x | Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
¨ | Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
Maryland (Digital Realty Trust, Inc.) Maryland (Digital Realty Trust, L.P.) | 26-0081711 20-2402955 | |
(State or other jurisdiction of incorporation or organization) | (IRS employer identification number) | |
Four Embarcadero Center, Suite 3200 San Francisco, CA | 94111 | |
(Address of principal executive offices) | (Zip Code) |
Digital Realty Trust, Inc. | Yes x No ¨ | |
Digital Realty Trust, L.P. | Yes x No ¨ |
Digital Realty Trust, Inc. | Yes x No ¨ | |
Digital Realty Trust, L.P. | Yes x No ¨ |
Large accelerated filer | x | Accelerated filer | ¨ | |
Non-accelerated filer | ¨ (Do not check if a smaller reporting company) | Smaller reporting company | ¨ | |
Emerging growth company | ¨ |
Large accelerated filer | ¨ | Accelerated filer | ¨ | |
Non-accelerated filer | x (Do not check if a smaller reporting company) | Smaller reporting company | ¨ | |
Emerging growth company | ¨ |
Digital Realty Trust, Inc. | ¨ | |
Digital Realty Trust, L.P. | ¨ |
Digital Realty Trust, Inc. | Yes ¨ No x | |
Digital Realty Trust, L.P. | Yes ¨ No x |
Class | Outstanding at August 3, 2018 | |
Common Stock, $.01 par value per share | 206,097,243 |
• | enhancing investors’ understanding of our Company and our Operating Partnership by enabling investors to view the business as a whole in the same manner as management views and operates the business; |
• | eliminating duplicative disclosure and providing a more streamlined and readable presentation since a substantial portion of the disclosure applies to both our Company and our Operating Partnership; and |
• | creating time and cost efficiencies through the preparation of one combined report instead of two separate reports. |
• | Condensed consolidated financial statements; |
• | the following notes to the condensed consolidated financial statements: |
• | "Debt of the Company" and "Debt of the Operating Partnership"; |
• | "Income per Share" and "Income per Unit"; and |
• | "Equity and Accumulated Other Comprehensive Loss, Net" and "Capital and Accumulated Other Comprehensive Loss"; |
• | Part I, Item 2. "Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources of the Parent Company" and "—Liquidity and Capital Resources of the Operating Partnership"; and |
• | Part II, Item 2. "Unregistered Sales of Equity Securities and Use of Proceeds". |
Page Number | ||
PART I. | FINANCIAL INFORMATION | |
ITEM 1. | Condensed Consolidated Financial Statements of Digital Realty Trust, Inc.: | |
Condensed Consolidated Financial Statements of Digital Realty Trust, L.P.: | ||
ITEM 2. | ||
ITEM 3. | ||
ITEM 4. | ||
PART II. | ||
ITEM 1. | ||
ITEM 1A. | ||
ITEM 2. | ||
ITEM 3. | ||
ITEM 4. | ||
ITEM 5. | ||
ITEM 6. | ||
June 30, 2018 | December 31, 2017 | ||||||
(unaudited) | |||||||
ASSETS | |||||||
Investments in real estate: | |||||||
Properties: | |||||||
Land | $ | 1,202,174 | $ | 1,136,341 | |||
Acquired ground leases | 10,879 | 11,150 | |||||
Buildings and improvements | 15,781,203 | 15,215,405 | |||||
Tenant improvements | 561,048 | 553,040 | |||||
Total investments in properties | 17,555,304 | 16,915,936 | |||||
Accumulated depreciation and amortization | (3,588,124 | ) | (3,238,227 | ) | |||
Net investments in properties | 13,967,180 | 13,677,709 | |||||
Investments in unconsolidated joint ventures | 167,306 | 163,477 | |||||
Net investments in real estate | 14,134,486 | 13,841,186 | |||||
Cash and cash equivalents | 17,589 | 51 | |||||
Accounts and other receivables, net of allowance for doubtful accounts of $8,825 and $6,737 as of June 30, 2018 and December 31, 2017, respectively | 282,287 | 276,347 | |||||
Deferred rent | 445,766 | 430,026 | |||||
Acquired above-market leases, net | 150,084 | 184,375 | |||||
Goodwill | 3,378,325 | 3,389,595 | |||||
Acquired in-place lease value, deferred leasing costs and intangibles, net | 2,823,275 | 2,998,806 | |||||
Restricted cash | 9,443 | 13,130 | |||||
Assets held for sale | — | 139,538 | |||||
Other assets | 170,168 | 131,291 | |||||
Total assets | $ | 21,411,423 | $ | 21,404,345 | |||
LIABILITIES AND EQUITY | |||||||
Global revolving credit facility, net | $ | 466,971 | $ | 550,946 | |||
Unsecured term loan, net | 1,376,784 | 1,420,333 | |||||
Unsecured senior notes, net | 7,156,084 | 6,570,757 | |||||
Mortgage loans, including premiums, net | 106,245 | 106,582 | |||||
Accounts payable and other accrued liabilities | 1,031,794 | 980,218 | |||||
Accrued dividends and distributions | — | 199,761 | |||||
Acquired below-market leases, net | 216,520 | 249,465 | |||||
