What is the primary purpose of this filing?

This filing announces Digital Realty Trust, Inc.'s (DLR) entry into a new "at-the-market" (ATM) equity offering program. The company can now sell up to $1.5 billion of its common stock through designated agents. The filing also details the termination of its previous ATM program and introduces the option of using forward sale agreements.

How will DLR use the proceeds from these potential stock sales?

The net proceeds from any sales of common stock are intended for general corporate purposes. This includes temporarily repaying borrowings under its operating partnership's credit facilities, acquiring additional properties or businesses, funding development opportunities, and providing for working capital. The proceeds could also be used for repaying other debt or repurchasing outstanding debt securities.

What are forward sale agreements and how do they impact DLR?

Forward sale agreements allow DLR to arrange for the future sale of its stock. A "Forward Purchaser" might borrow and sell shares to hedge its position. DLR expects to receive cash proceeds upon full physical settlement of these agreements, typically at maturity. However, if DLR opts for cash or net share settlement, the proceeds could be significantly lower, or DLR might owe cash or shares to the Forward Purchaser, introducing an element of financial complexity and potential future obligation.

What are the fees associated with this program?

DLR will pay commissions to the agents acting as sales agents, not to exceed 2.0% of the gross sales price of shares sold. For agents acting as forward sellers, compensation will be a mutually agreed commission, structured as a reduction to the initial forward price, also not exceeding 2.0% of the gross sales price of the borrowed shares sold.

DIGITAL REALTY TRUST, INC. 8-K SEC Disclosure

Summary

Digital Realty Trust, Inc. (DLR) has entered into a new "at-the-market" (ATM) equity offering program. This program allows the company to sell up to $1.5 billion of its common stock from time to time through a syndicate of agents. The company has terminated its previous ATM program, under which approximately $577.6 million of stock remained unsold. The new program includes the flexibility to sell shares directly through agents or to engage in forward sale agreements. In a forward sale, DLR may deliver shares to a forward purchaser at a future date, potentially receiving cash proceeds upfront or at settlement. This offers DLR strategic options for managing its capital needs and potentially accessing liquidity. The net proceeds from any stock sales are intended for general corporate purposes, including repaying debt, acquiring properties, funding development, or working capital. Investors should note that the use of forward sale agreements introduces complexities regarding the timing and amount of cash proceeds received. While full physical settlement is expected to result in cash proceeds, other settlement methods (cash or net share) could result in lower or no proceeds for DLR, and potentially an obligation to pay cash or deliver shares. The company has committed to paying commissions to the agents, not exceeding 2.0% of the gross sales price, and agents acting as forward sellers will receive a commission as a reduction to the forward price.

Key Highlights

1DLR has established a new "at-the-market" equity offering program to raise up to $1.5 billion in common stock.
2The company terminated its prior ATM program, under which approximately $577.6 million worth of shares remained unsold.
3The new program allows for sales directly through agents or via forward sale agreements with a group of financial institutions.
4Forward sale agreements introduce flexibility but also complexity regarding the timing and nature of cash proceeds received by DLR.
5Net proceeds are earmarked for general corporate purposes, including debt repayment, property acquisitions, and development funding.
6Commissions to sales agents will not exceed 2.0% of the gross sales price.
7The offering is made under an effective shelf registration statement filed in March 2020.

DIGITAL REALTY TRUST, INC. 8-K Report, Corporate Update (Apr 4, 2022)

Summary

Key Highlights

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