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]]

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

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FORM 10-Q

☒     Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

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For the quarterly period ended September 30, 2021

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☐     Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

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For the Transition Period From              to             .

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Commission file number 001-32336 (Digital Realty Trust, Inc.)

000-54023 (Digital Realty Trust, L.P.)

DIGITAL REALTY TRUST, INC.

DIGITAL REALTY TRUST, L.P.

(Exact name of registrant as specified in its charter)

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Maryland     (Digital Realty Trust, Inc.)

    

26-0081711

Maryland     (Digital Realty Trust, L.P.)

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20-2402955

(State or other jurisdiction of

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(IRS employer

incorporation or organization)

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identification number)

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5707 Southwest Parkway, Building 1, Suite 275

Austin, Texas       78735

(Address of principal executive offices)

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(737) 281-0101

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

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Title of each class

    

Trading symbol(s)

    

Name of each exchange on which registered

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Common Stock

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DLR

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New York Stock Exchange

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Series J Cumulative Redeemable Preferred Stock

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DLR Pr J

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New York Stock Exchange

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Series K Cumulative Redeemable Preferred Stock

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DLR Pr K

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New York Stock Exchange

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Series L Cumulative Redeemable Preferred Stock

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DLR Pr L

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New York Stock Exchange

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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

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Digital Realty Trust, Inc.

    

Yes    ⌧    No    ◻

Digital Realty Trust, L.P.

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Yes    ⌧    No    ◻

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Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

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Digital Realty Trust, Inc.

    

Yes    ⌧    No    ◻

Digital Realty Trust, L.P.

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Yes    ⌧    No    ◻

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Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

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Digital Realty Trust, Inc.:

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Large accelerated filer     ⌧

    

Accelerated filer                      ◻

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Non-accelerated filer       ◻

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Smaller reporting company     ☐

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Emerging growth company     ☐

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Digital Realty Trust, L.P.:

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Large accelerated filer     ◻

    

Accelerated filer                      ◻

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Non-accelerated filer       ⌧

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Smaller reporting company     ☐

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Emerging growth company     ☐

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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

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Digital Realty Trust, Inc.

    

◻

Digital Realty Trust, L.P.

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◻

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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

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Digital Realty Trust, Inc.

    

Yes    ☐    No    ⌧

Digital Realty Trust, L.P.

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Yes    ☐    No    ⌧

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Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

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Digital Realty Trust, Inc.:

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Class

    

Outstanding at November 3, 2021

Common Stock, $.01 par value per share

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283,787,456

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EXPLANATORY NOTE

This report combines the quarterly reports on Form 10-Q for the quarter ended September 30, 2021 of Digital Realty Trust, Inc., a Maryland corporation, and Digital Realty Trust, L.P., a Maryland limited partnership, of which Digital Realty Trust, Inc. is the sole general partner. Unless otherwise indicated or unless the context requires otherwise, all references in this report to “we,” “us,” “our,” “our Company”, or “the Company” refer to Digital Realty Trust, Inc. together with its consolidated subsidiaries, including Digital Realty Trust, L.P. Unless otherwise indicated or unless the context requires otherwise, all references to the “Parent” refer to Digital Realty Trust, Inc., and all references to “our Operating Partnership” or “the Operating Partnership” or “the OP” refer to Digital Realty Trust, L.P. together with its consolidated subsidiaries.

The Parent is a real estate investment trust, or REIT, and the sole general partner of the OP. As of September 30, 2021, the Parent owned an approximate 97.8% common general partnership interest in the OP. The remaining approximate 2.2% of the common limited partnership interests of the OP are owned by non-affiliated third parties and certain directors and officers of the Parent. As of September 30, 2021, the Parent owned all of the preferred limited partnership interests of the OP. As the sole general partner of the OP, the Parent has the full, exclusive and complete responsibility for the OP’s day-to-day management and control.

We believe combining the quarterly reports on Form 10-Q of the Parent and the OP into this single report results in the following benefits:

● enhancing investors’ understanding of the Parent and the OP by enabling investors to view the business as a whole in the same manner as management views and operates the business;
● eliminating duplicative disclosure and providing a more streamlined and readable presentation since a substantial portion of the disclosure applies to both the Parent and the OP; and
● creating time and cost efficiencies through the preparation of one combined report instead of two separate reports.

It is important to understand the few differences between the Parent and the OP in the context of how we operate the Company. The Parent does not conduct business itself, other than acting as the sole general partner of the OP and issuing public equity from time to time and guaranteeing certain unsecured debt of the OP and certain of its subsidiaries and affiliates. The OP holds substantially all the assets of the business, directly or indirectly. The OP conducts the operations of the business and is structured as a partnership with no publicly traded equity. Except for net proceeds from equity issuances by the Parent, which are generally contributed to the OP in exchange for partnership units, the OP generates capital required by the business through the OP’s operations, incurrence of indebtedness and issuance of partnership units to third parties.

The presentation of noncontrolling interests, stockholders’ equity and partners’ capital are the main areas of difference between the consolidated financial statements of the Parent and those of the OP. The differences in the presentations between stockholders’ equity and partners’ capital result from the differences in the equity and capital issuances in the Parent and in the OP.

The preferred stock, common stock, additional paid-in capital, accumulated other comprehensive income (loss) and distributions in excess of net earnings of the Parent are presented as stockholders’ equity in the Parent’s consolidated financial statements. These items represent the common and preferred general partnership interests held by the Parent in the OP and are presented as general partner’s capital within partners’ capital in the OP’s consolidated financial statements. The common limited partnership interests held by the limited partners in the OP are presented as noncontrolling interest within equity in the Parent’s consolidated financial statements and as limited partners’ capital within partners’ capital in the OP’s consolidated financial statements.

To highlight the differences between the Parent and the OP, separate sections in this report, as applicable, individually discuss the Parent and the OP, including separate financial statements and separate Exhibit 31 and 32

2

certifications. In the sections that combine disclosure of the Parent and the OP, this report refers to actions or holdings as being actions or holdings of the Company.

As general partner with control of the OP, the Parent consolidates the OP for financial reporting purposes, and it does not have significant assets other than its investment in the OP. Therefore, the assets and liabilities of the Parent and the OP are the same on their respective condensed consolidated financial statements. The separate discussions of the Parent and the OP in this report should be read in conjunction with each other to understand the results of the Company on a consolidated basis and how management operates the Company.

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In this report, “properties” and “buildings” refer to all or any of the buildings in our portfolio, including data centers and non-data centers, and “data centers” refers only to the properties or buildings in our portfolio that contain data center space. In this report, “global revolving credit facility” refers to our Operating Partnership’s $2.35 billion senior unsecured revolving credit facility and global senior credit agreement, as amended; “Yen revolving credit facility” refers to our Operating Partnership’s ¥33,285,000,000 (approximately $300 million based on exchange rates at September 30, 2021) senior unsecured revolving credit facility and Yen credit agreement, as amended; and “revolving credit facilities” or “global revolving credit facilities” refer to our global revolving credit facility and our Yen revolving credit facility, collectively.

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​

​

​

​

​

​

​

​

​

​

​

​

​

​

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3

DIGITAL REALTY TRUST, INC. AND DIGITAL REALTY TRUST, L.P.

FORM 10-Q

FOR THE QUARTER ENDED SEPTEMBER 30, 2021

TABLE OF CONTENTS

​

​

Page
Number

PART I.

FINANCIAL INFORMATION

​

​

​

​

ITEM 1.

Condensed Consolidated Financial Statements of Digital Realty Trust, Inc.:

​

​

​

​

​

Condensed Consolidated Balance Sheets as of September 30, 2021 (unaudited) and December 31, 2020 (unaudited)

5

​

​

​

​

Condensed Consolidated Income Statements for the three and nine months ended September 30, 2021 and 2020 (unaudited)

6

​

​

​

​

Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended September 30, 2021 and 2020 (unaudited)

7

​

​

​

​

Condensed Consolidated Statement of Equity for the three and nine months ended September 30, 2021 and 2020 (unaudited)

8

​

​

​

​

Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2021 and 2020 (unaudited)

12

​

​

​

​

Condensed Consolidated Financial Statements of Digital Realty Trust, L.P.:

​

​

​

​

​

Condensed Consolidated Balance Sheets as of September 30, 2021 (unaudited) and December 31, 2020 (unaudited)

13

​

​

​

​

Condensed Consolidated Income Statements for the three and nine months ended September 30, 2021 and 2020 (unaudited)

14

​

​

​

​

Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended September 30, 2021 and 2020 (unaudited)

15

​

​

​

​

Condensed Consolidated Statement of Capital for the three and nine months ended September 30, 2021 and 2020 (unaudited)

16

​

​

​

​

Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2021 and 2020 (unaudited)

20

​

​

​

​

Notes to Condensed Consolidated Financial Statements of Digital Realty Trust, Inc. and Digital Realty Trust, L.P. (unaudited)

21

​

​

​

ITEM 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

39

​

​

​

ITEM 3.

Quantitative and Qualitative Disclosures About Market Risk

57

​

​

​

ITEM 4.

Controls and Procedures (Digital Realty Trust, Inc.)

58

​

​

​

​

Controls and Procedures (Digital Realty Trust, L.P.)

58

​

​

​

PART II.

OTHER INFORMATION

60

​

​

​

ITEM 1.

Legal Proceedings

60

​

​

​

ITEM 1A.

Risk Factors

60

​

​

​

ITEM 2.

Unregistered Sales of Equity Securities and Use of Proceeds

60

​

​

​

ITEM 3.

Defaults Upon Senior Securities

60

​

​

​

ITEM 4.

Mine Safety Disclosures

60

​

​

​

ITEM 5.

Other Information

60

​

​

​

ITEM 6.

Exhibits

61

​

​

​

​

Signatures

62

​

​

4

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited, in thousands, except share and per share data)

​

​

​

​

​

​

​

​

​

    

September 30, 

    

December 31, 

​

​

2021

​

2020

ASSETS

​

​

​

​

​

​

Investments in real estate:

​

​

​

​

​

​

Investments in properties, net

​

$

20,581,993

​

$

20,582,954

Investments in unconsolidated entities

​

 

1,292,325

​

 

1,148,158

Net investments in real estate

​

 

21,874,318

​

 

21,731,112

Operating lease right-of-use assets, net

​

​

1,442,661

​

​

1,386,959

Cash and cash equivalents

​

 

116,002

​

 

108,501

Accounts and other receivables, net

​

 

610,416

​

 

603,111

Deferred rent

​

 

552,850

​

 

528,180

Goodwill

​

 

8,062,914

​

 

8,330,996

Customer relationship value, deferred leasing costs and intangibles, net

​

 

2,871,622

​

​

3,122,904

Other assets

​

 

316,863

​

 

264,528

Total assets

​

$

35,847,646

​

$

36,076,291

LIABILITIES AND EQUITY

​

​

​

​

​

​

Global revolving credit facilities, net

​

$

832,322

​

$

531,905

Unsecured term loans, net

​

 

—

​

 

536,580

Unsecured senior notes, net of discount

​

 

13,012,790

​

 

11,997,010

Secured and other debt, including premiums

​

 

242,427

​

 

239,222

Operating lease liabilities

​

​

1,543,231

​

​

1,468,712

Accounts payable and other accrued liabilities

​

 

1,341,864

​

 

1,420,162

Deferred tax liabilities, net

​

​

725,955

​

​

698,308

Accrued dividends and distributions

​

 

—

​

 

324,386

Security deposits and prepaid rents

​

 

341,778

​

 

371,659

Total liabilities

​

 

18,040,367

​

 

17,587,944

​

​

​

​

​

​

​

Redeemable noncontrolling interests

 

​

40,920

 

​

42,011

Commitments and contingencies

​

​

​

​

​

​

Equity:

​

​

​

​

​

​

Stockholders’ Equity:

​

​

​

​

​

​

Preferred Stock: $0.01 par value per share, 110,000,000 shares authorized; $755,000 and $956,250 liquidation preference ($25.00 per share), 30,200,000 and 38,250,000 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively

 

​

731,690

 

​

950,940

Common Stock: $0.01 par value per share, 392,000,000 shares authorized; 283,846,802 and 280,289,726 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively

 

​

2,818

 

​

2,788

Additional paid-in capital

 

​

21,010,202

 

​

20,626,897

Accumulated dividends in excess of earnings

 

​

(4,359,033)

 

​

(3,997,938)

Accumulated other comprehensive (loss) income, net

 

​

(111,560)

 

​

135,010

Total stockholders’ equity

 

​

17,274,117

 

​

17,717,697

Noncontrolling interests

 

​

492,242

 

​

728,639

Total equity

 

​

17,766,359

 

​

18,446,336

Total liabilities and equity

​

$

35,847,646

​

$

36,076,291

​

​

See accompanying notes to the condensed consolidated financial statements.

​

5

​

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED INCOME STATEMENTS

(unaudited, in thousands, except share and per share data)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Three Months Ended September 30, 

​

​

Nine Months Ended September 30, 

​

    

2021

    

2020

    

    

2021

    

2020

Operating Revenues:

​

​

​

​

​

​

​

​

​

​

​

​

​

Rental and other services

​

$

1,110,904

​

$

1,020,931

​

​

$

3,288,205

​

$

2,828,678

Fee income and other

​

 

22,232

​

 

3,737

​

 

 

28,510

​

 

12,322

Total operating revenues

​

 

1,133,136

​

 

1,024,668

​

​

 

3,316,715

​

 

2,841,000

Operating Expenses:

​

​

​

​

​

​

​

​

​

​

​

​

​

Rental property operating and maintenance

​

 

406,329

​

 

358,679

​

 

 

1,151,324

​

 

957,034

Property taxes and insurance

​

 

60,633

​

 

42,659

​

 

 

161,634

​

 

136,770

Depreciation and amortization

​

 

369,035

​

 

365,842

​

 

 

1,107,749

​

 

1,006,464

General and administrative

​

 

98,460

​

 

91,352

​

 

 

295,946

​

 

249,181

Transactions and integration

​

 

13,804

​

 

14,953

​

 

 

34,999

​

 

87,372

Impairment of investments in real estate

​

 

—

​

 

6,482

​

 

 

—

​

 

6,482

Other

​

 

510

​

 

298

​

 

 

2,551

​

 

434

Total operating expenses

​

 

948,771

​

 

880,265

​

 

 

2,754,203

​

 

2,443,737

Operating income

​

 

184,365

​

 

144,403

​

 

 

562,512

​

 

397,263

Other Income (Expenses):

​

​

​

​

​

​

​

​

​

​

​

​

​

Equity in earnings (loss) of unconsolidated entities

​

 

40,884

​

 

(2,056)

​

 

 

69,996

​

 

(88,684)

(Loss) gain on disposition of properties, net

​

​

(635)

​

​

10,410

​

​

​

333,785

​

​

315,211

Other income (expenses), net

​

 

(2,947)

​

 

4,348

​

 

 

(9)

​

 

22,969

Interest expense

​

 

(71,417)

​

 

(89,499)

​

 

 

(222,084)

​

 

(255,173)

Loss from early extinguishment of debt

​

 

—

​

 

(53,007)

​

 

 

(18,347)

​

 

(53,639)

Income tax expense

​

 

(13,709)

​

 

(16,053)

​

 

 

(68,838)

​

 

(34,725)

Net income (loss)

​

 

136,541

​

 

(1,454)

​

 

 

657,015

​

 

303,222

Net (income) loss attributable to noncontrolling interests

​

 

(2,266)

​

 

1,316

​

 

 

(15,566)

​

 

(4,515)

Net income (loss) attributable to Digital Realty Trust, Inc.

​

 

134,275

​

 

(138)

​

 

 

641,449

​

 

298,707

Preferred stock dividends, including undeclared dividends

​

 

(10,181)

​

 

(20,712)

​

 

 

(35,580)

​

 

(63,022)

Gain (loss) on redemption of preferred stock

​

 

—

​

 

(16,520)

​

 

 

18,000

​

 

(16,520)

Net income (loss) available to common stockholders

​

$

124,094

​

$

(37,370)

​

​

$

623,869

​

$

219,165

Net income (loss) per share available to common stockholders:

​

​

​

​

​

​

​

​

​

​

​

​

​

Basic

​

$

0.44

​

$

(0.14)

​

​

$

2.21

​

$

0.86

Diluted

​

$

0.44

​

$

(0.14)

​

​

$

2.21

​

$

0.85

Weighted average common shares outstanding:

​

​

​

​

​

​

​

​

​

​

​

​

​

Basic

​

 

283,105,966

​

 

270,214,413

​

 

 

282,004,907

​

 

253,377,527

Diluted

​

 

283,799,538

​

 

270,214,413

​

 

 

282,672,720

​

 

256,362,579

​

See accompanying notes to the condensed consolidated financial statements.

​

6

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(unaudited, in thousands)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Three Months Ended September 30, 

​

Nine Months Ended September 30, 

​

​

    

2021

    

2020

    

2021

    

2020

​

Net income (loss)

​

$

136,541

​

$

(1,454)

​

$

657,015

​

$

303,222

​

Other comprehensive income (loss):

​

​

​

​

​

​

​

​

​

​

​

​

​

Foreign currency translation adjustments

​

 

(147,120)

​

 

233,747

​

 

(254,444)

​

 

(34,796)

​

Increase (decrease) in fair value of interest rate swaps

​

 

209

​

 

137

​

 

772

​

 

(12,711)

​

Reclassification to interest expense from interest rate swaps

​

 

358

​

 

7,673

​

 

1,070

​

 

7,899

​

Other comprehensive income (loss)

​

​

(146,553)

​

​

241,557

​

​

(252,602)

​

​

(39,608)

​

Comprehensive income (loss)

​

 

(10,012)

​

 

240,103

​

 

404,413

​

 

263,614

​

Comprehensive (income) loss attributable to noncontrolling interests

​

 

995

​

 

(5,516)

​

 

(9,533)

​

 

(609)

​

Comprehensive income (loss) attributable to Digital Realty Trust, Inc.

​

$

(9,017)

​

$

234,587

​

$

394,880

​

$

263,005

​

​

See accompanying notes to the condensed consolidated financial statements.

​

​

7

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF EQUITY

(unaudited, in thousands, except share data)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Accumulated

​

Accumulated

​

​

​

​

​

​

​

​

Redeemable

​

​

​

​

Number of

​

​

​

​

Additional

​

Dividends in

​

Other

​

​

​

​

​

​

​

Noncontrolling

​

Preferred

​

Common

​

Common

​

Paid-in

​

Excess of

​

Comprehensive

​

Noncontrolling

​

​

​

Three Months Ended September 30, 2021

    

Interests

    

Stock

    

Shares

    

Stock

    

Capital

    

Earnings

    

Income (Loss), Net

    

Interests

    

Total Equity

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Balance as of June 30, 2021

 

$

41,490

​

$

731,690

​

282,603,152

​

$

2,806

​

$

20,844,834

​

$

(4,153,407)

​

$

31,733

​

$

706,591

​

$

18,164,247

Conversion of common units to common stock

​

 

—

​

 

—

​

562,151

​

 

6

​

 

46,509

​

 

—

​

 

—

​

 

(46,515)

​

 

—

Issuance of common stock, net of costs

​

 

—

​

 

—

​

583,181

​

 

6

​

 

92,865

​

 

—

​

 

—

​

 

—

​

 

92,871

Shares issued under employee stock purchase plan

​

 

—

​

 

—

​

52,654

​

 

—

​

 

6,468

​

 

—

​

 

—

​

 

—

​

 

6,468

Amortization of share-based compensation

​

 

—

​

 

—

​

—

​

 

—

​

 

19,427

​

 

—

​

 

—

​

 

—

​

 

19,427

Vesting of restricted stock, net

​

​

—

​

​

—

​

45,664

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

 

—

Shares repurchased and retired to satisfy tax withholding upon vesting

​

​

—

​

​

—

​

—

​

​

—

​

​

(701)

​

​

—

​

​

—

​

​

—

​

​

(701)

Reclassification of vested share-based awards

​

 

—

​

 

—

​

—

​

 

—

​

 

(138)

​

 

—

​

 

—

​

 

138

​

 

—

Adjustment to redeemable noncontrolling interests

​

 

(938)

​

 

—

​

—

​

 

—

​

 

938

​

 

—

​

 

—

​

 

—

​

 

938

Dividends declared on preferred stock

​

 

—

​

 

—

​

—

​

 

—

​

 

—

​

 

(10,181)

​

 

—

​

 

—

​

 

(10,181)

Dividends and distributions on common stock and common and incentive units

​

 

(181)

​

 

—

​

—

​

 

—

​

 

—

​

 

(329,720)

​

 

—

​

 

(7,277)

​

 

(336,997)

Contributions from noncontrolling interests in consolidated entities

​

 

484

​

 

—

​

—

​

 

—

​

 

—

​

 

—

​

 

—

​

 

37,380

​

 

37,380

Deconsolidation of consolidated entities

​

​

—

​

​

—

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

(197,016)

​

​

(197,016)

Net income

​

 

65

​

 

—

​

—

​

 

—

​

 

—

​

 

134,275

​

 

—

​

 

2,201

​

 

136,476

Other comprehensive loss—foreign currency translation adjustments

​

 

—

​

 

—

​

—

​

 

—

​

 

—

​

 

—

​

 

(143,847)

​

 

(3,273)

​

 

(147,120)

Other comprehensive income—fair value of interest rate swaps

​

 

—

​

 

—

​

—

​

 

—

​

 

—

​

 

—

​

 

204

​

 

5

​

 

209

Other comprehensive income— reclassification of accumulated other comprehensive loss to interest expense

​

 

—

​

 

—

​

—

​

 

—

​

 

—

​

 

—

​

 

350

​

 

8

​

 

358

Balance as of September 30, 2021

 

$

40,920

​

$

731,690

​

283,846,802

​

$

2,818

​

$

21,010,202

​

$

(4,359,033)

​

$

(111,560)

​

$

492,242

​

$

17,766,359

​

See accompanying notes to the condensed consolidated financial statements.

