UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
☒ Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the fiscal year ended December 31, 2023
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.)
Maryland (Digital Realty Trust, L.P.)
(State or other jurisdiction of incorporation or organization)
5707 Southwest Parkway, Building 1, Suite 275
Austin, Texas
(Address of principal executive offices)
26-0081711
20-2402955
(IRS employer identification number)
78735
(Zip Code)
(737) 281-0101
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Digital Realty Trust, Inc.
Title of each class
Common Stock, $0.01 par value per share
Series J Cumulative Redeemable Preferred
Stock, $0.01 par value per share
Series K Cumulative Redeemable Preferred
Stock, $0.01 par value per share
Series L Cumulative Redeemable Preferred
Stock, $0.01 par value per share
None
Digital Realty Trust, L.P.
Trading
Symbols(s)
DLR
DLR Pr J
DLR Pr K
DLR Pr L
None
Name of each exchange on which registered
New York Stock Exchange
New York Stock Exchange
New York Stock Exchange
New York Stock Exchange
None
Digital Realty Trust, Inc.
Digital Realty Trust, L.P.
None
Common Units of Partnership Interest
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Securities registered pursuant to Section 12(g) of the Act:
Digital Realty Trust, Inc.
Digital Realty Trust, L.P.
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Digital Realty Trust, Inc.
Digital Realty Trust, L.P.
Yes No
Yes No
Yes No
Yes No
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.
Digital Realty Trust, L.P.
Yes No
Yes No
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.
Digital Realty Trust, L.P.
Yes No
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 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
Non-accelerated filer
Digital Realty Trust, L.P.:
Large accelerated filer
Non-accelerated filer
Accelerated filer
Smaller reporting company
Emerging growth company
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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over
financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.
Digital Realty Trust, Inc.
Digital Realty Trust, L.P.
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect
the correction of an error to previously issued financial statements.
Digital Realty Trust, Inc.
Digital Realty Trust, L.P.
☐
☐
☐
☐
☐
☐
☒
☐
☐
☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the
registrant’s executive officers during the relevant recovery period pursuant to § 240.10D-1(b).
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 Act).
Digital Realty Trust, Inc.
Digital Realty Trust, L.P.
☐
☐
Yes ☐ No
Yes ☐ No
The aggregate market value of the common equity held by non-affiliates of Digital Realty Trust, Inc. as of June 30, 2023 totaled approximately $34 billion based on the
closing price for Digital Realty Trust, Inc.’s common stock on that day as reported by the New York Stock Exchange. Such value excludes common stock held by executive
officers, directors and 10% or greater stockholders as of June 30, 2023. The identification of 10% or greater stockholders as of June 30, 2023 is based on Schedule 13G and
amended Schedule 13G reports publicly filed before June 30, 2023. This calculation does not reflect a determination that such parties are affiliates for any other purposes.
There is no public trading market for the common units of Digital Realty Trust, L.P. As a result, the aggregate market value of the common units held by non-affiliates
of Digital Realty Trust, L.P. cannot be determined.
Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.
Digital Realty Trust, Inc.:
Common Stock, $.01 par value per share
Class
Outstanding at February 21, 2024
312,293,563
Part III incorporates by reference portions of Digital Realty Trust, Inc.’s Proxy Statement for its 2024 Annual Meeting of Stockholders which the registrants anticipate
will be filed no later than 120 days after the end of their fiscal year pursuant to Regulation 14A.
DOCUMENTS INCORPORATED BY REFERENCE
EXPLANATORY NOTE
This report combines the annual reports on Form 10-K for the year ended December 31, 2023 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, 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 December 31, 2023,
the Parent owned an approximate 98.0% common general partnership interest in Digital Realty Trust, L.P. The
remaining approximate 2.0% 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 December 31, 2023, 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 annual reports on Form 10-K of the Parent and the OP into this single report results in the
following benefits:
enhancing investors’ understanding of the Parent and the OP by enabling investors to view the business as a
whole in the same manner as management views and operates the business;
eliminating duplicative disclosure and providing a more streamlined and readable presentation since a
substantial portion of the disclosure applies to both the Parent and the OP; and
creating time and cost efficiencies through the preparation of one combined report instead of two separate
reports.
It is important to understand the few differences between the Parent and the OP in the context of how we operate the
Company. The Parent does not conduct business itself, other than acting as the sole general partner of the OP and issuing
public equity from time to time and guaranteeing certain unsecured debt of the OP and certain of its subsidiaries and
affiliates. The OP holds substantially all the assets of the business, directly or indirectly. The OP conducts the operations
of the business and is structured as a partnership with no publicly traded equity. Except for net proceeds from equity
issuances by the Parent, which are generally contributed to the OP in exchange for partnership units, the OP generates
capital required by the business through the OP’s operations, incurrence of indebtedness and issuance of partnership
units to third parties.
The presentation of noncontrolling interests, stockholders’ equity and partners’ capital are the main areas of difference
between the consolidated financial statements of the Parent and those of the OP. The differences in the presentations
between stockholders’ equity and partners’ capital result from the differences in the equity and capital issuances in the
Parent and in the OP.
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 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.
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 $236 million based on exchange rates at December 31, 2023)
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.
DIGITAL REALTY TRUST, INC. AND DIGITAL REALTY TRUST, L.P.
FORM 10-K
FOR THE YEAR ENDED DECEMBER 31, 2023
TABLE OF CONTENTS
PART I.
ITEM 1. Business
ITEM 1A. Risk Factors
ITEM 1B. Unresolved Staff Comments
ITEM 1C. Cybersecurity
ITEM 2. Properties
ITEM 3. Legal Proceedings
ITEM 4. Mine Safety Disclosures
PART II.
ITEM 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
ITEM 6. Reserved
ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of
Operations
ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk
ITEM 8. Financial Statements and Supplementary Data
ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure
ITEM 9A. Controls and Procedures
ITEM 9B. Other Information
ITEM 9C. Disclosure Regarding Foreign Jurisdictions That Prevent Inspections
PART III.
ITEM 10. Directors, Executive Officers and Corporate Governance
ITEM 11. Executive Compensation
ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
ITEM 13. Certain Relationships and Related Transactions and Director Independence
ITEM 14. Principal Accounting Fees and Services
PART IV.
ITEM 15. Exhibits and Financial Statement Schedules
ITEM 16. Form 10-K Summary
SIGNATURES
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ITEM 1. BUSINESS
The Company
PART I
Digital Realty Trust, Inc., through its controlling interest in Digital Realty Trust, L.P. and the subsidiaries of the
Operating Partnership, is a leading global provider of data center, colocation and interconnection solutions for customers
across a variety of industry verticals. The Parent operates as a REIT for U.S. federal income tax purposes. The OP is the
entity through which the Parent conducts its business of owning, acquiring, developing and operating data centers. The
Parent was incorporated in the state of Maryland on March 9, 2004. The OP was organized as a limited partnership in the
state of Maryland on July 21, 2004.
As of December 31, 2023, our portfolio consisted of 309 data centers (including 67 data centers held as investments in
unconsolidated entities), of which 124 are located in the United States, 112 are located in Europe, 36 are located in Latin
America, 14 are located in Africa, 14 are located in Asia, six are located in Australia and three are located in Canada.
Our principal executive offices are located at 5707 Southwest Parkway, Building 1, Suite 275, Austin, Texas 78735. Our
telephone number is (737) 281-0101. Our website is www.digitalrealty.com. The information found on, or otherwise
accessible through, our website is not incorporated by reference into, nor does it form a part of, this Annual Report on
Form 10-K.
Recent Acquisitions
On August 1, 2022, we completed the acquisition of 61.1% indirect controlling interest in Teraco Data Environments
(Pty) Ltd., (“Teraco”), a leading carrier-neutral data center and interconnection services provider in South Africa. 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. Teraco’s financial information is included in our consolidated financial statements and
associated notes to those financial statements.
Industry Background
The digital economy continues to grow and change how enterprises across all industries create and deliver value.
Companies increasingly need to operate ubiquitously, on-demand and with real-time intelligence serving customers,
partners and employees across multiple channels, business functions and points of business presence. Computational
processing power requirements continue to advance, data traffic is growing, and the volume of data that enterprises
generate, transmit, process, analyze, monitor and manage is expanding dramatically. The Internet of Things, 5G,
autonomous vehicles and artificial intelligence, among other technological advancements, are driving this digital
transformation.
We believe that enterprise data growth is accelerating due to the growing digital economy and emerging technological
advances. As enterprises analyze and process this accelerating data mass, they create more data. As this mass of data
continues to grow, it needs to be analyzed and processed: a task which we believe is becoming increasingly challenging
to replicate and relocate. This phenomenon is called Data Gravity. We believe that enterprise decisionmakers will need
to increasingly consider how Data Gravity impacts their enterprise IT architectures and, accordingly, we have developed
the Data Gravity Index: a global forecast that measures the intensity and gravitational force of enterprise data growth.
1
As the largest global provider of cloud- and carrier-neutral data center, colocation and interconnection solutions, we
believe the data center industry is poised for sustainable growth. The demand for data center infrastructure is being
driven by this digital transformation which is contributing to the explosive growth of data, rapid growth of cloud
adoption and greater demand for IT outsourcing. The power requirements and financial costs to support this growth in
data, traffic and storage are substantial and growing accordingly. We believe data centers will continue to play a critical
role in the digital economy and enabling business transformation strategies.
We believe cloud solutions and hybrid cloud solutions will remain significant drivers of demand for data center
infrastructure. The hybrid cloud, which combines public and private cloud solutions, has gained traction because it
enables corporate enterprises to achieve efficiencies and contain costs, as well as scale and secure their most sensitive
information. In addition, the leading cloud service providers are generally mature, well-capitalized technology
companies, and cloud platforms are among the fastest-growing business segments. Data center providers that can solve
global coverage, capacity and connectivity needs, and coordinate and aggregate diverse customer and application
demand, are poised to benefit from these cloud-specific industry drivers.
These diverse and secular industry dynamics are driving greater demand for data center capacity not only from global
cloud service providers, but also from businesses across other industries, including IT service firms, social media,
content providers and the financial services sector. As companies focus on their core competencies and rely on
outsourcing to meet their IT infrastructure needs, they are prioritizing colocation for their data center solutions for
various reasons, including to reduce latency in data transfer and increase global presence and connectivity. New
technologies need a fast, reliable and flexible foundation to operate, and the importance of offering a full spectrum of
power, space and connectivity solutions on a global platform continues to grow.
Our Business
We provide a global data center platform that supports our customers’ digital infrastructure and enables our customers to
interconnect with their customers and partners. We solve global coverage, capacity and connectivity needs for
companies of all sizes, including the world’s leading enterprises and services providers, through PlatformDIGITAL®, a
global data center platform for scaling digital business which enables customers to deploy their critical infrastructure
with a global data center provider.
PlatformDIGITAL® combines our global presence with our Pervasive Data Center Architecture (PDx®) solution
methodology for scaling digital business and efficiently managing data gravity challenges. Our global data center
footprint gives customers access to the connected data communities that matter to them with over 300 facilities in 54
metropolitan areas across 28 countries on six continents.
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.
We believe that the growth trends in the data center market, technology, the cloud, internet traffic and internet-based
services, combined with cost advantages in outsourcing data center requirements, provide attractive growth opportunities
for us as a data center solutions provider. Leveraging deep expertise in technology and real estate, we have an expansive
global footprint, impressive scale and a full-spectrum fit-for-purpose product offering in key metropolitan areas around
the world. These advantages simplify the contracting process for multinational enterprises, eliminating their need to
negotiate with multiple local data center solutions providers. In addition, in areas where high data center construction
and operating costs and long time-to-market prohibit many of our customers from building their own data centers, our
global footprint and scale allow us to meet our customers’ needs quickly and efficiently.
2
Our Data Center Portfolio
Our portfolio of high-quality data centers provides secure, highly connected and continuously available environments for
the exchange, processing and storage of critical data. Data centers are used for digital communication, disaster recovery
purposes, transaction processing and housing mission-critical corporate IT applications. Our internet gateway data
centers are highly connected, network-dense facilities that serve as hubs for internet and data communications within and
between major metropolitan areas. We believe internet gateways are extremely valuable, and a high-quality, highly
interconnected global portfolio such as ours could not be easily replicated today on a cost-competitive basis.
We are diversified across major metropolitan areas characterized by a high concentration of connected end-users and
technology companies. At December 31, 2023, we owned or had investments in properties, on a wholly-owned basis or
through unconsolidated entities, in the following geographies:
As of December 31, 2023, our portfolio contained a total of approximately 52.3 million rentable square feet including
approximately 8.5 million square feet of space under active development and 4.1 million square feet of space held for
development. As of December 31, 2023, the 67 data centers held as investments in unconsolidated entities had an
aggregate of approximately 10.7 million rentable square feet, and the 32 parcels of developable land we owned
comprised approximately 743 acres.
A significant component of our current and future growth is expected to be generated through the development of our
existing space held for future development and acquisition of new properties. As of December 31, 2023, our portfolio,
including the 67 data centers held as investments in unconsolidated entities, was approximately 81.7% leased. From time
to time, we may look to sell individual assets or portfolios that we do not consider to be core to our business and growth
strategy.
3
Through strategic investments, we have expanded our footprint into Latin America, enhanced our data center offerings
in strategic and complementary U.S. metropolitan areas, established our colocation and interconnection platform in the
U.S. and expanded our colocation and interconnection platform in Europe and Africa, with each transaction enhancing
our presence in top-tier locations throughout North America, Europe, Latin America and Africa. In addition, on
August 1, 2022, we completed our acquisition of a majority interest in Teraco, the largest and most densely
interconnected data center platform in South Africa, with an in-service portfolio of seven state-of-the-art data centers
strategically located in the key South African metro areas of Johannesburg, Cape Town and Durban. In addition, we are
investing in our portfolio to organically expand our capacity. As of December 31, 2023, we had 40 projects underway in
25 metropolitan areas around the world, and 53.5% percent of this data center activity was pre-leased.
The locations of and improvements to our data centers, the network density, interconnection infrastructure and
connectivity-centric customers in certain of our facilities, and our comprehensive product offerings are critical to our
customers’ businesses, which we believe results in high occupancy levels, longer average lease terms and customer
relationships, as well as lower turnover. In addition, many of our data centers contain significant improvements that have
been installed at our customers’ expense. The tenant improvements in our data centers are generally readily adaptable for
use by similar customers.
Our data centers are physically secure, network-rich and equipped to meet the power and cooling requirements of
smaller footprints up to the most demanding IT applications. Many of our data centers are located on major aggregation
points formed by the physical presence of multiple major telecommunications service providers, which reduces our
customers’ costs and operational risks and enhances the attractiveness of our properties. In addition, our strategically
located global data center campuses offer our customers the ability to expand their global footprint as their businesses
grow, while our connectivity offerings on our campuses enhance the capabilities and attractiveness of these facilities.
Further, the network density, interconnection infrastructure and connectivity-centric customers in certain of our data
centers have led to the organic formation of densely connected data communities that are difficult for competitors to
replicate and deliver added value to our customers.
Our Diversified Product Offerings
We provide a flexible, global data center platform that allows our customers to tailor infrastructure deployments and
controls matched to their business needs. Our data centers and comprehensive suite of product offerings are scalable to
meet our customers’ needs, from a single cabinet up to multi-megawatt deployments, along with connectivity, connected
data communities and solutions to support their architecture requirements. Over the past few years, we have expanded
our product mix to appeal to a broader spectrum of data center customers, especially those seeking to support a greater
portion of their data center requirements through a single provider. Our Critical Facilities Management® services and
team of engineers and data center operations experts provide 24/7 support for these mission-critical facilities.
PlatformDIGITAL® Solution Model. The PlatformDIGITAL® solution model is based on our patented Pervasive Data
Center Architecture (PDx®) methodology, which brings users, networks, clouds, controls and systems to the data,
removing barriers, creating centers of data exchange to accommodate distributed workflows and scaling digital business.
PlatformDIGITAL® offers solutions for service providers and enterprises supporting their IT architecture requirements
with features such as:
Network Hub
Consolidates and localizes traffic into ingress/egress points to optimize network performance and
cost
Control Hub
Hosts adjacent security and IT controls to improve security posture and Hybrid-IT operations
Data Hub
Localizes data aggregation, staging, analytics, streaming and data management to optimize data
exchange and Private AI workloads
4
Capacity
Product Types
0 to 1 MW
(Colocation)
> 1 MW
(Scale & Hyperscale
Powered Base Building®
Turn-Key Flex®)
Description
Small (one cabinet) to medium (75 cabinets) deployments
Provides agility to quickly deploy in days
Contract length generally 2-5 years
Consistent designs, operational environment, power expenses
Scale from medium to very large deployments
Solution can be executed in weeks
Contract length generally 5-10+ years
Customized data center environment for specific deployment needs
The PlatformDIGITAL® solution model is available in our colocation and scale data centers, which are move-in ready,
physically secure facilities with the power, cooling and interconnection capabilities to support customers requiring a
cabinet, cage, suite or entire hall. We believe our colocation and Turn-Key Flex® facilities are effective solutions for
customers who may lack the bandwidth, capital budget, expertise or desire to provide their own extensive data center
infrastructure, management and security. We believe our offerings are also well-suited for those customers who seek to
efficiently exchange data with others in our connected data communities lowering their costs and creating value for their
business. For customers who possess the ability to build and operate their own facility, our Powered Base Building®
solution provides the physical location, requisite power and network access necessary to support a state-of-the-art data
center.
Additionally, our data center campuses offer our customers the opportunity to expand in or near their existing
deployments within our data center campuses.
Connectivity
Product
Cross Connect
Campus Connect
Metro Connect
Interxion Cloud Connect
ServiceFabric™
IP Bandwidth
Pathway
Description
A physical connection between two customer defined end points in a Digital Realty
facility enabling customers to directly exchange data traffic
Local, dedicated connectivity solution within Digital Realty campus environments
located in hyperconnected metros around the world enabling multiple facilities on a
single campus to exchange data traffic and therefore operate as a virtual single data
center
Dedicated connection between multiple Digital Realty facilities located in the same
metro area enabling fast connectivity for data traffic between them
Provides secure and high-performance VLAN interconnections to multiple cloud
service providers from one physical connection
A global open orchestration platform enabling customers to easily provision global
connectivity and orchestrate connected services across Digital Realty’s worldwide data
center footprint and in third party locations
Dedicated Internet Access using blend of ISPs. Provides customer with highly
resilient customer dedicated connections including Fixed and Burstable Service
options
Conduit based access to support bulk fiber interconnection, typically terminating into
the POP or Meet Me Room within a given facility
5
Through investments and strategic partnerships, we have significantly expanded our capabilities as a leading provider of
interconnection and cloud-enablement services globally. We believe interconnection is an attractive line of business that
would be difficult to build organically and enhances the overall value proposition of our data center product offerings.
Through product offerings such as our ServiceFabric™ and partnerships with cloud service providers, we can support
our customers’ hybrid cloud architecture requirements.
Our Global Customers
Our portfolio has attracted a high-quality, diversified mix of customers. We have more than 5,000 customers, and no
single customer represented more than approximately 10.9% of the aggregate annualized recurring revenue of our
portfolio as of December 31, 2023.
Global Customer Base across a Wide Variety of Industry Sectors. We use our in-depth knowledge of requirements for
trends impacting cloud and information technology service providers, content providers, network and communications
providers, and other data center users, including enterprise customers, to market our data centers to meet these
customers’ specific technology needs. Our customers are increasingly launching multi-regional deployments and
growing with us globally. Our largest customer accounted for approximately 10.9% of our aggregate annualized
recurring revenue as of December 31, 2023. No other single customer accounted for more than approximately 5.5% of
the aggregate annualized recurring revenue of our portfolio. Our customers represent a variety of industry verticals,
ranging from cloud and information technology services, communications and social networking to financial services,
manufacturing, energy, gaming, life sciences and consumer products.
Cloud and IT Services
Digital Content Providers and
Network and Mobile Services
Fortune 50 Software Company
Fortune 25 Investment Grade-
AT&T
Financial Companies
Global Cloud Provider
IBM
Oracle Corporation
Rated Company
JPMorgan Chase & Co.
LinkedIn Corporation
Meta Platforms, Inc.
Comcast Corporation
Lumen Technologies, Inc.
Verizon
Proven Experience Attracting and Retaining Customers. Our specialized data center salesforce, which is aligned to
meet our customers’ needs for global, enterprise and network solutions, provides a robust pipeline of new customers,
while existing customers continue to grow and expand their utilization of our technology-enabled services to support a
greater portion of their IT needs.
Our Design, Engineering and Construction Program
Our extensive development activity, operating scale and process-based approach to data center design and construction
result in significant cost savings and added value for our customers. We have leveraged our purchasing power by
securing global purchasing agreements and developing relationships with major equipment manufacturers, reducing
costs and shortening delivery timeframes on key components, including major mechanical and electrical equipment. See
"We and our customers may experience supply chain or procurement disruptions, or increased supply chain costs, which
may lead to delays." in Item 1A. Risk Factors for further discussion. Utilizing our innovative modular data center design,
we deliver what we believe to be a technically superior data center environment at significant cost savings and reduced
time frames. Our access to capital and investment-grade ratings allow us to provide data center solutions for customers
who do not want to invest their own capital.
6
Our Investment Approach
We have developed detailed, standardized procedures for evaluating acquisitions and investments, including income-
producing properties as well as vacant buildings and land suitable for development, to ensure that they meet our
strategic, financial, technical and other criteria. These procedures, together with our in-depth knowledge of the
technology, data center and real estate industries, allow us to identify strategically located properties and evaluate
investment opportunities efficiently and, as appropriate, commit and close quickly. Our investment-grade ratings, along
with our broad network of contacts within the data center industry, enable us to effectively capitalize on acquisition and
investment opportunities.
Our Management Team and Organization
Our senior management team has many years of experience in the technology and/or real estate industries, including
experience as investors in and advisors to technology companies. We believe that our senior management team’s
extensive knowledge of both the technology and the real estate industries provides us with a key competitive advantage.
Further, a significant portion of compensation for our senior management team and directors is in the form of common
equity interests in our Company. We also maintain minimum stock ownership requirements for our senior management
team and directors, further aligning their interests with those of external stockholders, as well as an employee stock
purchase plan, which encourages our employees to have ownership in the Company.
Our Business and Growth Strategies
Our primary business objectives are to maximize: (i) sustainable long-term growth in earnings and funds from operations
per share and unit, (ii) cash flow and returns to our stockholders and our Operating Partnership’s unitholders through the
payment of dividends and distributions and (iii) return on invested capital. We expect to accomplish these 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.
Superior Risk-Adjusted Returns. We believe that achieving appropriate risk-adjusted returns on our business,
including on our development pipeline and leasing transactions, will deliver superior stockholder returns. We may
continue to build out our development pipeline when justified by anticipated returns. We have established robust internal
guidelines for reviewing and approving leasing transactions, which we believe will drive risk-adjusted returns. We also
believe that providing an even stronger value proposition to our customers, including new and more comprehensive
product offerings, as well as continuing to improve operational efficiencies, will further drive improved returns for our
business.
Prudently Allocate Capital. We believe that the strategic deployment of capital at sufficiently positive spreads above
our cost of capital enables us to increase cash flow and create long-term stockholder value.
Strategic and Complementary Investments. We have developed significant expertise at underwriting, financing
and executing data center investment opportunities. We employ a collaborative approach to deal analysis, risk
management and asset allocation, focusing on key elements, such as market fundamentals, accessibility to fiber
and power, and the local regulatory environment. In addition, the specialized nature of data centers makes these
investment opportunities more difficult for traditional real estate investors to underwrite, resulting in reduced
competition for investments relative to other property types. We believe this dynamic creates an opportunity for
us to generate attractive risk-adjusted returns on our capital.
7
Preserve the Flexibility of Our Balance Sheet. 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 around 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.
Since Digital Realty Trust, Inc.’s initial public offering in 2004, we have raised approximately $65 billion of
capital through common (excluding forward contracts), preferred and convertible preferred equity offerings,
exchangeable debt offerings, non-exchangeable bond offerings, our Global Revolving Credit Facilities, our
term loan facilities, a senior notes shelf facility, secured mortgage financings and re-financings, joint venture
partnerships and the sale of non-core assets. We endeavor to maintain financial flexibility while using our
liquidity and access to capital to support operations, our acquisition, investment, leasing and development
programs and global campus expansion, which are important sources of our growth.
Leverage Technology to Develop Comprehensive and Diverse Products. We believe we have one of the most
comprehensive suites of global data center solutions available to customers from a single provider.
Global Service Infrastructure Platform. With our acquisitions, which extended our footprint further across
Latin America, Europe and Africa, enhanced our portfolio of scale and hyper-scale data centers in the U.S. and
furthered our position as a leading provider of colocation, interconnection and cloud-enablement services
globally, we are able to offer one of the industry’s broadest range of data center solutions to meet our
customers’ needs, from a single rack or cabinet to multi-megawatt deployments. We believe our products like
ServiceFabric™ and our partnerships with managed services and cloud service providers further enhance the
attractiveness of our data centers.
Provide Foundational Services to Enable Customers and Partners. We believe that the platform, through which
we offer the foundational services of space, power and connectivity, will enable our customers and partners to
serve their customers and grow their businesses. We believe our Internet gateway data centers, individual data
centers and data center campuses are attractive to a wide variety of customers and partners of all sizes.
Furthermore, we believe our colocation and interconnection offerings, as well as the densely connected data
communities that have developed within our facilities, and the availability and scalability of our comprehensive
suite of products are valuable and critical to our customers and partners.
Accelerate Global Reach and Scale. We have strategically pursued international expansion since our IPO in 2004 and
now operate across six continents. We believe that our global multi-product data center portfolio is a foundational
element of our strategy and our scale and global platform represent key competitive advantages difficult to replicate.
Customers and competitors are recognizing the value of interconnected scale, which aligns with our connected campus
strategy that enables customers to “land and expand” with us. We expect to continue to source and execute strategic and
complementary transactions to strengthen our data center portfolio, expand our global footprint and product mix, and
enhance our scale.
Drive Revenue Growth and Operating Efficiencies. We aggressively manage our properties to maximize cash flow
and control costs by leveraging our scale to drive operating efficiencies.
Leverage Strong Industry Relationships. Our global market leadership position and strong industry relationships
provide us with a unique vantage point to detect and capitalize on secular trends as they emerge globally. We
focus our industry relationship efforts towards market sensing, market shaping and helping to set open
standards that benefit companies of all types to derive value from digital infrastructure and multi-tenant
datacenters. Industry collaboration includes engagements with industry associations, IT industry analysts,
venture capitalists, technology incubators, technology service providers, telecommunications providers, systems
integrators and large multi-national companies across segments including manufacturing, transportation and
logistics, financial services, healthcare, pharmaceutical and digital media. These relationships help us forge new
product capabilities, inform investment decisions, develop new routes to market and create differentiated value
for customers and drive long-term growth and yield for stockholders.
8
Maximize Cash Flow. We often acquire operating properties with substantial in-place cash flow and some
vacancy, which enables us to create upside through lease-up. We control our costs by negotiating expense pass-
through provisions in customer agreements for operating expenses, including power costs and certain capital
expenditure. We have also focused on centralizing functions and optimizing operations as well as improving
processes and technologies. We believe that expanding our global data center campuses will also contribute to
operating efficiencies because we expect to achieve economies of scale on our campus environments.
Sustainability. We believe that addressing sustainability by driving environmental efficiency through the
implementation of cost-effective design features and the use of carbon-free and renewable energy serves as a key
differentiator enabling us to deliver products that help attract and retain customers, generate cash flow, and manage
operational risks. In 2023, for the seventh consecutive year, we received the Nareit “Leader in the Light” award for data
centers, recognizing our sustainability and energy-efficiency achievements. In 2023, we allocated approximately €1.7
billion in net proceeds from our green bonds to green buildings, energy efficiency improvements, and renewable energy.
The Real Estate Sustainability Accounting Standard guidance, issued by the Sustainability Accounting Standards Board,
outlines proposed disclosure topics and accounting metrics for the real estate industry. We provide data on energy and
water management metrics that we believe best correlate with our business and industry as indicated in the following
sections. Energy and water data receive third party assurance as part of our annual environmental, social, and
governance (“ESG”) report development process.
Energy Management
a) 2022 Energy Data (1)
Energy
Consumption Data
Coverage as % of
Floor Area
a
Total Energy
Consumed by
Portfolio Area with
Data Coverage
(MWh)(2)
Grid electricity
consumption as a
% of Energy
Consumption
Renewable Energy
as a % of Energy
Consumption(3)
Like-for-Like Change in
Energy Consumption for
Portfolio Area with Data
Coverage(4)
95%
10,579,768
97%
56%
9%
(1) The most recent full year for which energy data is available is 2022. The scope of data coverage includes managed and non-
managed assets. In 2022, 99% of the Company’s portfolio consisted of data center space along with limited accessory uses,
predominantly office space. These secondary space types are not broken out by subsector.
(2) The scope of energy includes energy purchased from sources external to the Company and its customers; energy produced
by the Company and its customers (i.e., self-generated); and energy from other sources, including direct fuel usage.
(3) Provided as a percent of energy consumption for managed assets. Excludes renewable energy delivered as part of the
standard utility fuel mix. Includes above-baseline utility renewables (e.g., green tariffs), Renewable Energy Credit (“REC”)
and Guaranty-of-Origin (“GO”) purchases, customer-sourced renewable energy and RECs generated by the Company.
(4) Scope of data is aligned with the 2022 GRESB Real Estate Assessment Reference Guide (“Like-for-like Comparison”).
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b) Sustainable Data Center Ratings
We seek to certify new construction and major redevelopment projects in accordance with recognized sustainable
building standards including the U.S. Green Building Council LEED rating system and the BREEAM rating scheme. We
may also certify certain properties in accordance with recognized sustainable operations standards. Our data center space
receiving third-party sustainable ratings in 2023 totaled 1.3 million square feet. We received the following sustainable
data center ratings for the following sites:
Data Center
43704 Efficiency Drive
44540 Round Table Plaza
701 Union Boulevard
908 Quality Way
Metropolitan Area
Ashburn
Ashburn
Totowa
Richardson
Rating System
LEED (1)
LEED (1)
LEED (1)
LEED (1)
Level Achieved
Silver
Silver
Gold
Silver
(1) LEEDTM: Leadership in Energy and Environmental Design
For existing buildings, we seek to benchmark 100% of applicable properties in ENERGY STAR Portfolio Manager and
pursue EPA ENERGY STAR certification for eligible U.S. properties. In 2023, we achieved ENERGY STAR for Data
Centers recognition for 31 data centers, representing 39% of our U.S. managed data center portfolio by square feet. We
may also certify certain properties outside the U.S. in accordance with regionally recognized energy performance rating
standards, such as the NABERS rating scheme in Australia. In total, 30% of our total global managed portfolio by square
feet had an energy rating as of December 31, 2023, excluding Powered Base Building® space, space under active
development, space held for development and non-managed assets.
c) Energy management considerations
Energy and resource management considerations are integrated into our business decisions and strategy. For our
operating portfolio, annual capital expense investment planning identifies and evaluates resource efficiency project
opportunities alongside non-resource-impacting capital investments. For acquisitions and new development activity,
resiliency risks, resource availability, and renewable energy access are considered. Our design and construction process
incorporates sustainable features that support resource efficiency during construction as well as during the operational
lifecycle of the sites.
We seek to proactively identify and support opportunities to efficiently utilize resources, such as energy and water,
throughout our operating portfolio. We set annual power usage effectiveness targets for assets. Twenty-six of our data
centers in EMEA participate in the European Union’s Code of Conduct for Energy Efficiency in Data Centers, a
voluntary initiative which addresses airflow management, cooling system efficiency and capital plant replacement.
Globally, we conduct external technical building assessments as well as utilize ENERGY STAR Portfolio Manager
scores to prioritize efficiency opportunities. Energy efficiency measures implemented typically involve HVAC and
lighting-related improvements and building commissioning. In 2022, energy efficiency measures implemented totaled
over 14,000 MWh in projected energy saving.
We set a global carbon reduction target that has been validated by the Science-Based Target Initiative to reduce our
Scope 1 and 2 emissions 68% per square foot and Scope 3 emissions from purchased goods and services and fuel- and
energy-related activities 24% per square foot by 2030, from a 2018 baseline. In 2022, we showed a 43% reduction in
Scope 1 and 2 emissions and 1% reduction in Scope 3 emissions against our baseline. Additionally, we are a signatory to
the EU Climate Neutral Data Centre Pact, a Self-Regulatory Initiative committing to climate neutrality by 2030 and
setting additional goals around energy efficiency, carbon-free energy sourcing, water conservation and waste heat
recycling, and we received a certificate of conformity with respect to the Climate Neutral Data Centre Pact in 2023. We
continue to match the energy consumption of our European portfolio and the U.S. colocation business unit with
renewable energy. Our six operational U.S. renewable energy purchase agreements produced 992,000 MWh of
renewable energy credits in 2022.
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We implement ISO 14001 (Environmental Management) and ISO 50001 (Energy Management) to measure, manage and
improve the energy and environmental performance of our data centers. In 2022, 39% of our global portfolio had ISO
14001 certifications and 18% of our global portfolio was covered under ISO 50001. Additionally, 100% of our
Singapore portfolio was certified under the SS564 Green Data Centres standard for Energy and Environmental
Management Systems.
Water Management
a) 2022 Water Data (1)
Water
Withdrawal
Data Coverage
as % of Floor
Area
% of Floor Area with
40% or Greater
Baseline Water
Stress (2)
89%
39%
Total Water
Withdrawn by
Portfolio Area with
Data Coverage (cubic
meters, in
thousands) (3)
5,956
% of Water
Withdrawn with
40% or Greater
Baseline Water
Stress (2)
Like-for-Like Change in
Water Withdrawals (4)
48%
9%
(1) The most recent full year for which water data is available is 2022. The scope of data coverage includes managed and non-
managed assets. The scope of water withdrawals is aligned with the 2022 GRESB Real Estate Assessment Reference Guide.
In 2022, 99% of the Company’s portfolio consisted of data center space along with limited accessory uses, predominantly
office. These secondary space types are not broken out by subsector.
(2) Based on properties classified as High or Extremely High Baseline Water Stress determined by the World Resources
Institute’s Water Risk Atlas tool, Aqueduct. Includes properties that have complete water withdrawal data coverage.
(3) The scope of water consumed includes potable water and non-potable water purchased from third-party suppliers and water
reused.
(4) Scope of data is aligned with the 2022 GRESB Real Estate Assessment Reference Guide (“Like-for-like Comparison”).
b) Water Management Risks and Mitigation Strategies
Our global water strategy addresses the strategic role that water plays in our operations and regions where water quality
and scarcity pose the greatest interruption risk to our business. Some of our assets are in regions of high or extremely
high baseline water stress and may face future risk of water scarcity, higher water costs, and regulatory constraints on
water consumption. We consider water availability, cost, and alternate supply solutions to potable water such as
municipally supplied non-potable water, which accounted for 36% of our total water usage in 2023. We also consider
cooling system designs to maximize ‘free cooling’ and reduce or eliminate reliance on water for cooling.
Climate Change Adaptation
a) Properties located in 100-Year Flood Zones
Two U.S. data centers totaling approximately 0.5 million square feet are exposed to 100-year flood zones designated by
the U.S. Federal Emergency Management Agency as special flood hazard areas. An additional 25 data centers in Europe
totaling approximately 2.6 million square feet are exposed to 100-year flood zones.
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b) Climate Change Risks and Mitigation Strategies
We evaluate potential risks and opportunities as a result of climate change and have implemented strategies to mitigate
risks and capitalize on opportunities. Climate change risks that we have identified include acute and chronic physical
risks, as well as transition risks such as market, policy, reputational, and technology risks. Management of climate-
related risks and opportunities is a company-wide effort, delivered through an interdisciplinary effort with contributions
from our global operations team, risk management, environmental occupational health and safety, compliance,
information security, physical security and other functions, with oversight by our executive management team and
governed by our Board of Directors. We manage potential risks first via our siting and design standards, then by
implementing recommendations to proactively mitigate losses related to short-term acute weather events as well as long-
term climate-related changes. Climate resilience measures include maintaining appropriate levels of insurance for each
asset, performing climate risk scenario analyses for a selection of our global portfolio, and implementing operational risk
reduction measures at the site level. We continue to align our ESG Report with the recommendations of the Financial
Stability Board’s Task Force on Climate-related Financial Disclosures to disclose specific climate-related financial risks
and opportunities, mitigation strategies, and associated metrics and targets.
Competition
We compete with numerous data center providers globally, many of whom own or operate properties similar to ours in
some of the same metropolitan areas where our data centers are located, including Equinix, Inc. and NTT; various
private operators in the U.S.; as well as Global Switch Holdings Limited and various regional operators in Europe, Asia,
Latin America, Africa and Australia. See "We face significant competition, which may adversely affect the occupancy
and rental rates of our data centers." in Item 1A. Risk Factors.
Regulation
General
Our properties are subject to various laws, ordinances and regulations, including regulations relating to common areas.
We believe each of our properties as of December 31, 2023 has the necessary permits and approvals to operate.
Americans with Disabilities Act
Our properties must comply with Title III of the Americans with Disabilities Act of 1990, or the ADA, to the extent that
such properties are “public accommodations” as defined by the ADA. We believe our properties are in substantial
compliance with the ADA and that we will not be required to make substantial capital expenditures to address the
requirements of the ADA. However, non-compliance with the ADA could result in imposition of fines or an award of
damages to private litigants. The obligation to make accommodations in accordance with the ADA, as well as other
applicable laws and regulations is an ongoing one, and we will continue to assess our properties and make alterations as
appropriate in this respect. See “We may incur significant costs complying with applicable laws and governmental
regulations, including the Americans with Disabilities Act.” in Item 1A. Risk Factors.
Environmental Matters
We are exposed to various environmental risks that may result in unanticipated losses and could affect our operating
results and financial condition. Either the previous owners or we have conducted environmental reviews on a majority of
the properties we have acquired, including land. While some of these assessments have led to further investigation and
sampling, none of the environmental assessments have revealed an environmental liability that we believe would have a
material adverse effect on our business, financial condition or results of operations. See "We could incur significant
costs related to environmental matters, including from government regulation, private litigation, and existing conditions
at some of our properties." in Item 1A. Risk Factors for further discussion.
12
Climate Change Legislation
The Inflation Reduction Act, passed in 2022, commits funding to climate and energy programs but does not impose
mandatory emissions reductions. Regulatory agencies, including the U.S. Environmental Protection Agency, or EPA,
and states have taken the lead in regulating GHG emissions in the U.S. The Biden administration has described climate
change regulation as a top priority, announcing in April 2021 a target of reducing net U.S. GHG emissions by 50-52%
from 2005 levels by 2030.
The EPA made an endangerment finding in 2009 that allows it to create regulations imposing emissions reporting,
permitting, control technology installation, and monitoring requirements applicable to certain emitters of GHGs,
including facilities that provide electricity to our data centers, although the materiality of the impacts will not be fully
known until all regulations are finalized and legal challenges are resolved. Under the Obama administration, the EPA
finalized rules imposing permitting and control technology requirements upon certain newly-constructed or modified
facilities which emit GHGs under the Clean Air Act New Source Review Prevention of Significant Deterioration, or
NSR PSD, and Title V permitting programs. As a result, newly-issued NSR PSD and Title V permits for new or
modified electricity generating units (EGUs) and other facilities may need to address GHG emissions, including by
requiring the installation of “Best Available Control Technology.” The EPA also implemented in December 2015 the
“Clean Power Plan” regulating carbon dioxide (CO2) emissions from coal-fired and natural gas EGUs. However, in
2019 the EPA repealed the Clean Power Plan and issued the “Affordable Clean Energy Rule” to replace the Clean Power
Plan. The Affordable Clean Energy Rule requires heat rate efficiency improvements at certain EGUs, but does not place
numeric limits on EGU emissions. In 2021, the U.S. Court of Appeals for the District of Columbia Circuit vacated both
the Affordable Clean Energy Rule and the Clean Power Plan repeal rule, and the U.S. Supreme Court affirmed the ruling
in 2022. The EPA announced in January 2023 that it expects to propose carbon standards for new and existing power
plants in April 2023 and finalize them by June 2024. Separately, the EPA’s GHG “reporting rule” requires that certain
emitters, including electricity generators, monitor and report GHG emissions.
States have been driving regulation to reduce GHG emissions in the United States. At the state level, California
implemented a GHG cap-and-trade program that began imposing compliance obligations on industrial sectors, including
electricity generators and importers, in January 2013. In September 2016, California adopted legislation calling for a
further reduction in GHG emissions to 40% below 1990 levels by 2030, and in July 2017, California extended its cap-
and-trade program through 2030. In September 2018, California adopted legislation that will require all of the state’s
electricity to come from carbon-free sources by 2045. California also in December 2022 passed a regulation to achieve a
zero-carbon economy by 2045. The plan sets out various goals, including cutting GHG emissions by 48 percent by 2030
compared with 1990 levels, exceeding the state’s mandate of a 40 percent reduction. As other examples of state action,
in May 2021, Washington passed a law capping GHG emissions from electricity generators and other entities, and in
December 2021 Oregon adopted a GHG cap-and-trade program. In addition, in January 2023, New York implemented a
“cap-and-invest” program which sets an annual cap on the amount of GHG emissions permitted statewide to meet the
New York Climate Act requirement of a 40 percent reduction in emissions by 2030 and at least an 85 percent reduction
by 2050, in each case using 1990 as a baseline. Additionally, a number of states have adopted Renewable Portfolio
Standards to increase the use of renewable energy, and a number of eastern states participate in the Regional Greenhouse
Gas Initiative (RGGI), a market-based program aimed at reducing GHG emissions from power plants.
13
Outside the United States, the European Union, or EU (as well as the United Kingdom), have been operating since 2005
under a cap-and-trade program, which directly affects the largest emitters of GHGs, including electricity producers from
whom we purchase power, and the EU has taken a number of other climate change-related initiatives, including a
directive targeted at improving energy efficiency (which introduces energy efficiency auditing requirements). In
December 2019, EU leaders endorsed the objective of achieving by 2050 a climate-neutral EU, with net-zero GHG
emissions, and in July 2021 the European Commission adopted the European Climate Law to write this goal into the
law. The European Climate Law includes a 2030 GHG reduction target of at least 55% below 1990 levels. In July 2021
the European Commission also adopted a Carbon Border Adjustment Mechanism to institute a carbon import tax, which
covers electricity imports. In November 2022, the European Commission reached a provisional agreement with the
European Parliament to establish binding GHG emission targets for the transport, buildings, waste, and agriculture
sectors. National legislation may also be implemented independently by members of the EU. The United Kingdom, after
Brexit, independently adopted a target of net-zero emissions by 2050 and implemented an emissions trading scheme.
The Paris Agreement, which was adopted by the United States and 194 other countries and looks to prevent global
average temperatures from increasing by more than 2 degrees Celsius above preindustrial levels, went into force in
November 2016. President Trump announced in June 2017 that he would initiate the process to withdraw the United
States from the Paris Agreement; however, upon his inauguration in January 2021, President Biden signed an order
rejoining the Paris Agreement.
The Canadian Greenhouse Gas Pollution Pricing Act established a carbon-pricing regime that went into effect in January
2019 for provinces and territories in Canada where there is no provincial system in place already, or where the provincial
system does not meet the federal benchmark. The act was challenged in court and upheld by the Supreme Court of
Canada in March 2021. Climate change regulations are also in various stages of implementation in other nations as well,
including nations where we operate, such as Japan, Singapore, and Australia.
Insurance
We carry commercial general liability, property, business interruption insurance, and other insurance coverage on all of
the properties in our portfolio. We select coverages, policy specifications and insured limits which we believe to be
appropriate given the relative risk of loss, the cost of coverage, and industry practice. Insurance is maintained through a
combination of commercial insurance, self-insurance and wholly-owned captive insurance entity. We believe the
properties in our portfolio are adequately insured. We do not carry insurance for generally uninsured exposures such as
loss from war or nuclear reaction. In addition, we carry earthquake insurance on our properties in an amount and with
deductibles we believe are commercially reasonable. See “Potential losses may not be covered by insurance.” in Item
1A. Risk Factors.
Human Capital Resource Management
As of December 31, 2023, we had 3,664 full-time employees. The geographic distribution of our global employee base
as of December 31, 2023 is summarized in the following table.
Region
North America
EMEA
Asia Pacific
Total
Number of Employees
1,518
1,930
216
3,664
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Compensation, Benefits and Employee Wellbeing
To attract and retain the best-qualified talent and to help our employees maintain healthy and balanced lives, and meet
their financial and retirement goals, we offer competitive benefits, including market-competitive compensation,
healthcare, flexible vacation, parental leave, 401(k)/pension company match, an employee stock purchase plan, fitness
reimbursement program, commuter benefits, tuition reimbursement, employee skills development and leadership
development. Employee surveys are conducted annually to solicit feedback and to help prioritize and improve employee
engagement.
We also encourage our employees to give back to the community by matching their contributions to eligible charitable
organizations through our Matching Gifts Program. Additionally, our Donate 8 Program grants paid time off each year to
employees for the purpose of volunteering for eligible organizations. We also sponsor and support the Women’s
Leadership Forum, the Black Employee Resource Group, Digital Pride, the Hispanic Employee Resource Group, and the
Veterans Employee Group, which promote a diverse and inclusive network to grow and deliver the next wave of digital
innovation.
We prioritize providing programs and benefits that promote healthy and productive lifestyles. We offer a company-wide
wellness program, Wellness@Digital, that serves to invest in the health, fitness, financial wellness and overall quality of
life for our employees. We implement wellness challenges that promote physical activity and an active lifestyle, with
additional price incentivizes for winners of the challenges.
During 2023, we sought to play an active role in supporting the communities we operate in across North America,
EMEA and APAC. This included companywide giving focused on our four areas of philanthropic focus (disaster relief,
STEM, sustainability and diversity, equity and inclusion).
Diversity, Equity and Inclusion
It is our Company’s policy to recruit talent based on skill, knowledge, attitude and experience, without discrimination on
the basis of any legally protected characteristic, including but not limited to gender, sexual orientation, age, family
status, ethnic origin, nationality, disability or religious belief. In 2020, we formally launched DEI@Digital (formally
known as DEI Employee Leadership Council) to assess the current state of our diversity, equity and inclusion (“DEI”)
initiatives beyond the Women’s Leadership Forum employee resource group. DEI@Digital’s initial purpose in
collaboration with HR was to identify opportunities for progress, formulate a cohesive strategy, and ultimately lead our
global DEI effort. DEI@Digital’s ongoing mission is to support an environment where diverse voices can be heard,
equity is championed, and everyone is included. Additionally, it is intended to unlock innovation, enhance decision-
making, attract top talent, and better serve our customers. Since 2020, the Company has launched four new employee
resource groups (ERGs)—Digital Pride (LGBTQI+ ERG), the Black ERG, the Veteran’s ERG and the Digital Voces
(Hispanic ERG). Today, more than 1,000 employees globally are members of Digital Realty’s ERGs. DEI@Digital has
recently added Digital Circles which are employee-led groups based on shared experiences, identities, and interests.
Currently there are three Digital Circles—Parents of Neurodivergent Children, Pet Parents and Southeast Asian
Employees. Additionally, DEI@Digital runs a philanthropic program aligning Digital Realty’s DEI efforts with
charitable giving currently supporting organizations ranging from the National Museum of African American History &
Culture, to InterPride, to DFW Canines for Veterans.
Digital Realty’s DEI focus and work are set with the “tone from the top” from President & CEO Andrew P. Power. He
has signed the CEO Action Pledge for Diversity & Inclusion, the largest CEO-driven business commitment to advance
diversity and inclusion in the workplace. Mr. Power and his leadership team help drive our DEI efforts including through
ERG sponsorship and employee DEI events. In 2023, we published our EEO-1 report, providing transparency on the
racial and gender composition of our U.S. workforce. We disclose our DEI strategy and initiatives annually in our ESG
Report.
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Available Information
All reports we file with the SEC are available free of charge via EDGAR through the SEC website at www.sec.gov. We
will also provide copies of our Forms 8-K, Forms 10-K, Forms 10-Q, Proxy Statements and amendments to those
documents at no charge to investors upon request and make electronic copies of such reports available through our
website at www.digitalrealty.com as soon as reasonably practicable after filing such material with the SEC. The
information found on, or otherwise accessible through, our website is not incorporated by reference into, nor does it form
a part of, this report or any other document that we file with the SEC.
Offices
Our headquarters are located in Austin, Texas. We have regional U.S. offices in Boston, Chicago, Dallas, Los Angeles,
New York, Northern Virginia and San Francisco and regional international offices in Amsterdam, Dublin, London,
Singapore, Sydney, Tokyo and Hong Kong.
Reports to Security Holders
Digital Realty Trust, Inc. is required to send an annual report to its securityholders and to our Operating
Partnership’s unitholders.
ITEM 1A. RISK FACTORS
For purposes of this section, the term “stockholders” means the holders of shares of Digital Realty Trust, Inc.’s common
stock and preferred stock. Set forth below are the risks that we believe are material to Digital Realty Trust, Inc.’s
stockholders and Digital Realty Trust, L.P.’s unitholders. You should carefully consider the following factors in
evaluating our Company, our properties and our business. The occurrence of any of the following risks might cause
Digital Realty Trust, Inc.’s stockholders and Digital Realty Trust, L.P.’s unitholders to lose all or a part of their
investment. Some statements in this report, including statements in the following risk factors, constitute forward-looking
statements. Please refer to the section entitled “Forward-Looking Statements” starting on page 47.
Overview
Our business, operations and financial results are subject to various risks and uncertainties, including those described
below, that could adversely affect our business, financial condition, results of operations, cash flows, and the trading
price of our common stock and preferred stock. The following material factors, among others, could cause our actual
results to differ materially from historical results and those expressed in forward-looking statements made by us or on
our behalf in filings with the SEC, press releases, communications with investors and oral statements. The risks that we
describe in our public filings are not the only risks that we face. Additional risks and uncertainties not presently known
to us, or that we currently consider immaterial, also may materially adversely affect our business, financial condition,
and results of operations.
Risk Factors Summary
The following is a summary of the principal risks that could adversely affect our business, operations and financial
results.
Risk Related to Our Business and Operations
Our business depends upon the demand for data centers.
We face significant competition, which may adversely affect the occupancy and rental rates of our data centers.
Any failure of our physical or information technology or operational technology infrastructure or services could
lead to significant costs and disruptions.
We and our third-party providers may be vulnerable to cyberattacks and security breaches that could materially
disrupt or compromise our operations, data and results.
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We depend on significant customers, and many of our data centers are single-tenant properties or are currently
occupied by single tenants.
Failure to attract, grow and retain a diverse and balanced customer base, including key magnet customers, could
harm our business and operating results.
Our contracts with our customers could subject us to significant liability.
Certain of our customer agreements may include restrictions on the sale of our properties to certain third parties,
which could have a material adverse effect on us.
Our data centers may not be suitable for re-leasing without significant expenditures or renovations.
We may be unable to lease vacant or development space, renew leases, or re-lease space as leases expire.
Even if we have additional space available for lease at any one of our data centers, our ability to lease this space
to existing or new customers could be constrained by our ability to provide sufficient electrical power.
Our portfolio depends upon local economic conditions and is geographically concentrated in certain locations.
Our business and operations, and our customers, suppliers and business partners may be adversely affected by
epidemics, pandemics or other outbreaks.
We lease or sublease certain of our data center space from third parties and the ability to retain these leases or
subleases could be a significant risk to our ongoing operations.
We and our customers may experience supply chain or procurement disruptions, or increased supply chain
costs, which may lead to delays.
We may not be able to adapt to changing technologies and customer requirements, and our data center
infrastructure may become obsolete.
We depend upon third-party suppliers for power, and we are vulnerable to service failures and to price increases
by such suppliers and to volatility in the supply and price of power in the open market.
We depend on third parties to provide network connectivity to the customers in our data centers and any delays
or disruptions in connectivity may materially adversely affect our operating results and cash flow.
Our international activities, including acquisition, ownership and operation of data centers located outside of
the United States, subject us to risks different than those we face in the United States and we may not be able to
effectively manage our international business.