Security deposits and prepaid rents | 207,292 | 217,898 | |||||
Obligations associated with assets held for sale | — | 5,033 | |||||
Total liabilities | 10,561,690 | 10,300,993 | |||||
Redeemable noncontrolling interests – operating partnership | 52,805 | 53,902 | |||||
Commitments and contingencies | |||||||
Equity: | |||||||
Stockholders’ Equity: | |||||||
Preferred Stock: $0.01 par value per share, 110,000,000 shares authorized; 50,650,000 and 50,650,000 shares issued and outstanding as of June 30, 2018 and December 31, 2017, respectively | 1,249,560 | 1,249,560 | |||||
Common Stock: $0.01 par value per share, 315,000,000 shares authorized, 206,055,117 and 205,470,300 shares issued and outstanding as of June 30, 2018 and December 31, 2017, respectively | 2,047 | 2,044 | |||||
Additional paid-in capital | 11,310,132 | 11,261,461 | |||||
Accumulated dividends in excess of earnings | (2,314,291 | ) | (2,055,552 | ) | |||
Accumulated other comprehensive loss, net | (107,070 | ) | (108,432 | ) | |||
Total stockholders’ equity | 10,140,378 | 10,349,081 | |||||
Noncontrolling Interests: | |||||||
Noncontrolling interests in operating partnership | 654,261 | 698,126 | |||||
Noncontrolling interests in consolidated joint ventures | 2,289 | 2,243 | |||||
Total noncontrolling interests | 656,550 | 700,369 | |||||
Total equity | 10,796,928 | 11,049,450 | |||||
Total liabilities and equity | $ | 21,411,423 | $ | 21,404,345 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Operating Revenues: | |||||||||||||||
Rental and other services | $ | 596,326 | $ | 470,877 | $ | 1,188,624 | $ | 932,228 | |||||||
Tenant reimbursements | 155,723 | 93,342 | 305,802 | 180,630 | |||||||||||
Fee income | 2,343 | 1,429 | 3,476 | 3,324 | |||||||||||
Other | 527 | 341 | 1,385 | 376 | |||||||||||
Total operating revenues | 754,919 | 565,989 | 1,499,287 | 1,116,558 | |||||||||||
Operating Expenses: | |||||||||||||||
Rental property operating and maintenance | 230,322 | 174,716 | 455,962 | 344,055 | |||||||||||
Property taxes | 27,284 | 28,161 | 62,547 | 55,080 | |||||||||||
Insurance | 2,606 | 2,576 | 6,337 | 5,168 | |||||||||||
Depreciation and amortization | 298,788 | 178,111 | 593,577 | 354,577 | |||||||||||
General and administrative | 46,099 | 37,509 | 82,622 | 72,156 | |||||||||||
Transactions and integration | 5,606 | 14,235 | 9,784 | 17,558 | |||||||||||
Other | 152 | 24 | 583 | 24 | |||||||||||
Total operating expenses | 610,857 | 435,332 | 1,211,412 | 848,618 | |||||||||||
Operating income | 144,062 | 130,657 | 287,875 | 267,940 | |||||||||||
Other Income (Expenses): | |||||||||||||||
Equity in earnings of unconsolidated joint ventures | 7,438 | 8,388 | 14,848 | 13,712 | |||||||||||
Gain (loss) on sale of properties | 14,192 | 380 | 53,465 | (142 | ) | ||||||||||
Interest and other income | 3,398 | 367 | 3,356 | 518 | |||||||||||
Interest expense | (78,810 | ) | (57,582 | ) | (155,795 | ) | (113,032 | ) | |||||||
Tax expense | (2,121 | ) | (2,639 | ) | (5,495 | ) | (4,862 | ) | |||||||
Net income | 88,159 | 79,571 | 198,254 | 164,134 | |||||||||||
Net income attributable to noncontrolling interests | (2,696 | ) | (920 | ) | (6,164 | ) | (1,945 | ) | |||||||
Net income attributable to Digital Realty Trust, Inc. | 85,463 | 78,651 | 192,090 | 162,189 | |||||||||||
Preferred stock dividends | (20,329 | ) | (14,505 | ) | (40,658 | ) | (31,898 | ) | |||||||
Issuance costs associated with redeemed preferred stock | — | (6,309 | ) | — | (6,309 | ) | |||||||||
Net income available to common stockholders | $ | 65,134 | $ | 57,837 | $ | 151,432 | $ | 123,982 | |||||||
Net income per share available to common stockholders: | |||||||||||||||
Basic | $ | 0.32 | $ | 0.36 | $ | 0.74 | $ | 0.77 | |||||||
Diluted | $ | 0.32 | $ | 0.36 | $ | 0.73 | $ | 0.77 | |||||||
Weighted average common shares outstanding: | |||||||||||||||
Basic | 205,956,005 | 160,832,889 | 205,835,757 | 160,069,201 | |||||||||||
Diluted | 206,563,079 | 161,781,867 | 206,460,170 | 161,059,527 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Net income | $ | 88,159 | $ | 79,571 | $ | 198,254 | $ | 164,134 | |||||||
Other comprehensive income (loss): | |||||||||||||||
Foreign currency translation adjustments | (7,233 | ) | 13,677 | (10,976 | ) | 30,255 | |||||||||
Increase (decrease) in fair value of interest rate swaps and foreign currency hedges | 4,795 | (2,328 | ) | 13,411 | (6,692 | ) | |||||||||
Reclassification to interest expense from interest rate swaps | (783 | ) | 647 | (1,018 | ) | 1,677 | |||||||||
Comprehensive income | 84,938 | 91,567 | 199,671 | 189,374 | |||||||||||
