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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

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

For the quarterly period ended September 30, 2023March 31, 2024

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

For the Transition Period From              to             .

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)

Maryland     (Digital Realty Trust, Inc.)

    

26-0081711

Maryland     (Digital Realty Trust, L.P.)

20-2402955

(State or other jurisdiction of

(IRS employer

incorporation or organization)

identification number)

5707 Southwest Parkway, Building 1, Suite 275

Austin, Texas 78735

(Address of principal executive offices)

(737) 281-0101

(Registrant’s telephone number, including area code)

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

Title of each class

    

Trading symbol(s)

    

Name of each exchange on which registered

Common Stock

DLR

New York Stock Exchange

Series J Cumulative Redeemable Preferred Stock

DLR Pr J

New York Stock Exchange

Series K Cumulative Redeemable Preferred Stock

DLR Pr K

New York Stock Exchange

Series L Cumulative Redeemable Preferred Stock

DLR Pr L

New York Stock Exchange

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.

Digital Realty Trust, Inc.

    

Yes        No    

Digital Realty Trust, L.P.

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).

Digital Realty Trust, Inc.

    

Yes        No    

Digital Realty Trust, L.P.

Yes        No    

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.

Digital Realty Trust, Inc.:

Large accelerated filer     

    

Accelerated filer                      

Non-accelerated filer       

Smaller reporting company     

Emerging growth company     

Digital Realty Trust, L.P.:

Large accelerated filer     

    

Accelerated filer                      

Non-accelerated filer       

Smaller reporting company     

Emerging growth company     

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.

Digital Realty Trust, Inc.

    

Digital Realty Trust, L.P.

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

Digital Realty Trust, Inc.

    

Yes        No    

Digital Realty Trust, L.P.

Yes        No    

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

Digital Realty Trust, Inc.:

    

 

Class

    

Outstanding at November 3, 2023May 1, 2024

Common Stock, $.01 par value per share

302,852,090312,426,614

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EXPLANATORY NOTE

This report combines the quarterly reports on Form 10-Q for the quarter ended September 30, 2023March 31, 2024 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. In statements regarding qualification as a REIT, such terms refer solely to Digital Realty Trust, Inc. 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,” “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, 2023,March 31, 2024, the Parent owned an approximate 97.9% common general partnership interest in Digital Realty Trust, L.P. The remaining approximate 2.1% of the common limited partnership interests of Digital Realty Trust, L.P. are owned by non-affiliated third parties and certain directors and officers of the Parent. As of September 30, 2023,March 31, 2024, the Parent owned all of the preferred limited partnership interests of Digital Realty Trust, L.P. As the sole general partner of Digital Realty Trust, L.P., 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 the 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.

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 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.

2

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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 $3.75 billion senior unsecured revolving credit facility and global senior credit agreement; “Yen Revolving Credit Facility” refers to our Operating Partnership’s ¥33,285,000,000 (approximately $220 million based on exchange rates at March 31, 2024) senior unsecured revolving credit facility and Yen credit agreement; and “Global Revolving Credit Facilities” refer to our Global Revolving Credit Facility and our Yen Revolving Credit Facility, collectively.

3

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

FORM 10-Q

FOR THE QUARTER ENDED SEPTEMBER 30, 2023MARCH 31, 2024

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, 2023March 31, 2024 (unaudited) and December 31, 20222023 (unaudited)

45

Condensed Consolidated Income Statements for the three and nine months ended September 30,March 31, 2024 and 2023 and 2022 (unaudited)

56

Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended September 30,March 31, 2024 and 2023 and 2022 (unaudited)

67

Condensed Consolidated Statement of Equity for the three and nine months ended September 30,March 31, 2024 and 2023 and 2022 (unaudited)

78

Condensed Consolidated Statements of Cash Flows for the ninethree months ended September 30,March 31, 2024 and 2023 and 2022 (unaudited)

1110

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

Condensed Consolidated Balance Sheets as of September 30, 2023March 31, 2024 (unaudited) and December 31, 20222023 (unaudited)

1211

Condensed Consolidated Income Statements for the three and nine months ended September 30,March 31, 2024 and 2023 and 2022 (unaudited)

1312

Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended September 30,March 31, 2024 and 2023 and 2022 (unaudited)

1413

Condensed Consolidated Statement of Capital for the three and nine months ended September 30,March 31, 2024 and 2023 and 2022 (unaudited)

1614

Condensed Consolidated Statements of Cash Flows for the ninethree months ended September 30,March 31, 2024 and 2023 and 2022 (unaudited)

1916

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

2017

ITEM 2.

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

4439

ITEM 3.

Quantitative and Qualitative Disclosures About Market Risk

6460

ITEM 4.

Controls and Procedures (Digital Realty Trust, Inc.)

6561

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

6662

PART II.

OTHER INFORMATION

6763

ITEM 1.

Legal Proceedings

6763

ITEM 1A.

Risk Factors

6763

ITEM 2.

Unregistered Sales of Equity Securities and Use of Proceeds and Issuer Purchases of Equity Securities

6863

ITEM 3.

Defaults Upon Senior Securities

6863

ITEM 4.

Mine Safety Disclosures

6863

ITEM 5.

Other Information

6863

ITEM 6.

Exhibits

7064

Signatures

7165

34

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DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited, in thousands, except per share data)

    

September 30, 

    

December 31, 

2023

2022

ASSETS

Investments in real estate:

Investments in properties, net

$

23,598,260

$

23,774,662

Investments in unconsolidated entities

 

2,180,313

 

1,991,426

Net investments in real estate

 

25,778,573

 

25,766,088

Operating lease right-of-use assets, net

1,274,410

1,351,329

Cash and cash equivalents

 

1,062,050

 

141,773

Accounts and other receivables, net

 

1,325,725

 

969,292

Deferred rent, net

 

586,418

 

601,590

Goodwill

 

8,998,074

 

9,208,497

Customer relationship value, deferred leasing costs and intangibles, net

 

2,506,198

3,092,627

Other assets

 

401,069

 

353,802

Total assets

$

41,932,517

$

41,484,998

LIABILITIES AND EQUITY

Global revolving credit facilities, net

$

1,698,780

$

2,150,451

Unsecured term loans, net

 

1,524,663

 

797,449

Unsecured senior notes, net of discount

 

13,072,102

 

13,120,033

Secured and other debt, including premiums

 

574,231

 

528,870

Operating lease liabilities

1,404,510

1,471,044

Accounts payable and other accrued liabilities

 

2,147,104

 

1,868,885

Deferred tax liabilities, net

1,088,724

1,192,752

Accrued dividends and distributions

 

 

363,716

Security deposits and prepaid rents

 

385,521

 

369,654

Total liabilities

 

21,895,635

 

21,862,854

Redeemable noncontrolling interests

 

1,360,308

 

1,514,679

Commitments and contingencies

Equity:

Stockholders’ Equity:

Preferred Stock: $0.01 par value per share, 110,000 shares authorized; $755,000 liquidation preference ($25.00 per share), 30,200 shares issued and outstanding as of September 30, 2023 and December 31, 2022

 

731,690

 

731,690

Common Stock: $0.01 par value per share, 392,000 shares authorized; 302,846 and 291,148 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively

 

3,002

 

2,887

Additional paid-in capital

 

23,239,088

 

22,142,868

Accumulated dividends in excess of earnings

 

(4,900,758)

 

(4,698,313)

Accumulated other comprehensive loss, net

 

(882,996)

 

(595,798)

Total stockholders’ equity

 

18,190,026

 

17,583,334

Noncontrolling interests

 

486,548

 

524,131

Total equity

 

18,676,574

 

18,107,465

Total liabilities and equity

$

41,932,517

$

41,484,998

    

March 31, 

    

December 31, 

2024

2023

ASSETS

Investments in real estate:

Investments in properties, net

$

23,757,783

$

24,236,088

Investments in unconsolidated entities

 

2,365,821

 

2,295,889

Net investments in real estate

 

26,123,604

 

26,531,977

Operating lease right-of-use assets, net

1,233,410

1,414,256

Cash and cash equivalents

 

1,193,784

 

1,625,495

Accounts and other receivables, net

 

1,217,276

 

1,278,110

Deferred rent, net

 

611,670

 

624,427

Goodwill

 

9,105,026

 

9,239,871

Customer relationship value, deferred leasing costs and other intangibles, net

 

2,359,380

2,500,237

Assets held for sale

 

287,064

 

478,503

Other assets

 

501,875

 

420,382

Total assets

$

42,633,089

$

44,113,258

LIABILITIES AND EQUITY

Global revolving credit facilities, net

$

1,901,126

$

1,812,287

Unsecured term loans, net

 

1,303,263

 

1,560,305

Unsecured senior notes, net of discount

 

13,190,202

 

13,422,342

Secured and other debt, net of discount

 

625,750

 

630,973

Operating lease liabilities

1,357,751

1,542,094

Accounts payable and other accrued liabilities

 

1,870,344

 

2,168,984

Deferred tax liabilities, net

1,121,224

1,151,096

Accrued dividends and distributions

 

 

387,988

Security deposits and prepaid rents

 

413,225

 

401,867

Obligations associated with assets held for sale

 

9,981

 

39,001

Total liabilities

 

21,792,866

 

23,116,937

Redeemable noncontrolling interests

 

1,350,736

 

1,394,814

Commitments and contingencies

Equity:

Stockholders’ Equity:

Preferred Stock: $0.01 par value per share, 110,000 shares authorized; $755,000 liquidation preference ($25.00 per share), 30,200 shares issued and outstanding as of March 31, 2024 and December 31, 2023

 

731,690

 

731,690

Common Stock: $0.01 par value per share, 392,000 shares authorized; 312,421 and 311,608 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively

 

3,097

 

3,088

Additional paid-in capital

 

24,508,683

 

24,396,797

Accumulated dividends in excess of earnings

 

(5,373,529)

 

(5,262,648)

Accumulated other comprehensive loss, net

 

(850,091)

 

(751,393)

Total stockholders’ equity

 

19,019,850

 

19,117,534

Noncontrolling interests

 

469,637

 

483,973

Total equity

 

19,489,487

 

19,601,507

Total liabilities and equity

$

42,633,089

$

44,113,258

See accompanying notes to the condensed consolidated financial statements.

45

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DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED INCOME STATEMENTS

(unaudited, in thousands, except per share data)

Three Months Ended September 30, 

Nine Months Ended September 30, 

Three Months Ended March 31, 

    

2023

    

2022

    

2023

    

2022

    

2024

    

2023

Operating Revenues:

Rental and other services

$

1,394,613

$

1,184,165

$

4,075,008

$

3,437,252

$

1,317,271

$

1,329,968

Fee income and other

 

7,819

 

7,918

 

32,414

 

21,475

 

13,872

 

8,755

Total operating revenues

 

1,402,432

 

1,192,083

 

4,107,422

 

3,458,727

 

1,331,143

 

1,338,723

Operating Expenses:

Rental property operating and maintenance

 

607,544

 

477,731

1,778,465

 

1,334,826

 

548,939

 

571,225

Property taxes and insurance

 

76,568

 

43,862

 

172,450

 

145,135

 

43,850

 

44,779

Depreciation and amortization

 

420,613

 

388,704

 

1,274,384

 

1,147,803

 

431,102

 

421,198

General and administrative

 

110,721

 

97,447

 

332,257

 

301,736

 

115,210

 

111,920

Transactions and integration

 

14,465

 

25,862

 

44,496

 

51,416

 

31,839

 

12,267

Provision for impairment

 

113,000

 

 

113,000

 

Other

 

1,295

 

1,096

 

1,950

 

8,823

 

10,836

 

Total operating expenses

 

1,344,206

 

1,034,702

 

3,717,002

 

2,989,739

 

1,181,776

 

1,161,389

Operating income

 

58,226

 

157,381

 

390,420

 

468,988

 

149,367

 

177,334

Other Income (Expenses):

Equity in (loss) earnings of unconsolidated entities

 

(19,793)

 

(12,254)

 

163

 

14,616

 

(16,008)

 

14,897

Gain on disposition of properties, net

810,688

173,990

900,634

176,760

277,787

Other income, net

 

24,812

 

15,752

 

18,162

 

31,811

 

9,709

 

280

Interest expense

 

(110,767)

 

(76,502)

 

(324,103)

 

(212,250)

 

(109,535)

 

(102,220)

Loss from early extinguishment of debt

 

(1,070)

 

Income tax expense

 

(17,228)

 

(19,576)

 

(54,855)

 

(49,226)

 

(22,413)

 

(21,454)

Net income

 

745,938

 

238,791

 

930,421

 

379,564

 

287,837

 

68,837

Net (income) attributable to noncontrolling interests

 

(12,320)

 

(1,716)

 

(9,893)

 

(5,781)

Net income attributable to noncontrolling interests

 

(6,329)

 

(111)

Net income attributable to Digital Realty Trust, Inc.

 

733,618

 

237,075

 

920,528

 

373,783

 

281,508

 

68,726

Preferred stock dividends

 

(10,181)

 

(10,181)

 

(30,543)

 

(30,543)

 

(10,181)

 

(10,181)

Net income available to common stockholders

$

723,437

$

226,894

$

889,985

$

343,240

$

271,327

$

58,545

Net income per share available to common stockholders:

Basic

$

2.40

$

0.79

$

3.00

$

1.20

$

0.87

$

0.20

Diluted

$

2.33

$

0.75

$

2.93

$

1.15

$

0.82

$

0.20

Weighted average common shares outstanding:

Basic

 

301,827

 

286,693

 

296,184

 

285,312

 

312,292

 

291,219

Diluted

 

311,341

 

296,415

 

306,735

 

294,257

 

320,798

 

303,065

See accompanying notes to the condensed consolidated financial statements.

56

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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, 

Three Months Ended March 31, 

    

2023

    

2022

    

2023

    

2022

    

2024

    

2023

Net income

$

745,938

$

238,791

$

930,421

$

379,564

$

287,837

$

68,837

Other comprehensive income (loss):

Foreign currency translation adjustments

 

(190,425)

 

(535,246)

 

(478,792)

 

(843,036)

 

(200,004)

 

(112,076)

Increase in fair value of derivatives

 

48,580

 

7,154

 

61,730

 

6,166

 

69,035

 

572

Reclassification to interest expense from derivatives

 

(9,349)

 

(1,092)

 

(23,387)

 

(1,154)

 

(10,330)

 

(6,543)

Other comprehensive loss

(151,194)

(529,184)

(440,449)

(838,024)

(141,299)

(118,047)

Comprehensive income (loss)

 

594,744

 

(290,393)

 

489,972

 

(458,460)

 

146,538

 

(49,210)

Comprehensive (income) loss attributable to noncontrolling interests

 

(2,354)

 

140,225

 

142,605

 

143,319

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

$

592,390

$

(150,168)

$

632,577

$

(315,141)

Comprehensive loss attributable to noncontrolling interests

 

34,769

 

62,087

Comprehensive income attributable to Digital Realty Trust, Inc.

$

181,307

$

12,877

See accompanying notes to the condensed consolidated financial statements.

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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, 2023

    

Interests

    

Stock

    

Shares

    

Stock

    

Capital

    

Earnings

    

Loss, Net

    

Interests

    

Total Equity

Balance as of June 30, 2023

 

$

1,367,422

$

731,690

299,240,366

2,967

$

22,882,200

$

(5,253,917)

$

(741,484)

$

483,702

$

18,105,158

Conversion of common units to common stock

15,435

1

1,150

(1,151)

Vesting of restricted stock, net

66,419

Issuance of common stock, net of costs

 

3,454,148

34

335,279

335,313

Shares issued under equity plans, net of share settlement to satisfy tax withholding upon vesting

 

69,658

3,551

3,551

Amortization of unearned compensation regarding share-based awards

19,230

19,230

Reclassification of vested share-based awards

(1,490)

1,490

Adjustment to redeemable noncontrolling interests

 

1,116

(1,116)

(1,116)

Dividends declared on preferred stock

(10,181)

(10,181)

Dividends and distributions on common stock and common and incentive units

(190)

(370,278)

(7,823)

(378,101)

Contributions from (distributions to) noncontrolling interests

 

(64)

(64)

Net income

(2,657)

733,618

14,977

748,595

Other comprehensive income (loss)

(5,383)

284

(141,512)

(4,583)

(145,811)

Balance as of September 30, 2023

 

$

1,360,308

$

731,690

302,846,026

$

3,002

$

23,239,088

$

(4,900,758)

$

(882,996)

$

486,548

$

18,676,574

Accumulated

Accumulated

Redeemable

Number of

Additional

Dividends in

Other

Noncontrolling

Preferred

Common

Common

Paid-in

Excess of

Comprehensive

Noncontrolling

Three Months Ended March 31, 2024

    

Interests

    

Stock

    

Shares

    

Stock

    

Capital

    

Earnings

    

Loss, Net

    

Interests

    

Total Equity

Balance as of December 31, 2023

 

$

1,394,814

$

731,690

 

311,607,580

$

3,088

$

24,396,797

$

(5,262,648)

$

(751,393)

$

483,973

$

19,601,507

Conversion of common units to common stock

 

71,938

5,300

(5,300)

Vesting of restricted stock, net

 

55,243

Common stock offering costs

 

Issuance of common stock, net of costs

 

637,980

9

98,038

98,047

Shares issued under equity plans, net of share settlement to satisfy tax withholding upon vesting

 

47,918

2,902

2,902

Reclassification of vested share-based awards

 

(9,752)

9,752

Amortization of unearned compensation regarding share-based awards

18,377

18,377

Adjustment to redeemable noncontrolling interests

1,476

(1,476)

(1,476)

Dividends declared on preferred stock

 

(10,181)

(10,181)

Dividends and distributions on common stock and common and incentive units

(190)

(382,208)

(7,958)

(390,166)

Contributions from (distributions to) noncontrolling interests

(21,426)

(21,426)

Net income (loss)

 

(7,509)

281,508

13,838

295,346

Other comprehensive income (loss)

(37,855)

(1,503)

(98,698)

(3,242)

(103,443)

Balance as of March 31, 2024

 

$

1,350,736

$

731,690

 

312,420,659

$

3,097

$

24,508,683

$

(5,373,529)

$

(850,091)

$

469,637

$

19,489,487

See accompanying notes to the condensed consolidated financial statements.

7

Table of Contents

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

Nine Months Ended September 30, 2023

    

Interests

    

Stock

    

Shares

    

Stock

    

Capital

    

Earnings

    

Loss, Net

    

Interests

    

Total Equity

Balance as of December 31, 2022

 

$

1,514,679

$

731,690

 

291,148,222

$

2,887

$

22,142,868

$

(4,698,313)

$

(595,798)

$

524,131

$

18,107,465

Conversion of common units to common stock

 

77,432

2

5,590

(5,592)

Vesting of restricted stock, net

 

221,907

Issuance of common stock, net of costs

 

11,274,926

112

1,077,426

1,077,538

Shares issued under equity plans, net of share settlement to satisfy tax withholding upon vesting

 

123,539

1

(23)

(22)

Amortization of unearned compensation regarding share-based awards

 

54,785

54,785

Reclassification of vested share-based awards

 

(37,567)

37,567

Adjustment to redeemable noncontrolling interests

3,238

(3,238)

(3,238)

Dividends declared on preferred stock

(30,543)

(30,543)

Dividends and distributions on common stock and common and incentive units

 

(570)

(1,092,430)

(23,204)

(1,115,634)

Contributions from (distributions to) noncontrolling interests

 

129

4,441

4,441

Deconsolidation of noncontrolling interests in consolidated entities

(65,358)

(65,358)

Net income

(9,386)

920,528

19,279

939,807

Other comprehensive income (loss)

(147,782)

(753)

(287,198)

(4,716)

(292,667)

Balance as of September 30, 2023

 

$

1,360,308

$

731,690

 

302,846,026

$

3,002

$

23,239,088

$

(4,900,758)

$

(882,996)

$

486,548

$

18,676,574

See accompanying notes to the condensed consolidated financial statements.

8

Table of Contents

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, 2022

    

Interests

    

Stock

    

Shares

    

Stock

    

Capital

    

Earnings

    

Loss, Net

    

Interests

    

Total Equity

Balance as of June 30, 2022

 

$

41,047

$

731,690

284,733,922

2,824

$

21,091,364

$

(4,211,685)

$

(475,561)

$

491,587

$

17,630,219

Conversion of common units to common stock

6,253

503

(503)

Vesting of restricted stock, net

45,630

Partial settlement of forward sale agreements, net of costs

2,658,539

27

399,695

399,722

Shares issued under equity plans, net of share settlement to satisfy tax withholding upon vesting

 

63,863

11,684

11,684

Amortization of unearned compensation regarding share-based awards

21,288

21,288

Reclassification of vested share-based awards

(933)

933

Adjustment to redeemable noncontrolling interests

 

(4,783)

4,783

4,783

Dividends declared on preferred stock

(10,181)

(10,181)

Dividends and distributions on common stock and common and incentive units

(190)

(351,410)

(7,314)

(358,724)

Redeemable noncontrolling interests associated with acquisition of Teraco

1,530,090

Contributions from (distributions to) noncontrolling interests

 

10,379

10,379

Net income/(loss)

 

(3,423)

237,075

5,139

242,214

Other comprehensive income (loss)

(132,821)

(387,243)

(9,120)

(396,363)

Balance as of September 30, 2022

 

$

1,429,920

$

731,690

287,508,207

$

2,851

$

21,528,384

$

(4,336,201)

$

(862,804)

$

491,101

$

17,555,021

See accompanying notes to the condensed consolidated financial statements.

98

Table of Contents

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF EQUITY

(unaudited, in thousands, except share data)

Accumulated

Accumulated

Accumulated

Accumulated

Redeemable

Number of

Additional

Dividends in

Other

Redeemable

Number of

Additional

Dividends in

Other

Noncontrolling

Preferred

Common

Common

Paid-in

Excess of

Comprehensive

Noncontrolling

Noncontrolling

Preferred

Common

Common

Paid-in

Excess of

Comprehensive

Noncontrolling

Nine Months Ended September 30, 2022

    

Interests

    

Stock

    

Shares

    

Stock

    

Capital

    

Earnings

    

Loss, Net

    

Interests

    

Total Equity

Three Months Ended March 31, 2023

    

Interests

    

Stock

    

Shares

    

Stock

    

Capital

    

Earnings

    

Loss, Net

    

Interests

    

Total Equity

Balance as of December 31, 2021

 

$

46,995

$

731,690

 

284,415,013

$

2,824

$

21,075,863

$

(3,631,929)

$

(173,880)

$

472,219

$

18,476,787

Balance as of December 31, 2022

 

$

1,514,679

$

731,690

 

291,148,222

$

2,887

$

22,142,868

$

(4,698,313)

$

(595,798)

$

524,131

$

18,107,465

Conversion of common units to common stock

23,550

1,962

(1,962)

 

6,201

474

(474)

Vesting of restricted stock, net

 

305,054

 

90,306

Partial settlement of forward sale agreements, net of costs

 

2,700,727

27

400,851

400,878

Common stock offering costs

 

(441)

(441)

Shares issued under equity plans, net of share settlement to satisfy tax withholding upon vesting

 

63,863

4,541

4,541

 

53,881

1

(1,613)

(1,612)

Amortization of unearned compensation regarding share-based awards

 

62,253

62,253

 

17,502

17,502

Reclassification of vested share-based awards

 

(29,210)

29,210

 

(33,556)

33,556

Adjustment to redeemable noncontrolling interests

 

(12,124)

12,124

12,124

 

(306)

306

306

Dividends declared on preferred stock

(30,543)

(30,543)

(10,181)

(10,181)

Dividends and distributions on common stock and common and incentive units

(570)

(1,047,512)

(23,127)

(1,070,639)

(190)

(356,214)

(7,675)

(363,889)

Redeemable noncontrolling interests associated with acquisition of Teraco

1,530,090

Contributions from (distributions to) noncontrolling interests

 

1,703

21,906

21,906

 

129

4,552

4,552

Net income

 

(3,353)

373,783

9,134

382,917

Other comprehensive income (loss)

(132,821)

(688,924)

(16,279)

(705,203)

Balance as of September 30, 2022

 

$

1,429,920

$

731,690

 

287,508,207

$

2,851

$

21,528,384

$

(4,336,201)

$

(862,804)

$

491,101

$

17,555,021

Deconsolidation of noncontrolling interests in consolidated entities

(65,358)

(65,358)

Net income (loss)

(2,288)

68,726

2,399

71,125

Other comprehensive loss

(63,252)

839

(56,688)

1,054

(54,795)

Balance as of March 31, 2023

 

$

1,448,772

$

731,690

 

291,298,610

$

2,888

$

22,126,379

$

(4,995,982)

$

(652,486)

$

492,185

$

17,704,674

See accompanying notes to the condensed consolidated financial statements.

