10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

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

For the quarterly period ended March 31, 2006

¨ 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.

(Exact name of registrant as specified in its charter)

Maryland	26-0081711
(State or other jurisdiction of incorporation or organization)	(IRS employer identification number)
560 Mission Street, Suite 2900 San Francisco, CA	94105
(Address of principal executive offices)	(Zip Code)

(415) 738-6500

(Registrant’s telephone number, including area code)

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. x Yes     No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ¨                                 Accelerated filer x                                 Non- accelerated filer ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨     No x

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

Class	Outstanding at May 1, 2006
Common Stock, $.01 par value per share	32,104,961

DIGITAL REALTY TRUST, INC.

FORM 10-Q

FOR THE QUARTER ENDED MARCH 31, 2006

TABLE OF CONTENTS

		Page number
PART I. FINANCIAL INFORMATION
ITEM 1.	Consolidated Condensed Financial Statements:
	Condensed Consolidated Balance Sheets as of March 31, 2006 (unaudited) and December 31, 2005	1
	Condensed Consolidated Statements of Operations for the three months ended March 31, 2006 and 2005 (unaudited)	2
	Condensed Consolidated Statements of Comprehensive Income for the three months ended March 31, 2006 and 2005 (unaudited)	3
	Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2006 and 2005 (unaudited)	4
	Notes to Condensed Consolidated Financial Statements	6
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	35
ITEM 4.	Controls and Procedures	37
PART II. OTHER INFORMATION
ITEM 1.	Legal Proceedings	37
ITEM 1A.	Risk factors	37
ITEM 2.	Changes in Securities and Use of Proceeds	37
ITEM 3.	Defaults Upon Senior Securities	37
ITEM 4.	Submission of Matters to a Vote of Security Holders	37
ITEM 5.	Other Information	37
ITEM 6.	Exhibits	38
	Signatures	39

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS

DIGITAL REALTY TRUST, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands except share data)

	March 31, 2006 (unaudited)			December 31, 2005
ASSETS
Investments in real estate:
Land	$	193,891		$	191,961
Acquired ground lease		2,871			1,477
Buildings and improvements		966,137			941,115
Tenant improvements		126,327			123,957
Investments in real estate		1,289,226			1,258,510
Accumulated depreciation and amortization		(74,200	)		(64,404	)
Net investments in real estate		1,215,026			1,194,106
Cash and cash equivalents		25,179			10,930
Accounts and other receivables, net of allowance for doubtful accounts of $1,022 and $763 as of March 31, 2006 and December 31, 2005, respectively		27,872			7,587
Deferred rent		28,933			25,094
Acquired above market leases, net		46,448			48,237
Acquired in place lease value and deferred leasing costs, net		194,467			201,141
Deferred financing costs, net		7,044			7,659
Restricted cash		18,045			22,123
Other assets		11,027			12,293
Total Assets	$	1,574,041		$	1,529,170
LIABILITIES AND STOCKHOLDERS’ EQUITY
Notes payable under line of credit	$	204,408		$	181,000
Mortgage loans		609,247			568,067
Accounts payable and other accrued liabilities		43,222			36,869
Accrued dividends and distributions		—			15,639
Acquired below market leases, net		64,971			67,177
Security deposits and prepaid rents		13,191			11,476
Total liabilities		935,039			880,228
Commitments and contingencies
Minority interests in consolidated joint ventures		190			206
Minority interests in operating partnership		224,070			262,239
Stockholders’ equity:
Preferred Stock: $0.01 par value, 20,000,000 authorized:
Series A Cumulative Redeemable Preferred Stock, 8.50%, $103,500,000 liquidation preference ($25.00 per share), 4,140,000 issued and outstanding		99,297			99,297
Series B Cumulative Redeemable Preferred Stock, 7.875%, $63,250,000 liquidation preference ($25.00 per share), 2,530,000 issued and outstanding		60,502			60,502
Common Stock; $0.01 par value: 100,000,000 authorized, 31,429,296 and 27,363,408 shares issued and outstanding as of March 31, 2006 and December 31, 2005		314			274
Additional paid-in capital		285,747			252,562
Dividends in excess of earnings		(33,394	)		(27,782	)
Accumulated other comprehensive income, net		2,276			1,644
Total stockholders’ equity		414,742			386,497
Total liabilities and stockholders’ equity	$	1,574,041		$	1,529,170

See accompanying notes to the condensed consolidated financial statements.

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DIGITAL REALTY TRUST, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited in thousands except share data)

	Three Months Ended March 31,
	2006			2005
Operating Revenues:
Rental	$	49,242		$	32,691
Tenant reimbursements		11,573			6,520
Other		168			300
Total operating revenues		60,983			39,511
Operating Expenses:
Rental property operating and maintenance		12,196			7,145
Property taxes		7,057			3,681
Insurance		916			599
Depreciation and amortization		18,256			12,143
General and administrative		4,246			2,413
Other		181			521
Total operating expenses		42,852			26,502
Operating income		18,131			13,009
Other Income (Expenses):
Interest and other income		232			132
Interest expense		(11,388	)		(8,121	)
Loss from early extinguishment of debt		(57	)		(125	)
Income before minority interests		6,918			4,895
Minority interests in consolidated joint ventures		15			3
Minority interests in operating partnership		(1,846	)		(2,159	)
Net income		5,087			2,739
Preferred stock dividends		(3,445	)		(1,271	)
Net income available to common stockholders	$	1,642		$	1,468
Income per share available to common stockholders:
Basic	$	0.06		$	0.07
Diluted	$	0.06		$	0.07
Weighted average common shares outstanding:
Basic		27,503,248			21,421,300
Diluted		28,354,597			21,535,485

See accompanying notes to the condensed consolidated financial statements.

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DIGITAL REALTY TRUST, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(unaudited in thousands)

	Three months ended March 31,
	2006			2005
Net income	$	5,087		$	2,739
Other comprehensive income:
Foreign currency translation adjustments		573			1,164
Minority interests in foreign currency translation adjustments		(306	)		(693	)
Increase in fair value of interest rate swaps		1,204			1,410
Minority interests in change in fair value of interest rate swaps		(643	)		(839	)
Reclassification of other comprehensive income to interest expense		(421	)		309
Minority interests in reclassification of other comprehensive income to interest expense		225			(184	)
Comprehensive income	$	5,719		$	3,906

See accompanying notes to the condensed consolidated financial statements.

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DIGITAL REALTY TRUST, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited in thousands)

	Three Months Ended
	March 31, 2006			March 31, 2005
Cash flows from operating activities:
Net income	$	5,087		$	2,739
Adjustments to reconcile net income to net cash provided by operating activities:
Minority interests in operating partnership		1,846			2,159
Minority interests in consolidated joint ventures		(15	)		(3	)
Write-off of net assets due to early lease terminations		80			363
Depreciation and amortization of buildings and improvements, tenant improvements and acquired ground leases		9,842			6,801
Amortization over the vesting period of the fair value of equity compensation		431			52
Amortization of deferred financing costs		754			675
Write-off of deferred financing costs, included in net loss on early extinguishment of debt		57			125
Amortization of debt premium		(57	)		(6	)
Amortization of swap loss (gain) to interest		(421	)		309
Amortization of acquired in place lease value and deferred leasing costs		8,414			5,342
Amortization of acquired above market leases and acquired below market leases, net		(434	)		(586	)
Changes in assets and liabilities:
Accounts and other receivables		(2,567	)		(102	)
Deferred rent		(3,839	)		(2,475	)
Deferred leasing costs		(1,029	)		(16	)
Other assets		(1,869	)		(876	)
Accounts payable and other accrued liabilities		(3,138	)		(1,828	)
Security deposits and prepaid rents		1,715			(965	)
Net cash provided by operating activities		14,857			11,708
Cash flows from investing activities:
Acquisitions of properties		(22,858	)		(69,422	)
Deposits paid for acquisitions of properties		(1,000	)		(1,000	)
Receipt of value added tax refund		3,121			—
Refundable value added tax in conjunction with acquisition		(767	)		—
Change in restricted cash		4,078			434
Improvements to investments in real estate		(7,732	)		(1,657	)
Tenant improvement advances to tenants		(7,375	)		—
Net cash used in investing activities		(32,533	)		(71,645	)

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DIGITAL REALTY TRUST, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

(unaudited in thousands)

	Three Months Ended
	March 31, 2006			March 31, 2005
Cash flows from financing activities:
Borrowings on line of credit	$	83,456		$	50,000
Repayments on line of credit		(60,000	)		(58,000	)
Proceeds from mortgage loans		60,000			—
Principal payments on mortgage loans		(18,929	)		(9,788	)
Settlement of foreign currency forward sale contract		694			(2,519	)
Reimbursement by GI Partners of settlement cost of foreign currency forward sale contract		—			1,911
Payment of loan fees and costs		(222	)		—
Refund of rate-lock deposit		1,200			—
Gross proceeds from the sale of preferred stock		—			103,500
Common stock offering costs paid		—			(594	)
Preferred stock offering costs paid		—			(3,803	)
Proceeds from exercise of employee stock options		452			—
Payment of dividends to preferred stockholders		(3,445	)		(1,271	)
Payment of dividends to common stockholders and distributions to limited partners of operating partnership		(31,281	)		(21,181	)
Net cash provided by financing activities		31,925			58,255
Net increase (decrease) in cash and cash equivalents		14,249			(1,682	)
Cash and cash equivalents at beginning of period		10,930			4,557
Cash and cash equivalents at end of period	$	25,179		$	2,875
Supplemental disclosure of cash flow information:
Cash paid for interest, including amounts capitalized	$	10,244		$	7,347
Supplementary disclosure of noncash investing and financing activities:
Change in net assets related to foreign currency translation adjustments	$	573		$	1,164
Increase in other assets related to increase in fair value of interest rate swaps		1,204			1,410
Reclassification of owner's equity to minority interest in the Operating Partnership		32,644			—
Accrual for additions to investments in real estate and tenant improvement advances included in accounts payable and accrued expenses		9,800			946
Allocation of purchase of properties to:
Investments in real estate		22,858			65,079
Accounts and other receivables		—			200
Acquired above market leases		—			2,447
Acquired below market leases		—			(2,538	)
Acquired in place lease value and deferred leasing costs		1,059			16,066
Mortgage loans assumed		—			(9,746	)
Loan premium		—			(944	)
Accounts payable and other accrued liabilities		(1,059	)		(1,987	)
Reverse minority interest in consolidated joint venture		—			845
Cash paid for acquisition of properties		22,858			69,422
Increase to components of net investment foreign currency hedge upon settlement:
Investment in real estate		—			5,304
Mortgage loans		—			(3,307	)
Other accrued liabilities		—			(1,997	)
		—			—
Accrual of Series A preferred stock offering costs		—			400
Reallocation of limited partners’ interests in Operating Partnership to the general partner		—			257

See accompanying notes to the condensed consolidated financial statements.

5

DIGITAL REALTY TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2006 and 2005

(unaudited)

1. Organization and Description of Business

Digital Realty Trust, Inc. through its controlling interest in Digital Realty Trust, L.P. (the Operating Partnership) and the subsidiaries of the Operating Partnership (collectively, “we” or the Company) is engaged in the business of owning, acquiring, repositioning and managing technology-related real estate. As of March 31, 2006 our portfolio consists of 46 properties; 42 are located throughout the United States and four are located in Europe. Our properties are diversified in major markets where corporate data center and technology tenants are concentrated, including the Boston, Chicago, Dallas, Los Angeles, New York, Philadelphia, San Francisco and Silicon Valley metropolitan areas. The portfolio consists of Internet gateway properties, data center properties, technology manufacturing properties and regional or national headquarters of technology companies.

We completed our initial public offering (IPO) on November 3, 2004 and commenced operations on that date. The Operating Partnership was formed on July 21, 2004 in anticipation of our IPO. At March 31, 2006 we own a 53.2% common interest and a 100% preferred interest in the Operating Partnership. We have control over the Operating Partnership. The limited partners of the Operating Partnership do not have rights to replace the general partner nor do they have participating rights, although they do have certain protective rights.

2. Summary of Significant Accounting Policies

(a) Principles of Consolidation and Basis of Presentation

The accompanying condensed consolidated financial statements include all of the accounts of Digital Realty Trust, Inc., the Operating Partnership, the subsidiaries of the Operating Partnership and its consolidated joint venture. Intercompany balances and transactions have been eliminated. The interests of the joint venture partner, a third party, is reflected in minority interests in the accompanying condensed consolidated financial statements.

Property interests contributed to the Operating Partnership by Global Innovation Partners, LLC (GI Partners) in exchange for Units in anticipation of completion of our IPO have been accounted for as a reorganization of entities under common control in a manner similar to a pooling of interests. Accordingly, the contributed assets and assumed liabilities were recorded at the historical cost basis. Property interests acquired from third parties for cash or Units are accounted for using purchase accounting.

The accompanying condensed interim financial statements are unaudited, but have been prepared in accordance with U.S. generally accepted accounting principles (U.S. GAAP) for interim financial information and in compliance with the rules and regulations of the United States Securities and Exchange Commission. Accordingly, they do not include all of the disclosures required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments are of a normal recurring nature and necessary for a fair presentation of the financial statements for these interim periods have been included. The results of operations for the interim periods are not necessarily indicative of the results to be obtained for the full fiscal year. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto included in our annual report on Form 10-K for the year ended December 31, 2005.

(b) Cash Equivalents

For purpose of the condensed consolidated statements of cash flows, we consider short-term investments with original maturities of 90 days or less when purchased to be cash equivalents. As of March 31, 2006 and December 31, 2005, cash equivalents consist of investments in a money market fund.

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(c) Share Based Compensation

We account for share based compensation, including stock options and fully vested long-term incentive units granted in connection with the IPO, using the fair value method of accounting. The estimated fair value of each of the long-term incentive units granted in connection with our IPO was equal to the IPO price of our stock and such amount was recorded as an expense upon closing of the IPO since those long-term incentive units were fully vested as of the grant date. The estimated fair value of the stock options granted by us is being amortized over the vesting period of the stock options. The estimated fair value of the Class C Partnership units (discussed in note 8) is being amortized over the expected service period of five years.

(d) Income Taxes

We have elected to be treated and believe that we have operated in a manner that has enabled us to qualify as a Real Estate Investment Trust (REIT) under Sections 856 through 860 of the Internal Revenue Code of 1986, (the Code) as amended. As a REIT, we generally are not required to pay federal corporate income taxes on our taxable income to the extent it is currently distributed to our stockholders.

However, qualification and taxation as a REIT depends upon our ability to meet the various qualification tests imposed under the Code including tests related to annual operating results, asset composition, distribution levels and diversity of stock ownership. Accordingly, no assurance can be given that we will be organized or be able to operate in a manner so as to qualify or remain qualified as a REIT. If we fail to qualify as a REIT in any taxable year, we will be subject to federal income tax (including any applicable alternative minimum tax) on our taxable income at regular corporate tax rates.

We have elected to treat two of the Operating Partnership’s subsidiaries as taxable REIT subsidiaries (each, a TRS). In general, a TRS may perform non-customary services for tenants, hold assets that we cannot hold directly and generally may engage in any real estate or non-real estate related business (except for the operation or management of health care facilities or lodging facilities or the provision to any person, under a franchise, license or otherwise, rights to any brand name under which any lodging facility or health care facility is operated). Our TRS’s are subject to corporate federal and state income taxes based on their taxable income. These rates are generally those rates which are charged for regular corporate entities. Income taxes are recorded using the asset and liability method. Under the asset and liability method, deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. A valuation allowance is recorded against the combined federal and state net deferred taxes reducing the deferred tax asset to a net amount. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

As of March 31, 2006 one of our TRS’s is estimated to have a net operating loss carryforward for federal and state income tax purposes. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Due to the uncertainty of future realizability, management has fully offset the net deferred tax assets with a valuation allowance.

To the extent that any foreign taxes are incurred by the subsidiaries invested in real estate located outside of the United States, a provision is made for such taxes.

(e) Asset Retirement Obligations

We record accruals for estimated retirement obligations, as required by SFAS No. 143, “Accounting for Asset Retirement Obligations” and FASB Interpretation No. 47, “Accounting for Conditional Asset Retirement Obligations” (FIN 47). The amount of asset retirement obligations relates primarily to estimated asbestos removal costs at the end of the economic life of properties that were built before 1984. As of both March 31, 2006 and December 31, 2005 the amount included in accounts payable and other accrued liabilities on our condensed consolidated balance sheets was approximately $0.8 million and the equivalent asset is recorded at $0.7 million, net of amortization.

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(f) Reclassifications

Certain reclassifications have been made to the 2005 financial statements to conform to the 2006 presentation.

(g) Management’s Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates made.

3. Minority Interests in the Operating Partnership

Minority interests in the Operating Partnership relate to the interests that are not owned by us. The following table shows the ownership interest in the Operating Partnership at March 31, 2006 and December 31, 2005 (reflecting 4,030,184 shares that the owners of GI Partners converted from common units of the Operating Partnership to shares of our common stock on March 29, 2006 and which they sold on April 3, 2006).

	March 31, 2006			December 31, 2005
	Common units and long term incentive units	Percentage of total		Common units and long term incentive units	Percentage of total
The Company	31,429,296	53.2	%	27,363,408	46.4	%
Minority interest consisting of:
GI Partners	19,669,175	33.3		23,699,359	40.2
Third Parties	6,331,511	10.7		6,331,511	10.7
Employees (long term incentive units, see note 8)	1,622,671	2.8		1,622,671	2.7
	59,052,653	100.0	%	59,016,949	100.0	%

In conjunction with our formation, GI Partners received common units (founder units), in exchange for contributing ownership interests in properties to the Operating Partnership. Also in connection with acquiring real estate interests owned by third parties, the Operating Partnership issued common units to those sellers. Limited partners who acquired common units in the formation transactions have the right to require the Operating Partnership to redeem part or all of their common units for cash based upon the fair market value of an equivalent number of shares of our common stock at the time of the redemption. Alternatively, we may elect to acquire those common units in exchange for shares of our 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. Pursuant to registration rights agreements we entered into with GI Partners and the other third party contributors, we filed a shelf registration statement covering the issuance of the shares of our common stock issuable upon redemption of the common units, and the resale of those shares of common stock by the holders. GI Partners distributed 4,030,184 Operating Partnership common units to its owners and these units were converted into shares of our common stock on March 29, 2006 and sold to third parties on April 3, 2006. Richard Magnuson, the Executive Chairman of our board of directors, Michael Foust, our Chief Executive Officer and a member of our board of directors, and Scott Peterson, our Senior Vice President, Acquisitions, are minority indirect investors in GI Partners. The conversion of the GI Partners’ founder units of the Operating Partnership to shares of our common stock was recorded as a reduction to minority interest and an increase to common stock and additional paid in capital based on the book value per unit in the accompanying condensed consolidated balance sheet.

Under the terms of certain third parties’ (the eXchange parties) contribution agreement signed in the third quarter of 2004, we have agreed to indemnify each eXchange party against adverse tax consequences in the event the Operating Partnership directly or indirectly, sells, exchanges or otherwise disposes of (whether by way of merger, sale of assets or otherwise) in a taxable transaction any interest in 200 Paul Avenue 1-4 or 1100 Space Park Drive until the earlier of November 3, 2013 and the date on which these contributors hold less than 25% of the Units issued to them in the formation transactions consummated concurrently with the IPO. Under the eXchange parties’ contribution agreement, we agreed to make $20.0 million of indebtedness available for guaranty by these

8

parties until the earlier of November 3, 2013 and the date on which these contributors or certain transferees hold less than 25% of the Units issued to them in the formation transactions consummated concurrently with the IPO.

4. Investments in Real Estate Acquired During the Three Months Ended March 31, 2006

On January 6, 2006 we acquired 4025 Midway Road in Carrollton, Texas, a suburb of Dallas for approximately $16.2 million.