Comprehensive income attributable to noncontrolling interests | (2,571 | ) | (1,085 | ) | (6,219 | ) | (2,289 | ) | |||||||
Comprehensive income attributable to Digital Realty Trust, Inc. | $ | 82,367 | $ | 90,482 | $ | 193,452 | $ | 187,085 |
Redeemable Noncontrolling Interests -- Operating Partnership | Preferred Stock | Number of Common Shares | Common Stock | Additional Paid-in Capital | Accumulated Dividends in Excess of Earnings | Accumulated Other Comprehensive Loss, Net | Total Stockholders’ Equity | Noncontrolling Interests in Operating Partnership | Noncontrolling Interests in Consolidated Joint Ventures | Total Noncontrolling Interests | Total Equity | ||||||||||||||||||||||||||||||||||||
Balance as of December 31, 2017 | $ | 53,902 | $ | 1,249,560 | 205,470,300 | $ | 2,044 | $ | 11,261,461 | $ | (2,055,552 | ) | $ | (108,432 | ) | $ | 10,349,081 | $ | 698,126 | $ | 2,243 | $ | 700,369 | $ | 11,049,450 | ||||||||||||||||||||||
Conversion of common units to common stock | — | — | 406,639 | 4 | 35,823 | — | — | 35,827 | (35,827 | ) | — | (35,827 | ) | — | |||||||||||||||||||||||||||||||||
Issuance of unvested restricted stock, net of forfeitures | — | — | 193,118 | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
Issuance of common stock, net of offering costs | — | — | — | — | (652 | ) | — | — | (652 | ) | — | — | — | (652 | ) | ||||||||||||||||||||||||||||||||
Shares issued under employee stock purchase plan | — | — | 31,893 | — | 2,509 | — | — | 2,509 | — | — | — | 2,509 | |||||||||||||||||||||||||||||||||||
Shares repurchased and retired to satisfy tax withholding upon vesting | — | — | (46,833 | ) | (1 | ) | (4,717 | ) | — | — | (4,718 | ) | — | — | — | (4,718 | ) | ||||||||||||||||||||||||||||||
Amortization of share-based compensation | — | — | — | — | 17,458 | — | — | 17,458 | — | — | — | 17,458 | |||||||||||||||||||||||||||||||||||
Reclassification of vested share-based awards | — | — | — | — | (2,847 | ) | — | — | (2,847 | ) | 2,847 | — | 2,847 | — | |||||||||||||||||||||||||||||||||
Adjustment to redeemable noncontrolling interests—operating partnership | (1,097 | ) | — | — | — | 1,097 | — | — | 1,097 | — | — | — | 1,097 | ||||||||||||||||||||||||||||||||||
Dividends declared on preferred stock | — | — | — | — | — | (40,658 | ) | — | (40,658 | ) | — | — | — | (40,658 | ) | ||||||||||||||||||||||||||||||||
Dividends and distributions on common stock and common and incentive units | — | — | — | — | — | (416,086 | ) | — | (416,086 | ) | (17,120 | ) | — | (17,120 | ) | (433,206 | ) | ||||||||||||||||||||||||||||||
Contributions from noncontrolling interests in consolidated joint ventures, net of distributions | — | — | — | — | — | — | — | — | — | 62 | 62 | 62 | |||||||||||||||||||||||||||||||||||
Cumulative effect adjustment from adoption of new accounting standard | — | — | — | — | — | 5,915 | — | 5,915 | — | — | — | 5,915 | |||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | 192,090 | — | 192,090 | 6,180 | (16 | ) | 6,164 | 198,254 | ||||||||||||||||||||||||||||||||||
Other comprehensive loss—foreign currency translation adjustments | — | — | — | — | — | — | (10,550 | ) | (10,550 | ) | (426 | ) | — | (426 | ) | (10,976 | ) | ||||||||||||||||||||||||||||||
Other comprehensive income—fair value of interest rate swaps and foreign currency hedges | — | — | — | — | — | — | 12,891 | 12,891 | 520 | — | 520 | 13,411 | |||||||||||||||||||||||||||||||||||
Other comprehensive loss—reclassification of accumulated other comprehensive income to interest expense | — | — | — | — | — | — | (979 | ) | (979 | ) | (39 | ) | — | (39 | ) | (1,018 | ) | ||||||||||||||||||||||||||||||
Balance as of June 30, 2018 | $ | 52,805 | $ | 1,249,560 | 206,055,117 | $ | 2,047 | $ | 11,310,132 | $ | (2,314,291 | ) | $ | (107,070 | ) | $ | 10,140,378 | $ | 654,261 | $ | 2,289 | $ | 656,550 | $ | 10,796,928 |
Six Months Ended June 30, | |||||||
2018 | 2017 | ||||||
Cash flows from operating activities: | |||||||
Net income | $ | 198,254 | $ | 164,134 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
(Gain) loss on sale of properties | (53,465 | ) | 142 | ||||
Unrealized gain on equity investment | (3,136 | ) | — | ||||
Equity in earnings of unconsolidated joint ventures | (14,848 | ) | (13,712 | ) | |||
Distributions from unconsolidated joint ventures | 10,422 | 21,376 | |||||
Write-off of net assets due to early lease terminations | 583 | 24 | |||||
Depreciation and amortization of buildings and improvements, tenant improvements and acquired ground leases | 378,734 | 264,125 | |||||
Amortization of acquired in-place lease value and deferred leasing costs | 214,843 | 90,452 | |||||