109

Table of Contents

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in thousands)

Nine Months Ended September 30, 

    

2023

    

2022

Cash flows from operating activities:

  

 

Net income

$

930,421

$

379,564

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

Gain on disposition of properties, net

 

(900,634)

 

(176,760)

Provision for impairment

113,000

 

Equity in loss of unconsolidated entities

 

(163)

(14,616)

Distributions from unconsolidated entities

 

51,068

 

34,587

Depreciation and amortization

1,274,384

 

1,147,803

Amortization of share-based compensation

 

54,785

 

62,253

Loss from early extinguishment of debt

 

 

51,135

Straight-lined rents and amortization of above and below market leases

 

(18,597)

 

(38,190)

Amortization of deferred financing costs and debt discount / premium

19,705

 

13,764

Other items, net

(20,345)

 

14,511

Changes in assets and liabilities:

Increase in accounts receivable and other assets

(343,767)

 

(276,953)

Increase in accounts payable and other liabilities

12,618

 

5,866

Net cash provided by operating activities

 

1,172,475

1,202,964

Cash flows from investing activities:

Improvements to investments in real estate

(2,466,462)

(1,753,520)

Cash paid for business combination / asset acquisitions, net of cash acquired

(45,856)

(1,877,092)

Investment in unconsolidated entities, net

(12,421)

(240,541)

Proceeds from sale of assets

2,470,684

203,995

Other investing activities, net

(44,651)

(60,776)

Net cash used in investing activities

 

(98,706)

 

(3,727,934)

Cash flows from financing activities:

Net (payments on) proceeds from credit facilities

(443,337)

1,968,149

Borrowings on secured / unsecured debt

827,759

2,426,865

Repayments on secured / unsecured debt

(3,081)

(741,347)

Premium paid for early extinguishment of debt

(49,662)

Capital contributions from noncontrolling interests, net

 

4,570

17,977

Proceeds from issuance of common stock, net

1,077,538

400,878

Payments of dividends and distributions

(1,510,463)

(1,440,481)

Other financing activities, net

(61,261)

(14,851)

Net cash (used in) provided by financing activities

 

(108,275)

 

2,567,528

Net increase in cash, cash equivalents and restricted cash

 

965,494

 

42,558

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

 

(43,745)

 

(8,098)

Cash, cash equivalents and restricted cash at beginning of period

 

150,696

 

151,485

Cash, cash equivalents and restricted cash at end of period

$

1,072,445

$

185,944

Three Months Ended March 31, 

    

2024

    

2023

Cash flows from operating activities:

  

 

Net income

$

287,837

$

68,837

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

Gain on disposition of properties, net

 

(277,787)

 

Equity in loss (earnings) of unconsolidated entities

 

16,008

(14,897)

Distributions from unconsolidated entities

 

45,797

 

28,904

Depreciation and amortization

431,102

 

421,198

Amortization of share-based compensation

 

16,736

 

17,502

Loss from early extinguishment of debt

 

1,070

 

Straight-lined rents and amortization of above and below market leases

 

4,699

 

(18,971)

Amortization of deferred financing costs and debt discount / premium

6,931

 

5,409

Other operating activities, net

473

 

(3,880)

Changes in assets and liabilities:

Increase in accounts receivable and other assets

(33,034)

 

(141,958)

Decrease in accounts payable and other liabilities

(147,557)

 

(12,418)

Net cash provided by operating activities

 

352,275

349,726

Cash flows from investing activities:

Improvements to investments in real estate

(659,315)

(738,677)

Cash paid for business combination / asset acquisitions, net of cash acquired

(80,581)

(57,001)

Investments in and advances to unconsolidated entities

(121,357)

52,991

Return of investment from unconsolidated entities

85,586

Proceeds from sale of assets

814,101

Other investing activities, net

(31,815)

(6,320)

Net cash provided by (used in) investing activities

 

6,619

 

(749,007)

Cash flows from financing activities:

Proceeds from credit facilities

447,018

985,448

Payments on credit facilities

(311,174)

(640,298)

Borrowings on secured / unsecured debt

5,568

790,962

Repayments on secured / unsecured debt

(240,000)

(3,081)

Capital (distribution to) contributions from noncontrolling interests, net

 

(21,426)

4,681

Proceeds from issuance of common stock, net

98,047

Payments of dividends and distributions

(788,525)

(737,976)

Other financing activities, net

778

(8,828)

Net cash provided by (used in) financing activities

 

(809,714)

 

390,908

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

 

(450,820)

 

(8,373)

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

 

13,438

 

(693)

Cash, cash equivalents and restricted cash at beginning of period

 

1,636,470

 

150,696

Cash, cash equivalents and restricted cash at end of period

$

1,199,088

$

141,630

See accompanying notes to the condensed consolidated financial statements.

1110

Table of Contents

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited, in thousands, except per unit data)

    

September 30, 

    

December 31, 

2023

2022

ASSETS

  

  

Investments in real estate:

 

  

 

  

Investments in properties, net

$

23,598,260

$

23,774,662

Investments in unconsolidated entities

 

2,180,313

 

1,991,426

Net investments in real estate

 

25,778,573

 

25,766,088

Operating lease right-of-use assets, net

1,274,410

1,351,329

Cash and cash equivalents

 

1,062,050

 

141,773

Accounts and other receivables, net

 

1,325,725

 

969,292

Deferred rent, net

 

586,418

 

601,590

Goodwill

 

8,998,074

 

9,208,497

Customer relationship value, deferred leasing costs and intangibles, net

 

2,506,198

 

3,092,627

Other assets

 

401,069

 

353,802

Total assets

$

41,932,517

$

41,484,998

LIABILITIES AND CAPITAL

 

  

 

  

Global revolving credit facilities, net

$

1,698,780

$

2,150,451

Unsecured term loans, net

1,524,663

797,449

Unsecured senior notes, net

 

13,072,102

 

13,120,033

Secured and other debt, including premiums

574,231

528,870

Operating lease liabilities

1,404,510

1,471,044

Accounts payable and other accrued liabilities

 

2,147,104

 

1,868,885

Deferred tax liabilities, net

1,088,724

1,192,752

Accrued dividends and distributions

 

 

363,716

Security deposits and prepaid rents

 

385,521

 

369,654

Total liabilities

 

21,895,635

 

21,862,854

Redeemable noncontrolling interests

1,360,308

1,514,679

Commitments and contingencies

 

 

Capital:

 

  

 

  

Partners’ capital:

 

  

 

  

General Partner:

 

  

 

  

Preferred units, $755,000 liquidation preference ($25.00 per unit), 30,200 units issued and outstanding as of September 30, 2023 and December 31, 2022

 

731,690

 

731,690

Common units, 302,846 and 291,148 units issued and outstanding as of September 30, 2023 and December 31, 2022, respectively

 

18,341,332

 

17,447,442

Limited Partners, 6,479 and 6,289 units issued and outstanding as of September 30, 2023 and December 31, 2022, respectively

 

465,548

 

436,942

Accumulated other comprehensive loss

 

(907,178)

 

(613,423)

Total partners’ capital

 

18,631,392

 

18,002,651

Noncontrolling interests in consolidated entities

 

45,182

 

104,814

Total capital

 

18,676,574

 

18,107,465

Total liabilities and capital

$

41,932,517

$

41,484,998

    

March 31, 

    

December 31, 

2024

2023

ASSETS

  

  

Investments in real estate:

 

  

 

  

Investments in properties, net

$

23,757,783

$

24,236,088

Investments in unconsolidated entities

 

2,365,821

 

2,295,889

Net investments in real estate

 

26,123,604

 

26,531,977

Operating lease right-of-use assets, net

1,233,410

1,414,256

Cash and cash equivalents

 

1,193,784

 

1,625,495

Accounts and other receivables, net

 

1,217,276

 

1,278,110

Deferred rent, net

 

611,670

 

624,427

Goodwill

 

9,105,026

 

9,239,871

Customer relationship value, deferred leasing costs and other intangibles, net

 

2,359,380

 

2,500,237

Assets held for sale

 

287,064

 

478,503

Other assets

 

501,875

 

420,382

Total assets

$

42,633,089

$

44,113,258

LIABILITIES AND CAPITAL

 

  

 

  

Global revolving credit facilities, net

$

1,901,126

$

1,812,287

Unsecured term loans, net

1,303,263

1,560,305

Unsecured senior notes, net of discount

 

13,190,202

 

13,422,342

Secured and other debt, net of discount

625,750

630,973

Operating lease liabilities

1,357,751

1,542,094

Accounts payable and other accrued liabilities

 

1,870,344

 

2,168,984

Deferred tax liabilities, net

1,121,224

1,151,096

Accrued dividends and distributions

 

 

387,988

Security deposits and prepaid rents

 

413,225

 

401,867

Obligations associated with assets held for sale

 

9,981

 

39,001

Total liabilities

 

21,792,866

 

23,116,937

Redeemable noncontrolling interests

1,350,736

1,394,814

Commitments and contingencies

 

 

Capital:

 

  

 

  

Partners’ capital:

 

  

 

  

General Partner:

 

  

 

  

Preferred units, $755,000 liquidation preference ($25.00 per unit), 30,200 units issued and outstanding as of March 31, 2024 and December 31, 2023

 

731,690

 

731,690

Common units, 312,421 and 311,608 units issued and outstanding as of March 31, 2024 and December 31, 2023, respectively

 

19,138,251

 

19,137,237

Limited Partners, 6,588 and 6,449 units issued and outstanding as of March 31, 2024 and December 31, 2023, respectively

 

461,910

 

459,356

Accumulated other comprehensive loss

 

(873,579)

 

(772,668)

Total partners’ capital

 

19,458,272

 

19,555,615

Noncontrolling interests in consolidated entities

 

31,215

 

45,892

Total capital

 

19,489,487

 

19,601,507

Total liabilities and capital

$

42,633,089

$

44,113,258

See accompanying notes to the condensed consolidated financial statements.

1211

Table of Contents

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED INCOME STATEMENTS

(unaudited, in thousands, except per unit data)

Three Months Ended September 30, 

Nine Months Ended September 30, 

Three Months Ended March 31, 

    

2023

    

2022

    

2023

    

2022

    

2024

    

2023

Operating Revenues:

 

  

 

  

  

 

  

 

  

 

  

Rental and other services

$

1,394,613

$

1,184,165

$

4,075,008

$

3,437,252

$

1,317,271

$

1,329,968

Fee income and other

 

7,819

 

7,918

 

32,414

 

21,475

 

13,872

 

8,755

Total operating revenues

 

1,402,432

 

1,192,083

 

4,107,422

 

3,458,727

 

1,331,143

 

1,338,723

Operating Expenses:

 

  

 

  

 

  

 

  

 

  

 

  

Rental property operating and maintenance

 

607,544

 

477,731

 

1,778,465

 

1,334,826

 

548,939

 

571,225

Property taxes and insurance

 

76,568

 

43,862

 

172,450

 

145,135

 

43,850

 

44,779

Depreciation and amortization

 

420,613

 

388,704

 

1,274,384

 

1,147,803

 

431,102

 

421,198

General and administrative

 

110,721

 

97,447

 

332,257

 

301,736

 

115,210

 

111,920

Transactions and integration

 

14,465

 

25,862

 

44,496

 

51,416

 

31,839

 

12,267

Provision for impairment

 

113,000

 

 

113,000

 

Other

 

1,295

 

1,096

 

1,950

 

8,823

 

10,836

 

Total operating expenses

 

1,344,206

 

1,034,702

 

3,717,002

 

2,989,739

 

1,181,776

 

1,161,389

Operating income

 

58,226

 

157,381

390,420

468,988

 

149,367

 

177,334

Other Income (Expenses):

 

 

Equity in (loss) earnings of unconsolidated entities

 

(19,793)

 

(12,254)

 

163

 

14,616

 

(16,008)

 

14,897

Gain on disposition of properties, net

810,688

173,990

900,634

176,760

277,787

Other income, net

 

24,812

 

15,752

 

18,162

 

31,811

 

9,709

 

280

Interest expense

 

(110,767)

 

(76,502)

 

(324,103)

 

(212,250)

 

(109,535)

 

(102,220)

Loss from early extinguishment of debt

(1,070)

Income tax expense

 

(17,228)

 

(19,576)

 

(54,855)

 

(49,226)

 

(22,413)

 

(21,454)

Net income

 

745,938

 

238,791

930,421

379,564

 

287,837

 

68,837

Net loss attributable to noncontrolling interests

 

3,980

 

3,684

 

10,407

 

2,719

Net (income) loss attributable to noncontrolling interests

 

(129)

 

1,389

Net income attributable to Digital Realty Trust, L.P.

 

749,918

 

242,475

940,828

382,283

 

287,708

 

70,226

Preferred units distributions

 

(10,181)

 

(10,181)

 

(30,543)

 

(30,543)

 

(10,181)

 

(10,181)

Net income available to common unitholders

$

739,737

$

232,294

$

910,285

$

351,740

$

277,527

$

60,045

Net income per unit available to common unitholders:

 

  

 

  

 

  

 

  

 

  

 

  

Basic

$

2.40

$

0.79

$

3.00

$

1.20

$

0.87

$

0.20

Diluted

$

2.33

$

0.75

$

2.93

$

1.15

$

0.82

$

0.20

Weighted average common units outstanding:

 

  

 

  

 

  

 

  

 

  

 

  

Basic

 

308,024

 

292,536

 

302,316

 

291,084

 

318,469

 

297,180

Diluted

 

317,538

 

302,258

 

312,867

 

300,028

 

326,975

 

309,026

See accompanying notes to the condensed consolidated financial statements.

1312

Table of Contents

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, 

Three Months Ended March 31, 

    

2023

    

2022

    

2023

    

2022

    

2024

    

2023

Net income

$

745,938

$

238,791

$

930,421

$

379,564

$

287,837

$

68,837

Other comprehensive income (loss):

 

  

 

  

 

  

 

  

 

  

 

  

Foreign currency translation adjustments

 

(190,425)

 

(535,246)

 

(478,792)

 

(843,036)

 

(200,004)

 

(112,076)

Increase in fair value of derivatives

 

48,580

 

7,154

 

61,730

 

6,166

 

69,035

 

572

Reclassification to interest expense from derivatives

 

(9,349)

 

(1,092)

 

(23,387)

 

(1,154)

 

(10,330)

 

(6,543)

Other comprehensive loss

(151,194)

(529,184)

(440,449)

(838,024)

(141,299)

(118,047)

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

$

594,744

$

(290,393)

$

489,972

$

(458,460)

Comprehensive income (loss)

$

146,538

$

(49,210)

Comprehensive loss attributable to noncontrolling interests

 

10,772

 

136,505

 

156,348

 

135,540

 

38,755

 

62,238

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

$

605,516

$

(153,888)

$

646,320

$

(322,920)

Comprehensive income attributable to Digital Realty Trust, L.P.

$

185,293

$

13,028

See accompanying notes to the condensed consolidated financial statements.

1413

Table of Contents

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, 2023

    

Common Units

    

Units

    

Amount

    

Units

    

Amount

    

Units

    

Amount

    

Loss, Net

    

Interests

    

Total Capital

Balance as of June 30, 2023

 

$

1,367,422

30,200,000

$

731,690

299,240,366

$

17,631,250

 

6,483,064

$

457,107

$

(762,492)

$

47,603

$

18,105,158

Conversion of limited partner common units to general partner common units

 

 

15,435

 

1,151

(15,435)

 

(1,151)

 

 

 

Vesting of restricted common units, net

66,419

Issuance of common units, net of costs

 

 

3,454,148

 

335,313

 

 

 

 

335,313

Issuance of limited partner common units, net

 

 

 

11,765

 

 

 

 

Units issued under equity plans, net of unit settlement to satisfy tax withholding upon vesting

 

 

69,658

 

3,551

 

 

 

 

3,551

Amortization of share-based compensation

 

 

 

19,230

 

 

 

 

19,230

Reclassification of vested share-based awards

 

 

(1,490)

 

1,490

 

 

 

Adjustment to redeemable partnership units

 

1,116

 

 

(1,116)

 

 

 

 

(1,116)

Distributions

(190)

(10,181)

(370,278)

(7,823)

(388,282)

Contributions from noncontrolling interests in consolidated entities

(64)

(64)

Deconsolidation of noncontrolling interest in consolidated entities

Net income

(2,657)

10,181

723,437

15,925

(948)

748,595

Other comprehensive income (loss)

(5,383)

284

(144,686)

(1,409)

(145,811)

Balance as of September 30, 2023

 

$

1,360,308

30,200,000

$

731,690

302,846,026

$

18,341,332

6,479,394

$

465,548

$

(907,178)

$

45,182

$

18,676,574

See accompanying notes to the condensed consolidated financial statements.

15

Table of Contents

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CAPITAL

(unaudited, in thousands, except unit data)

Accumulated

Accumulated

Redeemable

General Partner

Limited Partners

Other

Redeemable

General Partner

Limited Partners

Other

Limited Partner

Preferred Units

Common Units

Common Units

Comprehensive

Noncontrolling

Limited Partner

Preferred Units

Common Units

Common Units

Comprehensive

Noncontrolling

Nine Months Ended September 30, 2023

    

Common Units

    

Units

    

Amount

    

Units

    

Amount

    

Units

    

Amount

    

Loss, Net

    

Interests

    

Total Capital

Three Months Ended March 31, 2024

    

Common Units

    

Units

    

Amount

    

Units

    

Amount

    

Units

    

Amount

    

Loss, Net

    

Interests

    

Total Capital

Balance as of December 31, 2022

 

$

1,514,679

30,200,000

$

731,690

291,148,222

$

17,447,442

 

6,288,669

$

436,942

$

(613,423)

$

104,814

$

18,107,465

Balance as of December 31, 2023

 

$

1,394,814

30,200,000

$

731,690

311,607,580

$

19,137,237

 

6,448,987

$

459,356

$

(772,668)

$

45,892

$

19,601,507

Conversion of limited partner common units to general partner common units

 

 

77,432

 

5,592

(77,432)

 

(5,592)

 

 

 

 

 

71,938

 

5,300

(71,938)

 

(5,300)

 

 

 

Vesting of restricted common units, net

 

221,907

 

55,243

Issuance of common units, net of costs

 

 

11,274,926

 

1,077,539

 

 

 

 

1,077,539

 

 

637,980

 

98,047

 

 

 

 

98,047

Issuance of limited partner common units, net

 

 

 

268,157

 

 

 

 

 

 

 

210,909

 

 

 

 

Units issued under equity plans, net of unit settlement to satisfy tax withholding upon vesting

 

 

123,539

 

(23)

 

 

 

 

(23)

 

 

47,918

 

2,902

 

 

 

 

2,902

Amortization of share-based compensation

 

 

 

54,785

 

 

 

 

54,785

 

 

 

18,377

 

 

 

 

18,377

Reclassification of vested share-based awards

 

 

 

(37,567)

 

37,567

 

 

 

 

 

 

(9,752)

 

9,752

 

 

 

Adjustment to redeemable partnership units

 

3,238

 

 

(3,238)

 

 

 

 

(3,238)

 

1,476

 

 

(1,476)

 

 

 

 

(1,476)

Distributions

(570)

(30,543)

(1,092,430)

(23,204)

(1,146,177)

(190)

(10,181)

(382,208)

(7,958)

(400,347)

Contributions from noncontrolling interests in consolidated entities

129

4,441

4,441

Deconsolidation of noncontrolling interest in consolidated entities

(65,358)

(65,358)

Net income

 

(9,386)

30,543

889,985

19,835

(556)

939,807

Contributions from (distributions to) noncontrolling interests in consolidated entities

(21,426)

(21,426)

Net income (loss)

 

(7,509)

10,181

271,327

6,060

7,778

295,346

Other comprehensive income (loss)

(147,782)

(753)

(293,755)

1,841

(292,667)

(37,855)

(1,503)

(100,911)

(1,029)

(103,443)

Balance as of September 30, 2023

 

$

1,360,308

30,200,000

$

731,690

302,846,026

$

18,341,332

 

6,479,394

$

465,548

$

(907,178)

$

45,182

$

18,676,574

Balance as of March 31, 2024

 

$

1,350,736

30,200,000

$

731,690

312,420,659

$

19,138,251

 

6,587,958

$

461,910

$

(873,579)

$

31,215

$

19,489,487

See accompanying notes to the condensed consolidated financial statements.

1614

Table of Contents

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, 2022

    

Common Units

    

Units

    

Amount

    

Units

    

Amount

    

Units

    

Amount

    

Loss, Net

    

Interests

Total Capital

Balance as of June 30, 2022

 

$

41,047

30,200,000

$

731,690

284,733,922

$

16,882,503

6,299,478

$

446,937

$

(490,285)

$

59,374

$

17,630,219

Conversion of limited partner common units to general partner common units

 

 

6,253

 

503

 

(503)

 

 

 

Vesting of restricted common units, net

45,630

Partial settlement of forward sale agreements, net of costs

2,658,539

399,722

399,722

Issuance of limited partner common units, net

 

 

 

(4,810)

 

 

 

 

Units issued under equity plans, net of unit settlement to satisfy tax withholding upon vesting

 

 

63,863

 

11,684

 

 

 

 

11,684

Amortization of share-based compensation

 

 

 

21,288

 

 

 

 

21,288

Reclassification of vested share-based awards

 

 

 

(933)

 

933

 

 

 

Adjustment to redeemable partnership units

(4,783)

 

 

4,783

 

 

 

 

4,783

Distributions

 

(190)

 

 

(361,591)

 

(7,314)

 

 

 

(368,905)

Redeemable noncontrolling interests associated with acquisition of Teraco

1,530,090

Contributions from noncontrolling interests in consolidated entities

10,379

10,379

Net income/(loss)

(3,423)

237,075

5,275

(136)

242,214

Other comprehensive income (loss)

(132,821)

(396,363)

(396,363)

Balance as of September 30, 2022

 

$

1,429,920

30,200,000

$

731,690

287,508,207

$

17,195,034

 

6,294,668

$

445,328

$

(886,648)

$

69,617

$

17,555,021

Accumulated

Redeemable

General Partner

Limited Partners

Other

Limited Partner

Preferred Units

Common Units

Common Units

Comprehensive

Noncontrolling

Three Months Ended March 31, 2023

    

Common Units

    

Units

    

Amount

    

Units

    

Amount

    

Units

    

Amount

    

Loss, Net

    

Interests

    

Total Capital

Balance as of December 31, 2022

 

$

1,514,679

30,200,000

$

731,690

291,148,222

$

17,447,442

 

6,288,669

$

436,942

$

(613,423)

$

104,814

$

18,107,465

Conversion of limited partner common units to general partner common units

 

 

6,201

 

474

 

(6,201)

 

(474)

 

 

 

Vesting of restricted common units, net

 

 

90,306

 

 

 

 

 

 

Common unit offering costs

 

 

(440)

 

 

 

 

 

(440)

Issuance of limited partner common units, net

 

 

 

 

179,689

 

 

 

 

Units issued under equity plans, net of unit settlement to satisfy tax withholding upon vesting

 

 

53,881

 

(1,613)

 

 

 

 

 

(1,613)

Amortization of share-based compensation

 

 

 

17,502

 

 

 

 

 

17,502

Reclassification of vested share-based awards

 

 

 

(33,556)

 

 

33,556

 

 

 

Adjustment to redeemable partnership units

 

(306)

 

 

306

 

 

 

 

 

306

Distributions

 

(190)

 

(10,181)

 

(356,214)

 

 

(7,675)

 

 

 

(374,070)

Contributions from (distributions to) noncontrolling interests

129

 

 

 

 

 

 

4,552

 

4,552

Impact of changes in foreign exchange rates

(63,252)

839

2,403

3,242

Deconsolidation of noncontrolling interest in consolidated entities

 

 

 

 

 

 

 

(65,358)

 

(65,358)

Net income (loss)

 

(2,288)

 

10,181

 

58,545

 

 

1,468

 

 

931

 

71,125

Other comprehensive income (loss)

(58,037)

(58,037)

Balance as of March 31, 2023

 

$

1,448,772

30,200,000

$

731,690

291,298,610

$

17,133,285

 

6,462,157

$

463,817

$

(671,460)

$

47,342

$

17,704,674

See accompanying notes to the condensed consolidated financial statements.