Our recent acquisitions may not achieve the intended benefits or may disrupt our plans and operations.
We may be subject to unknown or contingent liabilities related to our recent acquisitions, for which we may
have no or limited recourse against the sellers.
Joint venture (JV) investments could be adversely affected by our lack of sole decision-making authority, our
reliance on our JV partners’ financial condition and disputes between us and our JV partners.
Any delays or unexpected costs in the development of our existing space and developable land and new
properties acquired for development may delay and harm our growth prospects, future operating results and
financial condition.
Many of our costs, such as operating and general and administrative expenses, interest expense and real estate
acquisition and construction costs, could be adversely impacted by periods of heightened inflation.
We have substantial debt and face risks associated with the use of debt to fund our business activities, including
refinancing and interest rate risks.
Our growth depends on external sources of capital which are outside of our control.
Declining real estate valuations, impairment charges and illiquidity of real estate investments could adversely
affect our earnings and financial condition.
Our success depends on key personnel whose continued service is not guaranteed.
We may have difficulty managing our growth.
Potential losses may not be covered by insurance.
We could incur significant costs related to environmental matters, including from government regulation,
private litigation, and existing conditions at some of our properties.
We may incur significant costs complying with applicable laws and governmental regulations, including the
Americans with Disabilities Act.
Our business could be adversely impacted if there are deficiencies in our disclosure controls and procedures or
internal control over financial reporting.
17
Risks Related to the Organizational Structure
The interests of Digital Realty Trust, Inc.’s stockholders may conflict with the interests of Digital Realty
Trust, L.P.’s unitholders.
Digital Realty Trust, Inc.’s charter, Digital Realty Trust, L.P.’s partnership agreement and Maryland law
contain provisions that may delay, defer or prevent a change of control transaction.
The conversion rights of Digital Realty Trust, Inc.’s preferred stock may be detrimental to holders of Digital
Realty Trust, Inc.’s common stock.
Digital Realty Trust, Inc.’s rights and the rights of its stockholders to take action against its directors and
officers are limited.
Risks Related to Taxes and Digital Realty Trust, Inc.’s Status as a REIT
Failure to qualify as a REIT would have significant adverse consequences to Digital Realty Trust, Inc. and its
stockholders and to Digital Realty Trust, L.P. and its unitholders.
In certain circumstances, Digital Realty Trust, Inc. may be subject to federal and state taxes as a REIT, which
would reduce its cash available for distribution to its stockholders.
Dividends payable by REITs do not qualify for the reduced tax rates available for some dividends.
The tax imposed on REITs engaging in “prohibited transactions” may limit our ability to engage in transactions
which would be treated as sales for federal income tax purposes.
Complying with REIT requirements may cause us to forgo otherwise attractive opportunities or liquidate
otherwise attractive investments.
The power of Digital Realty Trust, Inc.’s Board of Directors to revoke Digital Realty Trust, Inc.’s REIT
election without stockholder approval may cause adverse consequences to Digital Realty Trust, Inc.’s
stockholders and Digital Realty Trust, L.P.’s unitholders.
If Digital Realty Trust L.P. were to fail to qualify as a partnership for federal income tax purposes, Digital
Realty Trust, Inc. would fail to qualify as a REIT and suffer other adverse consequences.
Tax liabilities and attributes inherited in connection with acquisitions may adversely impact our business.
Changes in U.S. or foreign tax laws and regulations, including changes to tax rates, legislation and other actions
may adversely affect our results of operations, our stockholders, Digital Realty Trust, L.P.’s unitholders and us.
Risks Related to Our Business and Operations
Our business depends upon the demand for data centers.
We are in the business of owning, acquiring, developing and operating data centers. A reduction in the demand for data
center space, power or connectivity would have a greater adverse effect on our business and financial condition than if
we owned a portfolio with a less specialized use. Our substantial development activities make us particularly susceptible
to general economic slowdowns as well as adverse developments in the data center, Internet and data communications
and broader technology industries. Any such slowdown or adverse development could lead to reduced corporate IT
spending or reduced demand for data center space. Reduced demand could also result from business relocations,
including to metropolitan areas that we do not currently serve. Changes in industry practice or in technology could also
reduce demand for the physical data center space we provide. In addition, our customers may choose to develop new
data centers or expand their own existing data centers or consolidate into data centers that we do not own or operate,
which could reduce demand for our newly developed data centers or result in the loss of one or more key customers. If
any of our key customers were to do so, it could result in a loss of business to us or put pressure on our pricing. Mergers
or consolidations of technology companies could reduce further the number of our customers and potential customers
and make us more dependent on a more limited number of customers. If our customers merge with or are acquired by
other entities that are not our customers, they may discontinue or reduce the use of our data centers in the future. Our
financial condition, results of operations, cash flow, cash available for distribution and ability to satisfy our debt service
obligations could be materially adversely affected as a result of any or all of these factors.
18
We face significant competition, which may adversely affect the occupancy and rental rates of our data centers.
We compete with numerous data center providers globally, many of whom own or operate properties similar to ours in
some of the same metropolitan areas where our data centers are located, including Equinix, Inc. and NTT; various
private operators in the U.S.; as well as Global Switch Holdings Limited and various regional operators in Europe, Asia,
Latin America, Africa and Australia. In addition, we may in the future face competition from new entrants into the data
center market, including new entrants who may acquire our current competitors. Some of our competitors and potential
competitors have significant advantages over us, including greater name recognition, longer operating histories, pre-
existing relationships with current or potential customers, significantly greater financial, marketing and other resources
and more ready access to capital which allow them to respond more quickly to new or changing opportunities.
If our competitors offer space that our customers or potential customers perceive to be superior to ours based on factors
such as available power, security, location, or connectivity, or if they offer rental rates below current market rates, or
below the rental rates we are offering, we may lose customers or potential customers or be required to incur costs to
improve our data centers or reduce our rental rates. In addition, many of our competitors have developed and continue to
develop additional data center space. If the supply of data center space continues to increase as a result of these activities
or otherwise, rental rates may be reduced or we may face delays in leasing or be unable to lease our vacant space,
including space that we develop. Further, if customers or potential customers desire services that we do not offer, we
may not be able to lease our space to those customers. Our financial condition, results of operations, cash flow, cash
available for distribution and ability to satisfy our debt service obligations could be materially adversely affected as a
result of any or all of these factors.
Any failure of our physical or information technology or operational technology infrastructure or services could
lead to significant costs and disruptions.
Our business depends on providing customers with highly reliable services, including with respect to power supply,
physical security, cybersecurity, and maintenance of environmental conditions. We may fail to provide such services
because our operations are vulnerable to, among other things, mechanical or telecommunications failure, power outage,
human error, physical or electronic security breaches, cyberattacks, war, terrorism, fire, earthquake, pandemics,
hurricane, flood and other natural disasters, sabotage and vandalism.
Substantially all of our customer agreements include terms requiring us to meet certain service level commitments. Any
failure to meet these or other commitments or any equipment damage in our data centers due to any reason could subject
us to contractual liability, including service level credits against customer rent payments, legal liability and monetary
damages, regulatory sanctions, or, in certain cases of repeated failures, the right by the customer to terminate the
agreement. Service interruptions, equipment failures or security breaches could also materially impact our brand and
reputation globally and lead to customer contract terminations or non-renewals and an inability to attract customers in
the future.
We and our third-party providers may be vulnerable to cyberattacks and security breaches that could materially
disrupt or compromise our operations, data and results.
We rely on computer systems, hardware, software, online sites and networks, as well as physical, digital and operational
technology infrastructure to support our internal and external operations (collectively, “Information Systems”). We own,
operate, and manage complex, global Information Systems and also rely on third-party providers for a range of
Information Systems and other products and services, such as cloud computing. We face evolving risks that threaten the
confidentiality, integrity, and availability of Information Systems and data, including from state-sponsored espionage
actors, financially motivated hackers, hacktivists and insiders, as well as through diverse attack vectors, such as social
engineering/phishing, malware (including ransomware), human or technological error, or due to “bugs,”
misconfigurations and known and unknown vulnerabilities in hardware, software, systems and processes that support our
business.
19
Attacks, breaches or disruptions to our, or any providers’ or customers’, Information Systems or controls could result in,
among other things, unauthorized access to our or customers’ physical assets or Information Systems, misappropriation
of our or customers’ sensitive or proprietary information, disruptions to our or customers’ operations, breaches of legal
and regulatory (e.g., privacy laws such as GDPR) or contractual obligations, and/or other operational and business
impacts. The foregoing could expose us to material lawsuits, regulatory actions, penalties or fines, monetary damages,
loss of existing or potential customers, harm to our reputation and significant increases in our security and insurance
costs, and other adverse effects on our business and results.
We regularly experience cyberattacks and security incidents, and we expect such attacks and incidents to continue in the
future. For example, we frequently face sophisticated phishing campaigns designed to install malicious software on our
network. While to date no attacks or incidents have materially impacted us, we cannot guarantee that material incidents
will not occur in the future. There can also be no assurance that our cybersecurity risk management processes will be
fully implemented as currently anticipated, complied with or effective in protecting our or our customers’ Information
Systems and data, particularly because threat actors are increasingly sophisticated and using tools such as artificial
intelligence that circumvent controls and evade detection, making mitigation and recovery challenging and uncertain.
Although our customers maintain computing equipment in our facilities, we generally do not have access to, nor
knowledge of, what applications or data are stored or processed on such equipment. For some customers, we provide
digital infrastructure and platforms-as-a-service, which increases the risk of compromise to customer data, and we have
been expanding these aspects of our business.
Regulators around the world are increasingly focusing on, and investigating, cybersecurity matters. For example, as we
disclosed in our Quarterly Report on Form 10-Q filed on November 9, 2023, 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 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 predict the likely outcome of this matter or the potential
cost or exposure or 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, but not limited to, civil monetary penalties and injunctive relief, and/or file litigation against the
Company.
We have made, and expect to continue to make, investments to update and modernize both existing and newly acquired
Information Systems. We have ongoing acquisitions and investment activity, including through the formation of joint
ventures. For example, we have acquired and invested in, and continue to acquire and invest in, businesses and
operations (including joint ventures) around the world, including in new regions with complex and evolving regulatory
frameworks and differing risk profiles, and including in and with companies that have cybersecurity vulnerabilities and
security measures which may be less robust than our existing Information Systems, which increases our cybersecurity
risks. In addition, transitioning to new or upgraded Information Systems, and integrating acquired Information Systems
and data, creates challenges, causes disruption to current processes, governance and structures, and can increase our
cybersecurity vulnerabilities and costs to mitigate and remediate such vulnerabilities. Further, cybersecurity governance
with respect to our joint ventures may be more complex due to the necessary interactions and oversight of multiple joint
venture partners and their respective governing bodies. Difficulties in implementing new, upgraded, and/or acquired
Information Systems or significant failures, delays, or other inability to modify and respond to changes in our or our
customers’ business and cybersecurity needs could adversely affect our results.
20
We depend on significant customers, and many of our data centers are single-tenant properties or are currently
occupied by single tenants.
As of December 31, 2023, the 20 largest customers in our portfolio represented approximately 50% of the total
annualized recurring revenue generated by our properties. Our top three customers represented approximately 21% of
the total annualized recurring revenue generated by our properties as of December 31, 2023. In addition, 32 of our 309
data centers are occupied by single customers, including data centers occupied solely by our top three customers. Many
factors, including global economic conditions, may cause our customers to experience a downturn in their businesses or
otherwise experience a lack of liquidity, which may weaken their financial condition and impact our estimates as to the
probability of collectability of payments, and ultimately result in their failure to make timely rental and other payments
or their default under their agreements with us. Further, the development of new technologies, the adoption of new
industry standards or other factors could render many of our customers’ current products and services obsolete or
unmarketable and contribute to a downturn in their businesses, thereby increasing the likelihood that they default under
their leases, become insolvent or file for bankruptcy. If any customer defaults or fails to make timely rent or other
payments, we may experience delays in enforcing our rights as landlord and may incur substantial costs in protecting our
investment, which could adversely affect our financial condition and results of operations.
If any customer becomes a debtor in a case under the U.S. Bankruptcy Code, we cannot evict the customer solely
because of the bankruptcy. In addition, the bankruptcy court might authorize the customer to reject and terminate its
contracts with us. Our claim against the customer for unpaid, future rent and other payments would be subject to a
statutory cap that might be substantially less than the remaining amounts actually owed under their agreements with us.
In either case, our claim for unpaid rent and other amounts would likely not be paid in full. Our revenue and cash
available for distribution could be materially adversely affected if any of our significant customers were to become
bankrupt or insolvent, suffer a downturn in their businesses, fail to renew their contracts or renew on terms less favorable
to us than their current terms. As of February 23, 2024, we had no material customers in bankruptcy.
Failure to attract, grow and retain a diverse and balanced customer base, including key magnet customers, could
harm our business and operating results.
Our ability to attract, grow and retain a diverse and balanced customer base, consisting of enterprises, cloud service
providers, network service providers, and digital economy customers, some of which we consider to be key magnets
drawing in other customers, may affect our ability to maximize our revenues. Dense and desirable customer
concentrations within a facility enable us to better generate significant interconnection revenues, which in turn increases
our overall revenues. Our ability to attract customers to our data centers will depend on a variety of factors, including
our product offerings, the presence of carriers, the overall mix of customers, the presence of key customers attracting
business through ecosystems, the data center’s operating reliability and security and our ability to effectively market our
product offerings. Our inability to develop, provide or effectively execute any of these factors may hinder the
development, growth and retention of a diverse and balanced customer base and adversely affect our business, financial
condition and results of operations.
Our contracts with our customers could subject us to significant liability.
In the ordinary course of business, we enter into agreements with our customers pursuant to which we provide data
center space, power, environmental controls, physical security and connectivity products to our customers. These
contracts typically contain indemnification and liability provisions, in addition to service level commitments, which
could potentially impose a significant cost on us in the event of losses arising out of certain breaches of such agreements,
services to be provided by us or our subcontractors or from third-party claims. Customers increasingly are looking to
pass through their regulatory obligations and other liabilities to their outsourced data center providers and we may not be
able to limit our liability or damages in an event of loss suffered by such customers whether as a result of our breach of
an agreement or otherwise. Further, liabilities and standards for damages and enforcement actions, including the
regulatory framework applicable to different types of losses, vary by jurisdiction, and we may be subject to greater
liability for certain losses in certain jurisdictions. Additionally, in connection with our acquisitions, we have assumed
existing agreements with customers that may subject us to greater liability for such an event of loss. If such an event of
loss occurred, we could be liable for material monetary damages and could incur significant legal fees in defending
against such an action, which could adversely affect our financial condition and results of operations.
21
Certain of our customer agreements may include restrictions on the sale of our properties to certain third parties,
which could have a material adverse effect on us.
Certain of our customer agreements may prohibit us from selling certain properties to a third party unless specified
conditions are met. The existence of such restrictions could hinder our ability to sell one or more of these properties,
which could materially adversely affect our business, financial condition and results of operations.
Our data centers may not be suitable for re-leasing without significant expenditures or renovations.
Because many of our data centers contain tenant improvements installed at our customers’ expense, they may be better
suited for a specific data center user or technology industry customer and could require significant modification in order
for us to re-lease vacant space to another data center user or technology industry customer. The tenant improvements
may also become outdated or obsolete as the result of technological change, the passage of time or other factors. In
addition, our development space will generally require substantial improvement to be suitable for data center use. For the
same reason, our properties also may not be suitable for leasing to traditional office customers without significant
expenditures or renovations.
As a result, we may be required to invest significant amounts or offer significant discounts to customers in order to lease
or re-lease that space, either of which could adversely affect our financial and operating results.
We may be unable to lease vacant or development space, renew leases, or re-lease space as leases expire.
At December 31, 2023, we owned approximately 8.5 million square feet of space under active development and
approximately 4.1 million square feet of space held for future development. We intend to continue to add new space to
our development inventory and to continue to develop additional space from this inventory. A portion of the space that
we develop has been, and may continue to be, developed on a speculative basis, meaning that we do not have a signed
customer agreement for the space when we begin the development process. We also develop space specifically for
customers pursuant to agreements signed prior to beginning the development process. In those cases, if we fail to meet
our development obligations under those agreements, these customers may be able to terminate the agreements and we
would be required to find a new customer for this space. In addition, in certain circumstances we lease data center
facilities prior to their completion. If we fail to complete the facilities in a timely manner, the customer may be entitled
to terminate its agreement, seek damages or penalties against us or pursue other remedies and we may be required to find
a new customer for the space. We cannot assure you that once we have developed space or land we will be able to
successfully lease it at all, or at rates we consider favorable or expected at the time we commenced development.
Further, once development of a data center facility is complete, we incur certain operating expenses even if there are no
customers occupying any space. If we are not able to complete development in a timely manner or successfully lease the
space that we develop, if development costs are higher than we currently estimate, or if rental rates are lower than
expected when we began the project or are otherwise undesirable, our financial condition, results of operations, cash
flow, cash available for distribution and ability to satisfy our debt service obligations could be materially adversely
affected.
In addition, as of December 31, 2023, customer agreements representing 22.8% of the square footage of the properties in
our portfolio, excluding month-to-month leases and space held for development, were scheduled to expire through 2025,
and an additional 19.7% of the net rentable square footage, excluding space held for development, was available to be
leased. Some of this space may require substantial capital investment to meet the power and cooling requirements of our
customers, or may no longer be suitable for their needs. In addition, we cannot assure you that customer agreements will
be renewed or that our properties will be re-leased at all, or at net effective rental rates equal to or above the current
average net effective rental rates. If the rental rates for our properties decrease, our existing customers do not renew their
agreements, we do not lease or re-lease our available space, including newly developed space and space for which
customer agreements are scheduled to expire, or it takes longer for us to lease or re-lease this space or for rents to
commence on this space, our financial condition, results of operations, cash flow, cash available for distribution and
ability to satisfy our debt service obligations could be materially adversely affected.
22
Additionally, a customer’s decision to lease space and power in one of our data centers and to purchase additional
products typically involves a significant commitment of resources and due diligence on the part of our customers
regarding the adequacy of our facilities. As a result, the leasing of data center space can have a long sales cycle, and we
may expend significant time and resources in pursuing a particular transaction that may not result in revenue. Economic
conditions, including market downturns, may further impact this long sales cycle by making it difficult for customers to
plan future business activities, which could cause customers to slow spending or delay decision-making. Our inability to
adequately manage the risks associated with the sales cycle may adversely affect our business, financial condition and
results of operations.
Even if we have additional space available for lease at any one of our data centers, our ability to lease this space to
existing or new customers could be constrained by our ability to provide sufficient electrical power.
As current and future customers increase their power footprint in our data centers over time, the corresponding reduction
in available power could limit our ability to increase occupancy rates or network density within our existing data centers.
Furthermore, at certain of our data centers, our aggregate maximum contractual obligation to provide power and cooling
to our customers may exceed the physical capacity at such data centers if customers were to quickly increase their
demand for power and cooling. If we are not able to increase the available power and/or cooling or move the customer to
another location within our data centers with sufficient power and cooling to meet such demand, we could lose the
customer as well as be exposed to liability under our customer agreements. In addition, our power and cooling systems
are difficult and expensive to upgrade. Accordingly, we may not be able to efficiently upgrade or change these systems
to meet new demands without incurring significant costs that we may not be able to pass on to our customers. Any such
material loss of customers, liability or additional costs could adversely affect our business, financial condition and
results of operations.
Our portfolio depends upon local economic conditions and is geographically concentrated in certain locations.
Our portfolio is located in 54 metropolitan areas. As of December 31, 2023, our portfolio, including the 67 data centers
held as investments in unconsolidated entities, was geographically concentrated in the following metropolitan areas:
Metropolitan Area
Northern Virginia
Chicago
Frankfurt
London
Singapore
Dallas
New York
Silicon Valley
Amsterdam
Sao Paulo
Johannesburg
Paris
Portland
Tokyo
Phoenix
Other
Total
Percentage of
December 31, 2023
Total annualized rent (1)
17.3 %
8.1 %
6.4 %
5.2 %
5.0 %
4.9 %
4.8 %
4.6 %
4.3 %
4.2 %
2.7 %
2.7 %
2.6 %
2.0 %
1.8 %
23.4 %
100.0 %
(1) Annualized rent is monthly contractual rent (defined as cash base rent before abatements) under existing leases as of
December 31, 2023 multiplied by 12. Includes consolidated portfolio and unconsolidated entities at the entities’
100% ownership level. The aggregate amount of abatements for the year ended December 31, 2023 was
approximately $105.3 million.
23
Some of these areas have experienced downturns in recent years. We depend upon the local economic conditions in
these areas, including local real estate conditions, and our operations, revenue and cash available for distribution could
be materially adversely affected by a downturn in local economic conditions in these areas. Our operations may also be
affected if too many competing properties are built in any of these areas or supply otherwise increases or exceeds
demand. We cannot assure you that these locations will grow or will remain favorable to data center investments or
operations. In addition, we are currently developing data centers in certain of these metropolitan areas. Any negative
changes in real estate, technology or economic conditions in these metropolitan areas in particular could negatively
impact our performance.
Our business and operations, and our customers, suppliers and business partners may be adversely affected by
epidemics, pandemics or other outbreaks.
Epidemics, pandemics or other outbreaks of an illness, disease or virus that affect countries or regions in which we or
our customers, suppliers or business partners operate, and actions taken to contain or prevent their further spread, may
have a material and adverse impact on general commercial activity and on our financial condition, results of operations,
liquidity and creditworthiness. Epidemics, pandemics or other outbreaks of an illness, disease or virus could result in
significant governmental measures being implemented to control the spread of such illness, disease or virus, including
quarantines, travel restrictions, manufacturing restrictions, declarations of states of emergency, business shutdowns,
prioritization and allocation of resources, and restrictions on the movement of our employees and those of our customers,
suppliers and business partners on which we rely, which could adversely affect our ability and their respective abilities to
adequately manage our respective businesses. Risks related to epidemics, pandemics or other outbreaks of an illness,
disease or virus could also lead to the complete or partial closure of one or more of our offices or properties or our
customers’, suppliers’ or business partners’ businesses, or otherwise result in significant disruptions to our business and
operations or theirs. Such events could materially and adversely impact our operations and the rental revenue we
generate from our agreements with our customers or could result in defaults by our customers.
In particular, the global spread of COVID-19 and the various attempts to contain it have created significant volatility,
uncertainty and economic disruption, including in construction activity. We have experienced delays in construction
activity in certain markets as a result of the availability of labor, and these delays have impacted and are continuing to
impact some of our anticipated deliveries to our customers. We may continue to experience delays in construction
activity due to increased safety protocols implemented in response to the COVID-19 pandemic.
We cannot predict the full extent of the impact that the epidemics, pandemics and other global events will have on our
customers, suppliers and other business partners; however, any material effect on these parties could adversely impact
us, our future financial condition, results of operations and cash flows. The full extent to which epidemics, pandemics
and the various responses to such events impact our business, operations and financial results will depend on numerous
evolving factors that we may not be able to accurately predict, including: the duration and scope of such event;
governmental, business and individuals’ actions that have been and continue to be taken in response to such event; the
availability of and cost to access the capital markets; the effect on our customers and customer demand for and ability to
pay for our services; the impact on our development projects; and disruptions or restrictions on our employees’ ability to
work and travel.
We lease or sublease certain of our data center space from third parties and the ability to retain these leases or
subleases could be a significant risk to our ongoing operations.
We do not own all the buildings in our portfolio. These leased buildings accounted for approximately 15% of our total
revenue for the year ended December 31, 2023. In addition, we may acquire additional leased data center space or
businesses that lease facilities instead of owning them. Our business could be harmed if we are unable to renew the
leases for these data centers on favorable terms or at all. Additionally, in several of our smaller facilities we sublease our
space, and our rights under these subleases are dependent on our sublandlord retaining its rights under the prime lease.
When the initial terms of our existing leases expire, we generally have the right to extend the terms of our leases for one
or more renewal periods, subject to, in the case of several of our subleases, our sublandlord renewing its term under the
prime lease. If renewal rates are less favorable than those we currently have, we may be required to increase revenues
within existing data centers to offset such increase in lease payments. Failure to increase revenues to sufficiently offset
these projected higher costs could adversely impact our operating income. Upon the end of our renewal options, we
would have to renegotiate our lease terms with the applicable landlords.
24
Additionally, if we are unable to renew the lease at any of our data centers, we could lose customers due to the
disruptions in their operations caused by the relocation. We could also lose those customers that choose our data centers
based on their locations. The costs of relocating data center infrastructure equipment, such as generators, power
distribution units and cooling units, to different data centers could be prohibitive and, as such, we could lose the value of
this equipment. For these reasons, any lease that cannot be renewed could adversely affect our business, financial
condition and results of operations.
We and our customers may experience supply chain or procurement disruptions, or increased supply chain costs,
which may lead to delays.
The development of our data centers requires the timely delivery of required equipment and materials. We rely on third
parties to provide the equipment, materials and services needed for our construction and development needs. Our global
supply chain and development activities could be impacted by disruptions, such as political events, international trade
disputes, war, terrorism, natural disasters, public health issues, industrial accidents, pandemics and other business
interruptions, which could impact our ability to meet delivery timelines, including delivery timelines to our customers.
These disruptions could also lead to delays, reputational damage, potential penalties that we may be required to pay and
potential terminations of agreements by our customers. If any such delay or disruption were to occur, it could have an
adverse effect on our liquidity and financial condition. Changes in the timing or cost of procuring materials, equipment
and services used in our construction and development programs could have an adverse effect on our results of
operations. Similarly, our customers may experience supply chain or procurement disruptions, constraints and increased
costs, which may impact their ability to deploy in our facilities, which could have a material adverse impact on our
business and financial condition. During the pandemic and its related and other ongoing global supply chain issues, we
have actively monitored our vendors and suppliers and remain in frequent communication with customers, contractors
and suppliers. We have proactively managed our supply chain, and we believe the required equipment will continue to
be delivered to complete our ongoing development activities. Although to date, we have been able to manage through
disruptions in our supply chain and procurement process due to the pandemic and other global events, continuing
disruptions could have a material adverse impact on our business and financial condition. However, the full extent and
impact of global supply chain constraints on our future supply chain and procurement process cannot be reasonably
estimated at this time and it could have a material adverse impact on our business and financial condition. In addition,
the ongoing military conflict between Russia and Ukraine, as well as the conflict in the Middle East and other potential
global conflicts, could lead to market disruptions, including significant volatility in commodity prices, credit and capital
markets, an increase in cyber security incidents as well as supply chain disruptions.
We may not be able to adapt to changing technologies and customer requirements, and our data center
infrastructure may become obsolete.
The technology industry generally and specific industries in which certain of our customers operate are characterized by
rapidly changing technology, customer requirements and industry standards. New systems to deliver power to or
eliminate heat in data centers or the development of new server technology that does not require the levels of critical
load and heat removal that our facilities are designed to provide and could be run less expensively on a different
platform could make our data center infrastructure obsolete. Our power and cooling systems are difficult and expensive
to upgrade, and we may not be able to efficiently upgrade or change these systems to meet new demands without
incurring significant costs that we may not be able to pass on to our customers which could adversely impact our
business, financial condition and results of operations. In addition, the infrastructure that connects our data centers to the
Internet and other external networks may become insufficient, including with respect to latency, reliability and
connectivity. We may not be able to adapt to changing technologies or meet customer demands for new processes or
technologies in a timely and cost-effective manner, if at all, which would adversely impact our ability to sustain and
grow our business.
25
Further, our inability to adapt to changing customer requirements may make our data centers obsolete or unmarketable to
such customers. Some of our customers operate at significant scale across numerous data center facilities and have
designed cloud and computing networks with redundancies and fail-over capabilities across these facilities, which
enhances the resiliency of their networks and applications. As a result, these customers may realize cost benefits by
locating their data center operations in facilities with less electrical or mechanical infrastructure redundancy than is
found in our existing data center facilities. Additionally, some of our customers have begun to operate their data centers
using a wider range of humidity levels and at temperatures that are higher than servers customarily have operated at in
the past, all of which may result in energy cost savings for these customers. We may not be able to operate our existing
data centers under these environmental conditions, particularly in multi-tenant facilities with other customers who are
not willing to operate under these conditions, and our data centers could be at a competitive disadvantage to facilities
that satisfy such requirements. Because we may not be able to modify the redundancy levels or environmental systems of
our existing data centers cost effectively, these or other changes in customer requirements could have a material adverse
effect on our business, results of operations and financial condition.
Additionally, due to regulations that apply to our customers as well as industry standards, such as ISO and SOC
certifications which customers may deem desirable, they may seek specific requirements from their data centers that we
are unable to provide. If new or different regulations or standards are adopted or such extra requirements are demanded
by our customers, we could lose some customers or be unable to attract new customers in certain industries, which could
materially and adversely affect our operations.
We depend upon third-party suppliers for power, and we are vulnerable to service failures and price increases by
such suppliers and to volatility in the supply and price of power in the open market.
We rely on third parties to provide power to our data centers, and we cannot ensure that these third parties will deliver
such power in adequate quantities or on a consistent basis. We are also reliant on third parties to deliver additional power
capacity to support the growth of our business If the amount of power available to us is inadequate to support our
customer requirements, we may be unable to satisfy our obligations to our customers or grow our business. In addition,
our data centers may be susceptible to power shortages and planned or unplanned power outages caused by these
shortages. Power outages may last beyond our backup and alternative power arrangements, which would harm our
customers and our business. Any loss of services or equipment damage could adversely affect both our ability to
generate revenues and our operating results, harm our reputation and potentially lead to customer disputes or litigation.
In addition, we may be subject to risks and unanticipated costs associated with obtaining power from various utility
companies. Utilities that serve our data centers may be dependent on, and sensitive to price increases for, a particular
type of fuel, such as natural gas, coal or nuclear. In addition, the price of these fuels and the total cost of delivered
electricity could increase as a result of: regulations intended to regulate carbon emissions and other pollutants, ratepayer
surcharges related to recovering the cost of extreme weather events and natural disasters, geopolitical conflicts, military
conflicts, grid modernization charges, as well as other charges borne by ratepayers. Increases in the cost of power at any
of our data centers could put those locations at a competitive disadvantage relative to data centers that are supplied
power at a lower price.
We have also entered into power purchase agreements with contract terms ranging from 5-15 years. These agreements
require us to purchase renewable energy and/or renewable energy credits from producers at fixed prices over the terms
of the contracts, subject to certain adjustments. In the event that the market price for energy decreases, we may be
required to pay more under the power purchase agreements than we would otherwise if we were to purchase renewable
energy credits on the open market, which could adversely affect our results of operations. Additionally, interruptions in
the operations of one or more of the suppliers under these agreements, as a result of extreme weather events, natural
disasters or otherwise, could negatively impact the quantity of renewable energy credits delivered to us.
In particular, disruptions in the oil and gas and electric power markets have caused, and could continue to cause,
significant increases in energy prices, which could have a material effect on our business. Additional potential sanctions
and penalties have also been implemented and/or threatened against Russia. Some of our data centers in Europe
indirectly rely on energy produced in-part from fossil fuels, including fossil fuels that may originate from Russia, which
Russia has reduced. If Russia further reduces or turns off energy supplies to Europe, our European operations could be
affected adversely.
26
We depend on third parties to provide network connectivity to the customers in our data centers and any delays
or disruptions in connectivity may materially adversely affect our operating results and cash flow.
We are not a telecommunications carrier. Although our customers generally are responsible for providing their own
network connectivity, we still depend upon the presence of telecommunications carriers’ fiber networks serving our data
centers in order to attract and retain customers. We believe that the availability of carrier capacity will directly affect our
ability to achieve our projected results. Any carrier may elect not to offer its services within our data centers. Any carrier
that has decided to provide network connectivity to our data centers may not continue to do so for any period of time.
Further, some carriers are experiencing business difficulties or have announced consolidations. As a result, some carriers
may be forced to downsize or terminate connectivity within our data centers, which could have an adverse effect on the
business of our customers and, in turn, our own operating results.
Our data centers may require construction and operation of a sophisticated redundant fiber network. The construction
required to connect multiple carrier facilities to our data centers is complex and involves factors outside of our control,
including regulatory requirements and the availability of construction resources. We have obtained the right to use
network resources owned by other companies, including rights to use dark fiber, in order to attract telecommunications
carriers and customers to our portfolio. If the establishment of highly diverse network connectivity to our data centers
does not occur, is materially delayed or is discontinued, or is subject to failure, our operating results and cash flow may
be materially adversely affected. Additionally, any hardware or fiber failures on this network may result in significant
loss of connectivity to our data centers. This could negatively affect our ability to attract new customers or retain
existing customers, which could have an adverse effect on our business, financial condition and results of operations.
Our international activities, including acquisition, ownership and operation of data centers located outside of the
United States, subject us to risks different than those we face in the United States and we may not be able to
effectively manage our international business.
Our portfolio included 184 data centers, including 47 held in unconsolidated entities, located outside of the United States
as of December 31, 2023. We have acquired and developed, and may continue to acquire and develop, and operate data
centers outside the United States.
The ownership and operation of data centers located outside of the United States subject us to risks from fluctuations in
exchange rates between foreign currencies and the U.S. dollar. Changes in the relation of these currencies to the U.S.
dollar will affect our revenues and operating margins, and may materially adversely impact our financial condition,
results of operations, cash flow, cash available for distribution and ability to satisfy our debt obligations. We may
attempt to mitigate some or all of the risk of currency fluctuation by financing our properties in the local currency
denominations, although we cannot assure you that we will be able to do so or that this will be effective. We may also
engage in direct hedging activities to mitigate the risks of exchange rate fluctuations in a manner consistent with our
qualifications as a REIT, although we cannot assure you that we will be able to do so or that this will be effective.
27
Our foreign operations involve additional risks not generally associated with or different from operations in the United
States, including:
our limited knowledge of and relationships with sellers, customers, contractors, suppliers or other parties in
these metropolitan areas;
complexity and costs associated with managing international development and operations;
difficulty in hiring qualified management, sales and construction personnel and service providers in a timely
fashion;
the adoption and expansion of trade restrictions or the occurrence of trade wars;
differing employment practices and labor issues, including related to works councils, employee committees,
labor unions and collective rights of action;
multiple, conflicting and changing legal, regulatory, entitlement and permitting, and tax and treaty
environments;
unexpected changes in political environments, such as the United Kingdom’s withdrawal from the European
Union;
exposure to increased taxation, confiscation or expropriation;
currency transfer restrictions and limitations on our ability to distribute cash earned in foreign jurisdictions to
the United States;
difficulty in enforcing agreements in non-U.S. jurisdictions, including those entered into in connection with our
acquisitions or in the event of a default by one or more of our customers, suppliers or contractors;
local business and cultural factors;
geographic, political and economic instability, including sovereign credit risk and rapid and unpredictable
changes in economic policy and regulatory environments, in certain geographic regions and emerging markets;
and
risks related to bribery and corruption.
The likelihood of such occurrences and their potential effect on us vary from country to country and are unpredictable.
Certain regions, including Latin America, Asia, Eastern Europe, the Middle East and Africa, have in the past and may
continue to be more economically and politically volatile and, as a result, operations in these regions could be subject to
heightened risk of disruption, which could have a material adverse effect on our overall results of operations.
With respect to the United Kingdom’s withdrawal from the European Union, significant political and economic
uncertainty remains about how the precise terms of the relationship between the parties will differ from the terms before
withdrawal. Lack of clarity about future United Kingdom laws and regulations as the United Kingdom determines which
European Union laws to replace or replicate, including financial laws and regulations, tax and free trade agreements, tax
and customs laws, intellectual property rights, environmental, health and safety laws and regulations, immigration laws,
employment laws and transport laws could increase costs, disrupt supply chains, and depress economic activity and
restrict our access to capital. Any of these factors could have a material adverse effect on our business, financial
condition and results of operations and reduce the price of our securities.
We also face risks with investing in unfamiliar metropolitan areas. We have acquired and may continue to acquire
properties in international metropolitan areas that are new to us. When we acquire properties located in these
metropolitan areas, we may face risks associated with a lack of market knowledge or understanding of the local economy
and culture, forging new business relationships in the area and unfamiliarity with local government and permitting
procedures. In addition, due diligence, transaction and structuring costs may be higher than those we may face in the
United States. We work to mitigate such risks through extensive diligence and research and associations with
experienced local partners; however, we cannot assure you that all such risks will be eliminated.
Our inability to overcome these risks could adversely affect our international activities, including our foreign operations
and could harm our business and results of operations.
28
Our recent acquisitions may not achieve the intended benefits or may disrupt our plans and operations.
Acquisitions present many risks, and we may not realize the financial or strategic goals that were contemplated at the
time of the transaction. Our ability to realize the anticipated benefits of our combination with Interxion in March 2020
and other acquisitions depends, to a large extent, on our ability to integrate each of them with our business. The
combination of two independent businesses can be a complex, costly and time-consuming process, which requires
significant time and focus from our management team and may divert attention from the day-to-day operations of our
business. There can be no assurance that we will be able to successfully integrate acquired properties and businesses
with our business or otherwise realize the expected benefits of these acquisitions. In addition, even if our operations are
integrated successfully with the operations of our acquisitions, we may not realize the full benefits of the acquisitions,
including the synergies, operating efficiencies, or sales or growth opportunities that are expected. These benefits may not
be achieved within the anticipated time frame or at all. All of these factors could decrease or delay any potential
accretive effect of the acquisitions and negatively impact the price of our common stock.
In addition, the overall integration of the businesses may result in material unanticipated problems, expenses, liabilities,
competitive responses and loss of customer relationships, among other potential adverse consequences. Actual
integration costs may exceed those estimated and there may be further unanticipated costs and the assumption of known
and unknown liabilities. While we have assumed that we will incur certain integration expenses, there are factors beyond
our control that could affect the total amount or the timing of such expenses. Many of the expenses that will be incurred,
by their nature, are difficult to estimate accurately. If we cannot integrate and operate acquired properties or businesses
to meet our financial expectations, our financial condition, results of operations, cash flow, cash available for
distribution and ability to satisfy our debt service obligations could be materially adversely affected.
The risks of combining businesses include, among others:
we may have underestimated the costs to make any necessary improvements to the acquired properties;
the acquired properties may be subject to reassessment, which may result in higher than expected property
tax payments;
we may be unable to integrate new acquisitions quickly and efficiently, particularly acquisitions of
operating businesses or portfolios of properties, into our existing operations;
we may face difficulties in integrating employees and in retaining key personnel;
we may face challenges in keeping existing customers, including key customers, which could adversely
impact our revenue;
we may be unable to effectively manage our expanded operations; and
market conditions may result in higher than expected vacancy rates and lower than expected rental rates on
acquired properties.
Any one of these risks could result in increased costs, decreases in the amount of expected revenue and diversion of our
management’s time and energy, which could have a material adverse effect on our business, financial condition, results
of operations and cash flows.
Several of our data centers, including the data centers which we have acquired in the past five years, have been under our
management for a limited time. The data centers may have characteristics or deficiencies unknown to us that could affect
their valuation or revenue potential. We cannot assure you that the operating performance of these data centers will not
decline under our management.
29
We may be subject to unknown or contingent liabilities related to our recent acquisitions, for which we may have
no or limited recourse against the sellers.
Our recent and future acquisitions may be subject to unknown or contingent liabilities for which we may have no or
limited recourse against the sellers. Unknown or contingent liabilities might include liabilities for clean-up or
remediation of environmental conditions, claims of customers, vendors or other persons dealing with the acquired
entities or the former owners of acquired properties or businesses, tax liabilities, claims for indemnification by general
partners, directors, officers and others indemnified by the former owners of acquired properties or businesses, and other
liabilities whether incurred in the ordinary course of business or otherwise. In addition, the total amount of costs and
expenses that we may incur with respect to liabilities associated with our acquisitions may exceed our expectations,
which may adversely affect our business, financial condition and results of operations.
Further, we have entered, and may in the future enter, into transactions with limited representations and warranties or
with representations and warranties that do not survive the closing of such transactions, in which event we would have
no or limited recourse against the sellers of such properties or businesses. While we usually require the sellers to
indemnify us with respect to breaches of representations and warranties that survive, such indemnification is often
limited and subject to various materiality thresholds, a significant deductible or an aggregate cap on losses. We may
obtain insurance policies providing for coverage for breaches of certain representations and warranties in certain
transactions, subject to certain exclusions and a deductible, however, there can be no assurance that we would be able to
recover any amounts with respect to losses due to breaches of any such representations and warranties. As a result, there
is no guarantee that we will recover any amounts with respect to losses due to breaches by the sellers of their
representations and warranties. Finally, indemnification agreements between us and the sellers typically provide that the
sellers will retain certain specified liabilities relating to the properties or businesses acquired by us. While the sellers are
generally contractually obligated to pay all losses and other expenses relating to such retained liabilities, there can be no
guarantee that such arrangements will not require us to incur losses or other expenses as well.
Joint venture (JV) investments could be adversely affected by our lack of sole decision-making authority, our
reliance on our JV partners’ financial condition and disputes between us and our JV partners.
We currently, and may in the future, co-invest with third parties through partnerships, joint ventures or other entities,
acquiring non-controlling interests in or sharing responsibility for managing the affairs of a property or portfolio of
properties, partnership, joint venture or other entity. In these events, we are not in a position to exercise sole decision-
making authority regarding the properties, partnership, joint venture or other entity. Investments in partnerships, joint
ventures, or other entities may, under certain circumstances, involve risks not present when a third party is not involved,
including the possibility that partners might become bankrupt or fail to fund their share of required capital contributions.
Partners may have economic, tax or other business interests or goals which are inconsistent with our business interests or
goals, and may be in a position to take actions contrary to our policies or objectives. Our joint venture partners may take
actions that are not within our control, which would require us to dispose of the joint venture asset or transfer it to a
taxable REIT subsidiary in order for Digital Realty Trust, Inc. to maintain its status as a REIT. Such investments may
also lead to impasses, for example, as to whether to sell a property, because neither we nor our partner would have full
control over the partnership or joint venture. Disputes between us and our partners may result in litigation or arbitration
that would increase our expenses and prevent our management from focusing their time and effort on our day-to-day
business. Consequently, actions by or disputes with our partners may subject properties owned by the partnership or joint
venture to additional risk. In addition, we may in certain circumstances be liable for the actions of our third-party
partners. Each of these factors may result in returns on these investments being less than we expect or in losses and our
financial and operating results may be adversely affected. In addition, we cannot assure you that we will be able to close
joint ventures, on the anticipated schedule or at all. Failure to complete any such joint venture could have a negative
impact on our business and the trading price of our common stock. Over the past few years, and particularly during the
last 12 months, we have completed a number of new joint ventures, including our first development joint ventures, and
such investments may increase the risks described herein.
30
Any delays or unexpected costs in the development of our existing space and developable land and new properties
acquired for development may delay and harm our growth prospects, future operating results and financial
condition.
At December 31, 2023, we had approximately 8.5 million square feet of space under active development and
approximately 4.1 million square feet of space held for future development. We have built and may continue to build out
a large portion of this space on a speculative basis at significant cost. Our successful development of these projects is
subject to many risks, including those associated with:
delays in construction, or changes to the plans or specifications;
budget overruns, increased prices for raw materials or building supplies, or lack of availability and/or increased
costs for specialized data center components, including long lead time items such as generators;
construction site accidents and other casualties;
financing availability, including our ability to obtain construction financing and permanent financing, or
increases in interest rates or credit spreads;
labor availability, costs, disputes and work stoppages with contractors, subcontractors or others that are
constructing the project;
failure of contractors to perform on a timely basis or at all, or other misconduct on the part of contractors;
access to sufficient power and related costs of providing such power to our customers;
environmental issues;
supply chain constraints;
fire, flooding, earthquakes and other natural disasters;
pandemics;
geological, construction, excavation and equipment problems; and
delays or denials of entitlements or permits, including zoning and related permits, or other delays resulting from
requirements of public agencies and utility companies.
In addition, while we intend to develop data centers primarily in metropolitan areas we are familiar with, we may in the
future develop data centers in new geographic regions where we expect the development to result in favorable risk-
adjusted returns on our investment. We may not possess the same level of familiarity with the development of data
centers in other metropolitan areas, which could adversely affect our ability to develop such data centers successfully or
at all or to achieve expected performance.
Development activities, regardless of whether they are ultimately successful, also typically require a substantial portion
of our management’s time and attention. This may distract our management from focusing on other operational activities
of our business. If we are unable to complete development projects successfully, our business may be adversely affected.
Many of our costs, such as operating and general and administrative expenses, interest expense and real estate
acquisition and construction costs, could be adversely impacted by periods of heightened inflation.
Over the past year, the consumer price index has increased substantially year over year. Federal policies to stimulate the
economy during the pandemic and more recent global events, such as the rising price of oil and the conflict between
Russia and Ukraine, may have exacerbated, and may continue to exacerbate, inflation and increases in the consumer
price index.
31
A sustained or further increase in inflation could have an adverse impact on our operating expenses incurred in
connection with, among others, the property-related contracted services such as repairs and maintenance, utilities,
security and insurance. With regard to utilities expense, which is our largest expense category, the vast majority of the
expense is passed directly through to our customers which significantly mitigates our exposure to increases in power
costs. For our other operating expenses, we expect to recover some increases from our customers through our existing
lease structures, annual rent escalations or from the resetting of rents from our renewal and re-leasing activities. As a
result, we do not believe that inflation would result in a significant adverse effect on our net operating income and
operating cash flows at the property level. However, there can be no assurance that the impact of inflation will be
adequately offset by some of our annual rent escalations contained in our leases, and it is possible that the resetting of
rents from our renewal and re-leasing activities would not fully offset the impact of higher operating expenses resulting
from inflationary pressure. As a result, during inflationary periods in which the inflation rate exceeds the annual rent
escalation percentages within our customer contracts, we may not adequately mitigate the impact of inflation, which may
adversely affect our business, financial condition, results of operations, and cash flows.
Our general and administrative expenses consist primarily of compensation costs and professional service fees. Rising
inflation rates may require us to provide compensation increases beyond historical annual increases, which may
unexpectedly or significantly increase our compensation costs. Similarly, professional service fees are also subject to the
impact of inflation and expected to increase proportionately with increasing market prices for such services.
Consequently, inflation may increase our general and administrative expenses over time and may adversely impact our
results of operations and cash flows.
Additionally, inflationary pricing may have a negative effect on the construction costs necessary to complete our
development projects, including, but not limited to, costs of construction equipment and materials, labor and services
from third-party contractors and suppliers. We rely on a number of third-party suppliers and contractors to supply raw
materials, skilled labor and services for our construction projects. Certain increases in the costs of construction
equipment and materials can often be managed in our development projects through either general budget contingencies
built into our overall construction cost estimates for each of our projects or guaranteed maximum price construction
contracts, which stipulate a maximum price for certain construction costs and shift inflation risk to our construction
general contractors. However, no assurance can be given that our budget contingencies would accurately account for
potential construction cost increases given the current severity of inflation and variety of contributing factors or that our
general contractors would be able to absorb such increases in costs and complete our construction projects timely, within
budget, or at all. Higher construction costs could adversely impact our investments in real estate assets and expected
yields on our development projects, which may adversely impact our returns on our investments. As a result, our
business, financial condition, results of operations, cash flows, liquidity and ability to satisfy our debt service obligations
and to pay dividends and distributions to security holders could be adversely affected over time.
We have substantial debt and face risks associated with the use of debt to fund our business activities, including
refinancing and interest rate risks.
Our total consolidated indebtedness at December 31, 2023 was approximately $17.5 billion, and we may incur
significant additional debt to finance future acquisition, investment and development activities. We have a Global
Revolving Credit Facility and the Yen Revolving Credit Facility, which provide for borrowings of 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 December 31, 2023. We have the ability from time to time to increase the
size of the Global Revolving Credit Facility by up to $750 million, subject to receipt of lender commitments and other
conditions precedent. At December 31, 2023, approximately $1.8 billion was available under this facility, net of
outstanding letters of credit. As of February 21, 2024, we had approximately $1.9 billion available under the Global
Revolving Credit Facility, net of outstanding letters of credit.
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Our substantial indebtedness currently requires us to dedicate a significant portion of our cash flow from operations to
debt service payments, which reduces the availability of our cash flow to fund working capital, capital expenditures,
expansion efforts, distributions and other general corporate purposes. Additionally, it could: make it more difficult for us
to satisfy our obligations with respect to our indebtedness; limit our ability in the future to undertake refinancing of our
debt or obtain financing for expenditures, acquisitions, development or other general corporate purposes on terms and
conditions acceptable to us, if at all; or affect adversely our ability to compete effectively or operate successfully under
adverse economic conditions.
In addition, we may violate restrictive covenants or fail to maintain financial ratios specified in our loan documents,
which would entitle the lenders to accelerate our debt obligations, and our secured lenders or mortgagees may foreclose
on our properties or our interests in the entities that own the properties that secure their loans and receive an assignment
of rents and leases. Our default under any one of our loans could result in a cross-default on other indebtedness. A
foreclosure on one or more of our properties could adversely affect our access to capital, financial condition, results of
operations, cash flow and cash available for distribution. Further, foreclosures could create taxable income without
accompanying cash proceeds, a circumstance which could hinder Digital Realty Trust, Inc.’s ability to meet the REIT
distribution requirements imposed by the Internal Revenue Code of 1986, as amended, or the Code.
Additional risks related to our indebtedness include the following:
We may be unable to refinance our indebtedness at maturity or the refinancing terms may be less favorable than the
terms of our original indebtedness. It is likely that we will need to refinance at least a portion of our outstanding debt as
it matures. If we are unable to refinance or extend principal payments due at maturity or pay them with proceeds of other
capital transactions, then our cash flow may not be sufficient in all years to repay all such maturing debt and to pay
distributions. Further, if prevailing interest rates or other factors at the time of refinancing, such as the reluctance of
lenders to make commercial real estate loans, result in higher interest rates upon refinancing, then the interest expense
relating to that refinanced indebtedness would increase.
Fluctuations in interest rates could materially affect our financial results and may increase the risk our counterparty
defaults on our interest rate hedges. Because a significant portion of our debt, including debt incurred under our Global
Revolving Credit Facilities, bears interest at variable rates, increases in interest rates could materially increase our
interest expense. If the United States Federal Reserve and other central banks continue to increase short-term interest
rates, this could have a significant upward impact on the interest rates that apply to our variable rate debt. Potential
future increases in interest rates and credit spreads may increase our interest expense and therefore negatively affect our
financial condition and results of operations, and reduce our access to capital markets. We have entered into interest rate
swap agreements and cross currency swap agreements. Our derivative transactions expose us to risk of financial loss if a
counterparty fails to perform under a derivative contract. Disruptions in the financial markets could lead to sudden
decreases in a counterparty's liquidity, which could make them unable to perform under the terms of their derivative
contract and we may not be able to realize the benefit of the derivative contract.
Adverse changes in our Company’s credit ratings could negatively affect our financing activity. The credit ratings of
our senior unsecured long-term debt and Digital Realty Trust, Inc.’s preferred stock are based on our Company’s
operating performance, liquidity and leverage ratios, overall financial position and other factors employed by the credit
rating agencies in their rating analyses of our Company. Our Company’s credit ratings can affect the amount of capital
we can access, as well as the terms and pricing of any debt we may incur. We cannot assure you that we will be able to
maintain our current credit ratings, and in the event our current credit ratings are downgraded, we would likely incur
higher borrowing costs and may encounter difficulty in obtaining additional financing. Also, a downgrade in our credit
ratings may trigger additional payments or other negative consequences under our current and future credit facilities and
debt instruments. For example, if the credit ratings of our senior unsecured long-term debt are downgraded to below
investment grade levels, we may not be able to obtain or maintain extensions on certain of our existing debt. Adverse
changes in our credit ratings could negatively impact our refinancing and other capital market activities, our ability to
manage our debt maturities, our future growth, our financial condition, the market price of Digital Realty Trust, Inc.’s
stock, and our development and acquisition activity.