Amortization of share-based compensation | 14,828 | 10,125 | |||||
Non-cash amortization of terminated swaps | 558 | 602 | |||||
Allowance for (recovery of) doubtful accounts | 2,120 | (2,555 | ) | ||||
Amortization of deferred financing costs | 6,013 | 4,956 | |||||
Amortization of debt discount/premium | 1,711 | 1,363 | |||||
Amortization of acquired above-market leases and acquired below-market leases, net | 13,452 | (3,978 | ) | ||||
Changes in assets and liabilities: | |||||||
Accounts and other receivables | (9,312 | ) | (23,711 | ) | |||
Deferred rent | (18,955 | ) | (6,198 | ) | |||
Deferred leasing costs | (11,946 | ) | (8,143 | ) | |||
Other assets | 2,959 | (5,357 | ) | ||||
Accounts payable and other accrued liabilities | (50,252 | ) | 17,083 | ||||
Security deposits and prepaid rents | (9,475 | ) | 8,584 | ||||
Net cash provided by operating activities | 673,088 | 519,312 | |||||
Cash flows from investing activities: | |||||||
Acquisitions of real estate | (76,286 | ) | (34,829 | ) | |||
Proceeds from sale of properties, net of sales costs | 195,385 | — | |||||
Excess proceeds from forward contracts | — | 51,308 | |||||
Investments in unconsolidated joint ventures | (348 | ) | (5,749 | ) | |||
Prepaid construction costs and other investments | (27,869 | ) | — | ||||
Improvements to investments in real estate | (613,841 | ) | (476,070 | ) | |||
Improvement advances to tenants | (25,054 | ) | (19,929 | ) | |||
Collection of improvement advances to tenants | 22,433 | 21,805 | |||||
Net cash used in investing activities | (525,580 | ) | (463,464 | ) |
Six Months Ended June 30, | |||||||
2018 | 2017 | ||||||
Cash flows from financing activities: | |||||||
Borrowings on global revolving credit facility | $ | 773,811 | $ | 1,141,370 | |||
Repayments on global revolving credit facility | (853,697 | ) | (801,837 | ) | |||
Repayments on unsecured term loan | (21,376 | ) | — | ||||
Borrowings on unsecured senior notes | 649,038 | 140,463 | |||||
Repayments on unsecured notes | — | (50,000 | ) | ||||
Principal payments on mortgage loans | (290 | ) | (268 | ) | |||
Payment of loan fees and costs | (6,461 | ) | (777 | ) | |||
Capital contributions from (distributions paid to) noncontrolling interests in consolidated joint ventures, net | 62 | (262 | ) | ||||
Taxes paid related to net settlement of stock-based compensation awards | (4,718 | ) | — | ||||
Proceeds from common and preferred stock offerings, net | (652 | ) | 211,887 | ||||
Redemption of preferred stock | — | (182,500 | ) | ||||
Proceeds from equity plans | 2,509 | 2,606 | |||||
Proceeds from forward swap contract | 1,560 | — | |||||
Payment of dividends to preferred stockholders | (40,658 | ) | (31,898 | ) | |||
Payment of dividends to common stockholders and distributions to noncontrolling interests in operating partnership | (632,967 | ) | (448,219 | ) | |||
Net cash used in financing activities | (133,839 | ) | (19,435 | ) | |||
Net increase in cash, cash equivalents and restricted cash | 13,669 | 36,413 | |||||
Effect of exchange rate changes on cash, cash equivalents and restricted cash | 182 | (17,135 | ) | ||||
Cash, cash equivalents and restricted cash at beginning of period | 13,181 | 22,036 | |||||
Cash, cash equivalents and restricted cash at end of period | $ | 27,032 | $ | 41,314 |
Supplemental disclosure of cash flow information: | |||||||
Cash paid for interest, net of amounts capitalized | $ | 146,650 | $ | 114,352 | |||
Cash paid for income taxes | 5,510 | 5,364 | |||||
Supplementary disclosure of noncash investing and financing activities: | |||||||
Change in net assets related to foreign currency translation adjustments | $ | (10,976 | ) | $ | 30,255 | ||
Increase (decrease) in accounts payable and other accrued liabilities related to change in fair value of interest rate swaps and foreign currency hedges | 13,411 | (6,692 | ) | ||||
Acquisition measurement period adjustment to goodwill and accounts payable and other accrued liabilities | — | 2,162 | |||||
Noncontrolling interests in operating partnership converted to shares of common stock | 35,827 | 6,429 | |||||
Accrual for additions to investments in real estate and tenant improvement advances included in accounts payable and accrued expenses | 202,377 | 141,590 | |||||
Addition to leasehold improvements pursuant to capital lease obligation | 73,873 | — |
June 30, 2018 | December 31, 2017 | ||||||
(unaudited) | |||||||
ASSETS | |||||||
Investments in real estate: | |||||||
Properties: | |||||||
Land | $ | 1,202,174 | $ | 1,136,341 | |||
Acquired ground leases | 10,879 | 11,150 | |||||
Buildings and improvements | 15,781,203 | 15,215,405 | |||||
