8-KMaterial AgreementsSecurities & ListingShareholder Matters+2

DIGITAL REALTY TRUST, INC. 8-K Report, Material Agreement (Apr 9, 2014)

Filed April 9, 2014For Securities:DLRDLR-PJDLR-PKDLR-PL

Summary

Digital Realty Trust, Inc. (DLR) filed an 8-K on April 9, 2014, detailing amendments to its partnership agreement and charter related to its Series H Cumulative Redeemable Preferred Stock. This filing primarily concerns the administrative and legal steps taken to accommodate recent and planned issuances of Series H Preferred Stock and corresponding Series H Preferred Units in its operating partnership, Digital Realty Trust, L.P. Investors should note that this report is largely procedural, formalizing adjustments to authorized share counts and partnership units to support capital-raising activities. The key takeaway for investors is the company's ongoing capital markets activity, specifically its use of preferred stock offerings to fund its operations and growth. The amendments ensure that the operating partnership's structure can accommodate these preferred equity issuances, maintaining alignment between the corporate and partnership levels for these securities. The report also clarifies minor adjustments to the articles of incorporation concerning the "Exchange Cap" for the Series H Preferred Stock.

Key Highlights

  • 1Digital Realty Trust, Inc. executed a First Amendment to its operating partnership's agreement to authorize an additional 2,000,000 Series H Preferred Units.
  • 2These Additional Units mirror the rights, preferences, and privileges of the recently issued 2,000,000 shares of Series H Cumulative Redeemable Preferred Stock.
  • 3The operating partnership issued 2,600,000 Series H Preferred Units to the parent company in exchange for net proceeds from recent Series H Preferred Stock offerings and an underwriter's option exercise.
  • 4The issuance of these Series H Preferred Units to the parent company was conducted under Section 4(2) of the Securities Act of 1933, relying on exemptions for private placements.
  • 5DLR filed a Certificate of Correction for its charter's Articles Supplementary related to Series H Preferred Stock to allow for an increase in the "Exchange Cap" on a pro-rata basis for future issuances.
  • 6DLR also filed Additional Articles Supplementary to its charter, classifying and designating an additional 2,000,000 shares as Series H Preferred Stock.
  • 7The amendments ensure the alignment of rights between the Series H Preferred Stock at the corporate level and Series H Preferred Units at the operating partnership level.

Frequently Asked Questions

This 8-K filing primarily serves to document the legal and administrative steps taken by Digital Realty Trust, Inc. and its operating partnership to formally authorize and issue additional Series H Cumulative Redeemable Preferred Stock and corresponding Series H Preferred Units. It reflects adjustments to their respective governing documents to accommodate recent and planned capital-raising activities.

This amendment allows the operating partnership, Digital Realty Trust, L.P., to issue an additional 2,000,000 Series H Preferred Units. These units have terms substantially similar to the Series H Preferred Stock issued by the parent company, Digital Realty Trust, Inc., ensuring consistency in preferred equity structure.

The operating partnership issued Series H Preferred Units to Digital Realty Trust, Inc. (the general partner) in exchange for the net proceeds received from the parent company's public offerings of Series H Preferred Stock. This is a common structure for REITs, where the operating partnership receives capital raised at the corporate level and issues corresponding partnership units.

The "Exchange Cap" likely refers to a limit or condition related to the conversion or exchange of the Series H Preferred Stock into other securities, such as common stock. The Certificate of Correction was filed to ensure this cap could be adjusted proportionally with any future issuances of Series H Preferred Stock, providing flexibility for subsequent capital-raising efforts.