8-KMaterial AgreementsSecurities & ListingShareholder Matters+3

DIGITAL REALTY TRUST, INC. 8-K Report, Material Agreement (Mar 13, 2019)

Filed March 13, 2019For Securities:DLRDLR-PJDLR-PKDLR-PL

Summary

Digital Realty Trust, Inc. (DLR) filed an 8-K on March 13, 2019, detailing the completion of an underwritten public offering of 8,000,000 shares of its 5.850% Series K Cumulative Redeemable Preferred Stock. The offering raised approximately $192.7 million in net proceeds. This issuance was accompanied by amendments to the company's and its L.P.'s governing documents to authorize and designate the Series K Preferred Stock and corresponding Series K Preferred Units. The Series K Preferred Stock ranks senior to the common stock with respect to dividend rights and liquidation preferences, and on parity with other existing preferred stock series. It carries a fixed dividend of 5.850% per annum, payable quarterly, with the first dividend expected in June 2019. The stock is generally not redeemable before March 13, 2024, after which it can be redeemed at $25.00 per share, plus accrued dividends. A significant feature includes a conversion right into common stock upon a Change of Control event, subject to certain conditions and a cap.

Key Highlights

  • 1Completed a public offering of 8,000,000 shares of 5.850% Series K Cumulative Redeemable Preferred Stock.
  • 2Raised approximately $192.7 million in net proceeds from the offering.
  • 3Designated and authorized the issuance of Series K Preferred Stock and Series K Preferred Units.
  • 4Series K Preferred Stock has a fixed dividend rate of 5.850% per annum, payable quarterly.
  • 5Series K Preferred Stock ranks senior to common stock regarding dividends and liquidation, and on parity with other preferred stock series.
  • 6Redemption of Series K Preferred Stock is generally restricted until March 13, 2024, after which it can be redeemed at $25.00 per share.
  • 7Holders have a conversion right into common stock upon a Change of Control event, subject to specific terms and a share cap.

Frequently Asked Questions

The Series K Cumulative Redeemable Preferred Stock pays a fixed dividend at a rate of 5.850% per annum of its $25.00 liquidation preference per share. This is equivalent to $1.4625 per share annually. Dividends are cumulative and payable quarterly in arrears on the last day of March, June, September, and December, with the first payment expected on June 28, 2019.

Generally, Digital Realty cannot redeem the Series K Preferred Stock before March 13, 2024, except in limited circumstances to maintain REIT status. On or after March 13, 2024, the company may redeem the stock at its option for $25.00 per share plus accrued and unpaid dividends. Additionally, upon a Change of Control event, the company also has the option to redeem the preferred stock within 120 days.

Upon a Change of Control, holders of Series K Preferred Stock have the right to convert their shares into Digital Realty's Common Stock. The conversion ratio is based on the liquidation preference plus accrued dividends, divided by the Common Stock Price, subject to a cap of 0.43611 shares of common stock per preferred share. This conversion right may be forfeited if the company opts to redeem the preferred stock prior to the Change of Control conversion date.

The Series K Cumulative Redeemable Preferred Stock ranks senior to Digital Realty's common stock concerning dividend rights and rights upon liquidation, dissolution, or winding-up. It ranks on parity with other existing series of cumulative redeemable preferred stock, including Series C, G, H, I, and J.