​

8

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF EQUITY

(unaudited, in thousands, except share data)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Accumulated

​

Accumulated

​

​

​

​

​

​

​

​

​

​

​

​

​

Number of

​

​

​

​

Additional

​

Dividends in

​

Other

​

Total

​

​

​

​

​

Redeemable

​

Preferred

​

Common

​

Common

​

Paid-in

​

Excess of

​

Comprehensive

​

Noncontrolling

​

​

​

Nine Months Ended September 30, 2021

    

Noncontrolling Interests

    

Stock

    

Shares

    

Stock

    

Capital

    

Earnings

    

Income (Loss), Net

    

Interests

    

Total Equity

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Balance as of December 31, 2020

 

$

42,011

​

$

950,940

 

280,289,726

​

$

2,788

​

$

20,626,897

​

$

(3,997,938)

​

$

135,010

​

$

728,639

​

$

18,446,336

Conversion of common units to common stock

​

 

—

​

 

—

 

1,902,826

​

 

19

​

 

157,893

​

 

—

​

 

—

​

 

(157,912)

​

 

—

Common stock issued in connection with acquisition

​

 

—

​

 

—

 

125,395

​

 

1

​

 

18,269

​

 

—

​

 

—

​

 

—

​

 

18,270

Issuance of common stock, net of costs

​

 

—

​

 

—

 

1,060,943

​

 

11

​

 

168,298

​

 

—

​

 

—

​

 

—

​

 

168,309

Shares issued under employee stock purchase plan

​

 

—

​

 

—

 

82,129

​

 

—

​

 

9,895

​

 

—

​

 

—

​

 

—

​

 

9,895

Amortization of share-based compensation

​

 

—

​

 

—

 

—

​

 

—

​

 

69,278

​

 

—

​

 

—

​

 

—

​

 

69,278

Vesting of restricted stock, net

​

 

—

​

 

—

 

385,783

​

 

—

​

 

—

​

 

—

​

 

—

​

 

—

​

 

—

Shares repurchased and retired to satisfy tax withholding upon vesting

​

 

—

​

 

—

 

—

​

 

(1)

​

 

(16,549)

​

 

—

​

 

—

​

 

—

​

 

(16,550)

Reclassification of vested share-based awards

​

 

—

​

 

—

 

—

​

 

—

​

 

(23,008)

​

 

​

​

 

—

​

 

23,008

​

 

—

Redemption of series C preferred stock

​

​

—

​

​

(219,250)

​

—

​

​

—

​

​

​

​

​

18,000

​

​

​

​

​

—

​

​

(201,250)

Adjustment to redeemable noncontrolling interests

​

 

771

​

 

—

 

—

​

 

—

​

 

(771)

​

 

—

​

 

—

​

 

—

​

 

(771)

Dividends declared on preferred stock

​

 

—

​

 

—

 

—

​

 

—

​

 

—

​

 

(35,580)

​

 

—

​

 

—

​

 

(35,580)

Dividends and distributions on common stock and common and incentive units

​

 

(543)

​

 

—

 

—

​

 

—

​

 

—

​

 

(984,964)

​

 

—

​

 

(23,779)

​

 

(1,008,743)

Contributions from (distributions to) noncontrolling interests in consolidated entities

​

 

(1,666)

​

 

—

 

—

​

 

—

​

 

—

​

 

—

​

 

—

​

 

110,115

​

 

110,115

Deconsolidation of consolidated joint venture

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

(197,016)

​

​

(197,016)

Net income

​

 

347

​

 

—

 

—

​

 

—

​

 

—

​

 

641,449

​

 

—

​

 

15,219

​

 

656,668

Other comprehensive loss—foreign currency translation adjustments

​

 

—

​

 

—

 

—

​

 

—

​

 

—

​

 

—

​

 

(248,367)

​

 

(6,077)

​

 

(254,444)

Other comprehensive income—fair value of interest rate swaps

​

 

—

​

 

—

 

—

​

 

—

​

 

—

​

 

—

​

 

753

​

 

19

​

 

772

Other comprehensive income— reclassification of accumulated other comprehensive income to interest expense

​

 

—

​

 

—

 

—

​

 

—

​

 

—

​

 

—

​

 

1,044

​

 

26

​

 

1,070

Balance as of September 30, 2021

 

$

40,920

​

$

731,690

 

283,846,802

​

$

2,818

​

$

21,010,202

​

$

(4,359,033)

​

$

(111,560)

​

$

492,242

​

$

17,766,359

​

See accompanying notes to the condensed consolidated financial statements.

​

​

​

​

9

​

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF EQUITY

(unaudited, in thousands, except share data)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Accumulated

​

Accumulated

​

​

​

​

​

​

​

​

Redeemable

​

​

​

​

Number of

​

​

​

​

Additional

​

Dividends in

​

Other

​

​

​

​

​

​

​

Noncontrolling

​

Preferred

​

Common

​

Common

​

Paid-in

​

Excess of

​

Comprehensive

​

Noncontrolling

​

​

​

Three Months Ended September 30, 2020

    

Interests

    

Stock

    

Shares

    

Stock

    

Capital

    

Earnings

    

Loss, Net

    

Interests

    

Total Equity

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Balance as of June 30, 2020

 

$

40,584

​

$

1,434,420

​

268,399,073

​

$

2,670

​

$

19,292,311

​

$

(3,386,525)

​

$

(358,349)

​

$

698,122

​

$

17,682,649

Conversion of common units to common stock

​

 

—

​

 

—

​

121,967

​

 

1

​

 

10,303

​

 

—

​

 

—

​

​

(10,304)

​

 

—

Issuance of common stock, net of costs

​

 

—

​

 

—

​

11,329,722

​

 

113

​

 

1,244,990

​

 

—

​

 

—

​

 

—

​

 

1,245,103

Shares issued under employee stock purchase plan

​

 

—

​

 

—

​

32,902

​

 

—

​

 

3,865

​

 

—

​

 

—

​

 

—

​

 

3,865

Shares repurchased and retired to satisfy tax withholding upon vesting

​

 

—

​

​

—

​

—

​

​

—

​

​

(3,820)

​

​

—

​

​

—

​

 

—

​

 

(3,820)

Amortization of share-based compensation

​

​

—

​

 

—

​

—

​

 

—

​

 

20,334

​

 

—

​

 

—

​

​

—

​

 

20,334

Vesting of restricted stock, net

​

​

—

​

​

—

​

36,957

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Reclassification of vested share-based awards

​

 

—

​

 

—

​

—

​

 

—

​

 

(612)

​

 

—

​

 

—

​

 

612

​

 

—

Reclassification of series G preferred stock to accounts payable and other accrued liabilities

​

​

—

​

​

(241,468)

​

—

​

​

—

​

​

—

​

​

(8,532)

​

​

—

​

​

—

​

​

(250,000)

Redemption of series I preferred stock

​

​

—

​

​

(242,012)

​

—

​

​

—

​

​

—

​

​

(7,988)

​

​

—

​

​

—

​

​

(250,000)

Adjustment to redeemable noncontrolling interests

​

 

726

​

 

—

​

—

​

 

—

​

 

(726)

​

 

—

​

 

—

​

 

—

​

 

(726)

Dividends declared on preferred stock

​

 

—

​

 

—

​

—

​

 

—

​

 

—

​

 

(20,712)

​

 

—

​

 

—

​

 

(20,712)

Dividends and distributions on common stock and common and incentive units

​

 

(175)

​

 

—

​

—

​

 

—

​

 

—

​

 

(303,006)

​

 

—

​

 

(9,314)

​

 

(312,320)

Contributions from noncontrolling interests in consolidated entities

​

 

522

​

 

—

​

—

​

 

—

​

 

—

​

 

—

​

 

—

​

 

43,663

​

 

43,663

Net (loss)

​

​

(347)

​

 

—

​

—

​

 

—

​

 

—

​

 

(138)

​

 

—

​

​

(969)

​

​

(1,107)

Other comprehensive income—foreign currency translation adjustments

​

 

(45)

​

 

—

​

—

​

 

—

​

 

—

​

 

—

​

 

227,136

​

 

6,611

​

 

233,747

Other comprehensive income—fair value of interest rate swaps

​

 

—

​

 

—

​

—

​

 

—

​

 

—

​

 

—

​

 

134

​

 

4

​

 

138

Other comprehensive income— reclassification of accumulated other comprehensive income to interest expense

​

 

—

​

 

—

​

—

​

 

—

​

 

—

​

 

—

​

 

7,456

​

 

217

​

 

7,673

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Balance as of September 30, 2020

 

$

41,265

​

$

950,940

​

279,920,621

​

$

2,784

​

$

20,566,645

​

$

(3,726,901)

​

$

(123,623)

​

$

728,642

​

$

18,398,487

​

​

See accompanying notes to the condensed consolidated financial statements.

​

10

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF EQUITY

(unaudited, in thousands, except share data)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Accumulated

​

Accumulated

​

​

​

​

​

​

​

​

​

​

​

​

​

Number of

​

​

​

​

Additional

​

Dividends in

​

Other

​

Total

​

​

​

​

​

Redeemable

​

Preferred

​

Common

​

Common

​

Paid-in

​

Excess of

​

Comprehensive

​

Noncontrolling

​

​

​

Nine Months Ended September 30, 2020

    

Noncontrolling Interests

    

Stock

    

Shares

    

Stock

    

Capital

    

Earnings

    

Loss, Net

    

Interests

    

Total Equity

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Balance as of December 31, 2019

 

$

41,465

​

$

1,434,420

 

208,900,758

​

$

2,073

​

$

11,577,320

​

$

(3,046,579)

​

$

(87,922)

​

$

728,788

​

$

10,608,100

Conversion of common units to common stock

​

 

—

​

 

—

 

927,779

​

 

9

​

 

80,577

​

 

—

​

 

—

​

 

(80,586)

​

 

—

Common stock and share-based awards issued in connection with Interxion combination

​

 

—

​

 

—

 

54,298,595

​

 

543

​

 

6,984,509

​

 

—

​

 

—

​

 

—

​

 

6,985,052

Issuance of common stock, net of costs

​

 

—

​

 

—

 

15,915,673

​

 

159

​

 

1,889,575

​

 

—

​

 

—

​

 

—

​

 

1,889,734

Shares issued under employee stock purchase plan

​

 

—

​

 

—

 

58,136

​

 

—

​

 

6,503

​

 

—

​

 

—

​

 

—

​

 

6,503

Shares repurchased and retired to satisfy tax withholding upon vesting

​

 

—

​

 

—

 

—

​

 

—

​

 

(8,570)

​

 

—

​

 

—

​

 

—

​

 

(8,570)

Amortization of share-based compensation

​

​

—

​

 

—

 

—

​

 

—

​

 

58,064

​

 

—

​

 

—

​

 

—

​

 

58,064

Vesting of restricted stock, net

​

​

—

​

 

—

 

(180,320)

​

 

—

​

 

—

​

 

—

​

 

—

​

 

—

​

 

—

Reclassification of vested share-based awards

​

 

—

​

 

—

 

—

​

 

—

​

 

(17,116)

​

 

—

​

 

—

​

 

17,116

​

 

—

Reclassification of series G preferred stock to accounts payable and other accrued liabilities

​

​

—

​

​

(241,468)

​

—

​

​

—

​

​

—

​

​

(8,532)

​

​

—

​

​

—

​

​

(250,000)

Redemption of series I preferred stock

​

​

—

​

​

(242,012)

​

—

​

​

—

​

​

—

​

​

(7,988)

​

​

—

​

​

—

​

​

(250,000)

Adjustment to redeemable noncontrolling interests

​

 

4,217

​

 

—

 

—

​

 

—

​

 

(4,217)

​

 

—

​

 

—

​

 

—

​

 

(4,217)

Dividends declared on preferred stock

​

 

—

​

 

—

 

—

​

 

—

​

 

—

​

 

(63,022)

​

 

—

​

 

—

​

 

(63,022)

Dividends and distributions on common stock and common and incentive units

​

 

(525)

​

 

—

 

—

​

 

—

​

 

—

​

 

(899,487)

​

 

—

​

 

(28,464)

​

 

(927,951)

Contributions from noncontrolling interests in consolidated entities

​

 

2,089

​

 

—

 

—

​

 

—

​

 

—

​

 

—

​

 

—

​

 

87,645

​

 

87,645

Net income (loss)

​

 

(3,535)

​

 

—

 

—

​

 

—

​

 

—

​

 

298,707

​

 

—

​

 

8,050

​

 

306,757

Other comprehensive loss—foreign currency translation adjustments

​

 

(2,446)

​

 

—

 

—

​

 

—

​

 

—

​

 

—

​

 

(31,121)

​

 

(3,675)

​

 

(34,796)

Other comprehensive loss—fair value of interest rate swaps

​

 

—

​

 

—

 

—

​

 

—

​

 

—

​

 

—

​

 

(12,259)

​

 

(452)

​

 

(12,711)

Other comprehensive income—reclassification of accumulated other comprehensive income to interest expense

​

 

—

​

 

—

 

—

​

 

—

​

 

—

​

 

—

​

 

7,679

​

 

220

​

 

7,899

Balance as of September 30, 2020

 

$

41,265

​

$

950,940

 

279,920,621

​

$

2,784

​

$

20,566,645

​

$

(3,726,901)

​

$

(123,623)

​

$

728,642

​

$

18,398,487

​

See accompanying notes to the condensed consolidated financial statements.

​

​

​

11

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in thousands)

​

​

​

​

​

​

​

​

​

​

Nine Months Ended September 30, 

​

    

2021

    

2020

Cash flows from operating activities:

​

​

  

 

​

  

Net income

​

$

657,015

​

$

303,222

Adjustments to reconcile net income to net cash provided by operating activities:

​

​

​

​

​

​

Gain on disposition of properties, net

​

 

(333,785)

​

 

(315,211)

Equity in (earnings) loss of unconsolidated entities

​

 

(69,996)

​

 

88,684

Distributions from unconsolidated entities

​

 

62,649

​

 

18,939

Depreciation and amortization

​

​

1,107,749

​

​

1,006,464

Amortization of share-based compensation

​

 

66,036

​

 

54,938

Loss from early extinguishment of debt

​

 

18,347

​

 

53,639

Amortization of acquired above-market leases and acquired below-market leases, net

​

 

5,322

​

 

9,447

Amortization of deferred financing costs and debt discount / premium

​

​

14,319

​

​

14,463

Other items, net

​

​

4,191

​

​

(7,802)

Changes in assets and liabilities:

​

​

​

​

​

​

Increase in accounts receivable and other assets

​

​

(241,104)

​

​

(103,083)

(Decrease) increase in accounts payable and other liabilities

​

​

(40,454)

​

​

57,039

Net cash provided by operating activities

​

 

1,250,290

​

 

1,180,739

Cash flows from investing activities:

​

​

​

​

​

​

Improvements to investments in real estate

​

 

(1,748,075)

​

 

(1,376,795)

Cash paid for business combinations and assets acquisition, net of cash and restricted cash acquired

​

​

(168,439)

​

​

(496,646)

Proceeds from (investment in) unconsolidated entities, net

​

​

9,306

​

​

(128,898)

Proceeds from sale of real estate

​

​

719,764

​

​

547,913

Other investing activities, net

​

​

7,627

​

​

(65,093)

Net cash used in investing activities

​

 

(1,179,817)

​

 

(1,519,519)

Cash flows from financing activities:

​

​

​

​

​

​

Net proceeds from (payments on) credit facilities

​

$

323,441

​

$

(228,867)

Borrowings on secured / unsecured debt

​

​

1,816,178

​

​

3,573,121

Repayments on secured / unsecured debt

​

​

(886,968)

​

​

(2,536,362)

Premium paid for early extinguishment of debt

​

​

(16,482)

​

​

(48,191)

Capital contributions from noncontrolling interests

​

 

108,448

​

 

81,061

Proceeds from issuance of common stock, net

​

​

168,309

​

​

1,881,164

Redemption of preferred stock

​

 

(201,250)

​

 

(250,000)

Payments of dividends and distributions

​

​

(1,369,251)

​

​

(1,225,547)

Other financing activities, net

​

​

(19,595)

​

​

(15,229)

Net cash (used in) provided by financing activities

​

 

(77,170)

​

 

1,231,150

Net (decrease) increase in cash, cash equivalents and restricted cash

​

 

(6,698)

​

 

892,370

Effect of exchange rate changes on cash, cash equivalents and restricted cash

​

 

10,138

​

 

(3,034)

Cash, cash equivalents and restricted cash at beginning of period

​

 

123,652

​

 

97,253

Cash, cash equivalents and restricted cash at end of period

​

$

127,092

​

$

986,589

​

​

​

​

​

​

​

​

See accompanying notes to the condensed consolidated financial statements.

​

12

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited, in thousands, except unit and per unit data)

​

​

​

​

​

​

​

​

​

    

September 30, 

    

December 31, 

​

​

2021

​

2020

ASSETS

​

  

​

​

  

​

Investments in real estate:

 

​

  

 

​

  

Investments in properties, net

​

$

20,581,993

​

$

20,582,954

Investments in unconsolidated entities

​

 

1,292,325

​

 

1,148,158

Net investments in real estate

​

 

21,874,318

​

 

21,731,112

Operating lease right-of-use assets, net

​

​

1,442,661

​

​

1,386,959

Cash and cash equivalents

​

 

116,002

​

 

108,501

Accounts and other receivables, net

​

 

610,416

​

 

603,111

Deferred rent

​

 

552,850

​

 

528,180

Goodwill

​

 

8,062,914

​

 

8,330,996

Customer relationship value, deferred leasing costs and intangibles, net

​

 

2,871,622

​

 

3,122,904

Other assets

​

 

316,863

​

 

264,528

Total assets

​

$

35,847,646

​

$

36,076,291

LIABILITIES AND CAPITAL

​

 

  

​

 

  

Global revolving credit facilities, net

​

$

832,322

​

$

531,905

Unsecured term loans, net

​

 

—

​

 

536,580

Unsecured senior notes, net

​

 

13,012,790

​

 

11,997,010

Secured and other debt, including premiums

​

​

242,427

​

​

239,222

Operating lease liabilities

​

​

1,543,231

​

​

1,468,712

Accounts payable and other accrued liabilities

​

 

1,341,864

​

 

1,420,162

Deferred tax liabilities, net

​

​

725,955

​

​

698,308

Accrued dividends and distributions

​

 

—

​

 

324,386

Security deposits and prepaid rents

​

 

341,778

​

 

371,659

Total liabilities

​

 

18,040,367

​

 

17,587,944

​

​

​

​

​

​

​

Redeemable noncontrolling interests

​

​

40,920

​

​

42,011

Commitments and contingencies

 

​

​

 

​

​

Capital:

 

​

  

 

​

  

Partners’ capital:

 

​

  

 

​

  

General Partner:

 

​

  

 

​

  

Preferred units, $755,000 and $956,250 liquidation preference ($25.00 per unit), 30,200,000 and 38,250,000 units issued and outstanding as of September 30, 2021 and December 31, 2020, respectively

 

​

731,690

 

​

950,940

Common units, 283,846,802 and 280,289,726 units issued and outstanding as of September 30, 2021 and December 31, 2020, respectively

 

​

16,653,987

 

​

16,631,747

Limited Partners, 6,494,065 and 8,046,267 units issued and outstanding as of September 30, 2021 and December 31, 2020, respectively

 

​

466,160

 

​

609,190

Accumulated other comprehensive (loss) income

 

​

(117,802)

 

​

134,800

Total partners’ capital

 

​

17,734,035

 

​

18,326,677

Noncontrolling interests in consolidated entities

 

​

32,324

 

​

119,659

Total capital

 

​

17,766,359

 

​

18,446,336

Total liabilities and capital

​

$

35,847,646

​

$

36,076,291

​

See accompanying notes to the condensed consolidated financial statements.

​

13

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED INCOME STATEMENTS

(unaudited, in thousands, except unit and per unit data)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Three Months Ended September 30, 

​

Nine Months Ended September 30, 

​

​

    

2021

    

2020

    

2021

    

2020

​

Operating Revenues:

 

​

  

 

​

  

​

​

  

 

​

  

​

Rental and other services

​

$

1,110,904

​

$

1,020,931

​

$

3,288,205

​

$

2,828,678

​

Fee income and other

​

 

22,232

​

 

3,737

​

 

28,510

​

 

12,322

​

Total operating revenues

​

 

1,133,136

​

 

1,024,668

​

 

3,316,715

​

 

2,841,000

​

Operating Expenses:

​

 

  

​

 

  

​

 

  

​

 

  

​

Rental property operating and maintenance

​

 

406,329

​

 

358,679

​

 

1,151,324

​

 

957,034

​

Property taxes and insurance

​

 

60,633

​

 

42,659

​

 

161,634

​

 

136,770

​

Depreciation and amortization

​

 

369,035

​

 

365,842

​

 

1,107,749

​

 

1,006,464

​

General and administrative

​

 

98,460

​

 

91,352

​

 

295,946

​

 

249,181

​

Transactions and integration

​

 

13,804

​

 

14,953

​

 

34,999

​

 

87,372

​

Other

​

 

510

​

 

298

​

 

2,551

​

 

434

​

Total operating expenses

​

 

948,771

​

 

880,265

​

 

2,754,203

​

 

2,443,737

​

Operating income

​

 

184,365

​

 

144,403

​

​

562,512

​

​

397,263

​

Other Income (Expenses):

​

 

​

​

​

​

​

​

​

​

​

​

​

Equity in earnings (loss) of unconsolidated entities

​

 

40,884

​

 

(2,056)

​

 

69,996

​

 

(88,684)

​

(Loss) gain on disposition of properties, net

​

​

(635)

​

​

10,410

​

​

333,785

​

​

315,211

​

Other (expense) income, net

​

 

(2,947)

​

 

4,348

​

 

(9)

​

 

22,969

​

Interest expense

​

 

(71,417)

​

 

(89,499)

​

 

(222,084)

​

 

(255,173)

​

Loss from early extinguishment of debt

​

​

—

​

​

(53,007)

​

​

(18,347)

​

​

(53,639)

​

Income tax expense

​

 

(13,709)

​

 

(16,053)

​

 

(68,838)

​

 

(34,725)

​

Net income (loss)

​

 

136,541

​

 

(1,454)

​

​

657,015

​

​

303,222

​

Net loss attributable to noncontrolling interests

​

 

734

​

 

316

​

 

434

​

 

3,685

​

Net income (loss) attributable to Digital Realty Trust, L.P.

​

 

137,275

​

 

(1,138)

​

​

657,449

​

​

306,907

​

Preferred units distributions, including undeclared distributions

​

 

(10,181)

​

 

(20,712)

​

 

(35,580)

​

 

(63,022)

​

Gain (loss) on redemption of preferred units

​

 

—

​

 

(16,520)

​

 

18,000

​

 

(16,520)

​

Net income (loss) available to common unitholders

​

$

127,094

​

$

(38,370)

​

$

639,869

​

$

227,365

​

Net income (loss) per unit available to common unitholders:

​

 

  

​

 

  

​

 

  

​

 

  

​

Basic

​

$

0.44

​

$

(0.14)

​

$

2.21

​

$

0.87

​

Diluted

​

$

0.44

​

$

(0.14)

​

$

2.21

​

$

0.86

​

Weighted average common units outstanding:

​

 

  

​

 

  

​

 

  

​

 

  

​

Basic

​

 

289,535,213

​

 

278,079,187

​

 

288,897,093

​

 

261,416,412

​

Diluted

​

 

290,228,785

​

 

278,079,187

​

 

289,564,906

​

 

264,401,464

​

​

See accompanying notes to the condensed consolidated financial statements.

​

14

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(unaudited, in thousands)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Three Months Ended September 30, 

​

Nine Months Ended September 30, 

​

​

    

2021

    

2020

    

2021

    

2020

​

Net income (loss)

​

$

136,541

​

$

(1,454)

​

$

657,015

​

$

303,222

​

Other comprehensive income (loss):

​

 

  

​

 

  

​

 

  

​

 

  

​

Foreign currency translation adjustments

​

 

(147,120)

​

 

233,747

​

 

(254,444)

​

 

(34,796)

​

Increase (decrease) in fair value of interest rate swaps

​

 

209

​

 

137

​

 

772

​

 

(12,711)

​

Reclassification to interest expense from interest rate swaps

​

 

358

​

 

7,673

​

 

1,070

​

 

7,899

​

Other comprehensive income (loss)

​

​

(146,553)

​

​

241,557

​

​

(252,602)

​

​

(39,608)

​

Comprehensive income (loss) attributable to Digital Realty Trust, L.P.

​

$

(10,012)

​

$

240,103

​

$

404,413

​

$

263,614

​

Comprehensive loss attributable to noncontrolling interests

​

 

734

​

 

316

​

 

434

​

 

3,685

​

Comprehensive income (loss) attributable to Digital Realty Trust, L.P.

​

$

(9,278)

​

$

240,419

​

$

404,847

​

$

267,299

​

​

See accompanying notes to the condensed consolidated financial statements.