Tenant improvements | 561,048 | 553,040 | |||||
Total investments in properties | 17,555,304 | 16,915,936 | |||||
Accumulated depreciation and amortization | (3,588,124 | ) | (3,238,227 | ) | |||
Net investments in properties | 13,967,180 | 13,677,709 | |||||
Investments in unconsolidated joint ventures | 167,306 | 163,477 | |||||
Net investments in real estate | 14,134,486 | 13,841,186 | |||||
Cash and cash equivalents | 17,589 | 51 | |||||
Accounts and other receivables, net of allowance for doubtful accounts of $8,825 and $6,737 as of June 30, 2018 and December 31, 2017, respectively | 282,287 | 276,347 | |||||
Deferred rent | 445,766 | 430,026 | |||||
Acquired above-market leases, net | 150,084 | 184,375 | |||||
Goodwill | 3,378,325 | 3,389,595 | |||||
Acquired in-place lease value, deferred leasing costs and intangibles, net | 2,823,275 | 2,998,806 | |||||
Restricted cash | 9,443 | 13,130 | |||||
Assets held for sale | — | 139,538 | |||||
Other assets | 170,168 | 131,291 | |||||
Total assets | $ | 21,411,423 | $ | 21,404,345 | |||
LIABILITIES AND CAPITAL | |||||||
Global revolving credit facility, net | $ | 466,971 | $ | 550,946 | |||
Unsecured term loan, net | 1,376,784 | 1,420,333 | |||||
Unsecured senior notes, net | 7,156,084 | 6,570,757 | |||||
Mortgage loans, including premiums, net | 106,245 | 106,582 | |||||
Accounts payable and other accrued liabilities | 1,031,794 | 980,218 | |||||
Accrued dividends and distributions | — | 199,761 | |||||
Acquired below-market leases, net | 216,520 | 249,465 | |||||
Security deposits and prepaid rents | 207,292 | 217,898 | |||||
Obligations associated with assets held for sale | — | 5,033 | |||||
Total liabilities | 10,561,690 | 10,300,993 | |||||
Redeemable limited partner common units | 52,805 | 53,902 | |||||
Commitments and contingencies | |||||||
Capital: | |||||||
Partners’ capital: | |||||||
General Partner: | |||||||
Preferred units, 50,650,000 and 50,650,000 units issued and outstanding as of June 30, 2018 and December 31, 2017, respectively | 1,249,560 | 1,249,560 | |||||
Common units, 206,055,117 and 205,470,300 units issued and outstanding as of June 30, 2018 and December 31, 2017, respectively | 8,997,888 | 9,207,953 | |||||
Limited Partners, 8,498,032 and 8,489,095 units issued and outstanding as of June 30, 2018 and December 31, 2017, respectively | 658,659 | 702,579 | |||||
Accumulated other comprehensive loss | (111,468 | ) | (112,885 | ) | |||
Total partners’ capital | 10,794,639 | 11,047,207 | |||||
Noncontrolling interests in consolidated joint ventures | 2,289 | 2,243 | |||||
Total capital | 10,796,928 | 11,049,450 | |||||
Total liabilities and capital | $ | 21,411,423 | $ | 21,404,345 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Operating Revenues: | |||||||||||||||
Rental and other services | $ | 596,326 | $ | 470,877 | $ | 1,188,624 | $ | 932,228 | |||||||
Tenant reimbursements | 155,723 | 93,342 | 305,802 | 180,630 | |||||||||||
Fee income | 2,343 | 1,429 | 3,476 | 3,324 | |||||||||||
Other | 527 | 341 | 1,385 | 376 | |||||||||||
Total operating revenues | 754,919 | 565,989 | 1,499,287 | 1,116,558 | |||||||||||
Operating Expenses: | |||||||||||||||
Rental property operating and maintenance | 230,322 | 174,716 | 455,962 | 344,055 | |||||||||||
Property taxes | 27,284 | 28,161 | 62,547 | 55,080 | |||||||||||
Insurance | 2,606 | 2,576 | 6,337 | 5,168 | |||||||||||
Depreciation and amortization | 298,788 | 178,111 | 593,577 | 354,577 | |||||||||||
General and administrative | 46,099 | 37,509 | 82,622 | 72,156 | |||||||||||
Transactions and integration | 5,606 | 14,235 | 9,784 | 17,558 | |||||||||||
Other | 152 | 24 | 583 | 24 | |||||||||||
Total operating expenses | 610,857 | 435,332 | 1,211,412 | 848,618 | |||||||||||
Operating income | 144,062 | 130,657 | 287,875 | 267,940 | |||||||||||
Other Income (Expenses): | |||||||||||||||
Equity in earnings of unconsolidated joint ventures | 7,438 | 8,388 | 14,848 | 13,712 | |||||||||||
Gain (loss) on sale of properties | 14,192 | 380 | 53,465 | (142 | ) | ||||||||||
Interest and other income | 3,398 | 367 | 3,356 | 518 | |||||||||||
Interest expense | (78,810 | ) | (57,582 | ) | (155,795 | ) | (113,032 | ) | |||||||
Tax expense | (2,121 | ) | (2,639 | ) | (5,495 | ) | (4,862 | ) | |||||||
Net income | 88,159 | 79,571 | 198,254 | 164,134 | |||||||||||
Net (loss) income attributable to noncontrolling interests in consolidated joint ventures | 4 | (113 | ) | 16 | (234 | ) | |||||||||
Net income attributable to Digital Realty Trust, L.P. | 88,163 | 79,458 | 198,270 | 163,900 | |||||||||||