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Our Global Revolving Credit Facilities and senior notes restrict our ability to engage in some business activities. Our
Global Revolving Credit Facilities contain negative covenants and other financial and operating covenants that, among
other things, restrict our ability to: incur additional indebtedness; make certain investments; merge with another
company; and create, incur or assume liens; and require us to maintain financial coverage ratios, including with respect
to unencumbered assets.
In addition, the Global Revolving Credit Facilities restrict Digital Realty Trust, Inc. from making distributions to its
stockholders, or redeeming or otherwise repurchasing shares of its capital stock, after the occurrence and during the
continuance of an event of default, except in limited circumstances including as necessary to enable Digital Realty Trust,
Inc. to maintain its qualification as a REIT and to avoid the payment of income or excise tax.
In addition, our unsecured senior notes are governed by indentures, which contain various restrictive covenants,
including limitations on our ability to incur indebtedness and requirements to maintain a pool of unencumbered assets.
These restrictions, and the restrictions in our Global Revolving Credit Facilities, could cause us to default on our senior
notes or Global Revolving Credit Facilities, as applicable, or negatively affect our operations or our ability to pay
dividends to Digital Realty Trust, Inc.’s stockholders or distributions to Digital Realty Trust, L.P.’s unitholders, which
could have a material adverse effect on the market value of Digital Realty Trust, Inc.’s common stock and preferred
stock.
Failure to hedge effectively against interest rate changes may adversely affect results of operations. We seek to
manage our exposure to interest rate volatility by issuing fixed rate debt instruments and by using interest rate hedging
arrangements, such as interest rate cap, forward or swap lock agreements. These agreements involve risks, such as the
risk that counterparties may fail to honor their obligations under these arrangements, that these arrangements may not be
effective in reducing our exposure to interest rate changes and that a court could rule that such an agreement is not
legally enforceable. Our policy is to use these derivatives only to hedge interest rate risks related to our borrowings, not
for speculative or trading purposes, and to enter into contracts only with major financial institutions based on their credit
ratings and other factors. However, we may choose to change this policy in the future. Approximately 85% of our total
indebtedness as of December 31, 2023 was subject to fixed interest rates or variable rates subject to interest rate swaps.
We do not currently hedge our Global Revolving Credit Facilities and as our borrowings under our Global Revolving
Credit Facilities increase, our percentage of indebtedness not subject to fixed rates and our exposure to interest rates may
increase. Hedging may reduce the overall returns on our investments. Failure to hedge effectively against interest rate
changes may materially adversely affect our results of operations.
Our growth depends on external sources of capital which are outside of our control.
In order for Digital Realty Trust, Inc. to maintain its qualification as a REIT, it is required under the Code to annually
distribute at least 90% of its REIT taxable income determined without regard to the dividends paid deduction and
excluding any net capital gain. In addition, Digital Realty Trust, Inc. will be subject to federal and state corporate income
taxes to the extent that it distributes less than 100% of its REIT taxable income, including any net capital gains. Digital
Realty Trust, L.P. is required to make distributions to Digital Realty Trust, Inc. that will enable the latter to satisfy this
distribution requirement and avoid income and excise tax liability. Because of these distribution requirements, we may
not be able to fund future capital needs, including any necessary acquisition or development financing, from operating
cash flow. Consequently, we may rely on third-party sources to fund our capital needs.
Our access to third-party sources of capital depends on a number of factors, including general market conditions, the
market’s perception of our business prospects and growth potential, our current and expected future earnings, funds from
operations, our cash flow and cash distributions, and the market price per share of Digital Realty Trust, Inc.’s common
stock. We cannot assure you that we will be able to obtain equity or debt financing at all or on terms favorable or
acceptable to us. Any additional debt we incur will increase our leverage. Further, equity markets have experienced high
volatility recently and we cannot assure you that we will be able to raise capital through the sale of equity securities at all
or on favorable terms. Sales of equity on unfavorable terms could result in substantial dilution to Digital Realty Trust,
Inc.’s common stockholders and Digital Realty Trust, L.P.’s unitholders. In addition, we may be forced to dispose of one
or more of our properties, possibly on disadvantageous terms.
If we cannot obtain capital from third-party sources, we may not be able to acquire or develop data centers when
strategic opportunities exist, satisfy our debt service obligations, pay cash dividends to Digital Realty Trust, Inc.’s
stockholders or make distributions to Digital Realty Trust, L.P.’s unitholders.
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Declining real estate valuations, impairment charges and illiquidity of real estate investments could adversely
affect our earnings and financial condition.
We review each of our properties for indicators that its carrying amount may not be recoverable. Examples of such
indicators may include a significant decrease in the market price, a significant adverse change in how the property is
being used or expected to be used based on the underwriting at the time of acquisition, an accumulation of costs
significantly in excess of the amount originally expected for the acquisition or development, a change in our intended
holding period due to our intention to sell an asset, or a history of operating or cash flow losses. When such impairment
indicators exist, we review an estimate of the future undiscounted net cash flows (excluding interest charges) expected to
result from the real estate investment’s or group of properties that operate together as a group use and eventual
disposition and compare it to the carrying value of the property or asset group. We consider factors such as future
operating income, trends and prospects, as well as the effects of leasing demand, competition and other factors. If our
future undiscounted net cash flow evaluation indicates that we are unable to recover the carrying value of a real estate
investment, an impairment loss is recorded to the extent that the carrying value exceeds the estimated fair value of the
property or asset group. These losses have a direct impact on our net income because recording an impairment loss
results in an immediate negative adjustment to net income. The evaluation of anticipated cash flows is highly subjective
and is based in part on assumptions regarding future occupancy, rental rates and capital requirements that could differ
materially from actual results in future periods. A worsening real estate market may cause us to reevaluate the
assumptions used in our impairment analysis. These impairment charges could be significant and could adversely affect
our financial condition, results of operations and cash available for distribution.
Because real estate investments are relatively illiquid and because there may be even fewer buyers for our specialized
real estate, our ability to promptly sell properties in our portfolio in response to adverse changes in their performance
may be limited, which may harm our financial condition. Further, Digital Realty Trust, Inc. is subject to provisions in the
Code that limit a REIT’s ability to dispose of properties, which limitations are not applicable to other types of real estate
companies. See “Risks Related to Our Organizational Structure—Digital Realty Trust, Inc.’s duty to its stockholders
may conflict with the interests of Digital Realty Trust, L.P.’s unitholders—Tax consequences upon sale or refinancing.”
While Digital Realty Trust, Inc. has exclusive authority under Digital Realty Trust, L.P.’s limited partnership agreement
to determine whether, when, and on what terms to sell a property, such decisions may require the approval of Digital
Realty Trust, Inc.’s Board of Directors. These limitations may affect our ability to sell properties.
This lack of liquidity and the Code restrictions may limit our ability to adjust our portfolio promptly in response to
changes in economic or other conditions and, as a result, could adversely affect our financial condition, results of
operations, cash flow, cash available for distribution and ability to access capital necessary to meet our debt payments
and other obligations.
Our success depends on key personnel whose continued service is not guaranteed.
We depend on the efforts of key personnel of our Company, particularly Andrew P. Power, our President & Chief
Executive Officer, and Matthew Mercier, our Chief Financial Officer. They are important to our success for many
reasons, including that each has a national or regional reputation in our industry and the investment community that
attracts investors and business and investment opportunities and assists us in negotiations with investors, lenders,
existing and potential customers and industry personnel. If we lost their services, our business and investment
opportunities and our relationships with lenders and other capital markets participants, existing and prospective
customers and industry personnel could suffer. Many of our Company’s other senior employees also have strong
technology, finance and real estate industry reputations. As a result, we have greater access to potential acquisitions,
financing, leasing and other opportunities, and are better able to negotiate with customers. As the number of our
competitors increases, it becomes more likely that a competitor would attempt to hire certain of these individuals away
from our Company. The loss of any of these key personnel would result in the loss of these and other benefits and could
materially and adversely affect our results of operations.
We also depend on the talents and efforts of highly skilled technical individuals. Our success depends on our continuing
ability to identify, hire, develop, motivate, and retain highly skilled technical personnel for all areas of our organization.
Competition in our industry for qualified technical employees is intense, and the availability of qualified technical
personnel is not guaranteed.
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We may have difficulty managing our growth.
We have significantly and rapidly expanded the size of our Company. Our growth may significantly strain our
management, operational and financial resources and systems. In addition, as a reporting company, we are subject to the
reporting requirements of the Securities Exchange Act of 1934 and the Sarbanes-Oxley Act of 2002, or the Sarbanes-
Oxley Act. The requirements of these rules and regulations subject us to certain accounting, legal and financial
compliance costs and may strain our management and financial, legal and operational resources and systems. An
inability to manage our growth effectively or the increased strain on our management of our resources and systems could
result in deficiencies in our disclosure controls and procedures or our internal control over financial reporting and could
negatively impact financial condition, results of operations and our cash available for distribution.
Potential losses may not be covered by insurance.
We currently carry commercial general liability, property, business interruption, including loss of rental income, and
other insurance policies to cover insurable risks to our Company. We select policy specifications, insured limits and
deductibles which we believe to be appropriate and adequate given the relative risk of loss, the cost of the coverage and
standard industry practices. Our insurance policies contain industry standard exclusions and we do not carry insurance
for generally uninsurable perils, such as loss from war or nuclear reaction. A significant portion of our properties are
located in seismically active zones such as California, which represents approximately 7% of our portfolio’s annualized
rent as of December 31, 2023. One catastrophic event, for example, in California, could significantly impact multiple
properties, the aggregate deductible amounts could be significant and the limits we purchase could prove to be
insufficient, which could materially and adversely impact our business, financial condition and results of operations.
Furthermore, a catastrophic regional event could also severely impact some of our insurers rendering them insolvent or
unable to fully pay on claims despite their current financial strength. We may discontinue purchasing insurance against
earthquake, flood or windstorm or other perils on some or all of our properties in the future if the cost of premiums for
any of these policies exceeds, in our judgment, the value of the coverage relative to the risk of loss.
In addition, many of our buildings contain extensive and highly valuable technology-related improvements. Under the
terms of our agreements with customers, customers are obligated to maintain adequate insurance coverage applicable to
such improvements and under most circumstances use their insurance proceeds to restore such improvements after a
casualty event. In the event of a casualty or other loss involving one of our buildings with extensive installed tenant
improvements, our customers may have the right to terminate their leases if we do not rebuild the base building within
prescribed times. In such cases, the proceeds from customers’ insurance will not be available to us to restore the
improvements, and our insurance coverage may be insufficient to replicate the technology-related improvements made
by such customers. Furthermore, the terms of our mortgage indebtedness at certain of our properties may require us to
pay insurance proceeds over to our lenders under certain circumstances, rather than use the proceeds to repair the
property. If we or one or more of our customers experience a loss which is uninsured or which exceeds policy limits, we
could lose the capital invested in the damaged properties as well as the anticipated future cash flows from those
properties. In addition, if the damaged properties are subject to recourse indebtedness, we would continue to be liable for
the indebtedness, even if these properties were irreparably damaged.
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We could incur significant costs related to environmental matters, including from government regulation, private
litigation, and existing conditions at some of our properties.
Under various laws relating to the protection of the environment in the United States, as well as in many jurisdictions in
which we operate, a current or previous owner or operator of real estate may be liable for contamination resulting from
the presence or discharge of hazardous or toxic substances at a property, and may be required to investigate and clean up
such contamination at or emanating from a property. Such laws often impose liability without regard to whether the
owner or operator knew of, or was responsible for, the presence of the contaminants, and the liability may be joint and
several. In the United States, the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, or
CERCLA, established a regulatory and remedial program intended to provide for the investigation and clean-up of
facilities where, or from which, a release of any hazardous substance into the environment has occurred or is threatened.
CERCLA’s primary mechanism for remedying such problems is to impose strict joint and several liability for clean-up
of facilities on current owners and operators of the site, former owners and operators of the site at the time of the
disposal of the hazardous substances, any person who arranges for the transportation, disposal or treatment of the
hazardous substances, and the transporters who select the disposal and treatment facilities, regardless of the care
exercised by such persons. CERCLA also imposes liability for the cost of evaluating and remedying any damage to
natural resources. The costs of CERCLA investigation and clean-up can be very substantial. CERCLA also authorizes
the imposition of a lien in favor of the United States on all real property subject to, or affected by, a remedial action for
all costs for which a party is liable. Subject to certain procedural restrictions, CERCLA gives a responsible party the
right to bring a contribution action against other responsible parties for their allocable shares of investigative and
remedial costs. Our ability to obtain reimbursement from others for their allocable shares of such costs would be limited
by our ability to find other responsible parties and prove the extent of their responsibility, their financial resources, and
other procedural requirements. Various U.S. state laws, as well as laws in other jurisdictions in which we operate, also
impose in certain cases strict joint and several liability for investigation, clean-up and other damages associated with
hazardous substance releases.
Previous owners used some of our properties for industrial and manufacturing purposes, and those properties may
contain some level of environmental contamination. Independent environmental consultants have conducted Phase I or
similar environmental site assessments on a majority of the properties in our portfolio. Site assessments are intended to
discover and evaluate information regarding the environmental condition of the surveyed property and surrounding
properties. These assessments do not generally include soil samplings, subsurface investigations or an asbestos survey
and the assessments may fail to reveal all environmental conditions, liabilities or compliance concerns. In addition,
material environmental conditions, liabilities or compliance concerns may have arisen after these reviews were
completed or may arise in the future. We could be held jointly and severally liable under CERCLA and various state,
local and national laws for the investigation and remediation of environmental contamination on our properties caused
by previous owners or operators. Further, fuel storage tanks are present at most of our properties, and if releases were to
occur, we may be liable for the costs of cleaning any resulting contamination. The presence of contamination or the
failure to remediate contamination at our properties may expose us to third-party liability or materially adversely affect
our ability to sell, lease or develop the real estate or to borrow using the real estate as collateral.
In addition, some of our customers, particularly those in the biotechnology and life sciences industry and those in the
technology manufacturing industry, routinely handle hazardous substances and wastes as part of their operations at our
properties. Environmental laws and regulations subject our customers, and potentially us, to liability resulting from these
activities or from previous industrial or retail uses of those properties. We could be held jointly and severally liable
under CERCLA and various state, local and national laws for the investigation and remediation of hazardous substances
released by our customers on our properties. Environmental liabilities could also affect a customer’s ability to make
rental payments to us. We cannot assure you that costs of investigation and remediation of environmental matters will
not affect our ability to pay dividends to Digital Realty Trust, Inc.’s stockholders and distributions to Digital Realty
Trust, L.P.’s unitholders or that such costs or other remedial measures will not have a material adverse effect on our
business, assets or results of operations.
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Some of our properties may contain asbestos-containing building materials and lead-based paint. Environmental laws
require that asbestos-containing building materials and lead-based paint be properly managed and maintained, and may
impose fines and penalties on building owners or operators for failure to comply with these requirements. These laws
may also allow third parties to seek recovery from owners or operators for personal injury associated with exposure to
asbestos-containing building materials and lead-based paint.
Our properties and their uses often require permits and entitlements from various government agencies, including
permits and entitlements related to zoning and land use. Certain permits from state or local environmental regulatory
agencies, including regulators of air quality, are usually required to install and operate diesel-powered generators, which
provide emergency back-up power at most of our facilities. These permits often set emissions limits for certain air
pollutants, including oxides of nitrogen. In addition, various federal, state, and local environmental, health and safety
requirements, such as fire requirements and treated and storm water discharge requirements, apply to some of our
properties. Our ability to comply with, as well as changes to, applicable regulations, such as air quality regulations, or
the permit requirements for equipment at our facilities, could hinder or prevent our construction or operation of data
center facilities.
Governmental authorities have in the past sought to restrict data center development based on environmental
considerations. For example, governmental authorities in locations where we operate have imposed moratoria on data
center development, citing concerns about energy usage and requiring new data centers to meet energy efficiency
requirements. Some government agencies have also sought to restrict the use of diesel generators for back-up power. We
may face higher costs from any laws requiring enhanced energy efficiency measures, changes to cooling systems, caps
on energy usage, land use restrictions, limitations on back-up power sources, or other environmental requirements.
Moratoria on data center construction could hinder our ability to construct new data centers.
Also, drought conditions in certain markets have resulted in water usage restrictions and proposals to further restrict
water usage. Our data center facilities could face restrictions on water usage, water efficiency mandates, or higher water
prices. Climate change could also limit water availability. In addition, sea level rise and more frequent and severe
weather events caused or contributed to by climate change pose physical risks to our facilities. Additional risks related to
our business and operations as a result of climate change include both physical and transition risks such as:
Higher energy costs (e.g., due to more extreme weather events, extreme temperatures or increased demand for
limited resources);
Increased environmental regulations impacting the cost to develop, or the ability to develop in certain areas;
Higher costs of materials due to environmental impacts from extraction and processing of raw materials and
production of finished goods;
Higher costs of supply chain services, with potential supply chain disruptions related to climate change; and
Lost revenue or higher expenses related to climate change events (e.g., higher insurance costs, uninsured losses,
diminished customer retention in areas subject to extreme weather or resource availability constraints).
The environmental laws and regulations to which our properties are subject may change in the future, and new laws and
regulations may be created. Future laws, ordinances or regulations may impose additional material environmental
liability. Such laws include those directly regulating our climate change impacts and those which regulate the climate
change impacts of companies with which we do business, such as utilities providing our facilities with electricity. See
“Item 1. Business—Regulations—Environmental Matters—Climate change legislation.” We do not know if or how the
requirements will change, but changes may require that we make significant unanticipated expenditures, and such
expenditures may materially adversely impact our financial condition, cash flow, results of operations, cash available for
distributions, Digital Realty Trust, Inc.’s common stock’s per share trading price, our competitive position and ability to
satisfy our debt service obligations.
38
We may incur significant costs complying with applicable laws and governmental regulations, including the
Americans with Disabilities Act.
Our business is subject to regulation under a wide variety of U.S. federal, state and local laws, regulations and policies,
including those imposed by the SEC, the Sarbanes-Oxley Act of 2002, the Dodd-Frank Wall Street Reform and
Consumer Protection Act and the NYSE, as well as applicable local, state, and national labor laws. Although we have
policies and procedures designed to comply with applicable laws and regulations, failure to comply with the various
laws and regulations may result in civil and criminal liability, fines and penalties and increased costs of compliance.
Under the Americans with Disabilities Act of 1990, or the ADA, all public accommodations must meet federal
requirements related to access and use by disabled persons. We have not conducted an audit or investigation of all of our
properties to determine our compliance with the ADA or similar laws of other jurisdictions in which we operate. If one
or more of the properties in our portfolio does not comply with the ADA or such other laws, then we would be required
to incur additional costs to bring the property into compliance. Additional federal, state and local laws also may require
modifications to our properties, or restrict our ability to renovate our properties. We cannot predict the ultimate cost of
compliance with the ADA or other similar laws. If we incur substantial costs to comply with the ADA and any other
similar legislation or are subject to awards of damages to private litigants, our financial condition, results of operations,
cash flow, cash available for distribution and ability to satisfy our debt service obligations could be materially adversely
affected.
The properties in our portfolio are subject to various federal, state and local regulations, such as state and local fire and
life safety regulations. If we fail to comply with these various regulations, we may have to pay fines or damage awards
to private litigants. In addition, we do not know whether existing regulations will change or whether future regulations
will require us to make significant unanticipated expenditures that will materially adversely impact our financial
condition, results of operations, cash flow, cash available for distribution and ability to satisfy our debt service
obligations.
Our business could be adversely impacted if there are deficiencies in our disclosure controls and procedures or
internal control over financial reporting.
The design and effectiveness of our disclosure controls and procedures and internal control over financial reporting may
not prevent all errors, misstatements or misrepresentations. While management will continue to review the effectiveness
of our disclosure controls and procedures and internal control over financial reporting, there can be no guarantee that our
internal control over financial reporting will be effective in accomplishing all control objectives all of the time.
Furthermore, our disclosure controls and procedures and internal control over financial reporting with respect to entities
that we do not control or manage may be substantially more limited than those we maintain with respect to the
subsidiaries that we have controlled or managed over the course of time. Deficiencies, including any material weakness,
in our internal control over financial reporting which may occur in the future could result in misstatements of our results
of operations, restatements of our financial statements, a decline in Digital Realty Trust, Inc.’s stock price, or otherwise
materially adversely affect our business, reputation, results of operations, financial condition or liquidity.
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Risks Related to Our Organizational Structure
The interests of Digital Realty Trust, Inc.’s stockholders may conflict with the interests of Digital Realty
Trust, L.P.’s unitholders.
Conflicts of interest may exist or could arise in the future as a result of the relationships between Digital Realty Trust,
Inc. and its stockholders, on the one hand, and Digital Realty Trust, L.P. and its partners, on the other. Digital Realty
Trust, Inc.’s directors and officers have duties to Digital Realty Trust, Inc. and its stockholders under Maryland law in
connection with their management of our Company. At the same time, Digital Realty Trust, Inc., as general partner, has
fiduciary duties under Maryland law to Digital Realty Trust, L.P. and to its limited partners in connection with the
management of our Operating Partnership. Digital Realty Trust, Inc.’s duties as general partner to Digital Realty Trust,
L.P. and its partners may come into conflict with the duties of Digital Realty Trust, Inc.’s directors and officers to
Digital Realty Trust, Inc. and its stockholders. Under Maryland law, a general partner of a Maryland limited partnership
owes its limited partners the duties of loyalty and care, which must be discharged consistently with the obligation of
good faith and fair dealing, unless the partnership agreement provides otherwise. The partnership agreement of Digital
Realty Trust, L.P. provides that for so long as Digital Realty Trust, Inc. owns a controlling interest in Digital Realty
Trust, L.P., any conflict that cannot be resolved in a manner not adverse to either Digital Realty Trust, Inc.’s
stockholders or the limited partners will be resolved in favor of Digital Realty Trust, Inc.’s stockholders.
The provisions of Maryland law that allow the fiduciary duties of a general partner to be modified by a partnership
agreement have not been tested in a court of law, and we have not obtained an opinion of counsel covering the
provisions set forth in the partnership agreement that purport to waive or restrict Digital Realty Trust, Inc.’s fiduciary
duties.
Digital Realty Trust, Inc.’s stockholders and Digital Realty Trust, L.P.’s unitholders are also subject to the following
additional conflict of interest:
Tax consequences upon sale or refinancing. Sales of properties and repayment of certain indebtedness will affect
holders of common units in Digital Realty Trust, L.P. and Digital Realty Trust, Inc.’s stockholders differently.
Consequently, these holders of common units in Digital Realty Trust, L.P. may have different objectives regarding the
appropriate pricing and timing of any such sale or repayment of debt. While Digital Realty Trust, Inc. has exclusive
authority under the partnership agreement of Digital Realty Trust, L.P. to determine when to refinance or repay debt or
whether, when, and on what terms to sell a property, such decisions may require the approval of Digital Realty Trust,
Inc.’s Board of Directors. Certain of Digital Realty Trust, Inc.’s directors and executive officers could exercise their
influence in a manner inconsistent with the interests of some, or a majority, of Digital Realty Trust, L.P.’s unitholders,
including in a manner which could prevent completion of a sale of a property or the repayment of indebtedness.
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Digital Realty Trust, Inc.’s charter, Digital Realty Trust, L.P.’s partnership agreement and Maryland law contain
provisions that may delay, defer or prevent a change of control transaction.
These provisions include the following:
Digital Realty Trust, Inc.’s charter, including the articles supplementary governing its preferred stock, contains 9.8%
ownership limits. Digital Realty Trust, Inc.’s charter, subject to certain exceptions, authorizes Digital Realty Trust,
Inc.’s Board of Directors to take such actions as are necessary and desirable to preserve Digital Realty Trust, Inc.’s
qualification as a REIT and to limit any person to actual or constructive ownership of no more than 9.8% (by value or by
number of shares, whichever is more restrictive) of the outstanding shares of Digital Realty Trust, Inc.’s common stock,
9.8% (by value or by number of shares, whichever is more restrictive) of the outstanding shares of any series of Digital
Realty Trust, Inc.’s preferred stock and 9.8% of the value of Digital Realty Trust, Inc.’s outstanding capital stock.
Digital Realty Trust, Inc.’s Board of Directors, in its sole discretion, may exempt (prospectively or retroactively) a
proposed transferee from the ownership limit. However, Digital Realty Trust, Inc.’s Board of Directors may not grant an
exemption from the ownership limit to any proposed transferee whose direct or indirect ownership of more than 9.8% of
the outstanding shares of Digital Realty Trust, Inc.’s common stock, more than 9.8% of the outstanding shares of any
series of Digital Realty Trust, Inc.’s preferred stock or more than 9.8% of the value of Digital Realty Trust, Inc.’s
outstanding capital stock could jeopardize Digital Realty Trust, Inc.’s status as a REIT. These restrictions on
transferability and ownership will not apply if Digital Realty Trust, Inc.’s Board of Directors determines that it is no
longer in Digital Realty Trust, Inc.’s best interests to attempt to qualify, or to continue to qualify, as a REIT or that
compliance is no longer required for REIT qualification. The ownership limit may delay, defer or prevent a transaction
or a change of control that might be in the best interests of Digital Realty Trust, Inc.’s stockholders and Digital Realty
Trust, L.P.’s unitholders.
Digital Realty Trust, L.P.’s partnership agreement contains provisions that may delay, defer or prevent a change of
control transaction. Digital Realty Trust, L.P.’s partnership agreement provides that Digital Realty Trust, Inc. may not
engage in any merger, consolidation or other combination with or into another person, any sale of all or substantially all
of its assets or any reclassification, recapitalization or change of its outstanding equity interests unless the transaction is
approved by the holders of common units and long-term incentive units representing at least 35% of the
aggregate percentage interests of all holders of common units and long-term incentive units and either:
all limited partners will receive, or have the right to elect to receive, for each common unit an amount of
cash, securities or other property equal to the product of the number of shares of Digital Realty Trust, Inc.
common stock into which a common unit is then exchangeable and the greatest amount of cash, securities
or other property paid in consideration of each share of Digital Realty Trust, Inc.’s common stock in
connection with the transaction (provided that, if, in connection with the transaction, a purchase, tender or
exchange offer is made to and accepted by the holders of more than 50% of the shares of Digital Realty
Trust, Inc. common stock, each holder of common units will receive, or have the right to elect to receive,
the greatest amount of cash, securities or other property which such holder would have received if it
exercised its right to redemption and received shares of Digital Realty Trust, Inc. common stock in
exchange for its common units immediately prior to the expiration of such purchase, tender or exchange
offer and thereupon accepted such purchase, tender or exchange offer and the transaction was then
consummated); or
the following conditions are met:
o
o
substantially all of the assets directly or indirectly owned by the surviving entity in the transaction
are held directly or indirectly by Digital Realty Trust, L.P. or another limited partnership or
limited liability company which is the survivor of a merger, consolidation or combination of assets
with Digital Realty Trust, L.P., which we refer to as the surviving partnership;
the holders of common units and long-term incentive units own a percentage interest of the
surviving partnership based on the relative fair market value of Digital Realty Trust, L.P.’s net
assets and the other net assets of the surviving partnership immediately prior to the consummation
of such transaction;
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o
o
the rights, preferences and privileges of the holders of interests in the surviving partnership are at
least as favorable as those in effect immediately prior to the consummation of such transaction and
as those applicable to any other limited partners or non-managing members of the surviving
partnership; and
the rights of the limited partners or non-managing members of the surviving partnership include at
least one of the following: (i) the right to redeem their interests in the surviving partnership for the
consideration available to such persons pursuant to Digital Realty Trust, L.P.’s partnership
agreement; or (ii) the right to redeem their interests for cash on terms equivalent to those in effect
with respect to their common units immediately prior to the consummation of such transaction (or,
if the ultimate controlling person of the surviving partnership has publicly traded common equity
securities, for such common equity securities, with an exchange ratio based on the determination
of relative fair market value of such securities and the shares of Digital Realty Trust, Inc. common
stock).
These provisions may discourage others from trying to acquire control of Digital Realty Trust, Inc. and may delay, defer
or prevent a change of control transaction that might be in the best interests of Digital Realty Trust, Inc.’s stockholders
and Digital Realty Trust, L.P.’s unitholders.
The change of control conversion features of Digital Realty Trust, Inc.’s preferred stock may make it more difficult
for a party to take over our Company or discourage a party from taking over our Company. Upon the occurrence of
specified change of control transactions, holders of our series J preferred stock, series K preferred stock and series L
preferred stock will have the right (unless, prior to the change of control conversion date, we have provided or provide
notice of our election to redeem such preferred stock) to convert some or all of their series J preferred stock, series K
preferred stock or series L preferred stock, as applicable, into shares of our common stock (or equivalent value of
alternative consideration), subject to caps set forth in the articles supplementary governing the applicable series of
preferred stock. The change of control conversion features of the series J preferred stock, series K preferred stock and
series L preferred stock may have the effect of discouraging a third party from making an acquisition proposal for our
Company or of delaying, deferring or preventing certain change of control transactions of our Company under
circumstances that otherwise could provide the holders of our common stock, series J preferred stock, series K preferred
stock and series L preferred stock with the opportunity to realize a premium over the then-current market price or that
stockholders may otherwise believe is in their best interests.
Digital Realty Trust, Inc.’s Board of Directors could amend Digital Realty Trust, Inc.’s charter to increase or
decrease the number of authorized shares of stock and Digital Realty Trust, Inc. could issue stock without
stockholder approval. Digital Realty Trust, Inc.’s charter authorizes Digital Realty Trust, Inc.’s Board of Directors,
without stockholder approval, to amend the charter from time to time to increase or decrease the aggregate number of
authorized shares of stock or the number of authorized shares of stock of any class or series, to authorize the issuance of
authorized but unissued shares of Digital Realty Trust, Inc.’s common stock or preferred stock and, subject to the voting
rights of holders of preferred stock, to classify or reclassify any unissued shares of Digital Realty Trust, Inc.’s common
stock or preferred stock into other classes of series of stock and to set the preferences, rights and other terms of such
classified or reclassified shares. Although Digital Realty Trust, Inc.’s Board of Directors has no such intention at the
present time, it could establish an additional class or series of preferred stock that could, depending on the terms of such
class or series, delay, defer or prevent a transaction or a change of control that might be in the best interest of Digital
Realty Trust, Inc.’s stockholders and Digital Realty Trust, L.P.’s unitholders.
Certain provisions of Maryland law could inhibit changes in control. Certain provisions of the Maryland General
Corporation Law, or MGCL, may have the effect of impeding a third party from making a proposal to acquire Digital
Realty Trust, Inc. or of impeding a change of control under circumstances that otherwise could be in the best interests of
Digital Realty Trust, Inc.’s stockholders and Digital Realty Trust, L.P.’s unitholders, including:
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“business combination” provisions that, subject to limitations, prohibit certain business combinations between
Digital Realty Trust, Inc. and an “interested stockholder” (defined generally as any person who beneficially
owns, directly or indirectly, 10% or more of the voting power of the outstanding shares of Digital Realty Trust,
Inc.’s voting stock or an affiliate or associate of Digital Realty Trust, Inc. who, at any time within the two-year
period prior to the date in question, was the beneficial owner, directly or indirectly, of 10% or more of the
voting power the then outstanding shares of Digital Realty Trust, Inc.’s of stock) or an affiliate thereof for five
years after the most recent date on which the stockholder becomes an interested stockholder, and thereafter
impose special appraisal rights and supermajority voting requirements on these combinations; and
“control share” provisions that provide that “control shares” of Digital Realty Trust, Inc. (defined as shares
which, when aggregated with other shares controlled by the stockholder (except solely by virtue of a revocable
proxy), entitle the stockholder to exercise one of three increasing ranges of voting power in electing directors)
acquired in a “control share acquisition” (defined as the direct or indirect acquisition of ownership or control of
issued and outstanding “control shares”) have no voting rights except to the extent approved by Digital Realty
Trust, Inc.’s stockholders by the affirmative vote of at least two-thirds of all the votes entitled to be cast on the
matter, excluding all interested shares.
Digital Realty Trust, Inc. has opted out of these provisions of the MGCL, in the case of the business combination
provisions of the MGCL by resolution of its Board of Directors, and in the case of the control share provisions of the
MGCL pursuant to a provision in its bylaws. However, Digital Realty Trust, Inc.’s Board of Directors may by resolution
elect to opt in to the business combination provisions of the MGCL and Digital Realty Trust, Inc. may, by amendment to
its bylaws, opt in to the control share provisions of the MGCL in the future.
The provisions of Digital Realty Trust, Inc.’s charter governing removal of directors and the advance notice provisions
of Digital Realty Trust, Inc.’s bylaws could delay, defer or prevent a change of control or other transaction that might be
in the best interests of Digital Realty Trust, Inc.’s stockholders and Digital Realty Trust, L.P.’s unitholders. Likewise, if
Digital Realty Trust, Inc.’s board of directors were to opt in to the business combination provisions of the MGCL or the
provisions of Title 3, Subtitle 8 of the MGCL not currently applicable to Digital Realty Trust, Inc., or if the provision in
Digital Realty Trust, Inc.’s bylaws opting out of the control share acquisition provisions of the MGCL were rescinded,
these provisions of the MGCL could have similar effects.
The conversion rights of Digital Realty Trust, Inc.’s preferred stock may be detrimental to holders of Digital
Realty Trust, Inc.’s common stock.
Digital Realty Trust, Inc. currently has outstanding 8,000,000 shares of 5.250% series J cumulative redeemable preferred
stock, 8,400,000 shares of 5.850% series K cumulative redeemable preferred stock and 13,800,000 shares of 5.200%
series L cumulative redeemable preferred stock, each series of which may be converted into Digital Realty Trust, Inc.’s
common stock upon the occurrence of limited specified change in control transactions. The conversion of the series J
preferred stock, series K preferred stock or series L preferred stock for Digital Realty Trust, Inc.’s common stock would
dilute stockholder ownership in Digital Realty Trust, Inc. and unitholder ownership in Digital Realty Trust, L.P., and
could adversely affect the market price of Digital Realty Trust, Inc. common stock and could impair Digital Realty
Trust, Inc.’s ability to raise capital through the sale of additional equity securities.
Digital Realty Trust, Inc.’s rights and the rights of its stockholders to take action against its directors and officers
are limited.
Maryland law provides that Digital Realty Trust, Inc.’s directors have no liability in their capacities as directors if they
perform their duties in good faith, in a manner they reasonably believe to be in the Company’s best interests and with the
care that an ordinarily prudent person in a like position would use under similar circumstances. As permitted by the
MGCL, Digital Realty Trust, Inc.’s charter limits the liability of Digital Realty Trust, Inc.’s directors and officers to the
Company and its stockholders for money damages, except for liability resulting from:
actual receipt of an improper benefit or profit in money, property or services; or
a final judgment based upon a finding of active and deliberate dishonesty by the director or officer that was
material to the cause of action adjudicated.
43
In addition, Digital Realty Trust, Inc.’s charter authorizes Digital Realty Trust, Inc. to obligate itself, and Digital Realty
Trust, Inc.’s bylaws require it, to indemnify Digital Realty Trust, Inc.’s directors and officers for actions taken by them
in those capacities and, without requiring a preliminary determination of the ultimate entitlement to indemnification, to
pay or reimburse their reasonable expenses in advance of final disposition of a proceeding to the maximum extent
permitted by Maryland law. Further, Digital Realty Trust, Inc. has entered into indemnification agreements with its
directors and officers. As a result, Digital Realty Trust, Inc. and its stockholders may have more limited rights against its
directors and officers than might otherwise exist under common law. Accordingly, in the event that actions taken in good
faith by any of Digital Realty Trust, Inc.’s directors or officers impede the performance of the Company, the Company’s
stockholders’ ability to recover damages from that director or officer will be limited.
Risks Related to Taxes and Digital Realty Trust, Inc.’s Status as a REIT
Failure to qualify as a REIT would have significant adverse consequences to Digital Realty Trust, Inc. and its
stockholders and to Digital Realty Trust, L.P. and its unitholders.
Digital Realty Trust, Inc. has operated and intends to continue operating in a manner that it believes will allow it to
qualify as a REIT for federal income tax purposes under the Code. Digital Realty Trust, Inc. has not requested and does
not plan to request a ruling from the Internal Revenue Service, or the IRS, that it qualifies as a REIT. Qualification as a
REIT involves the application of highly technical and complex Code provisions for which there are only limited judicial
and administrative interpretations. The complexity of these provisions and of the applicable Treasury regulations
promulgated under the Code, or Treasury Regulations, is greater in the case of a REIT that, like Digital Realty
Trust, Inc., holds its assets through a partnership. The determination of various factual matters and circumstances not
entirely within Digital Realty Trust, Inc.’s control may affect its ability to qualify as a REIT. In order to qualify as a
REIT, Digital Realty Trust, Inc. must satisfy a number of requirements, including requirements regarding the ownership
of its stock, requirements regarding the composition of its assets and requirements regarding the source of its income.
Also, Digital Realty Trust, Inc. must make distributions to stockholders aggregating annually at least 90% of its REIT
taxable income, excluding any net capital gains.
Furthermore, we own and may acquire direct or indirect interests in one or more entities that have elected or will elect to
be taxed as REITs under the Code, or a subsidiary REIT. Provided that each subsidiary REIT qualifies as a REIT, our
interest in such subsidiary REIT will be treated as a qualifying real estate asset for purposes of the REIT asset tests. To
qualify as a REIT, the subsidiary REIT must independently satisfy all of the REIT qualification requirements. The
failure of a subsidiary REIT to qualify as a REIT could have an adverse effect on Digital Realty Trust, Inc.’s ability to
comply with the REIT income and asset tests, and thus its ability to qualify as a REIT.
If Digital Realty Trust, Inc. loses its REIT status, it will face serious tax consequences that would substantially reduce its
cash available for distribution, including cash available to pay dividends to its stockholders, for each of the years
involved because:
Digital Realty Trust, Inc. would not be allowed a deduction for dividends paid to stockholders in computing its
taxable income and would be subject to federal and state corporate income taxes on its taxable income;
Digital Realty Trust, Inc. also could be subject to a federal alternative minimum tax and possibly increased state
and local taxes; and
unless Digital Realty Trust, Inc. is entitled to relief under applicable statutory provisions, it could not elect to be
taxed as a REIT for four taxable years following the year during which it was disqualified.
In addition, if Digital Realty Trust, Inc. fails to qualify as a REIT, it will not be required to make distributions to
common stockholders, and accordingly, distributions Digital Realty Trust, L.P. makes to its unitholders could be
similarly reduced. As a result of all these factors, Digital Realty Trust, Inc.’s failure to qualify as a REIT could impair
our ability to expand our business and raise capital, and could materially adversely affect the value of Digital Realty
Trust, Inc.’s stock and Digital Realty Trust, L.P.’s units.
44
In certain circumstances, Digital Realty Trust, Inc. may be subject to federal and state taxes as a REIT, which
would reduce its cash available for distribution to its stockholders.
Even if Digital Realty Trust, Inc. qualifies as a REIT for federal income tax purposes, it may be subject to some federal,
state and local taxes on its income or property and, in certain cases, a 100% penalty tax, in the event it sells property as a
dealer. In addition, our domestic taxable REIT subsidiaries, including Digital Services, Inc., could be subject to federal,
state and local taxes, and our foreign properties and companies are subject to tax in the jurisdictions in which they
operate and are located. A domestic taxable REIT subsidiary is subject to U.S. federal income tax as a regular C
corporation. In addition, a 100% excise tax will be imposed on certain transactions between a taxable REIT subsidiary
and its parent REIT that are not conducted on an arm’s length basis. Any federal, state or foreign taxes Digital Realty
Trust, Inc. pays will reduce its cash available for distribution to stockholders.
Dividends payable by REITs do not qualify for the reduced tax rates available for some dividends.
The maximum tax rate applicable to “qualified dividend income” payable to U.S. stockholders that are individuals, trusts
and estates is 20%. Dividends payable by REITs, however, generally are not eligible for these reduced rates. U.S.
stockholders that are individuals, trusts and estates generally may deduct up to 20% of the ordinary dividends (i.e.,
dividends not designated as capital gain dividends or qualified dividend income) received from a REIT for taxable years
beginning before January 1, 2026. Although this deduction reduces the effective tax rate applicable to certain dividends
paid by REITs (generally to 29.6% assuming the stockholder is subject to the 37% maximum rate), such tax rate is still
higher than the tax rate applicable to corporate dividends that constitute qualified dividend income. Accordingly,
investors who are individuals, trusts and estates may perceive investments in REITs to be relatively less attractive than
investments in the stocks of non-REIT corporations that pay dividends treated as qualified dividend income, which could
materially and adversely affect the value of the shares of REITs, including the per share trading price of Digital Realty
Trust, Inc.’s capital stock.
The tax imposed on REITs engaging in “prohibited transactions” may limit our ability to engage in transactions
which would be treated as sales for federal income tax purposes.
A REIT’s net income from prohibited transactions is subject to a 100% penalty tax. In general, prohibited transactions
are sales or other dispositions of property, other than foreclosure property, held primarily for sale to customers in the
ordinary course of business. Although we do not intend to hold any properties that would be characterized as held for
sale to customers in the ordinary course of our business, unless a sale or disposition qualifies under certain statutory safe
harbors, such characterization is a factual determination and no guarantee can be given that the IRS would agree with
our characterization of our properties or that we will always be able to make use of the available safe harbors.
Complying with REIT requirements may cause us to forgo otherwise attractive opportunities or liquidate
otherwise attractive investments.
To qualify as a REIT for federal income tax purposes, Digital Realty Trust, Inc. must continually satisfy tests
concerning, among other things, its sources of income, the nature and diversification of its assets (including its
proportionate share of Digital Realty Trust, L.P.’s assets), the amounts it distributes to its stockholders and the
ownership of its capital stock. If Digital Realty Trust, Inc. were to fail to comply with one or more of the asset tests at
the end of any calendar quarter, it would need to correct the failure within 30 days after the end of the calendar quarter or
qualify for certain statutory relief provisions to avoid losing its REIT qualification and suffering adverse tax
consequences. In order to meet these tests, we may be required to forgo investments we might otherwise make or to
liquidate otherwise attractive investments. Thus, compliance with the REIT requirements may hinder our performance
and reduce amounts available for distribution to Digital Realty Trust, Inc.’s stockholders and Digital Realty Trust, L.P.’s
unitholders.
45
The power of Digital Realty Trust, Inc.’s Board of Directors to revoke Digital Realty Trust, Inc.’s REIT election
without stockholder approval may cause adverse consequences to Digital Realty Trust, Inc.’s stockholders and
Digital Realty Trust, L.P.’s unitholders.
Digital Realty Trust, Inc.’s charter provides that its Board of Directors may revoke or otherwise terminate its REIT
election, without the approval of its stockholders, if the Board determines that it is no longer in Digital Realty Trust,
Inc.’s best interests to continue to qualify as a REIT. If Digital Realty Trust, Inc. ceases to qualify as a REIT, it would
become subject to U.S. federal and state corporate income taxes on its taxable income and it would no longer be required
to distribute most of its taxable income to its stockholders and, accordingly, distributions Digital Realty Trust, L.P.
makes to its unitholders could be similarly reduced.
If Digital Realty Trust L.P. were to fail to qualify as a partnership for federal income tax purposes, Digital Realty
Trust, Inc. would fail to qualify as a REIT and suffer other adverse consequences.
We believe that Digital Realty Trust, L.P. has been organized and operated in a manner that will allow it to be treated as
a partnership, and not an association or publicly traded partnership taxable as a corporation, for federal income tax
purposes. As a partnership, Digital Realty Trust, L.P. is not subject to federal income tax on its income. Instead, each of
its partners, including Digital Realty Trust, Inc., is allocated, and may be required to pay tax with respect to, that
partner’s share of Digital Realty Trust, L.P.’s income. No assurance can be provided, however, that the IRS will not
challenge Digital Realty Trust, L.P.’s status as a partnership for federal income tax purposes or that a court would not
sustain such a challenge. If the IRS were successful in treating Digital Realty Trust, L.P. as an association or publicly
traded partnership taxable as a corporation for federal income tax purposes, Digital Realty Trust, Inc. would fail to meet
the gross income tests and certain of the asset tests applicable to REITs and, accordingly, would cease to qualify as a
REIT. Such REIT qualification failure could impair our ability to expand our business and raise capital, and would
materially adversely affect the value of Digital Realty Trust, Inc.’s stock and Digital Realty Trust, L.P.’s units. Also, the
failure of Digital Realty Trust, L.P. to qualify as a partnership would cause it to become subject to federal corporate
income tax, which would reduce significantly the amount of its cash available for debt service and for distribution to its
partners, including Digital Realty Trust, Inc.
Tax liabilities and attributes inherited in connection with acquisitions may adversely impact our business.
From time to time, we may acquire other corporations or entities and, in connection with such acquisitions, we may
succeed to the historic tax attributes and liabilities of such entities. For example, if we acquire a C corporation and
subsequently dispose of its assets within five years of the acquisition, we could be required to pay tax on any built-in
gain attributable to such assets determined as of the date on which we acquired the assets. In addition, in order to qualify
as a REIT, at the end of any taxable year, we must not have any earnings and profits accumulated in a non-REIT year.
As a result, if we acquire a C corporation, we must distribute the corporation’s earnings and profits accumulated prior to
the acquisition before the end of the taxable year in which we acquire the corporation. We also could be required to pay
the acquired entity’s unpaid taxes even though such liabilities arose prior to the time we acquired the entity.
Changes in U.S. or foreign tax laws and regulations, including changes to tax rates, legislation and other actions
may adversely affect our results of operations, our stockholders, Digital Realty Trust, L.P.’s unitholders and us.
We are headquartered in the United States with subsidiaries and operations globally and are subject to income taxes in
these jurisdictions. Significant judgment is required in determining our provision for income taxes. Although we believe
that we have adequately assessed and accounted for our potential tax liabilities, and that our tax estimates are reasonable,
there can be no assurance that additional taxes will not be due upon audit of our tax returns or as a result of changes to
applicable tax laws. The governments of many of the countries in which we operate may enact changes to the tax laws of
such countries, including changes to the corporate recognition and taxation of worldwide income. The nature and timing
of any changes to each jurisdiction’s tax laws and the impact on our future tax liabilities cannot be predicted with any
accuracy but could materially and adversely impact our results of operations and cash flows.
Additionally, each of our properties is subject to real property and personal property taxes. These taxes may increase as
tax rates change and as the properties are assessed or reassessed by taxing authorities. Any increase in property taxes on
our properties could have a material adverse effect on our revenues and results of operations.
46
Further, the rules dealing with federal income taxation are constantly under review by persons involved in the legislative
process and by the IRS and the U.S. Department of the Treasury. Changes to the tax laws, with or without retroactive
application, could materially and adversely affect Digital Realty Trust, Inc.’s stockholders, Digital Realty Trust, L.P.’s
unitholders and us. We cannot predict how changes in the tax laws might affect our investors and us. New legislation,
Treasury Regulations, administrative interpretations or court decisions could significantly and adversely affect Digital
Realty Trust, Inc.’s ability to qualify as a REIT, the federal income tax consequences of such qualification, or the federal
income tax consequences of an investment in us. Moreover, the law relating to the tax treatment of other entities, or an
investment in other entities, could change, making an investment in such other entities more attractive relative to an
investment in a REIT.
Forward-Looking Statements
We make statements in this report that are forward-looking statements within the meaning of the federal securities laws.
In particular, statements pertaining to our capital resources, portfolio performance, our ability to lease vacant space and
space under development, leverage policy and acquisition and capital expenditure plans, as well as our discussion of
“Factors Which May Influence Future Results of Operations,” contain forward-looking statements. Likewise, all of our
statements regarding anticipated market conditions, demographics and results of operations are forward-looking
statements. You can identify forward-looking statements by the use of forward-looking terminology such as “believes,”
“expects,” “may,” “will,” “should,” “seeks,” “approximately,” “intends,” “plans,” “pro forma,” “estimates” or
“anticipates” or the negative of these words and phrases or similar words or phrases which are predictions of or indicate
future events or trends and 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 an epidemic, pandemic, 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;
47
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 federal income tax purposes;
Digital Realty Trust, L.P.’s failure to qualify as a partnership for federal income tax purposes;
restrictions on our ability to engage in certain business activities;
changes in local, state, federal and international laws and regulations, including related to taxation, real estate
and zoning laws, and increases in real property tax rates; and
the impact of any financial, accounting, legal or regulatory issues or litigation that may affect us.
The risks included here are not exhaustive, and additional factors could adversely affect our business and financial
performance, including factors and risks included in other sections of this report, including under Part I, 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. While forward-looking statements reflect our
good faith beliefs, they are not guaranties 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.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 1C. CYBERSECURITY
Cybersecurity Risk Management and Strategy
We have developed and implemented cybersecurity risk management processes intended to protect the confidentiality,
integrity, and availability of our information systems.
We utilize the United States National Institute of Standards and Technology, Cybersecurity Framework (NIST CSF) in
considering the design and in assessing our processes. This does not imply that we meet any particular technical
standards, specifications, or requirements, only that we use the NIST CSF as a guide to help us identify, assess, and
manage cybersecurity risks relevant to our business.
We have integrated aspects of our cybersecurity risk management processes into our overall risk management program
through, for example, common methodologies, reporting channels and governance processes that apply across the
overall risk management program to other risk areas.
48
Our cybersecurity risk management processes include, but are not limited to:
independent maturity assessments designed to help identify significant cybersecurity risks to our IT
environment and systems;
a cyber resilience team jointly responsible for managing (1) our cybersecurity risk assessment processes, (2) our
security controls, and (3) our response to cybersecurity incidents;
the use of external service providers, where appropriate, to assess, test or otherwise assist with aspects of our
security controls;
cybersecurity awareness training of our employees, incident response personnel, and senior management;
a cybersecurity incident response plan that includes procedures for responding to cybersecurity incidents; and
a risk management process for service providers, suppliers, and vendors that aligns to our compliance
requirements.
We have not identified risks from known cybersecurity threats as a result of any prior cybersecurity incidents that have
materially affected us, including our operations, business strategy, results of operations, or financial condition. We face
complex risks from cybersecurity threats that, if realized, are reasonably likely to materially affect us, including our
operations, business strategy, results of operations, or financial condition. See “Risk Factors—We and our third-party
providers may be vulnerable to cyberattacks and security breaches that could materially disrupt or compromise our
operations, data and results.” There can be no assurance that our cybersecurity risk management processes, including
our policies, controls or procedures, will be fully implemented as currently anticipated, complied with or effective in
protecting our systems and information or in allowing us to recover from a cybersecurity incident.
Cybersecurity Governance
Our Board considers cybersecurity and other information technology risks as part of its risk management and
compliance oversight function. The Board oversees management’s implementation of our cybersecurity risk
management processes and receives reports from management on our cybersecurity risks at least twice a year. In
addition, management updates the Board, as necessary, regarding any material cybersecurity incidents, as well as any
incidents with lesser impact potential. The Board receives briefings from management on our cyber risk management
processes, and it receives presentations on cybersecurity topics from our Chief Technology Officer, Chief Information
Security Officer and Chief Information Officer, internal security staff or external experts as part of the Board’s
continuing education on topics that impact public companies.
Our management team has overall responsibility for assessing and managing material risks from cybersecurity threats,
and for executing on our cybersecurity risk management processes. Our Chief Technology Officer, Chief Information
Officer and Chief Information Security Officer, among others, have decades of combined experience in areas such as
information technology, compliance, and cybersecurity program design and management. Additionally, certain leaders
and personnel within the cybersecurity operations team hold industry certifications, such as Certified Information
Systems Security Professional or Certified Information Security Manager. Our management team works closely with
our cybersecurity operations team to stay informed about and monitor efforts to prevent, detect, mitigate, and remediate
cybersecurity risks and incidents through various means, which may include briefings from internal security personnel,
threat intelligence and other information obtained from governmental, public or private sources, including external
consultants engaged by us, and alerts and reports produced by security tools deployed in the IT, Operational Technology
(OT), and products and services environments.
49
ITEM 2. PROPERTIES
General
In addition to the information in this Item 2, certain information regarding our portfolio is contained in Schedule III
(Financial Statement Schedule) under Part IV, Item 15(a)(2) and which is included in Part II, Item 8.