​

15

​

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CAPITAL

(unaudited, in thousands, except unit data)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Accumulated

​

​

​

​

​

​

​

Redeemable

​

General Partner

​

Limited Partners

​

Other

​

​

​

​

​

​

​

Limited Partner

​

Preferred Units

​

Common Units

​

Common Units

​

Comprehensive

​

Noncontrolling

​

​

​

Three Months Ended September 30, 2021

    

Common Units

    

Units

    

Amount

    

Units

    

Amount

    

Units

    

Amount

    

Income (Loss), Net

    

Interests

    

Total Capital

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Balance as of June 30, 2021

 

$

41,490

​

30,200,000

​

$

731,690

​

282,603,152

​

$

16,694,233

​

7,055,409

​

$

516,879

​

$

28,751

​

$

192,694

​

$

18,164,247

Conversion of limited partner common units to general partner common units

​

 

—

​

—

​

 

—

​

562,151

​

 

46,515

​

(562,151)

​

 

(46,515)

​

 

—

​

 

—

​

 

—

Issuance of common units, net of offering costs

​

 

—

​

—

​

 

—

​

583,181

​

 

92,871

​

—

​

 

—

​

 

—

​

 

—

​

 

92,871

Issuance of common units, net of forfeitures

​

 

—

​

—

​

 

—

​

—

​

 

—

​

807

​

 

—

​

 

—

​

 

—

​

 

—

Units issued in connection with employee stock purchase plan

​

 

—

​

—

​

 

—

​

52,654

​

 

6,468

​

—

​

 

—

​

 

—

​

 

—

​

 

6,468

Amortization of share-based compensation

​

 

—

​

—

​

 

—

​

—

​

 

19,427

​

—

​

 

—

​

 

—

​

 

—

​

 

19,427

Vesting of restricted common units, net

​

​

—

​

—

​

 

—

​

45,664

​

 

—

​

—

​

 

—

​

 

—

​

 

—

​

 

—

Reclassification of vested share-based awards

​

 

—

​

—

​

 

—

​

—

​

 

(138)

​

—

​

 

138

​

 

—

​

 

—

​

 

—

Units repurchased and retired to satisfy tax withholding upon vesting

​

​

—

​

—

​

​

—

​

—

​

​

(701)

​

—

​

​

—

​

​

—

​

​

—

​

​

(701)

Adjustment to redeemable partnership units

​

 

(938)

​

—

​

 

—

​

—

​

 

938

​

—

​

 

—

​

 

—

​

 

—

​

 

938

Distributions

​

 

(181)

​

​

​

 

(10,181)

​

—

​

 

(329,720)

​

—

​

 

(7,277)

​

 

—

​

 

—

​

 

(347,178)

Contributions from noncontrolling interests in consolidated entities

​

 

484

​

—

​

 

—

​

—

​

 

—

​

—

​

 

—

​

 

—

​

 

37,380

​

 

37,380

Deconsolidation of consolidated entities

​

​

—

​

—

​

​

—

​

—

​

​

—

​

—

​

​

—

​

​

—

​

​

(197,016)

​

​

(197,016)

Net income (loss)

​

 

65

​

—

​

 

10,181

​

—

​

 

124,094

​

—

​

 

2,935

​

 

—

​

 

(734)

​

 

136,476

Other comprehensive loss—foreign currency translation adjustments

​

 

—

​

—

​

 

—

​

—

​

 

—

​

—

​

 

—

​

 

(147,120)

​

 

—

​

 

(147,120)

Other comprehensive income—fair value of interest rate swaps

​

 

—

​

—

​

 

—

​

—

​

 

—

​

—

​

 

—

​

 

209

​

 

—

​

 

209

Other comprehensive income—reclassification of accumulated other comprehensive income to interest expense

​

 

—

​

—

​

 

—

​

—

​

 

—

​

—

​

 

—

​

 

358

​

 

—

​

 

358

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Balance as of September 30, 2021

 

$

40,920

​

30,200,000

​

$

731,690

​

283,846,802

​

$

16,653,987

​

6,494,065

​

$

466,160

​

$

(117,802)

​

$

32,324

​

$

17,766,359

​

See accompanying notes to the condensed consolidated financial statements.

​

16

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CAPITAL

(unaudited, in thousands, except unit data)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Accumulated

​

​

​

​

​

​

​

Redeemable

​

General Partner

​

Limited Partners

​

Other

​

​

​

​

​

​

​

Limited Partner

​

Preferred Units

​

Common Units

​

Common Units

​

Comprehensive

​

Noncontrolling

​

​

​

Nine Months Ended September 30, 2021

    

Common Units

    

Units

    

Amount

    

Units

    

Amount

    

Units

    

Amount

    

Income (Loss), Net

    

Interests

    

Total Capital

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Balance as of December 31, 2020

 

$

42,011

​

38,250,000

​

$

950,940

​

280,289,726

​

$

16,631,747

 

8,046,267

​

$

609,190

​

$

134,800

​

$

119,659

​

$

18,446,336

Conversion of limited partner common units to general partner common units

​

 

—

​

—

​

 

—

​

1,902,826

​

 

157,912

 

(1,902,826)

​

 

(157,912)

​

 

—

​

 

—

​

 

—

Common units issued in connection with acquisition

​

 

—

​

—

​

 

—

​

125,395

​

 

18,270

 

—

​

 

—

​

 

—

​

 

—

​

 

18,270

Issuance of common units, net of offering costs

​

 

—

​

—

​

 

—

​

1,060,943

​

 

168,309

 

—

​

 

—

​

 

—

​

 

—

​

 

168,309

Issuance of common units, net of forfeitures

​

 

—

​

—

​

 

—

​

—

​

 

—

 

350,624

​

 

—

​

 

—

​

 

—

​

 

—

Units issued in connection with employee stock purchase plan

​

 

—

​

—

​

 

—

​

82,129

​

 

9,895

 

—

​

 

—

​

 

—

​

 

—

​

 

9,895

Units repurchased and retired to satisfy tax withholding upon vesting

​

 

—

​

—

​

 

—

​

—

​

 

(16,550)

 

—

​

 

—

​

 

—

​

 

—

​

 

(16,550)

Amortization of share-based compensation

​

 

—

​

—

​

 

—

​

—

​

 

69,278

 

—

​

 

—

​

 

—

​

 

—

​

 

69,278

Vesting of restricted common units, net

​

 

—

​

—

​

 

—

​

385,783

​

 

—

 

—

​

 

—

​

 

—

​

 

—

​

 

—

Reclassification of vested share-based awards

​

 

—

​

—

​

 

—

​

—

​

 

(23,008)

 

—

​

 

23,008

​

 

—

​

 

—

​

 

—

Redemption of series C preferred units

​

​

—

​

(8,050,000)

​

​

(219,250)

​

—

​

​

18,000

​

—

​

​

—

​

​

—

​

​

—

​

​

(201,250)

Adjustment to redeemable partnership units

​

 

771

​

—

​

 

—

​

—

​

 

(771)

 

—

​

 

—

​

 

—

​

 

—

​

 

(771)

Distributions

​

 

(543)

​

—

​

 

(35,580)

​

—

​

 

(984,964)

 

—

​

 

(23,779)

​

 

—

​

 

—

​

 

(1,044,323)

Distributions to noncontrolling interests in
    consolidated entities, net of contributions

​

 

(1,666)

​

—

​

 

—

​

—

​

 

—

 

—

​

 

—

​

 

—

​

 

110,115

​

 

110,115

Deconsolidation of consolidated entities

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

(197,016)

​

​

(197,016)

Net income (loss)

​

 

347

​

—

​

 

35,580

​

—

​

 

605,869

 

—

​

 

15,653

​

 

​

​

 

(434)

​

 

656,668

Other comprehensive loss—foreign currency translation adjustments

​

 

—

​

—

​

 

—

​

—

​

 

—

 

—

​

 

—

​

 

(254,444)

​

 

—

​

 

(254,444)

Other comprehensive income—fair value of interest rate swaps

​

 

—

​

—

​

 

—

​

—

​

 

—

 

—

​

 

—

​

 

772

​

 

—

​

 

772

Other comprehensive income—reclassification of accumulated other comprehensive income to interest expense

​

 

—

​

—

​

 

—

​

—

​

 

—

 

—

​

 

—

​

 

1,070

​

 

—

​

 

1,070

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Balance as of September 30, 2021

 

$

40,920

​

30,200,000

​

$

731,690

​

283,846,802

​

$

16,653,987

 

6,494,065

​

$

466,160

​

$

(117,802)

​

$

32,324

​

$

17,766,359

​

See accompanying notes to the condensed consolidated financial statements.

​

​

​

​

​

17

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CAPITAL

(unaudited, in thousands, except unit data)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Accumulated

​

​

​

​

​

​

​

Redeemable

​

General Partner

​

Limited Partners

​

Other

​

​

​

​

​

​

​

Limited Partner

​

Preferred Units

​

Common Units

​

Common Units

​

Comprehensive

​

Noncontrolling

​

​

​

Three Months Ended September 30, 2020

    

Common Units

    

Units

    

Amount

    

Units

    

Amount

    

Units

    

Amount

    

Loss, Net

    

Interests

    

Total Capital

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Balance as of June 30, 2020

 

$

40,584

​

58,250,000

​

$

1,434,420

​

268,399,073

​

$

15,908,456

 

8,287,819

​

$

648,057

​

$

(372,575)

​

$

64,291

​

$

17,682,649

Conversion of limited partner common units to general partner common units

​

 

—

​

—

​

 

—

​

121,967

​

 

10,304

​

(121,967)

​

 

(10,304)

​

 

—

​

 

—

​

 

—

Issuance of common units, net of offering costs

​

 

—

​

—

​

 

—

​

11,329,722

​

 

1,245,103

​

—

​

 

—

​

 

—

​

 

—

​

 

1,245,103

Issuance of common units, net of forfeitures

​

 

—

​

—

​

 

—

​

—

​

 

—

​

809

​

 

—

​

 

—

​

 

—

​

 

—

Units issued in connection with employee stock purchase plan

​

 

—

​

—

​

 

—

​

32,902

​

 

3,865

​

—

​

 

—

​

 

—

​

 

—

​

 

3,865

Units repurchased and retired to satisfy tax withholding upon vesting

​

​

—

​

—

​

​

—

​

—

​

​

(3,820)

​

—

​

​

—

​

​

—

​

 

—

​

 

(3,820)

Amortization of share-based compensation

​

 

—

​

—

​

 

—

​

—

​

 

20,334

​

—

​

 

—

​

 

—

​

 

—

​

 

20,334

Vesting of restricted common units, net

​

​

—

​

—

​

 

—

​

36,957

​

 

—

​

—

​

 

—

​

 

—

​

 

—

​

 

—

Reclassification of vested share-based awards

​

 

—

​

—

​

 

—

​

—

​

 

(612)

​

—

​

 

612

​

 

—

​

 

—

​

 

—

Reclassification of series G preferred units to accounts payable and other accrued liabilities

​

​

—

​

(10,000,000)

​

​

(241,468)

​

—

​

​

(8,532)

​

—

​

​

—

​

​

—

​

​

—

​

​

(250,000)

Redemption of series I preferred units

​

​

—

​

(10,000,000)

​

​

(242,012)

​

—

​

​

(7,988)

​

—

​

​

—

​

​

—

​

​

—

​

​

(250,000)

Adjustment to redeemable partnership units

​

 

726

​

—

​

 

—

​

—

​

 

(726)

​

—

​

 

—

​

 

—

​

 

—

​

 

(726)

Distributions

​

 

(175)

​

—

​

 

(20,712)

​

—

​

 

(303,006)

​

—

​

 

(9,314)

​

 

—

​

 

—

​

 

(333,032)

Contributions from noncontrolling interests in consolidated joint ventures

​

 

522

​

—

​

 

—

​

—

​

 

—

​

—

​

 

—

​

 

—

​

 

43,663

​

 

43,663

Net income (loss)

​

 

(347)

​

—

​

 

20,712

​

—

​

 

(20,850)

​

—

​

 

(981)

​

 

—

​

​

12

​

​

(1,107)

Other comprehensive income (loss)—foreign currency translation adjustments

​

 

(45)

​

—

​

 

—

​

—

​

 

—

​

—

​

 

—

​

 

233,747

​

 

—

​

 

233,747

Other comprehensive income—fair value of interest rate swaps

​

 

—

​

—

​

 

—

​

—

​

 

—

​

—

​

 

—

​

 

138

​

 

—

​

 

138

Other comprehensive income—reclassification of accumulated other comprehensive income to interest expense

​

 

—

​

—

​

 

—

​

—

​

 

—

​

—

​

 

—

​

 

7,673

​

 

—

​

 

7,673

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Balance as of September 30, 2020

 

$

41,265

​

38,250,000

​

$

950,940

​

279,920,621

​

$

16,842,528

 

8,166,661

​

$

628,070

​

$

(131,017)

​

$

107,966

​

$

18,398,487

​

See accompanying notes to the condensed consolidated financial statements.

​

​

​

​

18

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CAPITAL

(unaudited, in thousands, except unit data)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Accumulated

​

​

​

​

​

​

​

Redeemable

​

General Partner

​

Limited Partners

​

Other

​

​

​

​

​

​

​

Limited Partner

​

Preferred Units

​

Common Units

​

Common Units

​

Comprehensive

​

Noncontrolling

​

​

​

Nine Months Ended September 30, 2020

    

Common Units

    

Units

    

Amount

    

Units

    

Amount

    

Units

    

Amount

    

Loss, Net

    

Interests

    

Total Capital

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Balance as of December 31, 2019

 

$

41,465

​

58,250,000

​

$

1,434,420

​

208,900,758

​

$

8,532,814

​

8,843,155

​

$

711,650

​

$

(91,409)

​

$

20,625

​

$

10,608,100

Conversion of limited partner common units to general partner common units

​

 

—

​

—

​

 

—

​

927,779

​

 

80,586

 

(927,779)

​

 

(80,586)

​

 

—

​

 

—

​

 

—

Common units and share-based awards issued in connection with Interxion combination

​

 

—

​

—

​

 

—

​

54,298,595

​

 

6,985,052

 

—

​

 

—

​

 

—

​

 

—

​

 

6,985,052

Issuance of common units, net of offering costs

​

 

—

​

—

​

 

—

​

15,915,673

​

 

1,889,734

 

—

​

 

—

​

 

—

​

 

—

​

 

1,889,734

Issuance of common units, net of forfeitures

​

 

—

​

—

​

 

—

​

—

​

 

—

 

251,285

​

 

—

​

 

—

​

 

—

​

 

—

Units issued in connection with employee stock purchase plan

​

 

—

​

—

​

 

—

​

58,136

​

 

6,503

 

—

​

 

—

​

 

—

​

 

—

​

 

6,503

Units repurchased and retired to satisfy tax withholding upon vesting

​

 

—

​

—

​

 

—

​

—

​

 

(7,320)

 

—

​

 

—

​

 

—

​

​

—

​

​

(7,320)

Amortization of share-based compensation

​

 

—

​

—

​

 

—

​

—

​

 

56,814

 

—

​

 

—

​

 

—

​

​

—

​

​

56,814

Vesting of restricted common units, net

​

 

—

​

—

​

 

—

​

(180,320)

​

 

—

 

—

​

 

—

​

 

—

​

 

—

​

 

—

Reclassification of vested share-based awards

​

 

—

​

—

​

 

—

​

—

​

 

(17,116)

 

—

​

 

17,116

​

 

—

​

 

—

​

 

—

Reclassification of series G preferred units to accounts payable and other accrued liabilities

​

​

—

​

(10,000,000)

​

​

(241,468)

​

—

​

​

(8,532)

​

—

​

​

—

​

​

—

​

​

—

​

​

(250,000)

Redemption of series I preferred units

​

​

—

​

(10,000,000)

​

​

(242,012)

​

—

​

​

(7,988)

​

—

​

​

—

​

​

—

​

​

—

​

​

(250,000)

Adjustment to redeemable partnership units

​

 

4,217

​

—

​

 

—

​

—

​

 

(4,217)

 

—

​

 

—

​

 

—

​

 

—

​

 

(4,217)

Distributions

​

 

(525)

​

—

​

 

(63,022)

​

—

​

 

(899,487)

 

—

​

 

(28,464)

​

 

—

​

 

—

​

 

(990,973)

Contributions from noncontrolling interests in consolidated joint ventures

​

 

2,089

​

—

​

 

—

​

—

​

 

—

 

—

​

 

—

​

 

—

​

 

87,645

​

 

87,645

Net income (loss)

​

 

(3,535)

​

—

​

 

63,022

​

—

​

 

235,685

 

—

​

 

8,354

​

 

—

​

 

(304)

​

 

306,757

Other comprehensive loss—foreign currency translation adjustments

​

 

(2,446)

​

—

​

 

—

​

—

​

 

—

 

—

​

 

—

​

 

(34,796)

​

​

—

​

​

(34,796)

Other comprehensive loss—fair value of interest rate swaps

​

 

—

​

—

​

 

—

​

—

​

 

—

 

—

​

 

—

​

 

(12,711)

​

 

—

​

 

(12,711)

Other comprehensive income—reclassification of accumulated other comprehensive income to interest expense

​

 

—

​

—

​

 

—

​

—

​

 

—

 

—

​

 

—

​

 

7,899

​

 

—

​

 

7,899

Balance as of September 30, 2020

 

$

41,265

​

38,250,000

​

$

950,940

​

279,920,621

​

$

16,842,528

​

8,166,661

​

$

628,070

​

$

(131,017)

​

$

107,966

​

$

18,398,487

​

See accompanying notes to the condensed consolidated financial statements.

​

​

​

​

19

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in thousands)

​

​

​

​

​

​

​

​

​

​

Nine Months Ended September 30, 

​

​

2021

    

2020

Cash flows from operating activities:

​

​

  

 

​

  

Net income

​

$

657,015

​

$

303,222

Adjustments to reconcile net income to net cash provided by operating activities:

​

​

​

​

​

​

Gain on disposition of properties, net

​

 

(333,785)

​

 

(315,211)

Equity in (earnings) loss of unconsolidated entities

​

 

(69,996)

​

 

88,684

Distributions from unconsolidated entities

​

 

62,649

​

 

18,939

Depreciation and amortization

​

​

1,107,749

​

​

1,006,464

Amortization of share-based compensation

​

 

66,036

​

 

54,938

Loss from early extinguishment of debt

​

 

18,347

​

 

53,639

Amortization of acquired above-market leases and acquired below-market leases, net

​

 

5,322

​

 

9,447

Amortization of deferred financing costs and debt discount / premium

​

​

14,319

​

​

14,463

Other items

​

​

4,191

​

​

(7,802)

Changes in assets and liabilities:

​

​

​

​

​

​

Increase in accounts receivable and other assets

​

​

(241,104)

​

​

(103,083)

(Decrease) increase in accounts payable and other liabilities

​

​

(40,454)

​

​

57,039

Net cash provided by operating activities

​

 

1,250,290

​

 

1,180,739

Cash flows from investing activities:

​

​

​

​

​

​

Improvements to investments in real estate

​

 

(1,748,075)

​

 

(1,376,795)

Cash paid for business combinations and assets acquisition, net of cash and restricted cash acquired

​

​

(168,439)

​

​

(496,646)

Proceeds from (investment in) unconsolidated entities, net

​

​

9,306

​

​

(128,898)

Proceeds from sale of real estate

​

​

719,764

​

​

547,913

Other investing activities, net

​

​

7,627

​

​

(65,093)

Net cash used in investing activities

​

 

(1,179,817)

​

 

(1,519,519)

Cash flows from financing activities:

​

​

​

​

​

​

Net proceeds from (payments on) credit facilities

​

$

323,441

​

$

(228,867)

Borrowings on secured / unsecured debt

​

​

1,816,178

​

​

3,573,121

Repayments on secured / unsecured debt

​

​

(886,968)

​

​

(2,536,362)

Premium paid for early extinguishment of debt

​

​

(16,482)

​

​

(48,191)

Capital contributions from noncontrolling interests

​

 

108,448

​

 

81,061

General partner contributions

​

​

168,309

​

​

1,881,164

General partner distributions

​

 

(201,250)

​

​

(250,000)

Payments of dividends and distributions

​

​

(1,369,251)

​

​

(1,225,547)

Other financing activities, net

​

​

(19,595)

​

​

(15,229)

Net cash (used in) provided by financing activities

​

 

(77,170)

​

 

1,231,150

Net (decrease) increase in cash, cash equivalents and restricted cash

​

 

(6,698)

​

 

892,370

Effect of exchange rate changes on cash, cash equivalents and restricted cash

​

 

10,138

​

 

(3,034)

Cash, cash equivalents and restricted cash at beginning of period

​

 

123,652

​

 

97,253

Cash, cash equivalents and restricted cash at end of period

​

$

127,092

​

$

986,589

​

See accompanying notes to the condensed consolidated financial statements.

​

​

20

Table of Contents

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. General

Business

​

Digital Realty Trust, Inc. (the Parent), through its controlling interest in Digital Realty Trust, L.P. (the Operating Partnership or the OP) and the subsidiaries of the OP (collectively, we, our, us or the Company), is a leading global provider of data center (including colocation and interconnection) solutions for customers across a variety of industry verticals ranging from cloud and information technology services, social networking and communications to financial services, manufacturing, energy, healthcare, and consumer products. The OP, a Maryland limited partnership, is the entity through which the Parent, a Maryland corporation, conducts its business of owning, acquiring, developing and operating data centers. The Parent operates as a REIT for federal income tax purposes.

​

Accounting Principles

​

Our unaudited interim condensed consolidated financial statements and accompanying notes are prepared in accordance with United States (“U.S.”) generally accepted accounting principles (“GAAP”). All material intercompany transactions with consolidated entities have been eliminated. In the opinion of management, the unaudited interim consolidated financial statements reflect all adjustments of a normal recurring nature that are necessary for a fair statement of the results for the interim periods presented. Interim results are not always indicative of results for a full year. The information included in this Form 10-Q should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2020 (“2020 Form 10-K”), as filed with the U.S. Securities and Exchange Commission (“SEC”), our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2021 and June 30, 2021, as filed with the SEC, and other filings with the SEC.

Basis of Presentation

The accompanying interim condensed consolidated financial statements include all accounts of the Parent, the OP and the subsidiaries of the OP. The notes to the condensed consolidated financial statements have been combined.

​

The Parent’s only material asset is its ownership of partnership interests of the OP. As a result, the Parent generally does not conduct business itself, other than acting as the sole general partner of the OP, issuing public securities from time to time and guaranteeing certain unsecured debt of the OP and certain of its subsidiaries and affiliates. The Parent has not issued any debt but guarantees the unsecured debt of the OP and certain of its subsidiaries and affiliates.

​

The OP holds substantially all the assets of the Company. The OP conducts the operations of the business and has no publicly traded equity. Except for net proceeds from public equity issuances by the Parent, which are generally contributed to the OP in exchange for partnership units, the OP generally generates the capital required by the Company’s business primarily through the OP’s operations, by the OP’s or its affiliates’ direct or indirect incurrence of indebtedness or through the issuance of partnership units.

