11. Capital and Accumulated Other Comprehensive Loss

(a) Convertible Preferred Units

5.500% Series D Cumulative Convertible Preferred Units

On February 6, 2008, the Operating Partnership issued 13,800,000 of its 5.500% series D cumulative convertible preferred units, or the series D preferred units, to the General Partner in conjunction with the General Partner’s issuance of an equivalent number of shares of its 5.500% series D cumulative convertible preferred stock, or the series D preferred stock. Distributions were cumulative on the series D preferred units from the date of original issuance in the amount of $1.375 per unit each year, which was equivalent to 5.500% of the $25.00 liquidation preference per unit. Distributions on the series D preferred units were payable quarterly in arrears. The series D preferred units did not have a stated maturity date and were not subject to any sinking fund. The Operating Partnership was required to redeem the series D units in the event that the General Partner redeems the series D preferred stock. The General Partner was not allowed to redeem the series D preferred stock except in limited circumstances to preserve the General Partner’s status as a REIT. Upon liquidation, dissolution or winding up, the series D preferred units ranked senior to the common units with respect to the payment of distributions and other amounts and ranked on parity with the Operating Partnership’s series E preferred units and series F preferred units.

Effective February 26, 2013, the General Partner converted all outstanding shares of its series D preferred stock, into shares of its common stock in accordance with the terms of the series D preferred stock. Each share of series D preferred stock was converted into 0.6360 shares of the General Partner’s common stock. In connection with this conversion, the Operating Partnership issued 3,054,186 common units to the General Partner upon conversion of 4,802,180 series D cumulative convertible preferred units.

(b) 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 Plan-Long-Term Incentive Units,” the Operating Partnership’s net income will generally be allocated to 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.

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 $170.6 million and $161.5 million based on the closing market price of Digital Realty Trust, Inc.’s common stock on March 31, 2013 and December 31, 2012, respectively.

(d) Distributions

All distributions on the Operating Partnership’s units are at the discretion of Digital Realty Trust, Inc.’s board of directors. The Operating Partnership has declared and paid the following distributions on its common and preferred units for the three months ended March 31, 2013 (in thousands):


Date distribution declared	Distribution payable date	Series E Preferred Units (1)	Series F Preferred Units (2)	Common Units (3)

February 12, 2013	March 29, 2013	$ 5,031	$ 3,023	$ 102,506


(1)	$1.750 annual rate of distribution per unit.

(2)	$1.656 annual rate of distribution per unit.

(3)	$3.120 annual rate of distribution per unit.

(e) Accumulated Other Comprehensive Loss

The accumulated balances for each item within other comprehensive loss are as follows (in thousands):


	Foreign currency translation adjustments	Cash flow hedge adjustments	Accumulated other comprehensive loss

Balance as of December 31, 2012	$ (4,401)	$ (10,509)	$ (14,910)

Net current period change	(63,063)	(124)	(63,187)
Reclassification to interest expense from interest rate swaps	-	1,741	1,741

Balance as of March 31, 2013	$ (67,464)	$ (8,892)	$ (76,356)