Our Portfolio
The following table presents an overview of our portfolio of properties, including the 67 data centers held as investments
in unconsolidated entities and developable land, based on information as of December 31, 2023 (amounts in thousands).
All data centers are held in fee simple except as otherwise indicated. Please refer to Note 11. “Debt of the Operating
Partnership” in the Notes to the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on
Form 10-K for a description of all applicable encumbrances as of December 31, 2023.
Metropolitan Area
North America
Northern Virginia
Chicago
New York
Dallas
Silicon Valley
Portland
Phoenix
San Francisco
Atlanta
Toronto
Los Angeles
Seattle
Boston
Houston
Miami
Austin
Charlotte
North America Total
EMEA
London
Frankfurt
Amsterdam
Paris
Marseille
Dublin
Vienna
Zurich
Madrid
Brussels
Stockholm
Copenhagen
Dusseldorf
Athens
Zagreb
Johannesburg
Cape Town
Durban
Nairobi
Mombasa
Maputo
EMEA Total
Asia Pacific
Singapore
Sydney
Melbourne
Seoul
Hong Kong
Asia Pacific Total
Non-Data Center Properties
Data Center
Buildings
Net Rentable
Square Feet (1)
Space Under
Active
Development (Sq Ft) (2)
Space Held for
Development (Sq Ft) (3)
Occupancy
Percentage (4)
1,545
—
158
327
—
291
—
—
20
218
31
—
—
—
—
—
—
2,590
—
1,590
222
656
—
—
133
166
105
80
108
—
71
159
—
1,105
402
—
75
—
—
4,872
7
—
—
—
66
73
—
265
113
107
77
131
—
—
—
314
—
—
—
51
14
—
—
—
1,071
77
—
92
—
38
—
—
—
—
—
—
99
—
—
13
—
—
—
—
23
—
342
—
88
—
—
120
207
264
88.8 %
91.2 %
71.4 %
83.6 %
90.5 %
99.9 %
71.0 %
64.3 %
96.5 %
87.0 %
85.4 %
77.8 %
42.1 %
63.9 %
85.5 %
56.3 %
90.7 %
83.8 %
56.5 %
87.1 %
83.2 %
71.9 %
76.8 %
76.0 %
84.0 %
79.5 %
76.3 %
66.8 %
70.0 %
66.6 %
58.7 %
92.8 %
85.7 %
71.1 %
74.6 %
84.4 %
61.9 %
17.3 %
41.6 %
75.2 %
93.8 %
92.2 %
62.3 %
7.6 %
2.2 %
76.7 %
— %
19
8
12
21
14
3
2
4
4
2
2
1
3
6
2
1
3
107
15
29
12
13
4
9
3
3
4
3
6
3
3
4
1
5
2
1
1
2
1
124
3
4
2
1
1
11
—
5,043
2,672
1,722
3,065
1,524
863
796
844
557
509
591
399
437
393
226
86
95
19,821
1,383
2,134
1,259
1,042
520
553
356
430
304
258
190
226
142
55
22
1,103
326
45
16
35
3
10,402
883
361
147
162
99
1,652
329
50
Metropolitan Area
Managed Unconsolidated Entities
Northern Virginia
Chicago
Silicon Valley
Hong Kong
Toronto
Los Angeles
Lagos
Abuja
Non-Managed Unconsolidated Entities
Sao Paulo
Tokyo
Osaka
Queretaro
Santiago
Rio De Janeiro
Fortaleza
Seattle
Bogota
Data Center
Buildings
Net Rentable
Square Feet (1)
Space Under
Active
Development (Sq Ft) (2)
Space Held for
Development (Sq Ft) (3)
Occupancy
Percentage (4)
12
2
2
1
1
2
1
1
22
25
4
4
3
3
2
1
1
2
45
2,418
790
142
186
104
197
4
1
3,843
1,366
1,272
522
105
119
112
94
51
—
3,641
364
—
—
—
—
—
—
—
364
124
267
62
—
118
—
—
—
—
571
—
—
—
—
—
—
—
—
—
1,198
—
196
583
71
—
—
—
197
2,246
97.9 %
91.3 %
100.0 %
59.1 %
55.8 %
100.0 %
100.0 %
73.0 %
93.7 %
91.8 %
76.2 %
81.4 %
100.0 %
90.1 %
100.0 %
87.0 %
100.0 %
— %
85.3 %
Total
309
39,688
8,470
4,130
81.7 %
Note: Table excludes data centers held for sale. Individual items may not add up to total due to rounding.
(1) Net rentable square feet at a building represents the current square feet at that building under lease as specified in
the lease agreements plus management’s estimate of space available for lease. 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 area. Net rentable square feet includes tenants’ proportional
share of common areas but excludes space held for development.
(2) Space under active development includes current base building and data center projects in progress.
(3) Space held for development includes space held for future data center development, and excludes space under active
development and land held for development.
(4) Excludes space held for development and space under active development. We estimate the total 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 area.
We lease space from third parties under noncancellable leases for: our corporate headquarters, several regional office
locations, certain data centers, and certain equipment. In addition, we are subject to ground leases at certain data centers
primarily in Europe and Singapore.
51
Customer Diversification
The following table sets forth information regarding the 20 largest customers in our portfolio based on annualized
recurring revenue as of December 31, 2023 (dollar amounts in thousands).
Tenant
Fortune 50 Software Company
Social Content Platform
Oracle Corporation
Global Cloud Provider
IBM
Equinix
LinkedIn Corporation
Fortune 25 Investment Grade-Rated Company
Fortune 25 Tech Company
Social Media Platform
Fortune 500 SaaS Provider
Meta Platforms, Inc.
Lumen Technologies, Inc.
Cyxtera
AT&T
Comcast Corporation
JPMorgan Chase & Co.
Rackspace
Verizon
Zayo
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Number
of
Locations
Annualized
Recurring
Revenue (1)
% of Annualized
Recurring
Revenue
Weighted Average
Remaining Lease
Term in Years
$
71
25
38
60
34
16
7
29
53
8
13
48
123
11
75
41
16
24
89
115
418,935
212,198
164,487
156,892
129,569
93,346
81,438
76,737
69,304
62,117
61,889
60,873
49,804
49,361
42,096
40,436
39,629
38,061
34,103
33,781
1,915,056
10.9 %
5.5 %
4.3 %
4.1 %
3.4 %
2.4 %
2.1 %
2.0 %
1.8 %
1.6 %
1.6 %
1.6 %
1.3 %
1.3 %
1.1 %
1.1 %
1.0 %
1.0 %
0.9 %
0.9 %
49.9 %
8.2
4.7
6.4
5.0
2.3
5.9
1.2
2.8
3.6
7.3
2.9
3.8
9.2
7.0
2.8
4.1
3.5
9.5
11.1
2.2
5.9
Total / Weighted Average
$
Note: Represents consolidated portfolio in addition to our managed portfolio of unconsolidated entities based on our
ownership percentage. Our direct customers may be the entities named in the table above or their subsidiaries or
affiliates.
(1) Annualized recurring revenue represents the monthly contractual base rent (defined as cash base rent before
abatements), and interconnection revenue under existing leases as of December 31, 2023 multiplied by 12.
52
Lease Distribution
The following table sets forth information relating to the distribution of leases in the properties in our portfolio, based on
size (in megawatts), excluding approximately 8.5 million square feet of space under active development and
approximately 4.1 million square feet of space held for development at December 31, 2023, under lease as of
December 31, 2023 (dollar and square feet amounts in thousands).
Size
Available
0 - 1 MW
> 1 MW
Other (3)
Total
Total Net
Percentage of Net
Rentable Square Rentable Square
Feet(1)
Feet(1)
Annualized
Rent(2)
Percentage of
Annualized Rent
6,424
5,008
13,730
7,509
32,670
19.7 %
15.3 % $
42.0 %
23.0 %
100.0 % $
—
1,280,715
1,874,806
267,172
3,422,692
—
37.4 %
54.8 %
7.8 %
100.0 %
Note: Represents consolidated portfolio in addition to our managed portfolio of unconsolidated entities based on our
ownership percentage.
(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 area.
(2) Annualized rent represents the monthly contractual base rent (defined as cash base rent before abatements) under
existing leases as of December 31, 2023 multiplied by 12.
(3) Other includes unimproved building shell capacity as well as storage and office space within fully improved data
center facilities.
Lease Expirations
The following table sets forth a summary schedule of the lease expirations for leases in place as of December 31, 2023
plus available space for ten calendar years and thereafter at the properties in our portfolio. The table excludes space that
is currently under active development or held for development. Unless otherwise stated in the footnotes to the table
below, the information set forth in the table assumes that tenants exercise no renewal options and early termination rights
(amounts in thousands, except per square foot amounts).
Percentage
Percentage of
Annualized
Rent Per
Rent Per
Occupied
Annualized
Year
Available
Month to Month (3)
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
Thereafter
Portfolio Total /
Weighted Average
Rent (2)
1.6 % $
Square Feet (1)
19.7 %
Square Footage of of Net Rentable Annualized
Expiring Leases (1)
6,424
519
4,191
3,264
3,074
2,398
1,765
1,827
1,954
1,282
945
614
4,413
86,188
940,076
483,000
414,840
323,292
187,792
180,767
224,259
151,694
109,178
80,866
240,740
12.8 %
10.0 %
9.4 %
7.3 %
5.4 %
5.6 %
6.0 %
3.9 %
2.9 %
1.9 %
13.5 %
Annualized Occupied Square Foot Annualized Rent
Rent (2)
Square Foot at Expiration
at Expiration
2.5 % $
27.5 %
14.1 %
12.1 %
9.4 %
5.5 %
5.3 %
6.6 %
4.4 %
3.2 %
2.4 %
7.0 %
166 $
224
148
135
135
106
99
115
118
116
132
55
167 $
225
152
142
143
116
110
126
132
134
156
65
86,476
942,104
495,513
436,400
343,545
204,508
200,780
246,295
168,630
126,552
95,764
288,388
32,670
100.0 % $ 3,422,692
100.0 % $
130 $
138 $
3,634,956
Note: Represents consolidated portfolio in addition to our managed portfolio of unconsolidated entities based on our
ownership percentage.
53
(1) For some of our properties, we calculate square footage based on factors in addition to contractually leased square
feet, including available power, required support space and common area. 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 area.
(2) Annualized rent represents the monthly contractual base rent (defined as cash base rent before abatements) under
existing leases as of December 31, 2023 multiplied by 12.
(3) Includes leases, licenses, and similar agreements that upon expiration have been automatically renewed on a month-
to-month basis.
ITEM 3. LEGAL PROCEEDINGS
In the ordinary course of our business, we may become subject to various legal proceedings. As of December 31, 2023,
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 4. MINE SAFETY DISCLOSURES
Not applicable.
PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS
AND ISSUER PURCHASES OF EQUITY SECURITIES
Digital Realty Trust, Inc.
Digital Realty Trust, Inc.’s common stock has been listed, and is traded, on the New York Stock Exchange, or the
NYSE, under the symbol “DLR” since October 29, 2004.
Subject to the distribution requirements applicable to REITs under the Code, Digital Realty Trust, Inc. intends, to the
extent practicable, to invest substantially all of the proceeds from sales and refinancings of its assets in real estate-related
assets and other assets. Digital Realty Trust, Inc. may, however, under certain circumstances, make a dividend of capital
or of assets. Such dividends, if any, will be made at the discretion of Digital Realty Trust, Inc.’s Board of Directors.
As of February 21, 2024, there were approximately 65 holders of record of Digital Realty Trust, Inc.’s common stock.
This figure does not reflect the beneficial ownership of shares held in nominee name.
Digital Realty Trust, L.P.
There is no established trading market for Digital Realty Trust, L.P.’s common units of limited partnership. As of
February 21, 2024, there were 73 holders of record of common units, including Digital Realty Trust, L.P.’s general
partner, Digital Realty Trust, Inc.
Digital Realty Trust, L.P. currently intends to continue to make regular quarterly distributions to holders of its common
units. Any future distributions will be declared at the discretion of the Board of Directors of Digital Realty Trust, L.P.’s
general partner, Digital Realty Trust, Inc., and will depend on our actual cash flow, financial condition, capital
requirements, the annual distribution requirements under the REIT provisions of the Code, and such other factors as the
Board of Directors may deem relevant.
54
STOCK PERFORMANCE GRAPH
The following graph compares the yearly change in the cumulative total stockholder return on Digital Realty
Trust, Inc.’s common stock during the period from December 31, 2018 through December 31, 2023, with the cumulative
total returns on the MSCI US REIT Index (RMS) and the S&P 500 Market Index. The comparison assumes that $100
was invested on December 31, 2018 in Digital Realty Trust, Inc.’s common stock and in each of these indices and
assumes reinvestment of dividends, if any.
COMPARISON OF CUMULATIVE TOTAL RETURNS
AMONG DIGITAL REALTY TRUST, INC., S&P 500 INDEX AND RMS INDEX
Assumes $100 invested on December 31, 2018 and
dividends reinvested
To fiscal year ending December 31, 2023
Pricing Date
December 31, 2018
December 31, 2019
December 31, 2020
December 31, 2021
December 31, 2022
December 31, 2023
DLR($)
S&P 500($)
RMS($)
100.0
116.5
140.4
183.4
108.3
151.6
100.0
131.5
155.7
200.4
164.1
207.2
100.0
125.8
116.3
166.4
125.6
142.9
This graph and the accompanying text are not “soliciting material,” are not deemed filed with the SEC and are not to
be incorporated by reference in any filing by us under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, whether made before or after the date hereof and irrespective of any general
incorporation language in any such filing.
The stock price performance shown on the graph is not necessarily indicative of future price performance.
The hypothetical investment in Digital Realty Trust, Inc.’s common stock presented in the stock performance graph
above is based on the closing price of the common stock on December 31, 2018.
55
SALES OF UNREGISTERED EQUITY SECURITIES
Digital Realty Trust, Inc.
None.
Digital Realty Trust, L.P.
During the year ended December 31, 2023, our Operating Partnership issued partnership units in private placements in
reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act, in the amounts and for the
consideration set forth below:
During the year ended December 31, 2023, Digital Realty Trust, Inc. issued an aggregate of 568,671 shares of its
common stock in connection with restricted stock awards for no cash consideration. For each share of common stock
issued by Digital Realty Trust, Inc. in connection with such awards, our Operating Partnership issued a restricted
common unit to Digital Realty Trust, Inc. During the year ended December 31, 2023, our Operating Partnership issued
an aggregate of 568,671 common units to Digital Realty Trust, Inc., as required by our Operating Partnership’s
partnership agreement. During the year ended December 31, 2023, an aggregate of 83,413 shares of its common stock
were forfeited to Digital Realty Trust, Inc. in connection with restricted stock awards for a net issuance of 485,258
shares of common stock.
All other issuances of unregistered equity securities of our Operating Partnership during the year ended
December 31, 2023 have been disclosed previously in filings with the SEC. For all issuances of units to Digital Realty
Trust, Inc., our Operating Partnership relied on Digital Realty Trust, Inc.’s status as a publicly traded NYSE-listed
company with over $44 billion in total consolidated assets and as our Operating Partnership’s majority owner and
general partner as the basis for the exemption under Section 4(a)(2) of the Securities Act.
REPURCHASES OF EQUITY SECURITIES
Digital Realty Trust, Inc.
None.
Digital Realty Trust, L.P.
None.
ITEM 6. [Reserved]
56
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the Consolidated Financial Statements and notes thereto
included in Item 8. of this report and the matters described under Item 1A. Risk Factors. We make statements in this
section that are forward-looking statements within the meaning of the federal securities laws. For a complete discussion
of forward-looking statements, see the section in this report entitled “Forward-Looking Statements.”
A discussion regarding our financial condition and results of operations for 2023 as compared to 2022 is presented
herein. Information on 2021 is presented in graphs and other tables only to show year-over-year trends in our results of
operations and operating metrics. Our financial condition for 2021 and results of operations for 2021 – and also 2021 as
compared to 2022 – can be found under Item 7. Management’s Discussion and Analysis of Financial Condition and
Results of Operations, of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed with the
SEC on February 27, 2023.
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.
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.
57
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 around 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.
Summary of 2023 Significant Activities
We completed the following significant activities in 2023 as described in the Notes to the Consolidated Financial
Statements:
In 2023, we closed on the sale of three non-core assets for gross proceeds of approximately $341 million
resulting in a net gain on sale in the aggregate of approximately $87 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.
In 2023, we generated net proceeds of approximately $2.2 billion from the issuance of approximately 20.0
million shares of common stock under our ATM program.
In July 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 and recognized a gain on disposition of approximately $238 million. We 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 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 perform the day-to-day accounting and
property management functions for the joint venture and, as such, will earn a management fee.
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 $1.4 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 $576 million. We perform
the day-to-day accounting and property management functions for the joint venture and, as such, will earn a
management fee.
In November 2023, we formed a joint venture with Realty Income to support the development of two data
centers in Northern Virginia. The facilities were 100% pre-leased prior to construction. We contributed the two
data center buildings at a purchase price of $185 million, which represented costs spent through November 10,
2023, to the new joint venture. We received approximately $148 million of gross proceeds from the
contribution of our data centers to the joint venture and 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. Each
partner will fund its pro rata share of the remaining $150 million estimated development cost for the first phase
of the project, which is slated for completion in mid-2024. We perform the day-to-day accounting and property
management functions for the joint venture and, as such, will earn a management fee.
58
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 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.
Region
North America
Europe
Asia Pacific
Africa
Consolidated Portfolio
Managed Unconsolidated
Portfolio
Non-Managed
Unconsolidated Portfolio
Total Portfolio
As of December 31, 2023
Space Under
Active
Development
(2)
2,590
3,291
73
1,581
7,535
Space Held for
Development
(3)
1,335
319
207
23
1,884
Net Rentable
Square Feet (1)
20,150
8,873
1,652
1,528
32,203
Occupancy
Data Center
Buildings
83.8 %
75.8 %
76.7 %
71.0 %
79.8 %
119
114
12
12
257
As of December 31, 2022
Space Under
Active
Development
(2)
3,165
4,261
421
873
8,720
Space Held for
Development
(3)
1,110
226
88
12
1,436
Net Rentable
Square Feet (1)
21,894
7,936
1,653
1,184
32,667
Occupancy
86.3 %
79.3 %
75.9 %
70.2 %
83.5 %
Data Center
Buildings
107
112
11
12
242
22
3,843
364
—
93.7 %
18
2,389
—
—
98.4 %
45
309
3,641
39,688
571
8,470
2,246
4,130
85.3 %
81.7 %
41
316
3,100
38,156
526
9,246
1,915
3,351
87.1 %
84.7 %
(1) Net rentable square feet represents the current square feet under lease as specified in the applicable lease agreement
plus management’s estimate of space available for lease based on engineering drawings. The amount includes
customers’ proportional share of common areas but excludes space held for the intent of or under active
development.
(2) Space under active development includes current base building and data center projects in progress and excludes
space held for development. For additional information on the current and future investment for space under active
development, see “Liquidity and Capital Resources—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”.
59
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 December 31, 2023, 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 year ended December 31, 2023 (square feet in
thousands):
Leasing Activity (3)(4)
Renewals Signed
0 — 1 MW
> 1 MW
Other (6)
New Leases Signed (5)
0 — 1 MW
> 1 MW
Other (6)
Leasing Activity Summary
0 — 1 MW
> 1 MW
Other (6)
Rentable
Square Feet (1)
Expiring
Rates (2)
New
Rates (2)
Rental Rate Per Square
Changes
Foot
Terms
(years)
TI’s/Lease Weighted
Commissions Average Lease
2,017 $
1,299 $
459 $
242 $
126 $
31 $
256
152
48
5.7 % $
21.0 % $
55.5 % $
616
1,614
90
2,633
2,913
549
— $
— $
— $
$
$
$
246
155
61
254
154
50
—
—
—
$
$
$
1
2
6
9
1
15
1.6
4.5
5.1
4.3
13.0
6.0
(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 December 31, 2023.
(3) Excludes short-term leases.
(4) Commencement dates for the leases signed range from 2023 to 2024.
(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 2024 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.
60
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 based on
annualized rent from our portfolio, including data centers held as investments in unconsolidated entities.
Metropolitan Area
Northern Virginia
Chicago
Frankfurt
London
Singapore
Dallas
New York
Silicon Valley
Amsterdam
Sao Paulo
Johannesburg
Paris
Portland
Tokyo
Phoenix
Other
Total
Percentage of
December 31, 2023
Total annualized rent (1)
17.3 %
8.1 %
6.4 %
5.2 %
5.0 %
4.9 %
4.8 %
4.6 %
4.3 %
4.2 %
2.7 %
2.7 %
2.6 %
2.0 %
1.8 %
23.4 %
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 year ended December 31, 2023 was
approximately $105.3 million.
Operating Expenses
Operating expenses primarily consist of utilities, property and ad valorem taxes, property management fees, insurance
and site maintenance costs, and rental expenses on our ground and building leases. Our buildings require significant
power to support data center operations and the cost of electric power and other utilities is a significant component of
operating expenses.
Many of our leases contain provisions under which tenants reimburse us for all or a portion of property operating
expenses and real estate taxes incurred by us. However, in some cases we are not entitled to reimbursement of property
operating expenses, other than utility expense, and real estate taxes under our leases for Turn-Key Flex® facilities. We
expect to incur additional operating expenses as we continue to expand.
Costs pertaining to our asset management function, legal, accounting, corporate governance, reporting and compliance
are categorized as general and administrative costs within operating expenses.
Other key components of operating expenses include: depreciation of our fixed assets, amortization of intangible assets,
and transaction and integration costs.
61
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 Other income/(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 12 properties operating in the United States, Canada, Germany and Japan. Refer to additional
discussion of Digital Core REIT and Ascenty in the Notes to the 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 year ended December 31, 2023 as
compared to December 31, 2022 is shown below (in thousands).
Net Rentable Square Feet
As of December 31, 2022
New development and space reconfigurations
Transfers to stabilized from non-stabilized
Transfers to non-stabilized from stabilized
Dispositions / Sales
As of December 31, 2023
Stabilized
Non-Stabilized
Total
23,160
(17)
2,368
(661)
(2,250)
22,600
9,507
2,399
(2,368)
591
(526)
9,603
32,667
2,382
—
(70)
(2,776)
32,203
62
Comparison of the Year Ended December 31, 2023 to the Year Ended December 31, 2022
Revenues
Total operating revenues as shown on our consolidated income statements was as follows (in thousands):
Stabilized
Non-Stabilized
Rental and other services
Fee income and other
Total operating revenues
Year Ended December 31,
2023
2022
$ Change
% Change
$
$
4,072,793
1,357,380
5,430,173
46,888
5,477,061
$
$
3,559,571
1,103,112
4,662,683
29,151
4,691,834
$
$
513,222
254,268
767,490
17,737
785,227
14.4 %
23.1 %
16.5 %
60.8 %
16.7 %
Total operating revenues increased by approximately $785.2 million for the year ended December 31, 2023 compared to
the same period in 2022.
Stabilized rental and other services revenue increased by $513.2 million for the year ended December 31, 2023
compared to the same period in 2022 primarily due to an increase of:
(i) $289.0 million in utility reimbursement largely driven by power price and usage increases;
(ii) $117.3 million in new leasing and renewals across all regions; and
(iii) $47.0 million due to an increase in installation fees and annual CPI indexation of fixed power agreements.
Non-stabilized rental and other services revenue increased $254.3 million for the year ended December 31, 2023,
compared to the same period in 2022, driven primarily by:
(i) an increase of $243.6 million due to the completion of our global development pipeline and related lease up
operating activities (the markets with the largest contributions were Northern Virginia, Portland, London and
Paris);
(ii) $140.5 million generated as a result of the Teraco acquisition in August 2022; and
(iii) offset by a decrease of $129.8 million related to properties sold and contributed after December 31, 2022.
63
Operating Expenses — Property Level
Property level operating expenses as shown in our consolidated income statements were as follows (in thousands):
Year Ended December 31,
Stabilized
Non-Stabilized
Total Utilities
Stabilized
Non-Stabilized
Total Rental property operating and maintenance
(excluding utilities)
$
2023
1,146,241
325,595
1,471,836
$
2022
825,570
179,500
1,005,070
$
320,671
146,095
466,766
$ Change
% Change
646,670
263,160
599,761
220,986
46,909
42,174
909,830
820,747
89,083
10.9 %
38.8 %
81.4 %
46.4 %
7.8 %
19.1 %
Total Rental property operating and maintenance
2,381,666
1,825,817
555,849
30.4 %
Stabilized
Non-Stabilized
Total Property taxes and insurance
146,676
69,729
216,405
135,870
55,875
191,745
10,806
13,854
24,660
8.0 %
24.8 %
12.9 %
Total property level operating expenses
$
2,598,071
$
2,017,562
$
580,509
28.8 %
Property level operating expenses include costs to operate and maintain the properties in our portfolio as well as taxes
and insurance. Many of our lease agreements allow us to pass through expenses to our customers. Reimbursement
revenue increased 31% in 2023 compared to the same period in 2022, mitigating a portion of the expense growth shown
above.
Total Utilities
Total stabilized utilities expenses increased by approximately $320.7 million compared to the same period in 2022
primarily due to higher rates and an increase in utility consumption at certain properties in the stabilized portfolio.
Total non-stabilized utilities expenses increased by approximately $146.1 million compared to the same period in 2022
primarily due to (i) an increase of $72.4 million due to the completion of our global development pipeline and related
lease up operating activities (the markets with the biggest contributions were Northern Virginia, Portland, Frankfurt,
London and Paris); (ii) $42.1 million generated as a result of the Teraco acquisition in August 2022; and (iii) offset by
power agreement credits that decreased $31.6 million.
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.
Total Rental Property Operating and Maintenance (Excluding Utilities)
Total stabilized rental property operating and maintenance expenses (excluding utilities) increased by approximately
$46.9 million compared to the same period 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 $42.2 million compared to the same period in 2022 primarily due to higher lease and common area
maintenance expense in a growing portfolio of recently completed development sites.
64
Total Property Taxes and Insurance
Total property taxes and insurance increased by approximately $24.7 million compared to the same period in 2022
primarily due to accruals for anticipated assessment increases in 2023, mainly within the Chicago metro area.
Provision for Impairment
Total provision for impairment increased by approximately $115.4 million compared to the same period in 2022
primarily due to the decline in fair value of our equity investment in DCRU, which was considered 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 during the three months ended September 30, 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 period is shown below (in thousands).
Depreciation and amortization
General and administrative
Transaction, integration and other expense
Provision for impairment
Other
Total other operating expenses
Total property level operating expenses
Total operating expenses
n/m – not meaningful
Year Ended December 31,
$
$
2023
1,694,859
449,056
84,722
118,363
7,529
2,354,529
2,598,071
4,952,600
2022
1,577,933
422,167
68,766
3,000
12,438
2,084,304
2,017,562
4,101,866
$
$
$
$
$ Change
% Change
116,926
26,889
15,956
115,363
(4,909)
270,225
580,509
850,734
7.4 %
6.4 %
23.2 %
n/m
(39.5)%
13.0 %
28.8 %
20.7 %
Equity in Earnings (Loss) of Unconsolidated Entities
Equity in earnings (loss) of unconsolidated entities decreased approximately $16.3 million compared to the same period
in 2022. Depreciation associated with new joint ventures, delivery of assets under construction and accelerated
depreciation at one entity related to a customer bankruptcy drove this fluctuation.
Gain on Disposition of Properties, net
Gain on disposition of properties, net increased approximately $723.8 million as compared to the same period in 2022.
In July 2023, we received approximately $0.7 billion of gross proceeds from the contribution of our data centers to the
joint venture with GI Partners for a net gain on sale of approximately $238 million and we received approximately $1.4
billion of gross proceeds from the contribution of our data centers to the joint venture with TPG Real Estate for a net
gain on sale of approximately $576 million.
In May 2023, we disposed of a non-core asset, resulting in a net gain on sale of $87 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.
65
Loss from Early Extinguishment of Debt
We had no extinguishment of debt in 2023. In February 2022, we redeemed the 4.750% Notes due 2025, which resulted
in a $51.1 million loss.
Interest Expense
Interest expense increased approximately $138.6 million compared to the same period in 2022 driven primarily by:
(i) an increase of $75.5 million due to the funding 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 $45.5 million, 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 $48.5 million in credit facilities interest expense as a result of higher average balances and higher
interest rates;
(iv) an increase of $33.3 million due to the Teraco acquisition; and
(v) offset by an increase in capitalized interest of $46.1 million as a result of increased construction activities and
higher interest rates and $25.7 million due to income related to cross-currency swaps and interest rate swaps.
Income Tax Expense
Income tax expense increased by approximately $44.0 million as compared to the same period in 2022 due to increased
profitability, jurisdictional rate mix in foreign jurisdictions, and reduced benefit included in 2022 reported income tax
expense associated with valuation allowance releases.
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.
66
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.
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"). Pursuant to the 2022 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 year ended December 31, 2023, our Parent generated net proceeds of
approximately $1.1 billion from the issuance of approximately 11.3 million common shares 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. 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. For the year ended
December 31, 2022, we had no sales under the 2022 Sales Agreement. The proceeds from the issuances under the 2022
Sales Agreement for the year ended December 31, 2023 were contributed to our Operating Partnership in exchange for
the issuance of approximately 11.3 million common units to our Parent Company.
For the year ended December 31, 2023, Digital Realty Trust, Inc. generated net proceeds of approximately $1.1 billion
from the issuance of approximately 8.7 million common shares under the 2023 Sales Agreement at an average price of
$133.21 per share after payment of approximately $11.4 million of commissions to the agents. As of December 31,
2023, approximately $343.4 million remained available for future sales under the 2023 Sales Agreement. The proceeds
from the issuances under the 2023 Sales Agreement for the year ended December 31, 2023 were contributed to our
Operating Partnership in exchange for the issuance of approximately 8.7 million common units to our Parent Company.
On September 13, 2021, Digital Realty Trust, Inc. completed an underwritten public offering of approximately 6.3
million shares of its common stock, all of which were offered in connection with forward sale agreements it entered into
with certain financial institutions acting as forward purchasers. The forward purchasers borrowed and sold an aggregate
of approximately 6.3 million shares of Digital Realty Trust, Inc.’s common stock in the public offering. Digital Realty
Trust, Inc. did not receive any proceeds from the sale of our common stock by the forward purchasers in the public
offering. During the year ended December 31, 2022, we fully settled the forward sale agreements by issuing
approximately 6.3 million shares, resulting in proceeds of approximately $939.0 million. Upon physical settlement of the
forward sale agreements, the Operating Partnership issued general partner common partnership units to Digital Realty
Trust, Inc. in exchange for contribution of the net proceeds.
We believe our Operating Partnership’s sources of working capital, specifically its cash flow from operations, and funds
available under its Global Revolving Credit Facility are adequate for it to make its distribution payments to our Parent
and, in turn, for our Parent to make its dividend payments to its stockholders. However, we cannot assure you that our
Operating Partnership’s sources of capital will continue to be available at all or in amounts sufficient to meet its needs,
including making distribution payments to our Parent. The lack of availability of capital could adversely affect our
Operating Partnership’s ability to pay its distributions to our Parent, which would in turn, adversely affect our Parent’s
ability to pay cash dividends to its stockholders.
Future Uses of Cash — Parent
Our Parent may from time to time seek to retire, redeem or repurchase its equity or the debt securities of our Operating
Partnership or its subsidiaries through cash purchases and/or exchanges for equity securities in open market purchases,
privately negotiated transactions or otherwise. Such repurchases, redemptions or exchanges, if any, will depend on
prevailing market conditions, our liquidity requirements, contractual restrictions or other factors. The amounts involved
may be material.
67
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
and short-term interest-bearing securities, which are consistent with our intention to maintain our Parent’s status as a
REIT.
As a result of this distribution requirement, our Operating Partnership cannot rely on retained earnings to fund its
ongoing operations to the same extent that other companies whose parent companies are not REITs can. Our Parent may
need to continue to raise capital in the debt and equity markets to fund our Operating Partnership’s working capital
needs, as well as potential developments at new or existing properties, acquisitions or investments in existing or newly
created joint ventures. In addition, our Parent may be required to use borrowings under the Operating Partnership’s
Global Revolving Credit Facility (which is guaranteed by our Parent), if necessary, to meet REIT distribution
requirements and maintain our Parent’s REIT status.
Distributions out of our Parent’s current or accumulated earnings and profits are generally classified as ordinary income
whereas distributions in excess of our Parent’s current and accumulated earnings and profits, to the extent of a
stockholder’s U.S. federal income tax basis in our Parent’s stock, are generally classified as a return of capital.
Distributions in excess of a stockholder’s U.S. federal income tax basis in our Parent’s stock are generally characterized
as capital gain. Cash provided by operating activities has been generally sufficient to fund distributions on an annual
basis. However, we may also need to utilize borrowings under the Global Revolving Credit Facility to fund distributions.
The expected tax treatment of distributions on our Parent’s common stock and preferred stock paid in 2023 is as follows:
approximately 40% ordinary income and 60% as capital gain distribution. The tax treatment of distributions on our
Parent’s common stock and preferred stock paid in 2022 was as follows: approximately 59% ordinary income, 16% as
capital gain distribution, and 25% as nondividend distribution. The tax treatment of distributions on our Parent’s
common stock paid in 2021 was as follows: approximately 9% ordinary income and 91% capital gain distribution.
For additional information regarding dividends declared and paid by our Parent on its common and preferred stock for
the years ended December 31, 2023, 2022 and 2021, see Item 8, Note 14. “Equity and Capital” in the Notes to the
Consolidated Financial Statements contained herein.
68
Analysis of Liquidity and Capital Resources — Operating Partnership
As of December 31, 2023, we had $1,625.5 million of cash and cash equivalents, excluding $11.0 million of restricted
cash. Restricted cash primarily consists of contractual capital expenditures plus other deposits and is included in Other
assets on our Consolidated Balance Sheets. 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, including joint ventures;
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.
On November 18, 2021, we refinanced our Global Revolving Credit Facility and Yen Revolving Credit Facility. On
April 5, 2022, the Operating Partnership entered into an amendment of the Global Revolving Credit Facility which,
among other things, increased the size of the Global Revolving Credit Facility from $3.0 billion to $3.75 billion. The
Global Revolving Credit Facilities provide for borrowings of 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 December 31, 2023. 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 Facilities, see Item 8, Note 11. “Debt of the
Operating Partnership” in the Notes to the 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 December 31, 2023, we had open commitments, related to construction contracts of
approximately $2.2 billion, including amounts reimbursable of approximately $78.3 million.
We currently expect to incur approximately $2.0 billion to $2.5 billion of capital expenditures, net of partner
contributions for our development programs, during the year ending December 31, 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.
69
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 square feet held in and costs incurred or to be incurred by unconsolidated
entities.
Development Lifecycle
Net Rentable
As of December 31, 2023
Future
Net Rentable
As of December 31, 2022
Future
Current
Current
Investment
(2)(6)(7)
Square Feet (1)
Investment (3) Total Cost
Square Feet (1) Investment (4) Investment (3) Total Cost
(in thousands)
Land held for future development
(5)
Construction in Progress and
Space Held for Development
Land - Current Development (5)
Space Held for Development
Base Building Construction
Data Center Construction
Equipment Pool and Other Inventory
Campus, Tenant Improvements and
Other
Total Construction in
Progress and Land Held for
Future Development
N/A $
118,197
$
— $
118,197
N/A $
118,452 $
— $
118,452
N/A $
1,907
3,548
4,030
N/A
1,194,646 $
325,638
734,812
2,351,092
203,821
— $
—
536,049
2,470,178
—
1,194,646
325,638
1,270,861
4,821,270
203,821
N/A $
1,437
3,918
4,802
N/A
1,118,954 $
245,483
693,926
2,180,060
32,409
— $
—
649,640
3,299,457
—
1,118,954
245,483
1,343,566
5,479,517
32,409
N/A
211,187
130,260
341,447
N/A
518,302
169,756
688,058
9,485 $
5,139,393 $
3,136,488 $
8,275,881
10,157 $
4,907,586 $
4,118,853 $
9,026,439
(1) We estimate the total net rentable square feet available for lease based on a number of factors in addition to
contractually leased square feet, including available power, required support space and common areas. Excludes
square footage of properties held in unconsolidated entities. Square footage is based on current estimates and project
plans, and may change upon completion of the project due to remeasurement.
(2) Represents balances incurred through December 31, 2023.
(3) Represents estimated cost to complete specific scope of work pursuant to contract, budget or approved capital plan.
(4) Represents balances incurred through December 31, 2022.
(5) Represents approximately 743 acres as of December 31, 2023, and approximately 842 acres as of
December 31, 2022.
(6) Includes costs incurred on consolidated entities and $57.5 million classified as Investments in Unconsolidated Joint
Ventures in our Consolidated Balance Sheet representing Digital Realty Inc.’s 20% interest in two development
projects contributed a joint venture with Realty Income on November 10, 2023.
(7) Includes $328.5 million classified as Assets Held for Sale in our Consolidated Balance Sheet related to two
development projects that were contributed to a joint venture with Blackstone on January 11, 2024. For additional
information, see Item 8, Note 22. “Subsequent Events” in the Notes to the Consolidated Financial Statements.
Land inventory and space held for development reflect cumulative cost spent pending future development. Base building
construction consists of ongoing improvements to building infrastructure in preparation for future data center fit-out.
Data center construction includes 7.6 million square feet of Turn Key Flex® and Powered Base Building® product.
Generally, we expect to deliver the space within 12 months; however, lease commencement dates may significantly
impact final delivery schedules. Equipment pool and other inventory represent the value of long-lead equipment and
materials required for timely deployment and delivery of data center construction fit-out. Campus, tenant improvements
and other costs include the value of development work which benefits space recently converted to our operating portfolio
and is composed primarily of shared infrastructure projects and first-generation tenant improvements.
70
Capital Expenditures (Cash Basis)
The table below summarizes our capital expenditure activity for the year ended December 31, 2023 and 2022 (in
thousands):
Development projects
Enhancement and improvements
Recurring capital expenditures
Total capital expenditures (excluding indirect costs)
Year Ended December 31,
2023
2022
$
$
2,966,898
15,705
327,022
3,309,625
$
$
2,210,790
12,291
266,466
2,489,547
For the year ended December 31, 2023, total capital expenditures increased $0.8 billion to approximately $3.3 billion
from $2.5 billion for the same period in 2022. Capital expenditures on our development projects plus our enhancement
and improvements projects for the year ended December 31, 2023 were approximately $3.0 billion, which reflects an
increase of approximately 34% from the same period in 2022. Our development capital expenditures are generally
funded by our available cash and equity and debt capital.
Indirect costs, including interest, capitalized in the years ended December 31, 2023 and 2022 were $216.0 million and
$156.9 million, respectively. Capitalized interest comprised approximately $116.8 million and $70.8 million of the total
indirect costs capitalized for the years ended December 31, 2023 and 2022, respectively. Capitalized interest in the year
ended December 31, 2023 increased, compared to the same period in 2022, due to an increase in qualifying activities and
higher interest rates.
Excluding capitalized interest, indirect costs in the year ended December 31, 2023 increased compared to the same
period in 2022 due primarily to capitalized amounts relating to compensation expense of employees directly engaged in
construction activities.
Consistent with our growth strategy, we actively pursue potential acquisition opportunities, with due diligence and
negotiations often at different stages at different times. The dollar value of acquisitions for the year ending December 31,
2024 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
February 21, 2024, we had approximately $2.0 billion of borrowings available under our Global Revolving Credit
Facilities.
71
Our Global Revolving Credit Facilities provides 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 $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 11. “Debt of the Operating Partnership” to
Consolidated Financial Statements contained herein.
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. For additional information regarding our Euro Term Loan Facilities and
the defined terms used above, see Note 11. “Debt of the Operating Partnership” to Consolidated Financial Statements
contained herein.
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. We 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 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 perform the day-to-day accounting and property
management functions for the joint venture and, as such, will earn a management fee.
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
$1.4 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. We perform the day-to-day accounting and property management
functions for the joint venture and, as such, will earn a management fee.
72
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 November 10, 2023, we formed a joint venture with Realty Income to support the development of two data centers in
Northern Virginia. The facilities were 100% pre-leased prior to construction. We contributed the two data center
buildings at a purchase price of $185 million, which represented costs spent through November 10, 2023, to the new
joint venture. We received approximately $148 million of gross proceeds from the contribution of our data centers to the
joint venture and retained a 20% interest in the joint venture.
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 years ended December 31, 2023 and 2022, see
Item 8, Note 14. “Equity and Capital” in the Notes to the Consolidated Financial Statements.
Outstanding Consolidated Indebtedness
The tables below summarize our outstanding debt, and also our contractual debt maturities and principal payments as of
December 31, 2023 (in thousands):
Outstanding Debt
Debt Summary:
Fixed rate
Variable rate debt subject to interest rate swaps
Total fixed rate debt (including interest rate swaps)
Variable rate—unhedged
Total
Percent of Total Debt:
Fixed rate (including swapped debt)
Variable rate
Total
Effective Interest Rate as of December 31, 2023
Fixed rate (including hedged variable rate debt)
Variable rate
Effective interest rate
$
$
12,102.3
2,855.6
14,957.9
2,579.7
17,537.6
85.3 %
14.7 %
100.0 %
2.56 %
4.82 %
2.89 %
73
Contractual Debt Maturities and Principal Payments
Global Revolving
Credit Facilities (1)(2)
2024
2025
2026
2027
2028
Thereafter
Subtotal
Unamortized net discounts
Unamortized deferred financing costs
Total
$
$
$
—
—
1,825,228
—
—
—
1,825,228
—
(12,941)
1,812,287
$
$
Unsecured
Term Loans(3)(4)
$
Unsecured
Senior Notes
Secured and
Other Debt
Total Debt
$
$
$
980,615
1,226,775
1,513,519
1,178,269
2,101,950
6,506,299
13,507,427
(33,324)
(51,761)
13,422,342
$
$
$
321
584
110,791
218,511
293,775
13,090
637,072
(3,754)
(2,345)
630,973
$
$
$
980,936
2,795,284
3,449,538
1,396,780
2,395,725
6,519,389
17,537,652
(37,078)
(74,667)
17,425,907
—
1,567,925
—
—
—
—
1,567,925
—
(7,620)
1,560,305
(1) Includes amounts outstanding under 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% 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 million 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 will result in an early extinguishment charge of approximately $1.1 million during the three months
ending March 31, 2024.
Our ratio of debt to total enterprise value was approximately 29% (based on the closing price of Digital Realty Trust,
Inc.’s common stock on December 31, 2023 of $134.58). For this purpose, our total enterprise value is defined as the
sum of the market value of Digital Realty Trust, Inc.’s outstanding common stock (which may decrease, thereby
increasing our debt to total enterprise value ratio), plus the liquidation value of Digital Realty Trust, Inc.’s preferred
stock, plus the aggregate value of our Operating Partnership’s units not held by Digital Realty Trust, Inc. (with the per
unit value equal to the market value of one share of Digital Realty Trust, Inc.’s common stock and excluding long-term
incentive units, Class C units and Class D units), plus the book value of our total consolidated indebtedness.
The variable rate debt shown above bears interest based on various one-month SOFR, EURIBOR, SORA, BBR, HIBOR,
TIBOR, Base CD Rate, CDOR and JIBAR rates, depending on the respective agreement governing the debt, including
our Global Revolving Credit Facilities, unsecured term loans, Teraco loans and ICN10 Facilities. As of December 31,
2023, our debt had a weighted average term to initial maturity of approximately 4.1 years (or approximately 4.3 years
assuming exercise of extension options).
Off-Balance Sheet Arrangements
As of December 31, 2023, our pro-rata share of secured debt of unconsolidated entities was approximately $1.5 billion.
74
Cash Flows
The following summary discussion of our cash flows is based on the 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 Year Ended December 31, 2023 to Year Ended December 31, 2022
The following table shows cash flows and ending cash, cash equivalents and restricted cash balances for the respective
periods (in thousands).
Net cash provided by operating activities
Net cash used in investing activities
Net cash provided by (used in) financing activities
Net increase (decrease) in cash, cash equivalents and
restricted cash
Year Ended December 31,
$
2023
1,634,780
(1,115,111)
963,474
$
2022
1,659,388 $
(4,699,403)
2,969,149
Change
(24,608)
3,584,292
(2,005,675)
$
1,483,143
$
(70,866) $
1,554,009
The changes in the activities that comprise net cash used in investing activities for the year ended December 31, 2023 as
compared to the year ended December 31, 2022 consisted of the following amounts (in thousands).
Decrease in net cash used in business combinations
Increase in cash used for improvements to investments in real estate
Decrease in cash contributed to investments in unconsolidated entities, net
Increase in net cash provided by proceeds from sale of real estate
Other changes
Decrease in net cash used in investing activities
Change
2023 vs 2022
1,877,881
(882,501)
201,623
2,348,211
39,078
3,584,292
$
$
The decrease in net cash used in investing activities as compared to the same period in 2022 was primarily due to:
(i)
(ii)
(iii)
(iv)
(v)
a decrease in spend due to the completion of the Teraco acquisition in August 2022 for approximately $1.7
billion;
an increase in spend on development projects of approximately $883 million;
a decrease in cash contributed to various investments in unconsolidated entities;
an increase in cash provided by the contribution of data centers to our joint ventures with GI Partners, TPG
Real Estate and Realty Income, for gross proceeds of approximately $0.7 billion, $1.4 billion, and $0.2
billion, respectively; and
the sale of three non-core assets for gross proceeds of approximately $341 million.
75
The changes in the activities that comprise net cash provided by financing activities for the year ended December 31,
2023 as compared to the year ended December 31, 2022 consisted of the following amounts (in thousands).
Decrease in cash provided by short-term borrowings
Decrease in cash provided by proceeds from secured / unsecured debt
Decrease in cash used for repayment on secured / unsecured debt
Increase in cash provided by proceeds from issuance of common stock, net of costs
Increase in cash used for dividend and distribution payments
Other changes, net
Decrease in net cash provided by financing activities
$
$
Change
2023 vs 2022
(2,112,984)
(1,921,895)
924,598
1,278,827
(70,007)
(104,214)
(2,005,675)
The decrease in net cash provided by financing activities as compared to the same period in 2022 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 Facility in January 2023 and CHF notes
in October 2023;
(iii) a decrease in cash used for repayment of unsecured notes (in 2022, we redeemed the 4.750% Notes due 2025
($450 million) and the Floating rate notes due 2022 (€300 million));
(iv) offset by an increase in cash provided by proceeds from the issuance of approximately 20.0 million shares of
common stock, net of costs, of approximately $2.2 billion under our ATM program, offset with the full
settlement of forward sale agreements in 2022 ($939 million); and
(v) an increase in dividend and distribution payments due to an increased number of common shares and common
units outstanding.
Noncontrolling Interests in Operating Partnership
Noncontrolling interests relate to the common units in our Operating Partnership that are not owned by Digital Realty
Trust, Inc., which, as of December 31, 2023, amounted to 2.0% of our Operating Partnership common units.
Historically, our Operating Partnership has issued common units to third party sellers in connection with our acquisition
of real estate interests from such third parties.
Limited partners have the right to require the Operating Partnership to redeem part or all 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. As of December 31, 2023, approximately 0.2
million 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 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.
76
In addition, refer to “Item 1A. Risk Factors” in this Annual Report on Form 10-K for a discussion about risks that
inflation directly or indirectly may pose to our business.
Critical Accounting Policies
A critical accounting policy is one that involves management’s use of judgement regarding expected outcomes of
uncertain events in order to make estimates and assumptions that are material to an entity’s financial condition and
results of operations. Though we base our estimates and assumptions regarding these matters on historical and current
conditions as well as future expectations, these estimates and assumptions are subjective in nature. Changes to the
estimates and assumptions we make regarding these matters could affect our financial position and specific items in our
results of operations used by stockholders, potential investors, industry analysts and lenders in the evaluation of our
performance. Of the significant accounting policies described in Note 2 to the Consolidated Financial Statements, the
subsequent items have been identified by us as meeting the criteria to be considered critical accounting policies. Refer to
Note 2 for more information on these critical accounting policies.
Fair Value Measurements. Fair value is intended to reflect the price that would be received for the sale of an asset or
paid for the transfer of a liability in an orderly transaction between market participants at the measurement date (the exit
price). We use fair value measurements to enable us to determine the fair value of a variety of items. Fair value
measurements are most significant to our financial statements in the following areas: 1) evaluation of recoverability of
real estate and intangible assets (which involves comparison of fair value of the assets to net book value to quantify any
potential impairments), 2) accounting for assets held for sale (which involves recording assets qualifying for held for
sale treatment at the lower of book value or fair value less costs to sell), and 3) determination of fair value of assets and
liabilities acquired in connection with business combinations or asset acquisitions as well as certain equity interests in
unconsolidated entities.
We estimate fair value using available market information and valuation methods we believe to be appropriate for these
purposes. Given the significant amount of judgement and subjectivity involved in the determination of fair value,
estimated fair value is not necessarily indicative of amounts that would be realized on disposition. Refer to Note 2.
“Summary of Significant Accounting Policies” the Consolidated Financial Statements for additional information.
Recoverability of Real Estate Assets. We assess the carrying value of our properties whenever events or circumstances
indicate carrying amounts of these assets may not be fully recoverable (“triggering events"). Triggering events typically
relate to a change in the expected holding period of a property, an adverse change in expected future cash flows of the
property, or a trend of past cash flow losses that is expected to continue in the future. If our assessment of triggering
events indicates the carrying value of a property or asset group might not be recoverable, we estimate the future
undiscounted net cash flows expected to be generated by the assets and compare that amount to the book value of the
assets. If our future undiscounted net cash flow evaluation indicates we are unable to recover the carrying value of a
property or asset group, we record an impairment loss to the extent the carrying value of the property or asset group
exceeds fair value. Refer to Note 2. “Summary of Significant Accounting Policies” of the Consolidated Financial
Statements for additional information.
Consolidation. We consolidate all entities that are wholly owned as well as all partially-owned entities that we control.
In addition, we consolidate any variable interest entities (“VIEs”) for which we are the primary beneficiary. We evaluate
whether or not an entity is a VIE (and we are the primary beneficiary) through consideration of substantive terms in the
arrangement to identify which enterprise has the power to direct the activities of the entity that most significantly impact
the entity’s economic performance and the obligation to absorb losses/receive benefits from the entity.
77
For entities that do not meet the definition of VIEs, we first consider if we are the general partner or a limited partner (or
the equivalent in investments not structured as partnerships). We consolidate entities in which we are the general partner
and the limited partners do not have rights that would preclude control. For entities in which we are the general partner,
but the limited partners hold substantive participating or kick-out rights that prohibit our ability to control the entity, we
apply the equity method of accounting since, as the general partner, we have the ability to exercise significant influence
over the operating and financial policies of the entities. For entities in which we are a limited partner, or that are not
structured similar to a partnership, we consider factors such as ownership interest, voting control, authority to make
decisions and contractual and substantive participating rights of the partners. When factors indicate we have a
controlling financial interest in an entity, we consolidate the entity. Refer to Note 8. “Investments in Unconsolidated
Entities” of the Consolidated Financial Statements for additional information.
Revenue Recognition. We generate the majority of our revenue by leasing our properties to customers under operating
lease agreements, which are accounted for under Accounting Standards Codification 842, Leases (“ASC 842”). We
recognize the total minimum lease payments provided for under the leases on a straight-line basis over the lease term if
we determine it is probable that substantially all of the lease payments will be collected over the lease term.
We estimate the probability of collection of lease payments based on customer creditworthiness, outstanding accounts
receivable balances, and historical bad debts – as well as current economic trends. If collection of substantially all lease
payments over the lease term is not probable, rental revenue is recognized when payment is received, and we record a
reduction to rental revenue equal to the balance of any deferred rent and rent receivable, less the balance of any security
deposits or letters of credit. If collection is subsequently determined to be probable, we: 1) resume recognizing rental
revenue on a straight-line basis, 2) record incremental revenue such that the cumulative amount recognized is equal to
the amount that would have been recorded on a straight-line basis since inception of the lease, and 3) reverse the
allowance for bad debt recorded on outstanding receivables.