Preferred units distributions | (20,329 | ) | (14,505 | ) | (40,658 | ) | (31,898 | ) | |||||||
Issuance costs associated with redeemed preferred units | — | (6,309 | ) | — | (6,309 | ) | |||||||||
Net income available to common unitholders | $ | 67,834 | $ | 58,644 | $ | 157,612 | $ | 125,693 | |||||||
Net income per unit available to common unitholders: | |||||||||||||||
Basic | $ | 0.32 | $ | 0.36 | $ | 0.74 | $ | 0.77 | |||||||
Diluted | $ | 0.32 | $ | 0.36 | $ | 0.73 | $ | 0.77 | |||||||
Weighted average common units outstanding: | |||||||||||||||
Basic | 214,288,199 | 163,077,599 | 214,149,188 | 162,280,678 | |||||||||||
Diluted | 214,895,273 | 164,026,577 | 214,773,601 | 163,271,004 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Net income | $ | 88,159 | $ | 79,571 | $ | 198,254 | $ | 164,134 | |||||||
Other comprehensive income (loss): | |||||||||||||||
Foreign currency translation adjustments | (7,233 | ) | 13,677 | (10,976 | ) | 30,255 | |||||||||
(Decrease) increase in fair value of interest rate swaps and foreign currency hedges | 4,795 | (2,328 | ) | 13,411 | (6,692 | ) | |||||||||
Reclassification to interest expense from interest rate swaps | (783 | ) | 647 | (1,018 | ) | 1,677 | |||||||||
Comprehensive income | $ | 84,938 | $ | 91,567 | $ | 199,671 | $ | 189,374 | |||||||
Comprehensive loss (income) attributable to noncontrolling interests in consolidated joint ventures | 4 | (113 | ) | 16 | (234 | ) | |||||||||
Comprehensive income attributable to Digital Realty Trust, L.P. | $ | 84,942 | $ | 91,454 | $ | 199,687 | $ | 189,140 |
Redeemable Limited Partner Common Units | General Partner | Limited Partners | Accumulated Other Comprehensive Loss | Noncontrolling Interests in Consolidated Joint Ventures | Total Capital | |||||||||||||||||||||||||||||||
Preferred Units | Common Units | Common Units | ||||||||||||||||||||||||||||||||||
Units | Amount | Units | Amount | Units | Amount | |||||||||||||||||||||||||||||||
Balance as of December 31, 2017 | $ | 53,902 | 50,650,000 | $ | 1,249,560 | 205,470,300 | $ | 9,207,953 | 8,489,095 | $ | 702,579 | $ | (112,885 | ) | $ | 2,243 | $ | 11,049,450 | ||||||||||||||||||
Conversion of limited partner common units to general partner common units | — | — | — | 406,639 | 35,827 | (406,639 | ) | (35,827 | ) | — | — | — | ||||||||||||||||||||||||
Issuance of unvested restricted common units | — | — | — | 193,118 | — | — | — | — | — | — | ||||||||||||||||||||||||||
Issuance of common units, net of offering costs | — | — | — | — | (652 | ) | — | — | — | — | (652 | ) | ||||||||||||||||||||||||
Issuance of common units, net of forfeitures | — | — | — | — | — | 415,576 | — | — | — | — | ||||||||||||||||||||||||||
Units issued in connection with employee stock purchase plan | — | — | — | 31,893 | 2,509 | — | — | — | — | 2,509 | ||||||||||||||||||||||||||
Units repurchased and retired to satisfy tax withholding upon vesting | — | — | — | (46,833 | ) | (4,718 | ) | — | — | — | — | (4,718 | ) | |||||||||||||||||||||||
Amortization of share-based compensation | — | — | — | — | 17,458 | — | — | — | — | 17,458 | ||||||||||||||||||||||||||
Reclassification of vested share-based awards | — | — | — | — | (2,847 | ) | — | 2,847 | — | — | — | |||||||||||||||||||||||||
Adjustment to redeemable partnership units | (1,097 | ) | — | — | — | 1,097 | — | — | — | — | 1,097 | |||||||||||||||||||||||||
Distributions | — | — | (40,658 | ) | — | (416,086 | ) | — | (17,120 | ) | — | — | (473,864 | ) | ||||||||||||||||||||||
Contributions from noncontrolling interests in consolidated joint ventures, net of distributions | — | — | — | — | — | — | — | — | 62 | 62 | ||||||||||||||||||||||||||
Cumulative effect adjustment from adoption of new accounting standard | — | — | — | — | 5,915 | — | — | — | — | 5,915 | ||||||||||||||||||||||||||
Net income | — | — | 40,658 | — | 151,432 | — | 6,180 | — | (16 | ) | 198,254 | |||||||||||||||||||||||||
Other comprehensive loss—foreign currency translation adjustments | — | — | — | — | — | — | — | (10,976 | ) | — | (10,976 | ) | ||||||||||||||||||||||||
Other comprehensive income—fair value of interest rate swaps and foreign currency hedges | — | — | — | — | — | — | — | 13,411 | — | 13,411 | ||||||||||||||||||||||||||
Other comprehensive loss—reclassification of accumulated other comprehensive income to interest expense | — | — | — | — | — | — | — | (1,018 | ) | — | (1,018 | ) | ||||||||||||||||||||||||
Balance as of June 30, 2018 | $ | 52,805 | 50,650,000 | $ | 1,249,560 | 206,055,117 | $ | 8,997,888 | 8,498,032 | $ | 658,659 | $ | (111,468 | ) | $ | 2,289 | $ | 10,796,928 |
Six Months Ended June 30, | |||||||
2018 | 2017 | ||||||