1715

Table of Contents

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTSTATEMENTS OF CAPITALCASH FLOWS

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

Accumulated

Redeemable

General Partner

Limited Partners

Other

Limited Partner

Preferred Units

Common Units

Common Units

Comprehensive

Noncontrolling

Nine Months Ended September 30, 2022

    

Common Units

    

Units

    

Amount

    

Units

    

Amount

    

Units

    

Amount

    

Income (Loss), Net

    

Interests

    

Total Capital

Balance as of December 31, 2021

 

$

46,995

30,200,000

$

731,690

284,415,013

$

17,446,758

 

5,931,771

$

432,902

$

(181,445)

$

46,882

$

18,476,787

Conversion of limited partner common units to general partner common units

 

 

23,550

 

1,962

 

(17,297)

 

(1,962)

 

 

 

Vesting of restricted common units, net

 

 

305,054

 

 

 

 

 

 

Payment of common unit offering costs and other, net

 

2,658,539

 

395,909

 

 

 

 

 

395,909

Issuance of limited partner common units, net

 

 

 

 

380,194

 

 

 

 

Units issued under equity plans, net of unit settlement to satisfy tax withholding upon vesting

 

 

106,051

 

9,510

 

 

 

 

 

9,510

Amortization of share-based compensation

 

 

 

62,253

 

 

 

 

 

62,253

Reclassification of vested share-based awards

 

 

 

(29,210)

 

 

29,210

 

 

 

Adjustment to redeemable partnership units

 

(12,124)

 

 

12,124

 

 

 

 

 

12,124

Distributions

 

(570)

 

 

(1,078,055)

 

 

(23,127)

 

 

 

(1,101,182)

Redeemable noncontrolling interests associated with acquisition of Teraco

1,530,090

 

Contributions from noncontrolling interests in consolidated entities

1,703

136,708

3,030

21,906

161,644

Net income

 

(3,353)

 

 

237,075

 

 

5,275

 

 

829

 

243,179

Other comprehensive income (loss)

(132,821)

(705,203)

(705,203)

Balance as of September 30, 2022

 

$

1,429,920

30,200,000

$

731,690

287,508,207

$

17,195,034

 

6,294,668

$

445,328

$

(886,648)

$

69,617

$

17,555,021

See accompanying notes to the condensed consolidated financial statements.

18

Table of Contents

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in thousands)

Nine Months Ended September 30, 

Three Months Ended March 31, 

2023

    

2022

2024

    

2023

Cash flows from operating activities:

  

 

  

  

 

  

Net income

$

930,421

$

379,564

$

287,837

$

68,837

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

Gain on disposition of properties, net

 

(900,634)

 

(176,760)

 

(277,787)

 

Provision for impairment

113,000

Equity in loss of unconsolidated entities

 

(163)

 

(14,616)

Equity in loss (earnings) of unconsolidated entities

 

16,008

 

(14,897)

Distributions from unconsolidated entities

 

51,068

 

34,587

 

45,797

 

28,904

Depreciation and amortization

1,274,384

1,147,803

431,102

421,198

Amortization of share-based compensation

 

54,785

 

62,253

 

16,736

 

17,502

Loss from early extinguishment of debt

 

 

51,135

 

1,070

 

Straight-lined rents and amortization of above and below market leases

 

(18,597)

 

(38,190)

 

4,699

 

(18,971)

Amortization of deferred financing costs and debt discount / premium

19,705

13,764

6,931

5,409

Other items, net

(20,345)

14,511

Other operating activities, net

473

(3,880)

Changes in assets and liabilities:

Increase in accounts receivable and other assets

(343,767)

(276,953)

(33,034)

(141,958)

Increase in accounts payable and other liabilities

 

12,618

 

5,866

Decrease in accounts payable and other liabilities

 

(147,557)

 

(12,418)

Net cash provided by operating activities

1,172,475

1,202,964

352,275

349,726

Cash flows from investing activities:

 

 

Improvements to investments in real estate

(2,466,462)

(1,753,520)

(659,315)

(738,677)

Cash paid for business combination / asset acquisitions, net of cash acquired

(45,856)

(1,877,092)

(80,581)

(57,001)

Investment in unconsolidated entities, net

 

(12,421)

(240,541)

Investments in and advances to unconsolidated entities

 

(121,357)

52,991

Return of investment from unconsolidated entities

85,586

Proceeds from sale of assets

2,470,684

203,995

814,101

Other investing activities, net

(44,651)

(60,776)

(31,815)

(6,320)

Net cash used in investing activities

(98,706)

(3,727,934)

Net cash provided by (used in) investing activities

6,619

(749,007)

Cash flows from financing activities:

Net (payments on) proceeds from credit facilities

(443,337)

1,968,149

Proceeds from credit facilities

447,018

985,448

Payments on credit facilities

(311,174)

(640,298)

Borrowings on secured / unsecured debt

827,759

2,426,865

5,568

790,962

Repayments on secured / unsecured debt

 

(3,081)

(741,347)

 

(240,000)

(3,081)

Premium paid for early extinguishment of debt

(49,662)

Capital contributions from noncontrolling interests, net

 

4,570

17,977

Capital (distribution to) contributions from noncontrolling interests, net

 

(21,426)

4,681

General partner contributions

1,077,538

400,878

98,047

Payments of dividends and distributions

 

(1,510,463)

(1,440,481)

 

(788,525)

(737,976)

Other financing activities, net

 

(61,261)

(14,851)

 

778

(8,828)

Net cash (used in) provided by financing activities

 

(108,275)

 

2,567,528

Net increase in cash, cash equivalents and restricted cash

 

965,494

 

42,558

Net cash provided by (used in) financing activities

 

(809,714)

 

390,908

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

 

(450,820)

 

(8,373)

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

(43,745)

 

(8,098)

13,438

 

(693)

Cash, cash equivalents and restricted cash at beginning of period

150,696

 

151,485

1,636,470

 

150,696

Cash, cash equivalents and restricted cash at end of period

$

1,072,445

$

185,944

$

1,199,088

$

141,630

See accompanying notes to the condensed consolidated financial statements.

1916

Table of Contents

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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1. General

Organization and Description of 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 U.S. federal income tax purposes.

The Parent’s only material asset is its ownership of partnership interests of the OP. 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.

Accounting Principles and Basis of Presentation. The accompanying unaudited interim condensed consolidated financial statements and accompanying notes (the “Financial Statements”) are prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”) and are presented in our reporting currency, the U.S. dollar. All of the accounts of the Parent, the OP, and the subsidiaries of the OP are included in the accompanying Financial Statements. 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, 20222023 (“20222023 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, 2023 and June 30, 2023, as filed with the SEC, and other filings with the SEC.

Management Estimates and Assumptions. U.S. GAAP requires us to make estimates and assumptions that affect reported amounts of revenue and expenses during the reporting period, reported amounts for assets and liabilities as of the date of the financial statements, and disclosures of contingent assets and liabilities as of the date of the financial statements. Although we believe the estimates and assumptions we made are reasonable and appropriate, as discussed in the applicable sections throughout the consolidated financial statements, different assumptions and estimates could materially impact our reported results. Actual results and outcomes may differ from our assumptions.

New Accounting Pronouncements. Recently issued accounting pronouncements that have yet to be adopted by the Company are not expected to have a material impact to the condensed consolidated financial statements.

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2. Investments in Properties

A summary of our investments in properties is below (in thousands):

���

Property Type

As of September 30, 2023

As of December 31, 2022

As of March 31, 2024

As of December 31, 2023

Land

$

1,064,058

$

1,061,408

$

1,098,238

$

1,087,278

Acquired ground lease

87

6,006

89

91

Buildings and improvements

23,998,641

24,287,103

25,179,025

25,388,788

Tenant improvements

824,244

781,540

845,444

830,211

25,887,030

26,136,057

27,122,796

27,306,368

Accumulated depreciation and amortization

(7,489,193)

(7,268,981)

(7,976,093)

(7,823,685)

Investments in operating properties, net

18,397,837

18,867,076

19,146,703

19,482,683

Construction in progress and space held for development

5,020,464

4,789,134

4,496,840

4,635,215

Land held for future development

179,959

118,452

114,240

118,190

Investments in properties, net

$

23,598,260

$

23,774,662

$

23,757,783

$

24,236,088

Asset Acquisitions

In January 2024, we acquired a 16-acre site in Paris for $80 million. Prior to the acquisition, we leased the land, which consisted of two completed data centers and two data centers under construction. As a result of the land acquisition, we derecognized the right-of-use assets and lease liabilities of $145 million and $150 million, respectively.

Dispositions

On July 13, 2023,January 11, 2024, we formed a joint venture with GI Partners, and GI Partners acquired a 65% interest in two stabilizedBlackstone Inc. to develop four hyperscale data center buildingscampuses across Frankfurt, Paris and Northern Virginia. The campuses are planned to support the construction of 10 data centers with approximately 500 megawatts of potential IT load capacity. The first phase of the joint venture closed on hyperscale data center campuses in Paris and Northern Virginia, while the Chicago metro area that we contributed.second phase is scheduled to close later in 2024, upon obtaining the required approvals. We received approximately $0.7 billion$231 million of grossnet proceeds from the contribution of our data centers to the joint venture and the associated financing, and retained a 35% interest infirst phase of the joint venture. As a result of transferring control, we derecognized the data centers and recognized a gain on disposition of approximately $238 million. We have also granted GI Partners an option to purchase an interest in the third facility on the same hyperscale data center campus in Chicago. In addition, GI Partners has a call option to increase their ownership interest in the joint venture from 65% to 80%. The call option must be delivered by written notice to the Company no later than January 9, 2024. We continue to manage the day-to-day operations of the assets.

On July 25, 2023, we formed a joint venture with TPG Real Estate, and TPG Real Estate acquired an 80% interest in three stabilized hyperscale data center buildings in Northern Virginia that we contributed. We received approximately $1.3 billion of gross proceeds from the contribution of our data centers to the joint venture and the associated financing, and retained a 20% interest in the joint venture. As a result of transferring control, we derecognized the data centers and recognized a gainloss on disposition of approximately $577$0.3 million. We will continue to manage the day‐to‐day operations of the assets.

3. Business Combinations

On August 1, 2022, we completed the acquisition of a 61.1% indirect controlling interest in Teraco, a leading carrier-neutral data center and interconnection services provider in South Africa (the “Teraco Acquisition”). The total purchase price was $1.7 billion cash, funded by our global revolving credit facility and partial settlement of our forward equity sale agreements described under Note 11. “Equity and Capital—Forward Equity Sale.” Teraco controls (and consolidates) the Teraco Connect Trust (the “Trust”) that was created as part of the Broad Based Black Economic Empowerment Program in South Africa. The Trust owns a 12% interest in Teraco’s primary operating company, however, because Teraco (and the Company) controls the Trust, the Trust is consolidated by Teraco (and the Company). If the Trust was not consolidated by Teraco, the Company’s ownership interest in Teraco would be approximately 55%.

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Goodwill — The purchase priceIn January 2024, we closed on the sale of our interest in four data centers to Brookfield Infrastructure Partners L.P., or Brookfield, for approximately $271 million. Two of the Teraco Acquisition exceeded the fair value of net tangible and intangible assets acquired and liabilities assumeddata centers were consolidated by $1.6 billion. This amount was recorded as goodwill. We believe the strategic benefitsus; while two of the data centers were owned by Digital Core REIT (see Note 5. “Investments in Unconsolidated Entities”). The sale was completed subsequent to Brookfield’s November 2023 acquisition supportof one of our tenants, Cyxtera Technologies. The acquisition was part of Cyxtera’s plan of reorganization under its Chapter 11 bankruptcy proceedings. In conjunction with the value of goodwill recorded. Specifically, Teraco has numerous cross-connects, cloud on-rampssale, we bought out Cyxtera’s leases in three data centers located in Singapore and Frankfurt for approximately $57 million. In addition, Brookfield assumed the leases on three facilities previously leased to Cyxtera and amended the leases on three additional data centers in additionNorth America, accelerating the expiration date to direct accessSeptember 2024. As a result of the sale, we recognized a total gain on disposition of approximately $203.1 million, of which $194.2 million is included within Gain on disposition of properties, net and $8.9 million is included within Equity in (loss) earnings of unconsolidated entities on our condensed consolidated income statements.

On March 1, 2024, we formed a joint venture with Mitsubishi Corporation, or Mitsubishi, to multiple subsea cables.support the development of two data centers in the Dallas metro area. The acquisitionfacilities were 100% pre-leased prior to construction. We contributed the two data center buildings at a contribution value of Teraco added South Africaapproximately $261 million. We received approximately $153 million of gross proceeds from the contribution of our data centers to the Company’sjoint venture and retained a 35% interest in the joint venture. Mitsubishi paid such cash in exchange for a 65% interest in the joint venture. As a result of transferring control, we derecognized the data centers and recognized a gain on disposition of approximately $7.1 million.

On April 16, 2024, we expanded our existing markets on the continent, including in Kenya, Mozambique, and Nigeria. The strategic importance of these markets has been enhanced by the recent and ongoing implementation of new subsea cable networks encircling Africa. When combinedjoint venture with GI Partners with the Company’s highly connected facilitiessale to GI Partners of a 75% interest in Marseille, France,a data center in the Chicago metro area. We received approximately $385 million of net proceeds from the contribution of our data centers to the joint venture and across EMEA,the associated financing and retained a 25% interest in the joint venture. The disposition of a portion of our customers now haveinterest in the data center met the criteria under ASC 360 for the assets to qualify as held for sale and contribution as of March 31, 2024. However, the operations are not classified as discontinued operations as a rangeresult of strategic connectivity hubs from which to serve all cornersour continuing interest in the joint venture. The data center was not representative of a significant component of our portfolio, nor did the African market.sale represent a significant shift in our strategy.

Redeemable Noncontrolling Interest (“Redeemable NCI”) — As part of the Teraco Acquisition, the Company and certain of its subsidiaries entered into a put/call agreement with the owners of the interest in Teraco that was not acquired by the Company (the “Put/Call Agreement”). The interest retained by these owners is hereafter referred to as the “Remaining Teraco Interest” and the owners of such interest are hereafter referred to as the “Rollover Shareholders”. Pursuant to the Put/Call Agreement, the Rollover Shareholders have the right to sell all or a portion of the Remaining Teraco Interest to the Company for a two-year period beginning on February 1, 2026, and the Company has the right to purchase all or a portion of the Remaining Teraco Interest from the Rollover Shareholders for a one-year period beginning on February 1, 2028. Per the terms of the agreement, the purchase price of the Remaining Teraco Interest for the put right and the call right can be settled by the Company with cash, shares in the Company, or a combination of cash and shares. In the event the Company elects to settle a put or call in whole or in part with shares of Digital Realty Trust, Inc.’s common stock, such shares will be issued in a private placement transaction with customary accompanying registration rights.

Since the Rollover Shareholders can redeem the put right at their discretion and such redemption, which could be in cash, is outside the Company’s control, the Company recorded the noncontrolling interest as Redeemable NCI and classified it in temporary equity within its condensed consolidated balance sheets. The Redeemable NCI was initially recorded at its acquisition-date fair value and will be adjusted each reporting period for income (or loss) attributable to the noncontrolling interest (a $3.0 million and $9.9 million net loss for the three and nine months ended September 30, 2023, respectively). If the contractual redemption value of the Redeemable NCI is greater than its carrying value, an adjustment is made to reflect Redeemable NCI at the higher of its contractual redemption value or its carrying value each reporting period. Changes to the redemption value are recognized immediately in the period the change occurs. If the redemption value of the Redeemable NCI is equal to or less than the fair market value of the Remaining Teraco Interest, the change in the redemption value will be adjusted through Additional Paid in Capital. If the redemption value is greater than the fair market value of the Remaining Teraco Interest, the change in redemption value will be adjusted through Retained Earnings. These adjustments are not reflected on the Company’s income statement, but are instead reflected as adjustments to the net income component of the Company’s earnings per share calculations. When calculating earnings per share attributable to Digital Realty Trust, Inc., the Company adjusts net income attributable to Digital Realty Trust, Inc. to the extent the redemption value exceeds the fair value of the Redeemable NCI on a cumulative basis. For the nine months ended September 30, 2023, no such adjustment was required.

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4.3. Leases

Lessor Accounting

We generate most of our revenue by leasing 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, some 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. Our largest customer’s total revenue approximates 12% of our total revenue base. No other individual customer makes up more than 6% of our total revenue.

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 2073.2069. As of September 30, 2023,March 31, 2024, certain of our data centers, primarily in Europe and Singapore, are subject to ground leases. As of September 30, 2023,March 31, 2024, the termination dates of these ground leases generally range from 2024 to 2049.2073. In addition, our corporate headquarters along with several regional office locations are subject to leases with termination dates ranging from 20232024 to 2041. 2036.

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 $37.4$37.0 million and $36.0$38.4 million for the three months ended September 30,March 31, 2024 and 2023, and 2022, respectively, and approximately $114.1 million and $109.0 million for the nine months ended September 30, 2023 and 2022, respectively.

5.4. Receivables

Accounts and Other Receivables, Net

Accounts and Other Receivables, net is primarily comprised of contractual rents and other lease-related obligations currently due from customers. These amounts (net of an allowance for estimated uncollectible amounts) are shown in the subsequent table as Accounts receivable – trade, net. Other receivables shown separately from Accounts receivable – trade, net consist primarily of amounts that have not yet been billed to customers, such as for utility reimbursements and installation fees.

Balance as of

Balance as of

(Amounts in thousands):

September 30, 2023

December 31, 2022

Accounts receivable – trade

$

666,069

$

551,393

Allowance for doubtful accounts

(46,643)

(33,048)

Accounts receivable – trade, net

619,426

518,345

Accounts receivable – customer recoveries

254,279

170,012

Value-added tax receivables

270,724

167,459

Accounts receivable – installation fees

80,697

60,663

Other receivables

100,599

52,813

Accounts and other receivables, net

$

1,325,725

$

969,292

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Balance as of

Balance as of

(Amounts in thousands):

March 31, 2024

December 31, 2023

Accounts receivable – trade

$

658,527

$

694,252

Allowance for doubtful accounts

(43,873)

(41,204)

Accounts receivable – trade, net

614,654

653,048

Accounts receivable – customer recoveries

208,997

233,499

Value-added tax receivables

200,225

257,911

Accounts receivable – installation fees

80,329

65,203

Other receivables

113,071

68,449

Accounts and other receivables, net

$

1,217,276

$

1,278,110

Deferred rent, net

Deferred rent, net represents rental income that has been recognized as revenue under ASC 842, but which is not yet due from customers under their existing rental agreements. The Company recognizes an allowance against deferred rent receivables to the extent it becomes no longer probable that a customer or group of customers will be able to make substantially all of their required cash rental payments over the entirety of their respective lease terms. As of September 30, 2023, allowance for deferred rent receivables increased primarily due to a customer bankruptcy.

Balance as of

Balance as of

Balance as of

Balance as of

(Amounts in thousands):

September 30, 2023

December 31, 2022

March 31, 2024

December 31, 2023

Deferred rent receivables

$

619,092

$

612,439

$

622,871

$

657,009

Allowance for deferred rent receivables

(32,674)

(10,849)

(11,201)

(32,582)

Deferred rent, net

$

586,418

$

601,590

$

611,670

$

624,427

6.5. Investments in Unconsolidated Entities

A summary of the Company’s investments in unconsolidated entities accounted for under the equity method of accounting is shown below (in thousands):

Balance as of

Balance as of

% Ownership

September 30, 2023

December 31, 2022

Americas (1)

Various

%

$

1,257,262

$

912,842

APAC (2)(5)

50

%

525,104

543,524

EMEA (3)

Various

%

59,402

62,570

Global (4)

42

%  

338,545

472,490

Total

  

$

2,180,313

$

1,991,426

Balance as of

Balance as of

March 31, 2024

December 31, 2023

Americas (1)

$

1,413,065

$

1,363,226

APAC (2)

541,862

569,996

EMEA (3)

86,495

28,334

Global (4)

324,399

334,333

Total

$

2,365,821

$

2,295,889

Includes the following unconsolidated entities along with our ownership percentage:

(1)Includes Ascenty (51%), Blackstone (20%), Clise (50%), Colovore (17%), GI Partners (20%), Mapletree (20%), Menlo (20%), Mitsubishi (35%), Realty Income (20%), TPG Real Estate (20%), and Walsh.Walsh (85%).
(2)Includes BAMDigital Connexion (33%), Lumen (50%), and MC Digital Realty Lumen, and MCDR.(50%).
(3)IncludesBlackstone (20%), Medallion (60%), and Mivne.Mivne (50%).
(4)Includes Digital Core REIT.
(5)During the nine months ended September 30, 2023, we derecognized all assets, liabilities and 50% noncontrolling interests related to a joint venture that was previously consolidated and recognized an equity method investment of approximately $61.9 million based on the value of our 50% noncontrolling interest in the joint venture. We had concluded that we would consolidate the joint venture during the development phase of the buildings because we had the power to direct activities that most significantly impacted the joint venture’s 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 venture’s economic performance and deconsolidated the joint venture and recognized the investment under the equity method as we still retained significant influence.REIT (38%).

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GI Partners Joint VentureOn July 13, 2023,Generally, we formed a joint venture with GI Partners. We contributed two stabilized hyperscale data center buildings in the Chicago metro area, at a purchase price of $900 million, to the new joint venture. We received approximately $0.7 billion of gross proceeds from the contribution of our data centers to the joint venture and the associated financing and retained a 35% interest in the joint venture. GI Partners contributed such cash to the joint venture in exchange for a 65% interest in the joint venture. We have also granted GI Partners an option to purchase an interest in the third facility on the same hyperscale data center campus in Chicago. In addition, GI Partners has a call option to increase their ownership interest in the joint venture from 65% to 80%. The call option must be delivered by written notice to the Company no later than January 9, 2024. We perform the day-to-day accounting and property management functions for the joint venture and, as such, will earn a management fee. DLR is to serve as the managing member responsible for operations in the ordinary course of business.business of the joint ventures. We perform the day-to-day accounting and property management functions for the joint ventures and, as such, will earn management fees. However, certain approval rights are granted through the terms of the LLC agreementjoint venture agreements and require unanimous consent of both members with respect to any major decisions. MajorGenerally, major decisions are defined to include the annual plan which sets out joint venture and property level budgets, including lease revenues, operating expenses, and capital expenditures. As such, we concluded we do not own a controlling interest and accounted for our interest in the joint ventureventures under the equity method of accounting.

GI Partners Joint Venture On July 13, 2023, we formed a joint venture with GI Partners, and GI Partners acquired a 65% interest in two stabilized hyperscale data center buildings in the Chicago metro area that we contributed. We retained a 35% interest in the joint venture. As a result of transferring control, we derecognized the date ofdata centers. In addition, GI Partners had a call option to increase their ownership interest in the joint venture formation, we used a discountedfrom 65% to 80%. The call option top-up election notice was delivered to the Company on December 21, 2023. On January 12, 2024, GI Partners made an additional cash flow model to calculate the fair value of our retained equity interest. The fair value of the retained interest was $157 million, and is classified as a Level 3 investmentcapital contribution in the fair value hierarchy. The primary inputsamount of $68 million, resulting in an additional 15% ownership in the joint venture. Currently, GI Partners has an 80% interest in the joint venture, and we have retained a 20% interest. We also granted GI Partners an option to purchase an interest in the valuation included volatility, hold period, and dividend yield.third facility on the same hyperscale data center campus in Chicago. On April 16, 2024, we expanded our existing joint venture with GI Partners with the sale to GI Partners of a 75% interest in this third facility, see Note 2. “Investments in Properties”.

TPG Real Estate Joint VentureOn July 25, 2023, we formed a joint venture with TPG Real Estate. We contributedEstate, and TPG Real Estate acquired an 80% interest in three stabilized hyperscale data center buildings in Northern Virginia at a purchase price of $1.5 billion, to the new joint venture.that we contributed. We received approximately $1.3 billion of gross proceeds from the contribution of our data centers to the joint venture and the associated financing and retained a 20% interest in the joint venture. TPG Real EstateAs a result of transferring control, we derecognized the data centers.

Realty Income Joint Venture– On November 10, 2023, we formed a joint venture with Realty Income to support the development of two data centers in Northern Virginia. We retained a 20% interest in the joint venture. Realty Income contributed such cash to the joint venture in exchange for an 80% interest in the joint venture. We performEach partner will fund its pro rata share of the day-to-day accountingremaining estimated development cost for the first phase of the project, which is slated for completion in mid-2024.

Blackstone Joint Venture- On January 11, 2024, we formed a joint venture with Blackstone Inc. to develop four hyperscale data center campuses across Frankfurt, Paris and property management functions forNorthern Virginia. The campuses are planned to support the construction of 10 data centers with approximately 500 megawatts of potential IT load capacity. The first phase of the joint venture closed on hyperscale data center campuses in Paris and as such, will earnNorthern Virginia, while the second phase is scheduled to close later in 2024, upon obtaining the required approvals. We retained a management fee. DLR is to serve as the managing member responsible for operations in the ordinary course of business. However, certain approval rights are granted through the terms of the LLC agreement and require unanimous consent of both members with respect to any major decisions. Major decisions are defined to include the annual plan which sets out joint venture and property level budgets, including lease revenues, operating expenses, and capital expenditures. As such, we concluded we do not own a controlling interest and accounted for our20% interest in the joint venture under the equity method of accounting.

