Investments In Real Estate

9 Months Ended

Sep. 30, 2012

3. Investments in Real Estate

We acquired the following real estate properties during the nine months ended September 30, 2012:



Location	Metropolitan Area	Date Acquired	Amount (in millions)
Convergence Business Park (1)	Dallas, Texas	February 22, 2012	$ 123.0
9333, 9355, 9377 Grand Avenue (2)	Chicago, Illinois	May 10, 2012	22.3
8025 North Interstate 35 (3)	Austin, Texas	May 18, 2012	12.5
400 S. Akard Street	Dallas, Texas	June 13, 2012	75.0
Sentrum Portfolio (4)	London, England	July 11, 2012	1,138.6
11900 East Cornell Avenue	Denver, Colorado	September 14, 2012	90.8
			$ 1,462.2

(1)	Convergence Business Park is comprised of nine buildings along with undeveloped land. It is considered one property for our property count.

(2)	9333, 9355, 9377 Grand Avenue is comprised of three buildings. It is considered one property for our property count.

(3)	In connection with the acquisition, we assumed a $6.7 million secured mortgage loan.

(4) On July 11, 2012, we completed the acquisition of a three-property data center portfolio, totaling approximately 733,000 square feet, located in the greater London area, referred to as the Sentrum Portfolio. The purchase price was £734.6 million (equivalent to approximately $1.1 billion based on the July 11, 2012 exchange rate of £1.00 to $1.55), which includes an £18.7 million (equivalent to approximately $29.0 million based on the July 11, 2012 exchange rate of £1.00 to $1.55) adjustment in the purchase price to reflect amounts associated with the early repayment of property debt. In addition, non-cash consideration of £56.5 million (or $87.6 million based on the July 11, 2012 exchange rate of £1.00 to $1.55) was recorded as the expected fair value of contingent consideration as required by prevailing accounting guidance. There was also a non-cash purchase adjustment related to deferred taxes, which amounted to £68.6 million (or $106.3 million based on the July 11, 2012 exchange rate of £1.00 to $1.55). The purchase price was paid in cash funded with proceeds from our common stock offering in July 2012 along with borrowings under our global revolving credit facility.

The Sentrum Portfolio’s aggregate acquisition consideration was allocated as follows, subject to adjustment: $18.1 million to land, $7.0 million to acquired ground lease, $1.2 billion to buildings and improvements, $11.6 million to tenant improvements, $151.6 million to identified intangible assets ($107.2 million associated with in place leases and $44.4 million associated with above market leases) and $38.2 million to identified intangible liabilities associated with below market leases.

Operating revenues of $28.4 million and operating income of $6.8 million from the Sentrum Portfolio are included in the condensed consolidated income statement for the three and nine months ended September 30, 2012.

The following summarizes the expected weighted average remaining lives of acquired intangible assets and liabilities for the Sentrum Portfolio as of September 30, 2012:


	Sentrum Portfolio
Acquired in place lease value		11.5 years
Acquired above market leases		7.3 years
Acquired below market leases		11.0 years

The pro forma operating revenues and operating income of the Company, including the Sentrum Portfolio had the acquisition taken place on January 1, 2011 for the following periods are as follows:


	Three months ended				Nine months ended
	Operating Revenues		Operating Income		Operating Revenues		Operating Income
	(in millions)				(in millions)
Supplemental pro forma for the periods ended September 30, 2012 ⁽¹⁾	$	345.9	$	98.4	$	995.9	$	297.8
Supplemental pro forma for the periods ended September 30, 2011 ⁽¹⁾		305.4		84.1		887.1		260.5


⁽¹⁾	These unaudited pro forma results do not purport to be indicative of what operating results would have been had the acquisition occurred on January 1, 2011, and may not be indicative of future operating results. The pro forma results exclude transaction expenses.

In March 2012, we entered into a joint venture with Savvis, Inc., a CenturyLink company. On June 26, 2012, this unconsolidated joint venture acquired a 164,000 square foot property in Hong Kong. The property is located at Tseung Kwan O Industrial Estate in New Territories, approximately 12 miles from downtown Hong Kong. As of September 30, 2012, we have contributed approximately $20.6 million to the joint venture.

Digital Realty Trust, L.P. [Member]

Investments In Real Estate

3. Investments in Real Estate

We acquired the following real estate properties during the nine months ended September 30, 2012:



Location	Metropolitan Area	Date Acquired	Amount (in millions)
Convergence Business Park (1)	Dallas, Texas	February 22, 2012	$ 123.0
9333, 9355, 9377 Grand Avenue (2)	Chicago, Illinois	May 10, 2012	22.3
8025 North Interstate 35 (3)	Austin, Texas	May 18, 2012	12.5
400 S. Akard Street	Dallas, Texas	June 13, 2012	75.0
Sentrum Portfolio (4)	London, England	July 11, 2012	1,138.6
11900 East Cornell Avenue	Denver, Colorado	September 14, 2012	90.8
			$ 1,462.2

(1)	Convergence Business Park is comprised of nine buildings along with undeveloped land. It is considered one property for our property count.

(2)	9333, 9355, 9377 Grand Avenue is comprised of three buildings. It is considered one property for our property count.

(3)	In connection with the acquisition, we assumed a $6.7 million secured mortgage loan.

The following summarizes the expected weighted average remaining lives of acquired intangible assets and liabilities for the Sentrum Portfolio as of September 30, 2012:


	Sentrum Portfolio
Acquired in place lease value		11.5 years
Acquired above market leases		7.3 years
Acquired below market leases		11.0 years

The pro forma operating revenues and operating income of the Company, including the Sentrum Portfolio had the acquisition taken place on January 1, 2011 for the following periods are as follows:


	Three months ended				Nine months ended
	Operating Revenues		Operating Income		Operating Revenues		Operating Income
	(in millions)				(in millions)
Supplemental pro forma for the periods ended September 30, 2012 ⁽¹⁾	$	345.9	$	98.4	$	995.9	$	297.8
Supplemental pro forma for the periods ended September 30, 2011 ⁽¹⁾		305.4		84.1		887.1		260.5


⁽¹⁾	These unaudited pro forma results do not purport to be indicative of what operating results would have been had the acquisition occurred on January 1, 2011, and may not be indicative of future operating results. The pro forma results exclude transaction expenses.

- Definition

The entire disclosure for real estate and accumulated depreciation. This may include a schedule that describes the property and lists the initial cost of land, buildings and improvements, improvements and carrying costs capitalized after acquisition, and the total carrying cost for land, buildings and improvements for each property and in aggregate. The schedule also lists the accumulated depreciation for each property and in aggregate, the date each property was constructed and acquired, the useful life used to calculate depreciation and any encumbrances on the properties. The entity provides a reconciliation of the carrying amount of real estate from the beginning of the period to the end of the period. Any real estate investments that have been written down or reserved against are described, including the basis of the write-down. A material amount of intercompany profit in the total carrying amount of real estate is disclosed. The aggregate cost of all real estate investments for federal income tax purposes is also disclosed.

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