On February 6, 2006 we purchased a property in Dublin, Ireland for €5.2 million ($6.3 million at the rate of exchange at the date of purchase) including $0.4 million in Stamp Duty Tax. We also paid an additional $0.8 million in Value Added Tax which we expect to recover in 2006.

The purchase price of these acquisitions have been allocated on a preliminary basis to the assets acquired and the liabilities assumed. We expect to finalize our purchase price allocation no later than twelve months from the date of each acquisition.

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5. Debt

A summary of outstanding indebtedness as of March 31, 2006 and December 31, 2005, respectively, is as follows (in thousands):

Properties	Interest Rate at March 31, 2006		Maturity Date		Principal Outstanding March 31, 2006			Principal Outstanding December 31, 2005
Mortgage loans:
Secured Term Debt (1)	5.65	%	Nov. 11, 2014		$	152,391		$	152,918
350 East Cermak Road	1-month LIBOR + 2.20	% (2)(3)	Jun. 9, 2008	(4)		100,000			100,000
200 Paul Avenue 1-4	5.74	%	Oct. 8, 2015			81,000			81,000
2323 Bryan Street (5)	6.04	%	Nov. 6, 2009			57,098			57,282
34551 Ardenwood Boulevard 1-4, 2334 Lundy Place, 2440 Marsh Lane	1-month LIBOR + 1.59	% (2)	Aug. 9, 2006	(6)		43,000			43,000
7979 East Tufts Avenue	5.14	%	Jan. 10, 2009			26,000			26,000
6 Braham Street	6.85	%	Oct. 31, 2009			22,179	(7)		22,490	(7)
4055 Valley View Lane	3-month LIBOR + 1.20	% (2)	Jan. 1, 2009			21,015			21,150
100 Technology Center Drive	3-month LIBOR + 1.70	% (2)	Apr. 1, 2009			20,000			20,000
47700 Kato Road & 1055 Page Avenue	1-month LIBOR + 2.25	%	—			—			17,540
1125 Energy Park Drive	7.62	%(8)	Mar. 1, 2032			9,660			9,675
375 Riverside Parkway	3-month LIBOR + 1.85	% (2)	Nov. 25, 2006	(4)		8,775			8,775
600 West Seventh Street	5.80	%	Mar. 15, 2016			60,000			—
731 East Trade Street	8.22	%	Jul. 1, 2020			5,991			6,042
						607,109			565,872
Unsecured line of credit (9)	2-month LIBOR + 1.50	% (9)	Oct. 31, 2008	(10)		204,408			181,000
Total principal outstanding						811,517			746,872
Loan premium—1125 Energy Park Drive and 731 East Trade Street mortgages						2,138			2,195
Total indebtedness					$	813,655		$	749,067

(1) This amount represents six mortgage loans secured by our interests in 36 NE 2nd Street, 3300 East Birch Street, 100 & 200 Quannapowitt Parkway, 300 Boulevard East, 4849 Alpha Road, and 11830 Webb Chapel Road. Each of these loans is cross-collateralized by the six properties.

(2) We have entered into interest rate swap agreements as a cash flow hedge for interest generated by these LIBOR based loans. The total notional amount of the swap agreements was $192.8 million as of March 31, 2006 and $192.9 million as of December 31, 2005. See note 9 for further information.

(3) This is the weighted average interest rate as of March 31, 2006. The first note, in a principal amount of $80.0 million, bears interest at a rate of 1-month LIBOR + 1.375% per annum and the second note, in a principal amount of $20.0 million, bears interest at a rate of 1-month LIBOR + 5.5% per annum.

(4) Two one-year extensions are available, which we may exercise if certain conditions are met.

(5) This loan is also secured by a $5.0 million letter of credit.

(6) A 13-month extension and a one-year extension are available, which we may exercise if certain conditions are met.

(7) Based on exchange rate of $1.74 to £1.00 as of March 31, 2006 and $1.72 to £1.00 as of December 31, 2005.

(8) If the loan is not repaid by March 1, 2012, the interest rate increases to the greater of 9.62% or the then treasury rate plus 2%.

(9) The interest rate under our unsecured line of credit equals either (i) LIBOR (ranging from 1- to 6-month LIBOR) plus a margin of between 1.250% and 1.625% or (ii) the greater of (x) the base rate announced by the lender and (y) the federal funds rate, plus a margin of between 0.375% - 0.750%. In each case, the margin is based on our leverage ratio. We incur a fee ranging from 0.15% to 0.25% for the unused portion of our unsecured line of credit.

(10) A one-year extension option is available.

At March 31, 2006, our Operating Partnership has an unsecured revolving line of credit facility (credit facility) for $350.0 million (with the option to further increase to $500 million subject to receipt of lender commitments and satisfaction of

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other conditions). As of March 31, 2006 borrowings under the credit facility bear interest at a rate based on 2-month LIBOR plus a margin ranging from 1.250% to 1.625%, depending on our Operating Partnership’s overall leverage and this margin was 1.50% as of March 31, 2006. The credit facility matures in October 2008, subject to a one-year extension option and has a $150.0 million sub-facility for foreign exchange advances in Euros and British Sterling. As of March 31, 2006, approximately $204.4 million was drawn under this facility. The credit facility contains various restrictive covenants, including limitations on our ability to incur additional indebtedness, make certain investments or merge with another company, and requirements to maintain financial coverage ratios and maintain a pool of unencumbered assets. In addition, except to enable us to maintain our status as a REIT for federal income tax purposes, we will not during any four consecutive fiscal quarters make distributions with respect to common stock or other equity interests in an aggregate amount in excess of 95% of Funds From Operations, as defined, for such period, subject to certain other adjustments. As of March 31, 2006, we were in compliance with all the covenants.

Some of the loans impose penalties upon prepayment. The terms of the following mortgage loans do not permit prepayment of the loan prior to the dates listed below:

Loan	Date
350 East Cermak Road	May 2006
2323 Bryan Street	August 2009
200 Paul Avenue 1-4	November 2010
1125 Energy Park Drive	December 2011
Secured Term Debt	September 2014

During the three months ended March 31, 2006 we capitalized interest of approximately $0.8 million, and in the three months ended March 31, 2005 we did not capitalize any interest.

6. Income per Share

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

	Three Months Ended March 31,
	2006			2005
Net income	$	5,087		$	2,739
Preferred stock dividends		(3,445	)		(1,271	)
Net income available to common stockholders	$	1,642		$	1,468
Weighted average shares outstanding—basic		27,503,248			21,421,300
Potentially dilutive common shares:
Stock options		390,630			114,185
Class C Units		460,719			—
Weighted average shares outstanding—diluted		28,354,597			21,535,485
Income per share:
Basic	$	0.06		$	0.07
Diluted	$	0.06		$	0.07

For the three months ended March 31, 2006 and 2005, weighted average Operating Partnership Units of 31,519,202 and 31,521,431, respectively were excluded from the computation of diluted earnings per share as their effect would not be dilutive. In addition, for the three months ended March 31, 2006, the effect of the assumed exercise of 52,500 potentially dilutive outstanding stock options was not included in the income per share calculation as this effect is antidilutive.

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7. Stockholders’ Equity

(a) Redeemable Preferred Stock

Underwriting discounts and commissions and other offering costs totaling approximately $7.0 million are reflected as a reduction to preferred stock in the accompanying consolidated balance sheet.

8.50% Series A Cumulative Redeemable Preferred Stock

We currently have outstanding 4,140,000 shares of our 8.50% series A cumulative redeemable preferred Stock, or series A preferred stock. Dividends are cumulative on our series A preferred stock from the date of original issuance in the amount of $2.125 per share each year, which is equivalent to 8.50% of the $25.00 liquidation preference per share. Dividends on our series A preferred stock are payable quarterly in arrears. Our series A preferred stock does not have a stated maturity date and is not subject to any sinking fund or mandatory redemption provisions. Upon liquidation, dissolution or winding up, our series A preferred stock will rank senior to our common stock with respect to the payment of distributions and other amounts and ranks on parity with our Series B Preferred Stock. We are not allowed to redeem our series A preferred stock before February 9, 2010, except in limited circumstances to preserve our status as a REIT. On or after February 9, 2010, we may, at our option, redeem our series A preferred stock, in whole or in part, at any time or from time to time, for cash at a redemption price of $25.00 per share, plus all accrued and unpaid dividends on such series A preferred stock up to but excluding the redemption date. Holders of our series A preferred stock generally have no voting rights except for limited voting rights if we fail to pay dividends for six or more quarterly periods (whether or not consecutive) and in certain other circumstances. Our series A preferred stock is not convertible into or exchangeable for any other property or securities of our company.

7.875% Series B Cumulative Redeemable Preferred Stock

We currently have outstanding 2,530,000 shares of our 7.875% series B cumulative redeemable preferred Stock, or series B preferred stock. Dividends are cumulative on our series B preferred stock from the date of original issuance in the amount of $1.96875 per share each year, which is equivalent to 7.875% of the $25.00 liquidation preference per share. Dividends on our series B preferred stock are payable quarterly in arrears. Our series B preferred stock does not have a stated maturity date and is not subject to any sinking fund or mandatory redemption provisions. Upon liquidation, dissolution or winding up, our series B preferred stock will rank senior to our common stock with respect to the payment of distributions and other amounts and ranks on parity with our Series A Preferred Stock. We are not allowed to redeem our series B preferred stock before July 26, 2010, except in limited circumstances to preserve our status as a REIT. On or after July 26, 2010, we may, at our option, redeem our series B preferred stock, in whole or in part, at any time or from time to time, for cash at a redemption price of $25.00 per share, plus all accrued and unpaid dividends on such series B preferred stock up to but excluding the redemption date. Holders of our series B preferred stock generally have no voting rights except for limited voting rights if we fail to pay dividends for six or more quarterly periods (whether or not consecutive) and in certain other circumstances. Our series B preferred stock is not convertible into or exchangeable for any other property or securities of our company.

(b) Shares and Units

A common unit and a share of our common stock have essentially the same economic characteristics as they share equally in the total net income or loss and distributions of the Operating Partnership. The common units are further discussed in note 3 and the long term incentive units are discussed in note 8.

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(c) Dividends and Distributions

In 2006, we have declared the following dividends and equivalent distributions on common units in our Operating Partnership:

Date dividend and distribution declared	Share class	Dividend and distribution amount per share	Period covered	Dividend and distribution payable date	Annual equivalent rate of dividend and distribution per share	Dividend and distribution amount (in thousands)
February 27, 2006	Series A Preferred Stock	$0.53125	January 1, 2006 to March 31, 2006	March 31, 2006 to shareholders on record on March 15, 2006.	$2.125	$2,199
February 27, 2006	Series B Preferred Stock	$0.49219	January 1, 2006 to March 31, 2006	March 31, 2006 to shareholders on record on March 15, 2006.	$1.969	1,246
February 27, 2006	Common stock and operating partnership common units and long term incentive units.	$0.26500	January 1, 2006 to March 31, 2006	March 31, 2006 to shareholders on record on March 15, 2006.	$1.060	15,642
						$19,087

(d) Stock Options

The fair value of each option granted under the 2004 Incentive Award Plan is estimated on the date of the grant using the Black-Scholes option-pricing model with the weighted-average assumptions listed below for grants in 2006 and 2005. The fair values are being expensed on a straight-line basis over the vesting period of the options, which ranges from four to five years. The expense recorded for the three months ended March 31, 2006 and 2005 was approximately $74,000 and $52,000, respectively. Unearned compensation representing the unvested portion of the stock options totaled $1.2 million and $1.0 million as of March 31, 2006 and December 31, 2005, respectively. We expect to recognize this unearned compensation over the next 3.7 years on a weighted average basis.

The following table sets forth the weighted-average assumptions used to calculate the fair value of the stock options granted during the three months ended March 31, 2006 and 2005:

	Three Months Ended March 31,
	2006		2005
Dividend yield	3.79	%	6.88	%
Expected life of option	120 months		120 months
Risk-free interest rate	4.59	%	4.13	%
Expected stock price volatility	25.02	%	20.00	%

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The following table summarizes the Plan’s stock option activity for the three months ended March 31, 2006:

	Shares		Weighted average exercise price
Options outstanding, January 1, 2006	939,841		$	13.27
Granted	52,500			28.09
Exercised	(35,704	)		12.67
Forfeited	(22,204	)		12.23
Options outstanding, March 31, 2006	934,433		$	14.15
Exercisable, end of period	147,922		$	12.15
Weighted-average fair value of options granted during the period			$	6.42

We issued newly created common shares for the common stock options exercised during the three months ended March 31, 2006. The intrinsic value of options granted exercised the three months ended March 31, 2006 was approximately $0.5 million.

The following table summarizes information about stock options outstanding and exercisable at March 31, 2006:

Options outstanding							Options exercisable
Exercise price	Number outstanding	Weighted average remaining contractual life	Weighted average exercise price		Aggregate Intrinsic Value		Number exercisable	Weighted average exercise price		Aggregate Intrinsic Value
$12.00-13.02	708,683	8.59	$	12.07	$	11,412,484	140,672	$	12.04	$	2,269,248
$13.47-14.50	53,250	8.84		14.19		744,665	7,250		14.32		100,395
$20.37-28.09	172,500	9.70		22.72		940,200	—		—		—
	934,433	8.81	$	14.15	$	13,097,349	147,922	$	12.15	$	2,369,643

8. Incentive Plan

(a) Incentive Award Plan

Our 2004 Incentive Award Plan provides for the grant of incentive awards to employees, directors and consultants. Awards issuable under the 2004 Incentive Award Plan include stock options, restricted stock, dividend equivalents, stock appreciation rights, long-term incentive units, cash performance bonuses and other incentive awards. Only employees are eligible to receive incentive stock options under the 2004 Incentive Award Plan. We have reserved a total of 4,474,102 shares of common stock for issuance pursuant to the 2004 Incentive Award Plan, subject to certain adjustments set forth in the 2004 Incentive Award Plan. As of March 31, 2006, 556,743 shares of common stock or awards convertible into or exchangeable for common stock remained available for future issuance under the 2004 Incentive Award Plan. Each long-term incentive and Class C unit issued under the 2004 Incentive Award Plan will count as one share of common stock for purposes of calculating the limit on shares that may be issued under the 2004 Incentive Award Plan and the individual award limit discussed below.

(b) Long Term Incentive Units

Long-term incentive units may be issued to eligible participants for the performance of services to or for the benefit of the Operating Partnership. Long-term incentive units, whether vested or not, will receive the same quarterly per unit distributions as common units in the Operating Partnership, which equal per share distributions on our common stock. Initially, long-term incentive units do not have full parity with common units with respect to liquidating distributions. Upon the occurrence of specified events, long-term incentive units may over time achieve full parity with common units in the Operating Partnership for all purposes, and therefore accrete to an economic value for participants equivalent to our

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common stock on a one-for-one basis. If such parity is reached, vested long-term incentive units may be converted into an equal number of common units of the Operating Partnership at any time, and thereafter enjoy all the rights of common units of the Operating Partnership.

In connection with the IPO, an aggregate of 1,490,561 of fully vested long-term incentive units were issued and compensation expense totaling $17.9 million was recorded at the completion of the IPO. Parity was reached for these units on February 9, 2005 upon completion of our series A preferred stock offering.

(c) Class C Profits Interests Units

During the fourth quarter of 2005, we granted to each of our named executive officers and certain other employees an award of Class C Profits Interest Units (Class C Units) of the Operating Partnership under our 2004 Incentive Award Plan. If the performance condition and the other vesting conditions are satisfied with respect to a Class C Unit, as described below, the Class C Unit will be treated in the same manner as the existing long-term incentive units issued by the Operating Partnership.

The Class C Units subject to each award will vest based on the achievement of a 10% or greater compound annual total shareholder return, as defined, for the period from the grant date through earlier of September 30, 2008 and the date of a change of control of our Company (the Performance Condition) combined with the employee’s continued service with our company or the Operating Partnership through September 30, 2010. Upon achievement of the performance condition, the Class C units will receive the same quarterly per unit distribution as common units in the Operating Partnership.

If we achieve a compound annual total stockholder return equal to at least 10% over a period commencing on October 1, 2005 and ending on the earlier of September 30, 2008 and the date of a change in control of our company, the performance condition will be deemed satisfied with respect to a number of class C units that is based on the executive’s allocated percentage of an aggregate performance award pool. The aggregate amount of the performance award pool will be equal to 7% of the excess shareholder value, as defined, created during the applicable performance period, but in no event will the amount of the pool exceed the lesser of $40,000,000 or the value of 2.5% of the total number of shares of our common stock and limited partnership units of the Operating Partnership at the end of the performance period.

Except in the event of a change in control of our company, 60% of the Class C Units that satisfy the Performance Condition will vest at the end of the three year performance period and an additional 1/60th of such Class C Units will vest on the date of each monthly anniversary thereafter, provided that the employee’s service has not terminated prior to the applicable vesting date.

To the extent that any Class C Units fail to satisfy the Performance Condition, such Class C Units will automatically be cancelled and forfeited by the employee. In addition, any Class C Units which are not eligible for pro rata vesting in the event of a termination of the employee’s employment due to death or disability or without cause (or for good reason, if applicable) will automatically be cancelled and forfeited upon a termination of the employee’s employment.

In the event that the value of the employee’s allocated portion of the award pool that satisfies the performance condition equates to a number of Class C Units that is greater than the number of Class C Units awarded to the executive, we will make an additional payment to the executive in the form of a number of shares of our restricted stock equal to the difference subject to the same vesting requirements as the Class C Units.

A portion of the award pool remains unallocated and available for grants to other future senior executives or to the then current grantees (including the named executive officers) if the Compensation Committee determines that the award pool percentage allocated to one or more of such executives should be increased.

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On October 26, 2005, the Operating Partnership amended and restated its agreement of limited partnership in order to create the Class C Units. As of March 31, 2006 and December 31, 2005, 1,180,000 Class C Units had been awarded to our executive officers and other employees, leaving a further 80,000 available for future awards. The fair value of these awards of approximately $4.0 million will be recognized as compensation expense on a straight line basis over the expected service period of five years. The unearned compensation as of March 31, 2006 and December 31, 2005 was $3.6 million and $3.8 million respectively, respectively. As of March 31, 2006 and December 31, 2005, none of the above awards had vested. We recognized compensation expense related to these Class C units of $0.2 million in the three months ended March 31, 2006. If the Performance Condition is not met, the unamortized amount will be recognized as an expense at that time.

9. Derivative Instruments

(a) Interest rate swap agreements

In November 2004 and May 2005, we entered into interest rate swap agreements to hedge variability in cash flows related to LIBOR based mortgage loans. The fair value of these derivatives was $4.2 million and $3.3 million at March 31, 2006 and December 31, 2005, respectively. For the three months ended March 31, 2006 and 2005, the change in net unrealized gains for derivatives designated as cash flow hedges was $0.8 million and $1.7 million, respectively, and is separately disclosed in the statement of comprehensive income, as reduced by the amount allocated to minority interests.

As of March 31, 2006, we estimate that $2.2 million of accumulated other comprehensive income will be reclassified to earnings as a reduction to interest expense during the twelve months ending March 31, 2007 as the hedged forecasted transactions impact earnings.

The table below summarizes the terms of these interest rate swaps and their fair values as of March 31, 2007 (in thousands):

Current Notional Amount		Strike Rate		Effective Date	Expiration Date	Fair Value
$	43,000	3.250	%	November 26, 2004	September 15, 2006	$	349
	20,970	3.754		November 26, 2004	January 2, 2009		714
	20,000	3.824		November 26, 2004	April 1, 2009		737
	8,775	3.331		November 26, 2004	December 1, 2006		103
	100,000	4.025		May 26, 2005	June 15, 2008		2,275
$	192,745					$	4,178

We have two LIBOR interest rate caps that are not designated as hedges. The fair values of the caps were immaterial as of March 31, 2006 and December 31, 2005.