Cash flows from operating activities: | |||||||
Net income | $ | 198,254 | $ | 164,134 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Gain on sale of properties | (53,465 | ) | 142 | ||||
Unrealized gain on equity investment | (3,136 | ) | — | ||||
Equity in earnings of unconsolidated joint ventures | (14,848 | ) | (13,712 | ) | |||
Distributions from unconsolidated joint ventures | 10,422 | 21,376 | |||||
Write-off of net assets due to early lease terminations | 583 | 24 | |||||
Depreciation and amortization of buildings and improvements, tenant improvements and acquired ground leases | 378,734 | 264,125 | |||||
Amortization of debt discount/premium | 1,711 | 1,363 | |||||
Amortization of acquired in-place lease value and deferred leasing costs | 214,843 | 90,452 | |||||
Amortization of share-based compensation | 14,828 | 10,125 | |||||
Non-cash amortization of terminated swaps | 558 | 602 | |||||
Allowance for (recovery of) doubtful accounts | 2,120 | (2,555 | ) | ||||
Amortization of deferred financing costs | 6,013 | 4,956 | |||||
Amortization of acquired above-market leases and acquired below-market leases, net | 13,452 | (3,978 | ) | ||||
Changes in assets and liabilities: | |||||||
Accounts and other receivables | (9,312 | ) | (23,711 | ) | |||
Deferred rent | (18,955 | ) | (6,198 | ) | |||
Deferred leasing costs | (11,946 | ) | (8,143 | ) | |||
Other assets | 2,959 | (5,357 | ) | ||||
Accounts payable and other accrued liabilities | (50,252 | ) | 17,083 | ||||
Security deposits and prepaid rents | (9,475 | ) | 8,584 | ||||
Net cash provided by operating activities | 673,088 | 519,312 | |||||
Cash flows from investing activities: | |||||||
Acquisitions of real estate | (76,286 | ) | (34,829 | ) | |||
Proceeds from sale of properties, net of sales costs | 195,385 | — | |||||
Excess proceeds from forward contracts | — | 51,308 | |||||
Investments in unconsolidated joint ventures | (348 | ) | (5,749 | ) | |||
Prepaid construction costs and other investments | (27,869 | ) | — | ||||
Improvements to investments in real estate | (613,841 | ) | (476,070 | ) | |||
Improvement advances to tenants | (25,054 | ) | (19,929 | ) | |||
Collection of improvement advances to tenants | 22,433 | 21,805 | |||||
Net cash used in investing activities | (525,580 | ) | (463,464 | ) |
Six Months Ended June 30, | |||||||
2018 | 2017 | ||||||
Cash flows from financing activities: | |||||||
Borrowings on global revolving credit facility | $ | 773,811 | $ | 1,141,370 | |||
Repayments on global revolving credit facility | (853,697 | ) | (801,837 | ) | |||
Repayments on unsecured term loan | (21,376 | ) | — | ||||
Borrowings on unsecured senior notes | 649,038 | 140,463 | |||||
Repayments on unsecured notes | — | (50,000 | ) | ||||
Principal payments on mortgage loans | (290 | ) | (268 | ) | |||
Payment of loan fees and costs | (6,461 | ) | (777 | ) | |||
Capital contributions from (distributions paid to) noncontrolling interests in consolidated joint ventures, net | 62 | (262 | ) | ||||
Taxes paid related to net settlement of stock-based compensation awards | (4,718 | ) | — | ||||
General partner contributions, net | 1,857 | 31,993 | |||||
Proceeds from forward swap contract | 1,560 | — | |||||
Payment of distributions to preferred unitholders | (40,658 | ) | (31,898 | ) | |||
Payment of distributions to common unitholders | (632,967 | ) | (448,219 | ) | |||
Net cash used in financing activities | (133,839 | ) | (19,435 | ) | |||
Net increase in cash, cash equivalents and restricted cash | 13,669 | 36,413 | |||||
Effect of exchange rate changes on cash, cash equivalents and restricted cash | 182 | (17,135 | ) | ||||
Cash, cash equivalents and restricted cash at beginning of period | 13,181 | 22,036 | |||||
Cash, cash equivalents and restricted cash at end of period | $ | 27,032 | $ | 41,314 |
Supplemental disclosure of cash flow information: | |||||||
Cash paid for interest, net of amounts capitalized | $ | 146,650 | $ | 114,352 | |||
Cash paid for income taxes | 5,510 | 5,364 | |||||
Supplementary disclosure of noncash investing and financing activities: | |||||||
Change in net assets related to foreign currency translation adjustments | $ | (10,976 | ) | $ | 30,255 | ||
Increase (decrease) in accounts payable and other accrued liabilities related to change in fair value of interest rate swaps and foreign currency hedges | 13,411 | (6,692 | ) | ||||
Acquisition measurement period adjustment to goodwill and accounts payable and other accrued liabilities | — | 2,162 | |||||
Accrual for additions to investments in real estate and tenant improvement advances included in accounts payable and accrued expenses | 202,377 | 141,590 | |||||
