8-KRegulation FDOther EventsExhibits & Filings

DIGITAL REALTY TRUST, INC. 8-K Report, Regulation FD Disclosure (Jan 11, 2019)

Filed January 11, 2019For Securities:DLRDLR-PJDLR-PKDLR-PL

Summary

Digital Realty Trust, Inc. (DLR) announced two significant financial activities on January 11, 2019. First, its operating partnership initiated a cash tender offer for all of its outstanding 5.875% Senior Notes due 2020. This move suggests a proactive approach to managing its debt obligations, potentially refinancing at more favorable terms or optimizing its capital structure. Investors should monitor the tender offer results to understand the extent of debt repayment and any associated costs. Second, DLR's wholly owned subsidiary, Digital Euro Finco, LLC, commenced an offering of Euro-denominated Guaranteed Notes. The proceeds from this offering are intended to finance or refinance eligible green projects, aligning with growing investor interest in Environmental, Social, and Governance (ESG) initiatives. The company also disclosed the closing of its $1.8 billion acquisition of Ascenty, a Brazilian data center provider, in late December 2018, which was financed through a combination of credit facilities, loans, and equity. This acquisition represents a significant expansion into the Latin American market.

Key Highlights

  • 1Digital Realty Trust's operating partnership launched a cash tender offer for all its 5.875% Senior Notes due 2020.
  • 2The company is offering Euro-denominated Guaranteed Notes through its subsidiary, Digital Euro Finco, LLC.
  • 3Proceeds from the Euro Notes offering are earmarked for financing or refinancing 'Eligible Green Projects'.
  • 4The Ascenty acquisition, valued at approximately $1.8 billion, was completed on December 20, 2018, expanding DLR's presence in Brazil.
  • 5Financing for the Ascenty acquisition involved borrowings under credit facilities, a short-term loan, a secured term loan, and the issuance of partnership units.
  • 6Brookfield Infrastructure Group has committed to acquiring approximately 49% of the equity interests in a joint venture expected to own Ascenty, with closing anticipated in Q1 2019.
  • 7The company is actively managing its debt by potentially using proceeds from the Euro Notes offering to repay outstanding debt, including the 2020 Notes.

Frequently Asked Questions

The primary purpose of the cash tender offer is for Digital Realty Trust's operating partnership to repurchase any and all of its outstanding 5.875% Senior Notes due 2020. This action indicates a strategic move to manage its debt, potentially refinancing it at lower interest rates or adjusting its capital structure.

'Eligible Green Projects' refer to initiatives related to green building, energy and resource efficiency, and renewable energy. Digital Realty is issuing Euro Notes to finance these projects, signaling a commitment to ESG principles and tapping into international capital markets for sustainable investments. The net proceeds are intended to fund or refinance these types of projects.

The $1.8 billion Ascenty acquisition was financed through a mix of debt and equity. This included borrowings from Digital Realty's global revolving credit facility, an unsecured short-term loan, a non-recourse secured term loan for the Brazilian subsidiary, and the issuance of Digital Realty's common units and joint venture units. The acquisition is significant as it substantially expands Digital Realty's footprint in the rapidly growing Brazilian data center market.

Brookfield Infrastructure Group has committed to acquiring approximately 49% of the total equity interests in one or more joint venture entities that will ultimately own Ascenty. This partnership, expected to close in the first quarter of 2019, will help finance the Ascenty operations and represents a strategic alliance for Digital Realty in the Latin American market.