(b) Foreign currency contract

On January 4, 2006, we received net proceeds of $0.7 million when we terminated a foreign currency forward sale contract entered into on January 24, 2005 which was used to hedge our equity investment in 6 Braham Street, located in London, England. This forward contract was designated as a net investment hedge. The cumulative translation adjustment amounts related to the net

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investment hedge (including the $0.7 million received upon termination in January 2006) are included in other accumulated comprehensive income and will be reclassified to earnings when the hedged investment is sold or liquidated.

10. Related Party Transactions

We paid CB Richard Ellis, an affiliate of GI Partners, building management fees and leasing commissions totaling $0.4 million during each of the three months ended March 31, 2006 and 2005. We owed approximately $130,000 and $150,000 to CB Richard Ellis as of March 31, 2006 and December 31, 2005, respectively.

In April 2005, we entered into two agreements with Linc Facility Services, LLC, or LFS primarily for personnel providing for operations and maintenance repairs of the mechanical, electrical, plumbing and general building service systems of five of our properties. LFS belongs to The Linc Group, which GI Partners has owned since late 2003. Our consolidated statement of operations includes expenses approximately $0.2 million for these services for the three months ended March 31, 2006 and we owed LFS approximately $77,000 as of March 31, 2006.

GI Partners distributed 4,030,184 Operating Partnership common units to its owners and these units were converted into shares of our common stock on March 29, 2006 and sold to third parties on April 3, 2006. Our condensed consolidated statement of operations included general and administrative expenses representing legal and other costs directly related to facilitating this conversion of $0.3 million during the three months ended March 31, 2006.

11. Commitments and Contingencies

The seller of 350 East Cermak Road can earn an additional $20.0 million by obtaining a change in the real estate tax classification prior to December 31, 2006. We have also agreed with the seller to share a portion, not to exceed $135,000 per month, of rental revenue, adjusted for our costs to lease the premises, from the lease of the 260,000 square feet of space held for redevelopment. This revenue sharing agreement will terminate in May 2013. We have recorded no liability for these contingent liabilities on our condensed consolidated balance sheet at March 31, 2006, as the events causing this contingency had not occurred at March 31, 2006.

As part of the acquisition of Paul van Vlissingenstraat 16, we entered into an agreement with the seller, whereby, for twelve months from the execution of the purchase and sale agreement, our purchase price may increase depending upon future leasing activity as a result of actions by the seller. The amount of the potential commitment is not currently quantifiable as it is based on a 10% cap rate on the incremental operating income from qualifying new leases that are closed or binding during the participation period. We have recorded no liability for this contingent liability on our consolidated balance sheet at March 31, 2006 as the events causing this contingency had not occurred at March 31, 2006.

As of March 31, 2006 we had signed agreements to acquire properties located in Atlanta, Houston and Toronto for purchase prices totaling $71.8 million. We acquired these properties in April 2006.

Our properties require periodic investments of capital for tenant-related capital expenditures and for general capital improvements. As of March 31, 2006, we had commitments under leases in effect for approximately $21.5 million of tenant improvement costs and leasing commissions all of which we expect to incur in 2006.

As part of the acquisition of Clonshaugh Industrial Estate, we entered into an agreement with the seller whereby the seller is entitled to receive 40% of the net rental income generated by the existing building after we have received a 9% return on all capital invested in the property. As of March 31, 2006, we have estimated the present value of these expected payments to be approximately $1.1 million and this value has been capitalized with an offsetting amount recorded in accounts payable and other liabilities.

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12. Tenant leases

For the three months ended March 31, 2006 and 2005 revenues recognized from Savvis Communications comprised approximately 12.8% and 10.8% of total revenues, respectively. For the three months ended March 31, 2006 and 2005, Qwest Communications International, Inc. comprised approximately 11.9% and 7.6% of total revenues, respectively. Other than noted here, for the three months ended March 31, 2006 and 2005 no single tenant comprised more than 10% of total revenues.

13. Subsequent Events

In April 2006 the holders of 675,665 common units of our Operating Partnership converted their units into shares of our common stock.

On April 13, 2006 we acquired a property in Toronto, Canada for $16.0 million.

On April 20, 2006 we acquired a property in Atlanta for $25.3 million.

On April 20, 2006 we refinanced the mortgage related to 6 Braham Street which resulted in a new loan for £13.2 million (approximately $23.5 million based on the exchange rate on April 20, 2006) at a variable interest rate of UK LIBOR plus 0.90% which matures in April 2011. In April 2006, we also entered into an interest rate swap agreement related to this loan to hedge variability in cash flows related to this loan. The rate on the swap is 5.84% and is effective from July 10, 2006 through April 10, 2011.

On April 26, 2006 we purchased a building in Houston for $30.5 million.

On April 27, 2006 we signed an agreement to acquire a building in Boston for $8.7 million.

On May 1, 2006, we declared the following distributions per share and the Operating Partnership made an equivalent distribution per unit.

Share Class	Series A Preferred Stock		Series B Preferred Stock		Common stock
Dividend and distribution amount	$	0.53125	$	0.49219	$	0.265
Dividend and distribution payable date		June 30, 2006		June 30, 2006		June 30, 2006
Dividend payable to shareholders of record on:		June 15, 2006		June 15, 2006		June 15, 2006
Annual equivalent rate of dividend and distribution	$	2.125	$	1.969	$	1.060

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

The following discussion should be read in conjunction with the condensed consolidated financial statements and notes thereto appearing elsewhere in this report. This report contains forward-looking statements within the meaning of the federal securities laws. We caution investors that any forward-looking statements presented in this report, or which management may make orally or in writing from time to time, are based on management’s beliefs and assumptions made by, and information currently available to, management. When used, the words “anticipate,” “believe,” “expect,” “intend,” “may,” “might,” “plan,” “estimate,” “project,” “should,” “will,” “result” and similar expressions, which do not relate solely to historical matters, are intended to identify forward-looking statements. Such statements are subject to risks, uncertainties and assumptions and are not guarantees of future performance, which may be affected by known and unknown risks, trends, uncertainties and factors that are beyond our control. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated or projected. We expressly disclaim any responsibility to update forward-looking statements, whether as a result of new information, future events or otherwise.

Some of the risks and uncertainties that may cause our actual results, performance or achievements to differ materially from those expressed or implied by forward-looking statements include, among others, the following: adverse economic or real estate developments in our markets or technology related real estate; general and local economic conditions; defaults on or non-renewal of leases by tenants; increased interest rates and operating costs; our inability to manage growth effectively; our failure to obtain necessary outside financing; decreased rental rates or increased vacancy rates; difficulties in identifying properties to acquire and completing acquisitions; our failure to successfully operate acquired properties and operations; our failure to successfully redevelop properties acquired for that purpose; our failure to maintain our status as a REIT; possible adverse changes to tax laws; environmental uncertainties and risks related to natural disasters; financial market fluctuations; changes in foreign currency exchange rates; and changes in real estate and zoning laws and increases in real property tax rates.

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. In addition, we discussed a number of material risks in our annual report on Form 10-K for the year ended December 31, 2005. Those risks continue to be relevant to our performance and financial condition. 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 predict all such risk factors, nor can it assess the impact of all such risk factors on the business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results.

Overview

Our Company. We completed our initial public offering, or IPO, of common stock on November 3, 2004. We believe that we have operated in a manner that has enabled us to qualify, and have elected to be treated, as a Real Estate Investment Trust (REIT) under Sections 856 through 860 of the Internal Revenue Code of 1986 as amended (the Code). Our company was formed on March 9, 2004. During the period from our formation until we commenced operations in connection with the completion of our IPO we did not have any corporate activity other than the issuance of shares of common stock in connection with the initial capitalization of the company. Any reference to “our”, “we” and “us” in this filing includes our company and our predecessor. The predecessor is comprised of the real estate activities and holdings of Global Innovation Partners LLC (GI Partners) related to the properties in our portfolio.

Business and strategy. Our primary business objectives are to maximize sustainable long-term growth in earnings, funds from operations and cash flow per share and to maximize returns to our stockholders. We expect to achieve our objectives by focusing on our core business of investing in technology-related real estate. We target high quality, strategically located properties containing applications and operations critical to the day-to-day operations of corporate enterprise data center and technology industry tenants. Most of our properties contain fully redundant electrical supply systems, multiple power feeds, above-standard precision cooling systems, raised floor areas, extensive in-building communications cabling and high-level security systems. We focus solely on

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technology-related real estate because we believe that the growth in corporate data center adoption and the technology-related real estate industry generally will be superior to that of the overall economy.

Since the acquisition of our first property in 2002 and through March 31, 2006, we acquired an aggregate of 46 technology-related real estate properties with 8.1 million net rentable square feet excluding approximately 1.2 million square feet of space held for redevelopment. We have developed detailed, standardized procedures for evaluating acquisitions to ensure that they meet our financial and other criteria. We expect to continue to acquire additional assets as a key part of our growth strategy. We intend to aggressively manage and lease our assets to increase their cash flow.

We may acquire properties subject to existing mortgage financing and other indebtedness or new indebtedness may be incurred in connection with acquiring or refinancing these properties. Debt service on such indebtedness will have a priority over any dividends with respect to our common stock and our preferred stock. We currently intend to limit our indebtedness to 60% of our total market capitalization and, based on the closing price of our common stock on March 31, 2006 of $28.17, our ratio of debt to total market capitalization was approximately 31% as of March 31, 2006. Our total market capitalization is defined as the sum of the market value of our outstanding common stock (which may decrease, thereby increasing our debt to total market capitalization ratio), excluding options issued under our incentive award plan, plus the liquidation value of our preferred stock, plus the aggregate value of the units not held by us (with each unit value equal to the market value of one share of our common stock), plus the book value of our total consolidated indebtedness.

Revenue Base. As of March 31, 2006, we owned 46 properties through our Operating Partnership. These properties are mainly located throughout the U.S., with four properties located in Europe. We acquired our first portfolio property in January 2002 and have added properties as follows:

Year Ended December 31:	Properties acquired	Net rentable square feet acquired	Space held for redevelopment square feet at March 31, 2006 (1)
2002	5	1,125,292	19,890
2003	8	1,540,806	123,891
2004	11	2,706,138	182,491
2005	20	2,693,774	820,266
Three months ended March 31, 2006	2	69,947	50,000
Properties owned at March 31, 2006	46	8,135,957	1,196,538

(1) Redevelopment space is unoccupied space that requires significant capital investment in order to develop data center facilities that are ready for use. Most often this is shell space. However, in certain circumstances this may include partially built data center space that was not completed by previous ownership and requires a large capital investment in order to build out the space.

As of March 31, 2006, the properties in our portfolio were approximately 93.3% leased excluding 1.2 million square feet held for redevelopment. Due to the capital intensive and long term nature of the operations being supported, our lease terms are generally longer than standard commercial leases. At March 31, 2006, our average lease term was 12.0 years, with an average of 7.2 years remaining. Our lease expirations through 2008 are 7.3% of net rentable square feet excluding space held for redevelopment. Operating revenues from properties outside the United States were $2.2 million and $1.1 million for the three months ended March 31, 2006 and 2005, respectively.

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Operating expense. Our operating expenses generally consist of utilities, property and ad valorem taxes, insurance and site maintenance costs, as well as rental expenses on our ground leases. Since the consummation of our IPO, our asset management function has been internalized and we are incurring our general and administrative expenses directly. Prior to April 2005, we had a transition services agreement with CB Richard Ellis Investors with respect to transitional accounting and other services. In addition, as a public company, we are incurring significant legal, accounting and other expenses related to corporate governance, Securities and Exchange Commission reporting and compliance with the various provisions of Sarbanes-Oxley Act of 2002. In addition, we engage third-party property managers to manage most of our properties. As of March 31, 2006, 33 of our properties were managed by CB Richard Ellis, an affiliate of GI Partners.

Formation Transactions. In connection with the completion of our IPO, our Operating Partnership received contributions of direct and indirect interests in 23 of the properties in our portfolio in exchange for consideration that included cash, assumption of debt, and an aggregate of 38,262,206 units in our Operating Partnership (with the cash, assumed debt and units having an aggregate value of $1,097.7 million based on the IPO price per share of $12.00).

We accounted for the ownership interests contributed to us by GI Partners in exchange for a partnership interest in our Operating Partnership as a reorganization of entities under common control in a manner similar to a pooling of interests. Accordingly, the assets and liabilities contributed by GI Partners are accounted for by our Operating Partnership at GI Partners’ historical cost. We utilized purchase accounting to account for the acquisition of (i) ownership interests in 200 Paul Avenue 1-4 and 1100 Space Park Drive, which were contributed to us by third parties in exchange for interests in our Operating Partnership, cash and the assumption of debt and (ii) the 10% minority ownership interest in 2323 Bryan Street, which was contributed to us by our joint venture partner in exchange for an interest in our Operating Partnership and the repayment of debt. Accordingly, the purchase price for these interests, which are equal to the value of the Operating Partnership units that we issued in exchange for these interests plus cash paid and debt assumed, were allocated to the assets acquired and liabilities assumed based on the fair value of the assets and liabilities.

Factors Which May Influence Future Results of Operations

Rental income. The amount of net rental income generated by the properties in our portfolio depends principally on our ability to maintain the occupancy rates of currently leased space and to lease currently available space and space available from lease terminations. Excluding 1.2 million square feet held for redevelopment, as of March 31, 2006, the occupancy rate in the properties in our portfolio was approximately 93.3% of our net rentable square feet.

The amount of rental income generated by us also depends on our ability to maintain or increase rental rates at our properties. Included in our approximately 8.1 million square feet of net rentable square feet at March 31, 2006 is approximately 113,000 net rentable square feet of space with extensive data center improvements that is currently, or will shortly be, available for lease. We had leased approximately 188,000 square feet of similar space at March 31, 2006. Rather than leasing all of this space to large single tenants, we are subdividing some of it for multi-tenant turn-key data center use, with tenants averaging between 100 and 15,000 square feet of net rentable space. Multi-tenant turn-key data centers are effective solutions for tenants who lack the expertise or capital budget to provide their own extensive data center infrastructure and security. As experts in data center construction and operations we are able to lease space to these tenants at a significant premium over other uses. Negative trends in one or more of these factors could adversely affect our rental income in future periods.

In addition, as of March 31, 2006, we had approximately 1.2 million square feet of redevelopment space, or approximately 13% of the total space in our portfolio, including two vacant properties comprising approximately 360,000 square feet. Redevelopment space requires significant capital investment in order to develop data center facilities that are ready for use, and in addition, we may require additional time or encounter delays in securing tenants for redevelopment space. We intend to purchase additional vacant properties and properties with vacant redevelopment space in the future.

Future economic downturns or regional downturns affecting our submarkets or downturns in the technology-related real estate industry that impair our ability to renew or re-lease space and the ability of our tenants to fulfill their lease

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commitments, as in the case of tenant bankruptcies, could adversely affect our ability to maintain or increase rental rates at our properties. At March 31, 2006 one tenant, VarTec Telecom, Inc. (VarTec) was in bankruptcy and had leased approximately 158,000 square feet of net rentable space across three separate properties as follows:

• In January 2006, VarTec notified us of its intention to file a motion to reject its lease of approximately 8,600 square feet at 2323 Bryan Street. The motion was granted by the bankruptcy court on February 21, 2006 and as such, this lease was rejected effective February 28, 2006. We are currently considering options to pursue appropriate economic relief through the bankruptcy court.

• In April 2006, VarTec verbally communicated to us that it is considering filing a motion to reject its lease of approximately 135,300 square feet at 2440 Marsh Lane. If this lease is rejected, we estimate that the rejection might occur in the third or fourth quarter of 2006. All rent was current at March 31, 2006. We are currently considering options to pursue appropriate economic relief through the bankruptcy court.

• VarTec also leases approximately 13,600 square feet at 350 East Cermak Road. On April 27, 2006 we were notified that VarTec intends to petition the court to accept this lease.

As of March 31, 2006, the carrying values of lease related net assets relating to VarTec total approximately $1.8 million, representing assets at 2440 Marsh Lane and 350 East Cermark Road. We will continue to monitor events to determine if a write off of these assets is appropriate.

Scheduled lease expirations. Our ability to re-lease expiring space will impact our results of operations. In addition to approximately 0.5 million square feet of available space in our portfolio excluding approximately 1.2 million square feet available for redevelopment as of March 31, 2006, leases representing approximately 1.8% and 2.5% of the square footage of our portfolio, excluding redevelopment space, are scheduled to expire during the periods ending December 31, 2006 and 2007, respectively.

Conditions in significant markets. As of March 31, 2006 our portfolio was geographically concentrated in the following metropolitan markets:

Metropolitan Market	Percentage of total gross annualized rent (1)
Silicon Valley	22.2	%
Dallas	14.8	%
Chicago	13.9	%
Los Angeles	8.6	%
San Francisco	8.1	%
Boston	6.3	%
Philadelphia	4.9	%
New York	4.5	%
Other	16.7	%
	100.0	%

(1) In reporting periods prior to March 31, 2006, our calculation of annualized rent reduced the base rent by base stops. In this filing we have adjusted our definition and are now reporting gross annualized rent, which is monthly contractual rent under existing leases as of the stated date multiplied by 12. Annualized rent will not be comparable to gross annualized rent.

Operating expenses. Our operating expenses generally consist of utilities, property and ad valorem taxes, insurance and site maintenance costs, as well as rental expenses on our ground leases. We are also incurring general and administrative expenses, including expenses relating to the internalization of our asset management function, as well as significant legal, accounting and other expenses related to corporate governance, Securities and Exchange Commission reporting and compliance with the various provisions of the Sarbanes-Oxley Act. Increases or decreases in such operating expenses will impact our overall performance. As a relatively new public company, we expect to incur additional operating expenses as we expand our various business functions.

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Interest Rates. At March 31, 2006, we had approximately $397.2 million of variable rate debt, of which approximately $192.8 million is subject to interest rate swap agreements. Since 2002, the United States Federal Reserve has been increasing short term interest rates, which has recently had a significant upward impact on shorter-term interest rates, including the interest rates that our variable rate debt is based upon. Continued increases in interest rates may increase our interest expense and therefore negatively affect our financial condition and results of operations. Increased interest rates may also increase the risk that the counterparties to our swap agreements will default on their obligations, which would further increase our interest expense.

Critical Accounting Policies

Our discussion and analysis of financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles (GAAP). The preparation of these financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses in the reporting period. Our actual results may differ from these estimates. We have provided a summary of our significant accounting policies in Note 2 to our financial statements included elsewhere in this report. We describe below those accounting policies that require material subjective or complex judgments and that have the most significant impact on our financial condition and results of operations. Our management evaluates these estimates on an ongoing basis, based upon information currently available and on various assumptions management believes are reasonable as of the date on the front cover of this report.

Investments in Real Estate

Acquisition of real estate. The price that we pay to acquire a property is impacted by many factors including the condition of the property and improvements, the occupancy of the building, the existence of above and below market tenant leases, the creditworthiness of the tenants, favorable or unfavorable financing, above or below market ground leases and numerous other factors. Accordingly, we are required to make subjective assessments to allocate the purchase price paid to acquire investments in real estate among the assets acquired and liabilities assumed based on our estimate of the fair values of such assets and liabilities. This includes determining the value of the property and improvements, land, any ground leases, tenant improvements, in-place tenant leases, tenant relationships, the value (or negative value) of above (or below) market leases and any debt assumed from the seller or loans made by the seller to us. Each of these estimates requires a great deal of judgment and some of the estimates involve complex calculations. Our allocation methodology is summarized in Note 2 to our consolidated financial statements. These allocation assessments have a direct impact on our results of operations. For example, if we were to allocate more value to land, there would be no depreciation with respect to such amount. If we were to allocate more value to the property as opposed to allocating to the value of tenant leases, this amount would be recognized as an expense over a much longer period of time. This potential effect occurs because the amounts allocated to property are depreciated over the estimated lives of the property whereas amounts allocated to tenant leases are amortized over the terms of the leases. Additionally, the amortization of value (or negative value) assigned to above (or below) market rate leases is recorded as an adjustment to rental revenue as compared to amortization of the value of in-place leases and tenant relationships, which is included in depreciation and amortization in our consolidated statements of operations.

