8-KMaterial AgreementsSecurities & ListingShareholder Matters+3

DIGITAL REALTY TRUST, INC. 8-K Report, Material Agreement (Oct 10, 2019)

Filed October 10, 2019For Securities:DLRDLR-PJDLR-PKDLR-PL

Summary

Digital Realty Trust, Inc. (DLR) has filed an 8-K detailing the completion of an underwritten public offering of 13,800,000 shares of its 5.200% Series L Cumulative Redeemable Preferred Stock. The offering, which included the full exercise of the underwriters' over-allotment option, generated net proceeds of approximately $334.6 million. These proceeds were contributed to the Digital Realty Trust, L.P. subsidiary in exchange for an equivalent number of Series L Preferred Units, which mirror the rights of the preferred stock. The Series L Preferred Stock ranks senior to common stock and on parity with existing preferred stock series. It carries a fixed annual dividend of 5.200% ($1.30 per share) payable quarterly, with dividends accruing from October 10, 2019. The stock has a liquidation preference of $25.00 per share plus accrued dividends. DLR may not redeem the Series L Preferred Stock until October 10, 2024, after which it can be redeemed at $25.00 per share. The preferred stock also includes conversion rights into common stock upon a Change of Control event, subject to certain conditions and limitations.

Key Highlights

  • 1Completion of a public offering of 13,800,000 shares of 5.200% Series L Cumulative Redeemable Preferred Stock.
  • 2Net proceeds from the offering were approximately $334.6 million.
  • 3Series L Preferred Stock has a fixed annual dividend rate of 5.200% ($1.30 per share), paid quarterly.
  • 4The preferred stock has a liquidation preference of $25.00 per share plus accrued dividends.
  • 5Redemption of Series L Preferred Stock is generally prohibited before October 10, 2024, with optional redemption thereafter.
  • 6Holders have a conversion right into common stock upon a Change of Control, subject to limitations.
  • 7The issuance of Series L Preferred Units by Digital Realty Trust, L.P. to Digital Realty Trust, Inc. in exchange for offering proceeds.

Frequently Asked Questions

This 8-K filing announces the completion of Digital Realty Trust's public offering of its Series L Cumulative Redeemable Preferred Stock and details the terms of this new preferred stock issuance, including its dividend rate, liquidation preference, redemption rights, and conversion features upon a Change of Control.

The Series L Preferred Stock carries a cumulative annual dividend rate of 5.200% per annum of its $25.00 liquidation preference, equivalent to $1.30 per share annually. These dividends are payable quarterly in arrears on the last day of March, June, September, and December, beginning December 31, 2019.

Digital Realty Trust, Inc. may not redeem the Series L Preferred Stock prior to October 10, 2024, except under limited circumstances to preserve its REIT status. On and after October 10, 2024, the company may redeem the shares at its option, in whole or in part, for $25.00 per share plus accrued and unpaid dividends.

Upon a Change of Control, holders of Series L Preferred Stock have the right to convert their shares into shares of Digital Realty's Common Stock. The conversion rate is calculated based on the liquidation preference and accrued dividends divided by the Common Stock Price, subject to a cap (Share Cap) and potential adjustments. However, this conversion right may be superseded if the company elects to redeem the preferred stock prior to the Change of Control.