​

Management Estimates and Assumptions

​

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. We evaluate our estimates on an ongoing basis. We base our estimates on historical experience, current market conditions, and various other assumptions that we believe to be reasonable under the circumstances. Examples of estimates and assumptions include: the probability of collection of lease payments from customers, the recoverability of the carrying values of investments in real estate, the fair value of share-based compensation awards, loss contingencies, the fair value of and/or potential impairment of goodwill and intangible assets, useful lives of tangible and intangible assets, and the fair value of customer relationships, buildings & improvements, and other tangible and intangible assets acquired in business

21

Table of Contents

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

combinations and asset acquisitions. Actual results and outcomes may differ from management’s estimates and assumptions due to risks and uncertainties.

​

The Company is closely monitoring the impact of the COVID-19 pandemic on all aspects of its business and geographies, including how the pandemic is impacting the Company’s customers and business partners. While the Company has not incurred significant disruptions during the nine months ended September 30, 2021 from the COVID-19 pandemic, we are unable to predict the impact the COVID-19 pandemic will have on the Company’s financial condition, results of operations and cash flows due to numerous uncertainties.

​

New Accounting Pronouncements

​

In December 2019, the Financial Accounting Standards Board (FASB) issued updated guidance for the accounting for income taxes. The updated guidance is intended to simplify the accounting for income taxes by removing several exceptions contained in existing guidance and amending other existing guidance to simplify several other income tax accounting matters. The Company adopted the updated guidance for the quarter ended March 31, 2021. The adoption of this guidance did not have a material effect on the Company’s results of operations, financial position or liquidity.

​

We determined that all other recently issued accounting pronouncements that have yet to be adopted by the Company will not have a material impact on our consolidated financial statements or do not apply to our operations.

​

​

​

​

​

​

22

Table of Contents

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

2. Business Combinations

We obtained control of InterXion Holding N.V. (“Interxion”) on March 9, 2020 and completed the Company’s combination with Interxion (“Interxion Combination”) on March 12, 2020 for total equity consideration of approximately $7.0 billion, including approximately $108.5 million of assumed cash and cash equivalents. Revenues attributable to Interxion amounted to $254.5 million and $216.5 million for the three months ended September 30, 2021 and 2020, respectively, and $735.2 million and $458.4 million for the nine months ended September 30, 2021 and 2020, respectively. Net income attributable to Interxion amounted to $25.6 million and $15.4 million for the three months ended September 30, 2021 and 2020, respectively, and $67.8 million and $27.6 million for nine months ended September 30, 2021 and 2020, respectively.

​

3. Investments in Properties

A summary of our investments in properties as of September 30, 2021 and December 31, 2020 is below (in thousands):

​

​

​

​

​

​

​

​

​

Property Type

​

As of September 30, 2021

​

​

As of December 31, 2020

Land

​

$

1,094,838

​

​

$

1,106,392

Acquired ground lease

​

​

6,695

​

​

​

10,308

Buildings and improvements

​

​

21,588,688

​

​

​

21,335,396

Tenant improvements

​

​

694,524

​

​

​

690,892

​

​

​

23,384,745

​

​

​

23,142,988

Accumulated depreciation and amortization

​

​

(6,159,294)

​

​

​

(5,555,221)

Investments in operating properties, net

​

​

17,225,451

​

​

​

17,587,767

Construction in progress and space held for development

​

​

3,238,451

​

​

​

2,768,325

Land held for future development

​

​

118,091

​

​

​

226,862

Investments in properties, net

​

$

20,581,993

​

​

$

20,582,954

​

​

Disposition

On March 16, 2021 we sold a portfolio of 11 data centers in Europe (four in the United Kingdom, three in the Netherlands, three in France and one in Switzerland) to Ascendas Reit, a CapitaLand sponsored REIT, for total consideration of approximately $680.0 million (subject to customary final adjustments for working capital and other items). The total gain recorded during the three months ended March 31, 2021 as a result of this sale was approximately $333.3 million. We are providing transitional property management services for one year from the closing date at a customary market rate. The assets and liabilities sold were not representative of a significant component of our portfolio, nor did the sale represent a significant shift in our strategy.

​

23

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DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

4. Leases

Lessor Accounting

We generate the majority of our revenue by leasing our operating properties to customers under operating lease agreements. We recognize the total minimum lease payments provided for under the leases on a straight-line basis over the lease term if we determine that it is probable that substantially all of the lease payments will be collected over the lease term. Otherwise, rental revenue is recognized based on the amount contractually due. Generally, under the terms of our leases, the majority of our rental expenses, including common area maintenance, real estate taxes and insurance, are recovered from our customers. We record amounts reimbursed by customers in the period the applicable expenses are incurred, which is generally ratably throughout the term of the lease. Reimbursements are recognized in rental and other services revenue in the condensed consolidated income statements as we are the primary obligor with respect to purchasing and selecting goods and services from third-party vendors and bearing the associated credit risk.

Lessee Accounting

We lease space at certain of our data centers from third parties and certain equipment under noncancelable lease agreements. Leases for our data centers expire at various dates through 2069. As of September 30, 2021, certain of our data centers, primarily in Europe and Singapore, are subject to ground leases. As of September 30, 2021, the termination dates of these ground leases generally range from 2041 to 2108. In addition, our corporate headquarters along with several regional office locations are subject to leases with termination dates ranging from 2021 to 2028. The leases generally require us to make fixed rental payments that increase at defined intervals during the term of the lease plus pay our share of common area, real estate and utility expenses as incurred. The leases neither contain residual value guarantees nor impose material restrictions or covenants on us. Further, the leases have been classified and accounted for as either operating or finance leases. Rent expense related to operating leases included in rental property operating and maintenance expense in the condensed consolidated income statements amounted to approximately $36.6 million and $34.9 million for the three months ended September 30, 2021 and 2020, respectively, and approximately $108.9 million and $92.8 million for the nine months ended September 30, 2021 and 2020, respectively.

​

​

5. Investments in Unconsolidated Entities

See below for a summary of our investments in unconsolidated entities accounted for under the equity method of accounting as presented in our condensed consolidated balance sheets (in thousands):

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Year

    

Metropolitan

    

​

    

Balance as of

    

Balance as of

Entity

​

Entity Formed

​

Area

​

% Ownership

​

September 30, 2021

​

December 31, 2020

​

​

​

​

​

​

​

​

​

​

​

​

​

Ascenty (1)

​

2019

 

Brazil / Chile / Mexico

 

51

% (2) 

$

547,398

​

$

567,192

Mapletree

​

2019

​

Northern Virginia

​

20

%  

​

175,282

​

​

184,890

Mitsubishi (3)

​

Various

 

Osaka / Tokyo

 

50

%  

 

392,349

​

 

278,947

Lumen

​

2012

 

Hong Kong

 

50

%  

 

77,987

​

 

86,600

Other

​

Various

 

U.S. / India

 

Various

​

 

99,309

​

 

30,529

Total

​

​

 

  

 

  

​

$

1,292,325

​

$

1,148,158

(1) Our maximum exposure to loss related to this unconsolidated variable interest entity (VIE) is limited to our equity investment in this VIE.
(2) Includes an approximate 2% ownership interest held by a non-controlling interest in our entity that holds the investment in the Ascenty entity, which has a carrying value as of September 30, 2021 and December 31, 2020 of

24

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DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

approximately $20.2 million and $21.9 million, respectively, and is classified within redeemable noncontrolling interests in our condensed consolidated balance sheet.
(3) As of September 30, 2021, we derecognized all assets, liabilities and 50% noncontrolling interests related to two joint ventures that were previously consolidated and recognized an equity method investment of $197.0 million based on the value of our 50% noncontrolling interest in the joint ventures. We had concluded that we would consolidate the joint ventures during the development phase of the buildings because we had the power to direct activities that most significantly impact the joint ventures’ economic performance, however, upon the building’s completion and commencing the operational phase, we no longer have the power to direct the activities that most significantly impact the joint ventures’ economic performance and deconsolidated the joint ventures and recognized the investment under the equity method.

​

During the three months ended September 30, 2021, the existing unconsolidated partnership between the Company and PGIM Real Estate, the real estate investment management and advisory business of Prudential Financial, completed the sale of a portfolio of 10 data centers in North America for $581 million. PGIM Real Estate owned an 80% interest and the Company owned a 20% interest in the partnership. We recognized a gain of approximately $64 million from the sale of the data centers. This gain is reflected in equity in earnings (loss) of unconsolidated entities in our condensed consolidated income statements. In addition, we received a promote in the amount of $19 million related to the partnership exceeding certain investor return thresholds over the life of the partnership, which is included in fee income and other in our condensed consolidated income statements.

​

The debt of our unconsolidated entities generally is non-recourse to us, except for customary exceptions pertaining to such matters as intentional misuse of funds, environmental conditions, and material misrepresentations.

​

25

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DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

6. Goodwill

Goodwill represents the excess of the purchase price over the fair value of net tangible and intangible assets acquired in a business combination. Changes in the value of goodwill at September 30, 2021 as compared to December 31, 2020 were immaterial and driven primarily by changes in exchange rates associated with goodwill balances denominated in foreign currencies.

​

7. Acquired Intangible Assets and Liabilities

The following table summarizes our acquired intangible assets and liabilities.

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

(Amounts in thousands)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Balance as of

​

​

September 30, 2021

​

December 31, 2020

​

​

​

Gross Carrying Amount

​

​

Accumulated Amortization

​

​

Net Carrying Amount

​

​

Gross Carrying Amount

​

​

Accumulated Amortization

​

​

Net Carrying Amount

Customer relationship value

​

$

2,930,218

​

$

(697,471)

​

$

2,232,747

​

$

2,993,093

​

$

(570,886)

​

$

2,422,207

Acquired in-place lease value

​

​

1,338,554

​

​

(1,025,673)

​

​

312,881

​

​

1,382,563

​

​

(1,004,421)

​

​

378,142

Other

​

​

76,432

​

​

(12,904)

​

​

63,528

​

​

57,370

​

​

(7,107)

​

​

50,263

Acquired above-market leases

​

​

274,365

​

​

(248,085)

​

​

26,280

​

​

280,216

​

​

(236,923)

​

​

43,293

Acquired below-market leases

​

​

(382,237)

​

​

269,599

​

​

(112,638)

​

​

(401,539)

​

​

270,648

​

​

(130,891)

​

Amortization of customer relationship value, acquired in-place lease value and other intangibles (a component of depreciation and amortization expense) was approximately $65.2 million and $75.1 million for the three months ended September 30, 2021 and 2020, respectively, and approximately $199.3 million and $210.9 million for the nine months ended September 30, 2021 and 2020, respectively. Amortization of acquired below-market leases, net of acquired above-market leases, resulted in a decrease in rental and other services revenue of $(0.7) million and $(2.4) million for the three months ended September 30, 2021 and 2020, respectively, and $(3.3) million and $(8.7) million for the nine months ended September 30, 2021 and 2020, respectively. Estimated annual amortization for each of the five succeeding years and thereafter, commencing October 1, 2021 is as follows:

​

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

(Amounts in thousands)

    

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Customer relationship value

​

​

Acquired in-place lease value

​

​

Other (1)

​

​

Acquired above-market leases

​

​

Acquired below-market leases

Remainder of 2021

$

43,556

​

$

18,376

​

$

2,055

​

$

4,691

​

$

(4,487)

2022

 

173,452

​

 

58,514

​

 

8,222

​

 

11,209

​

 

(15,934)

2023

 

172,784

​

 

47,606

​

 

1,484

​

 

4,759

​

 

(14,249)

2024

 

172,204

​

 

40,948

​

 

—

​

 

2,584

​

 

(12,637)

2025

 

171,702

​

 

35,723

​

 

—

​

 

1,452

​

 

(10,741)

Thereafter

 

1,499,049

​

 

111,714

​

 

—

​

 

1,585

​

 

(54,590)

Total

$

2,232,747

​

$

312,881

​

$

11,761

​

$

26,280

​

$

(112,638)

​

​

​

​

(1) Excludes power grid rights in the amount of approximately $51.8 million that are currently not being amortized. Amortization of these assets will begin once the data centers associated with the power grid rights are placed into service.

​

​

​

​

​

8. Debt

On a standalone basis (e.g., excluding its subsidiaries), Digital Realty Trust, Inc. does not have any indebtedness. The Parent is the guarantor or co-guarantor on all debt held by the OP or its subsidiaries. All debt is currently held directly or indirectly by the OP. A summary of outstanding indebtedness of the OP, together with its subsidiaries, as of September 30, 2021 and December 31, 2020 is as follows (in thousands):

​

​

​

​

​

​

​

​

​

​

​

​

​

​

    

September 30, 2021

    

December 31, 2020

​

​

Weighted-

​

​

​

​

​

Weighted-

​

​

​

​

​

average

​

​

Amount

​

average

​

Amount

​

​

interest rate

​

​

Outstanding

​

interest rate

​

Outstanding

Global revolving credit facilities

​

0.98

%

​

$

838,054

​

0.91

%

$

540,184

Unsecured term loans

​

—

%  

​

 

—

​

1.20

%  

 

537,470

Unsecured senior notes

​

2.25

%  

​

​

13,113,785

​

2.49

%  

​

12,096,029

Secured and other debt

​

3.06

%  

​

 

242,870

​

2.92

%  

 

239,330

Total

​

2.19

%  

​

$

14,194,709

  

2.38

%  

$

13,413,013

​

The interest rates presented in the table above represent the interest rates at the end of the periods for the debt outstanding and include the impact of designated interest rate swaps, which effectively fix the interest rates on certain variable rate debt.

​

We borrow in the functional currencies of the countries where we invest. Included in the outstanding balances were borrowings denominated in the following currencies (in thousands, U.S. dollars):

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

September 30, 2021

​

​

December 31, 2020

​

​

​

Amount

​

​

​

​

Amount

​

​

​

Denomination of Draw

    

Outstanding

    

% of Total

    

​

Outstanding

    

% of Total

    

U.S. dollar ($)

​

$

3,497,870

  

24.7

%

​

$

3,629,000

  

27.1

%

British pound sterling (£)

 

​

2,088,470

  

14.7

%

​

​

2,166,695

​

16.2

%

Euro (€)

​

​

7,569,846

​

53.3

%

​

​

6,912,142

​

51.5

%

Other

​

​

1,038,523

​

7.3

%

​

​

705,176

​

5.2

%

Total

​

$

14,194,709

  

​

​

​

$

13,413,013

  

​

​

​

27

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DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The following table provides details of our unsecured senior notes (balances in thousands):

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Aggregate Principal at Issuance

​

​

Balance as of

​

Borrowing Currency

​

USD

​

Maturity Date

​

September 30, 2021

​

​

December 31, 2020

Floating rate notes due 2022

€

300,000

​

$

349,800

​

Sep 23, 2022

$

347,400

​

$

366,480

0.125% notes due 2022

€

300,000

​

​

332,760

​

Oct 15, 2022

​

347,400

​

​

366,480

2.750% notes due 2023

$

350,000

​

​

350,000

​

Feb 1, 2023

​

-

​

​

350,000

2.625% notes due 2024

€

600,000

​

​

677,040

​

Apr 15, 2024

​

694,800

​

​

732,960

2.750% notes due 2024

£

250,000

​

​

324,925

​

Jul 19, 2024

​

336,850

​

​

341,750

4.250% notes due 2025

£

400,000

​

​

634,480

​

Jan 17, 2025

​

538,960

​

​

546,800

0.625% notes due 2025

€

650,000

​

​

720,980

​

Jul 15, 2025

​

752,700

​

​

794,040

4.750% notes due 2025

$

450,000

​

​

450,000

​

Oct 1, 2025

​

450,000

​

​

450,000

2.500% notes due 2026

€

1,075,000

​

​

1,224,640

​

Jan 16, 2026

​

1,244,850

​

​

1,313,219

0.200% notes due 2026

CHF

275,000

​

​

298,404

​

Dec 15, 2026

​

295,267

​

​

-

3.700% notes due 2027

$

1,000,000

​

​

1,000,000

​

Aug 15, 2027

​

1,000,000

​

​

1,000,000

1.125% notes due 2028

€

500,000

​

​

548,550

​

Apr 09, 2028

​

579,000

​

​

610,800

4.450% notes due 2028

$

650,000

​

​

650,000

​

Jul 15, 2028

​

650,000

​

​

650,000

0.550% notes due 2029

CHF

270,000

​

​

292,478

​

Apr 16, 2029

​

289,898

​

​

-

3.300% notes due 2029

£

350,000

​

​

454,895

​

Jul 19, 2029

​

471,590

​

​

478,450

3.600% notes due 2029

$

900,000

​

​

900,000

​

Jul 01, 2029

​

900,000

​

​

900,000

1.500% notes due 2030

€

750,000

​

​

831,900

​

Mar 15, 2030

​

868,500

​

​

916,200

3.750% notes due 2030

£

550,000

​

​

719,825

​

Oct 17, 2030

​

741,070

​

​

751,850

1.250% notes due 2031

€

500,000

​

​

560,950

​

Feb 1, 2031

​

579,000

​

​

610,800

0.625% notes due 2031

€

1,000,000

​

​

1,220,700

​

Jul 15, 2031

​

1,158,000

​

​

-

1.000% notes due 2032

€

750,000

​

​

874,500

​

Jan 15, 2032

​

868,500

​

​

916,200

​

​

​

​

​

​

​

​

$

13,113,785

​

$

12,096,029

Unamortized discounts, net of premiums

​

​

​

​

​

​

​

​

(35,156)

​

​

(34,988)

Deferred financing costs, net

​

​

​

​

​

​

​

​

(65,839)

​

​

(64,031)

Total unsecured senior notes, net of discount and deferred financing costs

​

​

​

​

​

​

​

$

13,012,790

​

$

11,997,010

​

The indentures governing our senior notes contain certain covenants, including (1) a leverage ratio not to exceed 60%, (2) a secured debt leverage ratio not to exceed 40% and (3) an interest coverage ratio of greater than 1.50. The covenants also require us to maintain total unencumbered assets of not less than 150% of the aggregate principal amount of unsecured debt. At September 30, 2021, we were in compliance with each of these financial covenants.

The table below summarizes our debt maturities and principal payments as of September 30, 2021 (in thousands):

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Global Revolving

​

Unsecured

​

​

​

​

​

​

​

    

Credit Facilities(1)

    

Senior Notes

    

Secured and Other Debt

    

Total Debt

Remainder of 2021

​

$

—

​

$

—

​

$

—

​

$

—

2022

​

​

—

​

​

694,800

​

​

—

​

​

694,800

2023

​

​

753,396

​

​

—

​

​

104,000

​

​

857,396

2024

 

​

84,658

 

​

1,031,650

 

​

—

 

​

1,116,308

2025

 

​

—

 

​

1,741,660

 

​

—

 

​

1,741,660

Thereafter

 

​

—

 

​

9,645,675

 

​

138,870

 

​

9,784,545

Subtotal

​

$

838,054

​

$

13,113,785

​

$

242,870

​

$

14,194,709

Unamortized net discounts

​

 

—

​

 

(35,156)

​

 

—

​

 

(35,156)

Unamortized deferred financing costs

​

​

(5,732)

​

​

(65,839)

​

​

(443)

​

​

(72,014)

Total

​

$

832,322

​

$

13,012,790

​

$

242,427

​

$

14,087,539

(1) The global revolving credit facility is subject to two six-month extension options exercisable by us. The bank group is obligated to grant the extension options provided we give proper notice, we make certain representations and warranties and no default exists under the global revolving credit facility.

​

During the nine months ended September 30, 2021, we recognized a loss on early extinguishment of debt of approximately $18.3 million, mostly due to the redemption of the 2.750% Notes due 2023 in February. During the three and nine months ended September 30, 2020, we recognized a loss on early extinguishment of debt of approximately $53.0 million and $53.6 million, respectively, primarily due to the redemption of the 3.950% 2022 Notes and 3.625% 2022 Notes in August 2020.

28

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DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

​

On July 15, 2021, Digital Intrepid Holding B.V., an indirect wholly owned holding and finance subsidiary of the Operating Partnership through which the Interxion business is held, issued and sold CHF 275 million aggregate principal amount of 0.20% Guaranteed Notes due 2026 (the “2026 Notes”) and CHF 270 million aggregate principal amount of 0.55% Guaranteed Notes due 2029 (the “2029 Notes” and together with the 2026 Notes, the “Swiss Franc Notes”). The Swiss Franc Notes are senior unsecured obligations of Digital Intrepid Holding B.V. and are fully and unconditionally guaranteed by Digital Realty Trust, Inc. and the Operating Partnership. Net proceeds from the offering of the Swiss Franc Notes were approximately CHF 542.3 million (approximately $590.9 million based on the exchange rate on July 15, 2021) after deducting the managers’ commissions and certain offering expenses.

​

​

​

9. Earnings per Common Share or Unit

The computation of basic and diluted earnings per share and unit is shown below (in thousands, except share/unit and per share / per unit amounts):

​

Digital Realty Trust, Inc. Earnings per Common Share

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Three Months Ended September 30, 

​

Nine Months Ended September 30, 

​

​

    

2021

    

2020

    

2021

    

2020

    

Net income (loss) available to common stockholders

​

$

124,094

​

$

(37,370)

​

$

623,869

​

$

219,165

​

Weighted average shares outstanding—basic

​

 

283,105,966

​

 

270,214,413

​

 

282,004,907

​

 

253,377,527

​

Potentially dilutive common shares:

​

 

  

​

 

  

​

 

  

​

 

  

​

Unvested incentive units

​

 

217,652

​

 

—

​

 

207,826

​

 

103,159

​

Unvested restricted stock

​

​

187,549

​

​

—

​

​

164,916

​

​

273,755

​

Forward equity offering

​

 

43,816

​

 

—

​

 

—

​

 

2,087,607

​

Market performance-based awards

​

 

244,555

​

 

—

​

 

295,071

​

 

520,531

​

Weighted average shares outstanding—diluted

​

 

283,799,538

​

 

270,214,413

​

 

282,672,720

​

 

256,362,579

​

Income (loss) per share:

​

 

  

​

 

  

​

 

  

​

 

  

​

Basic

​

$

0.44

​

$

(0.14)

​

$

2.21

​

$

0.86

​

Diluted

​

$

0.44

​

$

(0.14)

​

$

2.21

​

$

0.85

​

​

Digital Realty Trust, L.P. Earnings per Unit

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Three Months Ended September 30, 

​

Nine Months Ended September 30, 

​

​

    

2021

    

2020

    

2021

    

2020

    

Net income (loss) available to common unitholders

​

$

127,094

​

$

(38,370)

​

$

639,869

​

$

227,365

​

Weighted average units outstanding—basic

​

 

289,535,213

​

 

278,079,187

​

 

288,897,093

​

 

261,416,412

​

Potentially dilutive common units:

​

 

  

​

 

  

​

 

  

​

 

  

​

Unvested incentive units

​

 

217,652

​

 

—

​

 

207,826

​

 

103,159

​

Unvested restricted units

​

​

187,549

​

​

—

​

​

164,916

​

​

273,755

​

Forward equity offering

​

 

43,816

​

 

—

​

 

—

​

 

2,087,607

​

Market performance-based awards

​

 

244,555

​

 

—

​

 

295,071

​

 

520,531

​

Weighted average units outstanding—diluted

​

 

290,228,785

​

 

278,079,187

​

 

289,564,906

​

 

264,401,464

​

Income (loss) per unit:

​

 

  

​

 

  

​

 

  

​

 

  

​

Basic

​

$

0.44

​

$

(0.14)

​

$

2.21

​

$

0.87

​

Diluted

​

$

0.44

​

$

(0.14)

​

$

2.21

​

$

0.86

​

29

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DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

​

The below table shows the securities that would be antidilutive or not dilutive to the calculation of earnings per share and unit. Common units of the Operating Partnership not owned by Digital Realty Trust, Inc. were excluded only from the calculation of earnings per share as they are not applicable to the calculation of earnings per unit. All other securities shown below were excluded from the calculation of both earnings per share and earnings per unit.