Asventure. Each partner will fund its pro rata share of the dateremaining $3.0 billion estimated development cost for the first phase of the joint venture, formation, we used a discounted cash flow model to calculate the fair value of our retained equity interest. The fair value of the retained interest was $121 million, andwhich is classified as a Level 3 investmentslated for completion in various stages, contingent on customer demand, which began in the fair value hierarchy. The primary inputs to the valuation included volatility, hold period, and dividend yield.first quarter of 2024.

Mitsubishi Joint Venture - On March 1, 2024, we formed a joint venture with Mitsubishi Corporation, or Mitsubishi, to support the development of two data centers in the Dallas metro area. We retained a 35% interest in the joint venture. Each partner will fund its pro rata share of the remaining $140 million estimated development cost for the first phase of the project, which is slated for completion in late 2024.

DCREIT– Digital Core REIT is a standalone real estate investment trust formed under Singapore law, which is publicly-tradedpublicly traded on the Singapore Exchange under the ticker symbol “DCRU”. Digital Core REIT owns 1110 operating data center properties. The Company’s ownership interest in the units of DCRU, as well as its ownership interest in the operating properties of DCRU are collectively referred to as the Company’s investment in DCREIT.

As of September 30, 2023, the Company held 36% of the outstanding DCRU units and separately owned a 10% direct retained interest in the underlying North American operating properties and a 75% direct retained interest in the underlying German operating property.

The Company’s 36% interest in DCRU consisted of 406 million units and 396 million units as of September 30, 2023 and December 31, 2022, respectively. Based on the closing price per unit of $0.53 and $0.55 as of September 30, 2023 and December 31, 2022, respectively, the fair value of the units the Company owned in DCRU was approximately $215 million and $218 million as of September 30, 2023 and December 31, 2022, respectively.

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These values do not includeAs of March 31, 2024, the Company held 31% of the outstanding DCRU units and separately owned a 10% direct retained interest in the underlying North American operating properties. DCREIT has a 25.0% interest in a consolidated asset in Frankfurt which we account for as noncontrolling interest.

The Company’s 31% interest in DCRU consisted of 408 million units and 406 million units as of March 31, 2024 and December 31, 2023, respectively. Based on the closing price per unit of $0.60 and $0.65 as of March 31, 2024 and December 31, 2023, respectively, the fair value of the Company’s 10% interestunits the Company owned in the North American operating propertiesDCRU was approximately $245 million and 75% interest in the German operating property$264 million as of DCRU, because the associated ownership interests are not publicly traded. The Company accounts for its investment in DCREIT as an equity method investment (and not at fair value) based on the significant influence it is able to exert on DCREIT.March 31, 2024 and December 31, 2023, respectively.

Pursuant to contractual agreements with DCRU and its operating properties, the Company will earn fees for asset and property management services as well as fees for aiding in future acquisition, disposition and development activities. Certain of these fees are payable to the Company in the form of additional units in DCRU or in cash. The Company earned fees pursuant to these contractual agreements of approximately $2.4$2.9 million and $1.8$2.3 million for the three months ended September 30,March 31, 2024 and 2023, and 2022, respectively, and $7.3 million and $6.9 million for the nine months ended September 30, 2023 and 2022, respectively, which is recorded as fee income and other on the condensed consolidated income statement.

In preparing our financial statementsOn April 19, 2024, we completed the sale of an additional 24.9% interest in a data center facility in Frankfurt, Germany to DCREIT for total consideration of approximately $126 million, and DCREIT now has a 49.9% interest in the period ended September 30, 2023, we concluded thatFrankfurt data center. Because the decline in fair value of our equity investment in DCRU as of September 30, 2023 was other than temporary due to the length of time and extent to which the fair value of our investment has been less than the carrying value. As a result, we recorded an impairment charge of $95 million for the three months ended September 30, 2023, whichCompany still controls this asset, no gain or loss was recorded to provision for impairment in our condensedon this 49.9% interest. In connection with this transaction, DCREIT loaned the consolidated income statements. The charge reflectssubsidiary that owns the difference between the fair value of our equity investment in DCRU using DCRU’s share price as of September 30, 2023 and the carrying value of our equity investment in DCRU at September 30, 2023.data center approximately $80 million.

Ascenty– The Company’s ownership interest in Ascenty includes an approximate 2% interest held by one of the Company’s non-controllingnoncontrolling interest holders. This 2% interest had a carrying value of approximately $12$19 million and $18 million as of September 30, 2023March 31, 2024 and December 31, 2022,2023, respectively. Ascenty is a variable interest entity (“VIE”) and the Company’s maximum exposure to loss related to this VIE is limited to our equity investment in the entity.

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

7.6. 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, 2023March 31, 2024 as compared to December 31, 20222023 were primarily driven by changes in exchange rates associated with goodwill balances denominated in foreign currencies.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

8.7. Acquired Intangible Assets and Liabilities

The following table summarizes our acquired intangible assets and liabilities:

Balance as of

Balance as of

September 30, 2023

December 31, 2022

March 31, 2024

December 31, 2023

(Amounts in thousands)

Gross Carrying Amount

Accumulated Amortization

Net Carrying Amount

Gross Carrying Amount

Accumulated Amortization

Net Carrying Amount

Gross Carrying Amount

Accumulated Amortization

Net Carrying Amount

Gross Carrying Amount

Accumulated Amortization

Net Carrying Amount

Customer relationship value

$

2,861,384

$

(898,951)

$

1,962,433

$

3,327,765

$

(888,105)

$

2,439,660

$

2,822,165

$

(966,840)

$

1,855,325

$

2,926,808

$

(952,943)

$

1,973,865

Acquired in-place lease value

1,089,444

(847,985)

241,459

1,369,526

(1,041,631)

327,895

1,049,877

(840,176)

209,701

1,089,743

(859,167)

230,576

Other

99,927

(31,037)

68,890

94,829

(26,788)

68,041

118,165

(33,886)

84,279

108,744

(33,483)

75,261

Acquired above-market leases

151,924

(148,697)

3,227

264,071

$

(253,693)

10,378

130,299

(129,417)

882

153,205

(150,344)

2,861

Acquired below-market leases

(272,832)

224,148

(48,684)

(344,256)

255,821

(88,435)

(260,302)

220,901

(39,401)

(273,951)

226,840

(47,111)

Amortization of customer relationship value, acquired in-place lease value and other intangibles (a component of depreciation and amortization expense) was approximately $59.8$59.0 million and $65.7$68.5 million for the three months ended September 30,March 31, 2024 and 2023, and 2022, respectively, and approximately $194.4 million and $184.6 million for the nine months ended September 30, 2023 and 2022, respectively.

Amortization of acquired below-market leases, net of acquired above-market leases, resulted in an increase in rental and other services revenue of $1.6$1.4 million and $1.0$1.7 million for the three months ended September 30,March 31, 2024 and 2023, and 2022, respectively, and approximately $5.1 million and $1.5 million for the nine months ended September 30, 2023 and 2022, respectively.

Estimated annual amortization for each of the five succeeding years and thereafter, commencing OctoberApril 1, 20232024 is as follows:

(Amounts in thousands)

Customer relationship value

Acquired in-place lease value

Other (1)

Acquired above-market leases

Acquired below-market leases

Customer relationship value

Acquired in-place lease value

Other (1)

Acquired above-market leases

Acquired below-market leases

2023

$

43,576

$

12,995

$

1,122

$

366

$

(1,715)

2024

 

173,725

 

50,760

 

4,487

 

1,327

 

(6,656)

$

128,749

$

36,667

$

2,034

$

288

$

(4,361)

2025

 

173,183

 

49,246

 

4,447

 

1,070

 

(6,503)

 

171,123

 

47,737

 

2,712

 

302

 

(5,730)

2026

 

172,550

 

47,447

 

4,249

 

357

 

(5,773)

 

170,486

 

46,616

 

2,712

 

184

 

(4,974)

2027

 

172,158

 

38,180

 

4,235

 

48

 

(5,180)

 

170,094

 

37,506

 

2,712

 

48

 

(4,363)

2028

 

147,514

 

17,885

 

2,730

 

46

 

(4,160)

Thereafter

 

1,227,241

 

42,831

 

3,832

 

59

 

(22,857)

 

1,067,359

 

23,290

 

7,231

 

14

 

(15,813)

Total

$

1,962,433

$

241,459

$

22,372

$

3,227

$

(48,684)

$

1,855,325

$

209,701

$

20,131

$

882

$

(39,401)

(1)Excludes power grid rights in the amount of approximately $46.5$64.1 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.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

9.8. Debt of the Operating Partnership

All debt is currently held by the OP or its consolidated subsidiaries, and the Parent is the guarantor or co-guarantor of the Global Revolving Credit Facility and the Yen Revolving Credit Facility (together, referred to as the “Global Revolving Credit Facilities”), the unsecured term loans and the unsecured senior notes. A summary of outstanding indebtedness is as follows (in thousands):

    

September 30, 2023

    

December 31, 2022

    

March 31, 2024

    

December 31, 2023

Weighted-

Weighted-

Weighted-

Weighted-

average

Amount

average

Amount

average

Amount

average

Amount

interest rate

Outstanding

interest rate

Outstanding

interest rate

Outstanding

interest rate

Outstanding

Global revolving credit facilities

4.50

%

$

1,713,024

3.04

%

$

2,167,889

Global Revolving Credit Facilities

4.31

%

$

1,912,492

4.33

%

$

1,825,228

Unsecured term loans

4.78

%

1,532,975

2.49

%

802,875

4.45

%

1,309,250

4.76

%

1,567,925

Unsecured senior notes

2.24

%  

13,161,305

2.44

%  

13,220,961

2.25

%  

13,271,593

2.24

%  

13,507,427

Secured and other debt

7.84

%  

 

580,370

7.12

%  

 

532,130

8.12

%  

 

631,469

8.07

%  

 

637,072

Total

2.89

%  

$

16,987,674

  

2.68

%  

$

16,723,855

2.87

%  

$

17,124,804

  

2.89

%  

$

17,537,652

The weighted-average interest rates shown represent 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, along with cross-currency interest rate swaps, which effectively convert a portion of our U.S. dollar-denominated fixed-rate debt to foreign currency-denominated fixed-rate debt in order to hedge the currency exposure associated with our net investment in foreign subsidiaries.

We primarily 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, 2023

December 31, 2022

Amount

Amount

Denomination of Draw

    

Outstanding

    

% of Total

Outstanding

    

% of Total

U.S. dollar ($)

$

2,783,736

  

16.4

%

$

3,855,903

  

23.1

%

British pound sterling (£)

 

1,890,845

  

11.1

%

1,929,051

11.5

%

Euro ()

10,491,484

61.8

%

9,325,126

55.8

%

Other

1,821,609

10.7

%

1,613,775

9.6

%

Total

$

16,987,674

  

$

16,723,855

  

March 31, 2024

December 31, 2023

Amount

Amount

Denomination of Draw

    

Outstanding

    

% of Total

Outstanding

    

% of Total

U.S. dollar ($)

$

2,547,589

  

14.9

%

$

2,784,875

  

15.9

%

British pound sterling (£)

 

1,956,565

  

11.4

%

1,973,305

11.2

%

Euro ()

10,742,146

62.7

%

10,835,878

61.8

%

Other

1,878,504

11.0

%

1,943,594

11.1

%

Total

$

17,124,804

  

$

17,537,652

  

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The table below summarizes debt maturities and principal payments as of September 30, 2023March 31, 2024 (in thousands):

Global Revolving

Unsecured

Unsecured

Secured and

Global Revolving

Unsecured

Unsecured

Secured and

    

Credit Facilities (1)(2)

    

Term Loans(3)

    

Senior Notes

    

Other Debt

    

Total Debt

    

Credit Facilities (1)(2)

    

Term Loans(3)(4)

    

Senior Notes

    

Other Debt

    

Total Debt

2023

$

$

$

109,272

$

56

$

109,328

2024

939,355

4,539

943,894

$

$

$

962,975

$

234

$

963,209

2025

792,975

1,175,205

567

1,968,747

1,309,250

1,206,270

568

2,516,088

2026

 

1,713,024

 

740,000

 

1,437,096

 

98,666

 

3,988,786

1,912,492

1,464,840

108,177

3,485,509

2027

 

 

 

1,163,908

 

207,353

 

1,371,261

 

 

 

1,166,317

 

217,099

 

1,383,416

2028

 

 

 

2,089,500

 

290,516

 

2,380,016

Thereafter

 

 

 

8,336,469

 

269,189

 

8,605,658

 

 

 

6,381,691

 

14,875

 

6,396,566

Subtotal

$

1,713,024

$

1,532,975

$

13,161,305

$

580,370

$

16,987,674

$

1,912,492

$

1,309,250

$

13,271,593

$

631,469

$

17,124,804

Unamortized net discounts

 

 

 

(33,067)

 

 

(33,067)

 

 

 

(30,928)

 

(3,651)

 

(34,579)

Unamortized deferred financing costs

(14,244)

(8,312)

(56,136)

(6,139)

(84,831)

(11,366)

(5,987)

(50,463)

(2,068)

(69,884)

Total

$

1,698,780

$

1,524,663

$

13,072,102

$

574,231

$

16,869,776

$

1,901,126

$

1,303,263

$

13,190,202

$

625,750

$

17,020,341

(1)Includes amounts outstanding for the Global Revolving Credit Facilities.
(2)The Global Revolving Credit Facilities are subject to two six-month extension options exercisable by us; provided that the Operating Partnership must pay a 0.0625%0.06 extension fee based on each lender’s revolving commitments then outstanding (whether funded or unfunded).
(3)A €375.0 million senior unsecured term loan facility is subject to two maturity extension options of one year each, provided that the Operating Partnership must pay a 0.125% extension fee based on the then-outstanding principal amount of such facility commitments then outstanding. Our U.S. term loan facility of $740$500 million currently is subject to one twelve-month extension, provided that the Operating Partnership must pay a 0.1875% extension fee based on the then-outstanding principal amount of the term loans.

(4)On January 9, 2024, we paid down $240 million on the U.S. term loan facility, leaving $500 million outstanding. The paydown resulted in an early extinguishment charge of approximately $1.1 million during the three months ended March 31, 2024.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Unsecured Senior Notes

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

Aggregate Principal Amount at Issuance

Balance as of

Aggregate Principal Amount at Issuance

Balance as of

Borrowing Currency

USD

Maturity Date

September 30, 2023

December 31, 2022

Borrowing Currency

USD

Maturity Date

March 31, 2024

December 31, 2023

0.600% notes due 2023(1)

CHF

100,000

$

108,310

Oct 02, 2023

$

109,272

$

108,121

2.625% notes due 2024

600,000

677,040

Apr 15, 2024

634,380

642,300

2.625% notes due 2024(1)

600,000

677,040

Apr 15, 2024

$

647,400

$

662,340

2.750% notes due 2024

£

250,000

324,925

Jul 19, 2024

304,975

302,075

£

250,000

324,925

Jul 19, 2024

315,575

318,275

4.250% notes due 2025

£

400,000

634,480

Jan 17, 2025

487,960

483,320

£

400,000

634,480

Jan 17, 2025

504,920

509,240

0.625% notes due 2025

650,000

720,980

Jul 15, 2025

687,245

695,825

650,000

720,980

Jul 15, 2025

701,350

717,535

2.500% notes due 2026

1,075,000

1,224,640

Jan 16, 2026

1,136,598

1,150,788

1,075,000

1,224,640

Jan 16, 2026

1,159,925

1,186,693

0.200% notes due 2026

CHF

275,000

298,404

Dec 15, 2026

300,498

297,331

CHF

275,000

298,404

Dec 15, 2026

304,915

326,826

1.700% notes due 2027

CHF

150,000

162,465

Mar 30, 2027

163,908

162,181

CHF

150,000

162,465

Mar 30, 2027

166,317

178,269

3.700% notes due 2027(2)

$

1,000,000

1,000,000

Aug 15, 2027

1,000,000

1,000,000

$

1,000,000

1,000,000

Aug 15, 2027

1,000,000

1,000,000

5.550% notes due 2028(2)

$

900,000

900,000

Jan 15, 2028

900,000

900,000

$

900,000

900,000

Jan 15, 2028

900,000

900,000

1.125% notes due 2028

500,000

548,550

Apr 09, 2028

528,650

535,250

500,000

548,550

Apr 09, 2028

539,500

551,950

4.450% notes due 2028

$

650,000

650,000

Jul 15, 2028

650,000

650,000

$

650,000

650,000

Jul 15, 2028

650,000

650,000

0.550% notes due 2029

CHF

270,000

292,478

Apr 16, 2029

295,034

291,925

CHF

270,000

292,478

Apr 16, 2029

299,371

320,884

3.600% notes due 2029

$

900,000

900,000

Jul 01, 2029

900,000

900,000

$

900,000

900,000

Jul 01, 2029

900,000

900,000

3.300% notes due 2029

£

350,000

454,895

Jul 19, 2029

426,965

422,905

£

350,000

454,895

Jul 19, 2029

441,805

445,585

1.500% notes due 2030

750,000

831,900

Mar 15, 2030

792,975

802,875

750,000

831,900

Mar 15, 2030

809,250

827,925

3.750% notes due 2030

£

550,000

719,825

Oct 17, 2030

670,945

664,565

£

550,000

719,825

Oct 17, 2030

694,265

700,205

1.250% notes due 2031

500,000

560,950

Feb 01, 2031

528,650

535,250

500,000

560,950

Feb 01, 2031

539,500

551,950

0.625% notes due 2031

1,000,000

1,220,700

Jul 15, 2031

1,057,300

1,070,500

1,000,000

1,220,700

Jul 15, 2031

1,079,000

1,103,900

1.000% notes due 2032

750,000

874,500

Jan 15, 2032

792,975

802,875

750,000

874,500

Jan 15, 2032

809,250

827,925

1.375% notes due 2032

750,000

849,375

Jul 18, 2032

792,975

802,875

750,000

849,375

Jul 18, 2032

809,250

827,925

$

13,161,305

$

13,220,961

$

13,271,593

$

13,507,427

Unamortized discounts, net of premiums

Unamortized discounts, net of premiums

(33,067)

(37,280)

Unamortized discounts, net of premiums

(30,928)

(33,324)

Deferred financing costs, net

Deferred financing costs, net

(56,136)

(63,648)

Deferred financing costs, net

(50,463)

(51,761)

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

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

$

13,072,102

$

13,120,033

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

$

13,190,202

$

13,422,342

(1)Paid in full at maturity on October 2, 2023.April 15, 2024.
(2)Subject to cross-currency swaps.

Restrictive Covenants in Unsecured Senior Notes

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, 2023,March 31, 2024, we were in compliance with each of these financial covenants.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Euro Term Loan Agreement9. Earnings per Common Share or Unit

The following is a summary of basic and diluted income per share/unit (in thousands, except per share/unit amounts):

On August 11, 2022, the Company, the Operating Partnership, and certain of the Operating Partnership’s subsidiaries entered into a term loan agreement (the “Euro Term Loan Agreement”) which governs (i) a €375,000,000 three-year senior unsecured term loan facility (the “2025 Term Facility”), the entire amount of which was funded on such date, and (ii) a €375,000,000 five-year senior unsecured term loan facility (the “2025-27 Term Facility” and, together with the 2025 Term Facility, collectively, the “Euro Term Loan Facilities”), comprised of €125,000,000 of initial term loans, the entire amount of which was funded on such date, and €250,000,000 of delayed draw term loan commitments that were funded on September 9, 2023. The Euro Term Loan Facilities provide for borrowings in Euros. The 2025 Term Facility matures on August 11, 2025. The 2025-27 Term Facility matures on August 11, 2025, subject to two maturity extension options of one year each; provided that the Operating Partnership must pay a 0.125% extension fee based on the then-outstanding principal amount of the 2025-27 Term Facility commitments then outstanding.

Digital Realty Trust, Inc. Earnings per Common Share

USD Term Loan Agreement

On October 25, 2022, the Company, the Operating Partnership, and certain of the Operating Partnership’s subsidiaries entered into an escrow agreement (the “Escrow Agreement”) with Bank of America, N.A., as administrative agent (the “Administrative Agent”), certain lenders (the “Lenders”), and Arnold & Porter Kaye Scholer LLP, as escrow agent (the “Escrow Agent”), pursuant to which the Operating Partnership, the Company, the Administrative Agent and the Lenders delivered executed signature pages to a new term loan agreement among the Operating Partnership, the Company, the Lenders and the Administrative Agent (the “USD Term Loan Agreement”) to be held in escrow by the Escrow Agent and released by the Escrow Agent upon satisfaction of the terms described in the Escrow Agreement. On January 9, 2023, the terms and conditions of the Escrow Agreement were satisfied, and, on such date, the USD Term Loan Agreement was deemed executed and became effective. The USD Term Loan Agreement provides for a $740 million senior unsecured term loan facility (the “USD Term Loan Facility”). The USD Term Loan Facility provides for borrowings in U.S. dollars. The USD Term Loan Facility will mature on March 31, 2025, subject to one twelve-month extension option at the Operating Partnership’s option; provided, that the Operating Partnership must pay a 0.1875% extension fee based on the then-outstanding principal amount of the term loans under the USD Term Loan Facility.

Three Months Ended March 31, 

    

2024

    

2023

Numerator:

Net income available to common stockholders

$

271,327

$

58,545

Plus: Loss attributable to redeemable noncontrolling interest (1)

(7,649)

(2,320)

Net income available to common stockholders - diluted EPS

263,678

60,865

Denominator:

Weighted average shares outstanding—basic

 

312,292

 

291,219

Potentially dilutive common shares:

 

  

 

Unvested incentive units

 

196

 

176

Unvested restricted stock

112

27

Market performance-based awards

 

361

 

1

Redeemable noncontrolling interest shares (1)

7,837

11,644

Weighted average shares outstanding—diluted

 

320,798

 

303,065

Income per share:

 

  

 

  

Basic

$

0.87

$

0.20

Diluted

$

0.82

$

0.20

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DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

10. Earnings per Common Share or Unit

The following is a summary of basic and diluted income per share/unit (in thousands, except per share/unit amounts):

Digital Realty Trust, Inc. Earnings per Common Share

Three Months Ended September 30, 

Nine Months Ended September 30, 

    

2023

    

2022

    

2023

    

2022

Numerator:

Net income available to common stockholders

$

723,437

$

226,894

$

889,985

$

343,240

Plus: Loss attributable to redeemable noncontrolling interest (1)

(3,032)

(3,548)

(9,851)

(3,548)

Net income available to common stockholders - diluted EPS

726,469

223,346

899,836

339,692

Denominator:

Weighted average shares outstanding—basic

 

301,827

 

286,693

 

296,184

 

285,312

Potentially dilutive common shares:

 

  

 

 

  

 

Unvested incentive units

 

97

 

195

 

78

 

213

Unvested restricted stock

43

13

3

53

Forward equity offering

209

253

Market performance-based awards

 

166

 

86

 

90

 

112

Redeemable noncontrolling interest shares (1)

8,999

9,428

10,127

8,568

Weighted average shares outstanding—diluted

 

311,341

 

296,415

 

306,735

 

294,257

Income per share:

 

  

 

  

 

  

 

  

Basic

$

2.40

$

0.79

$

3.00

$

1.20

Diluted

$

2.33

$

0.75

$

2.93

$

1.15

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Digital Realty Trust, L.P. Earnings per Unit

Three Months Ended September 30, 

Nine Months Ended September 30, 

Three Months Ended March 31, 

    

2023

    

2022

    

2023

    

2022

    

2024

    

2023

Numerator:

Net income available to common unitholders

$

739,737

$

232,294

$

910,285

$

351,740

$

277,527

$

60,045

Plus: Loss attributable to redeemable noncontrolling interest (1)

(3,032)

(3,548)

(9,851)

(3,548)

(7,649)

(2,320)

Net income available to common unitholders - diluted EPS

742,769

228,746

920,136

348,192

269,878

62,365

Denominator:

Weighted average units outstanding—basic

 

308,024

 

292,536

 

302,316

 

291,084

 

318,469

 

297,180

Potentially dilutive common units:

 

  

 

  

 

  

 

  

 

  

 

  

Unvested incentive units

 

97

 

195

 

78

 

213

 

196

 

176

Unvested restricted units

43

13

3

53

112

27

Forward equity offering

209

253

Market performance-based awards

 

166

 

86

 

90

 

112

 

361

 

1

Redeemable noncontrolling interest shares (1)

8,999

9,428

10,127

8,568

7,837

11,644

Weighted average units outstanding—diluted

 

317,538

 

302,258

 

312,867

 

300,028

 

326,975

 

309,026

Income per unit:

 

  

 

  

 

  

 

  

 

  

 

  

Basic

$

2.40

$

0.79

$

3.00

$

1.20

$

0.87

$

0.20

Diluted

$

2.33

$

0.75

$

2.93

$

1.15

$

0.82

$

0.20

(1)Pursuant to(1)As part of the Put/Call Agreement with the Rollover Shareholders who remained after the Teraco Acquisition, the Rollover Shareholders have a put right on the Remaining Interestacquisition of Teraco that can be settled byin 2022, certain of Teraco's minority indirect shareholders (“Rollover Shareholders”) have the right to put their shares in an upstream parent company of Teraco (“Remaining Interest”) to the Company in Digital Realty Trust, Inc.exchange for cash or the equivalent value of shares in cash,of the Company common stock, or a combination of cash and shares.thereof. Under U.S. GAAP, diluted earnings per share must be reflected in a manner that assumes such put right was exercised at the beginning of the respective periods and settled entirely in shares. The amounts shown represent the redemption value of the Remaining Interest of Teraco divided by Digital Realty Trust, Inc.’s average share price for the respective periods. The put right is exercisable by the Rollover Shareholders for a two-year period commencing on February 1, 2026.