New Accounting Pronouncements
See Note 2. “Summary of Significant Accounting Policies” of the Consolidated Financial Statements.
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 gain
(loss) from the disposition of real estate assets, provision for impairment, 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 non-controlling interests in operating partnership and,
depreciation related to non-controlling 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 data 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 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.
78
Reconciliation of Net Income Available to Common Stockholders to Funds From Operations (FFO)
(in thousands, except per share and unit data)
(unaudited)
GAAP Net Income Available to Common
Stockholders
Non-GAAP Adjustments:
2023
Year Ended December 31,
2022
2021
$
908,114 $
336,960 $
1,681,498
Net income attributable to non-controlling interests
in operating partnership
Real estate related depreciation and amortization (1)
Depreciation related to non-controlling interests
Unconsolidated JV real estate related depreciation
and amortization
Gain from the disposition of real estate assets
Provision for impairment
FFO available to common stockholders and unitholders
(2)
Basic FFO per share and unit
Diluted FFO per share and unit (2)(3)
Weighted average common stock and units outstanding
Basic
Diluted (2)(3)
$
$
$
20,710
1,657,240
(57,477)
177,153
(908,356)
118,363
7,914
1,547,865
(22,110)
123,099
(177,332)
3,000
39,100
1,463,512
—
85,800
(1,445,229)
18,291
1,915,747 $
6.29 $
6.20 $
1,819,396 $
6.23 $
6.03 $
1,842,971
6.37
6.36
304,651
315,113
292,123
303,708
289,165
289,912
(1) Real estate related depreciation and amortization was computed as follows:
Depreciation and amortization per income statement $
Non-real estate depreciation
$
1,694,859 $
(37,619)
1,657,240 $
1,577,933 $
(30,068)
1,547,865 $
1,486,632
(23,120)
1,463,512
(2) As part of the acquisition of Teraco in 2022, certain of Teraco's minority indirect shareholders have the right to put
their shares in an upstream parent company of Teraco to the Company in exchange for cash or the equivalent value
of shares of the Company common stock, or a combination thereof. US 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/share. When calculating diluted FFO, Teraco 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 $39,386 and $11,919 for the year ended December 31, 2023 and 2022, respectively.
(3) For all periods presented, we have excluded the effect of the series C, series J, series K and series L preferred stock,
as applicable, that may be converted into common stock upon the occurrence of specified change in control
transactions as described in the articles supplementary governing the series C, series J, series K and series L
preferred stock, as applicable, as they would be anti-dilutive.
Weighted average common stock and units
outstanding
Add: Effect of dilutive securities
Weighted average common stock and units
outstanding—diluted
2023
Year Ended December 31,
2022
2021
304,651
10,462
292,123
11,585
315,113
303,708
289,165
747
289,912
79
ITEM 7A. 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
December 31, 2023, our consolidated debt was as follows (in millions):
Fixed rate debt
Variable rate debt subject to interest rate swaps
Total fixed rate debt (including interest rate swaps)
Variable rate debt
Total outstanding debt
Sensitivity to Changes in Interest Rates
Carrying Value
Estimated Fair
Value
$
$
12,102.3
2,855.6
14,957.9
2,579.7
17,537.7
$
$
11,000.8
2,855.6
13,856.5
2,579.7
16,436.2
The following table shows the effect if assumed changes in interest rates occurred, based on fair values and interest
expense as of December 31, 2023:
Assumed event
Increase in fair value of interest rate swaps following an assumed 10% increase in interest rates
Decrease in fair value of interest rate swaps following an assumed 10% decrease in interest rates
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
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
Increase in fair value of fixed rate debt following a 10% decrease in interest rates
Decrease in fair value of fixed rate debt following a 10% increase in interest rates
$
Change
($ millions)
4.1
(4.2)
11.1
(11.1)
2,386.7
(2,839.3)
Interest risk amounts were determined by considering the impact of hypothetical interest rates on our financial
instruments. These analyses do not consider the effect of any change in overall economic activity that could occur in that
environment. Further, in the event of a change of that magnitude, we may take actions to further mitigate our exposure to
the change. However, due to the uncertainty of the specific actions that would be taken and their possible effects, these
analyses assume no changes in our financial structure.
Foreign Currency Exchange Risk
We are subject to risk from the effects of exchange rate movements of a variety of foreign currencies, which may affect
future costs and cash flows. Our primary currency exposures are to the Euro, Japanese yen, British pound sterling,
Singapore dollar, South African 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.
80
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX TO THE CONSOLIDATED FINANCIAL STATEMENTS
Management’s Reports on Internal Control over Financial Reporting
Reports of Independent Registered Public Accounting Firm (Auditor Firm ID: 185)
Consolidated Financial Statements of Digital Realty Trust, Inc.
Consolidated Balance Sheets as of December 31, 2023 and 2022
Consolidated Income Statements for each of the years in the three-year period ended December 31, 2023
Consolidated Statements of Comprehensive Income for each of the years in the three-year period ended
December 31, 2023
Consolidated Statements of Equity for each of the years in the three-year period ended December 31, 2023
Consolidated Statements of Cash Flows for each of the years in the three-year period ended December 31,
2023
Consolidated Financial Statements of Digital Realty Trust, L.P.
Consolidated Balance Sheets as of December 31, 2023 and 2022
Consolidated Income Statements for each of the years in the three-year period ended December 31, 2023
Consolidated Statements of Comprehensive Income for each of the years in the three-year period ended
December 31, 2023
Consolidated Statements of Capital for each of the years in the three-year period ended December 31, 2023
Consolidated Statements of Cash Flows for each of the years in the three-year period ended December 31,
2023
Consolidated Financial Statements of Digital Realty Trust, Inc. and Digital Realty Trust, L.P.
Notes to Consolidated Financial Statements
Supplemental Schedule—Schedule III—Properties and Accumulated Depreciation
Notes to Schedule III—Properties and Accumulated Depreciation
Page No.
82
83
89
90
91
94
95
96
97
98
99
102
103
154
156
81
Management’s Report on Internal Control over Financial Reporting
The management of Digital Realty Trust, Inc. (the Company) is responsible for establishing and maintaining adequate
internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15(d)-15(f). Our
internal control system was designed to provide reasonable assurance to the Company’s management and board of
directors regarding the preparation and fair presentation of published financial statements.
All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems
determined to be effective can provide only reasonable assurance with respect to financial statement preparation and
presentation.
Under the supervision and with the participation of management, including our Chief Executive Officer and Chief
Financial Officer, we assessed the effectiveness of the Company’s internal control over financial reporting as of
December 31, 2023. In making this assessment, we used the criteria set forth by the Committee of Sponsoring
Organizations of the Treadway Commission in Internal Control—Integrated Framework (2013). Based on our
assessment, management concluded that as of December 31, 2023, the Company’s internal control over financial
reporting was effective based on those criteria.
Our independent registered public accounting firm has issued an audit report on the Company’s internal control over
financial reporting. This report appears on page 85.
Management’s Report on Internal Control over Financial Reporting
The management of Digital Realty Trust, L.P. (the Operating Partnership) is responsible for establishing and maintaining
adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and
15(d)-15(f). Our internal control system was designed to provide reasonable assurance to the Operating Partnership’s
management regarding the preparation and fair presentation of published financial statements.
All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems
determined to be effective can provide only reasonable assurance with respect to financial statement preparation and
presentation.
Under the supervision and with the participation of management, including the Chief Executive Officer and Chief
Financial Officer of our general partner, we assessed the effectiveness of the Operating Partnership’s internal control
over financial reporting as of December 31, 2023. In making this assessment, we used the criteria set forth by the
Committee of Sponsoring Organizations of the Treadway Commission in Internal Control—Integrated Framework
(2013). Based on our assessment, management concluded that as of December 31, 2023, the Operating Partnership’s
internal control over financial reporting was effective based on those criteria.
82
Report of Independent Registered Public Accounting Firm
To the Stockholders and Board of Directors
Digital Realty Trust, Inc.:
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of Digital Realty Trust, Inc. and subsidiaries (the
Company) as of December 31, 2023 and 2022, the related consolidated income statements, and statements of
comprehensive income, equity, and cash flows for each of the years in the three-year period ended December 31, 2023,
and the related notes and financial statement schedule III, properties and accumulated depreciation (collectively, the
consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material
respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and
its cash flows for each of the years in the three-year period ended December 31, 2023, in conformity with U.S. generally
accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2023, based on criteria
established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of
the Treadway Commission, and our report dated February 23, 2024 expressed an unqualified opinion on the
effectiveness of the Company’s internal control over financial reporting.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to
express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm
registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.
federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the
PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material
misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material
misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that
respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and
disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used
and significant estimates made by management, as well as evaluating the overall presentation of the consolidated
financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated
financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates
to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially
challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way
our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical
audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it
relates.
83
Evaluation of Scale and Hyperscale lease revenue
As discussed in note 2 to the consolidated financial statements, the Company records rental revenue, which includes
revenue related to Scale and Hyperscale leases, on a straight-line basis if the Company determines on a lease-by-lease
basis it is probable that substantially all lease payments over the term of the lease will be collected. Whenever the results
of that assessment indicate that it is not probable that the Company will be able to collect substantially all lease
payments over the remaining term of the lease, the Company records a reduction to rental revenue equal to the balance
of any deferred rent and rent receivable, and ceases recognizing rental revenue on a straight-line basis and commences
recognizing rental revenue on a cash collected basis. Rental and other services revenue was $5.4 billion for the year
ended December 31, 2023, and deferred rent, net and accounts receivable - trade, net was $624 million and $653 million,
respectively, as of December 31, 2023. A portion of each of these balances included amounts related to Scale and
Hyperscale leases.
We identified the evaluation of the probability of collection of Scale and Hyperscale lease payments as a critical audit
matter. Evaluating the Company’s probability assessment of collection of substantially all the lease payments for its
Scale and Hyperscale leases required significant auditor judgment because of the subjective nature of the evidence
obtained. Specifically, evaluating the creditworthiness of the customers and any guarantors required significant auditor
judgment.
The following are the primary procedures we performed to address the critical audit matter. We evaluated the design and
tested the operating effectiveness of certain internal controls over the Company’s probability assessment of Scale and
Hyperscale lease payment collection process, including controls related to the assessment of the creditworthiness of the
customer and any guarantors. For a selection of the Company’s Scale and Hyperscale leases, we evaluated the
Company’s determination of the collectability of substantially all of the lease payments by: (i) comparing the legal name
of customer and any guarantor to the underlying lease agreements and third-party credit rating report, (ii) evaluating the
creditworthiness of the customer by assessing their credit rating, (iii) reading publicly available information, including
the customer’s financial statements, recent public filings, and news articles, and (iv) inquiring of the Company’s
employees to obtain evidence regarding creditworthiness of the customers.
/s/ KPMG LLP
We have served as the Company’s auditor since 2004.
Dallas, Texas
February 23, 2024
84
Report of Independent Registered Public Accounting Firm
To the Stockholders and Board of Directors
Digital Realty Trust, Inc.:
Opinion on Internal Control Over Financial Reporting
We have audited Digital Realty Trust, Inc. and subsidiaries’ (the Company) internal control over financial reporting
as of December 31, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by
the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the Company
maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023,
based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of
Sponsoring Organizations of the Treadway Commission.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board
(United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2023 and 2022, the
related consolidated income statements, and statements of comprehensive income, equity, and cash flows for each of
the years in the three-year period ended December 31, 2023, and the related notes and financial statement schedule
III, properties and accumulated depreciation (collectively, the consolidated financial statements), and our report
dated February 23, 2024 expressed an unqualified opinion on those consolidated financial statements.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and
for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying
Management's Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on
the Company’s internal control over financial reporting based on our audit. We are a public accounting firm
registered with the PCAOB and are required to be independent with respect to the Company in accordance with the
U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and
the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting
was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an
understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and
testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit
also included performing such other procedures as we considered necessary in the circumstances. We believe that
our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. A company’s internal control over financial reporting
includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company are being made
only in accordance with authorizations of management and directors of the company; and (3) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s
assets that could have a material effect on the financial statements.
85
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may
become inadequate because of changes in conditions, or that the degree of compliance with the policies or
procedures may deteriorate.
Dallas, Texas
February 23, 2024
/s/ KPMG LLP
86
Report of Independent Registered Public Accounting Firm
To the Partners of Digital Realty Trust, L.P. and the Board of Directors of Digital Realty Trust, Inc. and
Digital Realty Trust, L.P.:
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of Digital Realty Trust, L.P. and subsidiaries (the
Operating Partnership) as of December 31, 2023 and 2022, the related consolidated income statements, the consolidated
statements of comprehensive income, capital, and cash flows for each of the years in the three-year period ended
December 31, 2023, and the related notes and financial statement schedule III, properties and accumulated depreciation
(collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly,
in all material respects, the financial position of the Operating Partnership as of December 31, 2023 and 2022, and the
results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2023, in
conformity with U.S. generally accepted accounting principles.
Basis for Opinion
These consolidated financial statements are the responsibility of the Operating Partnership’s management. Our
responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public
accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are
required to be independent with respect to the Operating Partnership in accordance with the U.S. federal securities laws
and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material
misstatement, whether due to error or fraud. The Operating Partnership is not required to have, nor were we engaged to
perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an
understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the
effectiveness of the Operating Partnership’s internal control over financial reporting. Accordingly, we express no such
opinion.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial
statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures
included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial
statements. Our audits also included evaluating the accounting principles used and significant estimates made by
management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our
audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated
financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates
to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially
challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way
our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical
audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it
relates.
87
Evaluation of Scale and Hyperscale lease revenue
As discussed in note 2 to the consolidated financial statements, the Operating Partnership records rental revenue, which
includes revenue related to Scale and Hyperscale leases, on a straight-line basis if the Operating Partnership determines
on a lease-by-lease basis it is probable that substantially all lease payments over the term of the lease will be collected.
Whenever the results of that assessment indicate that it is not probable that the Operating Partnership will be able to
collect substantially all lease payments over the remaining term of the lease, the Operating Partnership records a
reduction to rental revenue equal to the balance of any deferred rent and rent receivable, and ceases recognizing rental
revenue on a straight-line basis and commences recognizing rental revenue on a cash collected basis. Rental and other
services revenue was $5.4 billion for the year ended December 31, 2023, and deferred rent, net and accounts receivable -
trade, net was $624 million and $653 million, respectively, as of December 31, 2023. A portion of each of these balances
included amounts related to Scale and Hyperscale leases.
We identified the evaluation of the probability of collection of Scale and Hyperscale lease payments as a critical audit
matter. Evaluating the Operating Partnership’s probability assessment of collection of substantially all the lease
payments for its Scale and Hyperscale leases required significant auditor judgment because of the subjective nature of
the evidence obtained. Specifically, evaluating the creditworthiness of the customers and any guarantors required
significant auditor judgment.
The following are the primary procedures we performed to address the critical audit matter. We evaluated the design and
tested the operating effectiveness of certain internal controls over the Operating Partnership’s probability assessment of
Scale and Hyperscale lease payment collection process, including controls related to the assessment of the
creditworthiness of the customer and any guarantors. For a selection of the Operating Partnership’s Scale and Hyperscale
leases, we evaluated the Operating Partnership’s determination of the collectability of substantially all of the lease
payments by: (i) comparing the legal name of customer and any guarantor to the underlying lease agreements and third-
party credit rating report, (ii) evaluating the creditworthiness of the customer by assessing their credit rating, (iii) reading
publicly available information, including the customer’s financial statements, recent public filings, and news articles,
and (iv) inquiring of the Operating Partnership’s employees to obtain evidence regarding creditworthiness of the
customers.
/s/ KPMG LLP
We have served as the Operating Partnership’s auditor since 2004.
Dallas, Texas
February 23, 2024
88
DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
December 31,
2023
December 31,
2022
ASSETS
Investments in real estate:
Investments in properties, net
Investments in unconsolidated entities
Net investments in real estate
Operating lease right-of-use assets, net
Cash and cash equivalents
Accounts and other receivables, net
Deferred rent, net
Goodwill
Customer relationship value, deferred leasing costs and other
intangibles, net
Assets held for sale
Other assets
Total assets
LIABILITIES AND EQUITY
Global Revolving Credit Facilities, net
Unsecured term loans, net
Unsecured senior notes, net of discount
Secured and other debt, net of discount
Operating lease liabilities
Accounts payable and other accrued liabilities
Deferred tax liabilities, net
Accrued dividends and distributions
Security deposits and prepaid rents
Obligations associated with assets held for sale
Total liabilities
Redeemable noncontrolling interests
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 December 31, 2023 and
December 31, 2022
Common Stock: $0.01 par value per share, 392,000 shares
authorized; 311,608 and 291,148 shares issued and outstanding as of
December 31, 2023 and December 31, 2022, respectively
Additional paid-in capital
Accumulated dividends in excess of earnings
Accumulated other comprehensive loss, net
Total stockholders’ equity
Noncontrolling interests
Total equity
Total liabilities and equity
$
$
$
$
$
$
$
24,236,088
2,295,889
26,531,977
1,414,256
1,625,495
1,278,110
624,427
9,239,871
2,500,237
478,503
420,382
44,113,258
1,812,287
1,560,305
13,422,342
630,973
1,542,094
2,168,984
1,151,096
387,988
401,867
39,001
23,116,937
23,774,662
1,991,426
25,766,088
1,351,329
141,773
969,292
601,590
9,208,497
3,092,627
—
353,802
41,484,998
2,150,451
797,449
13,120,033
528,870
1,471,044
1,868,885
1,192,752
363,716
369,654
—
21,862,854
1,394,814
1,514,679
731,690
731,690
3,088
24,396,797
(5,262,648)
(751,393)
19,117,534
483,973
19,601,507
44,113,258
$
2,887
22,142,868
(4,698,313)
(595,798)
17,583,334
524,131
18,107,465
41,484,998
See accompanying notes to the consolidated financial statements.
89
DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
(in thousands, except per share data)
Operating Revenues:
Rental and other services
Fee income and other
Total operating revenues
Operating Expenses:
Rental property operating and maintenance
Property taxes and insurance
Depreciation and amortization
General and administrative
Transactions and integration
Provision for impairment
Other
Total operating expenses
Operating income
Other Income (Expenses):
Equity in (loss) earnings of unconsolidated entities
Gain on disposition of properties, net
Other income (expenses), net
Interest expense
Loss from early extinguishment of debt
Income tax expense
Net income
Net income attributable to noncontrolling interests
Net income attributable to Digital Realty Trust, Inc.
Preferred stock dividends
Gain on redemption of preferred stock
Net income available to common stockholders
Net income per share available to common stockholders:
Basic
Diluted
Weighted average common shares outstanding:
Basic
Diluted
2023
Year Ended December 31,
2022
2021
$
$
5,430,173
46,888
5,477,061
$
4,662,683
29,151
4,691,834
2,381,666
216,405
1,694,859
449,056
84,722
118,363
7,529
4,952,600
524,461
(29,791)
900,531
68,431
(437,741)
—
(75,579)
950,312
(1,474)
948,838
(40,724)
—
908,114
3.04
3.00
298,603
309,065
$
$
$
1,825,817
191,745
1,577,933
422,167
68,766
3,000
12,438
4,101,866
589,968
(13,497)
176,754
8,917
(299,132)
(51,135)
(31,550)
380,325
(2,641)
377,684
(40,724)
—
336,960
1.18
1.11
286,334
297,919
$
$
$
$
$
$
4,395,039
32,843
4,427,882
1,570,506
207,814
1,486,632
400,654
47,426
18,291
2,550
3,733,873
694,009
62,283
1,380,795
(4,358)
(293,846)
(18,672)
(72,799)
1,747,412
(38,153)
1,709,259
(45,761)
18,000
1,681,498
5.95
5.94
282,475
283,222
See accompanying notes to the consolidated financial statements.
90
DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands)
Net income
Other comprehensive income (loss):
Foreign currency translation adjustments
(Decrease) increase in fair value of derivatives
Reclassification to interest expense from derivatives
Other comprehensive loss
Comprehensive income (loss)
Comprehensive loss attributable to noncontrolling interests
Comprehensive income (loss) attributable to Digital Realty Trust, Inc.
2023
Year Ended December 31,
2022
$
950,312
$
380,325
$
(209,973)
(21,406)
(32,789)
(264,168)
686,144
105,911
792,055
$
(377,873)
(93,803)
(7,044)
(478,720)
(98,395)
54,161
(44,234)
$
$
2021
1,747,412
(318,828)
1,279
1,304
(316,245)
1,431,167
947
1,432,114
See accompanying notes to the consolidated financial statements.
91
DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EQUITY
(in thousands, except share data)
Accumulated Accumulated
Redeemable
Noncontrolling Preferred Common
Stock
Interests
Number of
Shares
Additional Dividends in
Common Paid-in
Capital
Stock
Excess of
Earnings
Other
Comprehensive
Income (Loss), Net
Total
Noncontrolling
Interests
Total Equity
Balance as of December 31, 2020
Conversion of common units to common stock
Vesting of restricted stock, net
Issuance of common stock in connection with acquisition
Issuance of common stock, net of costs
Shares issued under equity plans, net of share settlement to satisfy tax withholding upon vesting
Redemption of series C preferred stock
Amortization of unearned compensation on share-based awards
Reclassification of vested share-based awards
Adjustment to redeemable noncontrolling interests
Dividends declared on preferred stock
Dividends and distributions on common stock and common and incentive units
Contributions from (distributions to) noncontrolling interests
Deconsolidation of consolidated entities
Net income
Other comprehensive income (loss)
Balance as of December 31, 2021
$
42,011 $ 950,940 280,289,726 $
2,502,331
—
—
354,489
—
—
125,395
—
—
1,060,943
—
—
—
82,129
—
—
— (219,250)
—
—
—
—
—
—
—
5,830
—
—
—
—
—
(724)
—
—
—
(1,052)
—
—
—
—
—
930
—
—
—
2,788 $ 20,626,897 $ (3,997,938) $
—
—
—
—
—
18,000
—
—
—
(45,761)
(1,315,489)
—
—
1,709,259
—
206,695
—
18,269
172,085
(6,838)
—
88,414
(23,829)
(5,830)
—
—
—
—
—
—
25
—
1
11
(1)
—
—
—
—
—
—
—
—
—
—
$
46,995 $ 731,690 284,415,013 $ 2,824 $ 21,075,863 $ (3,631,929) $
135,010 $
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(308,890)
(173,880) $
728,639 $ 18,446,336
—
(206,720)
—
—
18,270
—
172,096
—
—
(6,839)
(201,250)
—
88,414
—
—
23,829
(5,830)
—
—
(45,761)
(1,347,056)
(31,567)
125,186
125,186
(197,016)
(197,016)
1,746,482
37,223
(316,245)
(7,355)
472,219 $ 18,476,787
See accompanying notes to the consolidated financial statements.
92
DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EQUITY (continued)
(in thousands, except share data)
Redeemable
Noncontrolling Preferred
Interests
Stock
Number of
Common
Shares
Accumulated Accumulated
Additional Dividends in
Other
Total
Common
Stock
Paid-in
Capital
Excess of
Earnings
Comprehensive Noncontrolling
Loss, Net
Interests
Total Equity
Balance as of December 31, 2021
Conversion of common units to common stock
Vesting of restricted stock, net
Partial settlement of forward sale agreements, net of costs
Shares issued under equity plans, net of share settlement to satisfy tax withholding upon
vesting
Amortization of unearned compensation regarding share-based awards
Reclassification of vested share-based awards
Adjustment to redeemable noncontrolling interests
Dividends declared on preferred stock
Dividends and distributions on common stock and common and incentive units
Redeemable noncontrolling interests associated with acquisition of Teraco
Contributions from (distributions to) noncontrolling interests
Sale of noncontrolling interest in property to DCRU
Net income (loss)
Other comprehensive income (loss)
Balance as of December 31, 2022
$
46,995 $ 731,690
—
—
—
—
—
—
—
—
—
(11,954)
—
(760)
1,530,090
1,703
—
(4,653)
(46,742)
—
—
—
—
—
—
—
—
—
—
—
1,514,679 $ 731,690
$
284,415,013 $ 2,824 $ 21,075,863 $ (3,631,929) $
(173,880) $
36,284
340,874
6,250,000
106,051
—
—
—
—
—
—
—
—
—
—
—
—
63
—
—
—
—
—
—
—
—
—
—
—
2,942
—
923,400
1,496
92,461
(29,864)
11,954
—
—
—
—
64,616
—
—
—
—
—
—
—
—
—
(40,724)
(1,403,344)
—
—
—
377,684
—
291,148,222 $ 2,887 $ 22,142,868 $ (4,698,313) $
—
—
—
—
—
—
—
—
—
—
—
—
—
(421,918)
(595,798) $
472,219 $ 18,476,787
—
—
923,463
(2,942)
—
—
1,496
—
92,461
—
—
29,864
11,954
—
(40,724)
—
(1,434,140)
(30,796)
—
—
46,277
46,277
76,891
12,275
384,978
7,294
(10,060)
(431,978)
524,131 $ 18,107,465
See accompanying notes to the consolidated financial statements.
93
DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EQUITY (continued)
(in thousands, except share data)
Redeemable
Noncontrolling Preferred Common
Stock
Interests
Shares
Number of
Accumulated Accumulated
Additional Dividends in
Other
Total
Common Paid-in
Capital
Stock
Excess of
Earnings
Comprehensive Noncontrolling
Loss, Net
Interests
Total Equity
Balance as of December 31, 2022
Conversion of common units to common stock
Vesting of restricted stock, net
Issuance of common stock, net of costs
Shares issued under equity plans, net of share settlement to satisfy tax withholding upon vesting
Amortization of unearned compensation regarding share-based awards
Reclassification of vested share-based awards
Adjustment to redeemable noncontrolling interests
Dividends declared on preferred stock
Dividends and distributions on common stock and common and incentive units
Contributions from (distributions to) noncontrolling interests
Deconsolidation of noncontrolling interests in consolidated entities
Net income (loss)
Other comprehensive income (loss)
Balance as of December 31, 2023
$
1,514,679 $ 731,690 291,148,222 $ 2,887 $ 22,142,868 $ (4,698,313) $
—
—
—
—
—
—
5,354
—
(760)
129
—
948,838
(17,618)
(106,970)
—
1,394,814 $ 731,690 311,607,580 $ 3,088 $ 24,396,797 $ (5,262,648) $
112,607
265,671
19,957,541
123,539
—
—
—
—
—
—
—
—
—
8,232
—
2,207,061
(1,945)
88,518
(41,396)
(5,354)
—
—
—
—
—
(1,187)
—
—
—
—
—
—
—
(40,724)
2
—
198
1
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(1,472,449)
—
—
$
(595,798) $
—
—
—
—
—
—
—
—
—
—
—
—
(155,595)
(751,393) $
(8,234)
—
—
—
—
41,396
—
—
(30,983)
4,345
(65,358)
19,092
(416)
524,131 $ 18,107,465
—
—
2,207,259
(1,944)
88,518
—
(5,354)
(40,724)
(1,503,432)
4,345
(65,358)
967,930
(157,198)
483,973 $ 19,601,507
See accompanying notes to the consolidated financial statements.
94
DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Cash flows from operating activities:
Net income
Adjustments to reconcile net income to net cash provided by
operating activities:
Gain on disposition of properties, net
Provision for impairment
Equity in loss (earnings) of unconsolidated entities
Distributions from unconsolidated entities
Depreciation and amortization
Amortization of share-based compensation
Loss from early extinguishment of debt
Straight-lined rents and amortization of above and below market
leases
Amortization of deferred financing costs and debt discount /
premium
Other operating activities, net
Changes in assets and liabilities:
Increase in accounts receivable and other assets
(Decrease) increase in accounts payable and other liabilities
Net cash provided by operating activities
Cash flows from investing activities:
Improvements to investments in real estate
Cash paid for business combination / asset acquisitions, net of
cash acquired
Investments in and advances to unconsolidated entities
Return of investment from unconsolidated entities
Proceeds from sale of assets
Other investing activities, net
Net cash used in investing activities
Cash flows from financing activities:
Proceeds from credit facilities
Payments on credit facilities
Borrowings on secured / unsecured debt
Repayments on secured / unsecured debt
Premium paid for early extinguishment of debt
Capital contributions from noncontrolling interests, net
Proceeds from issuance of common stock, net
Redemption of preferred stock
Payments of dividends and distributions
Other financing activities, net
Net cash provided by (used in) financing activities
Net increase (decrease) in cash, cash equivalents and restricted
cash
Effect of exchange rate changes on cash, cash equivalents and
restricted cash
Cash, cash equivalents and restricted cash at beginning of period
Cash, cash equivalents and restricted cash at end of period
2023
Year Ended December 31,
2022
2021
$
950,312
$
380,325
$
1,747,412
(900,531)
118,363
29,791
73,518
1,694,859
80,532
—
(176,754)
—
13,497
42,376
1,577,933
92,461
51,135
(1,380,795)
—
(62,283)
66,232
1,486,632
84,083
18,672
(50,931)
(64,954)
(30,793)
26,834
(8,216)
(155,317)
(224,434)
1,634,780
18,848
(45,141)
(272,452)
42,114
1,659,388
18,694
81,038
(389,116)
62,452
1,702,228
(3,525,598)
(2,643,097)
(2,520,772)
(52,297)
(336,456)
241,984
2,619,778
(62,522)
(1,115,111)
2,870,841
(3,293,644)
869,132
(111,979)
—
4,474
2,207,259
—
(1,520,644)
(61,965)
963,474
(1,930,178)
(299,427)
3,332
271,567
(101,600)
(4,699,403)
5,510,267
(3,820,086)
2,791,027
(1,036,577)
(49,662)
44,312
928,432
—
(1,450,637)
52,073
2,969,149
(192,015)
(59,450)
62,115
1,691,072
(42,671)
(1,061,721)
2,521,497
(2,611,051)
1,824,389
(990,968)
(16,482)
124,134
172,096
(201,250)
(1,379,198)
(33,797)
(590,630)
1,483,143
(70,866)
49,877
2,631
150,696
1,636,470
$
70,077
151,485
150,696
$
(22,044)
123,652
151,485
$
See accompanying notes to the consolidated financial statements.
95
DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except per unit data)
December 31,
2023
December 31,
2022
ASSETS
Investments in real estate:
Investments in properties, net
Investments in unconsolidated entities
Net investments in real estate
Operating lease right-of-use assets, net
Cash and cash equivalents
Accounts and other receivables, net
Deferred rent, net
Goodwill
Customer relationship value, deferred leasing costs and other
intangibles, net
Assets held for sale
Other assets
Total assets
LIABILITIES AND CAPITAL
Global Revolving Credit Facilities, net
Unsecured term loans, net
Unsecured senior notes, net of discount
Secured and other debt, net of discount
Operating lease liabilities
Accounts payable and other accrued liabilities
Deferred tax liabilities, net
Accrued dividends and distributions
Security deposits and prepaid rents
Obligations associated with assets held for sale
Total liabilities
Redeemable noncontrolling interests
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 December 31, 2023 and
December 31, 2022
Common units, 311,608 and 291,148 units issued and outstanding as
of December 31, 2023 and December 31, 2022, respectively
Limited Partners, 6,449 and 6,289 units issued and outstanding as of
December 31, 2023 and December 31, 2022, respectively
Accumulated other comprehensive loss
Total partners’ capital
Noncontrolling interests in consolidated entities
Total capital
Total liabilities and capital
$
$
$
$
$
$
$
24,236,088
2,295,889
26,531,977
1,414,256
1,625,495
1,278,110
624,427
9,239,871
2,500,237
478,503
420,382
44,113,258
1,812,287
1,560,305
13,422,342
630,973
1,542,094
2,168,984
1,151,096
387,988
401,867
39,001
23,116,937
23,774,662
1,991,426
25,766,088
1,351,329
141,773
969,292
601,590
9,208,497
3,092,627
—
353,802
41,484,998
2,150,451
797,449
13,120,033
528,870
1,471,044
1,868,885
1,192,752
363,716
369,654
—
21,862,854
1,394,814
1,514,679
731,690
731,690
19,137,237
17,447,442
459,356
(772,668)
19,555,615
45,892
19,601,507
44,113,258
$
436,942
(613,423)
18,002,651
104,814
18,107,465
41,484,998
See accompanying notes to the consolidated financial statements.
96
DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
(in thousands, except per unit data)
Year Ended December 31,
2023
2022
2021
Operating Revenues:
Rental and other services
Fee income and other
Total operating revenues
Operating Expenses:
Rental property operating and maintenance
Property taxes and insurance
Depreciation and amortization
General and administrative
Transactions and integration
Provision for impairment
Other
Total operating expenses
Operating income
Other Income (Expenses):
Equity in (loss) earnings of unconsolidated entities
Gain on disposition of properties, net
Other income (expenses), net
Interest expense
Loss from early extinguishment of debt
Income tax expense
Net income
Net loss attributable to noncontrolling interests
Net income attributable to Digital Realty Trust, L.P.
Preferred units distributions
Gain on redemption of preferred units
Net income available to common unitholders
Net income per unit available to common unitholders:
Basic
Diluted
Weighted average common units outstanding:
Basic
Diluted
$
$
5,430,173
46,888
5,477,061
$
4,662,683
29,151
4,691,834
2,381,666
216,405
1,694,859
449,056
84,722
118,363
7,529
4,952,600
524,461
(29,791)
900,531
68,431
(437,741)
—
(75,579)
950,312
19,236
969,548
(40,724)
—
928,824
3.05
3.01
304,651
315,113
$
$
$
1,825,817
191,745
1,577,933
422,167
68,766
3,000
12,438
4,101,866
589,968
(13,497)
176,754
8,917
(299,132)
(51,135)
(31,550)
380,325
5,459
385,784
(40,724)
—
345,060
1.18
1.12
292,123
303,708
$
$
$
$
$
$
See accompanying notes to the consolidated financial statements.
4,395,039
32,843
4,427,882
1,570,506
207,814
1,486,632
400,654
47,426
18,291
2,550
3,733,873
694,009
62,283
1,380,795
(4,358)
(293,846)
(18,672)
(72,799)
1,747,412
947
1,748,359
(45,761)
18,000
1,720,598
5.95
5.94
289,165
289,912
97
DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands)
Net income
Other comprehensive income (loss):
Foreign currency translation adjustments
(Decrease) increase in fair value of derivatives
Reclassification to interest expense from derivatives
Other comprehensive loss
Comprehensive income (loss) attributable to Digital Realty Trust, L.P. $
Comprehensive loss attributable to noncontrolling interests
Comprehensive income (loss) attributable to Digital Realty Trust, L.P. $
$
2023
Year Ended December 31,
2022
950,312
$
380,325
$
(209,973)
(21,406)
(32,789)
(264,168)
686,144
122,972
809,116
$
$
(377,873)
(93,803)
(7,044)
(478,720)
(98,395)
52,202
(46,193)
$
$
2021
1,747,412
(318,828)
1,279
1,304
(316,245)
1,431,167
947
1,432,114
See accompanying notes to the consolidated financial statements.
98
DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CAPITAL
(in thousands, except unit data)
Redeemable
Noncontrolling
Interests
General Partner
Preferred Units
Common Units
Limited Partners
Common Units
Accumulated
Other
Comprehensive Noncontrolling
Units
Amount
Units
Amount
Units
Amount Income (Loss)
Interests
Total Capital
Balance as of December 31, 2020
Conversion of limited partner common units to general partner common
units
Vesting of restricted common units, net
Issuance of common units in connection with acquisition
Issuance of common units, net of costs
Issuance of common units, net of forfeitures
Units issued under equity plans, net of unit settlement to satisfy tax
withholding upon vesting
Redemption of series C preferred units
Amortization of share-based compensation
Reclassification of vested share-based awards
Adjustment to redeemable partnership units
Distributions
Contribution from (distributions to) noncontrolling interests in
consolidated entities
Deconsolidation of consolidated entities
Net income (loss)
Other comprehensive income (loss)
Balance as of December 31, 2021
$
42,011
38,250,000 $ 950,940
280,289,726 $ 16,631,747
8,046,267 $ 609,190 $
134,800 $
119,659 $ 18,446,336
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
2,502,331
354,489
125,395
1,060,943
—
206,720
—
18,270
172,096
—
(2,502,331)
—
—
—
387,835
(206,720)
—
—
—
—
—
—
—
—
5,830
(724)
—
(8,050,000)
—
—
—
—
—
(219,250)
—
—
—
(45,761)
82,129
—
—
—
—
—
(6,839)
18,000
88,414
(23,829)
(5,830)
(1,315,989)
(1,052)
—
930
—
46,995
—
—
—
—
—
—
45,761
—
30,200,000 $ 731,690
—
—
1,663,998
—
284,415,013 $ 17,446,758
—
—
—
—
$
—
—
—
—
—
—
—
—
—
—
—
—
—
23,829
—
(31,067)
—
—
37,670
—
5,931,771 $ 432,902 $
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
18,270
172,096
—
(6,839)
(201,250)
88,414
—
(5,830)
(1,392,817)
—
—
—
(316,245)
(181,445) $
125,186
(197,016)
(947)
—
125,186
(197,016)
1,746,482
(316,245)
46,882 $ 18,476,787
See accompanying notes to the consolidated financial statements.
99
DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CAPITAL (continued)
(in thousands, except unit data)
General Partner
Preferred Units
Common Units
Limited Partners
Common Units
Accumulated
Other
Comprehensive Noncontrolling
Units
Amount
Units
Amount
Units
Amount
(Loss)
Interests
Total Capital
Redeemable
Noncontrolling
Interests
$
Balance as of December 31, 2021
Conversion of limited partner common units to general partner common
units
Vesting of restricted common units, net
Partial settlement of forward sale agreements, net of costs
Issuance of limited partner common units, net
Units issued under equity plans, net of unit settlement to satisfy tax
withholding upon vesting
Units repurchased and retired to satisfy tax withholding upon vesting
Amortization of share-based compensation
Reclassification of vested share-based awards
Adjustment to redeemable partnership units
Distributions
Redeemable noncontrolling interests associated with acquisition of Teraco
Contributions from noncontrolling interests in consolidated entities
Sale of noncontrolling interest in property to DCRU
Net income (loss)
Other comprehensive income (loss)
Balance as of December 31, 2022
$
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
—
—
—
—
—
—
—
—
—
—
—
—
36,284
340,874
6,250,000
—
2,942
—
923,463
—
(36,284)
—
—
393,182
(2,942)
—
—
—
—
—
—
—
(11,954)
(760)
1,530,090
1,703
—
(4,653)
(46,742)
1,514,679
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(40,724)
—
—
—
40,724
—
30,200,000 $ 731,690
106,051
—
—
—
—
—
—
—
—
—
—
8,639
(7,143)
92,461
(29,864)
11,954
(1,403,344)
—
—
64,616
336,960
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
29,864
—
(30,796)
—
—
—
7,914
—
291,148,222 $ 17,447,442 6,288,669 $ 436,942 $
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(431,978)
(613,423) $
—
—
—
—
—
—
923,463
—
—
—
—
—
—
—
—
46,277
12,275
(620)
—
8,639
(7,143)
92,461
—
11,954
(1,474,864)
—
46,277
76,891
384,978
(431,978)
104,814 $ 18,107,465
See accompanying notes to the consolidated financial statements.
100
DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CAPITAL (continued)
(in thousands, except unit data)
Redeemable
Noncontrolling
Interests
General Partner
Preferred Units
Common Units
Limited Partners
Common Units
Accumulated
Other
Comprehensive Noncontrolling
Units
Amount
Units
Amount
Units
Amount
(Loss)
Interests
Total Capital
Balance as of December 31, 2022
Conversion of limited partner common units to general partner common
units
Vesting of restricted common units, net
Issuance of common units, net of costs
Issuance of limited partner common units, net
Units issued under equity plans, net of unit settlement to satisfy tax
withholding upon vesting
Amortization of share-based compensation
Reclassification of vested share-based awards
Adjustment to redeemable partnership units
Distributions
Contributions from noncontrolling interests in consolidated entities
Deconsolidation of noncontrolling interest in consolidated entities
Net income (loss)
Other comprehensive income (loss)
Balance as of December 31, 2023
$
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
—
—
—
—
— $
—
—
—
—
—
—
—
112,607
265,671
19,957,541
—
8,234
—
2,207,260
—
(112,607)
—
—
272,925
(8,234)
—
—
—
—
—
—
5,354
(760)
129
—
(17,618)
(106,970)
1,394,814
—
—
—
—
—
—
—
—
—
—
—
—
—
(40,724)
—
—
40,724
—
30,200,000 $ 731,690
$
123,539
—
—
—
—
—
—
—
—
(1,945)
88,518
(41,396)
(5,354)
(1,472,449)
—
—
908,114
(1,187)
—
—
—
—
—
—
—
—
—
—
—
41,396
—
(30,983)
—
—
20,235
—
311,607,580 $ 19,137,237 6,448,987 $ 459,356 $
—
—
—
—
—
—
—
—
—
—
—
—
(159,245)
(772,668) $
—
—
—
—
—
—
2,207,260
—
(1,945)
—
88,518
—
—
—
(5,354)
—
(1,544,156)
—
4,345
4,345
(65,358)
(65,358)
967,930
(1,143)
3,234
(157,198)
45,892 $ 19,601,507
See accompanying notes to the consolidated financial statements.
101
DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Cash flows from operating activities:
Net income
Adjustments to reconcile net income to net cash provided by
operating activities:
Gain on disposition of properties, net
Provision for impairment
Equity in loss (earnings) of unconsolidated entities
Distributions from unconsolidated entities
Depreciation and amortization
Amortization of share-based compensation
Loss from early extinguishment of debt
Straight-lined rents and amortization of above and below market
leases
Amortization of deferred financing costs and debt discount /
premium
Other operating activities, net
Changes in assets and liabilities:
Increase in accounts receivable and other assets
(Decrease) increase in accounts payable and other liabilities
Net cash provided by operating activities
Cash flows from investing activities:
Improvements to investments in real estate
Cash paid for business combination / asset acquisitions, net of cash
acquired
Investments in and advances to unconsolidated entities
Return of investment from unconsolidated entities
Proceeds from sale of assets
Other investing activities, net
Net cash used in investing activities
Cash flows from financing activities:
Proceeds from credit facilities
Payments on credit facilities
Borrowings on secured / unsecured debt
Repayments on secured / unsecured debt
Premium paid for early extinguishment of debt
Capital contributions from noncontrolling interests, net
General partner contributions
General partner distributions
Payments of dividends and distributions
Other financing activities, net
Net cash provided by (used in) financing activities
Net increase (decrease) in cash, cash equivalents and restricted
cash
Effect of exchange rate changes on cash, cash equivalents and
restricted cash
Cash, cash equivalents and restricted cash at beginning of period
Cash, cash equivalents and restricted cash at end of period
2023
Year Ended December 31,
2022
2021
$
950,312
$
380,325
$
1,747,412
(900,531)
118,363
29,791
73,518
1,694,859
80,532
—
(50,931)
26,834
(8,216)
(155,317)
(224,434)
1,634,780
(176,754)
—
13,497
42,376
1,577,933
92,461
51,135
(64,954)
18,848
(45,141)
(272,452)
42,114
1,659,388
(1,380,795)
—
(62,283)
66,232
1,486,632
84,083
18,672
(30,793)
18,694
81,038
(389,116)
62,452
1,702,228
(3,525,598)
(2,643,097)
(2,520,772)
(52,297)
(336,456)
241,984
2,619,778
(62,522)
(1,115,111)
2,870,841
(3,293,644)
869,132
(111,979)
—
4,474
2,207,259
—
(1,520,644)
(61,965)
963,474
(1,930,178)
(299,427)
3,332
271,567
(101,600)
(4,699,403)
5,510,267
(3,820,086)
2,791,027
(1,036,577)
(49,662)
44,312
928,432
—
(1,450,637)
52,073
2,969,149
(192,015)
(59,450)
62,115
1,691,072
(42,671)
(1,061,721)
2,521,497
(2,611,051)
1,824,389
(990,968)
(16,482)
124,134
172,096
(201,250)
(1,379,198)
(33,797)
(590,630)
1,483,143
(70,866)
49,877
2,631
150,696
1,636,470
$
$
70,077
151,485
150,696
$
(22,044)
123,652
151,485
See accompanying notes to the consolidated financial statements.
102
DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES
DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-
December 31, 2023 and 2022
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 consolidated financial statements and
accompanying notes (the “Consolidated 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 Consolidated Financial Statements. All
material intercompany transactions with consolidated entities have been eliminated.
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.
2. Summary of Significant Accounting Policies
Consolidation. We consolidate all entities that are wholly owned as well as all partially-owned entities that we control.
In addition, we consolidate any variable interest entities (“VIEs”) for which we are the primary beneficiary. We evaluate
whether or not an entity is a VIE (and we are the primary beneficiary) through consideration of substantive terms in the
arrangement to identify which enterprise has the power to direct the activities of the entity that most significantly impact
the entity’s economic performance and the obligation to absorb losses/receive benefits from the entity.
103
DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES
DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)
December 31, 2023 and 2022
For entities that do not meet the definition of VIEs, we first consider if we are the general partner or a limited partner (or
the equivalent in investments not structured as partnerships). We consolidate entities in which we are the general partner
and the limited partners do not have rights that would preclude control. For entities in which we are the general partner,
but the limited partners hold substantive participating or kick-out rights that prohibit our ability to control the entity, we
apply the equity method of accounting since, as the general partner, we have the ability to exercise significant influence
over the operating and financial policies of the entities. For entities in which we are a limited partner, or that are not
structured similar to a partnership, we consider factors such as ownership interest, voting control, authority to make
decisions and contractual and substantive participating rights of the partners. When factors indicate we have a
controlling financial interest in an entity, we consolidate the entity.
Foreign Operations and Foreign Currencies. The functional currency of each of our consolidated subsidiaries and
unconsolidated entities operating in other countries is the principal currency in which each entity’s assets, liabilities,
income and expenses are denominated, which may be different from the local currency of incorporation or the currency
with which the entities conduct their operations. The primary functional currencies impacting our business include the
Euro, Japanese yen, British pound sterling, Singapore dollar, South African rand and Brazilian real.
For our consolidated subsidiaries whose functional currency is not the U.S. dollar, we translate financial statements into
U.S. dollars at the time we consolidate these subsidiaries’ financial statements. Generally, assets and liabilities are
translated at the exchange rate in effect at the balance sheet date. Certain balance sheet items, such as equity and capital-
related accounts are reflected at historical exchange rates. Income statement accounts are generally translated at the
average exchange rates for the reporting periods.
We and certain of our consolidated subsidiaries have intercompany and third-party debt that is not denominated in the
functional currency of the entities. When debt is denominated in a currency other than the functional currency of an
entity, a gain or loss can result. The associated adjustment is reflected in other (expenses) income, net, in the
consolidated income statements, unless it is intercompany debt that is deemed to be long-term in nature or third-party
debt that has been designated as a nonderivative net investment hedge – in which case the associated adjustments are
reflected as a cumulative translation adjustment as a component of other comprehensive income. In the statement of cash
flows, cash flows denominated in foreign currencies are translated using the exchange rates in effect at the time of the
respective cash flows or at average exchange rates for the period, depending on the nature of the cash flow items.
Acquisition Accounting. We evaluate whether or not substantially all of the value of acquired assets is concentrated in a
single identifiable asset or group of identifiable assets to determine whether a transaction is accounted for as an asset
acquisition or a business combination. For asset acquisitions: (1) transaction costs are included in the total costs of the
acquisition and are allocated on a pro-rata basis to the carrying value of the assets and liabilities acquired, (2) real estate
assets acquired are measured based on their cost or total consideration exchanged with any excess consideration or
bargain purchase amount allocated to real estate properties and their associated intangibles such as above and below-
market leases, in-place leases, acquired ground leases, and customer relationship value and (3) all other assets and
liabilities assumed, including any debt, are recorded at fair value. For business combinations: (1) transaction costs are
expensed as incurred, (2) all acquired tangible and identifiable intangible assets are recognized at fair value, (3) the
amount of any purchase consideration that exceeds the fair value of the tangible and identifiable intangible assets
acquired is recognized as goodwill, and (4) to the extent the purchase consideration is less than the fair value of the
tangible and identifiable intangible assets acquired, a gain on bargain purchase is recognized.
104
DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES
DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)
December 31, 2023 and 2022
When we obtain control of an unconsolidated entity that we previously held as an equity method investment and the
acquisition qualifies as a business combination, we remeasure our previously held interest in the unconsolidated entity at
its acquisition-date fair value, derecognize the book value associated with that interest, and recognize any resulting gain
or loss in earnings.
We allocate purchase price primarily using Level 2 and Level 3 inputs (further defined in Fair Value Measurements) as
follows:
Real Estate. The fair value of acquired land is determined based on relevant market data, such as comparable land sales.
The fair value of acquired improvements is determined based on replacement cost as adjusted for any physical and/or
market obsolescence. Operating properties are valued as if they are vacant (“as-if-vacant”) by applying an income
approach methodology using either a discounted cash flow analysis or by applying a capitalization rate to the estimated
Net Operating Income (“NOI”) of a property. As-if-vacant values consider estimated carrying costs during expected
lease-up periods and costs to execute similar leases (based on current market conditions). Carrying costs during expected
lease up periods include real estate taxes, insurance and other operating expenses as well as estimates of lost rental
revenue during the expected lease-up periods. Costs to execute similar leases include lease commissions, tenant
improvements, legal and other related costs.
Lease Intangibles. The portion of the purchase price related to acquired in-place leases is recorded as intangible assets
and liabilities as follows:
Above and below market leases: We use a discounted cash flow approach to determine the estimated
present value of any difference between contractual rents for acquired in-place leases as compared to
current market rents. If rents on acquired in-place leases are higher than current market rents, we record an
intangible asset for the favorable rents. If rents on acquired in-place leases are lower than current market
rents, we record a liability for the unfavorable rents. Favorable rent assets are amortized as a reduction to
rental income over the remaining non-cancelable term of the lease. Unfavorable rent liabilities are
amortized as an increase to rental income over the initial lease term plus any below-market fixed rate
renewal periods.
In-place lease value: Since the as-if-vacant model is used to determine the value of acquired operating
properties, the value of such properties does not include the value associated with having existing tenants
who are leasing space in the purchased properties. Having in-place tenants allows buyers to avoid costs
associated with leasing the property as well as any rent losses and unreimbursed operating expenses during
the lease-up period. An asset for such benefits is recorded separately as in-place lease value. In-place lease
value is determined based on estimated carrying costs during hypothetical expected lease-up periods as
well as costs to execute similar leases. We determine expected carrying costs and costs to execute similar
leases in the same manner as described in the previous discussion of the valuation of operating properties
using the as-if-vacant model. The value of in-place leases is amortized to expense over the remaining initial
terms of the respective leases.
105
DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES
DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)
December 31, 2023 and 2022
Customer relationship value: In some transactions, customers acquired are expected to generate recurring
revenues beyond existing in-place lease terms. We utilize the multi-period excess earnings method to
determine customer relationship value, if any. Key factors reflected in this approach include: (1) projected
revenue growth from existing customers, (2) historical customer lease renewals and attrition rates, (3)
rental renewal probabilities and related market terms, (4) estimated operating costs, and (5) discount rate.
Customer relationship value is amortized to expense ratably over the anticipated life of substantially all of
the acquired customer relationships that are expected to generate excess earnings.
Debt. We recognize the fair value of any acquired debt based on contractual future cash flows discounted using
borrowing spreads and market interest rates that would be available to us for issuance of debt with similar terms and
remaining maturities. If acquired debt is publicly traded, we utilize available market data to determine fair value of the
debt. Any discount or premium on the principal is included in the carrying value of the debt and amortized to interest
expense over the remaining term of the debt using the effective interest method.
Noncontrolling interests. The fair value of the ownership percentage of acquired entities held by third parties is
determined based on the fair value of the consolidated net assets acquired, adjusted for any put or call options or other
such features associated of the noncontrolling interests.
Other acquired assets and liabilities. The fair value of other acquired assets and liabilities is determined using the best
information available. For working capital items that are short-term in nature, fair value is generally presumed to equal
the seller’s carrying value, unless facts and circumstances suggest otherwise.