​

​

​

​

​

​

​

​

​

​

​

​

​

Three Months Ended September 30, 

​

Nine Months Ended September 30, 

​

​

    

2021

    

2020

    

2021

    

2020

    

Unvested incentive units

​

—

​

154,178

​

—

​

—

​

Unvested restricted stock

​

—

​

2,459,322

​

—

​

—

​

Shares subject to Forward Equity Offering

​

—

​

512,442

​

6,250,000

​

—

​

Market performance-based awards

​

—

​

318,386

​

—

​

—

​

Weighted average of Operating Partnership common units not owned by Digital Realty Trust, Inc. (excluded only from calculation of earnings per share)

 

6,429,247

 

7,864,774

 

6,892,186

 

8,038,885

 

Potentially dilutive Series C Cumulative Redeemable Perpetual Preferred Stock

 

—

 

1,417,537

 

721,665

 

1,485,177

 

Potentially dilutive Series G Cumulative Redeemable Preferred Stock

 

—

 

1,757,668

 

—

 

1,841,538

 

Potentially dilutive Series I Cumulative Redeemable Preferred Stock

 

—

 

1,304,786

 

—

 

1,692,046

 

Potentially dilutive Series J Cumulative Redeemable Preferred Stock

 

1,319,861

 

1,403,969

 

1,366,311

 

1,470,961

 

Potentially dilutive Series K Cumulative Redeemable Preferred Stock

​

1,387,905

​

1,476,350

​

1,436,750

​

1,546,796

​

Potentially dilutive Series L Cumulative Redeemable Preferred Stock

​

2,276,479

​

2,421,547

​

2,356,596

​

2,535,929

​

Total

 

11,413,492

 

21,090,959

 

19,023,508

 

18,611,332

 

​

​

​

​

30

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DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

10. Equity and Capital

Equity Distribution Agreement

Digital Realty Trust, Inc. and Digital Realty Trust, L.P., are parties to an at-the-market (ATM) equity offering sales agreement dated January 4, 2019, as amended in 2020 (the “Sales Agreement”). Pursuant to the Sales Agreement, Digital Realty Trust, Inc. can issue and sell common stock having an aggregate offering price of up to $1.0 billion through various named agents from time to time. For the nine months ended September 30, 2021, Digital Realty Trust, Inc. issued approximately 1.1 million common shares under the Sales Agreement at an average price of $161.92 per share. For the nine months ended September 30, 2020, Digital Realty Trust, Inc. issued approximately 6.1 million common shares under the Sales Agreement at an average price of $146.89 per share. As of September 30, 2021, approximately $577.6 million remains available for future sales under the program.

Forward Equity Sale

On September 13, 2021, Digital Realty Trust, Inc. completed an underwritten public offering of 6,250,000 shares of its common stock, all of which were offered in connection with forward sale agreements it entered into with certain financial institutions acting as forward purchasers. The forward purchasers borrowed and sold an aggregate of 6,250,000 shares of Digital Realty Trust, Inc.’s common stock in the public offering. Digital Realty Trust, Inc. did not receive any proceeds from the sale of our common stock by the forward purchasers in the public offering. The Company may receive gross proceeds of approximately $1.0 billion (based on the offering price of $155.69 per share) upon full physical settlement of the forward sale agreements, which is to be no later than March 13, 2023. Upon physical settlement of the forward sale agreements, the Operating Partnership is expected to issue general partner common partnership units to Digital Realty Trust, Inc. in exchange for contribution of the net proceeds. The forward purchasers had also granted to the underwriters an option, exercisable until October 13, 2021, to purchase up to 937,500 additional shares at a price of $155.69, which represents the initial price to the public less the underwriting discount. The underwriters opted not to exercise their option within the specified time period. We account for our forward equity sales agreements in accordance with the accounting guidance governing financial instruments and derivatives. As of September 30, 2021, none of our forward equity sales agreements were deemed to be liabilities as they did not embody obligations to repurchase our shares, nor did they embody obligations to issue a variable number of shares for which the monetary value was predominantly fixed, varied with something other than the fair value of our shares, or varied inversely in relation to our shares. We also evaluated whether the agreements met the derivatives and hedging guidance scope exception to be accounted for as equity instruments and concluded that the agreements can be classified as equity contracts based on the following assessment: (i) none of the agreements’ exercise contingencies were based on observable markets or indices besides those related to the market for our own stock price and operations; and (ii) none of the settlement provisions precluded the agreements from being indexed to our own stock.

Noncontrolling Interests

Noncontrolling interests are interests in consolidated subsidiaries that are not owned by Digital Realty Trust, Inc. The following table details the components of noncontrolling interests (in thousands):

​

​

​

​

​

​

​

​

​

​

September 30, 2021

​

December 31, 2020

Noncontrolling interests in Operating Partnership

​

$

459,918

​

$

608,980

Noncontrolling interests in consolidated entities

​

​

32,324

​

​

119,659

Total noncontrolling interests

​

$

492,242

​

$

728,639

​

​

31

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DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The following table shows the ownership interest noncontrolling interests hold in the Operating Partnership as well as the interest held by Digital Realty Trust, Inc. as of the respective dates shown below:

​

​

​

​

​

​

​

​

​

​

​

​

​

September 30, 2021

​

December 31, 2020

 

​

​

Number of

​

Percentage of

​

Number of

​

Percentage of

​

​

    

units

    

total

    

units

    

total

 

Digital Realty Trust, Inc.

​

283,846,802

​

97.8

%  

280,289,726

​

97.2

%

Noncontrolling interests consist of:

 

​

 

  

 

​

 

  

​

Common units held by third parties

 

4,977,994

 

1.7

%  

6,212,369

 

2.2

%

Incentive units held by employees and directors (see Note 12)

 

1,516,071

 

0.5

%  

1,833,898

 

0.6

%

​

 

290,340,867

 

100.0

%  

288,335,993

 

100.0

%

​

Limited partners have the right to require the Operating Partnership to redeem all or a portion of their common units for cash based on the fair market value of an equivalent number of shares of Digital Realty Trust, Inc. common stock at the time of redemption. Alternatively, Digital Realty Trust, Inc. may elect to acquire those common units in exchange for shares of its common stock on a one-for-one basis, subject to adjustment in the event of stock splits, stock dividends, issuance of stock rights, specified extraordinary distributions and similar events. The common units and incentive units of the Operating Partnership are classified within equity, except for certain common units issued to certain former DuPont Fabros Technology, L.P. unitholders in the Company’s acquisition of DuPont Fabros Technology, Inc., which are subject to certain restrictions and, accordingly, are not presented as permanent equity in the condensed consolidated balance sheet.

The redemption value of the noncontrolling Operating Partnership common units and the vested incentive units was approximately $888.4 million and $1,078.9 million based on the closing market price of Digital Realty Trust, Inc. common stock on September 30, 2021 and December 31, 2020, respectively.

The following table shows activity for the noncontrolling interests in the Operating Partnership for the nine months ended September 30, 2021:

​

​

​

​

​

​

​

​

​

    

Common Units

    

Incentive Units

    

Total

As of December 31, 2020

 

6,212,369

 

1,833,898

 

8,046,267

Redemption of common units for shares of Digital Realty Trust, Inc. common stock (1)

 

(1,234,375)

 

—

 

(1,234,375)

Conversion of incentive units held by employees and directors for shares of Digital Realty Trust, Inc. common stock (1)

 

—

 

(668,451)

 

(668,451)

Incentive units issued upon achievement of market performance condition

 

—

 

219,652

 

219,652

Grant of incentive units to employees and directors

 

—

 

132,848

 

132,848

Cancellation / forfeitures of incentive units held by employees and directors

 

—

 

(1,876)

 

(1,876)

As of September 30, 2021

 

4,977,994

 

1,516,071

 

6,494,065

(1) These redemptions and conversions were recorded as a reduction to noncontrolling interests in the Operating Partnership and an increase to common stock and additional paid in capital based on the book value per unit in the accompanying consolidated balance sheet of Digital Realty Trust, Inc.

​

32

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DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Dividends and Distributions

Digital Realty Trust, Inc. Dividends

​

Digital Realty Trust, Inc. declared and paid the following dividends on its common and preferred stock for the nine months ended September 30, 2021 (in thousands, except per share data):

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Series C

​

Series J

​

Series K

​

Series L

​

​

​

​

    

​

​

​

​

Preferred

​

Preferred

​

Preferred

​

Preferred

​

​

Common

​

Date dividend declared

    

Dividend payment date

    

Stock

    

Stock

    

Stock

    

Stock

​

​

Stock

​

February 25, 2021

​

March 31, 2021

​

$

3,333

​

$

2,625

​

$

3,071

​

$

4,485

​

​

$

326,965

​

May 10, 2021

​

June 30, 2021

​

​

—

(1)

​

2,625

​

​

3,071

​

​

4,485

​

​

​

328,279

​

August 10, 2021

​

September 30, 2021

​

​

—

​

​

2,625

​

​

3,071

​

​

4,485

​

​

​

329,720

​

​

​

​

​

$

3,333

​

$

7,875

​

$

9,213

​

$

13,455

​

​

$

984,964

​

Annual rate of dividend per share

​

  

​

$

1.65625

  

$

1.31250

​

$

1.46250

​

$

1.30000

​

​

$

4.64000

  

(1) These shares were redeemed on May 17, 2021.

Digital Realty Trust, L.P. Distributions

All distributions on the Operating Partnership’s units are at the discretion of Digital Realty Trust, Inc.’s Board of Directors. The table below shows the distributions declared and paid by the Operating Partnership on its common and preferred units for the nine months ended September 30, 2021 (in thousands, except for per unit data):

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Series C

​

Series J

​

Series K

​

Series L

​

​

​

​

​

​

​

​

Preferred

​

Preferred

​

Preferred

​

Preferred

​

Common

​

Date distribution declared

    

Distribution payment date

    

Units

    

Units

    

Units

​

Units

​

Units

​

February 25, 2021

​

March 31, 2021

​

$

3,333

​

$

2,625

​

$

3,071

​

$

4,485

​

$

336,041

​

May 10, 2021

​

June 30, 2021

​

 

—

(1)

 

2,625

​

 

3,071

​

 

4,485

​

 

336,543

​

August 10, 2021

​

September 30, 2021

​

 

—

​

 

2,625

​

 

3,071

​

 

4,485

​

 

337,447

​

​

​

​

​

$

3,333

​

$

7,875

​

$

9,213

​

$

13,455

​

$

1,010,031

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Annual rate of distribution per unit

​

​

​

$

1.65625

​

$

1.31250

​

$

1.46250

​

$

1.30000

​

$

4.64000

​

​

​

​

​

​

​

(1) These units were redeemed on May 17, 2021.

​

​

​

​

​

33

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DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

​

11. Accumulated Other Comprehensive Income (Loss), Net

The accumulated balances for each item within accumulated other comprehensive income (loss) are shown below (in thousands) for Digital Realty Trust, Inc. and separately for Digital Realty Trust, L.P:

​

​

Digital Realty Trust, Inc.

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Foreign currency

​

Cash flow

​

Foreign currency net

​

Accumulated other

​

​

translation

​

hedge

​

investment hedge

​

comprehensive

​

    

adjustments

    

adjustments

    

adjustments

    

income (loss), net

Balance as of December 31, 2020

​

$

98,760

​

$

(2,630)

​

$

38,880

​

$

135,010

Net current period change

​

 

(248,367)

​

 

753

​

 

—

​

 

(247,614)

Reclassification to interest expense from interest
rate swaps

​

 

—

​

 

1,044

​

 

—

​

 

1,044

Balance as of September 30, 2021

​

$

(149,607)

​

$

(833)

​

$

38,880

​

$

(111,560)

​

Digital Realty Trust, L.P.

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Foreign currency

​

​

​

Foreign currency net

​

Accumulated other

​

​

translation

​

Cash flow hedge

​

investment hedge

​

comprehensive

​

    

adjustments

    

adjustments

    

adjustments

    

income (loss)

Balance as of December 31, 2020

​

$

98,946

​

$

(3,823)

​

$

39,677

​

$

134,800

Net current period change

​

 

(254,444)

​

 

772

​

 

—

​

 

(253,672)

Reclassification to interest expense from interest
rate swaps

​

 

—

​

 

1,070

​

 

—

​

 

1,070

Balance as of September 30, 2021

​

$

(155,498)

​

$

(1,981)

​

$

39,677

​

$

(117,802)

​

​

12. Incentive Plans

2014 Incentive Award Plan

The Company provides incentive awards in the form of common stock or awards convertible into common stock pursuant to the Digital Realty Trust, Inc., Digital Services, Inc. and Digital Realty Trust, L.P. 2014 Incentive Award Plan, as amended (the “Incentive Plan”). The Incentive Plan allows for the issuance of a variety of awards. The major categories of awards that can be issued under the Incentive Plan include:

Long-Term Incentive Units (“LTIP Units”): LTIP Units, in the form of profits interest units of the Operating Partnership, may be issued to eligible participants for the performance of services to or for the benefit of the Operating Partnership. LTIP Units (other than Class D units), whether vested or not, receive the same quarterly per-unit distributions as Operating Partnership common units. Initially, LTIP Units do not have full parity with common units with respect to liquidating distributions. However, if such parity is reached, vested LTIP Units may be converted into an equal number of common units of the Operating Partnership at any time. The awards generally vest over periods between two and four years.

Service-Based Restricted Stock Units: Service-based Restricted Stock Units, which vest over periods between two and four years, convert to shares of Digital Realty Trust, Inc.’s common stock upon vesting.

34

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DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Market Performance-Based Awards (“the Awards”): Market performance-based Class D units of the Operating Partnership and market performance-based Restricted Stock Units covering shares of Digital Realty Trust, Inc.’s common stock can be issued to officers and employees of the Company. The Awards utilize total shareholder return (“TSR”) over a 3-year measurement period as the market performance metric. Awards vest based on the Company’s TSR relative to the MSCI US REIT Index over a 3-year period, subject to continued services.

In January 2021, following the completion of the applicable Market Performance Period, the Compensation Committee determined that the high level had been achieved for the 2018 awards and, accordingly, 240,377 Class D units (including 20,725 distribution equivalent units that immediately vested on December 31, 2020) and 63,498 market performance-based Restricted Stock Units performance vested, subject to service-based vesting. On February 27, 2021, 50% of the 2018 awards vested and the remaining 50% will vest on February 27, 2022, subject to continued employment through the applicable vesting date. The targets and vesting thresholds for these awards remain unchanged from the targets and thresholds disclosed in the 2020 Form 10-K as filed with the SEC.

The fair values of the awards granted were measured using a Monte Carlo simulation to estimate the probability of the market vesting condition being satisfied. The Company’s achievement of the market vesting condition is contingent on its TSR over a three-year market performance period, relative to the TSR of the MSCI US REIT Index. The Monte Carlo simulation is a probabilistic technique based on the underlying theory of the Black-Scholes formula, which was run for 100,000 trials to determine the fair value of the awards. For each trial, the payoff to an award is calculated at the settlement date and is then discounted to the grant date at a risk-free interest rate. The total expected value of the awards on the grant date was determined by multiplying the average value per award over all trials by the number of awards granted. Assumptions used in the valuations are summarized as follows:

​

​

​

​

​

​

​

​

    

Expected Stock Price

    

Risk-Free Interest

​

Award Date

 

Volatility

 

Rate

​

February 19, 2020

​

22

%  

1.39

%

February 20, 2020

​

22

%  

1.35

%

January 1, 2021

​

27

%  

0.17

%

February 25, 2021

​

26

%  

0.31

%

​

The grant date fair value of the Class D unit and market performance-based Restricted Stock Unit awards was approximately $25.0 million and $17.2 million for the nine months ended September 30, 2021 and 2020, respectively. This amount will be recognized as compensation expense on a straight-line basis over the expected service period of approximately four years.

Other Items: In addition to the LTIP Units, service-based Restricted Stock Units and Awards described above, one-time grants with time and/or performance-based vesting were issued associated with the Interxion Combination. The vesting of these awards is between two and three years.

As of September 30, 2021, approximately 5.5 million shares of common stock, including awards that can be converted to or exchanged for shares of common stock, remained available for future issuance under the Incentive Plan.

Each LTIP unit and each Class D unit issued under the Incentive Plan counts as one share of common stock for purposes of calculating the limit on shares that may be issued under the Incentive Plan and the individual award limits set forth therein.

35

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DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Below is a summary of compensation expense and unearned compensation (in millions):

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Expected

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

 

​

​

 

period to

​

​

Deferred Compensation

​

Unearned Compensation

 

recognize

​

​

Expensed

​

Capitalized

​

As of

​

As of

 

unearned

​

    

Three Months Ended September 30, 

    

September 30, 

​

December 31, 

 

compensation

Type of incentive award

    

2021

    

2020

    

2021

    

2020

    

2021

    

2020

    

(in years)

Long-term incentive units

​

$

2.8

​

$

3.3

​

$

—

​

$

0.1

​

$

21.2

​

$

15.1

 

2.1

Performance-based awards

​

 

6.4

​

 

6.8

​

 

0.2

​

 

0.1

​

 

41.9

​

 

34.4

 

2.2

Service-based restricted stock units

​

 

4.6

​

 

3.8

​

 

0.9

​

 

0.8

​

 

50.9

​

 

41.5

 

2.6

Interxion awards

​

​

3.1

​

​

4.8

​

​

—

​

​

—

​

​

10.5

​

​

27.2

​

1.7

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Nine Months Ended September 30, 

​

    

2021

    

2020

    

2021

    

2020

Long-term incentive units

​

$

8.7

​

$

9.6

​

$

0.1

​

$

0.2

Performance-based awards

​

 

21.3

​

 

18.2

​

 

0.7

​

 

0.6

Service-based restricted stock units

​

​

13.7

​

​

10.4

​

​

2.5

​

​

2.3

Interxion awards

​

 

17.7

​

 

14.9

​

 

—

​

 

—

​

​

Activity for LTIP Units and service-based Restricted Stock Units for the nine months ended September 30, 2021 is shown below.

​

​

​

​

​

​

​

​

​

    

​

    

Weighted-Average

​

​

​

​

 

Grant Date Fair

​

Unvested Long-term Incentive Units

​

Units

 

Value

​

Unvested, beginning of period

 

235,535

​

$

122.22

​

Granted

 

132,848

​

 

138.16

​

Vested

 

(126,826)

​

 

122.56

​

Cancelled or expired

 

(1,876)

​

 

128.38

​

Unvested, end of period

 

239,681

​

$

130.83

​

​

​

​

​

​

​

​

​

​

​

​

​

Weighted-Average

​

​

​

​

 

Grant Date Fair

​

Unvested Restricted Stock

    

Shares

    

Value

​

Unvested, beginning of period

 

783,219

​

$

123.04

​

Granted

 

258,414

​

 

136.75

​

Vested

 

(381,179)

​

 

122.12

​

Cancelled or expired

 

(49,817)

​

 

110.52

​

Unvested, end of period

 

610,637

​

$

130.44

​

​

Interxion Equity Plans

On March 9, 2020, in connection with the Interxion Combination, certain outstanding awards granted under various Interxion equity plans were assumed by Digital Realty Trust, Inc. and converted into adjusted equity-based awards of Digital Realty Trust, Inc. common stock in accordance with the terms of the Purchase Agreement for the Interxion Combination. All such awards will continue to be governed by the terms of the applicable Interxion equity plan and underlying award agreement evidencing the award. Approximately 0.6 million shares of Digital Realty Trust, Inc. common stock are registered and issuable pursuant to such awards. The impact of these plans is included in the tables above.

​

​

​

36

Table of Contents

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

​

13. Derivative Instruments

As of September 30, 2021, there was no impact from netting arrangements as the Company did not have any derivatives in asset positions. There have been no significant changes to our policy or strategy from what was disclosed in our 2020 Form 10-K. A summary of our outstanding interest rate derivative instruments is shown in the subsequent table (in thousands).

Summary of Outstanding Interest Rate Derivatives

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Fair Value at Significant Other

Notional Amount

​

​

​

​

​

​

​

​

​

Observable Inputs (Level 2)

As of

​

As of

​

​

​

​

​

​

​

​

​

As of

​

As of

September 30, 

​

December 31, 

​

Type of

​

Strike

​

Effective

​

Expiration

​

September 30, 

​

December 31, 

2021

    

2020

    

Derivative

    

Rate

    

Date

    

Date

    

2021

    

2020

​

​

  

 

  

 

  

 

  

 

​

  

 

​

  

​

104,000

​

 

104,000

​

Swap

 

1.435

​

Jan 15, 2016

​

Jan 15, 2023

​

 

(1,727)

​

 

(2,773)

​

—

​

 

77,352

​

Swap

 

0.779

​

Jan 15, 2016

​

Jan 15, 2021

​

 

—

​

 

(9)

$

104,000

​

$

181,352

​

​

​

​

​

​

​

​

​

$

(1,727)

​

$

(2,782)

​

​

As of September 30, 2021, we estimate that an additional $1.4 million will be reclassified as an increase to interest expense during the twelve months ended March 31, 2022, when the hedged forecasted transactions impact earnings.

​

14. Fair Value of Financial Instruments

There have been no significant changes in our policy for fair value measurements from what was disclosed in our 2020 Form 10-K.

As of September 30, 2021 and December 31, 2020, the carrying amounts of certain financial instruments, including cash and cash equivalents, accounts and notes receivable, accounts payable and accrued expenses were representative of their fair values. The carrying value of our global revolving credit facilities and unsecured term loans approximates estimated fair value, because these liabilities have variable interest rates and our credit ratings have remained stable. Differences between the carrying value and fair value of our unsecured senior notes and secured debt are caused by differences in interest rates or borrowing spreads that were available to us on September 30, 2021 and December 31, 2020 as compared to those in effect when the debt was issued or assumed.

A comparison of estimated fair value and carrying value of our debt is shown in the subsequent table (in thousands).

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Categorization

​

As of September 30, 2021

​

As of December 31, 2020

​

​

under the fair value

​

Estimated Fair

​

​

​

​

Estimated Fair

​

​

​

​

    

hierarchy

    

Value

    

Carrying Value

    

Value

    

Carrying Value

Global revolving credit facilities

 

Level 2

​

$

838,054

​

$

838,054

​

$

540,184

​

$

540,184

Unsecured term loans

 

Level 2

​

 

—

​

 

—

​

 

537,470

​

 

537,470

Unsecured senior notes (1)

 

Level 2

​

 

13,859,557

​

 

13,113,785

​

 

13,359,960

​

 

12,096,029

Secured debt (1)

 

Level 2

​

 

250,015

​

 

242,870

​

 

242,051

​

 

239,326

​

​

​

​

$

14,947,626

​

$

14,194,709

​

$

14,679,665

​

$

13,413,009

(1) Valuations for our unsecured senior notes and secured debt are determined based on the expected future payments discounted at risk-adjusted rates and quoted market prices.

37

Table of Contents

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

​

​

​

15. Commitments and Contingencies

Our properties require periodic investments of capital for tenant-related capital expenditures and for general capital improvements including ground up construction. From time to time in the normal course of our business, we enter into various construction contracts with third parties that may obligate us to make payments. At September 30, 2021, we had open commitments, including amounts reimbursable by customers of approximately $47.2 million, related to construction contracts of approximately $1.5 billion.