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 (in thousands).

Three Months Ended September 30, 

Nine Months Ended September 30, 

Three Months Ended March 31, 

    

2023

    

2022

    

2023

    

2022

    

2024

    

2023

Shares subject to Forward Equity Offering

3,454

3,591

3,454

5,364

Weighted average of Operating Partnership common units not owned by Digital Realty Trust, Inc.

 

6,197

 

5,843

 

6,132

 

5,771

 

6,176

 

5,961

Potentially dilutive Series J Cumulative Redeemable Preferred Stock

 

1,647

 

1,932

 

1,891

 

1,640

 

1,438

 

2,129

Potentially dilutive Series K Cumulative Redeemable Preferred Stock

1,732

2,032

1,988

1,725

1,512

2,239

Potentially dilutive Series L Cumulative Redeemable Preferred Stock

2,841

3,333

3,261

2,829

2,481

2,239

Total

 

15,871

 

16,731

 

16,726

 

17,329

 

11,607

 

12,568

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

11.10. Equity and Capital

Equity Distribution Agreement

Digital Realty Trust, Inc. and Digital Realty Trust, L.P. were parties to an ATM Equity OfferingSM Sales Agreement dated April 1, 2022, as amended inAugust 4, 2023 (the “2022“2023 Sales Agreement”). Pursuant to the 20222023 Sales Agreement, Digital Realty Trust, Inc. could issue and sell common stock having an aggregate offering price of up to $1.5 billion through various named agents from time to time. For the nine months ended September 30, 2023,From January 1, 2024 through February 23, 2024, Digital Realty Trust, Inc. generated net proceeds of approximately $1.1 billion$99 million from the issuance of approximately 11.30.6 million common shares under the 20222023 Sales Agreement at an average price of $96.35$133.43 per share after payment of approximately $7.5$0.6 million of commissions to the agents. For the three months ended March 31, 2023, we had no sales under the ATM program.

The 20222023 Sales Agreement was terminatedamended on August 4, 2023, and Digital Realty Trust, Inc. and Digital Realty Trust, L.P. entered into a new ATM Equity OfferingSMFebruary 23, 2024 (the “2024 Sales Agreement dated August 4, 2023 (the “2023 Sales Agreement”Amendment”). At the time of the termination, $408.7amendment, $258.3 million remained unsold under the 20222023 Sales Agreement. Pursuant to the 20232024 Sales Agreement Amendment, Digital Realty Trust, Inc. can issue and sell common stock having an aggregate offering price of up to $1.5$2.0 billion through various named agents from time to time. As of September 30, 2023, $1.5March 31, 2024, $2.0 billion remained available for future sales under the 20232024 Sales Agreement. For the nine months ended September 30, 2022, we had no sales under the 2022 Sales Agreement.Agreement Amendment.

Noncontrolling Interests in Operating Partnership

Noncontrolling interests in the Operating Partnership relate to the proportion of entities consolidated by the Company that are owned by third parties. The following table shows the ownership interest in the Operating Partnership as of September 30, 2023March 31, 2024 and December 31, 20222023 (in thousands):

September 30, 2023

December 31, 2022

March 31, 2024

December 31, 2023

Number of

Percentage of

Number of

Percentage of

Number of

Percentage of

Number of

Percentage of

    

units

    

total

units

    

total

(Units in thousands)

    

units

    

total

units

    

total

Digital Realty Trust, Inc.

302,846

97.9

%  

291,148

97.9

%

312,421

97.9

%  

311,608

98.0

%

Noncontrolling interests consist of:

 

 

  

 

 

  

 

 

  

 

 

  

Common units held by third parties

 

4,343

 

1.4

%  

4,375

 

1.5

%

 

4,343

 

1.4

%  

4,343

 

1.3

%

Incentive units held by employees and directors (see Note 13. "Incentive Plan")

 

2,136

 

0.7

%  

1,914

 

0.6

%

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

 

2,245

 

0.7

%  

2,106

 

0.7

%

 

309,325

 

100.0

%  

297,437

 

100.0

%

 

319,009

 

100.0

%  

318,057

 

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 balance sheet.

The redemption value of the noncontrolling Operating Partnership common units and the vested incentive units was approximately $750.9$906.0 million and $591.2$834.1 million based on the closing market price of Digital Realty Trust, Inc. common stock on September 30, 2023March 31, 2024 and December 31, 2022,2023, respectively.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The following table shows activity for noncontrolling interests in the Operating Partnership for the ninethree months ended September 30, 2023March 31, 2024 (in thousands):

    

Common Units

    

Incentive Units

    

Total

As of December 31, 2022

 

4,375

 

1,914

 

6,289

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

 

(32)

 

(45)

 

(77)

Incentive units issued upon achievement of market performance condition

 

 

141

 

141

Grant of incentive units to employees and directors

 

 

166

 

166

Cancellation / forfeitures of incentive units held by employees and directors

 

 

(40)

 

(40)

As of September 30, 2023

 

4,343

 

2,136

 

6,479

(Units in thousands)

    

Common Units

    

Incentive Units

    

Total

As of December 31, 2023

 

4,343

 

2,106

 

6,449

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

 

 

(72)

 

(72)

Incentive units issued upon achievement of market performance condition

 

 

72

 

72

Grant of incentive units to employees and directors

 

 

141

 

141

Cancellation / forfeitures of incentive units held by employees and directors

 

 

(2)

 

(2)

As of March 31, 2024

 

4,343

 

2,245

 

6,588

(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.

Dividends and Distributions

Digital Realty Trust, Inc. Dividends

We have declared and paid the following dividends on our common and preferred stock for the ninethree months ended September 30, 2023March 31, 2024 (in thousands, except per share data):

Series J

Series K

Series L

Series J

Series K

Series L

Preferred

Preferred

Preferred

Common

Preferred

Preferred

Preferred

Common

Date dividend declared

    

Dividend payment date

    

Stock

    

Stock

    

Stock

Stock

    

Dividend payment date

    

Stock

    

Stock

    

Stock

Stock

February 22, 2023

March 31, 2023

$

2,625

$

3,071

$

4,485

$

356,214

May 24, 2023

June 30, 2023

2,625

3,071

4,485

365,937

August 9, 2023

September 29, 2023

2,625

3,071

4,485

370,278

$

7,875

$

9,213

$

13,455

$

1,092,429

February 28, 2024

March 28, 2024

$

2,625

$

3,071

$

4,485

$

382,208

Annual rate of dividend per share

$

1.31250

$

1.46250

$

1.30000

$

4.88000

$

1.31250

$

1.46250

$

1.30000

$

4.88000

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 ninethree months ended September 30, 2023March 31, 2024 (in thousands, except for per unit data):

Series J

Series K

Series L

Series J

Series K

Series L

Preferred

Preferred

Preferred

Common

Preferred

Preferred

Preferred

Common

Date distribution declared

    

Distribution payment date

    

Units

    

Units

Units

Units

    

Distribution payment date

    

Units

    

Units

Units

Units

February 22, 2023

March 31, 2023

$

2,625

$

3,071

$

4,485

$

364,204

May 24, 2023

June 30, 2023

2,625

3,071

4,485

373,833

August 9, 2023

September 29, 2023

2,625

3,071

4,485

378,352

$

7,875

$

9,213

$

13,455

$

1,116,389

February 28, 2024

March 28, 2024

$

2,625

$

3,071

$

4,485

$

390,356

Annual rate of distribution per unit

$

1.31250

$

1.46250

$

1.30000

$

4.88000

$

1.31250

$

1.46250

$

1.30000

$

4.88000

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

12.11. 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:L.P.:

Digital Realty Trust, Inc.

Foreign currency

Increase (decrease) in

Accumulated other

Foreign currency

Increase (decrease) in

Accumulated other

translation

fair value of derivatives,

comprehensive

translation

fair value of derivatives,

comprehensive

    

adjustments

    

net of reclassification

    

income (loss), net

    

adjustments

    

net of reclassification

    

income (loss), net

Balance as of December 31, 2022

$

(536,019)

$

(59,779)

$

(595,798)

Balance as of December 31, 2023

$

(638,583)

$

(112,810)

$

(751,393)

Net current period change

 

(324,705)

 

60,369

 

(264,336)

 

(156,116)

 

57,418

 

(98,698)

Reclassification to interest expense from derivatives

 

 

(22,862)

 

(22,862)

Balance as of September 30, 2023

$

(860,724)

$

(22,272)

$

(882,996)

Balance as of March 31, 2024

$

(794,699)

$

(55,392)

$

(850,091)

Digital Realty Trust, L.P.

Foreign currency

Increase (decrease) in

Accumulated other

Foreign currency

Increase (decrease) in

Accumulated other

translation

fair value of derivatives,

comprehensive

translation

fair value of derivatives,

comprehensive

    

adjustments

    

net of reclassification

    

income (loss)

    

adjustments

    

net of reclassification

    

income (loss)

Balance as of December 31, 2022

$

(551,013)

$

(62,410)

$

(613,423)

Balance as of December 31, 2023

$

(656,063)

$

(116,605)

$

(772,668)

Net current period change

 

(332,098)

 

61,730

 

(270,368)

 

(159,617)

 

58,706

 

(100,911)

Reclassification to interest expense from derivatives

 

 

(23,387)

 

(23,387)

Balance as of September 30, 2023

$

(883,111)

$

(24,067)

$

(907,178)

Balance as of March 31, 2024

$

(815,680)

$

(57,899)

$

(873,579)

13.12. 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 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.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Performance-Based Awards (“the Performance Awards”): Performance-based Class D units of the Operating Partnership and performance-based Restricted Stock Units of Digital Realty Trust, Inc.’s common stock may be issued to officers and employees of the Company. The Performance Awards include performance-based and time-based vesting criteria. Depending on the type of award, the total number of units that qualify to fully vest is determined based on either a market performance criterion (“Market-Based Performance Awards”) or financial performance criterion (“Financial-Based Performance Awards”), in each case, subject to time-based vesting.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Market-Based Performance Awards.

The market performance criterion compares Digital Realty Trust, Inc.’s total shareholder return (“TSR”) relative to the MSCI US REIT Index (“RMS”) over a three-year performance period (“Market Performance Period”), subject to continued service, in order to determine the percentage of the total eligible pool of units that qualifies to be awarded. Following the completion of the Market Performance Period, the awards then have a time-based vesting element pursuant to which 50% of the performance-vested units fully vest in the February immediately following the end of the Market Performance Period and 50% of the performance-vested units fully vest in the subsequent February.

Vesting with respect to the market condition is measured based on the difference between Digital Realty Trust, Inc.’s TSR percentage and the TSR percentage of the RMS as is shown in the subsequent table (the “RMS Relative Market Performance”).

Market

Performance

RMS Relative

Vesting

Level

Market Performance

Percentage

Below Threshold Level

-500 basis points

0

%

Threshold Level

-500 basis points

25

%

Target Level

0 basis points

50

%

High Level

≥ 500 basis points

100

%

If the RMS Relative Market Performance falls between the levels specified in the above table, the percentage of the award that will vest with respect to the market condition will be determined using straight-line linear interpolation between such levels.

20202021 Awards

In January 2023,2024, the RMS Relative Market Performance fell between the threshold and target levels for the 20202021 awards and accordingly, 72,23071,926 Class D units and 7,0837,066 Restricted Stock Units performance vested and qualified for time-based vesting.

The Class D units included 5,8415,131 distribution equivalent units that immediately vested on December 31, 2022.2023.

On February 27, 2023,2024, 50% of the 20202021 awards vested and the remaining 50% will vest on February 27, 2024,2025, subject to continued employment through the applicable vesting date.

The grant date fair value of the Market-Based Performance Awards was approximately $8.2$9.8 million and $12.3$8.2 million for the ninethree months ended September 30,March 31, 2024 and 2023, and 2022, respectively. This amount will be recognized as compensation expense on a straight-line basis over the expected service period of approximately four years.

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(Unaudited)

Financial-Based Performance Awards.

On April 8, 2023, the Company granted Financial-Based Performance Awards, which vest based on growth in same-store cash net operating income during the three-year period commencing on January 1, 2023. The awards have a time-based vesting element consistent with the Market-Based Performance Awards discussed above. For these awards, fair value is based on market value on the date of grant and compensation cost is recognized based on the probable achievement of the performance condition at each reporting period. The grant date fair value of these awards was $8.1 million, based on Digital Realty Trust, Inc.’s closing stock price at the grant date.

On March 4, 2022, the Company granted Financial-Based Performance Awards, which vest based on the growth in core funds from operation (“Core FFO”) during the three-year period commencing on January 1, 2022. The awards have a time-based vesting element consistent with the Market-Based Performance Awards discussed above. For these awards, fair value is based on market value on the date of grant and compensation cost is recognized based on the probable achievement of the performance condition at each reporting period. The grant date fair value of these awards was $12.3 million, based on Digital Realty Trust, Inc.’s closing stock price at the grant date.

Other Items:In addition to the LTIP Units, service-based Restricted Stock Units and Performance Awards described above, one-time grants of time and/or performance-based Class D units and Restricted Stock Units were issued in connection with the Company’s combination with InterXion Holding N.V. These awards vest over a period of two and three years based on continued service and/or the attainment of performance metrics related to successful integration of the Interxion business.

As of September 30, 2023, approximately 4.2 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.

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(Unaudited)

Financial-Based Performance Awards.

On January 1, 2024, the Company granted Financial-Based Performance Awards, which vest based on growth in same-store cash net operating income during the three-year period commencing on January 1, 2024. The awards have a time-based vesting element consistent with the Market-Based Performance Awards discussed above. For these awards, fair value is based on market value on the date of grant and compensation cost is recognized based on the probable achievement of the performance condition at each reporting period. The grant date fair value of these awards was $9.8 million, based on Digital Realty Trust, Inc.’s closing stock price at the grant date.

As of March 31, 2024, approximately 3.7 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.

Below is a summary of our compensation expense and our 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

    

2023

    

2022

    

2023

    

2022

    

2023

    

2022

    

(in years)

Long-term incentive units

$

3.7

$

5.1

$

0.1

$

$

21.1

$

20.7

 

2.3

Performance-based awards

 

3.1

 

5.5

 

0.1

 

0.2

 

25.0

 

30.3

 

2.3

Service-based restricted stock units

 

8.2

 

6.7

 

1.8

 

0.9

 

74.2

 

55.4

 

2.7

Interxion awards

0.3

1.6

0.2

1.9

0.3

Nine Months Ended September 30, 

    

    

2023

    

2022

    

2023

    

2022

    

Long-term incentive units

$

10.1

$

16.7

$

0.1

$

0.1

Performance-based awards

 

8.6

 

16.1

 

0.2

 

0.4

Service-based restricted stock units

24.1

18.9

4.4

3.7

Interxion awards

 

1.6

 

3.7

 

0.1

 

Expected

 

 

period to

Deferred Compensation

Unearned Compensation

 

recognize

Expensed

Capitalized

As of

As of

 

unearned

    

Three Months Ended March 31, 

    

March 31, 

December 31, 

 

compensation

Type of incentive award

    

2024

    

2023

    

2024

    

2023

    

2024

    

2023

    

(in years)

Long-term incentive units

$

3.7

$

2.8

$

$

$

31.8

$

16.6

 

2.8

Performance-based awards

 

2.2

 

4.1

 

 

0.1

 

34.6

 

19.9

 

2.9

Service-based restricted stock units

 

7.6

 

7.7

 

1.5

 

1.1

 

100.6

 

66.4

 

3.0

Interxion awards

0.7

Activity for LTIP Units and service-based Restricted Stock Units for the ninethree months ended September 30, 2023March 31, 2024 is shown below.

    

    

Weighted-Average

    

    

Weighted-Average

 

Grant Date Fair

 

Grant Date Fair

Unvested LTIP Units

Units

 

Value

Units

 

Value

Unvested, beginning of period

 

279,258

$

146.37

 

238,360

$

121.99

Granted

 

179,979

 

104.78

 

252,009

 

137.00

Vested

 

(163,717)

 

135.79

 

(161,612)

 

132.68

Cancelled or expired

 

(39,332)

 

136.30

 

(49,997)

 

243.00

Unvested, end of period

 

256,188

$

125.46

 

278,760

$

107.66

Weighted-Average

Weighted-Average

 

Grant Date Fair

 

Grant Date Fair

Unvested Restricted Stock Units

    

Shares

    

Value

    

Shares

    

Value

Unvested, beginning of period

 

507,837

$

131.57

 

621,863

$

132.07

Granted

 

546,128

 

115.76

 

349,756

 

141.76

Vested

 

(295,575)

 

117.77

 

(57,208)

 

121.49

Cancelled or expired

 

(67,800)

 

117.32

 

(58,599)

 

122.58

Unvested, end of period

 

690,590

$

126.38

 

855,812

$

137.39

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DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

14.

13. Derivative Instruments

Derivatives Designated as Hedging Instruments

Net Investment Hedges

In September 2022, we entered into cross-currency interest rate swaps, which effectively convert a portion of our U.S. dollar-denominated fixed-rate debt to foreign currency-denominated fixed-rate debt in order to hedge the currency exposure associated with our net investment in foreign subsidiaries. As of September 30, 2023,March 31, 2024, we had cross-currency interest rate swaps outstanding with notional amounts of $1.55$1.7 billion and maturity dates ranging through 2028.

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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 effect of these net investment hedges on accumulated other comprehensive incomeloss and the condensed consolidated income statements for the three and nine months ended September 30,March 31, 2024 and 2023 and 2022 was as follows (in thousands):

Three Months Ended September 30, 

Nine Months Ended September 30, 

2023

    

2022

2023

    

2022

Cross-currency interest rate swaps (included component) (1)

$

(52,698)

$

(26,141)

$

(53,853)

$

(26,141)

Cross-currency interest rate swaps (excluded component) (2)

14,006

28,848

28,423

28,848

Total

$

(38,692)

$

2,707

$

(25,430)

$

2,707

Location of

Three Months Ended September 30, 

Nine Months Ended September 30, 

gain or (loss)

2023

    

2022

2023

    

2022

Cross-currency interest rate swaps (excluded component) (2)

Interest expense

$

5,505

$

650

$

16,699

$

650

Three Months Ended March 31, 

2024

    

2023

Cross-currency interest rate swaps (included component) (1)

$

(52,030)

$

14,365

Cross-currency interest rate swaps (excluded component) (2)

5,649

(9,478)

Total

$

(46,381)

$

4,887

Location of

Three Months Ended March 31, 

gain or (loss)

2024

    

2023

Cross-currency interest rate swaps (excluded component) (2)

Interest expense

$

6,103

$

5,589

(1)Included component represents foreign exchange spot rates.
(2)Excluded component represents cross-currency basis spread and interest rates.

Cash Flow Hedges  

As of September 30, 2023,March 31, 2024, we had derivatives designated as cash flow hedges on 50% of the Euro Term Loan Facilities (€750 million notional amount) and 68%100% of the USD term loan ($740500 million notional amount). Amounts reported in accumulatedAccumulated other comprehensive loss related to interest rate swaps are reclassified to interest expense as interest payments are made on our debt. As of September 30, 2023,March 31, 2024, we estimate that an additional $11.7$8.3 million will be reclassified as a decrease to interest expense during the ninetwelve months ended September 30, 2023,March 31, 2025, when the hedged forecasted transactions impact earnings.

The effect of these cash flow hedges on accumulated other comprehensive income and the condensed consolidated income statements for the three and nine months ended September 30,March 31, 2024 and 2023 and 2022 was as follows (in thousands):

Three Months Ended September 30, 

Nine Months Ended September 30, 

Three Months Ended March 31, 

2023

    

2022

2023

    

2022

2024

    

2023

Interest rate swaps

$

(538)

$

5,692

$

(12,912)

$

5,012

$

(12,324)

$

1,084

Location of

Three Months Ended September 30, 

Nine Months Ended September 30, 

Location of

Three Months Ended March 31, 

gain or (loss)

2023

    

2022

2023

    

2022

gain or (loss)

2024

    

2023

Interest rate swaps

Interest expense

$

3,845

$

478

$

6,688

$

539

Interest expense

$

4,227

$

549

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DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Fair Value of Derivative Instruments

The subsequent table presents the fair value of derivative instruments recognized in our condensed consolidated balance sheets as of September 30, 2023March 31, 2024 and December 31, 20222023 (in thousands):

September 30, 2023

December 31, 2022

March 31, 2024

December 31, 2023

    

Assets (1)

    

Liabilities (2)

    

Assets (1)

    

Liabilities (2)

    

Assets (1)

    

Liabilities (2)

    

Assets (1)

    

Liabilities (2)

Cross-currency interest rate swaps

$

1,698

$

84,890

$

$

108,621

$

10,060

$

120,432

$

$

156,753

Interest rate swaps

30,784

17,120

252

17,089

8,538

$

32,482

$

84,890

$

17,120

$

108,873

$

27,149

$

120,432

$

8,538

$

156,753

(1)As presented in our condensed consolidated balance sheets within otherOther assets.
(2)As presented in our condensed consolidated balance sheets within accountsAccounts payable and other accrued liabilities.

15.14. Fair Value of Financial Instruments

There have been no significant changes in our policy for fair value measurements from what was disclosed in our 20222023 Form 10-K.

The carrying amounts for cash and cash equivalents, restricted cash, accounts and other receivables, accounts payable and other accrued liabilities, accrued dividends and distributions, security deposits and prepaid rents approximate fair value because of the short-term nature of these instruments. The carrying value of our Global Revolving Credit Facilities, Euro Term Loan Facilities and USD Term Loan Facility 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 and other debt are caused by differences in interest rates or borrowing spreads that were available to us on September 30, 2023March 31, 2024 and December 31, 20222023 as compared to those in effect when the debt was issued or assumed.

We calculate the fair value of our secured and other debt and unsecured senior notes based on currently available market rates assuming the loans are outstanding through maturity and considering the collateral and other loan terms. In determining the current market rate for fixed rate debt, a market spread is added to the quoted yields on federal government treasury securities with similar maturity dates to our debt.

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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 aggregate estimated fair value and carrying value of our Global Revolving Credit Facilities, Euro Term Loan Facilities and USD Term Loan Facility, unsecured senior notes and secured and other debt as of the respective periods is shown below (in thousands):

Categorization

As of September 30, 2023

As of December 31, 2022

Categorization

As of March 31, 2024

As of December 31, 2023

under the fair value

Estimated Fair

Estimated Fair

under the fair value

Estimated Fair

Estimated Fair

    

hierarchy

    

Value

    

Carrying Value

    

Value

    

Carrying Value

    

hierarchy

    

Value

    

Carrying Value

    

Value

    

Carrying Value

Global revolving credit facilities (1)

 

Level 2

$

1,713,024

$

1,713,024

$

2,167,889

$

2,167,889

Global Revolving Credit Facilities (1)

 

Level 2

$

1,912,492

$

1,912,492

$

1,825,228

$

1,825,228

Unsecured term loans (1)

 

Level 2

1,532,975

1,532,975

802,875

802,875

 

Level 2

1,309,250

1,309,250

1,567,925

1,567,925

Unsecured senior notes (2)

 

Level 2

11,462,950

13,161,305

 

11,331,989

 

13,220,961

 

Level 2

12,146,003

13,271,593

 

12,417,619

 

13,507,427

Secured and other debt (2)

 

Level 2

564,923

580,370

 

517,226

 

532,130

 

Level 2

620,505

631,469

 

625,473

 

637,072

$

15,273,872

$

16,987,674

$

14,819,979

$

16,723,855

$

15,988,250

$

17,124,804

$

16,436,245

$

17,537,652

(1)The carrying value of our Global Revolving Credit Facilities and unsecured term loans approximates estimated fair value, due to the variability of interest rates and the stability of our credit ratings.
(2)Valuations for our unsecured senior notes and secured and other debt are determined based on the expected future payments discounted at risk-adjusted rates and quoted market prices.

