What is the purpose of issuing these Euro Notes?

The primary purpose of issuing these Euro Notes is to provide Digital Realty Trust with capital for various corporate initiatives. This includes temporarily repaying borrowings under the company's global revolving credit facilities, acquiring additional properties or businesses, funding development projects, investing in interest-bearing accounts and short-term securities to maintain REIT qualification, and for general working capital and other corporate purposes, potentially including debt repayment or repurchase.

Are these notes available to U.S. investors?

These Euro Notes were sold outside the United States in reliance on Regulation S and have not been registered under the Securities Act of 1933. Therefore, they may not be offered or sold within the United States or to U.S. persons unless they are registered or an applicable exemption from registration requirements is available. This means direct purchase by most U.S. investors in this specific offering is unlikely.

What kind of restrictions are in place due to the Indenture?

The Indenture governing the Euro Notes contains restrictive covenants. These covenants include limitations on the company's ability to incur additional indebtedness and requirements to maintain a pool of unencumbered assets. These are standard provisions designed to protect the interests of noteholders by ensuring the issuer maintains a certain level of financial flexibility and asset backing.

DLR 8-K: Material Agreements & Financial Events

Q: What are the key terms of the Euro Notes?

The Euro Notes have an aggregate principal amount of €500.0 million, a coupon rate of 1.250% per annum, and mature on February 1, 2031. Interest is payable annually on February 1st. They are senior unsecured obligations of Digital Dutch Finco B.V., guaranteed by DLR and its operating partnership. The notes can be redeemed by the issuer under certain conditions, including a make-whole premium if redeemed more than 90 days before maturity, and also in cases where the issuer becomes obligated to pay additional amounts due to tax changes.

Summary

Digital Realty Trust, Inc. (DLR) announced on June 26, 2020, through its indirect wholly owned finance subsidiary, Digital Dutch Finco B.V., the issuance and sale of €500.0 million aggregate principal amount of 1.250% Guaranteed Notes due 2031. These notes are senior unsecured obligations of the subsidiary and are fully and unconditionally guaranteed by DLR and its operating partnership. The net proceeds, approximately €493.1 million after expenses, are intended for general corporate purposes, including repaying revolving credit facilities, acquiring properties, funding development, and investing in short-term securities consistent with REIT status. The offering was conducted outside the United States under Regulation S, meaning the notes are not registered under the Securities Act and cannot be offered or sold within the U.S. to U.S. persons without registration or an exemption. These Euro Notes mature on February 1, 2031, and bear a coupon of 1.250% payable annually. The Indenture governing the notes includes restrictive covenants limiting indebtedness and requiring the maintenance of unencumbered assets. The notes are redeemable at Digital Dutch Finco B.V.'s option, potentially with a make-whole premium if redeemed more than 90 days prior to maturity. The filing also details provisions for tax-related redemptions and outlines various events of default that could lead to accelerated maturity, including payment defaults and covenant breaches. This debt issuance provides DLR with flexibility for growth and operational needs, while investors should note the foreign domicile of the issuer and the terms of the guarantee.

Key Highlights

1Digital Realty Trust subsidiary issued €500 million of 1.250% Guaranteed Notes due 2031.
2The notes are guaranteed by Digital Realty Trust, Inc. and the operating partnership.
3Net proceeds of approximately €493.1 million are earmarked for various corporate uses including debt repayment, property acquisition, and development.
4The issuance was made outside the U.S. under Regulation S and is not registered with the SEC.
5The notes mature on February 1, 2031.
6The Indenture includes covenants limiting additional indebtedness and requiring unencumbered assets.
7The notes are redeemable at the issuer's option, with potential make-whole premiums and provisions for tax-related redemptions.

DIGITAL REALTY TRUST, INC. 8-K Report, Material Agreement (Jun 26, 2020)

Summary

Key Highlights

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