In the ordinary course of our business, we may become subject to various legal proceedings. As of September 30, 2021, we were not a party to any legal proceedings which we believe would have a material adverse effect on our operations or financial position.

​

​

16. Supplemental Cash Flow Information

Cash, cash equivalents, and restricted cash balances as of September 30, 2021, and December 31, 2020:

​

​

​

​

​

​

​

​

​

​

Balance as of

(Amounts in thousands)

    

September 30, 2021

    

December 31, 2020

Cash and cash equivalents

​

$

116,002

​

$

108,501

Restricted cash (included in other assets)

​

 

11,090

​

 

15,151

Total

​

$

127,092

​

$

123,652

​

​

We paid $240.9 million and $261.2 million for interest, net of amounts capitalized, for the nine months ended September 30, 2021 and 2020, respectively.

​

We paid $19.6 million and $15.3 million for income taxes, net of refunds, for the nine months ended September 30, 2021 and 2020, respectively.

​

​

​

​

​

​

​

​

​

​

38

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the condensed consolidated financial statements and notes thereto appearing elsewhere in this report and our Annual Report on Form 10-K for the year ended December 31, 2020 and our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2021 and June 30, 2021, each as filed with the United States (“U.S.”) Securities and Exchange Commission (“SEC”). This report contains forward-looking statements within the meaning of the federal securities laws. In particular, statements pertaining to our capital resources, expected use of borrowings under our credit facilities, expected use of proceeds from our ATM equity program, expected settlement and use of proceeds from our forward sale agreements, litigation matters, portfolio performance, leverage policy, acquisition and capital expenditure plans, capital recycling program, returns on invested capital, supply and demand for data center space, capitalization rates, rents to be received in future periods and expected rental rates on new or renewed data center space, as well as our discussion of “Factors Which May Influence Future Results of Operations,” contain forward-looking statements. Likewise, all of our statements regarding anticipated market conditions, demographics and results of operations are forward-looking statements. You can identify forward-looking statements by the use of forward-looking terminology such as “believes,” “expects,” “may,” “will,” “should,” “seeks,” “approximately,” “intends,” “plans,” “pro forma,” “estimates” or “anticipates” or the negative of these words and phrases or similar words or phrases which are predictions of or indicate future events or trends and discussions which do not relate solely to historical matters. You can also identify forward-looking statements by discussions of strategy, plans or intentions. Forward-looking statements involve numerous risks and uncertainties and you should not rely on them as predictions of future events. Forward-looking statements depend on assumptions, data or methods that may be incorrect or imprecise and that we may not be able to realize. We do not guarantee that the transactions and events described will happen as described or that they will happen at all. The following factors, among others, could cause actual results and future events to differ materially from those set forth or contemplated in the forward-looking statements: reduced demand for data centers or decreases in information technology spending; increased competition or available supply of data center space; decreased rental rates, increased operating costs or increased vacancy rates; the impact of the COVID-19 pandemic on our, our customers’ and our suppliers’ operations; changes in political conditions, geopolitical turmoil, political instability, civil disturbances, restrictive governmental actions or nationalization in the countries in which we operate; the suitability of our data centers and data center infrastructure, delays or disruptions in connectivity or availability of power, or failures or breaches of our physical and information security infrastructure or services; our dependence upon significant customers, bankruptcy or insolvency of a major customer or a significant number of smaller customers, or defaults on or non-renewal of leases by customers; breaches of our obligations or restrictions under our contracts with our customers; our inability to successfully develop and lease new properties and development space, and delays or unexpected costs in development of properties; the impact of current global and local economic, credit and market conditions; global supply chain or procurement disruptions, or increased supply chain costs; our inability to retain data center space that we lease or sublease from third parties; information security and data privacy breaches; difficulties managing an international business and acquiring or operating properties in foreign jurisdictions and unfamiliar metropolitan areas; our failure to realize the intended benefits from, or disruptions to our plans and operations or unknown or contingent liabilities related to, our recent and future acquisitions; our inability to achieve expected revenue synergies or cost savings as a result of our combination with Interxion; our failure to successfully integrate and operate acquired or developed properties or businesses; difficulties in identifying properties to acquire and completing acquisitions; risks related to joint venture investments, including as a result of our lack of control of such investments; risks associated with using debt to fund our business activities, including re-financing and interest rate risks, our failure to repay debt when due, adverse changes in our credit ratings or our breach of covenants or other terms contained in our loan facilities and agreements; our failure to obtain necessary debt and equity financing, and our dependence on external sources of capital; financial market fluctuations and changes in foreign currency exchange rates; adverse economic or real estate developments in our industry or the industry sectors that we sell to, including risks relating to decreasing real estate valuations and impairment charges and goodwill and other intangible asset impairment charges; our inability to manage our growth effectively; losses in excess of our insurance coverage; our inability to attract and retain talent; environmental liabilities, risks related to natural disasters and our inability to achieve our sustainability goals; our inability to comply with rules and regulations applicable to our Company; Digital Realty Trust, Inc.’s failure to maintain its status as a REIT for federal income tax purposes; Digital Realty Trust, L.P.’s failure to qualify as a partnership for federal income tax purposes; restrictions on our ability to engage in certain business activities; and changes in local,

39

state, federal and international laws and regulations, including related to taxation, real estate and zoning laws, and increases in real property tax rates.

While forward-looking statements reflect our good faith beliefs, they are not guarantees of future performance. We disclaim any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, new information, data or methods, future events or other changes.

The risks included here are not exhaustive, and additional factors could adversely affect our business and financial performance, including factors and risks included in our annual report on Form 10-K for the year ended December 31, 2020. Moreover, we operate in a very competitive and rapidly changing environment. New risk factors emerge from time to time and it is not possible for management to identify all such risk factors, nor can we assess the impact of all such risk factors on the business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Given these risks and uncertainties, you should not place undue reliance on forward-looking statements as a prediction of actual results.

Occupancy percentages included in the following discussion, for some of our properties, are calculated based on factors in addition to contractually leased square feet, including available power, required support space and common area.

As used in this report: “Ascenty Acquisition” refers to the acquisition of Ascenty by the Operating Partnership and Stellar Participações S.A. (formerly Stellar Participações Ltda.), a Brazilian subsidiary of the Operating Partnership; “Ascenty entity” refers to the entity, which owns and operates Ascenty, formed with Brookfield Infrastructure; “Brookfield” refers to Brookfield Infrastructure, an affiliate of Brookfield Asset Management; “Interxion” refers to InterXion Holding N.V.; and “Interxion Combination” refers to the Company’s combination with InterXion Holding N.V.

Business Overview and Strategy

Digital Realty Trust, Inc., through its controlling interest in Digital Realty Trust, L.P. and its subsidiaries, delivers comprehensive space, power, and interconnection solutions that enable its customers and partners to connect with each other and service their own customers on a global technology and real estate platform. We are a leading global provider of data center, colocation and interconnection solutions for customers across a variety of industry verticals ranging from cloud and information technology services, social networking and communications to financial services, manufacturing, energy, healthcare, and consumer products. Digital Realty Trust, Inc. operates as a REIT for federal income tax purposes, and our Operating Partnership is the entity through which we conduct our business and own our assets.

Our primary business objectives are to maximize:

(i) sustainable long-term growth in earnings and funds from operations per share and unit;
(ii) cash flow and returns to our stockholders and our Operating Partnership’s unitholders through the payment of distributions; and
(iii) return on invested capital.

​

We expect to accomplish our objectives by achieving superior risk-adjusted returns, prudently allocating capital, diversifying our product offerings, accelerating our global reach and scale, and driving revenue growth and operating efficiencies. A significant component of our current and future internal growth is anticipated through the development of our existing space held for development, acquisition of land for future development, and acquisition of new properties.

We target high-quality, strategically located properties containing the physical and connectivity infrastructure that supports the applications and operations of data center and technology industry customers and properties that may be developed for such use. Most of our data center properties contain fully redundant electrical supply systems, multiple power feeds, above-standard cooling systems, raised floor areas, extensive in-building communications cabling and high-level security systems. We focus exclusively on owning, acquiring, developing and operating data centers because

40

we believe that the growth in data center demand and the technology-related real estate industry generally will continue to outpace the overall economy.

We have developed detailed, standardized procedures for evaluating new real estate investments to ensure that they meet our financial, technical and other criteria. We expect to continue to acquire additional assets as part of our growth strategy. We intend to aggressively manage and lease our assets to increase their cash flow. We may continue to build out our development portfolio when justified by anticipated demand and returns.

We may acquire properties subject to existing mortgage financing and other indebtedness or we may incur new indebtedness in connection with acquiring or refinancing these properties. Debt service on such indebtedness will have a priority over any cash dividends with respect to Digital Realty Trust, Inc.’s common stock and preferred stock. We are committed to maintaining a conservative capital structure. We target a debt-to-Adjusted EBITDA ratio at or less than 5.5x, fixed charge coverage of greater than three times, and floating rate debt at less than 20% of total outstanding debt. In addition, we strive to maintain a well-laddered debt maturity schedule, and we seek to maximize the menu of our available sources of capital, while minimizing the cost.

Revenue Base

The majority of revenue consists of rental income generated by the data centers in our portfolio. Our ability to generate and grow revenue depends on several factors, including our ability to maintain or improve occupancy rates. As of September 30, 2021, and December 31, 2020, our portfolio (excluding space under development or held for development) was 84.2% and 86.3% leased, respectively. A summary of our data center portfolio and related square feet occupied as of September 30, 2021 is shown below. Unconsolidated portfolios shown below consist of assets owned by unconsolidated entities in which we have invested. We often provide management services for these entities under management agreements and receive management fees. These are shown as Managed Unconsolidated Portfolio. Entities for which we do not provide such services are shown as Non-Managed Unconsolidated Portfolio.

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

As of September 30, 2021

Region

​

Data Center Buildings

​

Net Rentable Square Feet (1)

​

Space Under Active Development (2)

​

Space Held for Development (3)

​

Occupancy

​

North America

​

123

​

22,944,292

​

2,067,360

​

861,917

​

86.0

%

Europe

 

107

​

7,209,395

 

3,330,572

​

255,874

​

76.2

%

Asia Pacific

 

12

​

1,127,636

 

1,036,418

​

—

​

86.6

%

Africa

 

4

​

25,825

 

40,965

​

—

​

51.3

%

Consolidated Portfolio

 

246

​

31,307,147

 

6,475,315

​

1,117,791

​

83.8

%

Managed Unconsolidated Portfolio

​

6

​

1,174,565

​

—

​

—

​

90.2

%

Non-Managed Unconsolidated Portfolio

 

30

​

2,506,538

 

989,318

​

970,909

​

86.3

%

Total Portfolio

 

282

​

34,988,250

 

7,464,633

​

2,088,701

​

84.2

%

​

(1) Net rentable square feet represents the current square feet under lease as specified in the applicable lease agreement plus management’s estimate of space available for lease based on engineering drawings. The amount includes customers’ proportional share of common areas but excludes space held for the intent of or under active development.
(2) Space under active development includes current base building and data center projects in progress, and excludes space held for development. For additional information on the current and future investment for space under active development, see “—Liquidity and Capital Resources of the Operating Partnership—Construction”.
(3) Space held for development includes space held for future data center development, and excludes space under active development. For additional information on the current investment for space held for development, see “—Liquidity and Capital Resources of the Operating Partnership—Construction”.

​

41

Leasing Activities

As of September 30, 2021, our average remaining lease term was approximately five years.

Our ability to re-lease expiring space at rental rates equal to or in excess of current rental rates will impact our results of operations. The following table summarizes our leasing activity in the nine months ended September 30, 2021:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

    

​

    

​

​

    

​

​

    

​

    

TI’s/Lease

    

Weighted

​

​

​

​

​

​

​

​

​

​

​

​

Commissions 

​

Average Lease 

​

​

Rentable

​

Expiring 

​

New

​

Rental Rate

​

Per Square 

​

Terms 

​

​

Square Feet (1)

​

Rates (2)

​

Rates (2)

​

Changes

​

Foot

​

(years)

Leasing Activity (3)(4)

 

  

 

​

  

 

​

  

 

  

 

​

  

 

  

Renewals Signed

 

  

 

​

  

 

​

  

 

  

 

​

  

 

  

0 — 1 MW

 

1,434,422

​

$

261.42

​

$

266.36

 

1.9

%  

$

0.65

 

1.7

> 1 MW

 

1,251,852

​

$

149.69

​

$

142.70

 

(4.7)

%  

$

0.55

 

3.6

Other (6)

 

1,461,105

​

$

20.84

​

$

23.43

 

12.5

%  

$

1.17

 

3.9

New Leases Signed (5)

 

​

​

 

  

​

 

​

 

​

​

 

  

 

​

0 — 1 MW

 

386,377

​

 

—

​

$

275.73

 

—

​

$

36.99

 

3.6

> 1 MW

 

1,466,006

​

 

—

​

$

134.52

 

—

​

$

14.61

 

7.7

Other (6)

 

74,762

​

 

—

​

$

35.28

 

—

​

$

7.49

 

7.5

Leasing Activity Summary

 

  

​

 

  

​

 

​

 

​

​

 

  

 

  

0 — 1 MW

 

1,820,799

​

 

​

​

$

268.35

 

​

​

 

​

 

  

> 1 MW

 

2,717,858

​

 

​

​

$

138.29

 

​

​

 

​

 

  

Other (6)

 

1,535,867

​

 

​

​

$

24.01

 

​

​

 

​

 

  

(1) For some of our properties, we calculate square footage based on factors in addition to contractually leased square feet, including power, required support space and common area.
(2) Rental rates represent average annual estimated base cash rent per rentable square foot – calculated for each contract based on total cash base rent divided by the total number of years in the contract (including any tenant concessions). All rates were calculated in the local currency of each contract and then converted to USD based on average exchange rates for the nine months ended September 30, 2021.
(3) Excludes short-term leases.
(4) Commencement dates for the leases signed range from 2021 to 2022.
(5) Includes leases signed for new and re-leased space.
(6) Other includes Powered Base Building shell capacity as well as storage and office space within fully improved data center facilities.

​

We continue to see strong demand in most of our key metropolitan areas for data center space and, subject to the supply of available data center space in these metropolitan areas, we expect average aggregate rental rates on re-leased or renewed data center leases for 2021 expirations to generally be consistent with the rates currently being paid for the same space on a GAAP basis and on a cash basis. Our past performance may not be indicative of future results, and we cannot assure you that leases will be renewed or that our data centers will be re-leased at all or at rental rates equal to or above the current average rental rates. Further, re-leased/renewed rental rates in a particular metropolitan area may not be consistent with rental rates across our portfolio as a whole and may fluctuate from one period to another due to a number of factors, including local economic conditions, local supply and demand for data center space, competition from other data center developers or operators, the condition of the property and whether the property, or space within the property, has been developed.

42

Geographic concentration

​

We depend on the market for data centers in specific geographic regions and significant changes in these regional or metropolitan areas can impact our future results. The following table shows the geographic concentration of annualized rent from our portfolio, including data centers held as investments in unconsolidated entities.

​

​

​

​

​

​

    

Percentage of

 

​

​

September 30, 2021

 

​

​

total annualized

 

Metropolitan Area

​

rent (1)

 

Northern Virginia

 

19.3

%

Chicago

 

8.9

%

London, England

 

7.1

%

New York

 

6.4

%

Silicon Valley

 

6.3

%

Frankfurt, Germany

 

5.7

%

Dallas

​

5.7

%

Amsterdam, Netherlands

 

4.3

%

Sao Paulo, Brazil

 

3.9

%

Singapore

 

3.8

%

Phoenix

 

2.0

%

San Francisco

 

2.0

%

Paris, France

 

1.9

%

Osaka, Japan

 

1.6

%

Tokyo, Japan

​

1.6

%

Other

 

19.5

%

Total

 

100.0

%

(1) Annualized rent is monthly contractual rent (defined as cash base rent before abatements) under existing leases as of September 30, 2021 multiplied by 12. Includes consolidated portfolio and unconsolidated entities at the entities’ 100% ownership level. The aggregate amount of abatements for the nine months ended September 30, 2021 was approximately $79.6 million.  

Operating expenses

Operating expenses primarily consist of utilities, property and ad valorem taxes, property management fees, insurance and site maintenance costs, and rental expenses on our ground and building leases. Our buildings require significant power to support data center operations and the cost of electric power and other utilities is a significant component of operating expenses.

Many of our leases contain provisions under which tenants reimburse us for all or a portion of property operating expenses and real estate taxes incurred by us. However, in some cases we are not entitled to reimbursement of property operating expenses, other than utility expense, and real estate taxes under our leases for Turn-Key Flex® facilities. We expect to incur additional operating expenses as we continue to expand.

Costs pertaining to our asset management function, legal, accounting, corporate governance, reporting and compliance are categorized as general and administrative costs within operating expenses.

Other key components of operating expenses include: depreciation of our fixed assets, amortization of intangible assets, and transaction and integration costs.

Other Income / (Expenses)

Equity in earnings of unconsolidated entities, interest expense, and income tax expense make up the majority of other income/(expense). Equity in earnings of unconsolidated entities represents our share of the income/(loss) of entities

43

in which we invest, but do not consolidate under U.S. GAAP. The largest of these investments is currently Ascenty which is located primarily in Brazil. We also hold investments in multiple other unconsolidated entities across the globe. Given that many of these entities transact in currencies other than the U.S. Dollar, results of these entities can be significantly impacted by changes in foreign currency exchange rates.

Interest expense pertains primarily to unsecured senior notes, the majority of which are issued at fixed rates. The Company is subject to foreign, state and local taxes in the jurisdictions in which it operates and income tax expense can be impacted by changes in tax rates in these various jurisdictions.

Factors Which May Influence Future Results of Operations

COVID-19. We continue to closely monitor the impact of the COVID-19 pandemic on our global business and operations, including the impact on our customers, suppliers and business partners. While we did not experience significant disruptions from the COVID-19 pandemic during the nine months ended September 30, 2021 nor as of the date of this report, we cannot predict the impact that the COVID-19 pandemic will have on our future financial condition, results of operations and cash flows due to numerous uncertainties.

Rental Income. As of September 30, 2021, most of our leases (on a rentable square footage basis) contained base rent escalations that were either fixed (generally ranging from 2% to 4%) or indexed based on a consumer price index or other similar inflation-related index. We cannot assure you that these escalations will cover all the increases in our costs or will otherwise keep rental rates at or above market rates.

Our ability to increase revenue depends in part on our ability to develop and lease capacity at favorable rates, which we may not be able to obtain. Significant capital investment is required in order to develop data center facilities that are ready for use and, in addition, we may require additional time or encounter delays in securing customers for development projects. We may purchase additional vacant properties and properties with vacant development capacity in the future. We will require additional capital to finance our development activities, which may not be available or may not be available on terms acceptable to us.

In addition to approximately 5.1 million square feet of available space in our portfolio, which excludes approximately 6.5 million square feet of space under active development and approximately 1.1 million square feet of space held for development as of September 30, 2021 and the 30 data centers held as investments in our non-managed unconsolidated entities, leases representing approximately 2.8% and 11.6% of the net rentable square footage of our portfolio are scheduled to expire during the three months ending December 31, 2021 and the year ending December 31, 2022, respectively.

44

Results of Operations

As a result of the consistent and significant growth in our business since the first property acquisition in 2002, we evaluate period-to-period results for revenue and property level operating expenses on a stabilized, rather than non-stabilized portfolio basis.

​

Stabilized: The stabilized portfolio includes properties owned as of the beginning of all periods presented with less than 5% of total rentable square feet under development.

Non-stabilized: The non-stabilized portfolio includes: 1) properties that were undergoing, or were expected to undergo, development activities during any of the periods presented, 2) any properties contributed to joint ventures, sold, or held for sale during the periods presented, and 3) any properties that were acquired or delivered at any point during the periods presented.

Comparison of the Three and Nine Months Ended September 30, 2021 to the Three and Nine Months Ended September 30, 2020

Revenues

Total operating revenues increased by approximately $108.5 million and $475.7 million in the three and nine months ended September 30, 2021, respectively, compared to the same periods in 2020, driven primarily by growth in non-stabilized rental and other services revenue. Non-stabilized rental and other services revenue increased $88.3 million for the three-month period primarily due to the completion of global development pipeline and related lease up operating activities and expansion into new markets in EMEA offset by the impact of properties sold in 2020 and 2021. For the nine-month period, non-stabilized rental and other services revenue increased $435.9 million, primarily due to the Interxion Combination, which contributed $276.8 million to the increase. Stabilized rental and other services revenue increased $1.7 million and $23.6 million in the three and nine months ended September 30, 2021, respectively, compared to the same periods in 2020 due to new leasing and renewals, net of expirations as well as increased tenant reimbursements associated with higher utility costs in Texas due to winter storm Uri.

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Three Months Ended September 30, 

​

Nine Months Ended September 30, 

​

​

    

2021

    

2020

    

$ Change

​

% Change

    

2021

    

2020

    

$ Change

​

% Change

​

Stabilized

​

$

601,498

​

$

599,789

​

$

1,709

​

0.3

%

​

$

1,817,043

​

$

1,793,464

​

$

23,579

​

1.3

%

​

Non-Stabilized

​

​

509,406

​

​

421,142

​

​

88,264

​

21.0

%

​

​

1,471,162

​

​

1,035,214

​

​

435,948

​

42.1

%

​

Rental and other services

​

​

1,110,904

​

​

1,020,931

​

​

89,973

​

8.8

%

​

​

3,288,205

​

​

2,828,678

​

​

459,527

​

16.2

%

​

Fee income and other

​

​

22,232

​

​

3,737

​

​

18,495

​

494.9

%

​

 

28,510

​

 

12,322

​

​

16,188

​

131.4

%

​

Total operating revenues

​

$

1,133,136

​

$

1,024,668

​

$

108,468

​

10.6

%

​

$

3,316,715

​

$

2,841,000

​

$

475,715

​

16.7

%

​

​

​

45

Operating Expenses — Property Level

Property level operating expenses include costs to operate and maintain the locations as well as taxes and insurance. Stabilized property operating and maintenance expenses increased by approximately $10.2 million and $52.4 million in the three and nine months ended September 30, 2021, respectively, compared to the same periods in 2020, primarily related to higher utility consumption at certain properties in the stabilized portfolio. Non-stabilized property operating and maintenance expenses increased $37.4 million for the three-month period, primarily due to the completion of global development pipeline and related lease up operating activities and expansion into new markets in EMEA offset by the impact of properties sold in 2020 and 2021. For the nine-month period, non-stabilized property operating and maintenance expenses increased $141.9 million, primarily due to the Interxion Combination, which contributed $114.0 million to the increase. Stabilized property taxes and insurance increased by approximately $11.7 million in the three and nine months ended September 30, 2021 compared to the same periods in 2020, primarily related to property tax reassessments for certain properties located in Chicago in the stabilized portfolio during the three months ended September 30, 2021.

