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DIGITAL REALTY TRUST, INC. 8-K Report, Material Agreement (Apr 19, 2016)

Filed April 19, 2016For Securities:DLRDLR-PJDLR-PKDLR-PL

Summary

Digital Realty Trust, Inc. (DLR) announced the issuance of €600 million in aggregate principal amount of 2.625% Guaranteed Notes due 2024 by its wholly-owned indirect finance subsidiary, Digital Euro Finco, LLC. These senior unsecured notes are fully and unconditionally guaranteed by DLR and its operating partnership, Digital Realty Trust, L.P. The offering was conducted under Regulation S, outside the United States, and the net proceeds of approximately €594.0 million are intended to temporarily repay borrowings under the company's global revolving credit facility. This debt issuance provides Digital Realty with a significant tranche of long-term, fixed-rate financing at a relatively low interest rate, potentially improving its capital structure and providing flexibility. The funds are earmarked for debt reduction, which is a positive indicator for financial health and risk management. Investors should note the notes are senior unsecured obligations and the guarantee from the parent entities provides an additional layer of credit support.

Key Highlights

  • 1Digital Euro Finco, LLC issued €600 million in 2.625% Guaranteed Notes due 2024.
  • 2The Notes are senior unsecured obligations, fully guaranteed by Digital Realty Trust, Inc. and Digital Realty Trust, L.P.
  • 3Proceeds of approximately €594.0 million will be used to temporarily repay borrowings under the global revolving credit facility.
  • 4The offering was made under Regulation S, targeting international investors.
  • 5The Notes mature on April 15, 2024, with a fixed annual interest rate of 2.625%.
  • 6The indenture includes restrictive covenants regarding incurring additional indebtedness and maintaining unencumbered assets.
  • 7The company has the option to redeem the Notes under certain conditions, including a make-whole premium before maturity.

Frequently Asked Questions

The primary purpose of this debt issuance is to raise approximately €594.0 million in net proceeds, which will be used to temporarily repay borrowings under Digital Realty's global revolving credit facility. This helps manage short-term debt obligations and improve liquidity.

The Notes are issued by Digital Euro Finco, LLC, a finance subsidiary. However, they are fully and unconditionally guaranteed by the parent company, Digital Realty Trust, Inc., and its operating partnership, Digital Realty Trust, L.P. This guarantee provides significant credit support for the Notes.

No, the Notes were sold outside the United States in reliance on Regulation S and have not been registered under the Securities Act. They may not be offered or sold within the United States or to U.S. persons without registration or an applicable exemption.

The Notes have an aggregate principal amount of €600 million, a fixed interest rate of 2.625% per annum, and mature on April 15, 2024. They are senior unsecured obligations of the issuer, guaranteed by the parent companies, and contain restrictive covenants.