Useful lives of assets. We are required to make subjective assessments as to the useful lives of our properties for purposes of determining the amount of depreciation to record on an annual basis with respect to our investments in real estate. These assessments have a direct impact on our net income because if we were to shorten the expected useful lives of our investments in real estate we would depreciate such investments over fewer years, resulting in more depreciation expense and lower net income on an annual basis.

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Asset impairment evaluation. We review the carrying value of our properties when circumstances, such as adverse market conditions, indicate potential impairment may exist. We base our review on an estimate of the future cash flows (excluding interest charges) expected to result from the real estate investment’s use and eventual disposition. 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 evaluation indicates that we may be 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. 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. Since cash flows on properties considered to be long-lived assets to be held and used are considered on an undiscounted basis to determine whether an asset has been impaired, our strategy of holding properties over the long-term directly decreases the likelihood of recording an impairment loss. If our strategy changes or market conditions otherwise dictate an earlier sale date, an impairment loss may be recognized and such loss could be material. If we determine that impairment has occurred, the affected assets must be reduced to their fair value. No such impairment losses have been recognized to date.

We estimate the fair value of rental properties utilizing a discounted cash flow analysis that includes projections of future revenues, expenses and capital improvement costs, similar to the income approach that is commonly utilized by appraisers.

Capitalization of costs.

We capitalize pre-acquisition costs related to probable property acquisitions. We also capitalize direct and indirect costs related to construction and development, including property taxes, insurance and financing costs relating to space under development. Costs previously capitalized related to any property acquisitions no longer considered probable are written off. The selection of costs to capitalize and which acquisitions are probable is subjective and depends on many assumptions including the timing of potential acquisitions and the probability that future acquisitions occur. If we made different assumptions in this respect we would have a different amount of capitalized costs in the periods presented leading to different net income.

Revenue Recognition

Rental income is recognized using the straight-line method over the terms of the tenant leases. Deferred rents included in our balance sheets represent the aggregate excess of rental revenue recognized on a straight-line basis over the contractual rental payments that would be recognized under the remaining terms of the leases. Our leases generally contain provisions under which the tenants reimburse us for a portion of property operating expenses and real estate taxes incurred by us. Such reimbursements are recognized in the period that the expenses are incurred. Lease termination fees are recognized over the remaining term of the lease, effective as of the date the lease modification is finalized, assuming collection is not considered doubtful. As discussed above, we recognize amortization of the value of acquired above or below market tenant leases as a reduction of rental income in the case of above market leases or an increase to rental revenue in the case of below market leases.

We must make subjective estimates as to when our revenue is earned and the collectibility of our accounts receivable related to minimum rent, deferred rent, expense reimbursements, lease termination fees and other income. We specifically analyze accounts receivable and historical bad debts, tenant concentrations, tenant creditworthiness and current economic trends when evaluating the adequacy of the allowance for bad debts. These estimates have a direct impact on our net income because a higher bad debt allowance would result in lower net income, and recognizing rental revenue as earned in one period versus another would result in higher or lower net income for a particular period.

Share-based awards

We recognize compensation expense related to share-based awards. We generally amortize this compensation expense over the vesting period of the award. The calculation of the fair value of share-based awards is subjective and requires several assumptions over such items as expected stock volatility, dividend payments and future company results. These assumptions have a direct impact on our net income because a higher share-based awards amount would result in lower net income for a particular period.

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Results of Operations

The discussion below relates to our financial condition and results of operations for the three months ended March 31, 2006 and 2005. A summary of our results for the three months ended March 31, 2006 and 2005 is as follows (in thousands):

	Three Months Ended March 31,
	2006		2005
Statement of Operations Data:
Total revenues	$	61,215	$	39,643
Total expenses		54,297		34,748
Income before minority interests	$	6,918	$	4,895

Our property portfolio has experienced consistent and significant growth since the first property acquisition in January 2002. As a result of such growth, a period-to-period comparison of our financial performance focuses primarily on the impact on our revenues and expenses resulting from the new property additions to our portfolio. On a “same space” property basis, our revenues and expenses have remained substantially stable as a result of the generally consistent occupancy rates at our properties. The following table identifies each of the properties in our portfolio acquired from December 31, 2003 through March 31, 2006:

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Acquired Properties	Acquisition Date	Redevelopment Space (1)	Net Rentable Square Feet Excluding Redevelopment Space	Square Feet including Redevelopment Space	Occupancy Rate March 31, 2006 (2)
At December 31, 2003 (13 properties)		143,781	2,666,098	2,809,879	95.2	%
Year Ended December 31, 2004
100 Technology Center Drive	Feb-04	—	197,000	197,000	100.0
4849 Alpha Road	Apr-04	—	125,538	125,538	100.0
600 West Seventh Street	May-04	59,319	430,403	489,722	97.3
2045 & 2055 LaFayette Street	May-04	—	300,000	300,000	100.0
100 & 200 Quannapowitt Parkway	Jun-04	—	388,000	388,000	100.0
11830 Webb Chapel Road	Aug-04	—	365,648	365,648	93.3
150 South First Street	Sep-04	—	183,483	183,483	100.0
3065 Gold Camp Drive	Oct-04	—	62,957	62,957	100.0
200 Paul Avenue 1-4	Nov-04	37,630	490,050	527,680	94.2
1100 Space Park Drive	Nov-04	85,542	80,148	165,690	97.4
3015 Winona Avenue	Dec-04	—	82,911	82,911	100.0
Subtotal		182,491	2,706,138	2,888,629	97.5
Year Ended December 31, 2005
833 Chestnut Street	Mar-05	119,660	535,098	654,758	75.5
1125 Energy Park Drive	Mar-05	—	112,827	112,827	100.0
350 East Cermak Road	May-05	263,208	870,183	1,133,391	92.2
8534 Concord Center Drive	Jun-05	—	82,229	82,229	100.0
2401 Walsh Street	Jun-05	—	167,932	167,932	100.0
200 North Nash Street	Jun-05	—	113,606	113,606	100.0
2403 Walsh Street	Jun-05	—	103,940	103,940	100.0
4700 Old Ironsides Drive	Jun-05	—	90,139	90,139	100.0
4650 Old Ironsides Drive	Jun-05	—	84,383	84,383	100.0
731 East Trade Street	Aug-05	—	40,879	40,879	100.0
113 North Myers	Aug-05	10,501	18,717	29,218	100.0
125 North Myers	Aug-05	13,242	12,150	25,392	85.8
Paul van Vlissingenstraat 16	Aug-05	—	112,472	112,472	62.0
600-780 S. Federal	Sep-05	—	161,547	161,547	86.1
115 Second Avenue	Oct-05	55,569	12,500	68,069	—
Chemin de l’Epinglier 2	Nov-05	—	59,190	59,190	100.0
251 Exchange Place	Nov-05	—	70,982	70,982	100.0
7500 Metro Center Drive	Dec-05	74,962	—	74,962	—
7520 Metro Center Drive	Dec-05	—	45,000	45,000	100.0
3 Corporate Place	Dec-05	283,124	—	283,124	—
Subtotal		820,266	2,693,774	3,514,040	89.7
Three Months Ended March 31, 2006
4025 Midway Road	Jan-06	50,000	49,947	99,947	—
Clonshaugh Industrial Estate	Feb-06	—	20,000	20,000	—	(3)
Subtotal		50,000	69,947	119,947	—
Total		1,196,538	8,135,957	9,332,495	93.3	%

(1) Redevelopment space requires significant capital investment in order to develop data center facilities that are ready for use. Most often this is shell space. However, in certain circumstances this may include partially built data center space that was not completed by previous ownership and requires a large capital investment in order to build out the space.

(2) Occupancy rates exclude redevelopment space.

(3) In connection with the closing of the acquisition, we signed a 10-year lease with a leading U.S.-based Internet enterprise company for the entire net rentable square feet included in the above table.

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Comparison of the Three Months Ended March 31, 2006 to the Three Months Ended March 31, 2005

Portfolio

As of March 31, 2006, our portfolio consisted of 46 properties with an aggregate of 8.1 million net rentable square feet excluding 1.2 million square feet held for redevelopment compared to a portfolio consisting of 26 properties with an aggregate of 6.0 million net rentable square feet excluding space held for redevelopment as of March 31, 2005. The increase in our portfolio reflects the acquisition of 20 properties in the year ended March 31, 2006.

Operating revenues

Operating revenues during the three months ended March 31, 2006 and 2005 were as follows (in thousands):

	Three Months Ended March 31,							Percentage Change
	2006		2005		Change
Rental	$	49,242	$	32,691	$	16,551		50.6	%
Tenant reimbursements		11,573		6,520		5,053		77.5	%
Other		168		300		(132	)	(44.0	%)
Total Revenues	$	60,983	$	39,511	$	21,472		54.3	%

As shown by the same space and new properties table shown below, the increases in rental revenues and tenant reimbursement revenues in the three months ended March 31, 2006 compared to the same period in 2005 were primarily due to our acquisitions of properties. Other revenues changes in the periods presented were primarily due to varying tenant termination revenues. We acquired 20 properties during the twelve months ended March 31, 2006.

The following table shows operating revenues for new properties (properties that were not owned for each of the full three months ended March 31, 2006 and 2005) and same space properties (in thousands):

	Same space Three Months Ended March 31,							New properties Three Months Ended March 31,
	2006		2005		Change			2006		2005		Change
Rental	$	32,964	$	31,717	$	1,247		$	16,278	$	974	$	15,304
Tenant reimbursements		7,409		6,199		1,210			4,164		321		3,843
Other		—		300		(300	)		168		—		168
Total Revenues	$	40,373	$	38,216	$	2,157		$	20,610	$	1,295	$	19,315

Same space rental revenues increased primarily as a result of new leases at our properties during the year ended March 31, 2006, the largest of which was for space in 200 Paul Avenue 1-4. Same space tenant reimbursement revenues increased primarily as a result of higher utility and operating expenses being billed to our tenants, the largest occurrence of which was at 2323 Bryan Street where utility rate increases led to higher reimbursement revenues.

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Expenses

Expenses during the three months ended March 31, 2006 and 2005 were as follows (in thousands):

	Three Months Ended March 31,							Percentage Change
	2006		2005		Change
Rental property operating and maintenance	$	12,196	$	7,145	$	5,051		70.7	%
Property taxes		7,057		3,681		3,376		91.7	%
Insurance		916		599		317		52.9	%
Interest		11,388		8,121		3,267		40.2	%
Depreciation and amortization		18,256		12,143		6,113		50.3	%
General and administrative		4,246		2,413		1,833		76.0	%
Loss from early extinguishment of debt		57		125		(68	)	(54.4	%)
Other		181		521		(340	)	(65.3	%)
Total expenses	$	54,297	$	34,748	$	19,549		56.3	%

As shown in the same space expense and new properties table below, total expenses in the three months ended March 31, 2006 increased compared to the same period in 2005 primarily as a result of acquisition of properties. The following table shows expenses for new properties (properties that were not owned for each of the full three months ended March 31, 2006 and 2005) and same space properties (in thousands):

	Same space Three Months Ended March 31,							New properties Three Months Ended March 31,
	2006		2005		Change			2006		2005		Change
Rental property operating and maintenance	$	9,083	$	6,648	$	2,435		$	3,113	$	497	$	2,616
Property taxes		3,553		3,628		(75	)		3,504		53		3,451
Insurance		562		591		(29	)		354		8		346
Interest		6,843		7,446		(603	)		4,545		675		3,870
Depreciation and amortization		12,029		11,594		435			6,227		549		5,678
Loss from early extinguishment of debt		57		125		(68	)		—		—		—
Other		142		521		(379	)		39		—		39
Total property related expenses		32,269		30,553		1,716			17,782		1,782		16,000
General and administrative (1)		4,246		2,413		1,833			—		—		—
	$	36,515	$	32,966	$	3,549		$	17,782	$	1,782	$	16,000

(1) General and administrative expenses are included in same space as they are not allocable to specific properties.

Same space rental property and maintenance expenses increased in the three months ended March 31, 2006 compared to the same period in 2005 primarily as a result of higher utility rates in several of our properties leading to higher utility expense in 2006. Rental property operating and maintenance expenses included amounts paid to CB Richard Ellis for property management and other fees of $0.3 million and $0.4 million in the three months ended March 31, 2006 and 2005, respectively.

Same space interest expense decreased in the three months ended March 31, 2006 compared to the same period in 2005 primarily as a result of lower outstanding debt following the repayment of the 34551 Ardenwood Boulevard 1-4, 2334 Lundy Place, 2440 Marsh Lane mezzanine debt in the fourth quarter of 2005 and repayment of the 47700 Kato Road & 1055 Page Avenue mortgage loan in the first quarter of 2006. Interest incurred on our line of credit is allocated entirely to new properties in the table above.

Other expenses are primarily comprised of write-offs of the carrying amounts for deferred tenant improvements, acquired in place lease value and acquired above market lease values as a result of the early termination of tenant leases. Other expenses decreased in the three months ended March 31, 2006 compared to the same period in 2005 primarily due to the write off of assets following the termination of a tenant in 2005.

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General and administrative expenses in the three months ended March 31, 2006 increased compared to the same period in 2005 primarily due to higher employee compensation costs together with higher legal costs and accounting costs including Sarbanes Oxley compliance costs, partially offset by capitalized expenses. General and administrative expenses in the three months ended March 31, 2006 excluded amounts capitalized relating to compensation expense of employees directly engaged in construction and leasing activities as follows:

	Three Months Ended March 31,
	2006			2005
Gross expenses	$	4,749		$	521
Capitalized expenses		(503	)		—
Income statement expense	$	4,246		$	521

Liquidity and Capital Resources

Analysis of Liquidity and Capital Resources

As of March 31, 2006, we had $25.2 million of cash and cash equivalents, excluding $18.0 million of restricted cash. Restricted cash primarily consists of interest bearing cash deposits required by the terms of several of our mortgage loans for a variety of purposes, including real estate taxes, insurance, anticipated or contractually obligated tenant improvements and leasing deposits.

Our short term liquidity requirements primarily consist of operating expenses and other expenditures associated with our properties, dividend payments on our preferred stock, dividend payments to our stockholders and distributions to our unitholders in the Operating Partnership required to maintain our REIT status, capital expenditures, debt service on our loans and, potentially, acquisitions. We expect to meet our short-term liquidity requirements through net cash provided by operations, restricted cash accounts established for certain future payments and by drawing upon our unsecured credit facility.

As of March 31, 2006 our Operating Partnership has a $350 million unsecured revolving line of credit facility (with the option to further increase the unsecured revolving credit facility to $500 million subject to receipt of lender commitments and satisfaction of other conditions). Borrowings under this facility currently bear interest at a rate based on LIBOR (ranging from 1 to 6 month LIBOR) plus a margin ranging from 1.250% to 1.625%, depending on our Operating Partnership’s overall leverage, which margin was 1.50% as of March 31, 2006. The unsecured revolving line of credit facility matures in October 2008, subject to a one-year extension option that we may exercise if certain conditions are met. The amended unsecured revolving line of credit facility has a $150.0 million sub-facility for foreign exchange advances in Euros and British Sterling. We intend to use available borrowings under the amended unsecured revolving credit facility to, among other things, finance the acquisition of additional properties, to fund tenant improvements and capital expenditures, and to provide for working capital and other corporate purposes. As of March 31, 2006 the amount available under our line of credit was $76.3 million.

Properties acquired in 2006

During the three months ended March 31, 2006 we acquired the following properties:

Property	Location	Date acquired	Purchase price ($ millions)
4025 Midway Road	Dallas	January 6, 2006	$	16.2
Clonshaugh Industrial Estate	Dublin, Ireland	February 6, 2006		6.3
			$	22.5

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Future uses of cash

Our properties require periodic investments of capital for tenant-related capital expenditures and for general capital improvements. As of March 31, 2006, we had commitments under leases in effect for $21.5 million of tenant improvement costs and leasing commissions all of which we expect to incur in 2006.

As of March 31, 2006, we have identified from our existing properties approximately 1.2 million square feet of redevelopment space and we also owned approximately 113,000 net rentable square feet of data center space with extensive installed tenant improvements that we may subdivide for multi-tenant turn-key data center use during the next two years rather than lease such space to large single tenants. Turn-Key Data Center space is move-in-ready space for the placement of computer and network equipment required to provide a data center environment. Depending on demand for additional turn-key data space, we may incur significant tenant improvement costs to build out and redevelop these spaces.

We also acquired the following properties after March 31, 2006. We did not obtain any new mortgage loans to purchase any of these properties and thus financed their acquisition primarily through our credit facility:

• a property located in Toronto, Canada for approximately $16.0 million on April 13, 2006.

• a property located in Atlanta for approximately $25.3 million on April 20, 2006.

• a property located in Houston for approximately $30.5 million on April 26, 2006.

As of May 8, 2006 we also have a signed purchase agreement over a property located in Boston for a purchase price of approximately $8.7 million.

As we are completing due diligence over these potential acquisitions we can give no assurance that we will complete the purchase of these properties.

On December 3, 2005, we terminated share purchase agreements to acquire 100% of the shares of two German entities which together own IBM Technology Park, an approximately 80 acre technical campus located near Mainz, Germany containing 11 buildings with a total of approximately 1.5 million net rentable square feet. The terminated share purchase agreements provided for an aggregate purchase price, excluding expenses, for 100% of the shares in the two entities of approximately €77.4 million (approximately $98.5 million based on the rate of exchange on May 5, 2006). We are still in discussions with the owner of this property but there can be no assurance that we will acquire this property in the future, or if we do so that the price will be similar to the terminated agreements.

We are also subject to the commitments discussed below under “Commitments and Contingencies” and Off-Balance Sheet Arrangements, and Distributions as described below.

We expect to meet our long-term liquidity requirements to pay for scheduled debt maturities and to fund property 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. We also may fund future property acquisitions and non-recurring capital improvements using our unsecured credit facility pending permanent financing.

Distributions

We are required to distribute 90% of our REIT taxable income (excluding capital gains) on an annual basis in order to continue to qualify as a REIT for federal income tax purposes. Accordingly, we intend to make, but are not contractually bound to make, regular quarterly distributions to preferred stockholders, common stockholders and unit holders from cash flow from operating activities. All such distributions are at the discretion of our board of directors. We may be required to use borrowings under the credit facility, if necessary, to meet REIT distribution requirements and maintain our REIT status. We consider market factors and our performance in addition to REIT requirements in determining distribution levels. 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 status as a REIT. In the three months ended March 31, 2006, we declared the following dividends:

Date dividend and distribution declared	Share class	Dividend and distribution amount per share		Period covered	Dividend and distribution payable date	Annual equivalent rate of dividend and distribution per share		Dividend and distribution amount (in thousands)
February 27, 2006	Series A Preferred Stock	$	0.53125	January 1, 2006 to March 31, 2006	March 31, 2006 to shareholders on record on March 15, 2006.	$	2.125	$	2,199
February 27, 2006	Series B Preferred Stock	$	0.49219	January 1, 2006 to March 31, 2006	March 31, 2006 to shareholders on record on March 15, 2006.	$	1.969		1,246
February 27, 2006	Common stock and operating partnership common units and long term incentive units.	$	0.26500	January 1, 2006 to March 31, 2006	March 31, 2006 to shareholders on record on March 15, 2006.	$	1.060		15,642
								$	19,087

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Commitments and Contingencies

The following table summarizes our contractual obligations as of March 31, 2006, including the maturities and scheduled principal on our secured debt and unsecured credit facility debt, and provides information about the commitments due in connection with our ground leases, tenant improvement and leasing commissions (in thousands):

Obligation	Total		2006		2007-2008		2009-2010		Thereafter
Long-term debt principal payments (1)	$	811,517	$	57,314	$	319,931	$	148,296	$	285,976
Interest payable (2)		237,488		35,530		84,803		38,427		78,728
Ground leases (3)		22,745		307		817		817		20,804
Operating lease		3,772		380		1,176		1,290		926
Tenant improvements and leasing commissions (4)		21,521		21,521		—		—		—
	$	1,097,043	$	115,052	$	406,727	$	188,830	$	386,434

(1) Includes $204.4 million of borrowings under our unsecured credit facility, which is due to mature in October 2008 and excludes $2.1 million of loan premiums.