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Three Months Ended September 30, 

​

Nine Months Ended September 30, 

​

​

    

2021

    

2020

    

$ Change

​

% Change

​

2021

    

2020

    

$ Change

​

% Change

    

Stabilized

​

$

209,308

​

$

199,086

​

$

10,222

​

5.1

%

​

$

622,345

​

$

569,975

​

$

52,370

​

9.2

%

​

Non-Stabilized

​

 

197,021

​

 

159,593

​

​

37,428

​

23.5

%

​

 

528,979

​

 

387,059

​

​

141,920

​

36.7

%

​

Rental property operating and maintenance

​

​

406,329

​

​

358,679

​

​

47,650

​

13.3

%

​

​

1,151,324

​

​

957,034

​

​

194,290

​

20.3

%

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Stabilized

​

 

41,256

​

 

29,546

​

​

11,710

​

39.6

%

​

 

106,584

​

 

94,927

​

​

11,657

​

12.3

%

​

Non-Stabilized

​

 

19,377

​

 

13,113

​

​

6,264

​

47.8

%

​

 

55,050

​

 

41,843

​

​

13,207

​

31.6

%

​

Property taxes and insurance

​

 

60,633

​

 

42,659

​

​

17,974

​

42.1

%

​

 

161,634

​

 

136,770

​

​

24,864

​

18.2

%

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Total Property Level Expenses

​

$

466,962

​

$

401,338

​

$

65,624

​

16.4

%

​

$

1,312,958

​

$

1,093,804

​

$

219,154

​

20.0

%

​

​

​

Other Operating Expenses

Other operating expenses include costs which are either non-cash in nature (such as depreciation and amortization), or which do not directly pertain to operation of data center properties. A comparison of other operating expenses for the three and nine months ended September 30, 2021 and 2020 is shown below. The increases in depreciation and amortization and general and administrative expenses for the 2021 periods were primarily driven by the Interxion Combination, which closed in March 2020.

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Three Months Ended September 30, 

​

Nine Months Ended September 30, 

​

​

    

2021

    

2020

​

$ Change

​

% Change

    

2021

    

2020

​

$ Change

​

% Change

    

Depreciation and amortization

 

$

369,035

​

$

365,842

​

$

3,193

​

0.9

%

 

$

1,107,749

​

$

1,006,464

​

$

101,285

​

10.1

%

 

General and administrative

​

​

98,460

​

​

91,352

​

​

7,108

​

7.8

%

​

​

295,946

​

​

249,181

​

​

46,765

​

18.8

%

​

Transaction, integration and other expense

​

 

14,314

​

 

15,251

​

​

(937)

​

(6.1)

%

​

 

37,550

​

​

87,806

​

​

(50,256)

​

(57.2)

%

​

Impairment of investments in real estate

​

​

—

​

​

6,482

​

​

(6,482)

​

(100.0)

%

​

​

—

​

​

6,482

​

​

(6,482)

​

(100.0)

%

​

Total Other Operating Expenses

​

​

481,809

​

​

478,927

​

​

2,882

​

0.6

%

​

​

1,441,245

​

​

1,349,933

​

​

91,312

​

6.8

%

​

Property level operating expenses

​

​

466,962

​

​

401,338

​

​

65,624

​

16.4

%

​

​

1,312,958

​

​

1,093,804

​

​

219,154

​

20.0

%

​

Total Operating Expenses

​

$

948,771

​

$

880,265

​

​

68,506

​

7.8

%

​

$

2,754,203

​

$

2,443,737

​

​

310,466

​

12.7

%

​

​

Equity in earnings (loss) of unconsolidated entities

Equity in earnings (loss) of unconsolidated entities increased approximately $42.9 million and $158.7 million in the three and nine months ended September 30, 2021, respectively, compared to the same periods in 2020, primarily due to one of our unconsolidated entities completing the sale of a portfolio of 10 data centers during the three months ended September 30, 2021, which resulted in a gain of approximately $64 million, along with the foreign exchange remeasurement of debt associated with our Ascenty unconsolidated entity, which decreased $22.7 million and increased

46

$97.4 million in the three and nine months ended September 30, 2021, respectively, compared to the same periods in 2020.

Gain on Disposition of Properties, Net

Gain on disposition of properties, net decreased approximately $11.0 million and increased approximately $18.6 million in the three and nine months ended September 30, 2021, respectively, compared to the same periods in 2020. In March 2021, we sold a portfolio of 11 data centers in Europe (four in the United Kingdom, three in the Netherlands, three in France and one in Switzerland) to Ascendas Reit, a CapitaLand sponsored REIT, for total purchase consideration of approximately $680.0 million resulting in a gain of approximately $333.3 million. In January 2020, we sold 10 Powered Base Building® properties, which comprise 12 data centers, in North America to Mapletree at a purchase consideration of approximately $557.0 million, resulting in a gain of approximately $304.8 million.

Loss from Early Extinguishment of Debt

Loss from early extinguishment of debt decreased approximately $53.0 million and $35.3 million in the three and nine months ended September 30, 2021, respectively, compared to the same periods in 2020, primarily due to the redemption of the 3.950% 2022 Notes and 3.625% 2022 Notes in August 2020, offset by the redemption of the 2.750% 2023 Notes in February 2021.

Income Tax Expense

Income tax expense decreased by $2.3 million during the three months ended September 30, 2021 and increased by $34.1 million during the nine months ended September 30, 2021. The increase for the nine-month period was driven primarily by an increase in the corporate tax rate in the United Kingdom from 19% to 25% during the quarter ended June 30, 2021.

Liquidity and Capital Resources

The sections “Analysis of Liquidity and Capital Resources - Parent” and “Analysis of Liquidity and Capital Resources - Operating Partnership” should be read in conjunction with one another to understand our liquidity and capital resources on a consolidated basis. The term “Parent” refers to Digital Realty Trust, Inc. on an unconsolidated basis, excluding our Operating Partnership. The term “Operating Partnership” refers to Digital Realty Trust, L.P. on a consolidated basis.

Analysis of Liquidity and Capital Resources — Parent

Our Parent does not conduct business itself, other than acting as the sole general partner of the Operating Partnership, issuing public equity from time to time, and guaranteeing certain unsecured debt of the Operating Partnership and certain of its subsidiaries and affiliates. If our Operating Partnership or such subsidiaries fail to fulfill their debt requirements, which trigger Parent guarantee obligations, then our Parent will be required to fulfill its cash payment commitments under such guarantees. Our Parent’s only material asset is its investment in our Operating Partnership.

Our Parent’s principal funding requirement is the payment of dividends on its common and preferred stock. Our Parent’s principal source of funding is the distributions it receives from our Operating Partnership.

As the sole general partner of our Operating Partnership, our Parent has the full, exclusive and complete responsibility for our Operating Partnership’s day-to-day management and control. Our Parent causes our Operating Partnership to distribute such portion of its available cash as our Parent may in its discretion determine, in the manner provided in our Operating Partnership’s partnership agreement.

As circumstances warrant, our Parent may issue equity from time to time on an opportunistic basis, dependent upon market conditions and available pricing. Any proceeds from such equity issuances would generally be contributed to our

47

Operating Partnership in exchange for additional equity interests in our Operating Partnership. Our Operating Partnership may use the proceeds to acquire additional properties, to fund development opportunities and for general working capital purposes, including potentially for the repurchase, redemption or retirement of outstanding debt or equity securities.

Our Parent and our Operating Partnership are parties to an at-the-market (ATM) equity offering sales agreement dated January 4, 2019, as amended in 2020 (the “Sales Agreement”). In accordance with the Sales Agreement, following the date of the 2020 amendment, Digital Realty Trust, Inc. may offer and sell shares of its common stock having an aggregate offering price of up to $1.0 billion. Prior to the 2020 amendment, Digital Realty Trust, Inc. had offered and sold shares of its common stock having an aggregate gross sales price of approximately $652.2 million. The sales of common stock made under the Sales Agreement will be made in “at the market” offerings as defined in Rule 415 of the Securities Act. For the nine months ended September 30, 2021, Digital Realty Trust, Inc. issued approximately 1.1 million common shares under the Sales Agreement at an average price of $161.92 per share. For the nine months ended September 30, 2020, Digital Realty Trust, Inc. issued approximately 6.1 million common shares under the Sales Agreement at an average price of $146.89 per share. As of September 30, 2021, approximately $577.6 million remains available for future sales under the program. Our Parent has used and intends to use the net proceeds from the program to temporarily repay borrowings under our Operating Partnership’s global revolving credit facilities, to acquire additional properties or businesses, to fund development opportunities and for working capital and other general corporate purposes, including potentially for the repayment of other debt or the repurchase, redemption or retirement of outstanding debt securities. For additional information regarding the Sales Agreement, see our Annual Report on Form 10-K for the year ended December 31, 2020.

On September 13, 2021, Digital Realty Trust, Inc. completed an underwritten public offering of 6,250,000 shares of its common stock, all of which were offered in connection with forward sale agreements it entered into with certain financial institutions acting as forward purchasers. The forward purchasers borrowed and sold an aggregate of 6,250,000 shares of Digital Realty Trust, Inc.’s common stock in the public offering. Digital Realty Trust, Inc. did not receive any proceeds from the sale of our common stock by the forward purchasers in the public offering. The Company may receive gross proceeds of approximately $1.0 billion (based on the offering price of $155.69 per share) upon full physical settlement of the forward sale agreements, which is to be no later than March 13, 2023. Upon physical settlement of the forward sale agreements, the Operating Partnership is expected to issue general partner common partnership units to Digital Realty Trust, Inc. in exchange for contribution of the net proceeds. The forward purchasers had also granted to the underwriters an option, exercisable until October 13, 2021, to purchase up to 937,500 additional shares at a price of $155.69, which represents the initial price to the public less the underwriting discount. The underwriters opted not to exercise their option within the specified time period.

We believe our Operating Partnership’s sources of working capital, specifically its cash flow from operations, and funds available under its global revolving credit facility are adequate for it to make its distribution payments to our Parent and, in turn, for our Parent to make its dividend payments to its stockholders. However, we cannot assure you that our Operating Partnership’s sources of capital will continue to be available at all or in amounts sufficient to meet its needs, including making distribution payments to our Parent. The lack of availability of capital could adversely affect our Operating Partnership’s ability to pay its distributions to our Parent, which would in turn, adversely affect our Parent’s ability to pay cash dividends to its stockholders.

Future Uses of Cash — Parent

Our Parent may from time to time seek to retire, redeem or repurchase its equity or the debt securities of our Operating Partnership or its subsidiaries through cash purchases and/or exchanges for equity securities in open market purchases, privately negotiated transactions or otherwise. Such repurchases, redemptions or exchanges, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions or other factors. The amounts involved may be material.

48

Dividends and Distributions — Parent

Our Parent is required to distribute 90% of its taxable income (excluding capital gains) on an annual basis to continue to qualify as a REIT for federal income tax purposes. Our Parent intends to make, but is not contractually bound to make, regular quarterly distributions to its common stockholders from cash flow from our Operating Partnership’s operating activities. While historically our Parent has satisfied this distribution requirement by making cash distributions to its stockholders, it may choose to satisfy this requirement by making distributions of cash or other property. All such distributions are at the discretion of our Parent’s Board of Directors. Our Parent considers market factors and our Operating Partnership’s performance in addition to REIT requirements in determining distribution levels. Our Parent has distributed at least 100% of its taxable income annually since inception to minimize corporate level federal income taxes. Amounts accumulated for distribution to stockholders are invested primarily in interest-bearing accounts and short-term interest-bearing securities, which are consistent with our intention to maintain our Parent’s status as a REIT.

As a result of this distribution requirement, our Operating Partnership cannot rely on retained earnings to fund its ongoing operations to the same extent that other companies whose parent companies are not REITs can. Our Parent may need to continue to raise capital in the debt and equity markets to fund our Operating Partnership’s working capital needs, as well as potential developments at new or existing properties, acquisitions or investments in existing or newly created joint ventures. In addition, our Parent may be required to use borrowings under the Operating Partnership’s global revolving credit facility (which is guaranteed by our Parent), if necessary, to meet REIT distribution requirements and maintain our Parent’s REIT status.

Distributions out of our Parent’s current or accumulated earnings and profits are generally classified as ordinary income whereas distributions in excess of our Parent’s current and accumulated earnings and profits, to the extent of a stockholder’s U.S. federal income tax basis in our Parent’s stock, are generally classified as a return of capital. Distributions in excess of a stockholder’s U.S. federal income tax basis in our Parent’s stock are generally characterized as capital gain. Cash provided by operating activities has been generally sufficient to fund distributions on an annual basis. However, we may also need to utilize borrowings under the global revolving credit facility to fund distributions.

For additional information regarding dividends declared and paid by our Parent on its common and preferred stock for the nine months ended September 30, 2021, see Note 10 to our condensed consolidated financial statements contained herein.

Analysis of Liquidity and Capital Resources — Operating Partnership

As of September 30, 2021, we had $116.0 million of cash and cash equivalents, excluding $11.1 million of restricted cash. Restricted cash primarily consists of contractual capital expenditures plus other deposits. Our liquidity requirements primarily consist of:

● operating expenses,
● development costs and other expenditures associated with our properties,
● distributions to our Parent to enable it to make dividend payments,
● distributions to unitholders of common limited partnership interests in Digital Realty Trust, L.P.,
● capital expenditures,
● debt service, and,
● potentially, acquisitions.

​

Future Uses of Cash

Our properties require periodic investments of capital for customer-related capital expenditures and for general capital improvements. Depending upon customer demand, we expect to incur significant improvement costs to build out

49

and develop additional capacity. At September 30, 2021, we had open commitments, related to construction contracts of approximately $1.5 billion, including amounts reimbursable of approximately $47.2 million.

We currently expect to incur approximately $0.5 billion to $0.8 billion of capital expenditures for our development programs during the three months ending December 31, 2021. This amount could go up or down, potentially materially, based on numerous factors, including changes in demand, leasing results and availability of debt or equity capital.

Development Projects

The costs we incur to develop our properties is a key component of our liquidity requirements. The following table summarizes our cumulative investments in current development projects as well as expected future investments in these projects as of the periods presented, excluding costs incurred or to be incurred by unconsolidated entities.

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Development Lifecycle

​

As of September 30, 2021

​

As of December 31, 2020

​

​

Net Rentable 

​

Current 

​

​

​

​

​

​

​

Net Rentable 

​

Current 

​

Future 

​

​

​

​

​

Square Feet

​

Investment

​

Future Investment

​

​

​

​

 Square Feet 

​

Investment 

​

Investment

​

​

​

(dollars in thousands)

    

  (1)​

    

(2)​

    

(3)​

    

Total Cost

    

(1)​

    

 (4)​

    

(3)​

    

Total Cost

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Land held for future development (5)

 ​

N/A

 

$

118,091

 

$

—

 

$

118,091

 ​

N/A

 

$

226,862

 

$

—

 

$

226,862

Construction in Progress and Space Held for Development

 

  

 

​

  

 

​

  

 

​

  

 

  

 

​

  

 

​

  

 

​

  

Land - Current Development (5)

​

N/A

​

$

913,855

​

$

—

​

$

913,855

​

N/A

​

$

785,182

​

$

—

​

$

785,182

Space Held for Development (6)

 

1,117,791

 

​

230,779

 

​

—

 

​

230,779

 

1,501,310

​

​

236,545

 

​

—

​

​

236,545

Base Building Construction

 

3,334,023

 

​

503,391

​

​

566,701

 

​

1,070,093

 

2,331,472

​

 

458,357

​

​

485,613

​

 

943,970

Data Center Construction

 

3,141,292

 

​

1,559,410

​

 

1,907,286

 

​

3,466,696

 

2,573,759

​

 

1,232,762

​

 

1,596,821

​

 

2,829,583

Equipment Pool & Other Inventory

 

N/A

 

​

12,741

​

 

—

 

​

12,741

 

N/A

​

 

9,761

​

 

—

​

 

9,761

Campus, Tenant Improvements & Other

 

N/A

 

​

18,274

​

 

46,175

 

​

64,449

 

N/A

​

 

45,719

​

 

42,848

​

 

88,567

Total Construction in Progress and Land Held for Future Development

 

7,593,106

​

$

3,356,542

​

$

2,520,162

​

$

5,876,704

 

6,406,541

​

$

2,995,188

​

$

2,125,282

​

$

5,120,470

(1) We estimate the total net rentable square feet available for lease based on a number of factors in addition to contractually leased square feet, including available power, required support space and common areas. Excludes square footage of properties held in unconsolidated entities. Square footage is based on current estimates and project plans, and may change upon completion of the project due to remeasurement.
(2) Represents balances incurred through September 30, 2021.
(3) Represents estimated cost to complete specific scope of work pursuant to contract, budget or approved capital plan.
(4) Represents balances incurred through December 31, 2020.
(5) Represents approximately 832 acres as of September 30, 2021 and approximately 927 acres as of December 31, 2020.
(6) Excludes space held for development through unconsolidated entities.

​

50

Land inventory and space held for development reflect cumulative cost spent pending future development. Base building construction consists of ongoing improvements to building infrastructure in preparation for future data center fit-out. Data center construction includes 7.4 million square feet of Turn Key Flex® and Powered Base Building® product. Generally, we expect to deliver the space within 12 months; however, lease commencement dates may significantly impact final delivery schedules. Equipment pool and other inventory represent the value of long-lead equipment and materials required for timely deployment and delivery of data center construction fit-out. Campus, tenant improvements and other costs include the value of development work which benefits space recently converted to our operating portfolio and is composed primarily of shared infrastructure projects and first-generation tenant improvements.

Capital Expenditures (Cash Basis)

The table below summarizes our capital expenditure activity for the nine months ended September 30, 2021 and 2020 (in thousands):

​

​

​

​

​

​

​

​

​

​

Nine Months Ended September 30, 

​

    

2021

    

2020

Development projects

​

$

1,527,588

​

$

1,175,494

Enhancement and improvements

​

 

571

​

 

171

Recurring capital expenditures

​

 

129,553

​

 

127,156

Total capital expenditures (excluding indirect costs)

​

$

1,657,712

​

$

1,302,821

​

For the nine months ended September 30, 2021, total capital expenditures increased $354.9 million to approximately $1,657.7 million from $1,302.8 million for the same period in 2020. Capital expenditures on our development projects plus our enhancement and improvements projects for the nine months ended September 30, 2021 were approximately $1,528.2 million, which reflects an increase of approximately 30% from the same period in 2020. This increase was primarily due to development activity at properties acquired in the Interxion Combination. Our development capital expenditures are generally funded by our available cash and equity and debt capital.

Indirect costs, including capitalized interest, capitalized in the nine months ended September 30, 2021 and 2020 were $90.4 million and $74.2 million, respectively. Capitalized interest comprised approximately $38.1 million and $35.5 million of the total indirect costs capitalized for the nine months ended September 30, 2021 and 2020, respectively. Capitalized interest in the nine months ended September 30, 2021 increased, compared to the same period in 2020, due to an increase in qualifying activities. Excluding capitalized interest, indirect costs in the nine months ended September 30, 2021 increased compared to the same period in 2020 due primarily to capitalized amounts relating to compensation expense of employees directly engaged in construction activities. See “—Future Uses of Cash” below for a discussion of the amount of capital expenditures we expect to incur during the year ending December 31, 2021.

Consistent with our growth strategy, we actively pursue potential acquisition opportunities, with due diligence and negotiations often at different stages at different times. The dollar value of acquisitions for the year ending December 31, 2021 will depend upon numerous factors, including customer demand, leasing results, availability of debt or equity capital and acquisition opportunities. Further, the growing acceptance by private institutional investors of the data center asset class has generally pushed capitalization rates lower, as such private investors may often have lower return expectations than us. As a result, we anticipate near-term single asset acquisitions activity to comprise a smaller percentage of our growth while this market dynamic persists.

We may from time to time seek to retire or repurchase our outstanding debt or the equity of our Parent through cash purchases and/or exchanges for equity securities of our Parent in open market purchases, privately negotiated transactions or otherwise. Such repurchases or exchanges, if any, will depend upon prevailing market conditions, our liquidity requirements, contractual restrictions or other factors. The amounts involved may be material.

Sources of Cash

We expect to meet our short-term and long-term liquidity requirements, including payment of scheduled debt maturities and funding of acquisitions and non-recurring capital improvements, with net cash from operations, future

51

long-term secured and unsecured indebtedness and the issuance of equity and debt securities and the proceeds of equity issuances by our Parent. We also may fund future short-term and long-term liquidity requirements, including acquisitions and non-recurring capital improvements, using our global revolving credit facilities pending permanent financing. As of November 3, 2021, we had approximately $1.5 billion of borrowings available under our global revolving credit facilities.

Our global revolving credit facility provides for borrowings up to $2.35 billion. We have the ability from time to time to increase the size of the global revolving credit facility by up to $1.25 billion, subject to the receipt of lender commitments and other conditions precedent. The global revolving credit facility matures on January 24, 2023, with two six-month extension options available. We have used and intend to use available borrowings under the global revolving credit facility to fund our liquidity requirements from time to time. For additional information regarding our global revolving credit facility, see Note 8 to our condensed consolidated financial statements contained herein.

In connection with the issuance of the Swiss Franc Notes in July 2021, we intend to allocate an amount equal to the net proceeds from the offering of the Swiss Franc Notes to finance or refinance, in whole or in part, recently completed or future green building, energy and resource efficiency and renewable energy projects, including the development and redevelopment of such projects (collectively, “Eligible Green Projects”). Pending the allocation of an amount equal to the net proceeds of the Swiss Franc Notes to Eligible Green Projects, all or a portion of an amount equal to the net proceeds from the Swiss Franc Notes were used to temporarily repay borrowings outstanding under the Operating Partnership’s global credit facility and for other general corporate purposes. For additional information regarding our Swiss Franc Notes, see Note 8 to our condensed consolidated financial statements contained herein.

52

Distributions

All distributions on our units are at the discretion of our Parent’s Board of Directors. For additional information regarding distributions paid on our common and preferred units for the three and nine months ended September 30, 2021, see Note 10 to our condensed consolidated financial statements contained herein.

​

Outstanding Consolidated Indebtedness

The table below summarizes our debt, as of September 30, 2021 (in millions):

​

​

​

​

​

​

Debt Summary:

    

​

    

​

Fixed rate

​

$

12,905.2

​

Variable rate debt subject to interest rate swaps

​

 

104.0

​

Total fixed rate debt (including interest rate swaps)

​

 

13,009.2

​

Variable rate—unhedged

​

 

1,185.5

​

Total

​

$

14,194.7

​

Percent of Total Debt:

​

 

  

​

Fixed rate (including swapped debt)

​

 

91.6

%

Variable rate

​

 

8.4

%

Total

​

 

100.0

%

​

​

​

​

​

Effective Interest Rate as of September 30, 2021

​

 

  

​

Fixed rate (including hedged variable rate debt)

​

 

2.32

%

Variable rate

​

 

0.69

%

Effective interest rate

​

 

2.19

%

​

As of September 30, 2021, we had approximately $14.2 billion of outstanding consolidated long-term debt as set forth in the table above, which excludes deferred financing costs. Our ratio of debt to total enterprise value was approximately 25% (based on the closing price of Digital Realty Trust, Inc.’s common stock on September 30, 2021 of $144.45). For this purpose, our total enterprise value is defined as the sum of the market value of Digital Realty Trust, Inc.’s outstanding common stock (which may decrease, thereby increasing our debt to total enterprise value ratio), plus the liquidation value of Digital Realty Trust, Inc.’s preferred stock, plus the aggregate value of our Operating Partnership’s units not held by Digital Realty Trust, Inc. (with the per unit value equal to the market value of one share of Digital Realty Trust, Inc.’s common stock and excluding long-term incentive units, Class C units and Class D units), plus the book value of our total consolidated indebtedness.

