicitation or advertising.

No, Stifel received restricted shares. While they are a 'qualified institutional buyer' and DLR has agreed to register the resale of these shares, they will need to wait for the registration process to be completed and potentially adhere to other rules before they can be sold in the public market.

Filing a prospectus supplement signifies that DLR is facilitating the resale of the shares issued to Stifel into the public market. This allows Stifel to sell their position legally and provides transparency to potential buyers regarding the offering.