(2) Interest payable is based on the interest rate in effect on March 31, 2006 including the effect of interest rate swaps. Interest payable excluding the effect of interest rate swaps is as follows (in thousands):

	Total
2006	$	37,155
2007-2008		87,679
2009-2010		38,555
Thereafter		78,728
	$	242,117

(3) This is comprised of ground lease payments on 2010 East Centennial Circle, Chemin de l’Epinglier 2, Clonshaugh Industrial Estate and Paul van Vlissingenstraat 16. After February 2036, rent for the remaining term of the 2010 East Centennial Circle ground lease will be determined based on a fair market value appraisal of the asset and, as a result, is excluded from the above information. The Chemin de l’Epinglier 2 ground lease which expires in July 2074 contains potential inflation increases which are not reflected in the table above. The Paul van Vlissingenstraat and Clonshaugh Industrial Estate amounts are translated at the March 31, 2006 exchange rate of 1.21 per € 1.00. The 16 Chemin de l’Epinglier 2 amounts are translated at the March 31, 2006 exchange rate of 1.30 per Swiss Franc.

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(4) This amount includes approximately $9.9 million of commitments we will pay and the tenant will reimburse us for the costs.

We are obligated to pay the seller of the 350 East Cermak Road a contingent fee of up to $20.0 million in the event a new real estate tax classification for the property is obtained prior to December 31, 2006. We have also agreed with the seller to share a portion, not to exceed $135,000 per month, of rental revenue, adjusted for our costs to lease the premises, from the lease of the 263,000 square feet of space held for redevelopment. This revenue sharing agreement will terminate in May 2013. As part of the acquisition of Paul van Vlissingenstraat 16, we entered into an agreement with the seller, whereby, for twelve months from the execution of the purchase and sale agreement, our purchase price may increase dependant upon future leasing activity as a result of actions by the seller. The amount of the potential commitment is not currently quantifiable as it is based on a 10% cap rate on the incremental operating income from qualifying new leases that are closed or binding during the participation period. We have no liability for these contingent liabilities on our consolidated balance sheet at March 31, 2006.

In November 2004 and May 2005, we entered into interest rate swap agreements to hedge variability in cash flows related to LIBOR based mortgage loans for approximately $192.8 million of our variable rate debt as of March 31, 2006. Under these swaps, we receive variable-rate amounts in exchange for fixed-rate payments over the life of the agreements without exchange of the underlying principal amounts. See Item 3 “Quantitative and Qualitative Disclosures about Market Risk.”

Outstanding Consolidated Indebtedness

The table below summarizes our debt, at March 31, 2006 (in millions):

Debt Summary:
Fixed rate	$	416.5
Variable rate—hedged by interest rate swaps		192.8
Total fixed rate		609.3
Variable rate—unhedged		204.4
Total		813.7
Percent of Total Debt:
Fixed rate (including swapped debt)		74.9	%
Variable rate		25.1	%
Total		100.0	%
Effective Interest Rate at March 31, 2006
Fixed rate (including swapped debt)		5.79	%
Variable rate—unhedged		6.43	%
Effective interest rate		5.95	%

At March 31, 2006, we had approximately $813.7 million of outstanding consolidated long-term debt as set forth in the table above. Our ratio of debt to total market capitalization was approximately 31% (based on the closing price of our common stock on March 31, 2006 of $28.17. The variable rate debt shown above bears interest at interest rates based on various LIBOR rates ranging from one to twelve months, depending on the agreement governing the debt. The debt secured by our properties at March 31, 2006 had a weighted average term to initial maturity of approximately 5.3 years (approximately 6.0 years assuming exercise of extension options).

Unsecured Credit Facility. At March 31, 2006, we had an unsecured revolving line of credit facility (credit facility) under which we can borrow up to $350.0 million (with the option to further increase the line to $500.0 million subject to receipt of lender commitments and satisfaction of other conditions). Borrowings under the credit facility currently bear interest at a rate based on LIBOR plus margin ranging from 1.250% to 1.625%, depending on our Operating Partnership’s overall leverage. This margin was

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1.50% as of March 31, 2006, resulting in an interest rate at March 31, 2006 of 6.43% . The credit facility matures in October 2008, subject to a one-year extension option, which we may exercise if certain conditions are met. The credit facility has a $150.0 million sub-facility for foreign exchange advances in Euros and British Sterling. At March 31, 2006 we had outstanding $204.4 million under the credit facility and $76.3 million was available for use.

Off-Balance Sheet Arrangements

At March 31, 2006 we were a party to interest rate cap agreements in connection with debt and interest rate swap agreements with KeyBank National Association and Bank of America related to $192.8 million of outstanding principal on our variable rate debt. See Item 3 “Quantitative and Qualitative Disclosures about Market Risk.”

We were also a party to a foreign currency forward sale contract in connection with our ownership of the 6 Braham Street property in London, England. We terminated this foreign currency contract in January 2006 and received cash of approximately $0.7 million.

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 Three Months Ended March 31, 2006 to Three Months Ended March 31, 2005

The following table shows cash flows and ending cash and cash equivalent balances for the three months ended March 31, 2006 and 2005, respectively (in thousands):

	Three Months Ended
	2006			2005			Change
Net cash provided by operating activities	$	14,857		$	11,708		$	3,149
Net cash used in investing activities		(32,533	)		(71,645	)		39,112
Net cash provided by financing activities		31,925			58,255			(26,330	)
Net increase (decrease) in cash and cash equivalents	$	14,249		$	(1,682	)	$	15,931

The increase in net cash provided by operating activities was primarily due to revenues from the properties added to our portfolio which was partially offset by increased operating and interest expenses. We acquired 20 properties during the twelve months ended March 31, 2006.

Net cash used in investing activities primarily relates to new properties acquired during the three months ended March 31, 2006 and 2005, and tenant improvement advances to tenants during the three months ended March 31, 2006. The decrease in net cash used in investing activities was primarily due to lower expenditures to acquire properties in the three months ended March 31, 2006 compared to the same period in 2005. This decrease was partially offset by advances to tenants for tenant improvements in the three months ended March 31, 2006. No such advances occurred in the three months ended March 31, 2005.

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Net cash flows from financing activities consisted of the following amounts (in thousands):

	Three Months Ended
	2006			2005			Change
Net proceeds from borrowings	$	64,527		$	(17,788	)	$	82,315
Net proceeds from issuance of stock		452			99,103			(98,651	)
Dividend payments		(34,726	)		(22,452	)		(12,274	)
Other		1,672			(608	)		2,280
Net cash provided by financing activities	$	31,925		$	58,255		$	(26,330	)

Proceeds from issuance of stock were primarily related to our preferred stock offering in February 2005. Dividend payments increased primarily as a result of our July 2005 offering of common and preferred stock. We obtained a mortgage loan over our 600 West Seventh Street property for $60.0 million in the first quarter of 2006.

Minority interest

Minority interests relate to the interests in the Operating Partnership that are not owned by us, which, at March 31, 2006, amounted to 46.8% of the Operating Partnership common units. In conjunction with our formation, GI Partners received common units, in exchange for contributing ownership interests in properties to the Operating Partnership. Also in connection with acquiring real estate interests owned by third parties, the Operating Partnership issued common units to those sellers.

Limited partners who acquired common units in the formation transactions have the right to require the Operating Partnership to redeem part or all of their common units for cash based upon the fair market value of an equivalent number of shares of our common stock at the time of the redemption. Alternatively, we may elect to acquire those common units in exchange for shares of our 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. Pursuant to registration rights agreements we entered into with GI Partners and the other third party contributors, we filed a shelf registration statement covering the issuance of the shares of our common stock issuable upon redemption of the common units, and the resale of those shares of common stock by the holders. GI Partners distributed 4,030,184 Operating Partnership common units to its owners and these units were converted into shares of our common stock on March 29, 2006 and sold to third parties on April 3, 2006.

Inflation

Substantially all 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.

New Accounting Pronouncements

In December 2004, the Financial Accounting Standards Board issued Statement of Financial Reporting Standard (FAS) No. 123 (revised 2004), Share-Based Payment (FAS No. 123R), which is a revision of FAS No. 123, Accounting for Stock-Based Compensation. FAS No. 123R supersedes Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to Employees, and amends FAS No. 95, Statement of Cash Flows. Registrants were initially required to adopt FAS No. 123R as of the beginning of the first interim or annual period that begins after June 15, 2005. We adopted FAS No. 123R as of October 1, 2005 and there was no material impact on our consolidated financial statements.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

Analysis of debt between fixed and variable rate.

We use interest rate swap agreements and fixed rate debt to reduce our exposure to interest rate movements. At March 31, 2006, our consolidated debt was as follows:

	Q106
Fixed rate debt:
Fair value of fixed rate debt	$	417.0
Carrying value of fixed rate debt		416.5
Excess of fair value over carrying value	$	0.5
Total outstanding debt:
Principal on mortgage loans		607.2
Debt premium on two mortgage loans		2.1
Notes payable under line of credit		204.4
Total outstanding debt	$	813.7
Variable debt ignoring interest rate swaps	$	397.2
Variable debt after rate swaps	$	204.4
Variable debt after rate swaps as percentage of total outstanding debt		25.1	%

Interest rate swaps included in this table and their fair values as of March 31, 2006 were as follows (in thousands):

Current Notional Amount	Strike Rate		Effective Date	Expiration Date	Fair Value
$43,000	3.250	%	November 26, 2004	September 15, 2006	$	349
20,970	3.754		November 26, 2004	January 2, 2009		714
20,000	3.824		November 26, 2004	April 1, 2009		737
8,775	3.331		November 26, 2004	December 1, 2006		103
100,000	4.025		May 26, 2005	June 15, 2008		2,275
$192,745					$	4,178

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Sensitivity to changes in interest rates.

The following table shows the effect if assumed changes in interest rates occurred:

Assumed event	Interest rate change (basis points)		Change ($ millions)
Increase in fair value of interest rate swaps following an assumed 10% increase in interest rates	51		$	1.6
Decrease in fair value of interest rate swaps following an assumed 10% decrease in interest rates	(51	)		(1.6	)
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	51			1.0
Decrease in annual interest expense on our debt that is variable rate and not subject to swapped interest following a 10% increase in interest rates	51			(1.0	)
Increase in fair value of fixed rate debt following a 10% decrease in interest rates	(57	)		7.1
Decrease in fair value of fixed rate debt following a 10% increase in interest rates	57			(6.9	)

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 forward exchange risk

As of March 31, 2006, we have foreign operations in the United Kingdom, Switzerland, Ireland and The Netherlands and as such are subject to risk from the effects of exchange rate movements of foreign currencies, which may affect future costs and cash flows. Our foreign operations are conducted in the Euro and the British Pound. For these currencies we are a net receiver of the foreign currency (we receive more cash then we pay out) and therefore our foreign investments benefit from a weaker U.S. dollar and are adversely affected by a stronger U.S. dollar relative to the foreign currency. For the three months ended March 31, 2006, operating revenues from properties in Europe contributed $2.2 million which represented 3.6% of our operating revenues.

As of March 31, 2006, we have not entered into any foreign currency forward exchange contracts to hedge the effects of adverse fluctuations in foreign currency exchange rates. Prior to January 2006, we were party to a foreign currency forward sale contract with a notional value of approximately £7.9 million. We terminated this contract in January 2006 and received cash of approximately $0.7 million.

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ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We have adopted and maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, 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 management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

As required by Rule 13a-15(b) of the Securities Exchange Act of 1934, we have carried out an evaluation, under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the quarter covered by this report. Based on the foregoing, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level.

Changes in Internal Control Over Financial Reporting

There has been no change in our internal control over financial reporting that has occurred during the fiscal quarter ended March 31, 2006 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1 – Legal Proceedings.

None.

ITEM 1A – Risk factors

See our risk factors set forth in Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2005.

ITEM 2 – Unregistered Sales of Equity Securities and Use of Proceeds.

None.

ITEM 3 – Defaults Upon Senior Securities.

None.

ITEM 4 – Submission of Matters to a Vote of Security Holders.

None.

ITEM 5 – Other Information.

(a) None.

(b) None.

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ITEM 6 – Exhibits

Exhibit
10.1	Amendment No. 3 to the Credit Agreement, dated as of May 3, 2006, among Digital Realty Trust, L.P., Citicorp North America, Inc., as administrative agent, the financial institutions named therein, Merrill Lynch, Pierce, Fenner & Smith Incorporated, as syndication agent, Bank of America, N.A., KeyBank National Association and Royal Bank of Canada, as co-documentation agents, and Citigroup Global Markets Inc. and Merrill Lynch, as the arrangers.
12.1	Statement of Computation of Ratios
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes Oxley Act of 2002.
32.2	Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes Oxley Act of 2002.

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SIGNATURES

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

	DIGITAL REALTY TRUST, INC.
May 8, 2006	/s/    MICHAEL F. FOUST
	Michael F. Foust Chief Executive Officer
May 8, 2006	/s/    A. WILLIAM STEIN
	A. William Stein Chief Financial Officer and Chief Investment Officer (principal financial officer)
May 8, 2006	/s/    EDWARD F. SHAM
	Edward F. Sham Vice President and Controller (principal accounting officer)

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EX-10.1

Exhibit 10.1

EXECUTION COPY

AMENDMENT NO. 3 TO THE

CREDIT AGREEMENT

Dated as of May 3, 2006

AMENDMENT NO. 3 TO THE CREDIT AGREEMENT (this “Amendment”) among Digital Realty Trust, L.P. (the “Borrower”); Citicorp North America, Inc. (“CNAI”), as administrative agent (the “Administrative Agent”), the financial institutions party to the Credit Agreement referred to below (collectively, the “Lender Parties”), Merrill Lynch, Pierce, Fenner & Smith Incorporated (“Merrill Lynch”), as syndication agent (the “Syndication Agent”), Bank of America, N.A., KeyBank National Association and Royal Bank of Canada (the “Co-Documentation Agents”), and Citigroup Global Markets Inc. and Merrill Lynch (the “Arrangers”).

PRELIMINARY STATEMENTS:

(1) The Borrower, Digital Realty Trust, Inc. (the “Parent Guarantor”), the subsidiaries of the Borrower party thereto, the Lenders Party thereto (the “Existing Lenders”), the other Lender Parties, the Administrative Agent, the Syndication Agent and the Co-Documentation Agents have entered into a Credit Agreement dated as of November 3, 2004 (as amended prior to the date hereof, the “Credit Agreement”). Capitalized terms not otherwise defined in this Amendment have the same meanings as specified in the Credit Agreement.

(2) Each Person named as a Lender on the signature pages of this Amendment not previously named as a Lender under the Credit Agreement (each, a “New Lender”) has agreed to become a party to the Credit Agreement (as amended hereby) as a Lender, on the terms and subject to the conditions set forth in this Amendment and the Credit Agreement, as amended hereby.

(3) The Borrower and the Existing Lenders have agreed to amend the Credit Agreement, including for the purpose of including each New Lender as a Lender thereunder, on the terms and subject to the conditions hereinafter set forth.

SECTION 1. Amendments to Credit Agreement. The Credit Agreement is, upon the occurrence of the Amendment Effective Date (as defined in Section 4 below), hereby amended as follows:

(a) The cover page of the Credit Agreement is hereby amended by deleting the words “FRONTING BANK” after the words “INITIAL ISSUING BANK” thereon.

(b) The preamble to the Credit Agreement is hereby amended by deleting the words “the Fronting Bank (as hereinafter defined),” immediately before the words “the Swing Line Bank” therein.

(c) Section 1.01 of the Credit Agreement is hereby amended by deleting the following definitions set forth therein:

“Fronting Advance”, “Fronting Bank”, “Fronting Commitment”, “Fronting Event”, “Fronting Facility”, “Fronting Fee”, “Non-Qualified Lender”, “Other

Lender”, “Qualified Lender”, “Reduced Borrowing”, “Requested Borrowing” and “Sharing Event”.

(d) Section 1.01 of the Credit Agreement is hereby amended by adding the following new definitions in their appropriate alphabetical order:

“Amendment No. 3 Effective Date” means the date on which all of the conditions to effectiveness of Amendment No. 3 to the Credit Agreement dated as of May 3, 2006 have been satisfied.

“Excess Canada Value” shall have the meaning specified in the definition of “Total Unencumbered Asset Value”.

“Maxtor Property” means, collectively, the properties known as the “Maxtor Manufacturing Facility” located at 47700 Kato Road and 1055 Page Avenue, Fremont, California 94538.

“Multicurrency Revolving Credit Advance” has the meaning specified in Section 2.01(a)(ii).

“Multicurrency Revolving Credit Commitment” means, (a) with respect to any Lender at any time, the amount set forth opposite such Lender’s name on Schedule I hereto under the caption “Multicurrency Revolving Credit Commitment” or (b) if such Lender has entered into one or more Assignment and Acceptances or Assumption Agreements, set forth for such Lender in the Register maintained by the Administrative Agent pursuant to Section 9.07(d) as such Lender’s “Multicurrency Revolving Credit Commitment”, as such amount may be reduced at or prior to such time pursuant to Section 2.05.

“Multicurrency Revolving Credit Facility” means, at any time, the aggregate amount of the Lenders’ Multicurrency Revolving Credit Commitments at such time.

“Multicurrency Revolving Lender” means any Person that is a Lender hereunder in respect of the Multicurrency Revolving Credit Facility in its capacity as a Lender in respect of such Facility.

“Purchasing Lender” has the meaning specified in Section 2.18(e).

“Selling Lender” has the meaning specified in Section 2.18(e).

“Telco/Internet Gateway Property” means, collectively, the properties known as the “Data Center: Telco and Internet Gateway Facility” located at 113 North Meyers Street and 125 North Meyers Street, Charlotte, North Carolina 28202.

“Unused Multicurrency Revolving Credit Commitment” means, with respect to any Lender with a Multicurrency Revolving Credit Commitment at any time, (a) such Lender’s Multicurrency Revolving Credit Commitment at such time minus (b) the aggregate principal amount (denominated in Dollars (including, if applicable, the Dollar Equivalent of any amounts that are not Dollar denominated)) of all Multicurrency Revolving Credit Advances made by such Lender and outstanding at such time.

“Unused U.S. Dollar Revolving Credit Commitment” means, with respect to any Lender with a U.S. Dollar Revolving Credit Commitment at any time, (a) such Lender’s U.S. Dollar Revolving Credit Commitment at such time minus (b) the sum of (i) the aggregate principal amount of all U.S. Dollar Revolving Credit Advances, Swing Line Advances and Letter of Credit Advances made by such Lender (in its capacity as a Lender) and outstanding at such time plus (ii) such Lender’s U.S. Dollar Revolving Credit Pro Rata Share of (A) the aggregate Available Amount of all Letters of Credit outstanding at such time, (B) the aggregate principal amount of all Letter of Credit Advances made by the Issuing Banks pursuant to Section 2.03(c) and outstanding at such time and (C) the aggregate principal amount of all Swing Line Advances made by the Swing Line Bank pursuant to Section 2.01(c) and outstanding at such time.

“U.S. Dollar Lender Party” means any U.S. Dollar Revolving Lender, the Swing Line Bank or any Issuing Bank.

“U.S. Dollar Revolving Credit Advance” has the meaning specified in Section 2.01(a)(i).

