Capital and Comprehensive Income (Digital Realty Trust, L.P. [Member])

6 Months Ended

Jun. 30, 2011

Digital Realty Trust, L.P. [Member]

Capital and Comprehensive Income

11. Capital and Comprehensive Income

(a) Allocations of Net Income and Net Losses to Partners

Except for special allocations to holders of profits interest units described below in note 12(a) under the heading "Incentive Plans-Long-Term Incentive Units," the Operating Partnership's net income will generally be allocated to Digital Realty Trust, Inc. (the General Partner) to the extent of the accrued preferred return on its preferred units, and then to the General Partner and the Operating Partnership's limited partners in accordance with the respective percentage interests in the common units issued by the Operating Partnership. Net loss will generally be allocated to the General Partner and the Operating Partnership's limited partners in accordance with the respective common percentage interests in the Operating Partnership until the limited partner's capital is reduced to zero and any remaining net loss would be allocated to the General Partner. However, in some cases, losses may be disproportionately allocated to partners who have guaranteed our debt. The allocations described above are subject to special allocations relating to depreciation deductions and to compliance with the provisions of Sections 704(b) and 704(c) of the Code, and the associated Treasury Regulations.

(b) Partnership Units

Limited partners have the right to require the Operating Partnership to redeem part or all of their common units for cash based on the fair market value of an equivalent number of shares of the General Partner's common stock at the time of redemption. Alternatively, the General Partner may elect to acquire those common units in exchange for shares of the General Partner's 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 authoritative accounting guidance, the Operating Partnership evaluated whether it controls the actions or events necessary to issue the maximum number of shares that could be required to be delivered under the share settlement of the limited partners' common units and the vested incentive units. Based on the results of this analysis, the Operating Partnership concluded that the common and vested incentive Operating Partnership units met the criteria to be classified within capital.

The redemption value of the limited partners' common units and the vested incentive units was approximately $272.0 million and $244.5 million based on the closing market price of Digital Realty Trust, Inc.'s common stock on June 30, 2011 and December 31, 2010, respectively.

(c) Distributions

All distributions on our units are at the discretion of Digital Realty Trust, Inc.'s board of directors. As of June 30, 2011, the Operating Partnership declared the following distributions (in thousands):

Date distribution declared	Distribution payable date		Series C Preferred Units (1)		Series D Preferred Units (2)		Common Units  (3)
February 10, 2011		March 31, 2011	$	1,832	$	4,690	$	66,252
April 25, 2011		June 30, 2011	$	1,441	$	3,272	$	70,577
			$	3,273	$	7,962	$	136,829

(1) $1.094 annual rate of distribution per unit.

(2) $1.375 annual rate of distribution per unit.

(3) $2.720 annual rate of distribution per unit.

(d) Accumulated Other Comprehensive Loss

The accumulated balances for each classification of other comprehensive loss as of June 30, 2011 are as follows (in thousands):

	Foreign currency translation adjustments			Cash flow hedge adjustments			Accumulated other comprehensive loss
Balance as of December 31, 2010	$	(36,051	)	$	(9,809	)	$	(45,860	)
Net current period change		25,037			(947	)		24,090
Reclassification to interest expense from interest rate swaps		—			3,174			3,174
Balance as of June 30, 2011	$	(11,014	)	$	(7,582	)	$	(18,596	)

(e) Noncontrolling Interests in Consolidated Joint Ventures

On June 24, 2011, we acquired all of the noncontrolling ownership interest in the entity that owns Datacenter Park Dallas from our joint venture partner for approximately $53.2 million (subject to adjustment in limited circumstances). The acquisition was financed with borrowings under our revolving credit facility. The amount paid in excess of the carrying value of the noncontrolling ownership interest resulted in a decrease to general partner common capital as presented in the accompanying condensed consolidated statement of capital.