Fair Value Measurements. Fair value is intended to reflect the price that would be received for the sale of an asset or
paid for the transfer of a liability in an orderly transaction between market participants at the measurement date (the exit
price). We estimate fair value using available market information and valuation methods we believe to be appropriate for
these purposes. Given the significant amount of judgement and subjectivity involved in the determination of fair value,
estimated fair value is not necessarily indicative of amounts that would be realized on disposition. There are three levels
in the fair value hierarchy under U.S. GAAP, which are:
Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities that an entity can
access at the measurement date.
Level 2 – Inputs that are directly or indirectly observable for the associated asset or liability, but which do
not qualify as Level 1 inputs.
Level 3 – Unobservable inputs for the asset or liability.
In instances where inputs from multiple different levels of the fair value hierarchy are used to determine fair value, the
lowest level input that is significant is used to determine the fair-value measurement in its entirety. Our assessment of
the significance of a particular input to a fair-value measurement requires judgment and considers factors specific to the
asset or liability. We utilize fair value measurements on a recurring basis to determine the fair value of: marketable
equity securities, share-based compensation awards, derivative instruments, and outstanding debt. Such measurements
are also regularly utilized in assessing whether or not impairments may exist on intangible assets (including goodwill).
In addition, we utilize fair value measurements on a non-recurring basis to determine the fair value associated with assets
held for sale, acquisitions of assets, and acquisitions of businesses.
106
DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES
DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)
December 31, 2023 and 2022
Investments in Unconsolidated Entities. Investments in unconsolidated entities as reflected on the consolidated
balance sheets includes all investments accounted for using the equity method. We use the equity method to account for
these investments, because we have the ability to exercise significant influence over their operating and financial
policies, but do not control them. Equity method investments are initially recognized at our cost. Transaction costs
related to the formation of equity method investments are also capitalized. We subsequently adjust these balances to
reflect: (1) our proportionate share of net earnings/losses of the entities and accumulated other comprehensive income or
loss, (2) distributions received, (3) contributions made, (4) sales and redemptions of our investments, and (5) certain
other adjustments, as appropriate. When circumstances indicate there may have been a reduction in the value of an
equity method investment, we evaluate whether or not the loss in value is other than temporary. If we determine that a
loss in value is other than temporary, we recognize an impairment charge to reflect the equity investment at fair value.
With regard to the cash flow classifications of distributions from unconsolidated entities, we have elected the nature of
the distribution approach as the information is available to us to determine the nature of the underlying activity that
generated the distributions. In accordance with this approach, cash flows generated from the operations of an
unconsolidated entity are classified as a return on investment (cash inflow from operating activities) and cash flows that
are generated from property sales, debt refinancing or sales and redemptions of our investments are classified as a return
of investment (cash inflow from investing activities).
The Company has a negligible value of investments accounted for under the cost-method. These investments are
included in Other assets on the consolidated balance sheets.
Cash and Cash Equivalents. We consider all cash on hand, demand deposits with financial institutions, and short-term
highly liquid investments with original maturities of 90 days or less to be cash and cash equivalents. Our cash and cash
equivalents are financial instruments exposed to concentrations of credit risk. We invest our cash with high-credit quality
institutions. We may invest our cash balances in money market accounts that are not insured. We do not believe we are
exposed to any significant credit risk associated with our cash and cash equivalents and have not realized any losses
associated with cash investments or accounts.
Restricted Cash. Cash that is held for a specific purpose and thus not available to us for immediate or general business
use is categorized separately from cash and cash equivalents and is included in Other assets on the consolidated balance
sheet. Restricted cash primarily consists of contractual capital expenditures and other deposits.
Assets Held for Sale. We classify an asset as held for sale when the following criteria are met: (1) management that has
the proper authority has approved and committed to a plan to sell, (2) the asset is available for immediate sale, (3) an
active program to locate a buyer has commenced, (4) the sale of the asset is probable, and (5) transfer of the asset is
expected to occur within one year. Assets classified as held for sale are recorded at the lower of carrying value or fair
value less costs to sell and are no longer depreciated.
107
DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES
DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)
December 31, 2023 and 2022
Investments in Real Estate. Investments in real estate are stated at cost, less accumulated depreciation and
amortization. Land is not depreciated. Depreciation and amortization are recorded on a straight-line basis over the
estimated useful lives of the respective assts. Depreciable lives of assets are stated below.
Acquired ground leases
Buildings and improvements
Machinery and equipment
Furniture and fixtures
Leasehold improvements
Tenant improvements
Terms of the related lease
5-39 years
7-15 years
3-5 years
Shorter of the estimated useful lives or the terms of the related leases
Shorter of the estimated useful lives or the terms of the related leases
Improvements and replacements are capitalized when they extend the useful life, increase capacity, or improve the
efficiency of the asset. Repairs and maintenance are charged to expense as incurred.
Capitalization of Costs.
Development costs – During the land development and construction periods of qualifying projects, we capitalize direct
and indirect project costs that are clearly associated with the development of properties. Capitalized project costs include
all costs associated with the development of a property. Such costs include the cost of land and buildings, improvements
and fixed equipment, design and engineering, other construction costs, interest, property taxes, insurance, legal fees,
personnel working on the project, and corporate supervision. Capitalization of costs ceases when development projects
are substantially complete and ready for their intended use. We generally consider development projects to be
substantially complete and ready for intended use upon receipt of a certificate of occupancy.
Leasing commissions – Leasing commissions and other direct costs associated with the acquisition of tenants are
capitalized and amortized on a straight-line basis over the terms of the related leases. During the years ended
December 31, 2023, 2022 and 2021, we capitalized deferred leasing costs of approximately $43.1 million, $51.8 million
and $42.8 million, respectively. Deferred leasing costs are included in Customer relationship value, deferred leasing
costs and intangibles on the consolidated balance sheet and amounted to approximately $220.5 million and $257.0
million, net of accumulated amortization of $558.3 million and $514.3 million, as of December 31, 2023 and 2022,
respectively. Amortization expense on leasing costs was approximately $76.8 million, $79.2 million, and $83.4 million
for the years ended December 31, 2023, 2022 and 2021, respectively.
Recoverability of Real Estate Assets. We assess the carrying value of our properties whenever events or circumstances
indicate carrying amounts of these assets may not be fully recoverable (“triggering events"). Triggering events typically
relate to a change in the expected holding period of a property, an adverse change in expected future cash flows of the
property, or a trend of past cash flow losses that is expected to continue in the future. If our assessment of triggering
events indicates the carrying value of a property or asset group might not be recoverable, we estimate the future
undiscounted net cash flows expected to be generated by the assets and compare that amount to the book value of the
assets. If our future undiscounted net cash flow evaluation indicates we are unable to recover the carrying value of a
property or asset group, we record an impairment loss to provision for impairment in our consolidated income statements
to the extent the carrying value of the property or asset group exceeds fair value.
108
DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES
DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)
December 31, 2023 and 2022
We generally estimate fair value of rental properties using a discounted cash flow analysis that includes projections of
future revenues, expenses, and capital improvements that a market participant would use. In certain cases, we may
supplement this analysis by obtaining outside broker opinions of value. When determining undiscounted future cash
flows, we consider factors such as future operating income trends and prospects as well as the effects of leasing demand,
competition and other factors.
Goodwill and Other Acquired Intangible Assets. Goodwill represents the excess of the purchase price over the fair
value of net tangible and intangible assets acquired in a business combination. Goodwill is not amortized. Goodwill is
evaluated for impairment at the reporting unit level. The Company has one reportable segment and one reporting unit.
We evaluate goodwill for impairment whenever events or changes in circumstances occur that would more likely than
not reduce the fair value of the reporting unit below its carrying value. In addition to monitoring for impactful events and
circumstances, we perform an annual one-step quantitative test in which we compare the reporting unit’s carrying value
to its fair value. We determine the fair value of the reporting unit based on quoted market prices of the Company’s
publicly traded shares. To the extent the fair value of the reporting unit is less than its carrying value, we would record
an impairment charge equal to the amount by which the carrying value of the reporting unit exceeds its fair value. We
have not recognized any goodwill impairments since our inception. Since a significant aspect of our goodwill is
denominated in foreign currencies, changes to our goodwill balance can occur over time due to changes in foreign
currency exchange rates.
Other acquired intangible assets consist primarily of customer relationship value and in-place lease value. All of our
other acquired intangible assets have finite useful lives. If impairment indicators arise with respect to these finite-lived
intangible assets, we evaluate for impairment by comparing the carrying amount of the assets to the estimated future
undiscounted net cash flows expected to be generated by the assets. If estimated future undiscounted cash flows exceed
the carrying value of the assets, we record an impairment charge equal to the amount by which the carrying value
exceeds the estimated fair value of the assets. We have no indefinite-lived intangible assets other than goodwill.
Share-Based Compensation. The Company provides a variety of share-based compensation awards to employees and
directors, including awards that contain time-based vesting criteria and a combination of time-based and performance-
based criteria. The Company measures all share-based compensation awards at grant date fair value. The fair value of
awards that include only a time-based service condition (“time-based awards”) and / or a performance-based condition is
the closing price of the Company’s publicly traded shares at the grant date – and is expensed over the requisite service
period. The fair value of awards that include a combination of market-based criteria and time-based vesting is measured
using a Monte Carlo simulation method. The fair value of these awards is expensed over the requisite service period –
and is not adjusted based on actual achievement of the market performance condition.
Derivative Instruments. As part of the Company’s risk management program, a variety of financial instruments, such
as interest rate swaps and foreign exchange contracts, may be used to mitigate interest rate and foreign currency
exposures. The Company utilizes derivative instruments to manage risks, and not for trading or speculative purposes. All
derivatives are recorded at fair value. The majority of inputs used to value our derivatives fall within Level 2 of the fair
value hierarchy. However, credit valuation adjustments utilize Level 3 inputs (such as estimates of current credit
spreads). Based on the insignificance of credit valuation adjustments to the overall valuation of our derivatives, we have
determined that valuation of our outstanding derivatives is properly categorized in Level 2 of the fair value hierarchy.
109
DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES
DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)
December 31, 2023 and 2022
Changes in the fair value of derivatives are recognized periodically either in earnings or in other comprehensive income
(loss), depending on whether the derivative financial instrument is undesignated or qualifies for hedge accounting, and if
so, whether it represents a fair value, cash flow, or net investment hedge. Gains and losses on derivatives designated as
cash flow hedges, to the extent they are included in the assessment of effectiveness, are recorded in other comprehensive
income (loss) and subsequently reclassified to earnings to offset the impact of the hedged items when they occur. In the
event it becomes probable the forecasted transaction to which a cash flow hedge relates will not occur, the derivative
would be terminated and the amount in other comprehensive income (loss) would be recognized in earnings.
Gains and losses representing components excluded from the assessment of effectiveness for cash flow and fair value
hedges are recognized in earnings on a straight-line basis in the same caption as the hedged item over the term of the
hedge. Gains and losses representing components excluded from the assessment of effectiveness for net investment
hedges are recognized in earnings on a straight-line basis over the term of the hedge.
Interest Rate Swaps – The Company uses interest rate swaps to add stability to interest expense and to manage our
exposure to interest rate movements related to certain floating rate debt obligations. Interest rate swaps designated as
cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for making fixed-rate
payments over the life of the agreements without exchange of the underlying notional amount. We record all interest rate
swaps on the balance sheet at fair value. The fair value of interest rate swaps is determined using the market standard
methodology of netting discounted future fixed cash receipts (or payments) and discounted expected variable cash
payments (or receipts). Variable cash payments (or receipts) are based on expected future interest rates derived from
observable market interest rate curves. We incorporate credit valuation adjustments to appropriately reflect
nonperformance risk for the Company and for the respective counterparties. The counterparties of interest rate swaps are
generally larger financial institutions engaged in providing a variety of financial services.
Interest rate derivatives are presented on a gross basis on the consolidated balance sheets – with interest rate swap assets
presented in other assets, and interest rate swap liabilities presented in accounts payable and other accrued liabilities. As
of December 31, 2023, there was no impact from netting arrangements, because the Company had no derivatives in
liability positions. Net interest paid or received on interest rate swaps is recognized as interest expense. Gains and losses
resulting from the early termination of interest rate swap agreements are deferred and amortized as adjustments to
interest expense over the remaining period of the debt originally covered by the terminated swap.
Foreign Currency Contracts – The Company may, from time to time, enter into forward contracts pursuant to which we
agree to sell an amount of one currency in exchange for an agreed-upon amount of another currency. These agreements
are typically entered into to manage exposures related to transactions that are settled in currencies other than the
functional currency of the legal entity that is party to the transactions. To the extent the Company does not designate
such instruments as hedges, changes in the fair value of these instruments are reflected in earnings. The Company had no
outstanding derivative foreign currency contracts as of December 31, 2023.
Hedge of Net Investment in Foreign Operations – The Company has no outstanding derivatives that function as hedges
of net investments in foreign operations. However, notes denominated in the Swiss franc with a total outstanding
principal balance of 545 million Swiss francs (“CHF”) issued by Digital Intrepid Holding B.V. (“DIH”, a wholly-owned
subsidiary of the OP with Euro functional currency) are designated as non-derivative hedges of DIH’s net investment in
certain of its subsidiaries that have CHF as the functional currency. Changes in the fair value of these hedges, to the
extent they are included in the assessment of effectiveness, are reported in other comprehensive income (loss) and will
be deferred until disposal of the underlying assets (which is currently not expected to occur). Any amounts excluded
from the assessment of effectiveness are reflected as foreign-currency transaction gains/losses which are included as
Other (expense) income, net in the consolidated income statements.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)
December 31, 2023 and 2022
Cross-Currency Interest Rate Swaps – The Company's cross-currency interest rate swap agreements synthetically swap
U.S. dollar-denominated fixed rate debt for foreign currency-denominated fixed rate debt and are designated as net
investment hedges for accounting purposes. The gain or loss on the net investment hedge derivative instruments is
included in the foreign currency translation component of other comprehensive income until the net investment is sold,
diluted, or liquidated. Interest payments received from the cross-currency swaps are excluded from the net investment
hedge effectiveness assessment and are recorded in interest expense on the consolidated income statements.
See Note 17. “Derivative Instruments” for further discussion on the Company’s outstanding derivative instruments.
Income Taxes. Digital Realty Trust, Inc. has elected to be treated as a real estate investment trust (a “REIT”) for federal
income tax purposes. As a REIT, Digital Realty Trust, Inc. generally is not required to pay U.S. federal corporate income
tax to the extent taxable income is currently distributed to its stockholders. If Digital Realty Trust, Inc. were to fail to
qualify as a REIT in any taxable year, it would be subject to U.S. federal and state income taxes (including any
applicable alternative minimum tax) on its taxable income.
The Company is subject to foreign, state and local income taxes in the jurisdictions in which it conducts business. The
Company’s taxable REIT subsidiaries are subject to federal, state, local and foreign income taxes to the extent there is
taxable income. Accordingly, the Company recognizes current and deferred income taxes for the Company and its
taxable REIT subsidiaries, including for U.S. federal, state, local and foreign jurisdictions, as applicable.
We assess our significant tax positions in accordance with U.S. GAAP for all open tax years and determine whether we
have any material unrecognized liabilities from uncertain tax benefits. If a tax position is not considered “more-likely-
than-not” to be sustained solely on its technical merits, no benefits of the tax position are to be recognized (for financial
statement purposes). We classify interest and penalties from significant uncertain tax positions as current tax expense in
our consolidated income statements. We are open to examination by the major taxing jurisdictions for the tax years that
are within the statute of limitations for those jurisdictions. For further discussion related to tax reserves, see Note 13.
“Income Taxes”.
Transactional-based Taxes. We account for transactional-based taxes, such as value added tax, or VAT, for our
international properties on a net basis.
Noncontrolling Interests and Redeemable Noncontrolling Interests. Noncontrolling interests represent the share of
consolidated entities owned by third parties. We recognize each noncontrolling holder’s share of the fair value of the
respective entity’s net assets as noncontrolling interest on our consolidated balance sheets at the date of formation or
acquisition. Noncontrolling interest balances are adjusted for the noncontrolling holder’s share of additional
contributions, distributions, and net earnings or losses.
Partnership units which are contingently redeemable for cash are classified as redeemable noncontrolling interests and
presented in the mezzanine section of the Company’s consolidated balance sheets between total liabilities and
stockholder’s equity. Redeemable noncontrolling interests include amounts related to partnership units issued by
consolidated subsidiaries of the Company in which redemption for equity is outside the control of the Company.
The amounts of consolidated net income attributable to noncontrolling interests and redeemable noncontrolling interests
are presented on the Company’s consolidated income statements as income (or loss) attributable to noncontrolling
interests.
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DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)
December 31, 2023 and 2022
Revenue Recognition.
Rental and Other Services Revenue – We generate the majority of our revenue by leasing our properties to customers
under operating lease agreements, which are accounted for under Accounting Standards Codification 842, Leases (“ASC
842”). We recognize the total minimum lease payments provided for under the leases on a straight-line basis over the
lease term if we determine it is probable that substantially all of the lease payments will be collected over the lease term.
We commence recognition of revenue from rentals at the date the property is ready for its intended use by the tenant and
the tenant takes possession or controls the physical use of the leased asset. The excess of rents recognized as revenue
over amounts contractually due pursuant to the underlying leases is included in Deferred rent, net on the consolidated
balance sheet. Rental payments received in excess of revenue recognized are classified as Accounts payable and other
accrued liabilities on the consolidated balance sheet. Unpaid rents that are contractually due are included in Accounts
and other receivables, net on the consolidated balance sheet.
We estimate the probability of collection of lease payments based on customer creditworthiness, outstanding accounts
receivable balances, and historical bad debts – as well as current economic trends. If collection of substantially all lease
payments over the lease term is not probable, rental revenue is recognized when payment is received, and we record a
reduction to rental revenue equal to the balance of any deferred rent and rent receivable, less the balance of any security
deposits or letters of credit. If collection is subsequently determined to be probable, we: (1) resume recognizing rental
revenue on a straight-line basis, (2) record incremental revenue such that the cumulative amount recognized is equal to
the amount that would have been recorded on a straight-line basis since inception of the lease, and (3) reverse the
allowance for bad debt recorded on outstanding receivables.
Generally, under the terms of our leases, the majority of our rental expenses, including common area maintenance, real
estate taxes and insurance, are recovered from our customers. We record amounts reimbursable by customers (“tenant
recoveries”) as revenue in the period the applicable expenses are incurred – which is generally on a ratable basis through
the term of the lease.
We account for and present rental revenue and tenant recoveries as a single component under rental and other services as
the timing of recognition is the same, the pattern with which we transfer the right of use of the property and related
services to the lessee are both on a straight-line basis and our leases qualify as operating leases.
Interconnection services include port and cross-connect services generally provided on a month-to-month, one-year or
multi-year term. We bill for these services on a monthly basis and recognize the revenue over the period the service is
provided. Revenue for cross-connect installations is generally recognized in the period the cross-connect is installed.
Interconnection services that are not specific to a particular leased space are accounted for under Topic 606 and have
terms that are generally one year or less.
Fee Income and Other – Fee income arises primarily from contractual management agreements with entities in which we
have a noncontrolling interest. Management fees are recognized as earned under the respective agreements. The
Company also provides property and construction management services. Depending on the nature of the agreements,
revenue for these services is recognized either on a ratable monthly basis as the service is provided, or when certain
performance milestones are met. Service revenues are typically recognized on an equal monthly basis based on the
minimum fee to be earned. The monthly amounts could be adjusted depending on whether certain performance
milestones are met.
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DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)
December 31, 2023 and 2022
We utilize the practical expedient in ASC 842 that allows us to account for lease and non-lease components associated
with each lease as a single lease component recorded within rental and other services, instead of accounting for such
items separately under Accounting Standards Codification 606, Revenue (“ASC 606”). We recognize revenue for items
that do not qualify for revenue recognition under ASC 842 under ASC 606. Revenue recognized as a result of applying
ASC 606 was less than 10% of total rental and other services revenue for the years ended December 31, 2023, 2022 and
2021.
Transaction and Integration Expense. Transaction expenses include closing costs, broker commissions and other
professional fees, including legal and accounting fees related to business combinations or acquisitions that were not
consummated. Integration costs include transition costs associated with organizational restructuring (such as severance
and retention payments and recruiting expenses), third-party consulting expenses directly related to the integration of
acquired companies (in areas such as cost savings and synergy realization, technology and systems work), and internal
costs such as training, travel and labor, reflecting time spent by Company personnel on integration activities and
projects. Recurring costs are recorded in general and administrative expense.
Gains on Disposition of Properties. We recognize gains on the disposition of real estate when the recognition criteria
have been met, generally at the time the risks and rewards and title have transferred, and we no longer have control of
the real estate sold. We recognize losses from the disposition of real estate when known.
New Accounting Pronouncements.
Reference Rate Reform. The Financial Conduct Authority and other independent groups announced in July 2017, that
beginning in 2021, they would stop requiring banks to submit rates for the calculation of the London Inter-bank Offered
Rate (“LIBOR”). As a result, in the U.S. the Federal Reserve Board and the Federal Reserve Bank of New York
identified the Secured Overnight Financing Rate (“SOFR”) as its preferred alternative rate for USD LIBOR in debt and
derivative financial instruments. Other global regulators have also undertaken reference rate reform initiatives to identify
a preferred alternative rate for other interbank offered rates (“IBORs”). Both LIBOR and IBOR are herein referred to as
“IBOR-indexed rate”. In November 2020, the Federal Reserve Board along with various independent groups announced
the potential for certain USD LIBOR tenors to continue to be published until June 2023. This change would allow most
legacy USD LIBOR contracts to mature before disruptions occur in the USD LIBOR market, without the need to
transition these contracts to SOFR.
In March 2020, the Financial Accounting Standards Board (“FASB”) issued an Accounting Standard Update (“ASU”)
2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial
Reporting, that provided practical expedients to address existing guidance on contract modifications and hedge
accounting due to the expected market transition from an IBOR-indexed rate to alternative reference rates, such as SOFR
for LIBOR (“reference rate reform”).
The first practical expedient within the ASU allows companies to elect to not apply certain modification accounting
requirements to debt, derivative, and lease contracts affected by reference rate reform if certain criteria are met. The
second practical expedient allows companies to change the reference rate and other critical terms related to the reference
rate reform in derivative hedge documentation without having to designate the hedging relationship – allowing
companies to continue applying hedge accounting to existing cash flow and net investment hedges.
113
DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES
DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)
December 31, 2023 and 2022
The ASU was effective on a prospective basis beginning January 1, 2020 and may be elected over time as reference rate
reform activities occur. We will continue to evaluate debt, derivative, and lease contracts that are modified in the future
to ensure they are eligible for modification relief and apply the available practical expedients as needed. Also, in
December 2022, the FASB issued ASU 2022-06, Deferral of the Sunset Date of Topic 848 (“ASU 2022-06”), which was
issued to defer the sunset date of Topic 848 to December 31, 2024. ASU 2022-06 is effective immediately for all
companies. ASU 2022-06 had no impact on the Company’s Consolidated Financial Statements for the year ended
December 31, 2023.
Business Combinations. In October 2021, the FASB issued ASU 2021-08, "Business Combinations (Topic 805):
Accounting for Contract Assets and Contract Liabilities from Contracts with Customers," which requires contract assets
and contract liabilities acquired in a business combination to be recognized and measured by the acquirer on the
acquisition date in accordance with ASC 606, "Revenue from Contracts with Customers," as if the acquirer had
originated the contracts. ASU 2021-08 is applicable on a prospective basis and is effective for fiscal years and interim
reporting periods within those years beginning after December 15, 2022 (or in January 1, 2023 for the Company). Early
adoption is permitted. On January 1, 2023, we adopted this ASU and the adoption of this standard did not have a
material impact on our Consolidated Financial Statements.
Segment Reporting. In November 2023, the FASB issued ASU 2023-07, Segment Reporting ("Topic 280"):
Improvements to Reportable Segment Disclosure. The ASU is intended to improve reportable segment disclosure
requirements, primarily through enhanced disclosures about significant segment expenses. The ASU is effective for
fiscal years beginning after December 15, 2024, and interim periods within fiscal years beginning after December 15,
2024, with early adoption is permitted, and retrospective adoption required. We are currently evaluating the extent of the
impact of this ASU on disclosures in our Consolidated Financial Statements.
Income Taxes. In December 2023, FASB issued ASU 2023-09, Income Taxes ("Topic 740"): Improvements to Income
Tax Disclosures. This ASU is intended to enhance the transparency and decision usefulness of income tax disclosures by
requiring (1) consistent categories and greater disaggregation of information in the rate reconciliation and (2) income
taxes paid disaggregated by jurisdiction. The ASU is effective for fiscal years beginning after December 15, 2024 and to
be applied prospectively, with retrospective application and early adoption both permitted. We are currently evaluating
the extent of the impact of this ASU on disclosures in our Consolidated Financial Statements.
We determined that all other recently issued accounting pronouncements that have yet to be adopted by the Company
will not have a material impact on our Consolidated Financial Statements or do not apply to our operations.
114
DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES
DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)
December 31, 2023 and 2022
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 14. “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%.
The following table summarizes the amounts recorded at the acquisition date (in thousands):
Building and improvements
Construction in progress and space held for development
Operating lease right-of-use assets
Assumed cash and cash equivalents
Goodwill
Customer relationship value and other intangibles (weighted-average amortization life of 14 years)
Debt assumed
Operating lease liabilities
Deferred tax liabilities, net
Redeemable noncontrolling interests
Working capital assets, net
$
Total purchase consideration
$
Final Amounts
1,376,128
521,153
2,784
5,528
1,625,994
720,126
(355,688)
(4,031)
(632,841)
(1,530,090)
1,112
1,730,175
Goodwill — The purchase price of the Teraco Acquisition exceeded the fair value of net tangible and intangible assets
acquired and liabilities assumed by $1.6 billion. This amount was recorded as goodwill. We believe the strategic benefits
of the acquisition support the value of goodwill recorded. Specifically, Teraco has numerous cross-connects, cloud on-
ramps and data centers in addition to direct access to multiple subsea cables. The acquisition of Teraco added South
Africa to the Company’s 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 combined with the Company’s highly connected facilities in Marseille, France, and across
EMEA, our customers now have a range of strategic connectivity hubs from which to serve all corners of the African
market.
The Teraco acquisition was not material and neither the investment in the assets nor the results of operations of the
acquisition was significant to the Company’s consolidated financial position or results of operations, and thus pro forma
information is not required to be presented.
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DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES
DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)
December 31, 2023 and 2022
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 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 (an $18.1 million and $4.8 million net loss for the years ended December 31, 2023 and 2022,
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 year
ended December 31, 2023 and for the period from August 1, 2022 (date of acquisition) to December 31, 2022, no such
adjustment was required.
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DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES
DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)
December 31, 2023 and 2022
4. Leases
Lessor Accounting
We generate the majority of our revenue by leasing operating properties to customers under operating lease agreements.
The manner in which we recognize these transactions in our financial statements is described in Note 2. “Summary of
Significant Accounting Policies—Revenue Recognition” to these Consolidated Financial Statements. Our largest
customer’s total revenue approximates 10% of our total revenue base. No other individual customer makes up more than
6% of our total revenue.
A summary of minimum lease payments due from our customers under operating leases of land, prestabilized
development properties, and operating properties with lease periods of greater than one year at December 31, 2023 is
shown below. These amounts do not reflect future rental revenues from renewal or replacement of existing leases unless
we are reasonably certain we will exercise the option or the lessee has the sole ability to exercise the option.
Reimbursements of operating expenses and variable rent increases are excluded from the table below.
(Amounts in thousands)
2024
2025
2026
2027
2028
Thereafter
Total
Lessee Accounting
$
$
Operating leases
2,896,757
2,213,163
1,797,304
1,416,874
1,164,093
3,676,797
13,164,988
We lease space and equipment at certain of our data centers from third parties under noncancelable lease agreements.
Leases for our data centers expire on various dates through 2069. Certain of our data centers, primarily in Europe and
Singapore, are subject to ground leases. As of December 31, 2023, the termination dates of these ground leases ranged
from 2024 to 2073. In addition, our corporate headquarters along with several regional office locations are subject to
leases with termination dates ranging from 2024 to 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 do not contain residual
value guarantees and do not 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 consolidated income statements amounted to approximately $153.2 million,
$144.0 million and $145.7 million for the years ended December 31, 2023, 2022 and 2021, respectively.
As of December 31, 2023, the weighted average remaining lease term for our operating leases and finance leases was 13
years and 14 years, respectively. We do not include renewal options in the lease term for calculating the lease liability
unless we are reasonably certain we will exercise the option or the lessor has the sole ability to exercise the option. The
weighted average incremental borrowing rate was 3.4% for operating leases and 2.0% for finance leases at
December 31, 2023. We assigned a collateralized interest rate to each lease based on the term of the lease and the
currency in which the lease is denominated.
117
DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES
DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)
December 31, 2023 and 2022
Maturities of lease liabilities as of December 31, 2023 were as follows (in thousands):
2024
2025
2026
2027
2028
Thereafter
Total undiscounted future cash flows
Less: Imputed interest
Present value of undiscounted future cash flows
Operating
lease liabilities
Finance
lease liabilities (1)
163,799
167,415
167,687
166,075
158,538
1,110,512
1,934,026
(391,932)
1,542,094
$
$
21,899
21,925
21,867
22,368
91,771
212,979
392,809
(77,631)
315,178
$
$
(1) Included in accounts payable and other accrued liabilities on the consolidated balance sheet.
5. Receivables
Refer to Note 2 “Summary of Significant Accounting Policies—Revenue Recognition” for discussion of our accounting
policies related to accounts receivable, deferred rent and related allowances.
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.
(Amounts in thousands):
Accounts receivable – trade
Allowance for doubtful accounts
Accounts receivable – trade, net
Accounts receivable – customer recoveries
Value-added tax receivables
Accounts receivable – installation fees
Other receivables
Accounts and other receivables, net
Balance as of
December 31, 2023
Balance as of
December 31, 2022
694,252
(41,204)
653,048
233,499
257,911
65,203
68,449
1,278,110
$
$
551,393
(33,048)
518,345
170,012
167,459
60,663
52,813
969,292
$
$
118
DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES
DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)
December 31, 2023 and 2022
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
December 31, 2023, allowance for deferred rent receivables increased primarily due to a customer bankruptcy.
(Amounts in thousands):
Deferred rent receivables
Allowance for deferred rent receivables
Deferred rent, net
6. Investments in Properties
Balance as of
December 31, 2023
Balance as of
December 31, 2022
$
$
657,009
(32,582)
624,427
$
$
612,439
(10,849)
601,590
A summary of our investments in properties is below (in thousands):
Property Type
Land
Acquired ground lease
Buildings and improvements
Tenant improvements
Accumulated depreciation and amortization
Investments in operating properties, net
Construction in progress and space held for development
Land held for future development
Investments in properties, net
As of December 31, 2023
As of December 31, 2022
$
$
1,087,278
91
25,388,788
830,211
27,306,368
(7,823,685)
19,482,683
4,635,215
118,190
24,236,088
$
$
1,061,408
6,006
24,287,103
781,540
26,136,057
(7,268,981)
18,867,076
4,789,134
118,452
23,774,662
In December 2023, the Company and Blackstone Inc. announced a $7 billion joint venture to develop four hyperscale
data center campuses across Frankfurt, Paris and Northern Virginia. The disposition of a portion of our interest in the
data center campuses met the criteria under ASC 360 for the assets to qualify as held for sale and contribution. However,
the operations are not classified as discontinued operations as a result of our continuing interest in the joint venture.
These data center campuses were not representative of a significant component of our portfolio, nor did the sale
represent a significant shift in our strategy. We closed the first phase of the transaction in 2024. The Company will
manage the development and day-to-day operations of the joint venture, for which it will receive customary fees. The
second phase is subject to regulatory approvals and is targeted to close later in the year.
As of December 31, 2023, real estate assets, including those mentioned above, that qualified as held for sale had an
aggregate carrying value of $478.5 million within total assets and $39.0 million within total liabilities and are shown as
Assets held for sale and Obligations associated with assets held for sale on the consolidated balance sheet.
119
DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES
DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)
December 31, 2023 and 2022
7. Acquisitions and Dispositions of Properties
Acquisitions of Properties
For the years ended December 31, 2023, 2022 and 2021, acquisitions of properties that did not qualify as business
combinations were immaterial to our financial statements – both individually and in the aggregate.
Disposition of Properties to Digital Core REIT
On December 6, 2021, we completed the listing of Digital Core REIT as a standalone real estate investment trust
publicly traded on the Singapore Exchange under the ticker symbol “DCRU”. Hereafter, Digital Core REIT and its
associated subsidiaries are collectively referred to as the Singapore REIT (“SREIT”). In connection with the listing, the
Company contributed a portfolio of 10 operating data center properties to the SREIT. The fair value of these properties
was determined to be approximately $1.4 billion based on two separate third party appraisal reports.
In exchange for the contribution of these properties, the Company received: (1) $919 million cash and (2) a 39.4% equity
interest in the publicly traded Digital Core REIT entity, while retaining a 10% direct interest in the operating properties
that were contributed by the Company to the SREIT. In addition, the Company received approximately $13 million of
acquisition fees paid to the Company by Digital Core REIT in the form of additional units in Digital Core REIT.
The Company determined the fair market value of its 10% retained investment in the properties contributed to the
SREIT based on its retained ownership percentage applied to the appraised value of the properties. This approach was
deemed appropriate because the Company determined that a discount for lack of marketability and/or lack of control
associated with its 10% direct interest in the properties was not warranted.
As a result of this transaction, the Company recognized a gain on sale of assets of approximately $1.0 billion – which is
summarized below (in millions).
Cash received
Fair market value of retained investment in SREIT
Acquisition fees paid in Digital Core REIT units
Tax on acquisition fees
Net book value of assets contributed
Gain on disposition of properties
$
$
919.1
521.4
13.0
(3.0)
(439.3)
1,011.2
The Company provides property management and other services to the SREIT in exchange for contractual fees that are
payable to the Company in cash or in additional units of the SREIT. The Company’s retained investment in the SREIT is
accounted for as an equity method investment, based on the conclusion that the Company has significant influence over
(but does not control) the SREIT.
On December 13, 2022, we completed the sale of a 25% interest in a data center facility in Frankfurt, Germany to the
SREIT for total consideration of approximately $146 million. Because the Company still controls this asset, no gain or
loss was recorded on this 25% interest. In connection with this transaction, the SREIT loaned the consolidated subsidiary
that owns the data center $79.8 million.
The assets and liabilities sold to the SREIT were not representative of a significant component of our portfolio, nor did
the sale represent a significant shift in our strategy.
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DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES
DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)
December 31, 2023 and 2022
Disposition of Other Properties
The Company sold the following other real estate properties during the years ended December 31, 2023, 2022 and 2021:
Property Type
Joint venture contributions
Non-core assets
Non-core building
Other
European portfolio
Other
Metro Area
Various
Various
Dallas
Various
Various
Various
Date Sold /
contributed
2023
2023
Aug 8, 2022
2022
Mar 16, 2021
2021
Gross Proceeds / Fair
Value
(in millions)
Gain on Sale /
contribution
(in millions)
$
2,278.5 (1) $
341.3
203.0
2.8
680.0
109.6
814.0
86.6
174.0
2.8
332.0
37.7
(1) Includes GI Partners, Realty Income, and TPG Real Estate.
Joint venture contributions
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 and recognized a
gain on disposition of approximately $238 million. We 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 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 perform the day-to-day accounting and property
management functions for the joint venture and, as such, will earn a management fee.
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
$1.4 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 $576 million. We perform the day-to-day accounting and property
management functions for the joint venture and, as such, will earn a management fee.
On November 10, 2023, we formed a joint venture with Realty Income to support the development of two data centers in
Northern Virginia. The facilities were 100% pre-leased prior to construction. We contributed the two data center
buildings at a purchase price of $185 million, which represented costs spent through November 10, 2023, to the new
joint venture. We received approximately $148 million of gross proceeds from the contribution of our data centers to the
joint venture and 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. Each partner will fund its pro rata share of the remaining $150 million
estimated development cost for the first phase of the project, which is slated for completion in mid-2024. We perform
the day-to-day accounting and property management functions for the joint venture and, as such, will earn a management
fee.
121
DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES
DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)
December 31, 2023 and 2022
Non-core assets - In 2023, we closed on the sale of three non-core assets for gross proceeds of approximately $341
million resulting in a net gain on sale in the aggregate of approximately $87 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.
Non-core building - On August 8, 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. 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.
European portfolio - On March 16, 2021, we sold a portfolio of 11 data centers in Europe (four in the United Kingdom,
three in the Netherlands, three in France and one in Switzerland) to Ascendas Reit, a CapitaLand sponsored REIT, for
total consideration of approximately $680 million (subject to customary final adjustments for working capital and other
items). The total gain recorded during the three months ended March 31, 2021 as a result of this sale was approximately
$332 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.
8. 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):
Americas (1)
APAC (2)
EMEA (3)
Global (4)
Total
Balance as of
December 31, 2023
Balance as of
December 31, 2022
1,363,226
569,996
28,334
334,333
2,295,889
$
$
951,331
543,521
31,559
465,015
1,991,426
$
$
Includes the following unconsolidated entities along with our ownership percentage:
(1) Ascenty (50%), Clise (50%), Colovore (17%), GI Partners (35%), Mapletree (20%), Menlo (20%), Realty Income
(20%), TPG Real Estate (20%), and Walsh (85%).
(2) Digital Connexion (33%), Lumen (50%), and MC Digital Realty (50%).
(3) Medallion (60%) and Mivne (50%).
(4) Digital Core REIT (43%).
122
DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES
DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)
December 31, 2023 and 2022
GI Partners Joint Venture – On July 13, 2023, 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 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 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
perform the day-to-day accounting and property management functions for the joint venture and, as such, will earn a
management fee. We 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 joint venture 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 our interest in the joint
venture under the equity method of accounting.
As of the date 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 $157 million and is classified as a Level 3 investment
in the fair value hierarchy. The primary inputs to the valuation included volatility, hold period, and dividend yield.
TPG Real Estate Joint Venture – On July 25, 2023, we formed a joint venture with TPG Real Estate. We contributed
three stabilized hyperscale data center buildings in Northern Virginia, at a purchase price of $1.5 billion, to the new joint
venture. We received approximately $1.4 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 Estate contributed such
cash to the joint venture in exchange for an 80% interest in the joint venture. We perform the day-to-day accounting and
property management functions for the joint venture and, as such, will earn a management fee. We 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 joint venture 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 our interest in the joint venture under the equity method of accounting.
As of the date 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 and is classified as a Level 3 investment
in the fair value hierarchy. The primary inputs to the valuation included volatility, hold period, and dividend yield.
123
DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES
DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)
December 31, 2023 and 2022
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. The facilities were 100% pre-leased prior to construction. We
contributed the two data center buildings at a purchase price of $185 million, which represented costs spent through
November 10, 2023, to the new joint venture. We received approximately $148 million of gross proceeds from the
contribution of our data centers to the joint venture and 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. Each partner will fund its
pro rata share of the remaining $150 million estimated development cost for the first phase of the project, which is slated
for completion in mid-2024. We perform the day-to-day accounting and property management functions for the joint
venture and, as such, will earn a management fee. We 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 joint venture
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 our interest in the joint venture under the equity method of accounting.
DCREIT – Digital Core REIT is a standalone real estate investment trust formed under Singapore law, which is publicly
traded on the Singapore Exchange under the ticker symbol “DCRU”. Digital Core REIT owns 12 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 December 31, 2023, the Company held 36% of the outstanding DCRU units, 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 December 31, 2023
and 2022, respectively. Based on the closing price per unit of $0.65 and $0.55 as of December 31, 2023 and 2022,
respectively, the fair value of the units the Company owned in DCRU was approximately $264 million and $218 million
as of December 31, 2023 and 2022, respectively.
These values do not include the value of the Company’s 10% interest in the North American operating properties and
75% interest in the German operating property 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.
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. During the years
ended December 31, 2023 and 2022, the Company earned fees pursuant to these contractual agreements of
approximately $10.7 million and $10.6 million, respectively, which is recorded as fee income and other on the
consolidated income statement.
During the year ended December 31, 2023, we concluded that the decline in fair value of our equity investment in
DCRU 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, which was recorded to provision for impairment in our consolidated income statements. The charge
reflected 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.
124
DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES
DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)
December 31, 2023 and 2022
Ascenty – The Company’s ownership percentage in Ascenty includes an approximate 2% interest held by one of the
Company’s non-controlling interest holders. This 2% interest had a carrying value of approximately $18 million and $23
million as of December 31, 2023 and 2022, 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.
Summarized Financial Information of Investments in Unconsolidated Entities
The subsequent tables provide summarized financial information for all of our investments in unconsolidated entities
accounted for using the equity method. Amounts are shown in thousands.
December 31, 2023
Unconsolidated entities
Americas
APAC
EMEA
Global
Total Unconsolidated
entities
Our investment in and share of
equity in earnings of
unconsolidated entities
December 31, 2022
Unconsolidated entities
Americas
APAC
EMEA
Global
Total Unconsolidated
entities
Our investment in and share of
equity in loss of
unconsolidated entities
December 31, 2021
Unconsolidated entities
Americas
APAC
EMEA
Global
Total Unconsolidated
entities
Our investment in and share of
equity in earnings of
unconsolidated entities
Total
Assets
Total
Liabilities
Equity
Revenues
Net
Operating
Income
Net
Income
(Loss)
$
$
6,627,520
2,097,115
80,525
1,542,331
3,105,127 $
880,972
83,819
591,470
3,522,393 $
1,216,143
(3,294)
950,861
$
590,264
257,905
1,601
112,931
$
326,042
121,053
939
73,390
(13,097)
42,244
(8,225)
(60,867)
$
10,347,491 $
4,661,388 $
5,686,103 $
962,701 $
521,424 $
(39,945)
$
2,295,889
$
(29,791)
Total
Assets
Total
Liabilities
Equity
Revenues
Net
Operating
Income
Net
Income
(Loss)
$
$
3,648,169
1,705,553
121,950
1,602,725
1,350,163 $
541,509
68,223
551,088
2,298,006 $
1,164,044
53,727
1,051,637
$
406,325
201,405
1,632
118,233
$
240,498
90,924
851
77,582
(38,874)
25,946
(5,475)
(19,455)
$
7,078,397 $
2,510,983 $
4,567,414 $
727,595 $
409,855 $
(37,858)
$
1,991,426
$
(13,497)
Total
Assets
Total
Liabilities
Equity
Revenues
Net
Operating
Net
Income
(Loss)
$
$
3,377,842
1,527,323
65,459
1,440,500
1,223,434 $
548,578
38,377
350,000
2,154,408 $
978,745
27,082
1,090,500
$
375,271
193,744
316
8,184
$
231,960
102,822
141
5,844
183,336
32,691
(172)
(4,648)
$
6,411,124 $
2,160,389 $
4,250,735 $
577,515 $
340,767 $
211,207
$
1,807,689
$
62,283
The amounts reflected in the previous tables on this topic are based on the historical financial information of the
respective individual entities and have not been adjusted to show only the portion that is owned by the Company. The
debt of our unconsolidated entities generally is non-recourse to us, except for customary exceptions pertaining to such
matters as intentional misuse of funds, environmental conditions, and material misrepresentations.
125
DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES
DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)
December 31, 2023 and 2022
9. 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 December 31, 2023 as compared to December 31, 2022
were primarily driven by changes in exchange rates associated with goodwill balances denominated in foreign
currencies.
The following is a summary of goodwill activity for the years ended December 31, 2023 and 2022 (in thousands):
Merger / Portfolio Acquisition
Telx Acquisition
European Portfolio Acquisition
DFT Merger
Interxion Combination
Teraco Combination
Other Combination
Total
Merger / Portfolio Acquisition
Telx Acquisition
European Portfolio Acquisition
DFT Merger
Interxion Combination
Teraco Combination
Other Combination
Acquisition
$
$
$
Balance as of
December 31,
2022
330,845 $
408,055
2,592,147
4,288,208
1,576,704
12,538
9,208,497 $
Balance as of
December 31,
2021
330,845 $
448,124
2,592,147
4,547,153
—
19,171
Goodwill
Adjustments
Impact of Change
in Foreign
Exchange Rates
— $
—
—
—
—
—
— $
— $
3,011
—
4,843
—
(20)
7,834 $
— $
18,444
—
118,806
(113,710)
—
23,540 $
Goodwill
Adjustments
Impact of Change
in Foreign
Exchange Rates
Acquisition
— $
—
—
—
1,625,994
—
— $
—
—
5,409
—
(6,633)
(1,224) $
— $
(40,069)
—
(264,354)
(49,290)
—
Balance as of
December 31,
2023
330,845
429,510
2,592,147
4,411,857
1,462,994
12,518
9,239,871
Balance as of
December 31,
2022
330,845
408,055
2,592,147
4,288,208
1,576,704
12,538
9,208,497
Total
$
7,937,440 $ 1,625,994 $
(353,713) $
10. Acquired Intangible Assets and Liabilities
The following table summarizes our acquired intangible assets and liabilities:
(Amounts in thousands)
Customer relationship value $
Acquired in-place lease
value
Other
Acquired above-market
leases
Acquired below-market
leases
December 31, 2023
December 31, 2022
Balance as of
Gross
Carrying
Amount
2,926,808
1,089,743
108,744
Accumulated
Amortization
$
(952,943) $
Net Carrying
Amount
1,973,865
$
(859,167)
(33,483)
230,576
75,261
Gross
Carrying
Amount
3,327,765
1,369,526
94,829
Accumulated
Amortization
$
(888,105) $
Net Carrying
Amount
2,439,660
(1,041,631)
(26,788)
327,895
68,041
153,205
(150,344)
2,861
264,071
$
(253,693)
10,378
(273,951)
226,840
(47,111)
(344,256)
255,821
(88,435)
126
DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES
DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)
December 31, 2023 and 2022
Amortization of customer relationship value, acquired in-place lease value and other intangibles (a component of
depreciation and amortization expense) was approximately $252.0 million, $253.3 million and $262.9 million for the
years ended December 31, 2023, 2022 and 2021, respectively.
Amortization of acquired below-market leases, net of acquired above-market leases, resulted in an increase in rental and
other services revenue of $6.5 million and $2.9 million for the years ended December 31, 2023 and 2022, respectively,
and a decrease of $3.6 million for the year ended December 31, 2021. Estimated annual amortization for each of the five
succeeding years and thereafter, commencing January 1, 2024 is as follows:
(Amounts in thousands)
2024
2025
2026
2027
2028
Thereafter
Total
Customer
relationship
value
176,848 $
176,622
175,981
175,588
153,143
1,115,683
1,973,865 $
$
$
Acquired in-
place lease
value
Acquired
above-market
leases
Acquired
below-market
leases
Other (1)
51,381 $
49,839
48,012
38,482
18,563
24,299
230,576 $
2,802 $
2,802
2,802
2,802
2,817
7,916
21,941 $
1,327 $
1,070
357
48
46
13
2,861 $
(6,712)
(6,560)
(5,798)
(5,182)
(4,979)
(17,880)
(47,111)
Remaining Contractual Life (in years)
14.3
4.5
2.1
6.9
(1) Excludes power grid rights in the amount of approximately $53.3 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.
127
DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES
DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)
December 31, 2023 and 2022
11. 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, the unsecured term loans and the unsecured
senior notes. A summary of outstanding indebtedness is as follows (in thousands):
Global Revolving Credit Facilities
Unsecured term loans
Unsecured senior notes
Secured and other debt
Total
December 31, 2023
December 31, 2022
Weighted-
average
interest rate
4.33 %
4.76 %
2.24 %
8.07 %
2.89 %
Amount
Outstanding
1,825,228
1,567,925
13,507,427
637,072
17,537,652
$
$
Weighted-
average
interest rate
3.04 %
2.49 %
2.44 %
7.12 %
2.68 %
Amount
Outstanding
2,167,889
802,875
13,220,961
532,130
16,723,855
$
$
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):
December 31, 2023
December 31, 2022
Amount
Outstanding
% of Total
Amount
Outstanding
Denomination of Draw
U.S. dollar ($)
British pound sterling (£)
Euro (€)
Other
Total
% of Total
23.1 %
11.5 %
55.8 %
9.6 %
3,855,903
1,929,051
9,325,126
1,613,775
16,723,855
$
$
2,784,875
1,973,305
10,835,878
1,943,594
17,537,652
15.9 %
11.2 %
61.8 %
11.1 %
$
$
128
DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES
DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)
December 31, 2023 and 2022
The table below summarizes our debt maturities and principal payments as of December 31, 2023 (in thousands):
2024
2025
2026
2027
2028
Thereafter
Subtotal
Unamortized net discounts
Unamortized deferred financing
costs
Total
Global Revolving
Credit Facilities
(1)(2)
$
$
$
—
—
1,825,228
—
—
—
1,825,228
—
(12,941)
1,812,287
$
$
Unsecured
Unsecured
Secured and
Term Loans(3)(4)
$
—
1,567,925
—
—
—
—
1,567,925
—
(7,620)
1,560,305
Senior Notes
Other Debt
Total Debt
$
$
$
980,615
1,226,775
1,513,519
1,178,269
2,101,950
6,506,299
13,507,427
(33,324)
(51,761)
13,422,342
$
$
$
321
584
110,791
218,511
293,775
13,090
637,072
(3,754)
(2,345)
630,973
$
$
$
980,936
2,795,284
3,449,538
1,396,780
2,395,725
6,519,389
17,537,652
(37,078)
(74,667)
17,425,907
(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% 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 million 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 will result in an early extinguishment charge of approximately $1.1 million during the three months
ending March 31, 2024.
Global Revolving Credit Facility
We have a Global Revolving Credit Facility under which we may draw up to $3.75 billion on a revolving basis (subject
to currency fluctuations). The Global Revolving Credit Facility can be drawn in Australian dollars, British pounds
sterling, Canadian dollars, Euros, Hong Kong dollars, Japanese yen, Singapore dollars, Indonesian rupiah, Swiss francs,
Korean won and U.S. dollars (with the ability to add other currencies in the future).
On April 5, 2022, we entered into an amendment (the “Amendment”) to the Second Amended and Restated Global
Senior Credit Agreement (the “Credit Agreement”). The Amendment provided for, among other things: (1) an increase
in the size of the Global Revolving Credit Facility from $3.0 billion to $3.75 billion and (2) the transition from U.S.
dollar London Interbank Offered Rate (LIBOR) to Term Secured Overnight Financing Rate (SOFR) for floating rate
borrowings denominated in U.S. dollars for all purposes under the Credit Agreement.
129
DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES
DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)
December 31, 2023 and 2022
We have the ability to increase the size of the Global Revolving Credit Facility by up to $750 million, subject to the
receipt of lender commitments and other conditions precedent. Other key terms of the Global Revolving Credit Facility
are as follows:
Maturity date: January 24, 2026, with two six-month extension options available. The bank group is obligated
to grant the extension options provided we give proper notice, we make certain representations and warranties
and no default exists under the Global Revolving Credit Facilities.
Interest rate: the applicable index plus a margin which is based on the credit ratings of our long-term debt and is
currently 85 basis points.
Annual facility fee: based on the total commitment amount of the facility and the credit ratings of our long-term
debt and is currently 20 basis points and is payable quarterly.
Sustainability-linked pricing component: pricing can increase by up to 5 basis points or decrease by up to 5
basis points depending on whether or not the OP or its subsidiaries meet certain sustainability performance
targets.
Yen Revolving Credit Facility
In addition to the Global Revolving Credit Facility, we have a revolving credit facility that provides for borrowings in
Japanese Yen of up to ¥33.3 billion (approximately $236.0 million based on the exchange rate on December 31, 2023),
hereafter referred to as the Yen Revolving Credit Facility. We have the ability from time to time to increase the size of
the Yen Revolving Credit Facility to up to ¥93.3 billion (approximately $661.4 million based on the exchange rate on
December 31, 2023), subject to receipt of lender commitments and other conditions precedent. Other key terms of the
Yen Revolving Credit Facility are as follows:
Maturity date: January 24, 2026, with two six-month extension options available. The bank group is obligated
to grant the extension options provided we give proper notice, we make certain representations and warranties
and no default exists under the Global Revolving Credit Facilities.