“U.S. Dollar Revolving Credit Commitment” means, (a) with respect to any Lender at any time, the amount set forth opposite such Lender’s name on Schedule I hereto under the caption “U.S. Dollar Revolving Credit Commitment” or (b) if such Lender has entered into one or more Assignment and Acceptances or Assumption Agreements, set forth for such Lender in the Register maintained by the Administrative Agent pursuant to Section 9.07(d) as such Lender’s “U.S. Dollar Revolving Credit Commitment”, as such amount may be reduced at or prior to such time pursuant to Section 2.05 or increased pursuant to Section 2.18.

“U.S. Dollar Revolving Credit Facility” means, at any time, the aggregate amount of the Lenders’ U.S. Dollar Revolving Credit Commitments at such time.

“U.S. Dollar Revolving Lender” means any Person that is a Lender hereunder in respect of the U.S. Dollar Revolving Credit Facility in its capacity as a Lender in respect of such Facility.

“U.S. Dollar Revolving Credit Pro Rata Share” of any amount means, with respect to any Lender at any time, the product of such amount times a fraction the numerator of which is the amount of such Lender’s U.S. Dollar Revolving Credit Commitment at such time (or, if the Commitments shall have been terminated pursuant to Section 2.05 or 6.01, such Lender’s U.S. Dollar Revolving Credit Commitment as in effect immediately prior to such termination) and the denominator of which is the U.S. Dollar Revolving Credit Facility at such time (or, if the Commitments shall have been terminated pursuant to Section 2.05 or 6.01, the U.S. Dollar Revolving Credit Facility as in effect immediately prior to such termination).

(e) Section 1.01 of the Credit Agreement is hereby amended to restate the following definitions set forth therein in their entirety to read as follows:

“Advance” means a U.S. Dollar Revolving Credit Advance, a Multicurrency Revolving Credit Advance, a Swing Line Advance or a Letter of Credit Advance.

“Commitment” means a U.S. Dollar Revolving Credit Commitment, a Multicurrency Revolving Credit Commitment, a Swing Line Commitment or a Letter of Credit Commitment.

“Facility” means the U.S. Dollar Revolving Credit Facility, the Multicurrency Revolving Credit Facility, the Swing Line Facility or the Letter of Credit Facility.

“Lender Party” means any Lender, the Swing Line Bank or any Issuing Bank.

“Letter of Credit Advance” means an advance made by any Issuing Bank or any Lender pursuant to Section 2.03(c).

“Required Lenders” means, at any time, Lenders owed or holding greater than 50% of the sum of (a) the aggregate principal amount (expressed in Dollars and including the Equivalent in Dollars at such time of any amounts denominated in a Committed Foreign Currency) of the Advances outstanding at such time, (b) the aggregate Available Amount of all Letters of Credit outstanding at such time and (c) the aggregate Unused Revolving Credit Commitments at such time. For purposes of this definition, the aggregate principal amount of Swing Line Advances owing to the Swing Line Bank and of Letter of Credit Advances owing to any Issuing Bank and the Available Amount of each Letter of Credit shall be considered to be owed to the U.S. Dollar Revolving Lenders ratably in accordance with their respective U.S. Dollar Revolving Credit Commitments.

“Revolving Credit Advance” means a U.S. Dollar Revolving Credit Advance or a Multicurrency Revolving Credit Advance.

“Revolving Credit Commitment” means, with respect to any Lender, the sum of such Lender’s Multicurrency Revolving Credit Commitment and such Lender’s U.S. Dollar Revolving Credit Commitment and “Revolving Credit Commitments” means the aggregate principal amount of the Revolving Credit Commitments of all the Lenders, the maximum amount of which shall be $350,000,000, as increased from time to time pursuant to Section 2.18 or as reduced from time to time pursuant to Section 2.05.

“Swing Line Advance” means an advance made by (a) the Swing Line Bank pursuant to Section 2.01(c) or (b) any Lender pursuant to Section 2.02(b).

“Termination Date” means the earlier of (a) October 31, 2008, subject to any extension thereof pursuant to Section 2.16, and (b) the date of termination in whole of the Revolving Credit Commitments, the Letter of Credit Commitments and the Swing Line Commitment pursuant to Section 2.05 or 6.01.

“Total Unencumbered Asset Value” means an amount equal to the sum of the Unencumbered Asset Values of all Unencumbered Assets; provided, however, that, if at any time (a) there shall be fewer than three Unencumbered Assets, (b) the sum of the Unencumbered Asset Values of all Unencumbered Assets shall not be equal to or greater than $115,000,000 or (c) the weighted average occupancy of all Unencumbered Assets shall not be greater than or equal to 85%, “Total Unencumbered Asset Value” shall be $0; and provided further that if the sum of the Unencumbered Asset Values of all Unencumbered Assets located in Canada shall exceed 15% of the Total Unencumbered Asset Value, then Total Unencumbered Asset Value shall be reduced by the amount of

such excess (“Excess Canada Value”) other than for purposes of calculating compliance with the financial covenant set forth in Section 5.04(b)(i), with respect to which such reduction shall not apply.

“Unencumbered Asset Conditions” means, with respect to any Proposed Unencumbered Asset, that such Proposed Unencumbered Asset (a) is an Office Asset located in the United States of America or Canada, (b) is owned in fee simple absolute or subject to a Qualifying Ground Lease, (c) [intentionally omitted], (d) is income-producing, and, unless the Total Unencumbered Asset Value as of the applicable date of determination is at least $1,000,000,000, is at least 70% occupied and not more than 30% of which is under development or redevelopment, (e) is free of all structural defects or material architectural deficiencies, title defects, environmental conditions or other matters (including a casualty event or condemnation) that would have a material adverse affect on the value, use or ability to sell or refinance such Asset, (f) is operated by a property manager reasonably acceptable to the Administrative Agent, (g) is not subject to mezzanine Debt financing, (h) is not subject to any Lien (other than Permitted Liens) or any Negative Pledge, (i) to the extent owned by a Loan Party that is a Subsidiary of the Borrower, none of the Borrower’s direct or indirect Equity Interests in such Subsidiary owner is subject to any Lien (other than Permitted Liens) or any Negative Pledge, (j) is an Asset with respect to which the Borrower directly, or indirectly through such Subsidiary owner, has the right to take the following actions without the need to obtain the consent of any Person: (i) to create Liens on such Asset as security for the Obligations of the Loan Parties under or in respect of the Loan Documents, and (ii) to sell, transfer or otherwise dispose of such Asset, and (k) is owned directly by the Borrower or a Guarantor.

“Unencumbered Asset Value” means, at any date of determination, for any Unencumbered Asset, the Adjusted Net Operating Income thereof divided by 9.0%; provided, however, that in the case of any Unencumbered Asset acquired after the Amendment No. 2 Effective Date, Unencumbered Asset Value shall not exceed, during the first 12 months following the date of such acquisition, the acquisition price thereof; provided further that to the extent the limitation in the immediately preceding proviso shall apply, an upward adjustment shall be made to such acquisition price (in the reasonable discretion of the Administrative Agent) to account for Tenancy Leases entered into in respect of such Unencumbered Asset after the acquisition date.

“Unused Revolving Credit Commitment” means, with respect to any Lender at any time, the sum of (a) such Lender’s Unused U.S. Dollar Revolving Credit Commitment at such time and (b) such Lender’s Unused Multicurrency Revolving Credit Commitment at such time.

(f) The definition of “Debt for Borrowed Money” set forth in Section 1.01 of the Credit Agreement is hereby amended by deleting the words “(i) four (4) times (ii)” in each of clauses (a) and (b) thereof.

(g) Section 2.01(a) of the Credit Agreement is hereby amended and restated to read as follows:

“(a)(i) The U.S. Revolving Credit Advances. Each Lender with a U.S. Dollar Revolving Credit Commitment severally agrees, on the terms and conditions hereinafter set forth, to make advances (each a “U.S. Dollar Revolving Credit Advance”) in Dollars

to the Borrower from time to time on any Business Day during the period from the date hereof until the Termination Date in an amount for each such U.S. Dollar Revolving Credit Advance not to exceed such Lender’s Unused U.S. Dollar Revolving Credit Commitment at such time. Each Borrowing shall be in an aggregate amount not less than the Revolving Credit Borrowing Minimum or a Revolving Credit Borrowing Multiple in excess thereof and shall consist of U.S. Dollar Revolving Credit Advances in Dollars of the same Type made simultaneously by the Lenders with U.S. Dollar Revolving Credit Commitments ratably according to their U.S. Dollar Revolving Credit Commitments. Within the limits of each Lender’s Unused U.S. Dollar Revolving Credit Commitment in effect from time to time and prior to the Termination Date, the Borrower may borrow under this Section 2.01(a)(i), prepay pursuant to Section 2.06(a) and reborrow under this Section 2.01(a)(i).

(ii) The Multicurrency Revolving Credit Advances. Each Lender with a Multicurrency Revolving Credit Commitment severally agrees, on the terms and conditions hereinafter set forth, to make advances (each a “Multicurrency Revolving Credit Advance”) in Dollars or in a Committed Foreign Currency to the Borrower from time to time on any Business Day during the period from the date hereof until the Termination Date (A) in an amount for each such Multicurrency Revolving Credit Advance not to exceed such Lender’s Unused Multicurrency Revolving Credit Commitment at such time, and (B) for all such Multicurrency Revolving Credit Advances denominated in a Committed Foreign Currency, in an aggregate amount at any time outstanding not to exceed the Equivalent of $150,000,000 in such Committed Foreign Currencies. Each Borrowing shall be in an aggregate amount not less than the Revolving Credit Borrowing Minimum or a Revolving Credit Borrowing Multiple in excess thereof and shall consist of Multicurrency Revolving Credit Advances of the same Type and in the same currency made simultaneously by the Lenders with Multicurrency Revolving Credit Commitments ratably according to their Multicurrency Revolving Credit Commitments. Within the limits of each Lender’s Unused Multicurrency Revolving Credit Commitment in effect from time to time and prior to the Termination Date, the Borrower may borrow under this Section 2.01(a)(ii), prepay pursuant to Section 2.06(a) and reborrow under this Section 2.01(a)(ii).”

(h) Section 2.01(b) of the Credit Agreement is hereby amended by deleting the words “Unused Revolving Credit Commitments” in clause (iii) of the first sentence thereof and substituting therefor the words “Unused U.S. Dollar Revolving Credit Commitments”.

(i) Section 2.01(c) of the Credit Agreement is hereby amended by deleting the words “Unused Revolving Credit Commitments” in clause (ii) of the first sentence thereof and substituting therefor the words “Unused U.S. Dollar Revolving Credit Commitments”.

(j) Section 2.02(a) of the Credit Agreement is hereby amended and restated to read as follows:

“(a) Except as otherwise provided in Section 2.03, each Borrowing shall be made on notice, given not later than (x) 1:00 P.M. (New York City time) on the third Business Day prior to the date of the proposed Borrowing in the case of a Borrowing consisting of Eurocurrency Rate Advances denominated in Dollars, (y) 3:00 P.M. (London time) on the third Business Day prior to the date of the proposed Borrowing in the case of a Revolving Credit Borrowing consisting of Eurocurrency Rate Advances denominated in any Committed Foreign Currency, or (z) 12:00 P.M. (New York City

time) on the date of the proposed Borrowing in the case of a Borrowing consisting of Base Rate Advances, by the Borrower to the Administrative Agent (and, in the case of a Borrowing consisting of Eurocurrency Rate Advances denominated in any Committed Foreign Currency, simultaneously to the Sub-Agent), which shall give to each relevant Lender prompt notice thereof by telex or telecopier. Each such notice of a Borrowing (a “Notice of Borrowing”) shall be by telephone, confirmed immediately in writing, or telex or telecopier or e-mail, in each case in substantially the form of Exhibit B hereto, specifying therein the requested (i) date of such Borrowing, (ii) Facility under which such Borrowing is requested, (iii) Type of Advances comprising such Borrowing, (iv) aggregate amount of such Borrowing (v) in the case of a Borrowing consisting of Eurocurrency Rate Advances, initial Interest Period for each such Advance, and (vi) in the case of a Borrowing consisting of Multicurrency Revolving Credit Advances, currency of such Advances. Each Lender with a Commitment in respect of the applicable Facility shall, before 1:00 P.M. (New York City time) on the date of such Borrowing in the case of a Borrowing consisting of Advances denominated in Dollars, and before 3:00 P.M. (London time) on the date of such Borrowing in the case of a Borrowing consisting of Eurocurrency Advances denominated in any Committed Foreign Currency, make available for the account of its Applicable Lending Office to the Administrative Agent at the applicable Administrative Agent’s Account, in same day funds, such Lender’s ratable portion of such Borrowing in accordance with the respective Commitments of such Lender and the other Lenders in respect of the applicable Facility. After the Administrative Agent’s receipt of such funds and upon fulfillment of the applicable conditions set forth in Article III, the Administrative Agent will make such funds available to the Borrower by crediting the Borrower’s Account; provided, however, that in the case of any Borrowing under the U.S. Dollar Revolving Credit Facility, the Administrative Agent shall first make a portion of such funds equal to the aggregate principal amount of any Swing Line Advances and Letter of Credit Advances made by the Swing Line Bank or any Issuing Bank, as the case may be, and by any other Lender and outstanding on the date of such Borrowing, plus interest accrued and unpaid thereon to and as of such date, available to the Swing Line Bank or such Issuing Bank, as the case may be, and such other Lenders for repayment of such Swing Line Advances and Letter of Credit Advances.”

(k) Section 2.02(b) of the Credit Agreement is hereby amended and restated to read as follows:

“(b) Each Swing Line Borrowing shall be made on notice, given not later than 1:00 P.M. (New York City time) on the date of the proposed Swing Line Borrowing, by the Borrower to the Swing Line Bank and the Administrative Agent. Each such notice of a Swing Line Borrowing (a “Notice of Swing Line Borrowing”) shall be by telephone, confirmed immediately in writing or by telecopier or e-mail, in each case specifying therein the requested (i) date of such Borrowing, (ii) amount of such Borrowing and (iii) maturity of such Borrowing (which maturity shall be no later than the earlier of (A) the seventh day after the requested date of such Borrowing and (B) the Termination Date). The Swing Line Bank shall, before 2:00 P.M. (New York City time) on the date of such Swing Line Borrowing, make the amount thereof available to the Administrative Agent at the Administrative Agent’s Account, in same day funds. After the Administrative Agent’s receipt of such funds and upon fulfillment of the applicable conditions set forth in Article III, the Administrative Agent will make such funds available to the Borrower by crediting the Borrower’s Account. Upon written demand by the Swing Line Bank, with a copy of such demand to the Administrative Agent, each other U.S. Dollar

Revolving Lender shall purchase from the Swing Line Bank, and the Swing Line Bank shall sell and assign to each such other U.S. Dollar Revolving Lender, such other U.S. Dollar Revolving Lender’s U.S. Dollar Revolving Credit Pro Rata Share of such outstanding Swing Line Advance as of the date of such demand, by making available for the account of its Applicable Lending Office to the Administrative Agent for the account of the Swing Line Bank, by deposit to the Administrative Agent’s Account, in same day funds, an amount equal to the portion of the outstanding principal amount of such Swing Line Advance to be purchased by such U.S. Dollar Revolving Lender. The Borrower hereby agrees to each such sale and assignment. Each U.S. Dollar Revolving Lender agrees to purchase its U.S. Dollar Revolving Credit Pro Rata Share of an outstanding Swing Line Advance on (i) the Business Day on which demand therefor is made by the Swing Line Bank, provided that notice of such demand is given not later than 1:00 P.M. (New York City time) on such Business Day or (ii) the first Business Day next succeeding such demand if notice of such demand is given after such time. Upon any such assignment by the Swing Line Bank to any other U.S. Dollar Revolving Lender of a portion of a Swing Line Advance, the Swing Line Bank represents and warrants to such other U.S. Dollar Revolving Lender that the Swing Line Bank is the legal and beneficial owner of such interest being assigned by it, but makes no other representation or warranty and assumes no responsibility with respect to such Swing Line Advance, the Loan Documents or any Loan Party. If and to the extent that any U.S. Dollar Revolving Lender shall not have so made the amount of such Swing Line Advance available to the Administrative Agent, such U.S. Dollar Revolving Lender agrees to pay to the Administrative Agent forthwith on demand such amount together with interest thereon, for each day from the date of demand by the Swing Line Bank until the date such amount is paid to the Administrative Agent, at the Federal Funds Rate. If such U.S. Dollar Revolving Lender shall pay to the Administrative Agent such amount for the account of the Swing Line Bank on any Business Day, such amount so paid in respect of principal shall constitute a Swing Line Advance made by such U.S. Dollar Revolving Lender on such Business Day for purposes of this Agreement, and the outstanding principal amount of the Swing Line Advance made by the Swing Line Bank shall be reduced by such amount on such Business Day.”

(l) Section 2.02(c) of the Credit Agreement is hereby amended by deleting therefrom the words “seven (7) separate Borrowings” and substituting therefor the words “twelve (12) separate Borrowings”.

(m) Section 2.03(c) of the Credit Agreement is hereby amended and restated to read as follows:

“(c) Drawing and Reimbursement. The payment by any Issuing Bank of a draft drawn under any Letter of Credit shall constitute for all purposes of this Agreement the making by such Issuing Bank of a Letter of Credit Advance, which shall be a Base Rate Advance, in the amount of such draft. Upon written demand by any Issuing Bank with an outstanding Letter of Credit Advance, with a copy of such demand to the Administrative Agent, each U.S. Dollar Revolving Lender shall purchase from such Issuing Bank, and such Issuing Bank shall sell and assign to each such U.S. Dollar Revolving Lender, such Lender’s U.S. Dollar Revolving Credit Pro Rata Share of such outstanding Letter of Credit Advance as of the date of such purchase, by making available for the account of its Applicable Lending Office to the Administrative Agent for the account of such Issuing Bank, by deposit to the Administrative Agent’s Account, in same day funds, an amount equal to the portion of the outstanding principal amount of

such Letter of Credit Advance to be purchased by such U.S. Dollar Revolving Lender. Promptly after receipt thereof, the Administrative Agent shall transfer such funds to such Issuing Bank. The Borrower hereby agrees to each such sale and assignment. Each U.S. Dollar Revolving Lender agrees to purchase its U.S. Dollar Revolving Credit Pro Rata Share of an outstanding Letter of Credit Advance on (i) the Business Day on which demand therefor is made by the Issuing Bank which made such Advance, provided that notice of such demand is given not later than 11:00 A.M. (New York City time) on such Business Day, or (ii) the first Business Day next succeeding such demand if notice of such demand is given after such time. Upon any such assignment by an Issuing Bank to any U.S. Dollar Revolving Lender of a portion of a Letter of Credit Advance, such Issuing Bank represents and warrants to such other U.S. Dollar Revolving Lender that such Issuing Bank is the legal and beneficial owner of such interest being assigned by it, free and clear of any liens, but makes no other representation or warranty and assumes no responsibility with respect to such Letter of Credit Advance, the Loan Documents or any Loan Party. If and to the extent that any U.S. Dollar Revolving Lender shall not have so made the amount of such Letter of Credit Advance available to the Administrative Agent, such U.S. Dollar Revolving Lender agrees to pay to the Administrative Agent forthwith on demand such amount together with interest thereon, for each day from the date of demand by such Issuing Bank until the date such amount is paid to the Administrative Agent, at the Federal Funds Rate for its account or the account of such Issuing Bank, as applicable. If such Lender shall pay to the Administrative Agent such amount for the account of such Issuing Bank on any Business Day, such amount so paid in respect of principal shall constitute a Letter of Credit Advance made by such U.S. Dollar Revolving Lender on such Business Day for purposes of this Agreement, and the outstanding principal amount of the Letter of Credit Advance made by such Issuing Bank shall be reduced by such amount on such Business Day.”

(n) Section 2.03A of the Credit Agreement is hereby deleted in its entirety.