16.15. 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, 2023,March 31, 2024, we had open commitments, including amounts reimbursable by customers of approximately $25.9$75.6 million, related to construction contracts of approximately $2.6$2.0 billion.

InLegal Proceedings – Although the Company is involved in legal proceedings arising in the ordinary course of our business, we may become subject to various legal proceedings. Asas of September 30, 2023, we wereMarch 31, 2024, the Company is not currently a party to any legal proceedings which we believenor, to its knowledge, is any legal proceeding threatened against it that it believes would have a material adverse effect on ourits financial position, results of operations or financial position.liquidity.

TheAs disclosed previously, the Division of Enforcement of the U.S. Securities and Exchange Commission (SEC) is conducting an investigation into the adequacy of our disclosures of cybersecurity risks.risks and our related disclosure controls and procedures. We are cooperating with the SEC and are not aware of any cybersecurity issue or event that caused the Staff to open this matter. Responding to an investigation of this type can be costly and time-consuming. While we are unable to estimatepredict the likelihood of thelikely outcome of this matter ouror the potential cost or exposure or the duration of the process, based on the information we currently possess, we do not expect the total potential cost to be material to our financial condition. If the SEC believes that violations occurred, it could seek remedies including, an order prohibiting future violationsbut not limited to, civil monetary penalties and a civil money penalty.injunctive relief, and/or file litigation against the Company.

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DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

17.16. Supplemental Cash Flow Information

Cash, cash equivalents, and restricted cash balances as of September 30, 2023,March 31, 2024, and December 31, 2022:2023:

Balance as of

Balance as of

(Amounts in thousands)

    

September 30, 2023

    

December 31, 2022

    

March 31, 2024

    

December 31, 2023

Cash and cash equivalents

$

1,062,050

$

141,773

$

1,193,784

$

1,625,495

Restricted cash (included in other assets)

 

10,395

 

8,923

Restricted cash (included in Other assets)

 

5,304

 

10,975

Total

$

1,072,445

$

150,696

$

1,199,088

$

1,636,470

We paid $345.8$165.0 million and $252.5$140.4 million for interest, net of amounts capitalized, for the ninethree months ended September 30,March 31, 2024 and 2023, and 2022, respectively.

We paid $60.1$8.5 million and $29.9$6.5 million for income taxes, net of refunds, for the ninethree months ended September 30,March 31, 2024 and 2023, and 2022, respectively.

Accrued construction related costs totaled $607.6$469.3 million and $441.9$451.0 million as of September 30,March 31, 2024 and 2023, and 2022, respectively.

18.17. Segment and Geographic Information

A majority of the Company’s largest customers are global entities that transact with the Company across multiple geographies worldwide. In order to better address the needs of these global customers, the Company manages critical decisions around development, operations, and leasing globally based on customer demand considerations. In this regard, the Company manages customer relationships on a global basis in order to achieve consistent sales and delivery experience of our products for our customers throughout the global portfolio. In order to best accommodate the needs of global customers (and customers that might one day become global), the Company manages its operations as a single global business – with one operating segment and therefore one reporting segment.

Operating Revenues

Operating Revenues

Three Months Ended September 30, 

Nine Months Ended September 30, 

Three Months Ended March 31, 

(Amounts in millions)

2023

2022

2023

2022

2024

2023

Inside the United States

$

727.4

$

707.3

$

2,144.0

$

2,052.1

$

704.8

$

712.5

Outside the United States

675.0

484.8

1,963.4

1,406.6

626.3

626.2

Revenue Outside of U.S. %

48.1

%

40.7

%

47.8

%

40.7

%

47.1

%

46.8

%

Investments in Properties, net

Operating lease right-of-use assets, net

Investments in Properties, net

Operating lease right-of-use assets, net

As of September 30, 

As of December 31, 

As of September 30, 

As of December 31, 

As of March 31, 

As of December 31, 

As of March 31, 

As of December 31, 

(Amounts in millions)

2023

2022

2023

2022

2024

2023

2024

2023

Inside the United States

$

10,739.9

$

11,517.3

$

608.7

$

647.0

$

10,307.6

$

10,429.2

$

594.3

$

610.2

Outside the United States

12,858.4

12,257.4

665.7

704.3

13,450.2

13,806.9

639.1

804.1

Net Assets in Foreign Operations

$

6,479.4

$

6,330.2

$

6,612.6

$

6,778.4

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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, 2022, and our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2023, and June 30, 2023, 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, litigation matters or legal proceedings, 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 contain forward-looking statements. Likewise, all of our statements regarding anticipated market conditions, 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 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; decreased rental rates, increased operating costs or increased vacancy rates; increased competition or available supply of data center space; 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; 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; the impact from periods of heightened inflation on our costs, such as operating and general and administrative expenses, interest expense and real estate acquisition and construction costs; the impact on our customers’ and our suppliers’ operations during aan epidemic, pandemic, such as COVID-19;or other global events; 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; changes in political conditions, geopolitical turmoil, political instability, civil disturbances, restrictive governmental actions or nationalization in the countries in which we operate; 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 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; the expected operating performance of anticipated near-term acquisitions and descriptions relating to these expectations; 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 U.S. federal income tax purposes; Digital Realty Trust, L.P.’s failure to qualify as a partnership for U.S. federal income tax purposes; restrictions on our ability to engage in certain business activities; changes in local, state, federal and international laws and regulations, including related to taxation,

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real estate and zoning laws, and increases in real property tax rates; the impact of any financial, accounting, legal or regulatory

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issues or litigation that may affect us; and those additional risks and factors discussed in reports filed with the SEC by us from time to time, including those discussed under the heading “Risk Factors” in our most recently filed reportAnnual Report on Form 10-K and in other sections of this report, including under Part II, Item 1A, Risk Factors.

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 reportAnnual Report on Form 10-K for the year ended December 31, 20222023 and in other sections of this report, including under Part II, Item 1A, Risk Factors. 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 entity” refers to the entity which owns and operates Ascenty, formed with Brookfield Infrastructure.

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. 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 Digital Realty Trust, L.P.’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. Fundamentally, we bring together foundational real estate and innovative technology expertise around the world to deliver a comprehensive, dedicated product suite to meet customers’ data and connectivity needs. We represent an important part of the digital economy that we believe will benefit from powerful, long-term growth drivers.

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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. Our goal is to average through business cycles the following financial ratios: 1) a debt-to-Adjusted EBITDA ratio ofaround 5.5x, 2) a fixed charge coverage of greater than three times, and 3) 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.

Changes in political conditions, geopolitical turmoil, political instability, civil disturbances, restrictive governmental actions or nationalization in the countries in which we operate, including escalations in political and trade tensions involving the U.S. and regulatory and legislative changes, could potentially result in adverse effects on our, and our customers’, operations.

Our current ratio of debt-to-Adjusted EBITDA is higher than we have historically experienced, which could result in adverse changes in investor perception or our credit ratings. Any such changes could negatively affect our financing activity and the market price of Digital Realty Trust, Inc.’s common stock or other securities. For additional information, please see “Risk Factors—Adverse changes in our Company’s credit ratings could negatively affect our financing activity” in our Annual Report on Form 10-K for the year ended December 31, 2022.2023.

Summary of 20232024 Significant Activities

We completed the following significant activities during the ninethree months ended September 30, 2023:March 31, 2024:

In January 2023,2024, we satisfiedformed a joint venture with Blackstone Inc. to develop four hyperscale data center campuses across Frankfurt, Paris and Northern Virginia. We received approximately $231 million of net proceeds from the terms and conditionscontribution of our data centers to the first phase of the Escrow Agreementjoint venture and retained a 20% interest in the USD Term Loan was deemed executed and became effective. The USD Term Loan Agreement provides for a $740 million senior unsecured term loan facility. See “Liquidity and Capital Resources—Sources of Cash”.joint venture.
In 2023,January 2024, we closed on the sale of three non-core assetsour interest in four data centers to Brookfield Infrastructure Partners L.P., or Brookfield, for gross proceedsapproximately $271 million. The sale was completed subsequent to Brookfield’s November 2023 acquisition of one of our tenants, Cyxtera Technologies. As a result of the sale, we recognized a total gain on disposition of approximately $340$203.1 million, resultingof which $194.2 million is included within Gain on disposition of properties, net and $8.9 million is included within Equity in a net gain(loss) earnings of unconsolidated entities on sale in the aggregate of approximately $85 million. 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.condensed consolidated income statements.
In May, June and July 2023, we generated net proceeds of approximately $1.1 billion from the issuance of approximately 11.3 million shares of common stock under our ATM program.
In July 2023,On March 1, 2024, we formed a joint venture with GI Partners, and GI Partners acquired a 65% interestMitsubishi Corporation, or Mitsubishi, to support the development of two data centers in the Dallas metro area. The facilities were 100% pre-leased prior to construction. We contributed the two stabilized hyperscale data center buildings in the Chicago metro area that we contributed.at a contribution value of approximately $261 million. We received approximately $0.7 billion$153 million of gross proceeds from the contribution of our data centers to the joint venture and the associated financing, and retained a 35% interest in the joint venture. AsMitsubishi contributed such cash in exchange for a result of transferring control, we derecognized the data centers and recognized a gain on disposition of approximately $238 million. We have also granted GI Partners an option to purchase an interest in the third facility on the same hyperscale data center campus in Chicago. In addition, GI Partners has a call option to increase their ownership65% interest in the joint venture from 65% to 80%. The call option must be delivered by written notice to the Company no later than January 9, 2024. We continue to manage the day-to-day operations of the assets.
In July 2023, we formed a joint venture with TPG Real Estate, and TPG Real Estate acquired an 80% interest in three stabilized hyperscale data center buildings in Northern Virginia that we contributed. We received approximately $1.3 billion of gross proceeds from the contribution of our data centers to the joint venture and the associated financing, and retained a 20% interest in the joint venture. As a result of transferring control, we derecognized the data centers and recognized a gain on disposition of approximately $577 million. We continue to manage the day‐to‐day operations of the assets.

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Revenue Base

Most of our 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. A summary of our data center portfolio and related occupied square feet (in thousands) occupied (excluding space under development or held for development) 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, 2023

As of December 31, 2022

As of March 31, 2024

As of December 31, 2023

Region

Data Center Buildings

Net Rentable Square Feet (1)

Space Under Active Development (2)

Space Held for Development (3)

Occupancy

Data Center Buildings

Net Rentable Square Feet (1)

Space Under Active Development (2)

Space Held for Development (3)

Occupancy

Data Center Buildings

Net Rentable Square Feet (1)

Space Under Active Development (2)

Space Held for Development (3)

Occupancy

Data Center Buildings

Net Rentable Square Feet (1)

Space Under Active Development (2)

Space Held for Development (3)

Occupancy

North America

111

20,386

3,115

1,357

83.1

%

119

21,894

3,165

1,110

86.3

%

103

19,971

1,684

1,333

84.4

%

107

20,150

2,590

1,335

83.8

%

Europe

112

8,540

3,725

220

77.0

%

114

7,936

4,261

226

79.3

%

111

8,900

2,822

390

76.2

%

112

8,873

3,291

319

75.8

%

Asia Pacific

11

1,654

192

88

77.4

%

12

1,653

421

88

75.9

%

11

1,642

83

207

77.0

%

11

1,652

73

207

76.7

%

Africa

12

1,396

1,650

26

77.1

%

12

1,184

873

12

70.2

%

12

1,531

1,581

21

77.8

%

12

1,528

1,581

23

71.0

%

Consolidated Portfolio

246

31,976

8,682

1,691

80.9

%

257

32,667

8,720

1,436

83.5

%

237

32,043

6,170

1,951

80.6

%

242

32,203

7,535

1,884

79.8

%

Managed Unconsolidated Portfolio

22

4,081

35

94.6

%

18

2,389

98.4

%

26

3,985

1,313

91.9

%

22

3,843

364

93.7

%

Non-Managed Unconsolidated Portfolio

44

3,485

488

2,246

86.1

%

41

3,100

526

1,915

87.1

%

46

3,810

756

2,190

85.2

%

45

3,641

571

2,246

85.3

%

Total Portfolio

312

39,542

9,205

3,937

82.8

%

316

38,156

9,246

3,351

84.7

%

309

39,839

8,239

4,141

82.1

%

309

39,688

8,470

4,130

81.7

%

(1)Net rentable square feet representsrepresent 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—Development Projects”.
(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—Development Projects”.

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Leasing Activities

Due to the capital-intensive and long-term nature of the operations we support, our lease terms with customers are generally longer than standard commercial leases. As of September 30, 2023,March 31, 2024, 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 subsequent table summarizes our leasing activity in the ninethree months ended September 30, 2023March 31, 2024 (square feet in thousands):

    

    

    

    

    

TI’s/Lease

    

Weighted

    

    

    

    

    

TI’s/Lease

    

Weighted

Commissions 

Average Lease 

Commissions 

Average Lease 

Rentable

Expiring 

New

Rental Rate

Per Square 

Terms 

Rentable

Expiring 

New

Rental Rate

Per Square 

Terms 

Square Feet (1)

Rates (2)

Rates (2)

Changes

Foot

(years)

Square Feet (1)

Rates (2)

Rates (2)

Changes

Foot

(years)

Leasing Activity (3)(4)

 

  

 

  

 

  

 

  

 

  

 

  

 

  

 

  

 

  

 

  

 

  

 

  

Renewals Signed

 

  

 

  

 

  

 

  

 

  

 

  

 

  

 

  

 

  

 

  

 

  

 

  

0 1 MW

 

1,576

$

236

$

249

 

5.8

%  

$

1

 

1.6

 

551

$

242

$

252

 

4.3

%  

$

1

 

1.4

> 1 MW

 

794

$

127

$

154

 

21.6

%  

$

2

 

5.0

 

739

$

106

$

129

 

21.6

%  

$

2

 

5.9

Other (6)

 

395

$

29

$

48

 

64.0

%  

$

6

 

5.0

 

182

$

36

$

67

 

88.1

%  

$

 

5.9

New Leases Signed (5)

 

 

 

 

 

  

 

  

 

  

 

 

  

 

  

0 1 MW

 

416

 

$

252

 

$

10

 

3.7

 

145

 

$

275

 

$

8

 

4.1

> 1 MW

 

1,214

 

$

159

 

$

1

 

12.9

 

748

 

$

265

 

$

 

10.5

Other (6)

 

79

 

$

63

 

$

19

 

6.0

 

13

 

$

55

 

$

 

6.7

Leasing Activity Summary

 

 

  

 

  

 

  

 

  

 

  

 

 

  

 

  

0 1 MW

 

1,992

 

$

250

 

 

 

  

 

696

 

$

257

 

 

 

  

> 1 MW

 

2,008

 

$

157

 

 

 

  

 

1,487

 

$

197

 

 

 

  

Other (6)

 

474

 

$

50

 

 

 

  

 

195

 

$

66

 

 

 

  

(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 period presented.
(3)Excludes short-term leases.
(4)Commencement dates for the leases signed range from 20232024 to 2024.2025.
(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 renewed data center leases for 20232024 expirations to be positive as compared 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.

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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 ofbased on annualized rent from our portfolio, including data centers held as investments in unconsolidated entities.

    

Percentage of

September 30, 2023March 31, 2024

Metropolitan Area

Total annualized rent (1)

Northern Virginia

 

17.517.4

%

Chicago

 

8.17.2

%

Frankfurt

 

6.35.9

%

Dallas

4.9

%

Singapore

4.9

%

New York

 

5.34.8

%

London

5.2

%

Singapore

5.0

%

Dallas

5.04.7

%

Silicon Valley

 

4.9

%

Amsterdam

4.24.5

%

Sao Paulo

 

4.14.4

%

Portland

 

2.64.3

%

Amsterdam

4.3

%

Paris

 

2.53.1

%

Johannesburg

 

2.52.6

%

Tokyo

 

1.9

%

PhoenixOsaka

1.71.8

%

Other

 

23.223.3

%

Total

 

100.0

%

(1)Annualized rent is monthly contractual rent (defined as cash base rent before abatements) under existing leases as of the end of the period presented, multiplied by 12. Includes consolidated portfolio and unconsolidated entities at the entities’ 100% ownership level. The aggregate amount of abatements for the ninethree months ended September 30, 2023March 31, 2024 was approximately $71.3$8.1 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 includeinclude: depreciation of our fixed assets, amortization of intangible assets, and transaction and integration costs.

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Table of Contents

Other Income / (Expenses)

Equity in earnings of unconsolidated entities, gain on disposition of properties, interest expense, and income tax expense make up the majority of otherOther income/(expense)(expenses). Equity in earnings of unconsolidated entities represents our share of the income/(loss) of entities in which we invest, but do not consolidate under U.S. GAAP. The largest of these investments is currently our investment in Ascenty, which is located primarily in Latin America. Our second-largest equity-method investment is Digital Core REIT, which is publicly traded on the Singapore Exchange (“SGX”) and which owns a portfolio of 1110 properties operating in the United States, Canada, Germany and Germany.Japan. Refer to additional discussion of Digital Core REIT and Ascenty in the Notes to the Condensed Consolidated Financial Statements.

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 versus 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.

A roll forward showing changes in the stabilized and non-stabilized portfolios for the ninethree months ended September 30, 2023March 31, 2024 as compared to December 31, 20222023 is shown below.below (in thousands):

Net Rentable Square Feet

    

Stabilized

    

Non-Stabilized

    

Total

    

Stabilized

    

Non-Stabilized

    

Total

As of December 31, 2022

23,160

9,507

32,667

As of December 31, 2023

22,600

9,603

32,203

New development and space reconfigurations

17

1,747

1,764

(7)

183

176

Transfers to stabilized from nonstabilized

2,435

(2,435)

Transfers to nonstabilized from stabilized

(661)

569

(92)

Transfers to stabilized from non-stabilized

2,456

(2,519)

(63)

Dispositions / Sales

(2,250)

(114)

(2,364)

(328)

(18)

(346)

As of September 30, 2023

22,701

9,274

31,975

Acquisitions

73

73

As of March 31, 2024

24,721

7,322

32,043

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Table of Contents

Comparison of the Results of Operations for the Three and Nine Months Ended September 30, 2023March 31, 2024 to the Three and Nine Months Ended September 30, 2022March 31, 2023

Revenues

Total operating revenues as shown on our condensed consolidated income statements was as follows (in thousands):

Three Months Ended September 30, 

Nine Months Ended September 30, 

Three Months Ended March 31, 

    

2023

    

2022

    

$ Change

% Change

    

2023

    

2022

    

$ Change

% Change

    

2024

    

2023

    

$ Change

% Change

Stabilized

$

1,048,667

$

889,591

$

159,076

17.9

%

$

3,046,949

$

2,655,742

$

391,207

14.7

%

$

1,058,467

$

1,065,737

$

(7,270)

(0.7)

%

Non-Stabilized

345,946

294,574

51,372

17.4

%

1,028,059

781,510

246,549

31.5

%

258,804

264,231

(5,427)

(2.1)

%

Rental and other services

1,394,613

1,184,165

210,448

17.8

%

4,075,008

3,437,252

637,756

18.6

%

1,317,271

1,329,968

(12,697)

(1.0)

%

Fee income and other

7,819

7,918

(99)

(1.3)

%

 

32,414

 

21,475

10,939

50.9

%

13,872

8,755

5,117

58.4

%

Total operating revenues

$

1,402,432

$

1,192,083

$

210,349

17.6

%

$

4,107,422

$

3,458,727

$

648,695

18.8

%

$

1,331,143

$

1,338,723

$

(7,580)

(0.6)

%

Total operating revenues increaseddecreased by approximately $210.3 million and $648.7$7.6 million in the three and nine months ended September 30, 2023, respectively,March 31, 2024 compared to the same periodsperiod in 2022.2023.

Stabilized rental and other services revenue increased $159.1 million and $391.2decreased $7.3 million in the three and nine months ended September 30, 2023, respectively,March 31, 2024 compared to the same periodsperiod in 20222023 primarily due to:

(i)an increasea decrease of $72.2$42.8 million, and $227.2 million, respectively, in utility reimbursement largely driven by power price decreases, primarily in EMEA and usage increases;APAC;
(ii)offset by an increase of $30.7$23.6 million and $107.8 million, respectively, in new leasing and renewals across all regions; and
(iii)an increase of $8.0$6.2 million and $29.3 million, respectively,in other tenant reimbursements due to an increasea favorable property tax assessment at one of our North American properties realized in installation fees and annual CPI indexation of fixed power agreements.early 2023, which was passed through to our customers.

Non-stabilized rental and other services revenue increased $51.4 million and $246.5decreased $5.4 million in the three and nine months ended September 30, 2023, respectively,March 31, 2024 compared to the same periodsperiod in 20222023 driven primarily by:

(i)an increase of $73.9$84.5 million and $171.9 million, respectively, due to the completion of our global development pipeline and related lease up operating activities. The markets withactivities (with the biggest contributions werein Northern Virginia, Portland, LondonToronto, New York, Zurich, Cape Town and Paris;Johannesburg); and
(ii)$28.4 million and $121.7 million, respectively, generated as a result of the Teraco acquisition in August 2022;
(iii)offset by a decrease of $50.9$89.9 million and $44.5 million, respectively, related to properties sold or contributed after September 30, 2022.March 31, 2023.

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Table of Contents

Operating Expenses — Property Level

Property level operating expenses as shown in our condensed consolidated income statements were as follows (in thousands):

Three Months Ended September 30, 

Nine Months Ended September 30, 

Three Months Ended March 31, 

    

2023

    

2022

    

$ Change

% Change

2023

    

2022

    

$ Change

% Change

    

    

2024

    

2023

    

$ Change

% Change

Stabilized

$

312,322

$

224,113

$

88,209

39.4

%

$

865,055

$

612,435

$

252,620

41.2

%

$

265,035

$

295,375

$

(30,340)

(10.3)

%

Non-Stabilized

 

72,133

 

47,731

24,402

51.1

%

 

240,698

 

124,074

116,624

94.0

%

 

59,536

 

50,989

8,547

16.8

%

Total Utilities

384,455

271,844

112,611

41.4

%

1,105,753

736,509

369,244

50.1

%

324,571

346,364

(21,793)

(6.3)

%

Stabilized

157,331

151,078

6,253

4.1

%

475,465

440,154

35,311

8.0

%

167,068

167,052

16

0.0

%

Non-Stabilized

 

65,758

 

54,808

10,950

20.0

%

 

197,247

 

158,163

39,084

24.7

%

 

57,300

 

57,809

(509)

(0.9)

%

Total Rental property operating and maintenance (excluding utilities)

223,089

205,886

17,203

8.4

%

672,712

598,317

74,395

12.4

%

224,368

224,861

(493)

(0.2)

%

Total Rental property operating and maintenance

607,544

477,731

129,813

27.2

%

1,778,465

1,334,826

443,639

33.2

%

548,939

571,225

(22,286)

(3.9)

%

Stabilized

 

50,041

 

29,718

20,323

68.4

%

 

114,360

 

103,720

10,640

10.3

%

 

35,503

 

27,818

7,685

27.6

%

Non-Stabilized

 

26,527

 

14,144

12,383

87.5

%

 

58,090

 

41,415

16,675

40.3

%

 

8,347

 

16,961

(8,614)

(50.8)

%

Total Property taxes and insurance

 

76,568

 

43,862

32,706

74.6

%

 

172,450

 

145,135

27,315

18.8

%

 

43,850

 

44,779

(929)

(2.1)

%

Total property level operating expenses

$

684,112

$

521,593

$

162,519

31.2

%

$

1,950,915

$

1,479,961

$

470,954

31.8

%

$

592,789

$

616,004

$

(23,215)

(3.8)

%

Property level operating expenses include costs to operate and maintain the properties in our portfolio as well as taxes and insurance.

Total Utilities

Total stabilized utilities expenses increaseddecreased by approximately $88.2 million and $252.6$30.3 million in the three and nine months ended September 30, 2023, respectively,March 31, 2024 compared to the same periodsperiod in 20222023 primarily due to an increase in utility consumption and higher rateslower power pricing at certain properties in the stabilized portfolio.portfolio, primarily in EMEA and APAC.

Total non-stabilized utilities expenses increased by approximately $24.4 million and $116.6$8.5 million in the three and nine months ended September 30, 2023, respectively,March 31, 2024 compared to the same periodsperiod in 20222023 primarily due to:

(i)an increase of approximately $7.7$21.9 million and $64.5 million, respectively, due to higher utility consumption in a growing portfolio of recently completed development sites. The markets withsites (with the biggest contributions werein Northern Virginia, Portland, LondonToronto, New York, Zurich, Cape Town and Paris;Johannesburg);
(ii)$8.8 million and $30.1 million, respectively, generated as a result of the Teraco acquisition in August 2022;
(iii)offset by a decrease in power agreement credits that decreased $7.9by $4.7 million; and

(iii)a decrease of $19.6 million and $22.0 million, respectively.related to properties sold or contributed after March 31, 2023.