Interest rate: the applicable index plus a margin which is based on the credit ratings of our long-term debt and is
currently 50 basis points.
Quarterly unused commitment fee: currently is 10 basis points, calculated using the average daily unused
revolving credit commitment and is based on the credit ratings of our long-term debt.
Sustainability-linked pricing component: pricing can increase by up to 5 basis points or decrease by up to 5
basis points depending on whether or not the OP or its subsidiaries meet certain sustainability performance
targets.
130
DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES
DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)
December 31, 2023 and 2022
Restrictive Covenants in Global Revolving Credit Facility and Yen Revolving Credit Facility
The Global Revolving Credit Facility and the Yen Revolving Credit Facility both contain various restrictive covenants,
including limitations on our ability to incur additional indebtedness, make certain investments, or merge with another
company. In addition, we are required to maintain financial coverage ratios, including with ratios respect to
unencumbered assets. After the occurrence of and during the continuance of any event of default, these credit facilities
restrict the Parent’s ability to make distributions to stockholders or redeem or otherwise repurchase shares of its capital
stock, except in limited circumstances (such as those necessary to enable Digital Realty Trust, Inc. to maintain its
qualification as a REIT and to minimize the payment of income or excise tax). As of December 31, 2023, we were in
compliance with all of such covenants for both of these revolving credit facilities.
Unsecured Term Loans
Euro Term Loan Agreement
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.
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.
131
DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES
DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)
December 31, 2023 and 2022
Unsecured Senior Notes
The following table provides details of our unsecured senior notes (balances in thousands):
Aggregate Principal Amount at Issuance
Balance as of
USD
Maturity Date December 31, 2023
December 31, 2022
0.600% notes due 2023(1)
2.625% notes due 2024
2.750% notes due 2024
4.250% notes due 2025
0.625% notes due 2025
2.500% notes due 2026
0.200% notes due 2026
1.700% notes due 2027
3.700% notes due 2027(2)
5.550% notes due 2028(2)
1.125% notes due 2028
4.450% notes due 2028
0.550% notes due 2029
3.600% notes due 2029
3.300% notes due 2029
1.500% notes due 2030
3.750% notes due 2030
1.250% notes due 2031
0.625% notes due 2031
1.000% notes due 2032
1.375% notes due 2032
Borrowing Currency
CHF
€
£
£
€
€
CHF
CHF
$
$
€
$
CHF
$
£
€
£
€
€
€
€
100,000 $
600,000
250,000
400,000
650,000
1,075,000
275,000
150,000
1,000,000
900,000
500,000
650,000
270,000
900,000
350,000
750,000
550,000
500,000
1,000,000
750,000
750,000
108,310 Oct 02, 2023 $
677,040 Apr 15, 2024
Jul 19, 2024
324,925
Jan 17, 2025
634,480
Jul 15, 2025
720,980
Jan 16, 2026
1,224,640
298,404 Dec 15, 2026
162,465 Mar 30, 2027
1,000,000 Aug 15, 2027
900,000
Jan 15, 2028
548,550 Apr 09, 2028
650,000
Jul 15, 2028
292,478 Apr 16, 2029
Jul 01, 2029
900,000
454,895
Jul 19, 2029
831,900 Mar 15, 2030
719,825 Oct 17, 2030
Feb 01, 2031
560,950
Jul 15, 2031
1,220,700
Jan 15, 2032
874,500
Jul 18, 2032
849,375
Unamortized discounts, net of premiums
Deferred financing costs, net
Total unsecured senior notes, net of discount and deferred financing costs
$
$
(1) Paid in full at maturity on October 2, 2023.
(2) Subject to cross-currency swaps.
Restrictive Covenants in Unsecured Senior Notes
— $
662,340
318,275
509,240
717,535
1,186,693
326,826
178,269
1,000,000
900,000
551,950
650,000
320,884
900,000
445,585
827,925
700,205
551,950
1,103,900
827,925
827,925
13,507,427 $
(33,324)
(51,761)
13,422,342 $
108,121
642,300
302,075
483,320
695,825
1,150,788
297,331
162,181
1,000,000
900,000
535,250
650,000
291,925
900,000
422,905
802,875
664,565
535,250
1,070,500
802,875
802,875
13,220,961
(37,280)
(63,648)
13,120,033
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 December 31, 2023, we were in compliance with each of these financial covenants.
Early Extinguishment of Unsecured Senior Notes
We recognized the following losses on early extinguishment of unsecured notes:
During the year ended December 31, 2022: $51.1 million primarily due to redemption of the 4.750% Notes due
2025 in February 2022.
During the year ended December 31, 2021: $18.3 million primarily due to redemption of the 2.750% Notes due
2023 in February 2021.
132
DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES
DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)
December 31, 2023 and 2022
Secured and Other Debt
This amount consists of a variety of loans at fixed and floating rates ranging from 3.29% to 11.65%. The largest
component of the balance are Teraco debt facilities in the amount of $413.8 million, with an effective interest rate of
9.36%, along with a $135.0 million mortgage loan for the Company’s Westin building in Seattle – which bears interest
at 3.29%. The loan bearing interest at 11.65% is an unsecured loan with a balance of less than $10 million.
12. 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
2023
Year Ended December 31,
2022
2021
$
908,114
$
336,960
$
1,681,498
4,839
—
332,121
1,681,498
Numerator:
Net income available to common stockholders
Plus: Loss attributable to redeemable
noncontrolling interest (1)
Net income available to common stockholders -
diluted EPS
Denominator:
Weighted average shares outstanding—basic
Potentially dilutive common shares:
Unvested incentive units
Unvested restricted stock
Forward equity offering
Market performance-based awards
Redeemable noncontrolling interest shares (1)
Weighted average shares outstanding—diluted
Income per share:
(18,093)
926,207
298,603
118
9
248
112
9,975
309,065
286,334
257
45
—
103
11,180
297,919
282,475
253
192
—
302
—
283,222
5.95
5.94
Basic
Diluted
$
$
3.04
3.00
$
$
1.18
1.11
$
$
133
DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES
DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)
December 31, 2023 and 2022
Digital Realty Trust, L.P. Earnings per Unit
Numerator:
Net income available to common unitholders
Plus: Loss attributable to redeemable
noncontrolling interest (1)
Net income available to common unitholders -
diluted EPS
Denominator:
Weighted average units outstanding—basic
Potentially dilutive common units:
Unvested incentive units
Unvested restricted units
Forward equity offering
Market performance-based awards
Redeemable noncontrolling interest shares (1)
Weighted average units outstanding—diluted
Income per unit:
Basic
Diluted
$
$
2023
Year Ended December 31,
2022
2021
$
928,824
$
345,060
$
1,720,598
4,839
—
340,221
1,720,598
(18,093)
946,917
304,651
118
9
248
112
9,975
315,113
292,123
257
45
—
103
11,180
303,708
289,165
253
192
—
302
—
289,912
5.95
5.94
3.05
3.01
$
$
1.18
1.12
$
$
(1) Pursuant to the Put/Call Agreement with the Rollover Shareholders who remained after the Teraco Acquisition, the
Rollover Shareholders have a put right on the Remaining Interest of Teraco that can be settled by the Company in
Digital Realty Trust, Inc. shares, in cash, or a combination of cash and shares. 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. For additional
information regarding the Teraco Acquisition and the defined terms used above, see Note 3. “Business
Combinations” to Consolidated Financial Statements contained herein.
134
DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES
DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)
December 31, 2023 and 2022
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).
Shares subject to Forward Equity Offering
Weighted average of Operating Partnership common units not owned
by Digital Realty Trust, Inc.
Potentially dilutive Series C Cumulative Redeemable Perpetual
Preferred Stock
Potentially dilutive Series J Cumulative Redeemable Preferred Stock
Potentially dilutive Series K Cumulative Redeemable Preferred Stock
Potentially dilutive Series L Cumulative Redeemable Preferred Stock
Total
13. Income Taxes
2023
Year Ended December 31,
2022
2021
—
6,048
—
1,794
1,887
3,095
12,824
—
5,789
—
1,736
1,825
2,993
12,343
6,250
6,691
541
1,318
1,386
2,274
18,460
Digital Realty Trust, Inc. has elected to be treated and believes that it has been organized and has operated in a manner
that has enabled it to qualify as a REIT for federal income tax purposes. As a REIT, Digital Realty Trust, Inc. is
generally not subject to corporate level federal income taxes on taxable income distributed currently to its stockholders.
Since inception, Digital Realty Trust, Inc. has distributed at least 100% of its taxable income annually. As
such, no provision for federal income taxes has been included in the Company’s accompanying Consolidated Financial
Statements years ended December 31, 2023, 2022 and 2021.
The Operating Partnership is a partnership and is not required to pay federal income tax. Instead, taxable income is
allocated to its partners, who include such amounts on their federal income tax returns. As such, no provision for federal
income taxes has been included in the Operating Partnership’s accompanying Consolidated Financial Statements.
We have elected taxable REIT subsidiary (“TRS”) status for some of our consolidated subsidiaries. In general, a TRS
may provide services that would otherwise be considered impermissible for REITs to provide and may hold assets that
REITs cannot hold directly. Income taxes for TRS entities were accrued, as necessary, for the years ended
December 31, 2023, 2022 and 2021.
For our TRS entities and foreign subsidiaries that are subject to U.S. federal, state, local and foreign income taxes,
deferred tax assets and liabilities are established for temporary differences between the financial reporting basis and the
tax basis of assets and liabilities at the enacted tax rates expected to be in effect when the temporary differences reverse.
A valuation allowance for deferred tax assets is provided if we believe it is more likely than not that the deferred tax
asset may not be realized, based on available evidence at the time the determination is made. An increase or decrease in
the valuation allowance that results from the change in circumstances that causes a change in our judgment about the
realizability of the related deferred tax asset is included in the income statement. Deferred tax assets (net of valuation
allowance) and liabilities for our TRS entities and foreign subsidiaries were accrued, as necessary, for the years ended
December 31, 2023, 2022 and 2021.
135
DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES
DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)
December 31, 2023 and 2022
As of December 31, 2023 and 2022, we had deferred tax liabilities net of deferred tax assets of approximately $1,144.9
million and $1,184.6 million, respectively, primarily related to our foreign properties, classified within Other assets
(deferred tax assets) and separately stated Deferred tax liabilities, net in the consolidated balance sheet. The majority of
our net deferred tax liability relates to differences between foreign tax basis and book basis of the assets acquired in the
Teraco Acquisition in August 2022, Interxion Combination in March 2020, the European Portfolio Acquisition in
July 2016 and the Sentrum portfolio acquisition in 2012. The valuation allowance against the deferred tax assets at
December 31, 2023 and 2022 relate primarily to net operating loss carryforwards, nondeductible interest expense
carryforwards and hybrid attributes that we do not expect to utilize attributable to certain foreign jurisdictions.
As of December 31, 2023, we are under examination for various years in Australia, France, Germany, Singapore and the
United States.
The amount of gross unrecognized tax benefits at December 31, 2023, was $3.7 million, which includes $0.2 million of
accrued interest and penalties.
Deferred income tax assets and liabilities as of December 31, 2023 and 2022 were as follows (in thousands):
Gross deferred income tax assets:
Net operating loss carryforwards
Basis difference - real estate property
Basis difference - intangibles
Basis difference - equity investments
Tax credit carryforward
Other - temporary differences
Total gross deferred income tax assets
Valuation allowance
Total deferred income tax assets, net of valuation allowance
Gross deferred income tax liabilities:
Basis difference - real estate property
Basis difference - intangibles
Straight line rent
Other - temporary differences
Total gross deferred income tax liabilities
Net deferred income tax liabilities(1)
2023
2022
$
$
188,735
18,035
7,744
—
2,056
180,316
396,886
(176,268)
220,618
1,162,143
190,607
5,992
6,750
1,365,492
1,144,874
$
$
175,935
14,027
7,682
5,694
—
132,578
335,916
(125,491)
210,425
1,160,412
219,653
9,215
5,744
1,395,024
1,184,599
(1) Net of deferred tax assets of $6.2 million and $8.2 million for the year ended December 31, 2023 and 2022,
respectively.
136
DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES
DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)
December 31, 2023 and 2022
14. 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 in 2023 (the “2022 Sales Agreement”). Pursuant to the 2022 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 year ended December 31, 2023, Digital Realty Trust, Inc. generated net
proceeds of approximately $1.1 billion from the issuance of approximately 11.3 million common shares 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. For the year ended December 31, 2022, we had no sales under the 2022 Sales Agreement.
The 2022 Sales Agreement was terminated on August 4, 2023, and Digital Realty Trust, Inc. and Digital Realty Trust,
L.P. 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. can 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 year ended December 31, 2023, Digital Realty
Trust, Inc. generated net proceeds of approximately $1.1 billion from the issuance of approximately 8.7 million common
shares under the 2023 Sales Agreement at an average price of $133.21 per share after payment of approximately $11.4
million of commissions to the agents. As of December 31, 2023, approximately $343.4 million remained available for
future sales under the 2023 Sales Agreement.
Forward Equity Sale
On September 13, 2021, the Parent completed an underwritten public offering of approximately 6.3 million shares of its
common stock, all of which were offered in connection with forward sale agreements it entered into with certain
financial institutions acting as forward purchasers. The forward purchasers borrowed and sold an aggregate of
approximately 6.3 million shares of the Parent’s common stock in the public offering. The Parent did not receive any
proceeds from the sale of common stock by the forward purchasers in the public offering. During the year ended
December 31, 2022, we settled the forward sale agreements in full by issuing approximately 6.3 million shares, resulting
in proceeds of approximately $939.0 million. Upon physical settlement of the forward sale agreements, the OP issued
general partner common partnership units to the Parent in exchange for contribution of the net proceeds. We accounted
for our forward equity sales agreements in accordance with the accounting guidance governing financial instruments and
derivatives.
137
DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES
DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)
December 31, 2023 and 2022
Redeemable Preferred Stock
The Company has issued and outstanding the following series of cumulative redeemable preferred stock, which are
governed by the articles supplementary for the applicable series of preferred stock as of December 31, 2023 and 2022 (in
thousands, except for share cap and annual dividend rate).
Date(s)
Issued
Initial Date to
Redeem (2)
Preferred Stock (1)
5.250% Series J Cumulative
Redeemable Preferred Stock Aug 7, 2017 Aug 7, 2022
5.850% Series K
Cumulative Redeemable
Preferred Stock
5.200% Series L Cumulative
Redeemable Preferred Stock Oct 10, 2019 Oct 10, 2024
Mar 13, 2019 Mar 13, 2024
Total
Liquidation
Share Cap (3)
Value (4)
Annual
Dividend
Rate (5)
Shares Outstanding as of
December 31,
2023
2022
Balance (net of issuance costs)
as of December 31,
2023
2022
0.4252100 $
200,000
1.31250
8,000
8,000 $
193,540 $
193,540
0.4361100
210,000
1.46250
8,400
8,400
203,264
203,264
0.3851800
$
345,000
755,000
1.30000
13,800
30,200
13,800
30,200 $
334,886
731,690 $
334,886
731,690
(1) All series of preferred stock do not have a stated maturity date and are not subject to any sinking fund or mandatory
redemption provisions. Upon liquidation, dissolution or winding up, each series of preferred stock will rank senior
to Digital Realty Trust, Inc. common stock and on parity with the other series of preferred stock. Holders of each
series of preferred stock generally have no voting rights except for limited voting rights if Digital Realty Trust, Inc.
fails to pay dividends for six or more quarterly periods (whether or not consecutive) and in certain other
circumstances.
(2) Except in limited circumstances, reflects earliest date that Digital Realty Trust, Inc. may exercise its option to
redeem the preferred stock, at a redemption price of $25.00 per share, plus accrued and unpaid dividends up to but
excluding the date of redemption.
(3) Upon the occurrence of specified changes of control, as a result of which neither Digital Realty Trust, Inc.’s
common stock nor the common securities of the acquiring or surviving entity (or American Depositary Receipts
representing such securities) is listed on the New York Stock Exchange, the NYSE MKT, LLC or the NASDAQ
Stock Market or listed or quoted on a successor exchange or quotation system, each holder of preferred stock will
have the right (unless, prior to the change of control conversion date specified in the applicable Articles
Supplementary governing the preferred stock, Digital Realty Trust, Inc. has provided or provides notice of its
election to redeem the preferred stock) to convert some or all of the preferred stock held by it into a number of
shares of Digital Realty Trust, Inc.’s common stock per share of preferred stock to be converted equal to the lesser
of (i) the quotient obtained by dividing (a) the sum of the $25.00 liquidation preference plus the amount of any
accrued and unpaid dividends to, but not including, the change of control conversion date (unless the change of
control conversion date is after a record date for a preferred stock dividend payment and prior to the corresponding
dividend payment date, in which case no additional amount for such accrued and unpaid dividend will be included
in this sum) by (b) the common stock price specified in the applicable Articles Supplementary governing the
preferred stock; and (ii) the Share Cap, subject to certain adjustments; subject, in each case, to provisions for the
receipt of alternative consideration as described in the applicable Articles Supplementary governing the preferred
stock. Except in connection with specified change of control transactions, the preferred stock is not convertible into
or exchangeable for any other property or securities of Digital Realty Trust, Inc.
(4) Liquidation preference is $25.00 per share.
(5) Dividends on preferred shares are cumulative and payable quarterly in arrears.
138
DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES
DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)
December 31, 2023 and 2022
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
December 31, 2023 and 2022:
(Units in thousands)
Digital Realty Trust, Inc.
Noncontrolling interests consist of:
Common units held by third parties
Incentive units held by employees and directors (see Note
16. "Incentive Plans")
December 31, 2023
December 31, 2022
Number of
units
311,608
Percentage of
total
98.0 %
Number of
units
291,148
Percentage of
total
97.9 %
4,343
1.3 %
4,375
1.5 %
2,106
318,057
0.7 %
100.0 %
1,914
297,437
0.6 %
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 consolidated balance
sheet.
The redemption value of the noncontrolling Operating Partnership common units and the vested incentive units was
approximately $834.1 million and $591.2 million based on the closing market price of Digital Realty Trust, Inc. common
stock on December 31, 2023 and December 31, 2022, respectively.
139
DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES
DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)
December 31, 2023 and 2022
The following table shows activity for the noncontrolling interests in the Operating Partnership for the years ended
December 31, 2023 and 2022:
(Units in thousands)
As of December 31, 2021
Redemption of common units for shares of Digital Realty
Trust, Inc. common stock (1)
Conversion of incentive units held by employees and
directors for shares of Digital Realty Trust, Inc. common
stock (1)
Incentive units issued upon achievement of market
performance condition
Grant of incentive units to employees and directors
Cancellation / forfeitures of incentive units held by
employees and directors
As of December 31, 2022
Conversion of incentive units held by employees and
directors for shares of Digital Realty Trust, Inc. common
stock (1)
Incentive units issued upon achievement of market
performance condition
Grant of incentive units to employees and directors
Cancellation / forfeitures of incentive units held by
employees and directors
As of December 31, 2023
Common Units
Incentive Units
Total
4,389
(14)
—
—
—
—
4,375
(32)
—
—
—
4,343
1,542
—
(22)
221
170
3
1,914
(80)
142
171
(41)
2,106
5,931
(14)
(22)
221
170
3
6,289
(112)
142
171
(41)
6,449
(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 sheets of Digital Realty Trust, Inc.
140
DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES
DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)
December 31, 2023 and 2022
Dividends and Distributions
Digital Realty Trust, Inc. Dividends
We have declared and paid the following dividends on our common and preferred stock for the years ended
December 31, 2023, 2022 and 2021 (in thousands, except per share data):
Date dividend declared
Dividend payment date
Series C
Preferred
Stock
Series J
Preferred
Stock
Series K
Preferred
Stock
Series L
Preferred
Stock
Common
Stock
March 31, 2021
$
3,333
$
February 25, 2021
May 10, 2021
August 11, 2021
November 18, 2021
March 3, 2022
May 24, 2022
August 17, 2022
November 29, 2022
February 22, 2023
May 24, 2023
August 8, 2023
November 28, 2023
June 30, 2021
September 30, 2021
December 31, 2021 for
Preferred Stock; January 14,
2022 for Common Stock
March 31, 2022
$
$
June 30, 2022
September 30, 2022
December 31, 2022 for
Preferred Stock; January 13,
2023 for Common Stock
March 31, 2023
$
$
June 30, 2023
September 29, 2023
December 29, 2023 for
Preferred Stock; January 19,
2024 for Common Stock
Annual rate of dividend per share
$
$
— (1)
—
—
3,333
—
—
—
—
—
—
—
—
—
—
1.65625
$
$
$
$
$
$
2,625
2,625
2,625
2,625
10,500
2,625
2,625
2,625
2,625
10,500
2,625
2,625
2,625
2,625
10,500
1.31250
$
$
$
$
$
$
$
3,071
3,071
3,071
3,071
12,284
3,071
3,071
3,071
3,071
12,284
3,071
3,071
3,071
3,071
12,284
1.46250
$
$
$
$
$
$
$
4,485
4,485
4,485
4,485
17,940
4,485
4,485
4,485
4,485
17,940
4,485
4,485
4,485
4,485
17,940
1.30000
$
$
$
$
$
$
$
326,965 (2)
328,279 (2)
329,720 (2)
329,772 (2)
1,314,736
348,025 (3)
348,077 (3)
351,410 (3)
355,832 (3)
1,403,344
356,214 (3)
365,937 (3)
370,278 (3)
380,019 (3)
1,472,448
4.88000
(1) Redeemed on May 17, 2021 for $ 25.211632 per share, or a redemption price of $25.00 per share, plus accrued and
unpaid dividends up to but not including the redemption date. The transaction resulted in a gain on redemption of
$18.0 million, measured as the difference between the cash consideration paid upon redemption, which was $201.3
million and the carrying value of the preferred stock at the time of the redemption, which was $219.3 million. This
amount is reflected as gain on redemption of preferred stock which increased net income available to common
stockholders.
(2) $4.640 annual rate of dividend per share.
(3) $4.880 annual rate of dividend per share.
141
DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES
DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)
December 31, 2023 and 2022
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 years ended December 31, 2023, 2022 and 2021, (in thousands, except for per unit data):
Date distribution declared
Distribution payment date
Units
Series C
Preferred
Series J
Preferred
Units
Series K
Preferred
Units
Series L
Preferred
Units
Common
Units
February 25, 2021
May 10, 2021
August 11, 2021
November 18, 2021
March 3, 2022
May 24, 2022
August 17, 2022
November 29, 2022
February 22, 2023
May 24, 2023
August 8, 2023
November 28, 2023
Annual rate of distribution per unit
March 31, 2021
$
3,333
$
June 30, 2021
September 30, 2021
December 31, 2021 for
Preferred Units; January 14,
2022 for Common Units
March 31, 2022
June 30, 2022
September 30, 2022
December 31, 2022 for
Preferred Units; January 13,
2023 for Common Units
March 31, 2023
June 30, 2023
September 29, 2023
December 29, 2023 for
Preferred Units; January 19,
2024 for Common Units
— (1)
—
—
3,333
—
—
—
—
—
—
—
—
—
—
—
$
$
$
$
$
$
$
$
$
$
$
$
2,625
2,625
2,625
2,625
10,500
2,625
2,625
2,625
2,625
10,500
2,625
2,625
2,625
2,625
10,500
1.31250
$
$
$
$
$
$
$
3,071
3,071
3,071
3,071
12,284
3,071
3,071
3,071
3,071
12,284
3,071
3,071
3,071
3,071
12,284
1.46250
$
$
$
$
$
$
$
4,485
4,485
4,485
4,485
17,940
4,485
4,485
4,485
4,485
17,940
4,485
4,485
4,485
4,485
17,940
1.30000
$
$
$
$
$
$
$
336,041 (2)
336,543 (2)
337,447 (2)
337,476 (2)
1,347,507
355,812 (3)
355,885 (3)
359,207 (3)
363,616 (3)
1,434,520
364,204 (3)
373,833 (3)
378,352 (3)
387,988 (3)
1,504,377
4.88000
(1) Redeemed on May 17, 2021 for $ 25.211632 per unit, or a redemption price of $25.00 per unit, plus accrued and
unpaid distributions up to but not including the redemption date. The transaction resulted in a gain on redemption of
$18.0 million, measured as the difference between the cash consideration paid upon redemption, which was $201.3
million and the carrying value of the preferred stock at the time of the redemption, which was $219.3 million. This
amount is reflected as gain on redemption of preferred stock which increased net income available to common
unitholders.
(2) $4.640 annual rate of distribution per unit.
(3) $4.880 annual rate of distribution per unit.
Distributions out of Digital Realty Trust, Inc.’s current or accumulated earnings and profits are generally classified as
dividends whereas distributions in excess of its current and accumulated earnings and profits, to the extent of a
stockholder’s U.S. federal income tax basis in Digital Realty Trust, Inc.’s stock, are generally classified as a return of
capital. Distributions in excess of a stockholder’s U.S. federal income tax basis in Digital Realty Trust, Inc.’s stock are
generally characterized as capital gain. Cash provided by operating activities has generally been sufficient to fund all
distributions, however, in the future we may also need to utilize borrowings under the Global Revolving Credit Facility
to fund all or a portion of distributions.
142
DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES
DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)
December 31, 2023 and 2022
15. Accumulated Other Comprehensive Income (Loss), Net
The accumulated balances for each item within Accumulated other comprehensive income (loss) are shown below (in
thousands) for Digital Realty Trust, Inc. and separately for Digital Realty Trust, L.P:
Digital Realty Trust, Inc.
Balance as of December 31, 2021
Net current period change
Balance as of December 31, 2022
Net current period change
Balance as of December 31, 2023
Digital Realty Trust, L.P.
Balance as of December 31, 2021
Net current period change
Balance as of December 31, 2022
Net current period change
Balance as of December 31, 2023
16. Incentive Plans
2014 Incentive Award Plan
Foreign currency
translation
adjustments
Increase (decrease) in
fair value of derivatives,
net of reclassification
Accumulated other
comprehensive
income (loss), net
$
$
$
$
$
$
(212,653)
(323,366)
(536,019)
(102,564)
(638,583)
$
$
$
38,773
(98,552)
(59,779)
(53,031)
(112,810)
Foreign currency
translation
adjustments
Increase (decrease) in
fair value of derivatives,
net of reclassification
(219,882)
(331,131)
(551,013)
(105,050)
(656,063)
$
$
$
38,437
(100,847)
(62,410)
(54,195)
(116,605)
$
$
$
$
$
$
(173,880)
(421,918)
(595,798)
(155,595)
(751,393)
Accumulated other
comprehensive
income (loss)
(181,445)
(431,978)
(613,423)
(159,245)
(772,668)
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 covering shares of Digital Realty Trust, Inc.
common stock (“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.
143
DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES
DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)
December 31, 2023 and 2022
Performance-Based Awards (“the Performance Awards”): Performance-based Class D units of the Operating
Partnership and performance-based Restricted Stock Units 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.
Market-Based Performance Awards.
The market performance criterion compares Digital Realty Trust, Inc.’s total stockholder 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 will fully vest in the February immediately following the end of
the Market Performance Period and 50% of the performance-vested units will 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”).
RMS Relative
Market Performance
Level
Below Threshold Level
Threshold Level
Target Level
High Level
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.
≤ -500 basis points
-500 basis points
0 basis points
≥ 500 basis points
0 %
25 %
50 %
100 %
Market
Performance
Vesting
Percentage
144
DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES
DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)
December 31, 2023 and 2022
Following the completion of the applicable Market Performance Period, the Compensation Committee made the
following determinations regarding the vesting of these awards.
2021 Awards
In January 2024, the RMS Relative Market Performance fell between the threshold and target level for the 2021
awards and accordingly, 71,926 Class D units and 7,066 Restricted Stock Units performance vested and
qualified for time-based vesting.
The Class D units included 5,131 distribution equivalent units that immediately vested on December 31, 2023.
On February 27, 2024, 50% of the 2021 awards will vest and the remaining 50% will vest on February 27,
2025, subject to continued employment through the applicable vesting date.
2020 Awards
In January 2023, the RMS Relative Market Performance fell between the threshold and target levels for the
2020 awards and accordingly, 72,230 Class D units and 7,083 Restricted Stock Units performance vested and
qualified for time-based vesting.
The Class D units included 5,841 distribution equivalent units that immediately vested on December 31, 2022.
On February 27, 2023, 50% of the 2020 awards vested and the remaining 50% will vest on February 27, 2024,
subject to continued employment through the applicable vesting date.
2019 Awards
In January 2022, the RMS Relative Market Performance fell between the target and high level for the 2019
awards and accordingly, 239,436 Class D units and 70,721 Restricted Stock Units performance vested and
qualified for time-based vesting.
The Class D units included 18,966 distribution equivalent units that immediately vested on December 31, 2021.
On February 27, 2022, 50% of the 2019 awards vested and the remaining 50% vested on February 27, 2023,
subject to continued employment through the applicable vesting date.
145
DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES
DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)
December 31, 2023 and 2022
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.
Fair Value of Market Performance-Based Awards
The fair values of the Performance Awards granted were measured using a Monte Carlo simulation to estimate the
probability of the market vesting condition being satisfied. The Monte Carlo simulation is a probabilistic technique
based on the underlying theory of the Black-Scholes formula, which was run for 100,000 trials to determine the fair
value of the awards. For each trial, the payoff to an award is calculated at the settlement date and is then discounted to
the grant date at a risk-free interest rate. The total expected value of the awards on the grant date was determined by
multiplying the average value per award over all trials by the number of awards granted. Assumptions used in the
valuations are summarized as follows:
Award Date
January 1, 2021
February 25, 2021
January 1, 2022
January 1, 2023
Expected Stock Price
Volatility
Risk-Free Interest
rate
27 %
26 %
26 %
32 %
0.17 %
0.31 %
0.97 %
4.18 %
The expected stock price volatility assumption is calculated based on our historical volatility, which is calculated over a
period of time commensurate with the expected term of the awards being valued. The expected dividend yield
assumption used in the Monte Carlo simulation represents the percent of return to a stock that is available to the holder
of an award. Because the holders of the awards receive dividend equivalents, an expected dividend yield assumption of
0.00% was used in the valuation. These valuations were performed in a risk-neutral framework, and no assumption was
made with respect to an equity risk premium.
The grant date fair value of the Performance Awards was approximately $8.2 million, $12.3 million and $25.0 million
for the years ended December 31, 2023, 2022 and 2021, respectively. We recognize compensation expense on a straight-
line basis over the expected service period of approximately four years.
The aggregate intrinsic value of the Performance Awards that vested in 2023, 2022 and 2021 was $36.4 million, $41.2
million and $28.6 million, respectively.
146
DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES
DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)
December 31, 2023 and 2022
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 Interxion Combination. These awards vested over two- and three-year performance periods ending
in 2022 and 2023 based on continued service and/or the attainment of performance metrics related to successful
integration of the Interxion business.
As of December 31, 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.
Below is a summary of compensation expense and unearned compensation (in millions):
Deferred Compensation
Expensed
Capitalized
Unearned Compensation
As of
As of
Expected
period to
recognize
unearned
2022
Year Ended December 31,
2021
2023
2022
December 31, December 31, compensation
2021
2023
2022
(in years)
Type of incentive award
Long-term incentive units
Performance-based awards
Service-based restricted stock
units
Interxion awards
2023
$
14.5
12.9
$
21.7
21.4
$
15.4
23.9
$
21.1
6.0
25.9
4.7
23.2
17.7
$
$
0.2
0.2
7.5
0.1
0.2
0.5
5.4
—
0.2
0.7
3.3
—
$
16.6
19.9
$
66.4
—
20.7
30.3
55.4
1.9
2.1
2.0
2.5
—
The following table sets forth the weighted-average fair value per share/unit for each type of incentive award at the date
of grant for the years ended December 31, 2023, 2022 and 2021:
Type of incentive award
Long-term incentive units
Performance-based awards
Restricted stock
Weighted Average Fair Value at Date of Grant
2022
2023
2021
$
$
121.99
97.06
132.07
$
146.37
154.26
131.57
132.66
137.69
129.52
Activity for LTIP Units and service-based Restricted Stock Units for the year ended December 31, 2023 is shown below.
Unvested LTIP Units
Unvested, beginning of period
Granted
Vested
Cancelled or expired
Unvested, end of period
Weighted-Average Weighted-Average
Grant Date Fair Remaining Contractual Intrinsic Value (1)
Life (Years)
(in thousands)
Aggregate
Value
146.37
104.82
136.39
149.36
121.99
1.96 $
32,078
Units
279,258 $
180,535
(181,182)
(40,251)
238,360 $
(1) The intrinsic value is calculated based on the market value of our common stock as of December 31, 2023.
147
DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES
DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)
December 31, 2023 and 2022
The grant date fair values, which equal the market price of Digital Realty Trust, Inc. common stock on the applicable
grant date(s), are being expensed on a straight-line basis for service awards between two and four years, the current
vesting periods of the long-term incentive units.
The aggregate intrinsic value of long-term incentive units that vested in 2023, 2022 and 2021 was $18.3 million, $18.1
million and $17.5 million, respectively. As of December 31, 2023, we had approximately 1.2 million long-term incentive
units that were outstanding and exercisable with an aggregate intrinsic value of approximately $158.1 million (based on
the market price of our common stock as of December 31, 2023).
Unvested Restricted Stock Units
Unvested, beginning of period
Granted
Vested
Cancelled or expired
Unvested, end of period
Weighted-Average Weighted-Average
Grant Date Fair Remaining Contractual Intrinsic Value (1)
Life (Years)
(in thousands)
Aggregate
Value
131.57
122.25
119.87
116.39
132.07
2.47
$
83,690
Shares
507,837 $
568,671
(371,232)
(83,413)
621,863 $
(1) The intrinsic value is calculated based on the market value of our common stock as of December 31, 2023.
The grant date fair values, which equal the market price of Digital Realty Trust, Inc. common stock on the grant date, are
expensed on a straight-line basis for service awards over the vesting period of the restricted stock, which is
generally four years.
The aggregate intrinsic value of restricted stock that vested in 2023, 2022 and 2021 was $41.5 million, $59.0 million and
$53.4 million, respectively.
Interxion Equity Plans
On March 9, 2020, in connection with the Interxion Combination, certain outstanding awards granted under various
Interxion equity plans were assumed by Digital Realty Trust, Inc. and converted into adjusted equity-based awards of
Digital Realty Trust, Inc. common stock in accordance with the terms of the Purchase Agreement for the Interxion
Combination. All such awards will continue to be governed by the terms of the applicable Interxion equity plan and
underlying award agreement evidencing the award. Approximately 0.6 million shares of Digital Realty Trust, Inc.
common stock are registered and issuable pursuant to such awards. The impact of these plans is included in the tables
above.
Defined Contribution Plans
We have a 401(k) plan whereby our U.S. employees may contribute a portion of their compensation to their respective
retirement accounts, in an amount not to exceed the maximum allowed under the Code. The 401(k) plan complies with
Internal Revenue Service requirements as a 401(k) safe harbor plan whereby matching contributions made by us are
100% vested. The aggregate cost of our contributions to the 401(k) plan was approximately $6.8 million, $5.9 million,
and $5.9 million for the years ended December 31, 2023, 2022 and 2021, respectively. In addition, Interxion has a
defined contribution pension plan for most of its employees. Contributions are made in accordance with the terms of
such defined contribution pension plan and are expensed as incurred.
148
DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES
DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)
December 31, 2023 and 2022
17. 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 December 31, 2023 and 2022, we had cross-
currency interest rate swaps outstanding with notional amounts of approximately $1.7 billion and maturity dates ranging
through 2028.
The effect of these net investment hedges on accumulated other comprehensive loss and the consolidated income
statements for the years ended December 31, 2023, 2022 and 2021 was as follows (in thousands):
Cross-currency interest rate swaps
(included component) (1)
Cross-currency interest rate swaps
(excluded component) (2)
Total
2023
Year Ended December 31,
2022
2021
$
$
22,703
$
116,550
$
25,428
48,131
$
(7,929)
108,621
$
—
—
—
Cross-currency interest rate swaps
(excluded component) (2)
Interest expense
$
21,836
$
6,260
$
—
Location of
gain or (loss)
Year Ended December 31,
2023
2022
2021
(2) Included component represents foreign exchange spot rates.
(3) Excluded component represents cross-currency basis spread and interest rates.
Cash Flow Hedges
As of December 31, 2023, we had derivatives designated as cash flow hedges on 50% of the Euro Term Loan Facilities
(€750 million notional amount) and 68% of the USD Term Loan Facility ($740 million notional amount). Amounts
reported in Accumulated other comprehensive loss related to interest rate swaps are reclassified to interest expense as
interest payments are made on our debt. As of December 31, 2023, we estimate that an additional $6.4 million will be
reclassified as a decrease to interest expense during the year ending December 31, 2024, when the hedged forecasted
transactions impact earnings.
On December 13, 2021, in connection with the paydown of our secured note due March 2023, we terminated interest
rate swap agreements with notional amounts in the aggregate of $104.0 million and, as a result of the termination, the
accumulated fair value of the interest rate swap will be ratably reclassified from Accumulated other comprehensive
income to interest expense on the accompanying consolidated income statement over the original term of the interest rate
swap.
149
DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES
DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)
December 31, 2023 and 2022
The effect of these cash flow hedges on accumulated other comprehensive loss and the consolidated income statements
for the years ended December 31, 2023, 2022 and 2021, was as follows (in thousands):
Interest rate swaps
Interest rate swaps
Location of
gain or (loss)
Interest expense
$
$
2023
Year Ended December 31,
2022
2021
7,221
$
(7,774)
$
(2,582)
Year Ended December 31,
2023
2022
2021
10,953
$
819
$
(1,304)
Fair Value of Derivative Instruments
The subsequent table presents the fair value of derivative instruments recognized in our consolidated balance sheets as of
December 31, 2023 and 2022 (in thousands):
December 31, 2023
December 31, 2022
Assets (1)
Liabilities (2)
Assets (1)
Cross-currency interest rate swaps
Interest rate swaps
$
$
—
8,538
8,538
$
$
156,753
—
156,753
$
$
$
Liabilities (2)
108,621
252
108,873
$
—
17,120
17,120
(1) As presented in our consolidated balance sheets within Other assets.
(2) As presented in our consolidated balance sheets within Accounts payable and other Accrued liabilities.
Credit-Risk Related Contingent Features
Upon entering into derivatives, we have agreements with each of our derivative counterparties that contain a provision
where we could be declared in default on our derivative obligations if repayment of the underlying indebtedness is
accelerated by the lender due to our default on the indebtedness.
150
DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES
DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)
December 31, 2023 and 2022
18. Fair Value of Financial Instruments
We disclose fair value information for all financial instruments, whether or not recognized in the consolidated balance
sheets, for which it is practicable to estimate fair value. Considerable judgment is necessary to interpret market data in
order to estimate the fair value of financial instruments. The use of different market assumptions or estimation methods
may have a material effect on the estimated fair value amounts.
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 December 31, 2023 and 2022 as compared to those in effect when the
debt was issued or assumed. As described in Note 17. "Derivative Instruments", outstanding derivative contracts are
recorded at fair value.
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.
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
under the fair value
hierarchy
As of December 31, 2023
As of December 31, 2022
Estimated Fair
Value
Carrying Value
Estimated Fair
Value
Carrying Value
Global
Revolving Credit
Facilities (1)
Unsecured term
loans (1)
Unsecured senior
notes (2)
Secured and
other debt (2)
Level 2
$
1,825,228 $
1,825,228 $
2,167,889 $
2,167,889
Level 2
Level 2
Level 2
1,567,925
1,567,925
802,875
802,875
12,417,619
13,507,427
11,331,989
13,220,961
625,473
16,436,245 $
637,072
17,537,652 $
517,226
14,819,979 $
532,130
16,723,855
$
(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.
151
DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES
DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)
December 31, 2023 and 2022
19. Commitments and Contingencies
Construction Commitments – Our properties require periodic investments of capital for tenant-related capital
expenditures and for general capital improvements and 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
December 31, 2023, we had open commitments, including amounts reimbursable of approximately $78.3
million, related to construction contracts of approximately $2.2 billion.
Legal Proceedings – Although the Company is involved in legal proceedings arising in the ordinary course of business,
as of December 31, 2023, the Company is not currently a party to any legal proceedings nor, to its knowledge, is any
legal proceeding threatened against it that it believes would have a material adverse effect on its financial position,
results of operations or liquidity.
As we disclosed in our Quarterly Report on Form 10-Q filed on November 9, 2023, 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 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 predict the likely outcome of this matter or the potential
cost or exposure or 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, but not limited to, civil monetary penalties and injunctive relief, and/or file litigation against the
Company.
20. Supplemental Cash Flow Information
Cash, cash equivalents, and restricted cash balances as of December 31, 2023, 2022, and 2021:
Balance as of
(Amounts in thousands)
Cash and cash equivalents
Restricted cash (included in Other assets)
Total
$
December 31, 2023 December 31, 2022 December 31, 2021
142,698
8,787
151,485
141,773 $
8,923
150,696 $
1,625,495
10,975
1,636,470
$
$
$
We paid $391.4 million, $271.5 million and $274.7 million for interest, net of amounts capitalized, for the years ended
December 31, 2023, 2022 and 2021, respectively. During the years ended December 31, 2023, 2022 and 2021, we
capitalized interest of approximately $116.8 million, $70.6 million and $53.5 million, respectively.
During the years ended December 31, 2023, 2022 and 2021, we capitalized amounts relating to compensation and other
overhead expense of employees direct and incremental to construction activities of approximately $99.2 million, $86.1
million and $71.2 million, respectively.
We paid $88.8 million, $41.7 million and $29.9 million for income taxes, net of refunds, for the years ended
December 31, 2023, 2022 and 2021, respectively.
152
DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES
DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)
December 31, 2023 and 2022
Accrued construction related costs totaled $599.4 million, $417.1 million and $423.0 million as of years ended
December 31, 2023, 2022 and 2021, respectively.
21. 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.
(Amounts in millions)
Inside the United States
Outside the United States
Revenue Outside of U.S. %
$
2023
2,836.0
2,641.1
48.2 %
Operating Revenues
Year Ended December 31,
2022
$
2,760.4
1,931.4
41.2 %
$
2021
2,769.5
1,658.4
37.5 %
Investments in Properties, net
As of December 31,
2023
10,429.1
13,806.9
6,778.4
$
$
2022
11,517.3
12,257.4
6,330.2
$
$
Operating lease right-of-use assets, net
As of December 31,
$
2023
610.2
804.0
$
2022
647.0
704.3
(Amounts in millions)
Inside the United States
Outside the United States
Net Assets in Foreign Operations
22. Subsequent Events
In December 2023, the Company and Blackstone Inc. announced a $7 billion joint venture to develop four hyperscale
data center campuses 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. Blackstone will invest
approximately $700 million to acquire an 80% equity interest in the joint venture, while the Company would maintain a
20% interest. The Company will manage the development and day-to-day operations of the joint venture, for which it
will receive customary fees. Subsequent to year end, the first phase of the joint venture closed on hyperscale data center
campuses in Paris and Northern Virginia, while the second phase is scheduled to close later in 2024, upon obtaining the
required regulatory approvals.
153
DIGITAL REALTY TRUST, INC.
DIGITAL REALTY TRUST, L.P.
SCHEDULE III
PROPERTIES AND ACCUMULATED DEPRECIATION
December 31, 2023
(Dollar amounts in thousands)
Data Center
Buildings Encumbrances
Land
Initial costs
Acquired
ground
lease
Costs capitalized
subsequent to acquisition
Buildings
and
improvements Improvements
Carrying
costs
Land
Total costs
Acquired
ground
lease
Buildings
and
improvements
Accumulated
depreciation
and
Date of
acquisition
or
Total
amortization construction
19 $
8
12
21
14
3
2
4
2
1
4
3
2
6
1
2
6
110
— $
—
—
—
—
—
—
—
—
135,000
—
—
—
—
—
—
—
135,000
122,168 $
67,162
12,161
50,533
129,702
1,689
11,859
41,165
26,600
43,110
6,537
17,826
29,531
6,965
1,177
2,964
14,307
585,456
— $
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
466,221 $
757,149
425,838
241,081
842,693
3,131
399,122
358,066
116,863
329,283
264,948
253,711
105,910
23,492
4,877
29,793
33,122
4,655,300
3,038,772 $
972,037
1,049,738
1,165,705
450,944
875,873
387,722
317,548
412,234
62,071
141,146
110,351
160,424
155,250
77,880
41,808
173,477
9,592,980
— $
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(18,000)
(18,000)
148,190 $
66,607
16,308
46,539
126,486
12,549
11,859
41,478
27,180
43,110
6,552
16,600
29,118
6,594
1,177
2,964
14,308
617,619
— $
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
3,478,971
1,729,741
1,471,429
1,410,780
1,296,853
868,144
786,844
675,301
528,517
391,354
406,079
365,288
266,747
179,113
82,757
71,601
188,598
14,198,117
$ 3,627,161 $ (1,048,343) 2005 - 2019
(734,390) 2005 - 2017
(724,675) 2002 - 2015
(663,861) 2002 - 2015
(599,625) 2002 - 2018
(121,204) 2011 - 2015
(414,122) 2006 - 2015
(309,825) 2004 - 2015
(64,599) 2013 - 2017
(51,115)
(136,304) 2011 - 2017
(184,525) 2006 - 2011
(150,281) 2004 - 2015
(118,182)
(28,673)
(39,164) 2002 - 2015
(82,737)
(5,471,625)
1,796,348
1,487,737
1,457,319
1,423,339
880,693
798,703
716,779
555,697
434,464
412,631
381,888
295,865
185,707
83,934
74,565
202,906
14,815,736
2006
2005
2,020
29
15
13
12
5
4
3
9
2
3
3
4
3
6
3
1
5
4
124
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
31,260
101,397
45,722
40,709
10,099
1,121
20,605
11,722
5,100
14,159
3,874
8,456
11,665
—
—
900
3,144
—
309,933
—
—
—
—
—
—
—
90
—
—
—
—
—
—
—
—
—
—
90
876,342
1,098,809
355,386
968,935
1,008,751
220,737
48,325
89,597
276,021
364,949
118,034
134,817
107,529
93,861
30,093
66,646
43,046
—
5,901,877
1,035,998
572,439
845,856
202,598
125,255
370,449
415,146
381,032
130,558
3,530
102,611
66,931
56,032
58,194
81,914
(3,287)
226,639
225,569
4,897,466
154
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
106,876
61,646
54,507
70,211
9,085
1,081
39,461
7,791
4,587
13,105
11,498
13,392
4,583
—
—
810
26,149
3,113
427,895
—
—
—
—
—
—
—
91
—
—
—
—
—
—
—
—
—
—
91
1,836,724
1,710,999
1,192,457
1,142,031
1,135,020
591,227
444,615
474,559
407,092
369,533
213,021
196,812
170,643
152,055
112,007
63,449
246,680
222,456
10,681,380
1,943,600
1,772,645
1,246,964
1,212,242
1,144,105
592,308
484,076
482,441
411,679
382,638
224,519
210,204
175,226
152,055
112,007
64,259
272,829
225,569
11,109,366
2022
2020
2020
(307,656) 2015 - 2020
(607,287) 2007 - 2020
(115,942) 2012 - 2020
(258,958) 2005 - 2020
(69,330)
(80,487)
(42,609)
(135,864) 2006 - 2020
(23,027)
(72,500)
(21,413)
(28,450)
(22,665)
(29,430)
(12,455)
(5,055)
(76,969)
(21,861)
(1,931,958)
2022
2020
2020
2020
2020
2020
2020
2022
North American Markets
Northern Virginia
Chicago
New York
Dallas
Silicon Valley
Portland
Phoenix
San Francisco
Toronto
Seattle
Atlanta
Boston
Los Angeles
Houston
Austin
Miami
North America - Other
Total North America
EMEA Markets
Frankfurt
London
Paris
Amsterdam
Johannesburg
Marseille
Zurich
Dublin
Cape Town
Vienna
Brussels
Madrid
Copenhagen
Stockholm
Dusseldorf
Durban
Europe - Other
Africa - Other
Total EMEA
DIGITAL REALTY TRUST, INC.
DIGITAL REALTY TRUST, L.P.
SCHEDULE III
PROPERTIES AND ACCUMULATED DEPRECIATION- (Continued)
December 31, 2023
(Dollar amounts in thousands)
Data Center
Buildings Encumbrances
Land
Initial costs
Acquired
ground
lease
Costs capitalized
subsequent to acquisition
Buildings
and
improvements Improvements
Carrying
costs
Land
Total costs
Acquired
ground
lease
Buildings
and
improvements
Accumulated
depreciation
and
Date of
acquisition
or
Total
amortization construction
APAC Markets
Singapore
Sydney
Seoul
Melbourne
Hong Kong
Asia Pacific - Other
Total APAC
3
4
1
2
1
4
15
—
—
—
—
—
—
—
—
18,285
—
4,467
—
—
22,752
—
—
—
—
—
—
—
137,545
3,868
—
—
—
—
141,413
718,681
190,211
132,617
103,068
59,323
13,201
1,217,101
—
—
—
—
—
—
—
—
21,159
17,620
2,985
—
—
41,764
—
—
—
—
—
—
—
856,226
191,205
114,997
104,550
59,323
13,201
1,339,502
856,226
212,364
132,617
107,535
59,323
13,201
1,381,266
(301,293) 2010 - 2015
(48,137) 2011 - 2012
(7,913)
(51,882)
(7,137)
(3,740)
(420,102)
2022
2011
2021
Total Portfolio
249 $
135,000
$
918,141
$
90
$ 10,698,590
$ 15,707,547
$
(18,000)
$
1,087,278
$
91
$ 26,218,999
$ 27,306,368
$ (7,823,685)
155
DIGITAL REALTY TRUST, INC.
DIGITAL REALTY TRUST, L.P.
SCHEDULE III
PROPERTIES AND ACCUMULATED DEPRECIATION
December 31, 2023
(Dollar amounts in thousands)
(1) Tax Cost
The aggregate gross cost of the Company’s properties for federal income tax purposes approximated $42.6 billion
(unaudited) as of December 31, 2023.
(2) Historical Cost and Accumulated Depreciation and Amortization
The following table reconciles the historical cost of the Company’s properties for financial reporting purposes for each
of the years in the three-year period ended December 31, 2023.
Balance, beginning of year
Additions during period (acquisitions and
improvements)
Deductions during period (dispositions,
impairments and assets held for sale)
Balance, end of year
$
$
2023
26,136,057
Year Ended December 31,
2022
23,625,450
$
3,494,450
2,553,946
(2,324,139)
27,306,368
$
(43,339)
26,136,057
$
$
2021
23,142,988
1,570,162
(1,087,700)
23,625,450
The following table reconciles accumulated depreciation and amortization of the Company’s properties for financial
reporting purposes for each of the years in the three-year period ended December 31, 2023.
Balance, beginning of year
Additions during period (depreciation and
amortization expense)
Deductions during period (dispositions and
assets held for sale)
Balance, end of year
$
$
2023
7,268,981
Year Ended December 31,
2022
6,210,281
$
1,338,912
1,079,497
(784,208)
7,823,685
$
(20,797)
7,268,981
$
$
2021
5,555,221
1,042,011
(386,951)
6,210,281
Schedules other than those listed above are omitted because they are not applicable or the information required is
included in the Consolidated Financial Statements or the notes thereto.
156
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
Our Management’s Reports on Internal Control over Financial Reporting for Digital Realty Trust, Inc. and Digital
Realty Trust, L.P. are included in Part II, Item 8, Financial Statements and Supplementary Data on page 81.
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 December 31, 2023. Based on the foregoing, the Company’s management concluded that its disclosure
controls and procedures were effective at the reasonable assurance level.
Changes in Internal Control over Financial Reporting
There has not been any change in our internal control over financial reporting during the three months
December 31, 2023, that has materially affected, or is reasonably likely to materially affect, our internal control over
financial reporting.