The variable rate debt shown above bears interest at interest rates based on various one-month LIBOR, EURIBOR, SOR, JPY LIBOR, HIBOR, BBR, Base CD and CDOR rates, depending on the respective agreement governing the debt, including our global revolving credit facilities. As of September 30, 2021, our debt had a weighted average term to initial maturity of approximately 6.0 years (or approximately 6.1 years assuming exercise of extension options).

Off-Balance Sheet Arrangements

As of September 30, 2021, we were party to interest rate swap agreements related to $104.0 million of outstanding principal on our variable rate debt. See Item 3. “Quantitative and Qualitative Disclosures about Market Risk.”

As of September 30, 2021, our pro-rata share of secured debt of unconsolidated entities was approximately $684.7 million.

53

Cash Flows

The following summary discussion of our cash flows is based on the condensed consolidated statements of cash flows and is not meant to be an all-inclusive discussion of the changes in our cash flows for the periods presented below.

Comparison of Nine Months Ended September 30, 2021 to Nine Months Ended September 30, 2020

The following table shows cash flows and ending cash and cash equivalent balances for the nine months ended September 30, 2021 and 2020 (in thousands).

​

​

​

​

​

​

​

​

​

​

​

​

​

Nine Months Ended September 30, 

​

    

2021

    

2020

    

Change

Net cash provided by operating activities

​

$

1,250,290

​

$

1,180,739

​

$

69,551

Net cash used in investing activities

​

 

(1,179,817)

​

 

(1,519,519)

​

 

339,702

Net cash (used in) provided by financing activities

​

 

(77,170)

​

 

1,231,150

​

 

(1,308,320)

Net (decrease) increase in cash, cash equivalents and restricted cash

​

$

(6,698)

​

$

892,370

​

$

(899,068)

​

The increase in net cash provided by operating activities was primarily due to the Interxion Combination offset by the operating activities of properties sold during the twelve months ended September 30, 2021.

The changes in the activities that comprise the decrease in net cash used in investing activities for the nine months ended September 30, 2021 as compared to the nine months ended September 30, 2020 consisted of the following amounts (in thousands).

​

​

​

​

​

​

​

Change

Increase in cash used for improvements to investments in real estate

​

$

(371,280)

Decrease in cash paid for business combinations and assets acquisition, net of cash and restricted cash acquired

​

​

328,207

Increase in cash from investment in joint ventures

​

 

138,204

Increase in cash provided by proceeds from sale of real estate

​

​

171,851

Other changes

​

 

72,720

Decrease in net cash used in investing activities

​

$

339,702

​

The decrease in net cash used in investing activities was primarily due to an increase in cash provided by proceeds from sale of investments related to the sale of 11 data centers in Europe in March 2021 partially offset by the sale of 10 Powered Base Building® properties, which comprise 12 data centers, in North America to Mapletree in January 2020, an increase in cash used for improvements to investments in real estate and a decrease in cash paid for acquisitions related to the acquisition of an additional 49% ownership interest in the Westin Building Exchange in February 2020, partially offset by an increase in cash used for improvements to investments in real estate.

​

54

The changes in the activities that comprise the increase in net cash used in financing activities for the nine months ended September 30, 2021 as compared to the nine months ended September 30, 2020 for the Company consisted of the following amounts (in thousands).

​

​

​

​

​

​

    

Change

Increase in proceeds from short-term borrowings, net of repayments

​

$

552,308

Decrease in cash provided by proceeds from secured / unsecured debt

​

 

(1,756,943)

Decrease in cash used for repayment on secured / unsecured debt

​

​

1,649,394

Decrease in cash provided by proceeds from issuance of common stock, net

​

​

(1,712,855)

Decrease in cash used for redemption of preferred stock

​

​

48,750

Increase in cash used for dividend and distribution payments

​

 

(143,704)

Other changes

​

 

54,730

Increase in net cash used in financing activities

​

$

(1,308,320)

​

The increase in cash used in financing activities was primarily due to a decrease in cash provided by proceeds from secured / unsecured debt, due to the redemption of two tranches of notes in August 2020, a decrease in cash provided by proceeds from issuance of common stock and an increase in dividend and distribution payments for the nine months ended September 30, 2021 as compared to the same period in 2020 as a result of an increase in the number of shares outstanding due to the Interxion Combination and increased dividend amount per share of common stock in the nine months ended September 30, 2021 as compared to the same period in 2020 partially offset by an increase in cash proceeds from short-term borrowings and a decrease in repayments of secured / unsecured debt.

​

​

Noncontrolling Interests in Operating Partnership

Noncontrolling interests in the Operating Partnership relate to the common units in our Operating Partnership that are not owned by Digital Realty Trust, Inc., which, as of September 30, 2021, amounted to 2.2% of our Operating Partnership common units. Historically, our Operating Partnership has issued common units to third party sellers in connection with our acquisition of real estate interests from such third parties.

Limited partners have the right to require our Operating Partnership to redeem part or all of their common units for cash based upon the fair market value of an equivalent number of shares of Digital Realty Trust, Inc. common stock at the time of the redemption. Alternatively, we may elect to acquire those common units in exchange for shares of Digital Realty Trust, Inc. common stock on a one-for-one basis, subject to adjustment in the event of stock splits, stock dividends, issuance of stock rights, specified extraordinary distributions and similar events. As of  September 30, 2021, approximately 0.2 million common units of the Operating Partnership that were issued to certain former unitholders of DuPont Fabros Technology, L.P. in connection with the Company’s acquisition of DuPont Fabros Technology, Inc. were outstanding, which are subject to certain restrictions and, accordingly, are not presented as permanent capital in the condensed consolidated balance sheet.

Inflation

Many of our leases provide for separate real estate tax and operating expense escalations. In addition, many of the leases provide for fixed base rent increases. We believe that inflationary increases may be at least partially offset by the contractual rent increases and expense escalations described above.

Funds from Operations

We calculate funds from operations, or FFO, in accordance with the standards established by the National Association of Real Estate Investment Trusts (Nareit) in the Nareit Funds From Operations White Paper - 2018 Restatement. FFO represents net income (loss) (computed in accordance with GAAP), excluding gains (or losses) from sales of property, a gain from a pre-existing relationship, impairment charges and real estate related depreciation and amortization (excluding amortization of deferred financing costs) and after adjustments for unconsolidated partnerships and joint ventures. Management uses FFO as a supplemental performance measure because, in excluding real estate

55

related depreciation and amortization and gains and losses from property dispositions and after adjustments for unconsolidated partnerships and joint ventures, it provides a performance measure that, when compared year over year, captures trends in occupancy rates, rental rates and operating costs. We also believe that, as a widely recognized measure of the performance of REITs, FFO will be used by investors as a basis to compare our operating performance with that of other REITs. However, because FFO excludes depreciation and amortization and captures neither the changes in the value of our properties that result from use or market conditions, nor the level of capital expenditures and capitalized leasing commissions necessary to maintain the operating performance of our properties, all of which have real economic effect and could materially impact our financial condition and results from operations, the utility of FFO as a measure of our performance is limited. Other REITs may not calculate FFO in accordance with the Nareit definition and, accordingly, our FFO may not be comparable to other REITs’ FFO. FFO should be considered only as a supplement to net income computed in accordance with GAAP as a measure of our performance.

Reconciliation of Net Income Available to Common Stockholders to Funds From Operations (FFO)

(unaudited, in thousands, except per share and unit data)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

 

Three Months Ended September 30, 

 

Nine Months Ended September 30, 

​

    

2021

    

2020

    

2021

    

2020

Net Income Available to Common Stockholders

​

$

124,094

​

$

(37,370)

​

$

623,869

​

$

219,165

Adjustments:

​

 

  

​

 

  

​

 

  

​

 

  

Non-controlling interests in operating partnership

​

 

3,000

​

 

(1,000)

​

 

16,000

​

 

8,200

Real estate related depreciation & amortization (1)

​

 

362,728

​

 

358,619

​

 

1,091,065

​

 

987,470

Unconsolidated JV real estate related depreciation & amortization

​

​

21,293

​

​

19,213

​

​

61,654

​

​

56,259

Gain on real estate transactions

​

 

(63,799)

​

 

(10,410)

​

 

(398,219)

​

 

(315,211)

Impairment of investments in real estate

​

 

—

​

 

6,482

​

 

—

​

 

6,482

FFO available to common stockholders and unitholders (2)

​

$

447,316

​

$

335,534

​

$

1,394,369

​

$

962,365

Basic FFO per share and unit

​

$

1.54

​

$

1.21

​

$

4.83

​

$

3.68

Diluted FFO per share and unit (2)

​

$

1.54

​

$

1.19

​

$

4.82

​

$

3.64

Weighted average common stock and units outstanding

​

 

  

​

 

  

​

 

  

​

 

  

Basic

​

 

289,535

​

 

278,079

​

 

288,897

​

 

261,416

Diluted (2)

​

 

290,229

​

 

281,524

​

 

289,565

​

 

264,401

(1) Real estate related depreciation and amortization was computed as follows:

​

​

​

​

​

​

​

​

​

​

​

​

Depreciation and amortization per income statement

    

$

369,035

    

$

365,842

    

​

1,107,749

    

​

1,006,464

Non-real estate depreciation

 

​

(6,307)

​

​

(7,223)

 

​

(16,684)

​

​

(18,994)

​

​

$

362,728

​

$

358,619

​

$

1,091,065

​

$

987,470

(2) For all periods presented, we have excluded the effect of the series C, series G, series I, series J, series K and series L preferred stock, as applicable, that may be converted into common stock upon the occurrence of specified change in control transactions as described in the articles supplementary governing the series C, series G, series I, series J, series K and series L preferred stock, as applicable, as they would be anti-dilutive.

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Three Months Ended September 30, 

 

Nine Months Ended September 30, 

​

    

2021

    

2020

    

2021

    

2020

Weighted average common stock and units outstanding

​

 

289,535

 

 

278,079

 

 

288,897

 

​

261,416

Add: Effect of dilutive securities

​

 

694

 

 

3,445

 

 

668

 

​

2,985

Weighted average common stock and units outstanding—diluted

​

​

290,229

 

​

281,524

 

​

289,565

 

​

264,401

​

​

56

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our future income, cash flows and fair values relevant to financial instruments depend upon prevalent market interest rates. Market risk refers to the risk of loss from adverse changes in market prices and interest rates. We do not use derivatives for trading or speculative purposes and only enter into contracts with major financial institutions based on their credit rating and other factors.

Analysis of Debt between Fixed and Variable Rate

We use interest rate swap agreements and fixed rate debt to reduce our exposure to interest rate movements. As of September 30, 2021, our consolidated debt was as follows (in millions):

​

​

​

​

​

​

​

​

​

    

​

​

    

Estimated Fair

​

​

Carrying Value

 

Value

Fixed rate debt

​

$

12,905.2

​

$

13,658.1

Variable rate debt subject to interest rate swaps

​

 

104.0

​

 

104.0

Total fixed rate debt (including interest rate swaps)

​

 

13,009.2

​

 

13,762.1

Variable rate debt

​

 

1,185.5

​

 

1,185.5

Total outstanding debt

​

$

14,194.7

​

$

14,947.6

​

​

Sensitivity to Changes in Interest Rates

The following table shows the effect if assumed changes in interest rates occurred, based on fair values and interest expense as of September 30, 2021:

​

​

​

​

​

​

    

Change

Assumed event

​

($ millions)

Increase in fair value of interest rate swaps following an assumed 10% increase in interest rates

​

$

0.0

Decrease in fair value of interest rate swaps following an assumed 10% decrease in interest rates

​

 

(0.0)

Increase in annual interest expense on our debt that is variable rate and not subject to swapped interest following a 10% increase in interest rates

​

 

0.4

Decrease in annual interest expense on our debt that is variable rate and not subject to swapped interest following a 10% decrease in interest rates

​

 

(0.4)

Increase in fair value of fixed rate debt following a 10% decrease in interest rates

​

 

21.1

Decrease in fair value of fixed rate debt following a 10% increase in interest rates

​

 

(22.6)

​

Interest risk amounts were determined by considering the impact of hypothetical interest rates on our financial instruments. These analyses do not consider the effect of any change in overall economic activity that could occur in that environment. Further, in the event of a change of that magnitude, we may take actions to further mitigate our exposure to the change. However, due to the uncertainty of the specific actions that would be taken and their possible effects, these analyses assume no changes in our financial structure.

Foreign Currency Exchange Risk

We are subject to risk from the effects of exchange rate movements of a variety of foreign currencies, which may affect future costs and cash flows. Our primary currency exposures are to the British pound sterling, Euro and the Singapore dollar. As a result of the Ascenty entity and deconsolidation of Ascenty, our exposure to foreign exchange risk related to the Brazilian real is limited to the impact that currency has on our share of the Ascenty entity’s operations and financial position. We attempt to mitigate a portion of the risk of currency fluctuation by financing our investments in the local currency denominations and we may also hedge well-defined transactional exposures with foreign currency forwards or options, although there can be no assurances that these will be effective. As a result, changes in the relation of any such foreign currency to U.S. dollars may affect our revenues, operating margins and distributions and may also affect the book value of our assets and the amount of stockholders’ equity. For the three months ended

57

September 30, 2021 and 2020, operating revenues from properties outside the United States contributed $422.5 million and $368.9 million, respectively, which represented 37.3% and 36.0% of our total operating revenues, respectively. For the nine months ended September 30, 2021 and 2020, operating revenues from properties outside the United States contributed $1,228.8 million and $906.3 million, respectively, which represented 37.0% and 31.9% of our total operating revenues, respectively. Net investment in properties outside the United States was $9.2 billion and $9.3 billion as of September 30, 2021 and December 31, 2020, respectively. Net assets in foreign operations were approximately $3.4 billion and $5.7 billion as of September 30, 2021 and December 31, 2020, respectively.

​

​

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures (Digital Realty Trust, Inc.)

The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in its reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the U.S. Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to its management, including its chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, the Company’s management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and its management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Also, the Company has investments in certain unconsolidated entities, which are accounted for using the equity method of accounting. As the Company does not control or manage these entities, its disclosure controls and procedures with respect to such entities may be substantially more limited than those it maintains with respect to its consolidated subsidiaries.

As required by Rule 13a-15(b) or Rule 15d-15(b) of the Securities Exchange Act of 1934, as amended, management of the Company carried out an evaluation, under the supervision and with participation of its chief executive officer and chief financial officer, of the effectiveness of the design and operation of its disclosure controls and procedures that were in effect as of the end of the quarter covered by this report. Based on the foregoing, the Company’s chief executive officer and chief financial officer concluded that its disclosure controls and procedures were effective at the reasonable assurance level.

Changes in Internal Control over Financial Reporting

​

There have been no changes in the Company’s internal control over financial reporting during its most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, its internal control over financial reporting.

As a result of COVID-19, our global workforce shifted to a primarily work from home environment beginning in March 2020. This change to remote working was rapid and included employees that are not considered critical to our daily data center operations. While pre-existing controls were not specifically designed to operate in our current work from home operating environment, we believe that our internal controls over financial reporting continue to be effective. We took precautionary actions to re-evaluate and refine our financial reporting process to provide reasonable assurance that we could report our financial results accurately and timely.

​

58

Evaluation of Disclosure Controls and Procedures (Digital Realty Trust, L.P.)

The Operating Partnership maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in its reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the U.S. Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to its management, including the chief executive officer and chief financial officer of its general partner, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, the Operating Partnership’s management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and its management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Also, the Operating Partnership has investments in certain unconsolidated entities, which are accounted for using the equity method of accounting. As the Operating Partnership does not control or manage these entities, its disclosure controls and procedures with respect to such entities may be substantially more limited than those it maintains with respect to its consolidated subsidiaries.

As required by Rule 13a-15(b) or Rule 15d-15(b) of the Securities Exchange Act of 1934, as amended, management of the Operating Partnership carried out an evaluation, under the supervision and with participation of the chief executive officer and chief financial officer of its general partner, of the effectiveness of the design and operation of its disclosure controls and procedures that were in effect as of the end of the quarter covered by this report. Based on the foregoing, the chief executive officer and chief financial officer of the Operating Partnership’s general partner concluded that its disclosure controls and procedures were effective at the reasonable assurance level.

Changes in Internal Control over Financial Reporting

​

There have been no changes in the Operating Partnership’s internal control over financial reporting during its most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, its internal control over financial reporting.

​

As a result of COVID-19, our global workforce shifted to a primarily work from home environment beginning in March 2020. This change to remote working was rapid and included employees that are not considered critical to our daily data center operations. While pre-existing controls were not specifically designed to operate in our current work from home operating environment, we believe that our internal controls over financial reporting continue to be effective. We took precautionary actions to re-evaluate and refine our financial reporting process to provide reasonable assurance that we could report our financial results accurately and timely.

​

​

59

PART II—OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

In the ordinary course of our business, we may become subject to various legal proceedings. As of September 30, 2021, we were not a party to any legal proceedings which we believe would have a material adverse effect on our operations or financial position.

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ITEM 1A. RISK FACTORS.

The risk factors discussed under the heading “Risk Factors” and elsewhere in the Company’s and the Operating Partnership’s Annual Report on Form 10-K for the year ended December 31, 2020 continue to apply to our business.

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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

Digital Realty Trust, Inc.

None.

Digital Realty Trust, L.P.

During the three months ended September 30, 2021, our Operating Partnership issued partnership units in private placements in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act, in the amounts and for the consideration set forth below:

During the three months ended September 30, 2021, Digital Realty Trust, Inc. issued an aggregate of 15,307 shares of its common stock in connection with restricted stock awards for no cash consideration. For each share of common stock issued by Digital Realty Trust, Inc. in connection with such an award, our Operating Partnership issued a restricted common unit to Digital Realty Trust, Inc. During the three months ended September 30, 2021, our Operating Partnership issued an aggregate of 15,307 common units to Digital Realty Trust, Inc., as required by our Operating Partnership’s partnership agreement. During the three months ended September 30, 2021, an aggregate of 19,451 shares of its common stock were forfeited to Digital Realty Trust, Inc. in connection with restricted stock awards for a net forfeiture of 4,144 shares of common stock.

For these issuances of common units to Digital Realty Trust, Inc., our Operating Partnership relied on Digital Realty Trust, Inc.’s status as a publicly traded NYSE-listed company with approximately $35.8 billion in total consolidated assets and as our Operating Partnership’s majority owner and general partner as the basis for the exemption under Section 4(a)(2) of the Securities Act.

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ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

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ITEM 4. MINE SAFETY DISCLOSURES.

Not applicable.

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ITEM 5. OTHER INFORMATION.

None.  

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60

ITEM 6. EXHIBITS.

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​

​

​

Exhibit
Number

    

Description

​

​

​

2.1

​

Amendment No. 1 to Purchase Agreement dated as of January 23, 2020, by and among Digital Realty Trust, Inc., Digital Intrepid Holding B.V. and InterXion Holding N.V. (incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K of Digital Realty Trust, Inc. (File No. 001-32336) filed on January 27, 2020).

3.1

​

Articles of Amendment and Restatement of Digital Realty Trust, Inc., as amended (incorporated by reference to Exhibit 3.1 to the Combined Quarterly Report on Form 10-Q of Digital Realty Trust, Inc. and Digital Realty Trust, L.P. (File Nos. 001-32336 and 000-54023) filed on May 11, 2020.

3.2

​

Eighth Amended and Restated Bylaws of Digital Realty Trust, Inc. (incorporated by reference to exhibit 3.02 to the Combined Annual Report on Form 10-K of Digital Realty Trust, Inc. and Digital Realty Trust, L.P. (File Nos. 001-32336 and 000-54023) filed on February 25, 2019).

3.3

​

Certificate of Limited Partnership of Digital Realty Trust, L.P. (incorporated by reference to Exhibit 3.1 to Digital Realty Trust, L.P.’s General Form for Registration of Securities on Form 10 (File No. 000-54023) filed on June 25, 2010).

3.4

​

Nineteenth Amended and Restated Agreement of Limited Partnership of Digital Realty Trust, L.P. (incorporated by reference to Exhibit 3.1 to the Combined Current Report on Form 8-K of Digital Realty Trust, Inc. and Digital Realty Trust, L.P. (File Nos. 001-32336 and 000-54023) filed on October 10, 2019).

4.1

​

Terms and Conditions of the Notes, dated as of July 13, 2021 (incorporated by reference to Exhibit 4.1 to the Combined Current Report on Form 8-K of Digital Realty Trust, Inc. and Digital Realty Trust, L.P. (File Nos. 001-32336 and 000-54023) filed on July 15, 2021).

4.2

​

Form of the 2026 Notes (incorporated by reference to Exhibit 4.2 to the Combined Current Report on Form 8-K of Digital Realty Trust, Inc. and Digital Realty Trust, L.P. (File Nos. 001-32336 and 000-54023) filed on July 15, 2021).

4.3

​

Form of the 2029 Notes (incorporated by reference to Exhibit 4.3 to the Combined Current Report on Form 8-K of Digital Realty Trust, Inc. and Digital Realty Trust, L.P. (File Nos. 001-32336 and 000-54023) filed on July 15, 2021).

31.1

​

Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer for Digital Realty Trust, Inc.

31.2

​

Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer for Digital Realty Trust, Inc.

31.3

​

Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer for Digital Realty Trust, L.P.

31.4

​

Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer for Digital Realty Trust, L.P.

32.1

​

18 U.S.C. § 1350 Certification of Chief Executive Officer for Digital Realty Trust, Inc.

32.2

​

18 U.S.C. § 1350 Certification of Chief Financial Officer for Digital Realty Trust, Inc.

32.3

​

18 U.S.C. § 1350 Certification of Chief Executive Officer for Digital Realty Trust, L.P.

32.4

​

18 U.S.C. § 1350 Certification of Chief Financial Officer for Digital Realty Trust, L.P.

101

​

The following financial statements from Digital Realty Trust, Inc.’s and Digital Realty Trust, L.P.’s Form 10-Q for the quarter ended September 30, 2021, formatted in Inline XBRL interactive data files: (i) Condensed Consolidated Balance Sheets as of September 30, 2021 and December 31, 2020; (ii) Condensed Consolidated Income Statements for the three and nine months ended September 30, 2021 and 2020; (iii) Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2021 and 2020; (iv) Condensed Consolidated Statements of Equity/Capital for the three and nine months ended September 30, 2021 and 2020; (v) Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2021 and 2020; and (vi) Notes to Condensed Consolidated Financial Statements.

104

​

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

​

61

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

​

​

​

​

DIGITAL REALTY TRUST, INC.

​

​

November 5, 2021

/S/  A. WILLIAM STEIN

​

A. William Stein
Chief Executive Officer
(principal executive officer)

​

​

November 5, 2021

/S/  ANDREW P. POWER

​

Andrew P. Power
Chief Financial Officer
(principal financial officer)

​

​

November 5, 2021

/S/  CAMILLA A. HARRIS

​

Camilla A. Harris
Chief Accounting Officer
(principal accounting officer)

​

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

​

​

​

​

​

DIGITAL REALTY TRUST, L.P.

​

​

​

​

By:

Digital Realty Trust, Inc.

​

​

Its general partner

​

​

​

By:

​

​

​

November 5, 2021

/S/  A. WILLIAM STEIN

​

A. William Stein
Chief Executive Officer
(principal executive officer)

​

​

November 5, 2021

/S/  ANDREW P. POWER

​

Andrew P. Power
Chief Financial Officer
(principal financial officer)

​

​

November 5, 2021

/s/  CAMILLA A. HARRIS

​

Camilla A. Harris
Chief Accounting Officer
(principal accounting officer)

​

​

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62

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