The cost of electric power comprises a significant component of our operating expenses. Any additional taxation or regulation of energy use, including as a result of (i) new legislation that the U.S. Congress may pass, (ii) the regulations that the U.S. EPA has proposed or finalized, (iii) regulations under legislation that states have passed or may pass, or (iv) any further legislation or regulations in EMEA, APAC or other regions where we operate could significantly increase our costs, and we may not be able to effectively pass all of these costs on to our customers. These matters could adversely impact our business, results of operations, or financial condition.

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Table of Contents

Total Rental Property Operating and Maintenance (Excluding Utilities)

Total stabilized rental property operating and maintenance expenses (excluding utilities) increased by approximately $6.3 million and $35.3 million in the three and nine months ended September 30, 2023, respectively, compared to the same periods in 2022 primarily due to an increase in data center labor and common area maintenance expense.

Total non-stabilized rental property operating and maintenance expenses (excluding utilities) increased $11.0 million and $39.1decreased by approximately $1.0 million in the three and nine months ended September 30, 2023, respectively,March 31, 2024 compared to the same periodsperiod in 20222023 primarily due to higher lease anda decrease in common area maintenance expense in a growing portfolio of recently completed development sites.Northern Virginia offset by an increase in data center labor expense throughout the portfolio.

Total Property Taxes and Insurance

Total stabilized property taxes and insurance increased by approximately $32.7 million and $27.3$7.7 million in the three and nine months ended September 30, 2023, respectively,March 31, 2024 compared to the same periodsperiod in 20222023 primarily due to accruals for anticipateda favorable property tax assessment increasesat one of our North American properties realized in early 2023.

Total non-stabilized property taxes and insurance decreased $8.6 million in the three months ended March 31, 2024 compared to the same period in 2023 mainly within the Chicago metro area.primarily related to properties sold or contributed after March 31, 2023.

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 respective periods is shown below (in thousands).

Three Months Ended September 30, 

Nine Months Ended September 30, 

    

2023

    

2022

$ Change

% Change

    

2023

    

2022

$ Change

% Change

    

Depreciation and amortization

 

$

420,613

$

388,704

$

31,909

8.2

%

 

$

1,274,384

$

1,147,803

$

126,581

11.0

%

General and administrative

110,721

97,447

13,274

13.6

%

332,257

301,736

30,521

10.1

%

Transaction, integration and other expense

 

14,465

 

25,862

(11,397)

(44.1)

%

 

44,496

51,416

(6,920)

(13.5)

%

Provision for impairment

113,000

113,000

100.0

%

113,000

113,000

100.0

%

Other

 

1,295

 

1,096

199

18.2

%

 

1,950

 

8,823

 

(6,873)

(77.9)

%

Total other operating expenses

660,094

513,109

146,985

28.6

%

1,766,087

1,509,778

256,309

17.0

%

Total property level operating expenses

684,112

521,593

162,519

31.2

%

1,950,915

1,479,961

470,954

31.8

%

Total operating expenses

$

1,344,206

$

1,034,702

309,504

29.9

%

$

3,717,002

$

2,989,739

$

727,263

24.3

%

Three Months Ended March 31, 

    

2024

    

2023

$ Change

% Change

Depreciation and amortization

 

$

431,102

$

421,198

$

9,904

2.4

%

General and administrative

115,210

111,920

3,290

2.9

%

Transaction, integration and other expense

 

31,839

 

12,267

19,572

159.6

%

Other

 

10,836

 

-

10,836

n/m

Total other operating expenses

588,987

545,385

43,602

8.0

%

Total property level operating expenses

592,789

616,004

(23,215)

(3.8)

%

Total operating expenses

$

1,181,776

$

1,161,389

20,387

1.8

%

Equity in Earnings (Loss) of Unconsolidated Entities

Equity in earnings (loss) of unconsolidated entities decreased approximately $7.5$30.9 million and $14.5 million in the three and nine months ended September 30, 2023, respectively, compared to the same periodsperiod in 2022.2023. The foreign exchange remeasurement of debt associated with our unconsolidated Ascenty entity creates volatility in our equity in earnings and drove this fluctuation.

Gain on Disposition of Properties, Net

Gain on disposition of properties increased approximately $636.7 million and $723.9$277.8 million for the three and nine months ended September 30, 2023, respectively,March 31, 2024, as compared to the same period in 2022.2023.

In July 2023,January 2024, we received approximately $0.7 billion of gross proceeds fromclosed on the contributionsale of our interest in four data centers to Brookfield Infrastructure Partners L.P., or Brookfield, for approximately $271 million. As a result of the joint venture with GI Partners forsale, we recognized a nettotal gain on disposition of approximately $201.3 million.

In March 2024, we recognized a total gain of $74.4 million from the sale of approximately $238 million and we received approximately $1.3 billion of gross proceeds from the contribution of our data centersan easement to the joint venture with TPG Real Estate for a net gain on sale of approximately $577 million.local power provider in Northern Virginia.

In May 2023, we disposed of a non-core asset, resulting in a net gain on sale of $90 million.

In August 2022, we sold a non-core building in Dallas for net proceeds of approximately $203 million resulting in a net gain on sale of approximately $174 million.

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Loss from Early Extinguishment of Debt

We had no extinguishment of debt in 2023. In February 2022,On January 9, 2024, we redeemedpaid down $240 million on the 4.750% Notes due 2025, whichU.S. term loan facility, leaving $500 million outstanding. The paydown resulted in a $51.1an early extinguishment charge of approximately $1.1 million loss.during the three months ended March 31, 2024.

Interest Expense

Interest expense increased approximately $34.3 million and $111.9$7.3 million in the three and nine months ended September 30, 2023, respectively,March 31, 2024 compared to the same periodsperiod in 20222023 driven primarily by:by higher interest rates on our credit facilities and the non-swapped portion of our term loans.

(i)an increase of $20.9 million and $57.2 million, respectively, due to the issuances of the Euro term loan (€750 million) in August 2022 along with the U.S. dollar term loan ($740 million) in January 2023;
(ii)an increase of $12.1 million and $36.8 million, respectively, due to the issuance of the 5.550% notes due 2028 ($900 million) in September 2022 ($550 million) and December 2022 ($350 million);
(iii)an increase of $7.3 million and $43.8 million, respectively, in credit facilities interest expense as a result of higher average balances and higher interest rates;
(iv)an increase of $8.3 million and $27.1 million, respectively, due to the Teraco acquisition; and
(v)offset by an increase in capitalized interest of $11.8 million and $37.6 million, respectively, as a result of increased construction activities and higher interest rates.

Income Tax Expense

Income tax expense decreasedincreased by approximately $2.3$1.0 million in the three months ended September 30, 2023 and increased by approximately $5.6 million in the nine months ended September 30, 2023March 31, 2024 as compared to the same period in 20222023 due to increased profitability and jurisdictional rate mix in foreign jurisdictions. We carried out an analysis for the purposes of the Model GloBE Rules for Pillar Two and no material top-up tax is expected.

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” or “OP” 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, incurring certain expenses in operating as a public company (which are fully reimbursed by the Operating Partnership) 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.

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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 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.

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Our Parent and our Operating Partnership were parties to an at-the-market (ATM) Equity OfferingSM Sales Agreement dated April 1, 2022, as amended in 2023 (the “2022 Sales Agreement”). The 2022 Sales Agreement was terminated on August 4, 2023, and our Parent and our Operating Partnership entered into a new ATM Equity OfferingSM Sales Agreement dated August 4, 2023 (the “2023 Sales Agreement”). At the time of the termination, $408.7 million remained unsold under the 2022 Sales Agreement. Pursuant to the 2023 Sales Agreement, Digital Realty Trust, Inc. cancould issue and sell common stock having an aggregate offering price of up to $1.5 billion through various named agents from time to time. From January 1, 2024 through February 23, 2024, Digital Realty Trust, Inc. generated net proceeds of approximately $99 million from the issuance of approximately 0.6 million common shares under the 2023 Sales Agreement at an average price of $133.43 per share after payment of approximately $0.6 million of commissions to the agents. For the three months ended March 31, 2023, we had no sales under the ATM program.

The 2023 Sales Agreement was amended on February 23, 2024 (the “2024 Sales Agreement Amendment”). At the time of the amendment, $258.3 million remained unsold under the 2023 Sales Agreement. Pursuant to the 2024 Sales Agreement Amendment, Digital Realty Trust, Inc. can issue and sell common stock having an aggregate offering price of up to $2.0 billion through various named agents from time to time. As of March 31, 2024, $2.0 billion remained available for future sales under the 2024 Sales Agreement Amendment.

The sales of common stock made under the 2023 Sales Agreement will be made in “at the market” offerings as defined in Rule 415 of the Securities Act. 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 the nine months ended September 30, 2023, our Parent generated net proceeds of approximately $1.1 billion from the issuance of approximately 11.3 million shares of common stock under the 2022 Sales Agreement at an average price of $96.35 per share after payment of approximately $7.5 million of commissions to the agents. As of September 30, 2023, $1.5 billion remained available for future sales under the 2023 Sales Agreement. For the nine months ended September 30, 2022, we had no sales under the 2022 Sales Agreement.

We believe our Operating Partnership’s sources of working capital, specifically its cash flow from operations, and funds available under its global revolving credit facilityGlobal 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.

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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 U.S. 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 and state income taxes. Amounts accumulated for distribution to stockholders are invested primarily in interest-bearing accounts

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and short-term interest-bearing securities, in a manner 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 facilityGlobal 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 except to the extent that our Parent recognizes capital gains and declares a capital gains dividend, or that such amounts constitute “qualified dividend income” subject to a reduced rate of tax. Non-corporate stockholders, including individuals, generally may deduct up to 20% of dividends from a REIT, other than capital gain dividends and dividends treated as qualified dividend income, for taxable years beginning before January 1, 2026. 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 our Parent’s current and accumulated earnings and profits and 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 facilityGlobal 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 ninethree months ended September 30, 2023,March 31, 2024, see Note 11.10. “Equity and Capital” to our condensed consolidated financial statements contained herein.

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Analysis of Liquidity and Capital Resources — Operating Partnership

As of September 30, 2023,March 31, 2024, we had $1,062.1$1,193.8 million of cash and cash equivalents, excluding $10.4$5.3 million of restricted cash. Restricted cash primarily consists of contractual capital expenditures plus other deposits. As circumstances warrant, our Operating Partnership may dispose of stabilized assets or enter into joint venture arrangements with institutional investors or strategic partners, on an opportunistic basis dependent upon market conditions. Our Operating Partnership may use the proceeds from such dispositions to acquire additional properties, to fund development opportunities and for general working capital purposes, including the repayment of indebtedness. 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.;
debt service; and
potentially, acquisitions.

The Global Revolving Credit Facilities provide for borrowings up to $3.9 billion (including approximately $0.2 billion available to be drawn on the Yen revolving credit facility) based on currency commitments and foreign exchange rates as of March 31, 2024. The Global Revolving Credit Facility provides for borrowings in a variety of currencies and can be increased by an additional $750 million, subject to receipt of lender commitments and other conditions precedent. Both facilities mature on January 24, 2026, with two six-month extension options available.

These facilities also feature a sustainability-linked pricing component, with pricing subject to adjustment based on annual performance targets, further demonstrating our continued leadership and commitment to sustainable business practices.

The Global Revolving Credit Facility provides for borrowings in a variety of currencies and includes the ability to add additional currencies in the future. We have used and intend to use available borrowings under the Global Revolving Credit Facilities to acquire additional properties, fund development opportunities and for general working capital and other corporate purposes, including potentially for the repurchase, redemption or retirement of outstanding debt or equity securities. For additional information regarding our Global Revolving Credit Facility, see Note 8. “Debt of the Operating Partnership” in the Notes to our Condensed Consolidated Financial Statements.

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 and develop additional capacity. At September 30, 2023,March 31, 2024, we had open commitments, related to construction contracts of approximately $2.6$2.0 billion, including amounts reimbursable of approximately $25.9$75.6 million.

We currently expect to incur approximately $0.6$1.4 billion to $0.8$1.9 billion of capital expenditures for our development programs during the three months ending December 31, 2023.remainder of 2024. 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.

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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, 2023

As of December 31, 2022

Net Rentable 

Current 

Future 

Net Rentable 

Current 

Future 

(in thousands)

    

Square Feet (1)

    

Investment (2)

    

Investment (3)

    

Total Cost

    

 Square Feet (1)

    

Investment (4)

    

Investment (3)

    

Total Cost

Land held for future development (5)

 

N/A

 

$

179,959

 

$

 

$

179,959

 

N/A

 

$

118,452

 

$

 

$

118,452

Construction in Progress and Space Held for Development

 

  

 

  

 

  

 

  

 

  

 

  

 

  

 

  

Land - Current Development (5)

N/A

$

1,120,228

$

$

1,120,228

N/A

$

1,118,954

$

$

1,118,954

Space Held for Development (6)

 

1,691

 

247,766

 

 

247,766

 

1,437

245,483

 

245,483

Base Building Construction

 

3,905

 

762,940

609,651

 

1,372,591

 

3,918

 

693,926

649,640

 

1,343,566

Data Center Construction

 

4,778

 

2,333,237

 

3,177,294

 

5,510,531

 

4,802

 

2,180,060

 

3,299,457

 

5,479,517

Equipment Pool and Other Inventory

 

N/A

 

131,996

 

 

131,996

 

N/A

 

32,409

 

 

32,409

Campus, Tenant Improvements and Other

 

N/A

 

424,296

 

179,649

 

603,945

 

N/A

 

518,302

 

169,756

 

688,058

Total Construction in Progress and Land Held for Future Development

 

10,374

$

5,200,423

$

3,966,594

$

9,167,017

 

10,157

$

4,907,586

$

4,118,853

$

9,026,439

Construction Projects in Progress

As of March 31, 2024

As of December 31, 2023

Current 

Future 

Current 

Future 

(in thousands)

    

Investment (1)

    

Investment (2)

    

Total Cost

    

Investment (3)

    

Investment (2)

    

Total Cost

Future Development Capacity (4)

 

2,161,311

562,481

 

2,723,792

 

 

2,222,062

337,681

 

2,559,743

Data Center Construction

 

2,032,674

 

2,111,105

 

4,143,779

 

 

2,116,335

 

2,231,747

 

4,348,082

Equipment Pool and Other Inventory (5)

 

184,706

 

 

184,706

 

 

203,821

 

 

203,821

Campus, Tenant Improvements and Other (6)

 

232,389

 

107,835

 

340,224

 

 

211,187

 

130,260

 

341,447

Consolidated Land Held and Development Construction in Progress

 

$

4,611,080

$

2,781,421

$

7,392,501

 

$

4,753,405

$

2,699,688

$

7,453,093

(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.Represents cost incurred through March 31, 2024.
(2)Represents balances incurred through September 30, 2023.estimated cost to complete scope of work pursuant to approved development budget.
(3)Represents estimated cost to complete specific scope of work pursuant to contract, budget or approved capital plan.costs incurred through December 31, 2023.
(4)Represents balances incurred through December 31, 2022.Includes land and space held or actively under construction in preparation for future data center fit-out.
(5)Represents approximately 761 acres aslong-lead equipment and materials required for timely deployment and delivery of September 30, 2023 and approximately 842 acres as of December 31, 2022.data center fit-out.
(6)ExcludesRepresents improvements in progress, which benefit space held for development through unconsolidated entities.recently converted to our operating portfolio and is composed primarily of shared infrastructure projects and first-generation tenant improvements. Includes $3.0 million included in our condensed consolidated balance sheet related to fair value adjustments on Teraco portfolio projects that were partially constructed as of August 1, 2022.

Land inventory and space held forFuture development reflectreflects cumulative cost spent pending future development. Base building construction consists ofdevelopment and includes ongoing improvements to building infrastructure in preparation for future data center fit-out. Data center construction includes 8.7 million square feet of Turn Key Flex® and Powered Base Building® product. 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 ninethree months ended September 30,March 31, 2024 and 2023 and 2022 (in thousands):

Nine Months Ended September 30, 

Three Months Ended March 31, 

    

2023

    

2022

    

2024

    

2023

Development projects

$

2,121,583

$

1,480,449

$

549,522

$

644,910

Enhancement and improvements

 

5,592

 

10,268

 

7,738

 

2,796

Recurring capital expenditures

 

184,214

 

156,467

 

47,676

 

40,465

Total capital expenditures (excluding indirect costs)

$

2,311,389

$

1,647,184

$

604,936

$

688,171

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Our development capital expenditures are generally funded by our available cash and equity and debt capital.

Indirect costs, including interest, capitalized in the ninethree months ended September 30,March 31, 2024 and 2023 and 2022 were $155.1$54.4 million and $109.7$50.5 million, respectively. Capitalized interest comprised approximately $83.8$28.5 million and $46.2$26.8 million of the total indirect costs capitalized for the ninethree months ended September 30,March 31, 2024 and 2023, and 2022, respectively. Capitalized interest in the ninethree months ended September 30, 2023March 31, 2024 increased, compared to the same period in 2022,2023, due to an increase in qualifying activities and higher interest rates.

Excluding capitalized interest, indirect costs in the ninethree months ended September 30, 2023March 31, 2024 increased compared to the same period in 20222023 due primarily to capitalized amounts relating to compensation expense of employees directly engaged in construction activities. See “Future Uses of Cash” for a discussion of the amount of capital expenditures we expect to incur during the year ending December 31, 2023.2024.

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

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December 31, 20232024 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 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, 2023,May 1, 2024, we had approximately $1.8$2.0 billion of borrowings available under our Global Revolving Credit Facilities.

Our Global Revolving Credit Facilities provide for borrowings up to $3.9 billion (including approximately $0.2 billion available to be drawn on the Yen revolving credit facility). We have the ability from time to time to increase the size of the global revolving credit facility by up to an additional $750 million, subject to the receipt of lender commitments and other conditions precedent. Both facilities mature on January 24, 2026, with two six-month extension options available; provided that the Operating Partnership must pay a 0.0625% extension fee based on each lender’s revolving commitments then outstanding (whether funded or unfunded). These facilities also feature a sustainability-linked pricing component, with pricing subject to adjustment based on annual performance targets, further demonstrating our continued leadership and commitment to sustainable business practices. We have used and intend to use available borrowings under the Global Revolving Credit Facilities to fund our liquidity requirements from time to time. For additional information regarding our global revolving credit facility, see Note 9. “Debt of the Operating Partnership” to our condensed consolidated financial statements contained herein.

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The Euro Term Loan Facilities provide (i) a €375,000,000 three-year senior unsecured term loan facility and (ii) a €375,000,000 five-year senior unsecured term loan facility, comprised of €125,000,000 of initial term loans, and €250,000,000 of delayed draw term loan commitments that were funded on September 9, 2023. The Euro Term Loan Facilities provide for borrowings in Euros. The 2025 Term Facility matures on August 11, 2025. The 2025-27 Term Facility matures on August 11, 2025, subject to two maturity extension options of one year each; provided that the Operating Partnership must pay a 0.125% extension fee based on the then-outstanding principal amount of the 2025-27 Term Facility commitments then outstanding.

On October 25, 2022, the Company, the Operating Partnership, and certain of the Operating Partnership’s subsidiaries entered into an escrow agreement, pursuant to which the Operating Partnership delivered executed signature pages to a new term loan agreement to be held in escrow upon satisfaction of specific terms. On January 9, 2023, the terms and conditions of the agreement were satisfied, and, on such date, the term loan was deemed executed and became effective. The USD Term Loan Facility provides for a $740 million senior unsecured term loan facility and borrowings in U.S. dollars. The USD Term Loan Facility will mature on March 31, 2025, subject to one twelve-month extension at the Operating Partnership’s option; provided, that the Operating Partnership must pay a 0.1875% extension fee based on the then-outstanding principal amount of the term loans under the USD Term Loan Facility.

In December 2022, Teraco entered into a syndicated loan facility worth R11.8 billion (approximately $681 million based on the exchange rate on December 6, 2022), of which R5.7 billion (approximately $329 million based on the exchange rate on December 6, 2022) was used to finance the company’s continued growth and R6.1 billion (approximately $329 million based on the exchange rate on December 6, 2022) refinanced and extended the average maturity profile of existing drawn debt. The new facility matures in December 2028.

On July 13, 2023, we formed a joint venture with GI Partners, and GI Partners acquired a 65% interest in two stabilized hyperscale data center buildings in the Chicago metro area that we contributed. We received approximately $0.7 billion of gross proceeds from the contribution of our data centers to the joint venture and the associated financing, and retained a 35% interest in the joint venture. As a result of transferring control, we derecognized the data centers. In addition, GI Partners had a call option to increase their ownership interest in the joint venture from 65% to 80%. The call option top-up election notice was delivered to the Company on December 21, 2023. On January 12, 2024, GI Partners made an additional cash capital contribution in the amount of $68 million, resulting in an additional 15% ownership in the joint venture. Currently, GI Partners has an 80% interest in the joint venture, and we have retained a 20% interest.

We have also granted GI Partners an option to purchase an interest in the third facility on the same hyperscale data center campus in Chicago. On April 16, 2024, we expanded our existing joint venture with GI Partners with the sale to GI Partners of a 75% interest in this third facility. We will continuereceived approximately $385 million of gross proceeds from the contribution of our data center to manage the day-to-day operationsjoint venture and the associated financing and retained a 25% interest in the joint venture.

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Table of the assets.Contents

On July 26, 2023, we fully settled the forward sale agreements by issuing approximately 3.5 million shares, resulting in proceeds of approximately $336 million.

On July 25, 2023,January 11, 2024, we formed a joint venture with TPG Real Estate, and TPG Real Estate acquired an 80% interest in three stabilizedBlackstone Inc. to develop four hyperscale data center buildingscampuses across Frankfurt, Paris and Northern Virginia. The campuses are planned to support the construction of 10 data centers with approximately 500 megawatts of potential IT load capacity. The first phase of the joint venture closed on hyperscale data center campuses in Paris and Northern Virginia, that we contributed.while the second phase is scheduled to close later in 2024, upon obtaining the required approvals. We received approximately $1.3$231 million of net proceeds from the contribution of our data centers to the first phase of the joint venture and retained a 20% interest in the joint venture. Each partner will fund its pro rata share of the remaining $3.0 billion estimated development cost for the first phase of the joint venture, which is slated for completion in various stages, contingent on customer demand, which began in the first quarter of 2024.

In January 2024, we closed on the sale of our interest in four data centers to Brookfield Infrastructure Partners L.P., or Brookfield, for approximately $271 million. Two of the data centers were consolidated by us; while two of the data centers were owned by Digital Core REIT. The sale was completed subsequent to Brookfield’s November 2023 acquisition of one of our tenants, Cyxtera Technologies. The acquisition was part of Cyxtera’s plan of reorganization under its Chapter 11 bankruptcy proceedings. In conjunction with the sale, we bought out Cyxtera’s leases in three data centers located in Singapore and Frankfurt for approximately $57 million. In addition, Brookfield assumed the leases on three facilities previously leased to Cyxtera and amended the leases on three additional data centers in North America, accelerating the expiration date to September 2024. As a result of the sale, we recognized a total gain on disposition of approximately $203.1 million, of which $194.2 million is included within Gain on disposition of properties, net and $8.9 million is included within Equity in (loss) earnings of unconsolidated entities on our condensed consolidated income statements.

On March 1, 2024, we formed a joint venture with Mitsubishi Corporation, or Mitsubishi, to support the development of two data centers in the Dallas metro area. The facilities were 100% pre-leased prior to construction. We contributed the two data center buildings at a contribution value of approximately $261 million. We received approximately $153 million of gross proceeds from the contribution of our data centers to the joint venture and the associated financing, and retained a 20%35% interest in the joint venture. WeMitsubishi contributed such cash in exchange for a 65% interest in the joint venture. Each partner will continue to manage the day‐to‐day operationsfund its pro rata share of the assets.remaining $140 million estimated development cost for the first phase of the project, which is slated for completion in late 2024.

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, 2023,March 31, 2024, see Note 11.10. “Equity and Capital” to our condensed consolidated financial statements contained herein.