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.
157
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 December 31, 2023. Based on the foregoing, the Operating
Partnership’s management concluded that its disclosure controls and procedures were effective at the reasonable
assurance level.
Changes in Internal Control over Financial Reporting
There has not been any change in our internal control over financial reporting during the three months
ended December 31, 2023, that has materially affected, or is reasonably likely to materially affect, our internal control
over financial reporting.
ITEM 9B. OTHER INFORMATION
During the three months ended December 31, 2023, two officers adopted a “Rule 10b5-1 trading arrangement” as such
term is defined in Item 408(a) of Regulation S-K. On November 15, 2023, Cindy Fiedelman, our Chief Human
Resources Officer, entered into a trading plan that provides for the conversion and redemption of profits interest units
and sale of 31,051 shares of common stock. The plan will expire on November 29, 2024, subject to early termination for
certain specified events as set forth in the plan. On November 22, 2023, Christopher Sharp, our Chief Technology
Officer, entered into a trading plan that provides for the conversion and redemption of profits interest units and sale of
43,870 shares of common stock. The plan will expire November 22, 2024, subject to early termination for certain
specified events as set forth in the plan.
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
None.
158
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The information concerning our directors, executive officers and corporate governance required by Item 10 will be
included in the Proxy Statement to be filed relating to our 2024 Annual Meeting of Stockholders and is incorporated
herein by reference.
We have filed, as exhibits to this Annual Report on Form 10-K for the year ended December 31, 2023, the certifications
of our Chief Executive Officer and Chief Financial Officer required under Section 302 of the Sarbanes Oxley Act to be
filed with the Securities and Exchange Commission regarding the quality of our public disclosure. We have furnished to
the Securities and Exchange Commission as exhibits to this Annual Report on Form 10-K for the year ended
December 31, 2023, the certifications of our Chief Executive Officer and Chief Financial Officer required under
Section 906 of the Sarbanes Oxley Act. In addition, as required by Section 303A.12 of the NYSE Listed Company
Manual, our Chief Executive Officer made his annual certification to the NYSE stating that he was not aware of any
violation by the Company of the corporate governance listing standards of the NYSE.
ITEM 11. EXECUTIVE COMPENSATION
The information concerning our executive compensation required by Item 11 will be included in the Proxy Statement to
be filed relating to our 2024 Annual Meeting of Stockholders and is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
AND RELATED STOCKHOLDER MATTERS
The information concerning the security ownership of certain beneficial owners and management and related
stockholder matters (including equity compensation plan information) required by Item 12 will be included in the Proxy
Statement to be filed relating to our 2024 Annual Meeting of Stockholders and is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR
INDEPENDENCE
The information concerning certain relationships, related transactions and director independence required by Item 13
will be included in the Proxy Statement to be filed relating to our 2024 Annual Meeting of Stockholders and is
incorporated herein by reference.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
The information concerning our principal accounting fees and services required by Item 14 will be included in the Proxy
Statement to be filed relating to our 2024 Annual Meeting of Stockholders and is incorporated herein by reference.
159
PART IV
ITEM 15.
EXHIBITS.
Exhibit
Number
Description
3.1
Articles of Amendment and Restatement of Digital Realty Trust, Inc., as amended (incorporated by
reference to Exhibit 3.1 to the Combined Quarterly Report on Form 10-Q of Digital Realty Trust, Inc. and
Digital Realty Trust, L.P. (File Nos. 001-32336 and 000-54023) filed on May 11, 2020).
3.2
3.3
Ninth Amended and Restated Bylaws of Digital Realty Trust, Inc. (incorporated by reference to Exhibit 3.1
to the Combined Current Report on Form 8-K of Digital Realty Trust, Inc. and Digital Realty Trust, L.P.
(File Nos. 001 32336 and 000 54023) filed on April 3, 2023).
Certificate of Limited Partnership of Digital Realty Trust, L.P. (incorporated by reference to Exhibit 3.1 to
Digital Realty Trust, L.P.’s General Form for Registration of Securities on Form 10 filed on June 25, 2010
(File No. 000-54023)).
3.4
Nineteenth Amended and Restated Agreement of Limited Partnership of Digital Realty Trust, L.P.
(incorporated by reference to Exhibit 3.1 to the Combined Current Report on Form 8-K of Digital Realty
Trust, Inc. and Digital Realty Trust, L.P. (File Nos. 001-32336 and 000-54023) filed on October 10, 2019).
4.1
Specimen Certificate for Common Stock for Digital Realty Trust, Inc. (incorporated by reference to
Exhibit 4.1 to Digital Realty Trust, Inc.’s Registration Statement on Form S-11 (Registration
No. 333-117865) (File No. 001-32336) filed on October 26, 2004).
4.2
Registration Rights Agreement, dated as of October 27, 2004, by and among Digital Realty Trust, Inc.,
Digital Realty Trust, L.P. and the Unit Holders, as defined therein (incorporated by reference to
Exhibit 10.2 to Digital Realty Trust, Inc.’s Quarterly Report on Form 10-Q (File No. 001-32336) filed on
December 13, 2004).
4.3
4.4
4.5
Indenture, dated as of March 8, 2011, among Digital Realty Trust, L.P., as issuer, Digital Realty Trust, Inc.,
as guarantor, and Deutsche Bank Trust Company Americas, as trustee (incorporated by reference to
Exhibit 4.1 to the Combined Current Report on Form 8-K of Digital Realty Trust, Inc. and Digital Realty
Trust, L.P. (File Nos. 001-32336 and 000-54023) filed on March 8, 2011).
Indenture, dated as of January 18, 2013, among Digital Stout Holding, LLC, Digital Realty Trust, Inc.,
Digital Realty Trust, L.P., Deutsche Trustee Company Limited, as trustee, Deutsche Bank AG, London
Branch, as paying agent and a transfer agent, and Deutsche Bank Luxembourg S.A., as registrar and a
transfer agent, including the form of the 4.250% Guaranteed Notes due 2025 (incorporated by reference to
Exhibit 4.1 to the Combined Current Report on Form 8-K of Digital Realty Trust, Inc. and Digital Realty
Trust, L.P. (File Nos. 001-32336 and 000-54023) filed on January 25, 2013).
Indenture, dated as of June 23, 2015, among Digital Realty Trust, L.P., as issuer, Digital Realty Trust, Inc.,
as guarantor, and Wells Fargo Bank, National Association, as trustee (incorporated by reference to
Exhibit 4.1 to the Combined Current Report on Form 8-K of Digital Realty Trust, Inc. and Digital Realty
Trust, L.P. (File Nos. 001-32336 and 000-54023) filed on June 23, 2015).
160
Exhibit
Number
4.6
4.7
4.8
4.9
4.10
4.11
4.12
4.13
Description
Indenture, dated as of April 15, 2016, among Digital Euro Finco, LLC, Digital Realty Trust, Inc., Digital
Realty Trust, L.P., Deutsche Trustee Company Limited, as trustee, Deutsche Bank AG, London Branch, as
paying agent and a transfer agent, and Deutsche Bank Luxembourg S.A., as registrar and a transfer agent,
including the form of the 2.625% Guaranteed Notes due 2024 (incorporated by reference to Exhibit 4.1 to
the Combined Current Report on Form 8-K of Digital Realty Trust, Inc. and Digital Realty Trust, L.P. (File
Nos. 001-32336 and 000-54023) filed on April 19, 2016).
Supplemental Indenture No. 2, dated as of August 7, 2017, among Digital Realty Trust, L.P., as issuer,
Digital Realty Trust, Inc., as guarantor, and Wells Fargo Bank, National Association, as trustee, including
the form of 2.750% Notes due 2023, the form of 3.700% Notes due 2027 and the guarantees (incorporated
by reference to Exhibit 4.2 to the Combined Current Report on Form 8-K of Digital Realty Trust, Inc. and
Digital Realty Trust, L.P. (File Nos. 001-32336 and 000-54023) filed on August 9, 2017).
Indenture, dated as of July 21, 2017, among Digital Stout Holding, LLC, Digital Realty Trust, Inc., Digital
Realty Trust, L.P., Deutsche Trustee Company Limited, as trustee, Deutsche Bank AG, London Branch, as
paying agent and a transfer agent, and Deutsche Bank Luxembourg S.A., as registrar and a transfer agent,
including the form of the 2.750% Guaranteed Notes due 2024 (incorporated by reference to Exhibit 4.1 to
the Combined Current Report on Form 8-K of Digital Realty Trust, Inc. and Digital Realty Trust, L.P. (File
Nos. 001-32336 and 000-54023) filed on July 21, 2017).
Indenture, dated as of July 21, 2017, among Digital Stout Holding, LLC, Digital Realty Trust, Inc., Digital
Realty Trust, L.P., Deutsche Trustee Company Limited, as trustee, Deutsche Bank AG, London Branch, as
paying agent and a transfer agent, and Deutsche Bank Luxembourg S.A., as registrar and a transfer agent,
including the form of the 3.300% Guaranteed Notes due 2029 (incorporated by reference to Exhibit 4.2 to
the Combined Current Report on Form 8-K of Digital Realty Trust, Inc. and Digital Realty Trust, L.P. (File
Nos. 001-32336 and 000-54023) filed on July 21, 2017).
Specimen Certificate for Digital Realty Trust, Inc.’s 5.250% Series J Cumulative Redeemable Preferred
Stock (incorporated by reference to Exhibit 4.1 to the Registration Statement on Form 8-A of Digital
Realty Trust, Inc. (File No. 001-32336) filed on August 4, 2017).
Supplemental Indenture No. 3, dated as of June 21, 2018, among Digital Realty Trust, L.P., as issuer,
Digital Realty Trust, Inc., as guarantor, and Wells Fargo Bank, National Association, as trustee, including
the form of 4.450% Notes due 2028 and the guarantees (incorporated by reference to Exhibit 4.2 to the
Combined Current Report on Form 8-K of Digital Realty Trust, L.P. (File
Nos. 001-32336 and 000-54023) filed on June 21, 2018).
Indenture, dated as of October 17, 2018, among Digital Stout Holding, LLC, Digital Realty Trust, Inc.,
Digital Realty Trust, L.P., Deutsche Trustee Company Limited, as trustee, Deutsche Bank AG, London
Branch, as paying agent and a transfer agent, and Deutsche Bank Luxembourg S.A., as registrar and a
transfer agent, including the form of the 3.750% Guaranteed Notes due 2030 (incorporated by reference to
Exhibit 4.1 to the Combined Current Report on Form 8-K of Digital Realty Trust, Inc. and Digital Realty
Trust, L.P. (File Nos. 001-32336 and 000-54023) filed on October 18, 2018).
Indenture, dated as of January 16, 2019, among Digital Euro Finco, LLC, as issuer, Digital Realty Trust,
L.P. and Digital Realty Trust, Inc., as guarantors, Deutsche Trustee Company Limited, as the trustee,
Deutsche Bank AG, London Branch, as paying agent and a transfer agent, and Deutsche Bank Luxembourg
S.A., as registrar and a transfer agent (incorporated by reference to Exhibit 4.1 to the Combined Current
Report on Form 8-K of Digital Realty Trust, Inc. and Digital Realty Trust, L.P. (File Nos. 001-32336 and
000-54023) filed on January 16, 2019).
161
Exhibit
Number
4.14
4.15
4.16
4.17
Description
Form of Specimen Certificate for Digital Realty Trust, Inc.’s 5.850% Series K Cumulative Redeemable
Preferred Stock (incorporated by reference to Exhibit 4.1 to the Registration Statement on Form 8-A of
Digital Realty Trust, Inc. (File No. 001-32336) filed on March 12, 2019).
Supplemental Indenture No. 4, dated as of June 14, 2019, among Digital Realty Trust, L.P., as issuer,
Digital Realty Trust, Inc., as guarantor, and Wells Fargo Bank, National Association, as trustee, including
the form of 3.600% Notes due 2029 and the guarantee (incorporated by reference to Exhibit 4.2 to the
Combined Current Report on Form 8-K of Digital Realty Trust, Inc. and Digital Realty Trust, L.P. (File
Nos. 001-32336 and 000-54023) filed on June 14, 2019).
Indenture, dated as of October 9, 2019, among Digital Euro Finco, LLC, Digital Realty Trust, Inc., Digital
Realty Trust, L.P., Deutsche Trustee Company Limited, as trustee, Deutsche Bank AG, London Branch, as
paying agent and a transfer agent, and Deutsche Bank Luxembourg S.A., as registrar and a transfer agent,
including the form of the 1.125% Guaranteed Notes due 2028 (incorporated by reference to Exhibit 4.1 to
the Combined Current Report on Form 8-K of Digital Realty Trust, Inc. and Digital Realty Trust, L.P. (File
Nos. 001-32336 and 000-54023) filed on October 9, 2019).
Specimen Certificate for Digital Realty Trust, Inc.’s 5.200% Series L Cumulative Redeemable Preferred
Stock (incorporated by reference to Exhibit 4.1 to the Registration Statement on Form 8-A of Digital
Realty Trust, Inc. (File No. 001-32336) filed on October 9, 2019).
4.18
Description of Securities (incorporated by reference to exhibit 4.20 to the Combined Annual Report on
Form 10-K of Digital Realty Trust, Inc. and Digital Realty Trust, L.P. (File Nos. 001-32336 and
000-54023) filed on February 25, 2022).
4.19
4.20
4.21
4.22
Indenture, dated as of January 17, 2020, among Digital Dutch Finco B.V., Digital Realty Trust, Inc.,
Digital Realty Trust, L.P., Deutsche Trustee Company Limited, as trustee, Deutsche Bank AG, London
Branch, as paying agent and a transfer agent, and Deutsche Bank Luxembourg S.A., as registrar and a
transfer agent, including the form of the 0.625% Guaranteed Notes due 2025 (incorporated by reference to
Exhibit 4.2 to the Combined Current Report on Form 8-K of Digital Realty Trust, Inc. and Digital Realty
Trust, L.P. (File Nos. 001-32336 and 000-54023) filed on January 17, 2020).
Indenture, dated as of January 17, 2020, among Digital Dutch Finco B.V., Digital Realty Trust, Inc.,
Digital Realty Trust, L.P., Deutsche Trustee Company Limited, as trustee, Deutsche Bank AG, London
Branch, as paying agent and a transfer agent, and Deutsche Bank Luxembourg S.A., as registrar and a
transfer agent, including the form of the 1.500% Guaranteed Notes due 2030 (incorporated by reference to
Exhibit 4.3 to the Combined Current Report on Form 8-K of Digital Realty Trust, Inc. and Digital Realty
Trust, L.P. (File Nos. 001-32336 and 000-54023) filed on January 17, 2020).
Indenture, dated as of June 26, 2020, among Digital Dutch Finco B.V., Digital Realty Trust, Inc., Digital
Realty Trust, L.P., Deutsche Trustee Company Limited, as trustee, Deutsche Bank AG, London Branch, as
paying agent and a transfer agent, and Deutsche Bank Luxembourg S.A., as registrar and a transfer agent,
including the form of the 1.250% Guaranteed Notes due 2031 (incorporated by reference to Exhibit 4.1 to
the Combined Current Report on Form 8-K of Digital Realty Trust, Inc. and Digital Realty Trust, L.P. (File
Nos. 001-32336 and 000-54023) filed on June 26, 2020).
Indenture, dated as of September 23, 2020, among Digital Dutch Finco B.V., Digital Realty Trust, Inc.,
Digital Realty Trust, L.P., Deutsche Trustee Company Limited, as trustee, Deutsche Bank AG, London
Branch, as paying agent and a transfer agent, and Deutsche Bank Luxembourg S.A., as registrar and a
transfer agent, including the form of the 1.000% Guaranteed Notes due 2032 (incorporated by reference to
Exhibit 4.1 to the Combined Current Report on Form 8-K of Digital Realty Trust, Inc. and Digital Realty
Trust, L.P. (File Nos. 001-32336 and 000-54023) filed on September 23, 2020).
162
Exhibit
Number
4.23
4.24
4.25
4.26
4.27
4.28
4.29
4.30
4.31
Description
Indenture, dated as of January 12, 2021, among Digital Intrepid Holding B.V., Digital Realty Trust, Inc.,
Digital Realty Trust, L.P., Deutsche Trustee Company Limited, as trustee, Deutsche Bank AG, London
Branch, as paying agent and a transfer agent, and Deutsche Bank Luxembourg S.A., as registrar and a
transfer agent, including the form of the 0.625% Guaranteed Notes due 2031. (incorporated by reference to
Exhibit 4.1 to the Combined Current Report on Form 8-K of Digital Realty Trust, Inc. and Digital Realty
Trust, L.P. (File Nos. 001-32336 and 000-54023) filed on January 12, 2021).
Terms and Conditions of the Notes, dated as of July 13, 2021 (incorporated by reference to Exhibit 4.1 to
the Combined Current Report on Form 8-K of Digital Realty Trust, Inc. and Digital Realty Trust, L.P. (File
Nos. 001-32336 and 000-54023) filed on July 15, 2021).
Form of the 2026 Notes (incorporated by reference to Exhibit 4.2 to the Combined Current Report on Form
8-K of Digital Realty Trust, Inc. and Digital Realty Trust, L.P. (File Nos. 001-32336 and 000-54023) filed
on July 15, 2021).
Form of the 2029 Notes (incorporated by reference to Exhibit 4.3 to the Combined Current Report on Form
8-K of Digital Realty Trust, Inc. and Digital Realty Trust, L.P. (File Nos. 001-32336 and 000-54023) filed
on July 15, 2021).
Indenture, dated as of January 18, 2022, among Digital Intrepid Holding B.V., Digital Realty Trust, Inc.,
Digital Realty Trust, L.P., Deutsche Trustee Company Limited, as trustee, Deutsche Bank AG, London
Branch, as paying agent and a transfer agent, and Deutsche Bank Luxembourg S.A., as registrar and a
transfer agent, including the form of the 1.375% Guaranteed Notes due 2032 (incorporated by reference to
Exhibit 4.1 to the Combined Current Report on Form 8-K of Digital Realty Trust, Inc. and Digital Realty
Trust, L.P. (File Nos. 001-32336 and 000-54023) filed on January 18, 2022).
Terms and Conditions of the Notes dated March 28, 2022 (incorporated by reference to Exhibit 4.1 of the
Current Report on Form 8-K of Digital Realty Trust, Inc. and Digital Realty Trust, L.P. (File Nos. 001-
32336 and 000-54023) filed on March 30, 2022).
Form of the 2023 Notes (incorporated by reference to Exhibit 4.2 to the Combined Current Report on Form
8-K of Digital Realty Trust, Inc. and Digital Realty Trust, L.P. (File Nos. 001-32336 and 000-54023) filed
on March 30, 2022).
Form of the 2027 Notes (incorporated by reference to Exhibit 4.3 to the Combined Current Report on Form
8-K of Digital Realty Trust, Inc. and Digital Realty Trust, L.P. (File Nos. 001-32336 and 000-54023) filed
on March 30, 2022).
Supplemental Indenture No. 5, dated as of September 27, 2022, among Digital Realty Trust, L.P., as issuer,
Digital Realty Trust, Inc., as guarantor, and Computershare Trust Company, N.A., as successor to Wells
Fargo Bank, National Association, as trustee, including the form of 5.550% Notes due 2028 and the
guarantee (incorporated by reference to Exhibit 4.2 to the Combined Current Report on Form 8-K of
Digital Realty Trust, Inc. and Digital Realty Trust, L.P. (File Nos. 001-32336 and 000-54023) filed on
September 27, 2022).
10.1†
Form of Indemnification Agreement by and between Digital Realty Trust, Inc. and its directors and officers
(incorporated by reference to Exhibit 10.4 to Digital Realty Trust, Inc.’s Registration Statement on
Form S-11 (Registration No. 333-117865) filed on October 13, 2004).
163
Exhibit
Number
10.2
10.3†
10.4†
10.5†
10.6†
10.7†
10.8†
10.9†
10.10†
10.11†
10.12†
Description
Contribution Agreement, dated as of July 31, 2004, by and among Digital Realty Trust, L.P., San Francisco
Wave eXchange, LLC, Santa Clara Wave eXchange, LLC and eXchange colocation, LLC (incorporated by
reference to Exhibit 10.12 to Digital Realty Trust, Inc.’s Registration Statement on Form S-11 (Registration
No. 333-117865) filed on September 17, 2004).
Form of Profits Interest Units Agreement (incorporated by reference to Exhibit 10.44 to Digital Realty
Trust, Inc.’s Quarterly Report on Form 10-Q (File No. 001-32336) filed on December 13, 2004).
Form of Class C Profits Interest Units Agreement (incorporated by reference to Exhibit 10.1 to Digital
Realty Trust, Inc.’s Quarterly Report on Form 10-Q (File No. 001-32336) filed on August 9, 2007).
First Amended and Restated Digital Realty Trust, Inc., Digital Services, Inc. and Digital Realty Trust, L.P.
2004 Incentive Award Plan (incorporated by reference to Appendix A to Digital Realty Trust, Inc.’s
definitive proxy statement on Schedule 14A (File No. 001-32336) filed on March 30, 2007).
Form of 2008 Performance-Based Profits Interest Units Agreement (incorporated by reference to
Exhibit 10.3 to Digital Realty Trust, Inc.’s Quarterly Report on Form 10-Q (File No. 001-32336) filed on
May 9, 2008).
First Amendment to First Amended and Restated Digital Realty Trust, Inc., Digital Services, Inc. and
Digital Realty Trust, L.P. 2004 Incentive Award Plan (incorporated by reference to Exhibit 10.4 to Digital
Realty Trust, Inc.’s Quarterly Report on Form 10-Q (File No. 001-32336) filed on May 9, 2008).
Second Amendment to First Amended and Restated Digital Realty Trust, Inc., Digital Services, Inc. and
Digital Realty Trust, L.P. 2004 Incentive Award Plan (incorporated by reference to Exhibit 10.4 to Digital
Realty Trust, Inc.’s Quarterly Report on Form 10-Q (File No. 001-32336) filed on August 6, 2009).
Third Amendment to First Amended and Restated Digital Realty Trust, Inc., Digital Services, Inc. and
Digital Realty Trust, L.P. 2004 Incentive Award Plan (incorporated by reference to Exhibit 10.1 to Digital
Realty Trust, Inc.’s Quarterly Report on Form 10-Q (File No. 001-32336) filed on November 9, 2009).
Fourth Amendment to First Amended and Restated Digital Realty Trust, Inc., Digital Services, Inc. and
Digital Realty Trust, L.P. 2004 Incentive Award Plan (incorporated by reference to Exhibit 10.1 to the
Combined Quarterly Report on Form 10-Q of Digital Realty Trust, Inc. and Digital Realty Trust, L.P. (File
Nos. 001-32336 and 000-54023) filed on August 7, 2012).
Fifth Amendment to First Amended and Restated Digital Realty Trust, Inc., Digital Services, Inc. and
Digital Realty Trust, L.P. 2004 Incentive Award Plan. (incorporated by reference to exhibit 10.46 to the
Combined Annual Report on Form 10-K of Digital Realty Trust, Inc. and Digital Realty Trust, L.P. (File
Nos. 001-32336 and 000-54023) filed on March 2, 2015).
Profits Interest Unit Agreement – Directors (incorporated by reference to Exhibit 10.21 to the Combined
Annual Report on Form 10-K of Digital Realty Trust, Inc. and Digital Realty Trust, L.P. (File Nos. 001-
32336 and 000-54023) filed on February 25, 2019).
10.13†
Digital Realty Deferred Compensation Plan (incorporated by reference to Exhibit 10.33 to the Combined
Annual Report on Form 10-K of Digital Realty Trust, Inc. and Digital Realty Trust, L.P. (File Nos.
001-32336 and 000-54023) filed on February 28, 2014).
164
Exhibit
Number
10.14†
10.15†
10.16†
10.17†
10.18†
10.19†
10.20†
10.21†
10.22†
Description
First Amendment to Digital Realty Deferred Compensation Plan (incorporated by reference to
Exhibit 10.45 to the Combined Annual Report on Form 10-K of Digital Realty Trust, Inc. and Digital
Realty Trust, L.P. (File Nos. 001-32336 and 000-54023) filed on March 2, 2015).
Second Amendment to Digital Realty Deferred Compensation Plan (incorporated by reference to
Exhibit 10.3 to the Combined Quarterly Report on Form 10-Q of Digital Realty Trust, Inc. and Digital
Realty Trust, L.P. (File Nos. 001-32336 and 000-54023) filed on November 6, 2015).
Form of Class D Profits Interest Unit Agreement (incorporated by reference to Exhibit 10.34 to the
Combined Annual Report on Form 10-K of Digital Realty Trust, Inc. and Digital Realty Trust, L.P. (File
Nos. 001-32336 and 000-54023) filed on February 28, 2014).
Form of Performance-Based Restricted Stock Unit Agreement (incorporated by reference to Exhibit 10.35
to the Combined Annual Report on Form 10-K of Digital Realty Trust, Inc. and Digital Realty Trust, L.P.
(File Nos. 001-32336 and 000-54023) filed on February 28, 2014).
Form of Time-Based Restricted Stock Unit Agreement (incorporated by reference to Exhibit 10.36 to the
Combined Annual Report on Form 10-K of Digital Realty Trust, Inc. and Digital Realty Trust, L.P. (File
Nos. 001-32336 and 000-54023) filed on February 28, 2014).
Form of Time-Based Profits Interest Unit Agreement (incorporated by reference to Exhibit 10.23 to the
Combined Annual Report on Form 10-K of Digital Realty Trust, Inc. and Digital Realty Trust, L.P. (File
Nos. 001-32336 and 000-54023) filed on March 1, 2017).
Form of Executive Time-Based Profits Interest Unit Agreement (incorporated by reference to Exhibit 10.27
to the Combined Annual Report on Form 10-K of Digital Realty Trust, Inc. and Digital Realty Trust, L.P.
(File Nos. 001-32336 and 000-54023) filed on March 1, 2018).
Form of Class D Profits Interest Unit Agreement (incorporated by reference to Exhibit 10.30 to the
Combined Annual Report on Form 10-K of Digital Realty Trust, Inc. and Digital Realty Trust, L.P. (File
Nos. 001-32336 and 000-54023) filed on February 25, 2019).
Executive Time-Based Profits Interest Unit Agreement (incorporated by reference to Exhibit 10.31 to the
Combined Annual Report on Form 10-K of Digital Realty Trust, Inc. and Digital Realty Trust, L.P. (File
Nos. 001-32336 and 000-54023) filed on February 25, 2019).
10.23†
Digital Realty Trust, Inc., Digital Services, Inc. and Digital Realty Trust, L.P. 2014 Incentive Award Plan
(incorporated by reference to Exhibit 10.1 to the Combined Current Report on Form 10-Q of Digital Realty
Trust, Inc. and Digital Realty Trust, L.P. (File Nos. 001-32336 and 000-54023) filed on August 7, 2014).
10.24†
10.25†
First Amendment to Digital Realty Trust, Inc., Digital Services, Inc. and Digital Realty Trust, L.P. 2014
Incentive Award Plan. (incorporated by reference to Exhibit 10.1 to the Combined Quarterly Report on
Form 10-Q of Digital Realty Trust, Inc. and Digital Realty Trust, L.P. (File Nos. 001-32336 and
000-54023) filed on November 7, 2014).
Second Amendment to Digital Realty Trust, Inc., Digital Services, Inc. and Digital Realty Trust, L.P. 2014
Incentive Award Plan (incorporated by reference to Exhibit 10.44 to the Combined Annual Report on
Form 10-K of Digital Realty Trust, Inc. and Digital Realty Trust, L.P. (File Nos. 001-32336 and
000-54023) filed on March 2, 2015).
165
Exhibit
Number
10.26†
10.27†
10.28†
10.29†
10.30†
Description
Third Amendment to Digital Realty Trust, Inc., Digital Services, Inc. and Digital Realty Trust, L.P. 2014
Incentive Award Plan (incorporated by reference to Exhibit 10.1 to the Combined Annual Report on
Form 10-Q of Digital Realty Trust, Inc. and Digital Realty Trust, L.P. filed on November 9, 2016).
Fourth Amendment to the Digital Realty Trust, Inc., Digital Services, Inc. and Digital Realty Trust, L.P.
2014 Incentive Award Plan (incorporated by reference to Exhibit 10.1 to the Combined Current Report on
Form 8-K of Digital Realty Trust, Inc. and Digital Realty Trust, L.P. (File Nos. 001-32336 and 000-54023)
filed on September 14, 2017).
Fifth Amendment to the Digital Realty Trust, Inc., Digital Services, Inc. and Digital Realty Trust, L.P.
2014 Incentive Award Plan (incorporated by reference to Exhibit 10.38 to the Combined Annual Report on
Form 10-K of Digital Realty Trust, Inc. and Digital Realty Trust, L.P. (File Nos. 001-32336 and 000-
54023) filed on February 25, 2019).
Sixth Amendment to the Digital Realty Trust, Inc., Digital Services, Inc. and Digital Realty Trust, L.P.
2014 Incentive Award Plan (incorporated by reference to Exhibit 10.33 to the Combined Annual Report on
Form 10-K of Digital Realty Trust, Inc. and Digital Realty Trust, L.P. (File Nos. 001-32336 and 000-
54023) filed on March 1, 2021).
Employment Agreement among Digital Realty Trust, Inc., DLR LLC and A. William Stein (incorporated
by reference to Exhibit 10.1 to the Combined Current Report on Form 8-K of Digital Realty Trust, Inc. and
Digital Realty Trust, L.P. (File Nos. 001-32336 and 000-54023) filed on July 9, 2018).
10.31†
Digital Realty Trust, Inc. 2015 Employee Stock Purchase Plan (incorporated by reference to Exhibit 10.6 to
the Combined Quarterly Report on Form 10-Q of Digital Realty Trust, Inc. and Digital Realty Trust, L.P.
(File Nos. 001-32336 and 000-54023) filed on August 6, 2015).
10.32†
10.33†
10.34*
First Amendment to Digital Realty Trust, Inc. 2015 Employee Stock Purchase Plan (incorporated by
reference to Exhibit 4.7 to the Registration Statement on Form S-8 of Digital Realty Trust, Inc. (File Nos.
001-32336 and 000-54023) filed on October 7, 2015).
Form of Director Confidentiality Agreement (incorporated by reference to Exhibit 10.39 to the Combined
Annual Report on Form 10-K of Digital Realty Trust, Inc. and Digital Realty Trust, L.P. (File Nos.
001-32336 and 000-54023) filed on March 1, 2017).
Second Amended and Restated Global Senior Credit Agreement, dated as of November 18, 2021, among
Digital Realty Trust, L.P. and the other initial borrowers named therein and additional borrowers party
thereto, as borrowers, Digital Realty Trust, Inc., as parent guarantor, the additional guarantors party thereto,
as additional guarantors, the banks, financial institutions and other institutional lenders listed therein, as the
initial lenders, each issuing bank and swing line bank as listed therein, Citibank, N.A., as administrative
agent, BofA Securities, Inc. and Citibank, as co-sustainability structuring agents, Bank of America, N.A.
and JPMorgan Chase Bank, N.A., as syndication agents, and BofA Securities, Inc., Citibank, N.A., and
JPMorgan Chase Bank, N.A., as joint lead arrangers and joint bookrunners, and the other agents and
lenders named therein (incorporated by reference to exhibit 10.37 to the Combined Annual Report on
Form 10-K of Digital Realty Trust, Inc. and Digital Realty Trust, L.P. (File Nos. 001-32336 and
000-54023) filed on February 25, 2022).
166
Exhibit
Number
10.35*
10.36†
10.37†
10.38†
10.39†
10.40†
10.41†
10.42†
10.43†
10.44†
Description
Amended and Restated Credit Agreement, dated as of November 18, 2021, among Digital Realty
Trust, L.P. and the other initial borrowers named therein and additional borrowers party thereto, as
borrowers, Digital Realty Trust, Inc. and Digital Euro Finco LLC and Digital Realty Trust, L.P. as
guarantors, the subsidiary borrowers and additional guarantors named therein, the initial lenders and
issuing banks named therein, Sumitomo Mitsui Banking Corporation, as administrative agent, Sumitomo
Mitsui Banking Corporation as sustainability structuring agent, SMBC, MUFG Bank Ltd. and Mizuho
Bank, Ltd., as joint lead arrangers and joint bookrunners, and the other agents and lenders named therein
(incorporated by reference to exhibit 10.38 to the Combined Annual Report on Form 10-K of Digital
Realty Trust, Inc. and Digital Realty Trust, L.P. (File Nos. 001-32336 and 000-54023) filed on February
25, 2022).
Form of Executive Severance Agreement (incorporated by reference to Exhibit 10.56 to the Combined
Annual Report on Form 10-K of Digital Realty Trust, Inc. and Digital Realty Trust, L.P. (File Nos. 001-
32336 and 000-54023) filed on March 2, 2020).
Employment Agreement, dated November 19, 2018, by and among Digital Realty Trust, Inc., DLR, LLC
and Gregory S. Wright (incorporated by reference to Exhibit 10.1 to the Combined Quarterly Report on
Form 10-Q of Digital Realty Trust, Inc. and Digital Realty Trust, L.P. (File Nos. 001-32336 and 000-
54023) filed on May 11, 2020).
Form of Executive Severance Time-Based Profits Interest Unit Agreement (incorporated by reference to
Exhibit 10.9 to the Combined Quarterly Report on Form 10-Q of Digital Realty Trust, Inc. and Digital
Realty Trust, L.P. (File Nos. 001-32336 and 000-54023) filed on May 11, 2020).
Form of Executive Severance Class D Profits Interest Unit Agreement (incorporated by reference to
Exhibit 10.10 to the Combined Quarterly Report on Form 10-Q of Digital Realty Trust, Inc. and Digital
Realty Trust, L.P. (File Nos. 001-32336 and 000-54023) filed on May 11, 2020).
InterXion Holding N.V. 2017 Executive Director Long Term Incentive Plan (incorporated by reference to
Exhibit 4.5 to the Registration Statement on Form S-8 of Digital Realty Trust, Inc. (File No. 333-237038)
filed on March 9, 2020).
InterXion Holding N.V. 2013 Amended International Equity Based Incentive Plan (incorporated by
reference to Exhibit 4.4 to the Registration Statement on Form S-8 of Digital Realty Trust, Inc. (File No.
333-237038) filed on March 9, 2020).
Form of Indemnification Agreement by and between Digital Realty Trust, Inc. and its directors and officers
(incorporated by reference to Exhibit 10.59 to the Combined Annual Report on Form 10-K of Digital
Realty Trust, Inc. and Digital Realty Trust, L.P. (File Nos. 001-32336 and 000-54023) filed on March 1,
2021).
Form of Omnibus Letter Agreement to 2020 Equity Award Agreements (incorporated by reference to
exhibit 10.52 to the Combined Annual Report on Form 10-K of Digital Realty Trust, Inc. and Digital
Realty Trust, L.P. (File Nos. 001-32336 and 000-54023) filed on February 25, 2022).
Form of Amended and Restated Form of Executive Severance Agreement - United States (incorporated by
reference to exhibit 10.53 to the Combined Annual Report on Form 10-K of Digital Realty Trust, Inc. and
Digital Realty Trust, L.P. (File Nos. 001-32336 and 000-54023) filed on February 25, 2022).
167
Exhibit
Number
10.45†
10.46†
10.47†
10.48†
10.49†
10.50*
10.51*
Description
Form of Amended and Restated Form of Executive Severance Agreement – Canada (incorporated by
reference to exhibit 10.54 to the Combined Annual Report on Form 10-K of Digital Realty Trust, Inc. and
Digital Realty Trust, L.P. (File Nos. 001-32336 and 000-54023) filed on February 25, 2022).
Form of Second Amended and Restated Executive Severance Agreement—United States (incorporated by
reference to exhibit 10.55 to the Combined Annual Report on Form 10-K of Digital Realty Trust, Inc. and
Digital Realty Trust, L.P. (File Nos. 001-32336 and 000-54023) filed on February 24, 2023).
Form of Class D Profits Interest Unit Agreement (incorporated by reference to Exhibit 10.2 to the
Combined Quarterly Report on 10-Q of Digital Realty Trust, Inc. and Digital Realty Trust, L.P. (File Nos.
001-32336 and 000-54023) filed on May 6, 2022).
Form of Executive Severance Class D Profits Interest Unit Agreement (FFO Award) (incorporated by
reference to 10.3 to the Combined Quarterly Report on Form 10-Q of Digital Realty Trust, Inc. and Digital
Realty Trust, L.P. (File Nos. 001-32336 and 000-54023) filed on May 6, 2022).
Form of Performance-Based Restricted Stock Unit Agreement (US) (FFO Award) (incorporated by
reference to Exhibit 10.4 to the Combined Quarterly Report on Form 10-Q of Digital Realty Trust, Inc. and
Digital Realty Trust, L.P. (File Nos. 001-32336 and 000-54023) filed on May 6, 2022).
Amendment No. 2, dated as of April 5, 2022 to the Second Amended and Restated Global Senior Credit
Agreement, dated as of November 18, 2021, among Digital Realty Trust, L.P. and the other initial
borrowers named therein and additional borrowers party thereto, as borrowers, Digital Realty Trust, Inc., as
parent guarantor, the additional guarantors party thereto, as additional guarantors, the banks, financial
institutions and other institutional lenders listed therein, as the initial lenders, each issuing bank and swing
line bank as listed therein, Citibank, N.A., as administrative agent, BofA Securities, Inc. and Citibank, as
co-sustainability structuring agents, Bank of America, N.A. and JPMorgan Chase Bank, N.A., as
syndication agents, and BofA Securities, Inc., Citibank, N.A. and JPMorgan Chase Bank, N.A., as joint
lead arrangers and joint bookrunners and the other agents and lenders named therein (incorporated by
reference to Exhibit 10.1 to the Combined Quarterly Report on Form 10-Q of Digital Realty Trust, Inc. and
Digital Realty Trust, L.P. (File Nos. 001-32336 and 000-54023) filed on May 6, 2022).
Term Loan Agreement, dated as of August 11, 2022, among Digital Dutch Finco B.V., and the other initial
borrowers named therein and additional borrowers party thereto, as borrowers, Digital Realty Trust, L.P.,
Digital Euro Fico LLC, and Digital Realty Trust, L.P., as guarantors, the subsidiary borrowers and
additional guarantors named therein, the initial lenders and issuing banks named therein, Citibank, N.A., as
administrative agent, Bank of America, N.A. and JPMorgan Chase Bank, N.A., as syndication agents,
BofA Securities, Inc., Citibank, N.A., JPMorgan Chase Bank, N.A., Deutsche Bank Securities Inc., PNC
Bank National Association, The Bank of Nova Scotia, Bank of China, Los Angeles Branch, Oversea-
Chinese Banking Corporation Limited- Los Angeles Agency, Raymond James Bank, Sumitomo Mitsui
Banking Corporation, DBS Bank LTD., TD Securities (USA) LLC and U.S. Bank National Association, as
joint lead arrangers, BofA Securities, Inc., Citibank, N.A. and JPMorgan Chase Bank, N.A., as joint
bookrunners, and the other gents and lenders named therein (incorporated by reference to Exhibit 10.1 to
the Combined Current Report on Form 8-K of Digital Realty Trust, Inc. and Digital Realty Trust, L.P. (File
Nos. 001-32336 and 000-54023) filed on August 17, 2022).
168
Exhibit
Number
10.52†
10.53*
10.54†
10.55†
10.56†
10.57†
Description
Amendment to Employment Agreement, dated as of September 7, 2022, by and among Digital Realty
Trust, Inc., DLR LLC and Greg Wright (incorporated by reference to Exhibit 10.2 to the Combined
Quarterly Report on Form 10-Q of Digital Realty Trust, Inc. and Digital Realty Trust, L.P. (File Nos. 001-
32336 and 000-54023) filed on November 4, 2022).
Term Loan Agreement, dated as of January 9, 2023, among Digital Realty Trust, L.P., as borrower, Digital
Realty Trust, Inc., Digital Dutch Finco B.V., Digital Euro Finco, LLC and the additional guarantors party
thereto, Bank of America, N.A., as administrative agent and the lenders named therein (incorporated by
reference to Exhibit 10.1 to the Combined Current Report on Form 8-K of Digital Realty Trust, Inc. and
Digital Realty Trust, L.P. (File Nos. 001-32336 and 000-54023) filed on January 13, 2023).
Form of Class D Profits Interest Unit Agreement (NOI Award) (incorporated by reference to Exhibit 10.4
to the Combined Quarterly Report on Form 10-Q of Digital Realty Trust, Inc. and Digital Realty Trust,
L.P. (File Nos. 001-32336 and 000-54023) filed on May 4, 2023).
Form of Executive Severance Class D Profits Interest Unit Agreement (NOI Award) (incorporated by
reference to Exhibit 10.5 to the Combined Quarterly Report on Form 10-Q of Digital Realty Trust, Inc. and
Digital Realty Trust, L.P. (File Nos. 001-32336 and 000-54023) filed on May 4, 2023).
Form of Performance-Based Restricted Stock Unit Agreement (NOI Award) (incorporated by reference to
Exhibit 10.6 to the Combined Quarterly Report on Form 10-Q of Digital Realty Trust, Inc. and Digital
Realty Trust, L.P. (File Nos. 001-32336 and 000-54023) filed on May 4, 2023).
Form of Executive Severance Performance-Based Restricted Stock Unit Agreement (NOI Award)
(incorporated by reference to Exhibit 10.7 to the Combined Quarterly Report on Form 10-Q of Digital
Realty Trust, Inc. and Digital Realty Trust, L.P. (File Nos. 001-32336 and 000-54023) filed on May 4,
2023).
10.58†
Form of Executive Performance-Based Class D Profits Interest Unit Agreement.
10.59†*
Form of Executive Performance-Based Class D Profits Interest Unit Agreement (NOI Award).
10.60†
Form of Executive Time-Based Profits Interest Unit Agreement.
10.61†
Form of Amended Management Equity Election Program (incorporated by reference to Exhibit 10.32 to the
Combined Quarterly Report on Form 10-Q of Digital Realty Trust, Inc. and Digital Realty Trust, L.P. filed
on November 9, 2023).
10.62†
Director Compensation Program.
169
Exhibit
Number
10.63
10.64
10.65
10.66
10.67
Description
Term Loan Agreement, dated as of January 9, 2023, among Digital Realty Trust, L.P., as borrower, Digital
Realty Trust, Inc., Digital Dutch Finco, B.V., Digital Euro Finco LLC and the additional guarantors party
hereto, as guarantors, the initial lenders and issuing banks named therein, Bank of America, N.A., as
administrative agent, JPMorgan Chase Bank, N.A., as syndication agent, BofA Securities, Inc., JPMorgan
Chase Bank, N.A., Capital One, N.A., , Deutsche Bank Securities Inc., Mizhuho Bank, LTD., Oversea-
Chinese Banking Corporation, Limited – Los Angeles Agency, PNC Bank, National Association, Raymond
James Bank, Sumitomo Mitsui Banking Corporation, The Bank of China, Los Angeles Branch, The Bank
of Nova Scotia, TD Securities (USA) LLC, DBS Bank LTD., and Citibank, N.A., as joint lead arrangers,
BofA Securities, Inc. and JPMorgan Chase Bank, N.A., as joint bookrunners, and the other agents and
lenders named therein (incorporated by reference to Exhibit 10.1 to the Combined Current Report on Form
8-K of Digital Realty Trust, Inc. and Digital Realty Trust, L.P. (File Nos. 001 32336 and 000 54023) filed
on January 13, 2023).
Amendment No. 3, dated March 16, 2023 to the Second Amended and Restated Global Credit Agreement,
dated as of November 18, 2021, among Digital Realty Trust L.P. and the other initial borrowers named
therein and additional borrowers party thereto, as borrowers, Digital Realty Trust, Inc., as parent guarantor,
the additional guarantors party thereto, as additional guarantors, the banks, financial institutions and other
institutional lenders listed therein, as the initial lenders, each issuing bank and swing line bank as listed
therein, Citibank N.A., as administrative agent, BofA Securities, Inc. and Citibank, as co-sustainability
structuring agents, Bank of America, N.A. and JPMorgan Chase Bank, N.A., as syndication agents, and
BofA Securities, Inc., Citibank N.A. and JPMorgan Chase Bank, N.A., as joint lead arrangers and joint
bookrunners, and the other agents and lenders named therein (incorporated by reference to Exhibit 10.2 to
the Combined Quarterly Report on Form 10-Q of Digital Realty Trust, Inc. and Digital Realty Trust, L.P.
(File Nos. 001-32336 and 000-54023) filed on May 4, 2023).
Amendment No. 2, dated March 16, 2023, among Digital Realty Trust, L.P., its subsidiary Digital Japan
LLC, as the initial borrower, and the additional borrowers named therein, as borrowers, Digital Realty
Trust, Inc., and the other guarantors named therein, as guarantors, the banks, financial institutions and other
lenders listed therein, as the initial lenders, each issuing bank, as listed therein Sumitomo Mitsui Banking
Corporation (“SMBC”), as administrative agent, SMBC, as sustainability structuring agent, SMBC, MUFG
Bank Ltd. and Mizuho Bank, Ltd., as joint lead arrangers and joint bookrunners, and the other agents and
lenders named therein (incorporated by reference to Exhibit 10.7 to the Combined Quarterly Report on
Form 10-Q of Digital Realty Trust, Inc. and Digital Realty Trust, L.P. (File Nos. 001-32336 and 000-
54023) filed on May 4, 2023).
Amended and Restated Employment Agreement, dated as of August 10, 2023, by and between Digital
Realty Trust, Inc., DLR LLC, and Andrew P. Power (incorporated by reference to Exhibit 10.1 to the
Combined Current Report on Form 8-K of Digital Realty Trust, Inc. and Digital Realty Trust, L.P. (File
Nos. 001 32336 and 000 54023) filed on August 15, 2023).
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 (incorporated by reference to Exhibit 10.2 to the Combined Quarterly Report on Form
10-Q of Digital Realty Trust, Inc. and Digital Realty Trust, L.P. (File Nos. 001-32336 and 000-54023) filed
on November 9, 2023).
21.1
List of Subsidiaries of Digital Realty Trust, Inc.
170
Exhibit
Number
Description
21.2
List of Subsidiaries of Digital Realty Trust, L.P.
23.1
Consent of Independent Registered Public Accounting Firm.
31.1
Rule 13a-14(a)/15d-14(a) Certifications of Chief Executive Officer for Digital Realty Trust, Inc.
31.2
Rule 13a-14(a)/15d-14(a) Certifications of Chief Financial Officer for Digital Realty Trust, Inc.
31.3
Rule 13a-14(a)/15d-14(a) Certifications of Chief Executive Officer for Digital Realty Trust, L.P.
31.4
Rule 13a-14(a)/15d-14(a) Certifications of Chief Financial Officer for Digital Realty Trust, L.P.
32.1
32.2
32.3
32.4
18 U.S.C. § 1350 Certifications of Chief Executive Officer for Digital Realty Trust, Inc.
18 U.S.C. § 1350 Certifications of Chief Financial Officer for Digital Realty Trust, Inc.
18 U.S.C. § 1350 Certifications of Chief Executive Officer for Digital Realty Trust, L.P.
18 U.S.C. § 1350 Certifications of Chief Financial Officer for Digital Realty Trust, L.P.
97.1
Digital Realty Trust, Inc. Policy for Recovery of Erroneously Awarded Compensation.
101
The following financial statements from Digital Realty Trust, Inc.’s and Digital Realty Trust, L.P.’s Form
10-K for the year ended December 31, 2023, formatted in Inline XBRL interactive data files: (i)
Consolidated Balance Sheets as of December 31, 2023 and December 31, 2022; (ii) Consolidated Income
Statements for each of the years in the three-year period ended December 31, 2023; (iii) Consolidated
Statements of Equity and Comprehensive Income/Statements of Capital and Comprehensive Income for
each of the years in the three-year period ended December 31, 2023; (iv) Consolidated Statements of Cash
Flows for each of the years in the three-year period ended December 31, 2023; and (v) Notes to
Consolidated Financial Statements.
104
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
† Management contract or compensatory plan or arrangement.
* Portions of this exhibit have been omitted because such portions (i) are not material and (ii) would be competitively
harmful if publicly disclosed.
ITEM 16. FORM 10-K SUMMARY
None.
171
Pursuant to the requirements of Section 13 or 15(d) 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.
SIGNATURES
DIGITAL REALTY TRUST, INC.
By:
/s/ ANDREW P. POWER
Andrew P. Power
President & Chief Executive Officer
Date: February 23, 2024
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and
appoints Andrew P. Power, Jeannie Lee and Matthew R. Mercier, and each of them, with full power to act without the
other, such person’s true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for
him or her and in his or her name, place and stead, in any and all capacities, to sign this Form 10-K and any and all
amendments thereto, and to file the same, with exhibits and schedules thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of
them, full power and authority to do and perform each and every act and thing necessary or desirable to be done in and
about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, or their or his or her substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following
persons on behalf of the registrant and in the capacities and on the dates indicated.
Signature
Title
Date
/s/ MARY HOGAN PREUSSE
Mary Hogan Preusse
/s/ ANDREW P. POWER
Andrew P. Power
Chairman of the Board
February 23, 2024
President & Chief Executive Officer (Principal
Executive Officer)
February 23, 2024
/s/ MATTHEW R. MERCIER
Matthew R. Mercier
Officer)
Chief Financial Officer (Principal Financial
Chief Accounting Officer (Principal Accounting
/s/ CHRISTINE B. KORNEGAY
Christine B. Kornegay
Officer)
/s/ VERALINN JAMIESON
VeraLinn Jamieson
Director
February 23, 2024
February 23, 2024
February 23, 2024
172
Signature
Title
Date
/s/ KEVIN J. KENNEDY
Kevin J. Kennedy
Director
/s/ WILLIAM G. LAPERCH
William G. LaPerch
Director
/s/ JEAN F.H.P. MANDEVILLE
Jean F.H.P. Mandeville
Director
/s/ AFSHIN MOHEBBI
Afshin Mohebbi
Director
/s/ MARK R. PATTERSON
Mark R. Patterson
Director
February 23, 2024
February 23, 2024
February 23, 2024
February 23, 2024
February 23, 2024
173
Pursuant to the requirements of Section 13 or 15(d) 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.
SIGNATURES
DIGITAL REALTY TRUST, L.P.
By: Digital Realty Trust, Inc.,
Its
General Partner
By:
/s/ ANDREW P. POWER
Andrew P. Power
President & Chief Executive Officer
Date: February 23, 2024
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and
appoints Andrew P. Power, Jeannie Lee and Matthew R. Mercier, and each of them, with full power to act without the
other, such person’s true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for
him or her and in his or her name, place and stead, in any and all capacities, to sign this Form 10-K and any and all
amendments thereto, and to file the same, with exhibits and schedules thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of
them, full power and authority to do and perform each and every act and thing necessary or desirable to be done in and
about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, or their or his or her substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following
persons on behalf of the registrant and in the capacities and on the dates indicated.
Signature
Title
Date
/s/ MARY HOGAN PREUSSE
Mary Hogan Preusse
/s/ ANDREW P. POWER
Andrew P. Power
Chairman of the Board
February 23, 2024
President & Chief Executive Officer (Principal
Executive Officer)
February 23, 2024
/s/ MATTHEW R. MERCIER
Matthew R. Mercier
Officer)
Chief Financial Officer (Principal Financial
Chief Accounting Officer (Principal Accounting
/s/ CHRISTINE B. KORNEGAY
Christine B. Kornegay
Officer)
/s/ VERALINN JAMIESON
VeraLinn Jamieson
Director
February 23, 2024
February 23, 2024
February 23, 2024
174
Signature
Title
Date
/s/ KEVIN J. KENNEDY
Kevin J. Kennedy
Director
/s/ WILLIAM G. LAPERCH
William G. LaPerch
Director
/s/ JEAN F.H.P. MANDEVILLE
Jean F.H.P. Mandeville
Director
/s/ AFSHIN MOHEBBI
Afshin Mohebbi
Director
/s/ MARK R. PATTERSON
Mark R. Patterson
Director
February 23, 2024
February 23, 2024
February 23, 2024
February 23, 2024
February 23, 2024
175