(o) Section 2.05(b) of the Credit Agreement is hereby amended and restated to read as follows:

“(b) Mandatory. (i) The Letter of Credit Facility shall be permanently reduced from time to time on the date of each reduction in the U.S. Dollar Revolving Credit Facility by the amount, if any, by which the amount of the Letter of Credit Facility exceeds the U.S. Dollar Revolving Credit Facility after giving effect to such reduction of the U.S. Dollar Revolving Credit Facility.

(ii) The Swing Line Facility shall be permanently reduced from time to time on the date of each reduction in the U.S. Dollar Revolving Credit Facility by the amount, if any, by which the amount of the Swing Line Facility exceeds the U.S. Dollar Revolving Credit Facility after giving effect to such reduction of the U.S. Dollar Revolving Credit Facility.”

(p) Section 2.06(b) of the Credit Agreement is hereby amended by restating the first sentence of clause (v) thereof to read as follows:

“(v) Prepayments of the Revolving Credit Facility made pursuant to clauses (i), (ii), (iii) and (iv) above shall be applied first to prepay Letter of Credit Advances then outstanding until such Advances are paid in full, second to prepay Swing Line Advances then outstanding until such Advances are paid in full, third to prepay Revolving Credit

Advances then outstanding (on a pro rata basis in respect of all Lenders) until such Advances are paid in full and fourth deposited in the L/C Cash Collateral Account to cash collateralize 100% of the Available Amount of the Letters of Credit then outstanding to the extent required under the foregoing clauses.”

(q) Section 2.08 of the Credit Agreement is hereby amended by deleting subsection (e) thereto in its entirety.

(r) Section 2.09(b)(iii) of the Credit Agreement is hereby amended and restated to read as follows:

“(iii) Upon the occurrence and during the continuance of any Event of Default, (x) each Base Rate Advance denominated in any Committed Foreign Currency will automatically, on the date of such Event of Default, be exchanged for an Equivalent amount of Dollars, (y) each Eurocurrency Rate Advance will automatically, on the last day of the then existing Interest Period therefor, (1) if such Eurocurrency Rate Advance is denominated in Dollars, be Converted into a Base Rate Advance and (2) if such Eurocurrency Rate Advance is denominated in any Committed Foreign Currency, be exchanged for an Equivalent amount of Dollars and be Converted into a Base Rate Advance and (z) the obligation of the Lenders to make, or to Convert Advances into, Eurocurrency Rate Advances shall be suspended.”

(s) Section 2.13 of the Credit Agreement is hereby amended and restated to read as follows:

“SECTION 2.13. Sharing of Payments, Etc. (a) Sharing Within U.S. Dollar Revolving Credit Facility. If any U.S. Dollar Lender Party shall obtain at any time any payment (whether voluntary, involuntary, through the exercise of any right of set-off, or otherwise, other than as a result of an assignment pursuant to Section 9.07) (a) on account of Obligations due and payable to such U.S. Dollar Lender Party hereunder and under the Notes at such time in excess of its ratable share (according to the proportion of (i) the amount of such Obligations due and payable to such U.S. Dollar Lender Party at such time to (ii) the aggregate amount of the Obligations due and payable to all U.S. Dollar Lender Parties hereunder and under the Notes at such time) of payments on account of the Obligations due and payable to all U.S. Dollar Lender Parties hereunder and under the Notes at such time obtained by all the U.S. Dollar Lender Parties at such time or (b) on account of Obligations owing (but not due and payable) to such U.S. Dollar Lender Party hereunder and under the Notes at such time in excess of its ratable share (according to the proportion of (i) the amount of such Obligations owing to such U.S. Dollar Lender Party at such time to (ii) the aggregate amount of the Obligations owing (but not due and payable) to all U.S. Dollar Lender Parties hereunder and under the Notes at such time) of payments on account of the Obligations owing (but not due and payable) to all U.S. Dollar Lender Parties hereunder and under the Notes at such time obtained by all of the U.S. Dollar Lender Parties at such time, such U.S. Dollar Lender Party shall forthwith purchase from the other U.S. Dollar Lender Parties such interests or participating interests in the Obligations due and payable or owing to them, as the case may be, as shall be necessary to cause such purchasing U.S. Dollar Lender Party to share the excess payment ratably with each of them; provided, however, that if all or any portion of such excess payment is thereafter recovered from such purchasing U.S. Dollar Lender Party, such purchase from each other U.S. Dollar Lender Party shall be rescinded and such other U.S. Dollar Lender Party shall repay to the purchasing U.S. Dollar Lender Party the

purchase price to the extent of such U.S. Dollar Lender Party’s ratable share (according to the proportion of (i) the purchase price paid to such U.S. Dollar Lender Party to (ii) the aggregate purchase price paid to all U.S. Dollar Lender Parties) of such recovery together with an amount equal to such U.S. Dollar Lender Party’s ratable share (according to the proportion of (i) the amount of such other U.S. Dollar Lender Party’s required repayment to (ii) the total amount so recovered from the purchasing U.S. Dollar Lender Party) of any interest or other amount paid or payable by the purchasing U.S. Dollar Lender Party in respect of the total amount so recovered. The Borrower agrees that any U.S. Dollar Lender Party so purchasing an interest or participating interest from another U.S. Dollar Lender Party pursuant to this Section 2.13(a) may, to the fullest extent permitted by law, exercise all its rights of payment (including the right of set-off) with respect to such interest or participating interest, as the case may be, as fully as if such U.S. Dollar Lender Party were the direct creditor of the Borrower in the amount of such interest or participating interest, as the case may be.

(b) Sharing Within Multicurrency Revolving Credit Facility. If any Multicurrency Revolving Lender shall obtain at any time any payment (whether voluntary, involuntary, through the exercise of any right of set-off, or otherwise, other than as a result of an assignment pursuant to Section 9.07) (a) on account of Obligations due and payable to such Multicurrency Revolving Lender hereunder and under the Notes at such time in excess of its ratable share (according to the proportion of (i) the amount of such Obligations due and payable to such Multicurrency Revolving Lender at such time to (ii) the aggregate amount of the Obligations due and payable to all U.S. Dollar Lender Parties hereunder and under the Notes at such time) of payments on account of the Obligations due and payable to all U.S. Dollar Lender Parties hereunder and under the Notes at such time obtained by all the U.S. Dollar Lender Parties at such time or (b) on account of Obligations owing (but not due and payable) to such Multicurrency Revolving Lender hereunder and under the Notes at such time in excess of its ratable share (according to the proportion of (i) the amount of such Obligations owing to such Multicurrency Revolving Lender at such time to (ii) the aggregate amount of the Obligations owing (but not due and payable) to all U.S. Dollar Lender Parties hereunder and under the Notes at such time) of payments on account of the Obligations owing (but not due and payable) to all U.S. Dollar Lender Parties hereunder and under the Notes at such time obtained by all of the U.S. Dollar Lender Parties at such time, such Multicurrency Revolving Lender shall forthwith purchase from the other U.S. Dollar Lender Parties such interests or participating interests in the Obligations due and payable or owing to them, as the case may be, as shall be necessary to cause such purchasing Multicurrency Revolving Lender to share the excess payment ratably with each of them; provided, however, that if all or any portion of such excess payment is thereafter recovered from such purchasing Multicurrency Revolving Lender, such purchase from each other Multicurrency Revolving Lender shall be rescinded and such other Multicurrency Revolving Lender shall repay to the purchasing Multicurrency Revolving Lender the purchase price to the extent of such Multicurrency Revolving Lender’s ratable share (according to the proportion of (i) the purchase price paid to such Multicurrency Revolving Lender to (ii) the aggregate purchase price paid to all U.S. Dollar Lender Parties) of such recovery together with an amount equal to such Multicurrency Revolving Lender’s ratable share (according to the proportion of (i) the amount of such other Multicurrency Revolving Lender’s required repayment to (ii) the total amount so recovered from the purchasing Multicurrency Revolving Lender) of any interest or other amount paid or payable by the purchasing Multicurrency Revolving Lender in respect of the total amount so recovered. The Borrower agrees that any Multicurrency Revolving

Lender so purchasing an interest or participating interest from another Multicurrency Revolving Lender pursuant to this Section 2.13(b) may, to the fullest extent permitted by law, exercise all its rights of payment (including the right of set-off) with respect to such interest or participating interest, as the case may be, as fully as if such Multicurrency Revolving Lender were the direct creditor of the Borrower in the amount of such interest or participating interest, as the case may be.

(c) Pro Rata Sharing Following Event of Default. Notwithstanding the foregoing provisions of this Section 2.13, following the occurrence and during the continuance of any Event of Default and the conversion of all Advances denominated in any Committed Foreign Currency into Dollars pursuant to Section 2.09(b)(iii), if any Lender Party shall obtain at any time any payment (whether voluntary, involuntary, through the exercise of any right of set-off, or otherwise, other than as a result of an assignment pursuant to Section 9.07) (a) on account of Obligations due and payable to such Lender Party hereunder and under the Notes at such time in excess of its ratable share (according to the proportion of (i) the amount of such Obligations due and payable to such Lender Party at such time to (ii) the aggregate amount of the Obligations due and payable to all Lender Parties hereunder and under the Notes at such time) of payments on account of the Obligations due and payable to all Lender Parties hereunder and under the Notes at such time obtained by all the Lender Parties at such time or (b) on account of Obligations owing (but not due and payable) to such Lender Party hereunder and under the Notes at such time in excess of its ratable share (according to the proportion of (i) the amount of such Obligations owing to such Lender Party at such time to (ii) the aggregate amount of the Obligations owing (but not due and payable) to all Lender Parties hereunder and under the Notes at such time) of payments on account of the Obligations owing (but not due and payable) to all Lender Parties hereunder and under the Notes at such time obtained by all of the Lender Parties at such time, such Lender Party shall forthwith purchase from the other Lender Parties such interests or participating interests in the Obligations due and payable or owing to them, as the case may be, as shall be necessary to cause such purchasing Lender Party to share the excess payment ratably with each of them; provided, however, that if all or any portion of such excess payment is thereafter recovered from such purchasing Lender Party, such purchase from each other Lender Party shall be rescinded and such other Lender Party shall repay to the purchasing Lender Party the purchase price to the extent of such Lender Party’s ratable share (according to the proportion of (i) the purchase price paid to such Lender Party to (ii) the aggregate purchase price paid to all Lender Parties) of such recovery together with an amount equal to such Lender Party’s ratable share (according to the proportion of (i) the amount of such other Lender Party’s required repayment to (ii) the total amount so recovered from the purchasing Lender Party) of any interest or other amount paid or payable by the purchasing Lender Party in respect of the total amount so recovered. The Borrower agrees that any Lender Party so purchasing an interest or participating interest from another Lender Party pursuant to this Section 2.13(c) may, to the fullest extent permitted by law, exercise all its rights of payment (including the right of set-off) with respect to such interest or participating interest, as the case may be, as fully as if such Lender Party were the direct creditor of the Borrower in the amount of such interest or participating interest, as the case may be.”

(t) Section 2.18(a) of the Credit Agreement is hereby amended by deleting the words “Revolving Credit Commitments” therein and substituting therefor the words “U.S. Dollar Revolving Credit Commitments”.

(u) Section 2.18(b) of the Credit Agreement is hereby amended and restated to read as follows:

“(b) The Administrative Agent shall promptly notify the Lenders of each request by the Borrower for a Commitment Increase, which notice shall include (i) the proposed amount of such requested Commitment Increase, (ii) the proposed Increase Date and (iii) the date by which Lenders wishing to participate in the Commitment Increase must commit to an increase in the amount of their respective U.S. Dollar Revolving Credit Commitments (the “Commitment Date”). Each Lender that is willing to participate in such requested Commitment Increase (each, an “Increasing Lender”) shall, in its sole discretion, give written notice to the Administrative Agent on or prior to the Commitment Date of the amount by which it is willing to increase its U.S. Dollar Revolving Credit Commitment (an “Increased Commitment Amount”). If the Lenders notify the Administrative Agent that they are willing to increase the amount of their respective U.S. Dollar Revolving Credit Commitments by an aggregate amount that exceeds the amount of the requested Commitment Increase, the requested Commitment Increase shall be allocated to each Lender willing to participate therein in an amount equal to the Commitment Increase multiplied by the ratio of each Lender’s Increased Commitment Amount to the aggregate amount of all Increased Commitment Amounts.”

(v) Section 2.18(d) of the Credit Agreement is hereby amended by (i) deleting the word “Commitment” in the third line thereof and substituting therefor the words “U.S. Dollar Revolving Credit Commitment”, and (ii) deleting the word “Commitment” in clause (ii) thereof and substituting therefor the words “U.S. Dollar Revolving Credit Commitment”.

(w) Section 2.18(e) of the Credit Agreement is hereby amended and restated to read as follows:

“(e) On the Increase Date, to the extent the Advances then outstanding and owed to any U.S. Dollar Revolving Lender immediately prior to the effectiveness of the Commitment Increase shall be less than such Lender’s U.S. Dollar Revolving Credit Pro Rata Share (calculated immediately following the effectiveness of the Commitment Increase) of all Advances then outstanding that are owed to U.S. Dollar Revolving Lenders (each such Lender, including any Assuming Lender, a “Purchasing Lender”), then such Purchasing Lender, without executing an Assignment and Acceptance, shall be deemed to have purchased an assignment of a pro rata portion of the Advances then outstanding and owed to each U.S. Dollar Revolving Lender that is not a Purchasing Lender (a “Selling Lender”) in an amount sufficient such that following the effectiveness of all such assignments the Advances outstanding and owed to each U.S. Dollar Revolving Lender shall equal such Lender’s U.S. Dollar Revolving Credit Pro Rata Share (calculated immediately following the effectiveness of the Commitment Increase on the Increase Date) of all Advances then outstanding and owed to all U.S. Dollar Revolving Lenders. The Administrative Agent shall calculate the net amount to be paid by each Purchasing Lender and received by each Selling Lender in connection with the assignments effected hereunder on the Increase Date. Each Purchasing Lender shall make the amount of its required payment available to the Administrative Agent, in same day funds, at the office of the Administrative Agent not later than 12:00 P.M. (New York time) on the Increase Date. The Administrative Agent shall distribute on the Increase Date the proceeds of such amount to each of the Selling Lenders entitled to receive such payments at its Applicable Lending Office. If in connection with the transactions described in this Section 2.18 any Lender shall incur any losses, costs or expenses of the

type described in Section 9.04(c), then the Borrower shall, upon demand by such Lender (with a copy of such demand to the Administrative Agent), pay to the Administrative Agent for the account of such Lender any amounts required to compensate such Lender for such losses, costs or expenses reasonably incurred.”

(x) Section 2.18 of the Credit Agreement is hereby further amended by deleting subsection (f) thereof in its entirety.

(y) The two provisos in the paragraph immediately following Section 5.01(j)(iii)(A) of the Credit Agreement are hereby amended and restated in their entirety to read as follows:

“provided, however, that, notwithstanding the foregoing:

(i) the failure to comply with one or more of the Unencumbered Asset Conditions or clause (4) above shall not preclude the addition of any Proposed Unencumbered Asset as an Unencumbered Asset so long as the Required Lenders shall have expressly consented to the addition of such Asset as an Unencumbered Asset notwithstanding such failure,

(ii) the survey in respect of the Philadelphia Property delivered to the Administrative Agent prior to the Amendment No. 1 Effective Date shall be deemed to be satisfactory for purposes of determining compliance with the provisions of clause (4) above with respect to the date of such survey,

(iii) (x) for the 45 day period following the Amendment No. 3 Effective Date, the survey in respect of the Maxtor Property delivered to the Administrative Agent prior to the Amendment No. 3 Effective Date shall be deemed to be satisfactory for purposes of determining compliance with the provisions of clause (4) above with respect to the date of such survey, and (y) after the last day of such 45 day period, unless the Required Lenders shall otherwise agree in writing, the Maxtor Property shall be excluded as a Borrowing Base Asset so long as the Borrower shall have failed to deliver to the Administrative Agent a revised survey of the Maxtor Property dated a then current date and otherwise compliant with the requirements of clause (4) above, and

(iv) (x) for the period from and including the Amendment No. 3 Effective Date to and including December 31, 2006, the Telco/Internet Gateway Property shall be deemed to satisfy the minimum occupancy requirement set forth in clause (d) of the definition of “Unencumbered Asset Conditions” so long as such Asset shall at all times be at least 40% occupied, and (y) after December 31, 2006, unless the Required Lenders shall otherwise agree in writing, the Telco/Internet Gateway Property shall be excluded as a Borrowing Base Asset so long as the Borrower shall have failed to deliver to the Administrative Agent a certificate of a Responsible Officer (with supporting information in detail reasonably satisfactory to the Administrative Agent) stating that the Telco/Internet Gateway Property complies with the minimum occupancy requirement set forth in clause (d) of the definition of “Unencumbered Asset Conditions”; and”

(z) Section 5.02(b)(i) of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

“(i) (y) in the case of any Loan Party or any Subsidiary of a Loan Party, Debt owed to any other Loan Party or any wholly-owned Subsidiary of any Loan Party (other than an Excluded Subsidiary), provided that, in each case, such Debt (1) shall be on terms acceptable to the Administrative Agent and (2) shall be evidenced by promissory notes in form and substance satisfactory to the Administrative Agent, which promissory notes shall (unless payable to the Borrower) by their terms be subordinated to the Obligations of the Loan Parties under the Loan Documents, and (z) in the case of any Excluded Subsidiary, Debt owed to any other Excluded Subsidiary;”

(aa) Section 5.02(b)(ii)(H) of the Credit Agreement is hereby amended by deleting therefrom the words “not secured by any Lien”.

(bb) Section 5.02(f)(i) of the Credit Agreement is hereby amended by adding thereto the words “(including, without limitation, Investments comprised of loans or equity contributions to Excluded Subsidiaries or loans or equity contributions by one Excluded Subsidiary to another Excluded Subsidiary)” immediately after the words “additional Investments in Subsidiaries”.

(cc) Section 5.02(f)(iv)(A) of the Credit Agreement is hereby amended by deleting the words “5.0% of Total Asset Value” that appear in the fifth line thereof and substituting therfor the words “10.0% of Total Asset Value”.

(dd) Section 5.02(f)(iv)(B) of the Credit Agreement is hereby amended by adding thereto the words “or its Subsidiaries” immediately after the words “of any Loan Party”.

(ee) Sections 5.03(f) and 5.03(j) of the Credit Agreement are each hereby amended by deleting the words “45 days” set forth therein and substituting therefor the words “90 days”.

(ff) Section 5.03(i) of of the Credit Agreement is hereby amended by deleting the words “30 days” set forth therein and substituting therefor the words “90 days”.

(gg) Section 6.01 of the Credit Agreement is hereby amended by amending and restating the two parentheticals in the last paragraph thereof to read in both instances as follows: “(other than Letter of Credit Advances by an Issuing Bank or a Lender pursuant to Section 2.03(c) and Swing Line Advances by a Lender pursuant to Section 2.02(b))”.

(hh) Section 8.01 of the Credit Agreement is hereby amended by deleting in the first line thereof the words “, the Fronting Bank (if applicable)” immediately after the words “the Swing Line Bank (if applicable)”.

(ii) Section 9.01 of the Credit Agreement is hereby amended by deleting the words “the Fronting Bank” immediately after the words “the Swing Line Bank” each time such words appear in such Section.

(jj) Section 9.02(a) of the Credit Agreement is hereby amended by deleting the phrase “and if to the Administrative Agent, the Swing Line Bank or the Fronting Bank,” therein and substituting therefor the phrase “and if to the Administrative Agent or the Swing Line Bank,”.

