8-KMaterial AgreementsSecurities & ListingShareholder Matters+2

DIGITAL REALTY TRUST, INC. 8-K Report, Material Agreement (Apr 12, 2013)

Filed April 12, 2013For Securities:DLRDLR-PJDLR-PKDLR-PL

Summary

This Form 8-K filing by Digital Realty Trust, Inc. (DLR) details the finalization of their 5.875% Series G Cumulative Redeemable Preferred Stock offering and its corresponding units issued by the operating partnership. The company filed Articles Supplementary with Maryland to designate and authorize the issuance of up to 10,350,000 shares of Series G Preferred Stock, which ranks senior to common stock and on parity with existing preferred stock (Series E and F) in terms of dividend rights and liquidation preferences. The Series G Preferred Stock carries a liquidation preference of $25.00 per share and accrues cumulative dividends at an annual rate of 5.875%, payable quarterly. The filing also outlines specific redemption rights, including optional redemption after April 9, 2018, and special redemption upon a Change of Control. Importantly, holders of Series G Preferred Stock have a conversion right into Digital Realty's Common Stock upon a Change of Control, subject to certain conditions and a cap, which provides a potential equity upside in such events.

Key Highlights

  • 1Digital Realty Trust, Inc. completed its underwritten public offering of 10,000,000 shares of 5.875% Series G Cumulative Redeemable Preferred Stock.
  • 2The operating partnership issued 10,000,000 Series G Preferred Units to the company in exchange for the net proceeds from the stock offering.
  • 3The Series G Preferred Stock has a liquidation preference of $25.00 per share and an annual dividend rate of 5.875%, paid quarterly.
  • 4The Series G Preferred Stock ranks senior to common stock and on parity with Series E and F Preferred Stock regarding dividends and liquidation.
  • 5The company has optional redemption rights for the Series G Preferred Stock starting April 9, 2018, at $25.00 per share plus accrued dividends.
  • 6Holders of Series G Preferred Stock have a conversion right into common stock upon a Change of Control, subject to specific terms and a cap.
  • 7The issuance of Series G Preferred Units by the operating partnership was made in reliance on the exemption from registration under Section 4(2) of the Securities Act of 1933.

Frequently Asked Questions

The Series G Cumulative Redeemable Preferred Stock pays a cumulative cash dividend at an annual rate of 5.875% per annum of its $25.00 liquidation preference, which is equivalent to $1.46875 per share annually. These dividends are payable quarterly in arrears on the last day of March, June, September, and December, beginning on June 28, 2013.

Digital Realty Trust, Inc. may not generally redeem the Series G Preferred Stock before April 9, 2018, except in limited circumstances to maintain REIT status. After April 9, 2018, the company can redeem the stock, in whole or in part, at $25.00 per share plus accrued and unpaid dividends. Additionally, upon a Change of Control, the company has the option to redeem the stock within 120 days at $25.00 per share plus accrued dividends.

In the event of a Change of Control, holders of Series G Preferred Stock have the option to convert their shares into shares of Digital Realty's Common Stock. The number of shares received is determined by a formula based on the liquidation preference, accrued dividends, and the Common Stock Price, subject to a cap. This conversion right is forfeited if the company exercises its redemption option related to the Change of Control.

The Series G Preferred Stock ranks senior to Digital Realty's common stock with respect to dividend rights and rights upon liquidation, dissolution, or winding-up. It ranks on parity with the company's Series E and Series F Cumulative Redeemable Preferred Stocks and any future stock explicitly designated as ranking on parity.