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Outstanding Consolidated Indebtedness

The table below summarizes our outstanding debt as of September 30, 2023March 31, 2024 (in millions):

Debt Summary:

    

    

    

    

Fixed rate

$

11,755.0

$

11,869

Variable rate debt subject to interest rate swaps

 

2,773.9

 

2,836

Total fixed rate debt (including interest rate swaps)

 

14,528.9

 

14,705

Variable rate—unhedged

 

2,458.8

 

2,420

Total

$

16,987.7

$

17,125

Percent of Total Debt:

 

  

 

  

Fixed rate (including swapped debt)

 

85.5

%

 

85.9

%

Variable rate

 

14.5

%

 

14.1

%

Total

 

100.0

%

 

100.0

%

Effective Interest Rate as of September 30, 2023

 

  

Effective Interest Rate as of March 31, 2024

 

  

Fixed rate (including hedged variable rate debt)

 

2.54

%

 

2.58

%

Variable rate

 

4.99

%

 

4.63

%

Effective interest rate

 

2.89

%

 

2.58

%

Our ratio of debt to total enterprise value was approximately 31%27% (based on the closing price of Digital Realty Trust, Inc.’s common stock on September 30, 2023March 31, 2024 of $121.02)$144.04). 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 Digital Realty Trust, L.P. 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 based on various one-month SOFR, EURIBOR, BBR, HIBOR, TIBOR, SARON and Base CD Rate rates, depending on the respective agreement governing the debt, including our Global Revolving Credit Facilities and unsecured term loans. As of September 30, 2023March 31, 2024, our debt had a weighted average term to initial maturity of approximately 4.33.9 years (or approximately 4.54.1 years assuming exercise of extension options).

As of September 30, 2023,March 31, 2024, our pro-rata share of secured debt of unconsolidated entities was approximately $1,463.2$1,382.1 million.

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 NineThree Months Ended September 30, 2023March 31, 2024 to NineThree Months Ended September 30, 2022March 31, 2023

The following table shows cash flows and ending cash, cash equivalents and restricted cash balances for the respective periods (in thousands).

Nine Months Ended September 30, 

Three Months Ended March 31, 

2023

    

2022

    

Change

2024

    

2023

    

Change

Net cash provided by operating activities

$

1,172,475

$

1,202,964

$

(30,489)

$

352,275

$

349,726

$

2,549

Net cash used in investing activities

 

(98,706)

 

(3,727,934)

 

3,629,228

Net cash (used in) provided by financing activities

 

(108,275)

 

2,567,528

 

(2,675,803)

Net increase in cash, cash equivalents and restricted cash

$

965,494

$

42,558

$

922,936

Net cash provided by (used in) investing activities

 

6,619

 

(749,007)

 

755,626

Net cash provided by (used in) financing activities

 

(809,714)

 

390,908

 

(1,200,622)

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

$

(450,820)

$

(8,373)

$

(442,447)

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The changes in the activities that comprise the increasedecrease in net cash used in investing activities for the ninethree months ended September 30, 2023March 31, 2024 as compared to the ninethree months ended September 30, 2022March 31, 2023 consisted of the following amounts (in thousands).

Change

Change

2023 vs 2022

2024 vs 2023

Decrease in net cash used in business combinations

$

1,831,236

Increase in cash used for improvements to investments in real estate

(712,942)

Decrease in cash contributed to investments in unconsolidated entities

228,120

Increase in net cash used in business combinations / asset acquisitions

$

(23,580)

Decrease in cash used for improvements to investments in real estate

79,362

Increase in cash contributed to investments in unconsolidated entities, net

(88,762)

Increase in net cash provided by proceeds from sale of real estate

2,266,689

814,101

Other changes

 

16,125

 

(25,495)

Decrease in net cash used in investing activities

$

3,629,228

$

755,626

The decrease in net cash used in investing activities was primarily due to:

(i)a decreasean increase in spend due to the completion of the Teraco acquisition in August 2022 for approximately $1.7 billion;2024 of land parcels in Paris;
(ii)an increasea decrease in spend on development projects of approximately $713$79 million;
(iii)a decreasean increase in cash contributed to various investments in unconsolidated entities;
(iv)an increase in cash provided by the contribution of data centers to our joint ventures with GI PartnersBlackstone and TPG Real EstateMitsubishi, for gross proceeds of approximately $0.7 billion$231 million and $1.3 billion,$153 million, respectively; and
(v)the sale of three non-core assetsfour data centers to Brookfield for gross proceeds of approximately $340$271 million, the sale of a land parcel in Sydney for gross proceeds of approximately $68 million and the sale of an easement to a local power provider in Northern Virginia for gross proceeds of approximately $92 million.

The changes in the activities that comprise the increase in net cash used in financing activities for the ninethree months ended September 30, 2023March 31, 2024 as compared to the ninethree months ended September 30, 2022March 31, 2023 consisted of the following amounts (in thousands).

Change

20232024 vs 20222023

Decrease in cash provided by short-term borrowings

$

(2,411,486)(209,306)

Decrease in cash provided by proceeds from secured / unsecured debt

(1,599,106)(785,394)

DecreaseIncrease in cash used for repayment on secured / unsecured debt

738,266(236,919)

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

676,66098,047

Increase in cash used for dividend and distribution payments

 

(69,982)(50,549)

Other changes, net

(10,155)(16,501)

DecreaseIncrease in net cash provided byused in financing activities

$

(2,675,803)(1,200,622)

The decreaseincrease in net cash provided byused in financing activities was primarily due to:

(i)a decrease in cash proceeds from short-term borrowings;
(ii)a decrease in cash provided by proceeds from secured / unsecured debt due to the issuance of notes in 2022 (2032 Notes in January 2022, Swiss Franc Notes in March 2022, Euro Term Loan in August 2022 and 2028 Notes in September 2022), offset by the closing of the USD Term Loan FacilityU.S. term loan facility in January 2023;
(iii)a decreasean increase in cash used for repayment of unsecured notes (in 2022, we redeemed$240 million on the 4.750% Notes due 2025 ($450 million) and the Floating rate notes due 2022 (€300 million));U.S. term loan facility;
(iv)offset by an increase in cash provided by proceeds from the issuance of approximately 11.30.6 million shares of common stock, net of costs, of approximately $1.1 billion$99 million under our ATM program, offset with the partial settlement of forward sale agreements in July 2022 ($400 million);program; and
(v)an increase in dividend and distribution payments due to an increased number of common shares and common units outstanding.

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Noncontrolling Interests in Operating Partnership

Noncontrolling interests relate to the common units in Digital Realty Trust, L.P. that are not owned by Digital Realty Trust, Inc., which, as of September 30, 2023,March 31, 2024, amounted to 2.1% of Digital Realty Trust, L.P. common units. Historically, Digital Realty Trust, L.P. 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 Digital Realty Trust, L.P. to redeem part or all of their common units for cash based uponon the fair market value of an equivalent number of shares of Digital Realty Trust, Inc. common stock at the time of the redemption. Alternatively, weDigital Realty Trust, Inc. may elect to acquire those common units in exchange for shares of Digital Realty Trust, Inc.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. As of September 30, 2023,March 31, 2024, approximately 0.2 million common units and incentive units of Digital Realty Trust, L.P. that wereare classified within equity, except for certain common units issued to certain former unitholders of DuPont Fabros Technology, L.P. unitholders 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 capitalequity 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. A period of inflation, however, could cause an increase in the cost of our variable-rate borrowings, including borrowings under our Global Revolving Credit Facilities, borrowings under our Euro Term Loan Facilities and USD Term Loan Facility and issuances of unsecured senior notes.

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 is a non-GAAP financial measure and represents net income (loss) (computed in accordance with GAAP), excluding gains (or losses)gain (loss) from salesthe disposition of property, a gain from a pre-existing relationship,real estate assets, provision for impairment, charges and real estate related depreciation and amortization (excluding amortization of deferred financing costs), our share of unconsolidated JV real estate related depreciation & amortization, net income attributable to noncontrolling interests in operating partnership and, after adjustments for unconsolidated partnerships and joint ventures.depreciation related to noncontrolling interests. Management uses FFO as a supplemental performance measure because, in excluding real estate 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 propertiesdata centers 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,data centers, 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.

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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, 

    

2023

    

2022

    

2023

    

2022

GAAP Net Income Available to Common Stockholders

$

723,437

$

226,894

$

889,985

$

343,240

Non-GAAP Adjustments:

 

  

 

  

 

  

 

  

Non-controlling interests in operating partnership

 

16,300

 

5,400

 

20,300

 

8,500

Real estate related depreciation and amortization (1)

 

410,836

 

381,425

 

1,247,072

 

1,124,914

Depreciation related to non-controlling interests

(14,569)

(8,254)

(42,101)

(8,254)

Unconsolidated JV real estate related depreciation and amortization

43,215

30,831

112,320

89,172

Gain on real estate transactions

(810,688)

(173,990)

(908,459)

(177,904)

Provision for impairment

113,000

113,000

FFO available to common stockholders and unitholders (2)

$

481,531

$

462,306

$

1,432,117

$

1,379,668

Basic FFO per share and unit

$

1.56

$

1.58

$

4.74

$

4.74

Diluted FFO per share and unit (2)(3)

$

1.55

$

1.55

$

4.68

$

4.61

Weighted average common stock and units outstanding

 

  

 

  

 

  

 

  

Basic

 

308,024

 

292,536

 

302,316

 

291,084

Diluted (2)(3)

 

317,538

 

302,258

 

312,867

 

300,028

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

Depreciation and amortization per income statement

    

$

420,613

    

$

388,704

$

1,274,384

    

$

1,147,803

Non-real estate depreciation

 

(9,777)

(7,279)

(27,312)

(22,889)

$

410,836

$

381,425

$

1,247,072

$

1,124,914

 

Three Months Ended March 31, 

    

2024

    

2023

GAAP Net Income Available to Common Stockholders

$

271,327

$

58,545

Non-GAAP Adjustments:

 

  

 

  

Net income attributable to non-controlling interests in operating partnership

 

6,200

 

1,500

Real estate related depreciation and amortization (1)

 

420,591

 

412,192

Depreciation related to non-controlling interests

(8,017)

(13,388)

Unconsolidated JV real estate related depreciation and amortization

47,877

33,719

Gain from the disposition of real estate assets

(286,704)

(7,825)

FFO available to common stockholders and unitholders (2)

$

451,273

$

484,742

Basic FFO per share and unit

$

1.42

$

1.63

Diluted FFO per share and unit (2)(3)

$

1.41

$

1.60

Weighted average common stock and units outstanding

 

  

 

  

Basic

 

318,469

 

297,180

Diluted (2)(3)

 

326,975

 

309,026

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

Depreciation and amortization per income statement

    

$

431,102

    

$

421,198

Non-real estate depreciation

 

(10,511)

(9,006)

$

420,591

$

412,192

(2)Rollover ShareholdersAs part of the acquisition of Teraco in 2022, certain of Teraco's minority indirect shareholders have the right to put their shares in Remainingan upstream parent company of Teraco Interests to the Company in exchange for cash or the equivalent value of shares of the Company common stock, or a combination thereof. U.S. GAAP requires the Company to assume the put right is settled in shares for purposes of calculating diluted EPS. This same approach was utilized to calculate FFO per share. When calculating diluted FFO, the net income allocated to the Rollover ShareholdersTeraco related minority interest is added back to the FFO numerator as the denominator assumes all shares have been put back to the Company. The Teraco noncontrolling share of FFO was $9,768 and $11,069 for the three months ended March 31, 2024 and 2023, respectively.
(3)For all periods presented, we have excluded the effect of the 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 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, 

Three Months Ended March 31, 

2023

    

2022

    

2023

    

2022

2024

    

2023

Weighted average common stock and units outstanding

 

308,024

 

 

292,536

 

 

302,316

 

291,084

 

318,469

 

 

297,180

Add: Effect of dilutive securities

 

9,514

 

 

9,722

 

 

10,551

 

8,944

 

8,506

 

 

11,846

Weighted average common stock and units outstanding—diluted

317,538

 

302,258

 

312,867

 

300,028

326,975

 

309,026

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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 ratings 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, 2023,March 31, 2024, our consolidated debt was as follows (in millions):

    

    

Estimated Fair

Carrying Value

 

Value

Fixed rate debt

$

11,755.0

$

10,041.3

Variable rate debt subject to interest rate swaps

 

2,773.9

 

2,773.9

Total fixed rate debt (including interest rate swaps)

 

14,528.9

 

12,815.2

Variable rate debt

���

 

2,458.7

 

2,458.7

Total outstanding debt

$

16,987.6

$

15,273.9

    

    

Estimated Fair

Carrying Value

 

Value

Fixed rate debt

$

11,869

$

10,732

Variable rate debt subject to interest rate swaps

 

2,836

 

2,836

Total fixed rate debt (including interest rate swaps)

 

14,705

 

13,568

Variable rate debt

 

2,420

 

2,420

Total outstanding debt

$

17,125

$

15,988

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, 2023:March 31, 2024:

    

Change

Assumed event

($ millions)

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

$

5.8

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

 

(5.9)

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

 

10.6

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

 

(10.6)

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

 

2,294.6

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

 

(2,719.4)

    

Change

Assumed event

($ millions)

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

$

4

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

 

(4)

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

 

9

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

 

(9)

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

 

2,081

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

 

(2,451)

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.

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Table of Contents

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 Euro, Japanese yen, British pound sterling, Singapore dollar, and South African rand.rand and Brazilian real. 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 fluctuations by financing our investments in local currency denominations in order to reduce our exposure to any foreign currency transaction gains or losses resulting from transactions entered into in currencies other than the functional currencies of the associated entities. We also utilize cross-currency interest rate swaps, designated as net investment hedges, which effectively convert a portion of our U.S. dollar-denominated fixed-rate debt to foreign currency-denominated fixed-rate debt, to hedge the currency exposure associated with our net investment in our foreign subsidiaries. In addition, 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. dollar may affect our revenues, operating margins and distributions and may also affect the book value of our assets and the amount of stockholders’ equity.

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Table of Contents

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.

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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.

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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, 2023,March 31, 2024, we were not a party to any legal proceedings which we believe would have a material adverse effect on our operations or financial position.

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, 20222023 continue to apply to our business and should be supplemented with the following risk factor:

We may be vulnerable to breaches, or unauthorized access to, or disruption of our physical and information technology and operational technology infrastructure and systems.

Security breaches, or disruption, of our or our customers’ physical or information technology or operational technology infrastructure, networks and related management systems and controls could result in, among other things, unauthorized access to our facilities, a breach of our and our customers’ networks and information technology infrastructure, the misappropriation of our or our customers’ or their customers’ proprietary or confidential information, interruptions or malfunctions in our or our customers’ operations, delays or interruptions to our ability to meet customer needs, breach of our legal, regulatory or contractual obligations, inability to access or rely upon critical business records or other disruptions in our operations. We may be required to expend significant financial resources to protect against or to remediate such security breaches. We may not be able to implement security measures in a timely manner or, if and when implemented, these measures could be circumvented. Any breaches that may occur could expose us to increased risk of lawsuits, material monetary damages, potential violations of applicable privacy and other laws, penalties and fines, loss of existing or potential customers, harm to our reputation and increases in our security and insurance costs, which could have a material adverse effect on our business, financial condition and results of operations.business.

Although our customers’ computing equipment resides in our buildings, we generally do not have access to, nor do we have knowledge of, what applications and data are being housed and processed on their equipment. In certain instances, we provide digital infrastructure and platforms as a service to our customers, which increases the risk of loss of data, and have recently expanded these aspects of our business. In the event of a breach resulting in loss of data, such as personally identifiable information or other such data protected by data privacy or other laws, we may be liable for damages, fines and penalties for such losses under applicable regulatory frameworks despite not handling the data. Further, the regulatory framework around data custody, data privacy and breaches varies by jurisdiction and is an evolving area of law. For example, the EU General Data Protection Regulation (GDPR), and any subsequent amended versions of it, and similar regulations that apply to our business globally may have significant impact on our compliance frameworks and operations. If we fail to comply with these various regulations, we may have to pay fines or damages. We may not be able to limit our liability or damages in the event of such a loss.

The Division of Enforcement of the Securities and Exchange Commission is conducting an investigation into the adequacy of our disclosures of cybersecurity risks. We are cooperating with the SEC and are not aware of any cybersecurity issue or event that caused the Staff to open this matter. Responding to an investigation of this type can be costly and time-consuming. While we are unable to estimate the likelihood of the outcome of this matter, our potential cost or exposure or the duration of the process, based on the information we currently possess, we do not expect the total potential cost to be material to our financial condition. If the SEC believes that violations occurred, it could seek remedies including an order prohibiting future violations and a civil money penalty.

We have made, and continue to make, investments to update and modernize our information technology systems and expect such investments to continue in order to meet our business needs, including for ongoing improvements for our customer experience. Additionally, as part of our global platform strategy, we have acquired and invested in, and continue to acquire and invest in, businesses and operations globally, including in new regions with complex and

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evolving regulatory frameworks and different risk profiles. Transitioning to new or upgraded systems, and integrating acquired networks and data, can create difficulties, including potential disruptions to current processes and cybersecurity complexities. In addition, our information technology systems may require further modification as we grow and as our business needs change, which could prolong difficulties we experience with such transitions and integrations. Such significant investments in our systems may take longer to deploy and cost more than originally planned. In addition, we may not realize the full benefits we hoped to achieve, and we may need to expend significant attention, time and resources to correct problems or find alternative sources for performing various functions. Difficulties in implementing new or upgraded information or operational technology systems or significant system failures or delays or the failure to successfully modify our systems and respond to changes in our business needs could adversely affect our business and results of operations.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS, AND ISSUER PURCHASES OF EQUITY SECURITIES.PROCEEDS.

Digital Realty Trust, Inc.

None.

Digital Realty Trust, L.P.

During the three months ended September 30, 2023,March 31, 2024, Digital Realty Trust, L.P. 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, 2023,March 31, 2024, Digital Realty Trust, Inc. issued an aggregate of 47,480349,756 shares of its common stock in connection with restricted stock unit awards for no cash consideration. For each share of common stock issued by Digital Realty Trust, Inc. in connection with such an award, Digital Realty Trust, L.P. issued a restricted common unit to Digital Realty Trust, Inc. During the three months ended September 30, 2023,March 31, 2024, Digital Realty Trust, L.P. issued an aggregate of 47,480349,756 common units to Digital Realty Trust, Inc., as required by Digital Realty Trust, L.P.’s partnership agreement. During the three months ended September 30, 2023,March 31, 2024, an aggregate of 28,64658,599 shares of its common stock were forfeited to Digital Realty Trust, Inc. in connection with restricted stock unit awards for a net issuance of 18,834291,157 shares of common stock.

For these issuances of common units to Digital Realty Trust, Inc., Digital Realty Trust, L.P. relied on Digital Realty Trust, Inc.’s status as a publicly traded NYSE-listed company with approximately $42.0$42.6 billion in total consolidated assets and as Digital Realty Trust, L.P.’s majority owner and general partner as the basis for the exemption under Section 4(a)(2) of the Securities Act.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4. MINE SAFETY DISCLOSURES.

Not applicable.

ITEM 5. OTHER INFORMATION.

During the fiscal quarter ended September 30, 2023, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement” (in each case, as defined in Item 408 of Regulation S-K).

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On November 6, 2023, the Board of Directors (“Board”) determined to freeze the ability of eligible individuals to further defer compensation under the Digital Realty Deferred Compensation Plan (the “DCP”), such that, effective as of January 1, 2024 (the “Effective Date”), no further deferrals of compensation earned in respect of periods commencing on or after the Effective Date may be made under the DCP (the “Deferral Freeze”). Except with respect to the Deferral Freeze, all other terms of the DCP remain in full force and effect. Additionally, in connection with the Deferral Freeze, the Board delegated authority to the Compensation Committee of the Board (the “Compensation Committee”) to remove the Deferral Freeze and allow future deferrals under the DCP at such time (if any) as the Compensation Committee deems appropriate.

None.

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ITEM 6. EXHIBITS.

Incorporated by

Incorporated by

Reference

Reference

Exhibit
Number

    

Description

    

Form

File Number

Date

Number

Filed Herewith

    

Description

    

Form

File Number

Date

Number

Filed Herewith

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.

8-K

001-32336

01/27/2020

2.1

3.1

Articles of Amendment and Restatement of Digital Realty Trust, Inc., as amended

10-Q

001-32336 and 000-54023

05/11/2020

3.1

Articles of Amendment and Restatement of Digital Realty Trust, Inc., as amended

10-Q

001-32336 and 000-54023

05/11/2020

3.1

3.2

Ninth Amended and Restated Bylaws of Digital Realty Trust, Inc.

8-K

001-32336 and 000-54023

04/03/2023

3.1

Ninth Amended and Restated Bylaws of Digital Realty Trust, Inc.

8-K

001-32336 and 000-54023

04/03/2023

3.1

3.3

Certificate of Limited Partnership of Digital Realty Trust, L.P.

10

000-54023

06/25/2010

3.1

Certificate of Limited Partnership of Digital Realty Trust, L.P.

10

000-54023

06/25/2010

3.1

3.4

Nineteenth Amended and Restated Agreement of Limited Partnership of Digital Realty Trust, L.P.

8-K

001-32336 and 000-54023

10/10/2019

3.1

Nineteenth Amended and Restated Agreement of Limited Partnership of Digital Realty Trust, L.P.

8-K

001-32336 and 000-54023

10/10/2019

3.1

10.1

Amended and Restated Employment Agreement, dated as of August 10, 2023, by and between Digital Realty Trust, Inc., DLR LLC, and Andrew P. Power.

8-K

001-32336 and 000-54023

08/15/2023

10.1

Seventh Amendment to the Digital Realty Trust, Inc., Digital Services, Inc., and Digital Realty Trust, L.P. 2014 Incentive Award Plan.

X

10.2

Amendment No. 4 to the Second Amended and Restated Global Senior Credit Agreement, among Digital Realty Trust, L.P., Digital Singapore Jurong East PTE. LTD., Digital Singapore 1 PTE. LTD., Digital HK JV Holding Limited, Digital Singapore 2 PTE. LTD, Digital HK KIN CHUEN Limited, Digital Stout Holding, LLC, Digital Japan, LLC, Digital Euro Finco, L.P., Moose Ventures LP, Digital Dutch Finco, B.V., Digital Australia Finco PTY, LTD, Digital Realty Korea LTD., Digital Seoul 2 LTD., and PT Digital Jakarta One, as borrowers, Digital Realty Trust, Inc. and Digital Euro Finco, LLC, as guarantors, and each Lender, Issuing Bank, and Swing Line Bank listed on the signature pages thereto and Citibank, N.A., as administrative agent.

X

10.32

Amended Management Equity Election Program.

X

31.1

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

X

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

X

31.2

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

X

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

X

31.3

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

X

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

X

31.4

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

X

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

X

32.1

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

X

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

X

32.2

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

X

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

X

32.3

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

X

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

X

32.4

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

X

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

X

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, 2023, formatted in Inline XBRL interactive data files: (i) Condensed Consolidated Balance Sheets as of September 30, 2023 and December 31, 2022; (ii) Condensed Consolidated Income Statements for the three and nine months ended September 30, 2023 and 2022; (iii) Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2023 and 2022; (iv) Condensed Consolidated Statements of Equity/Capital for the three and nine months ended September 30, 2023 and 2022; (v) Condensed Consolidated Statements of Cash Flows for the three and nine months ended September 30, 2023 and 2022; and (vi) Notes to Condensed Consolidated Financial Statements.

The following financial statements from Digital Realty Trust, Inc.’s and Digital Realty Trust, L.P.’s Form 10-Q for the quarter ended March 31, 2024, formatted in Inline XBRL interactive data files: (i) Condensed Consolidated Balance Sheets as of March 31, 2024 and December 31, 2023; (ii) Condensed Consolidated Income Statements for the three months ended March 31, 2024 and 2023; (iii) Condensed Consolidated Statements of Comprehensive Income for the three months ended March 31, 2024 and 2023; (iv) Condensed Consolidated Statements of Equity/Capital for the three months ended March 31, 2024 and 2023; (v) Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2024 and 2023; and (vi) Notes to Condensed Consolidated Financial Statements.

104

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

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

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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 9, 2023May 3, 2024

/S/  ANDREW P. POWER

Andrew P. Power
President & Chief Executive Officer
(principal executive officer)

November 9, 2023May 3, 2024

/S/  MATTHEW R. MERCIER

Matthew R. Mercier
Chief Financial Officer
(principal financial officer)

November 9, 2023May 3, 2024

/s/ CS/  PETERHRISTINE C. OB. KLSONORNEGAY

Peter C. OlsonChristine B. Kornegay
Global Controller & 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 9, 2023May 3, 2024

/S/  ANDREW P. POWER

Andrew P. Power
President & Chief Executive Officer
(principal executive officer)

November 9, 2023May 3, 2024

/S/  MATTHEW R. MERCIER

Matthew R. Mercier
Chief Financial Officer
(principal financial officer)

November 9, 2023May 3, 2024

/s/ CS/  PETERHRISTINE C. OB. KLSONORNEGAY

Peter C. OlsonChristine B. Kornegay
Global Controller & Chief Accounting Officer
(principal accounting officer)

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