(kk) Section 9.07(a) of the Credit Agreement is hereby amended by restating clause (i) of the proviso thereto to read as follows:

“(i) each such assignment shall be of a uniform, and not a varying, percentage of all rights and obligations under and in respect of one or more of the Facilities (and any assignment of a Multicurrency Revolving Credit Commitment (or Multicurrency Revolving Credit Advance) must be made to an Eligible Assignee that is capable of lending in both Dollars and Committed Foreign Currencies),”

(ll) The signature page for CNAI is hereby amended by deleting the words “FRONTING BANK” immediately after the words “SWING LINE BANK” thereon.

(mm) Schedule I to the Credit Agreement is hereby amended and replaced in its entirety with Annex A attached hereto.

(nn) Exhibit B to the Credit Agreement is hereby amended and replaced in its entirety with Annex B attached hereto.

(oo) Exhibit F to the Credit Agreement is hereby amended and replaced in its entirety with Annex C attached hereto.

SECTION 2. New Lender Assumptions; Reallocation of Pro Rata Shares. (a) On the Amendment Effective Date, each New Lender shall be deemed (without executing an Assignment and Acceptance or Assumption Agreement) to have (i) become a party to the Credit Agreement (as amended hereby) and have the rights and obligations of a Lender thereunder, (ii) represented and warranted that it is legally authorized to enter into the Credit Agreement and this Amendment; (iii) confirmed that it has received a copy of the Credit Agreement and this Amendment, together with copies of the financial statements referred to in Section 4.01 thereof and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into the Credit Agreement (as amended hereby); (iv) agreed that it will, independently and without reliance upon the Administrative Agent or any other Lender Party and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Credit Agreement (as amended hereby); (v) represented and warranted that its name set forth on Annex A hereto is its legal name; (vi) confirmed that it is an Eligible Assignee; (vii) appointed and authorized the Administrative Agent to take such action as agent on its behalf and to exercise such powers and discretion under the Loan Documents as are delegated the Administrative Agent by the terms thereof, together with such powers and discretion as are reasonably incidental thereto; (viii) agreed that it will perform in accordance with their terms all of the obligations that by the terms of the Credit Agreement (as amended hereby) are required to be performed by it as a Lender Party; and (ix) agreed that it will promptly deliver any U.S. Internal Revenue Service forms required under Section 2.12 of the Credit Agreement (as amended hereby).

(b) On the Amendment Effective Date, (y) all outstanding Advances denominated in any Committed Foreign Currency, if any, shall be deemed to be Multicurrency Revolving Credit Advances made pursuant to Section 2.01(a)(ii) of the Credit Agreement, as amended hereby, and (z) all other outstanding Advances shall be deemed to be U.S. Dollar Revolving Credit Advances made pursuant to Section 2.01(a)(i) of the Credit Agreement, as amended hereby. On the Amendment Effective Date, to the extent the Advances then outstanding and owed to any Lender immediately prior to the effectiveness of this Amendment shall be less than such Lender’s Pro Rata Share (calculated immediately following the effectiveness of this Amendment) of all Advances then outstanding and owed to all Lenders (each such Lender, including any New

Lender, a “Purchasing Lender”), then such Purchasing Lender, without executing an Assignment and Acceptance, shall be deemed to have purchased an assignment of a pro rata portion of the Advances then outstanding and owed to each Lender that is not a Purchasing Lender (a “Selling Lender”) in an amount sufficient such that following the effectiveness of all such assignments the Advances outstanding and owed to each Lender shall equal such Lender’s Pro Rata Share (calculated immediately following the effectiveness of this Amendment) of all Revolving Credit Advances then outstanding and owed to all Lenders; provided, however, that no Purchasing Lender that is a Lender solely with respect to the U.S. Dollar Revolving Credit Facility shall be deemed pursuant to this Section 2(b) to have purchased any Advances denominated in a Committed Foreign Currency. The assignments deemed made pursuant to this Section 2(b) shall not be subject to the $3,500 processing and recordation fee set forth in Section 9.07(a) of the Credit Agreement.

(c) The Administrative Agent shall calculate the net amount to be paid by each Purchasing Lender and received by each Selling Lender in connection with the assignments effected hereunder on the Amendment Effective Date. Each Purchasing Lender shall make the amount of its required payment available to the Administrative Agent, in same day funds, at the office of the Administrative Agent not later than 12:00 P.M. (New York time) on the Amendment Effective Date. The Administrative Agent shall distribute on the Amendment Effective Date the proceeds of such amount to each of the Selling Lenders entitled to receive such payments at its Applicable Lending Office. If in connection with the transactions described in this Section 2 any Lender shall incur any losses, costs or expenses of the type described in Section 9.04(c) of the Credit Agreement, then the Borrower shall, upon demand by such Lender (with a copy of such demand to the Administrative Agent), pay to the Administrative Agent for the account of such Lender any amounts required to compensate such Lender for such losses, costs or expenses reasonably incurred.

SECTION 3. Representations and Warranties. The Borrower hereby represents and warrants that the representations and warranties contained in each of the Loan Documents (as amended or supplemented to date, including pursuant to this Amendment) are true and correct on and as of the Amendment Effective Date (defined below), before and after giving effect to this Amendment (including, without limitation, the representation and warranty set forth in Section 4.01(g) of the Credit Agreement, as amended by this Amendment), as though made on and as of such date (except for any such representation and warranty that, by its terms, refers to an earlier date, in which case as of such earlier date).

SECTION 4. Conditions of Effectiveness. This Amendment shall become effective as of the first date (the “Amendment Effective Date”) on which, and only if, each of the following conditions precedent shall have been satisfied:

(a) The Administrative Agent shall have received (i) counterparts of this Amendment executed by the Borrower and each Lender or, as to any of the Lenders, advice satisfactory to the Administrative Agent that such Lender has executed this Amendment, (ii) the consent attached hereto (the “Consent”) executed by each of the Guarantors, and (iii) a Note payable to the order of each Lender requesting the same in a principal amount equal to such Lender’s respective Revolving Credit Commitment as of the Amendment Effective Date.

(b) The representations and warranties set forth in each of the Loan Documents shall be correct in all material respects on and as of the Amendment Effective Date, before and after giving effect to this Amendment, as though made on and as of such date (except for any such

representation and warranty that, by its terms, refers to a specific date other than the Amendment Effective Date, in which case as of such specific date).

(c) No event shall have occurred and be continuing, or shall result from the effectiveness of this Amendment, that constitutes a Default.

(d) All of the fees and expenses of the Administrative Agent (including the reasonable fees and expenses of counsel for the Administrative Agent) due and payable on the Amendment Effective Date shall have been paid in full.

(e) Certified copies of (i) the resolutions of the Board of Directors, general partner or managing member, as applicable, of (A) the Borrower approving this Amendment and the matters contemplated hereby and thereby and (B) each Guarantor approving the Consent and the matters contemplated hereby and thereby and (ii) all documents evidencing other necessary corporate action and governmental approvals, if any, with respect to this Amendment, the Consent and the matters contemplated hereby and thereby.

(f) A certificate of the Secretary or an Assistant Secretary of (i) the Borrower certifying the names and true signatures of the officers of the Borrower authorized to sign this Amendment and (ii) each Guarantor certifying the names and true signatures of the officers of such Guarantor authorized to sign the Consent.

The effectiveness of this Amendment is conditioned upon the accuracy of the factual matters described herein. This Amendment is subject to the provisions of Section 9.01 of the Credit Agreement.

SECTION 5. Reference to and Effect on the Credit Agreement, the Notes and the Loan Documents. (a) On and after the effectiveness of this Amendment, each reference in the Credit Agreement to “this Agreement”, “hereunder”, “hereof” or words of like import referring to the Credit Agreement, and each reference in the Notes and each of the other Loan Documents to “the Credit Agreement”, “thereunder”, “thereof” or words of like import referring to the Credit Agreement, shall mean and be a reference to the Credit Agreement, as amended by this Amendment.

(b) The Credit Agreement, the Notes and each of the other Loan Documents, as specifically amended by this Amendment, are and shall continue to be in full force and effect and are hereby in all respects ratified and confirmed.

(c) The execution, delivery and effectiveness of this Amendment shall not, except as expressly provided herein, operate as a waiver of any right, power or remedy of any Lender or the Administrative Agent under any of the Loan Documents, nor constitute a waiver of any provision of any of the Loan Documents.

SECTION 6. Costs and Expenses. The Borrower agrees to pay on demand all costs and expenses of the Administrative Agent in connection with the preparation, execution, delivery and administration, modification and amendment of this Amendment and the other instruments and documents to be delivered hereunder (including, without limitation, the reasonable fees and expenses of counsel for the Administrative Agent) in accordance with the terms of Section 9.04 of the Credit Agreement.

SECTION 7. Execution in Counterparts. This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute but one and the same

agreement. Delivery of an executed counterpart of a signature page to this Amendment by facsimile shall be effective as delivery of a manually executed counterpart of this Amendment.

SECTION 8. Governing Law. This Amendment shall be governed by, and construed in accordance with, the laws of the State of New York.

[Balance of page intentionally left blank.]

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their respective officers thereunto duly authorized, as of the date first above written.

BORROWER:
DIGITAL REALTY TRUST, L.P.
By:	DIGITAL REALTY TRUST, INC.,
	its sole general partner

By	/s/ A. William Stein
	Name:	A. William Stein
	Title:	Chief Financial Officer
		Chief Investment Officer

ADMINISTRATIVE AGENT, SWING LINE BANK, AN EXISTING LENDER AND A LENDER:
CITICORP NORTH AMERICA, INC.
By	/s/ David Bouton
	Name: David Bouton
	Title: Vice President

ISSUING BANK:
CITIBANK, N.A.
By	/s/ David Bouton
	Name: David Bouton
	Title: Vice President

OTHER LENDER PARTIES:
MERRILL LYNCH CAPITAL CORPORATION, as an Existing Lender and a Lender
By	/s/ John C. Rowland
	Name: John C. Rowland
	Title: Vice President

BANK OF AMERICA, N.A., as an Existing Lender and a Lender
By	/s/ Allison M. Gauthier
	Name: Allison M. Gauthier
	Title: Senior Vice President

KEYBANK NATIONAL ASSOCIATION, as an Existing Lender and a Lender
By	/s/ John J. Murphy
	Name: John J. Murphy
	Title: Senior Vice President

ROYAL BANK OF CANADA, as an Existing Lender and a Lender
By	/s/ Gordon MacArthur
	Name: Gordon MacArthur
	Title: Authorized Signatory

CREDIT SUISSE, CAYMAN ISLANDS BRANCH (F/K/A CREDIT SUISSE FIRST BOSTON, ACTING THROUGH ITS CAYMAN ISLANDS BRANCH), as an Existing Lender and a Lender
By	/s/ Bill O’Daly
	Name: Bill O’Daly
	Title: Director
By	/s/ Cassandra Droogan
	Name: Cassandra Droogan
	Title: Vice President

UBS LOAN FINANCE LLC, as an Existing Lender and a Lender
By	/s/ Richard L. Tavrow
	Name: Richard L. Tavrow
	Title: Director
By	/s/ Irja R. Otsa
	Name: Irja R. Otsa
	Title: Associate Director

Emigrant Bank, as a New Lender and a Lender
By	/s/ Patricia Goldstein
	Name: Patricia Goldstein
	Title: SVP & Chief Credit Officer

CONSENT

Dated as of May 3, 2006

Each of the undersigned, as a Guarantor under the Credit Agreement referred to in the foregoing Amendment, hereby consents to such Amendment and hereby confirms and agrees that notwithstanding the effectiveness of such Amendment, the Guaranty contained in the Credit Agreement is and shall continue to be, in full force and effect and is hereby ratified and confirmed in all respects, except that, on and after the effectiveness of such Amendment, each reference in the Loan Documents to “Credit Agreement”, “thereunder”, “thereof” or words of like import shall mean and be a reference to the Credit Agreement, as amended by such Amendment.

[Guarantor signatures begin on next page.]

GUARANTORS:
	DIGITAL REALTY TRUST, INC.
	By	/s/ A. William Stein
		Name:	A. William Stein
		Title:	Chief Financial Officer Chief Investment Officer

DIGITAL SERVICES, INC.
By	/s/ A. William Stein
	Name:	A. William Stein
	Title:	Chief Financial Officer
		Chief Investment Officer

GLOBAL ASML, LLC
By:	DIGITAL REALTY TRUST, L.P., its member and manager
	By:	DIGITAL REALTY TRUST, INC., its sole general partner

By	/s/ A. William Stein
	Name:	A. William Stein
	Title:	Chief Financial Officer Chief Investment Officer

GLOBAL LAFAYETTE STREET HOLDING COMPANY, LLC
By:	DIGITAL REALTY TRUST, L.P., its member and manager
	By:	DIGITAL REALTY TRUST, INC., its sole general partner

By	/s/ A. William Stein
	Name:	A. William Stein
	Title:	Chief Financial Officer Chief Investment Officer

GLOBAL LAFAYETTE STREET, LLC
By:	GLOBAL LAFAYETTE STREET HOLDING COMPANY, LLC, its member and manager
	By:	DIGITAL REALTY TRUST, L.P., its member and manager

By:	DIGITAL REALTY TRUST, INC., its sole general partner
	By	/s/ A. William Stein
		Name:	A. William Stein
		Title:	Chief Financial Officer
			Chief Investment Officer

GIP FAIRMONT HOLDING COMPANY, LLC
By:	DIGITAL REALTY TRUST, L.P., its member and manager
	By:	DIGITAL REALTY TRUST, INC., its sole general partner
		By	/s/ A. William Stein
			Name:	A. William Stein
			Title:	Chief Financial Officer
				Chief Investment Officer

GIP FAIRMONT, LLC
By:	GIP FAIRMONT HOLDING COMPANY, LLC, its member and manager
	By:	DIGITAL REALTY TRUST, L.P., its member and manager
		By:	DIGITAL REALTY TRUST, INC., its sole general partner
			By	/s/ A. William Stein
				Name:	A. William Stein
				Title:	Chief Financial Officer
					Chief Investment Officer

GLOBAL INNOVATION SUNSHINE HOLDINGS LLC
By:	DIGITAL REALTY TRUST, L.P., its member and manager
	By:	DIGITAL REALTY TRUST, INC., its sole general partner
		By	/s/ A. William Stein
			Name:	A. William Stein
			Title:	Chief Financial Officer
				Chief Investment Officer

GLOBAL GOLD CAMP, LLC
By:	GLOBAL GOLD CAMP HOLDING COMPANY, LLC, its member and manager
	By:	DIGITAL REALTY TRUST, L.P., its member and manager
		By:	DIGITAL REALTY TRUST, INC., its sole general partner
			By	/s/ A. William Stein
				Name:	A. William Stein
				Title:	Chief Financial Officer
					Chief Investment Officer

GLOBAL GOLD CAMP HOLDING COMPANY, LLC
By:	DIGITAL REALTY TRUST, L.P., its member and manager
	By:	DIGITAL REALTY TRUST, INC., its sole general partner
		By	/s/ A. William Stein
			Name:	A. William Stein
			Title:	Chief Financial Officer
				Chief Investment Officer

DIGITAL 833 CHESTNUT, LLC
By:	DIGITAL REALTY TRUST, L.P., its member and manager
	By:	DIGITAL REALTY TRUST, INC., its sole general partner
		By	/s/ A. William Stein
			Name:	A. William Stein
			Title:	Chief Financial Officer
				Chief Investment Officer
DIGITAL CONCORD CENTER, LLC
By:	DIGITAL REALTY TRUST, L.P., its member and manager
	By:	DIGITAL REALTY TRUST, INC., its sole general partner
		By	/s/ A. William Stein
			Name:	A. William Stein
			Title:	Chief Financial Officer
				Chief Investment Officer
DIGITAL PRINTER SQUARE, LLC
By:	DIGITAL REALTY TRUST, L.P., its member and manager
	By:	DIGITAL REALTY TRUST, INC., its sole general partner
		By	/s/ A. William Stein
			Name:	A. William Stein
			Title:	Chief Financial Officer
				Chief Investment Officer

GLOBAL KATO HG, LLC
By:	DIGITAL REALTY TRUST, L.P., its member and manager
	By:	DIGITAL REALTY TRUST, INC., its sole general partner
		By	/s/ A. William Stein
			Name:	A. William Stein
			Title:	Chief Financial Officer
				Chief Investment Officer

DIGITAL GREENSPOINT, L.P.
By:	DRT GREENSPOINT, LLC, its general partner and manager
	By:	DIGITAL REALTY TRUST, L.P., its member and manager
		By:	DIGITAL REALTY TRUST, INC., its sole general partner

By	/s/ A. William Stein
	Name:	A. William Stein
	Title:	Chief Financial Officer
		Chief Investment Officer

DRT GREENSPOINT, LLC
By:	DIGITAL REALTY TRUST, L.P., its member and manager
	By:	DIGITAL REALTY TRUST, INC., its sole general partner
		By	/s/ A. William Stein
			Name:	A. William Stein
			Title:	Chief Financial Officer
				Chief Investment Officer

DIGITAL GREENSPOINT, LLC
By:	DIGITAL REALTY TRUST, L.P., its member and manager
	By:	DIGITAL REALTY TRUST, INC., its sole general partner
		By	/s/ A. William Stein
			Name:	A. William Stein
			Title:	Chief Financial Officer
				Chief Investment Officer

EX-12.1

Exhibit 12.1

Digital Realty Trust, Inc.

Statement of Computation of Ratios

	Three Months Ended March 31,
	2006		2005
Income before minority interests	$	6,918	$	4,895
Interest		11,388		8,121
Interest within rental expense		60		20
Minority interests in consolidated joint ventures		15		3
Earnings available to cover fixed charges	$	18,381	$	13,039
Fixed charges:
Interest	$	11,388	$	8,121
Interest within rental expense		60		20
Capitalized interest		762		—
		12,210		8,141
Preferred stock dividends		3,445		1,271
Fixed charges and preferred stock dividends	$	15,655	$	9,412
Ratio of earnings to fixed charges		1.51		1.60
Ratio of earnings to fixed charges and preferred stock dividends		1.17		1.39

EX-31.1

Exhibit 31.1

Certification Of Principal Executive Officer

Pursuant To Section 302 Of The Sarbanes–Oxley Act Of 2002

I, Michael F. Foust, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Digital Realty Trust, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: May 8, 2006

By:	/s/    MICHAEL F. FOUST
	Michael F. Foust
	Chief Executive Officer
	(Principal Executive Officer)

EX-31.2

Exhibit 31.2

Certification Of Principal Financial Officer

Pursuant To Section 302 Of The Sarbanes–Oxley Act Of 2002

I, A. William Stein, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Digital Realty Trust, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: May 8, 2006

By:	/s/    A. WILLIAM STEIN
	A. William Stein
	Chief Financial Officer and Chief Investment Officer
	(Principal Financial Officer)

EX-32.1

Exhibit 32.1

Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as

Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Pursuant to 18 U.S.C. § 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of Digital Realty Trust, Inc. (the “Company”) hereby certifies, to such officer’s knowledge, that:

(i) the accompanying Quarterly Report on Form 10-Q of the Company for the quarterly period ended March 31, 2006 (the “Report”) fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and

(ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: May 8, 2006

/s/    MICHAEL F. FOUST

Michael F. Foust

Chief Executive Officer

Pursuant to Securities and Exchange Commission Release 33-8238, dated June 5, 2003, this certification is being furnished and shall not be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or incorporated by reference in any registration statement of the Company filed under the Securities Act of 1933, as amended.

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as

Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Pursuant to 18 U.S.C. § 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of Digital Realty Trust, Inc. (the “Company”) hereby certifies, to such officer’s knowledge, that:

(i) the accompanying Quarterly Report on Form 10-Q of the Company for the quarterly period ended March 31, 2006 (the “Report”) fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and

(ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: May 8, 2006

/s/    A. WILLIAM STEIN

A. William Stein

Chief Financial Officer

Pursuant to Securities and Exchange Commission Release 33-8238, dated June 5, 2003, this certification is being furnished and shall not be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or incorporated by reference in any registration statement of the Company filed under the Securities Act of 1933, as amended.

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.