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Equity and Capital
 6 Months Ended
Jun. 30, 2023
Equity and Capital  
Equity and Capital

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11. Equity and Capital

Equity Distribution Agreement

Digital Realty Trust, Inc. and Digital Realty Trust, L.P. are parties to an ATM Equity OfferingSM Sales Agreement dated April 1, 2022, as amended by Amendment No. 1 to ATM Equity OfferingSM Sales Agreement dated March 16, 2023 (the “Sales Agreement”). Pursuant to the Sales Agreement, Digital Realty Trust, Inc. can issue and sell common stock having an aggregate offering price of up to $1.5 billion through various named agents from time to time. For the six months ended June 30, 2023, Digital Realty Trust, Inc. generated net proceeds of approximately $743.0 million from the issuance of approximately 7.8 million common shares under the Sales Agreement at an average price of $95.96 per share after payment of approximately $7.5 million of commissions to the agents. In addition, during such period the company entered into forward equity sale agreements with a financial institution acting as a forward purchaser under its ATM program with respect to approximately 3.5 million shares of its common stock at an initial forward sale price of approximately $97.68 per share. The company did not initially receive any proceeds from the sale of shares of common stock by the forward purchaser. 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. As of June 30, 2023, approximately $408.7 million remains available for future sales under the program. For the six months ended June 30, 2022, we had no sales under the Sales Agreement.

We account for our forward equity sales agreements in accordance with the accounting guidance governing financial instruments and derivatives. As of June 30, 2023, none of our forward equity sales agreements were deemed to be liabilities as they did not embody obligations to repurchase our shares, nor did they embody obligations to issue a variable number of shares for which the monetary value was predominantly fixed, varied with something other than the fair value of our shares, or varied inversely in relation to our shares. We also evaluated whether the agreements met the derivatives and hedging guidance scope exception to be accounted for as equity instruments and concluded that the agreements could be classified as equity contracts based on the following assessment: (i) none of the agreements’ exercise contingencies were based on observable markets or indices besides those related to the market for our own stock price and operations; and (ii) none of the settlement provisions precluded the agreements from being indexed to our own stock. The shares issuable upon settlement of our forward sale agreement is reflected in our diluted earnings per share using the treasury stock method.

Noncontrolling Interests in Operating Partnership

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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 June 30, 2023 and December 31, 2022 (in thousands):

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​

​

​

​

​

​

​

​

​

​

June 30, 2023

​

December 31, 2022

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​

Number of

​

Percentage of

​

Number of

​

Percentage of

​

    

units

    

total

​

units

    

total

Digital Realty Trust, Inc.

​

299,240

​

97.9

%  

​

291,148

​

97.9

%

Noncontrolling interests consist of:

 

​

 

  

 

​

​

 

  

​

Common units held by third parties

 

4,343

 

1.4

%  

​

4,375

 

1.5

%

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

 

2,140

 

0.7

%  

​

1,914

 

0.6

%

​

 

305,723

 

100.0

%  

​

297,437

 

100.0

%

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

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The redemption value of the noncontrolling Operating Partnership common units and the vested incentive units was approximately $707.0 million and $591.2 million based on the closing market price of Digital Realty Trust, Inc. common stock on June 30, 2023 and December 31, 2022, respectively.

The following table shows activity for noncontrolling interests in the Operating Partnership for the six months ended June 30, 2023 (in thousands):

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​

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Common Units

    

Incentive Units

    

Total

As of December 31, 2022

 

4,375

 

1,914

 

6,289

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

 

(32)

 

(30)

 

(62)

Incentive units issued upon achievement of market performance condition

 

—

 

128

 

128

Grant of incentive units to employees and directors

 

—

 

165

 

165

Cancellation / forfeitures of incentive units held by employees and directors

 

—

 

(37)

 

(37)

As of June 30, 2023

 

4,343

 

2,140

 

6,483

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

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Dividends and Distributions

Digital Realty Trust, Inc. Dividends

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

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​

​

​

​

​

​

​

​

​

​

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Series J

​

Series K

​

Series L

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​

​

​

​

​

​

Preferred

​

Preferred

​

Preferred

​

Common

Date dividend declared

    

Dividend payment date

    

Stock

    

Stock

    

Stock

​

Stock

February 22, 2023

​

March 31, 2023

​

$

2,625

​

$

3,071

​

$

4,485

​

$

356,214

May 24, 2023

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June 30, 2023

​

​

2,625

​

​

3,071

​

​

4,485

​

​

365,937

​

​

​

​

$

5,250

​

$

6,142

​

$

8,970

​

$

722,151

Annual rate of dividend per share

​

​

​

$

1.31250

​

$

1.46250

​

$

1.30000

​

$

4.88000

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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 six months ended June 30, 2023 (in thousands, except for per unit data):

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​

​

​

​

​

​

​

​

​

​

​

​

Series J

​

Series K

​

Series L

​

​

​

​

​

​

​

Preferred

​

Preferred

​

Preferred

​

Common

Date distribution declared

    

Distribution payment date

    

Units

    

Units

​

Units

​

Units

February 22, 2023

​

March 31, 2023

​

$

2,625

​

$

3,071

​

$

4,485

​

$

364,204

May 24, 2023

​

June 30, 2023

​

​

2,625

​

​

3,071

​

​

4,485

​

​

373,833

​

​

​

​

$

5,250

​

$

6,142

​

$

8,970

​

$

738,037

Annual rate of distribution per unit

​

​

​

$

1.31250

​

$

1.46250

​

$

1.30000

​

$

4.88000

​