Addition to leasehold improvements pursuant to capital lease obligation | 73,873 | — |
Data Centers | ||||||||||||||||||
As of June 30, 2018 | As of December 31, 2017 | |||||||||||||||||
Region | Operating | Held for Sale | Unconsolidated Joint Ventures | Total | Operating | Held for Sale | Unconsolidated Joint Ventures | Total | ||||||||||
United States | 132 | — | 14 | 146 | 131 | 7 | 14 | 152 | ||||||||||
Europe | 37 | — | — | 37 | 38 | — | — | 38 | ||||||||||
Asia | 3 | — | 4 | 7 | 3 | — | 4 | 7 | ||||||||||
Australia | 5 | — | — | 5 | 5 | — | — | 5 | ||||||||||
Canada | 3 | — | — | 3 | 3 | — | — | 3 | ||||||||||
Total | 180 | — | 18 | 198 | 180 | 7 | 18 | 205 |
• | enhancing investors’ understanding of the Company and the Operating Partnership by enabling investors to view the business as a whole in the same manner as management views and operates the business; |
• | eliminating duplicative disclosure and providing a more streamlined and readable presentation since a substantial portion of the disclosure applies to both the Company and the Operating Partnership; and |
• | creating time and cost efficiencies through the preparation of one set of notes instead of two separate sets of notes. |
• | condensed consolidated face financial statements; and |
• | the following notes to the condensed consolidated financial statements: |
• | "Debt of the Company" and "Debt of the Operating Partnership"; |
• | "Income per Share" and "Income per Unit"; and |
• | "Equity and Accumulated Other Comprehensive Loss, Net of the Company" and "Capital and Accumulated Other Comprehensive Loss of the Operating Partnership". |
Balance as of December 31, 2017 | Impact of Change in Foreign Exchange Rates | Balance as of June 30, 2018 | ||||||||||
Merger / Portfolio Acquisition | ||||||||||||
Telx Acquisition | $ | 330,845 | $ | — | $ | 330,845 | ||||||
European Portfolio Acquisition | 466,604 | (11,270 | ) | 455,334 | ||||||||
DuPont Fabros Technology Merger | 2,592,146 | — | 2,592,146 | |||||||||
Total | $ | 3,389,595 | $ | (11,270 | ) | $ | 3,378,325 |
Location | Market | Date Acquired | Amount (in millions) | |||||
10000-10006 Godwin Drive (1) | Northern Virginia | May 3, 2018 | $ | 16.5 | ||||
2825-2845 Lafayette Street | Silicon Valley | June 19, 2018 | $ | 55.5 | ||||
$ | 72.0 |
(1) | Represents currently vacant land which is not included in our operating property count. Purchase price excludes capitalized closing costs. |
Location | Metro Area | Date Sold | Gross Proceeds (in millions) | Gain (loss) on sale (in millions) | ||||||||
200 Quannapowitt Parkway | Boston | January 25, 2018 | $ | 15.0 | $ | (0.4 | ) | |||||
34551 Ardenwood Boulevard | Silicon Valley | February 9, 2018 | 73.3 | 25.3 | ||||||||
3065 Gold Camp Drive | Sacramento | March 14, 2018 | 14.2 | 5.4 | ||||||||
11085 Sun Center Drive | Sacramento | March 14, 2018 | 36.8 | 9.1 | ||||||||
Austin Portfolio | Austin | April 19, 2018 | 47.6 | 12.0 | ||||||||
2010 East Centennial Circle | Phoenix | May 22, 2018 | 5.5 | (0.5 | ) | |||||||
1125 Energy Park Drive | Minneapolis | May 31, 2018 | 7.0 | 2.8 | ||||||||
$ | 199.4 | $ | 53.7 |
As of June 30, 2018 | Six Months Ended June 30, 2018 | ||||||||||||||||||||||||||||||||||
2018 | Net Investment in Properties | Total Assets | Debt | Total Liabilities | Equity | Revenues | Property Operating Expense | Net Operating Income | Net Income | ||||||||||||||||||||||||||
Total Unconsolidated Joint Ventures | $ | 1,038,172 | $ | 1,338,870 | $ | 717,024 | $ | 830,944 | $ | 507,926 | $ | 105,759 | $ | (38,786 | ) | $ | 66,973 | $ | 29,897 | ||||||||||||||||
Our investment in and share of equity in earnings of unconsolidated joint ventures | $ | 167,306 | $ | 14,848 | |||||||||||||||||||||||||||||||
As of December 31, 2017 | Six Months Ended June 30, 2017 | ||||||||||||||||||||||||||||||||||
2017 | Net Investment in Properties | Total Assets | Debt | Total Liabilities | Equity | Revenues | Property Operating Expense | Net Operating Income | Net Income | ||||||||||||||||||||||||||
Total Unconsolidated Joint Ventures | $ | 1,061,950 | $ | 1,375,006 | $ | 712,690 | $ | 869,879 | $ | 505,127 | $ | 71,072 | $ | (21,969 | ) | $ | 49,103 | $ | 20,615 | ||||||||||||||||
Our investment in and share of equity in earnings of unconsolidated joint ventures | $ | 163,477 | $ | 13,712 |
Balance as of | |||||||
(Amounts in thousands) | June 30, 2018 | December 31, 2017 | |||||
Real Estate Intangibles: | |||||||
Acquired in-place lease value: | |||||||
Gross amount | $ | 1,464,461 | $ | 1,473,515 | |||
Accumulated amortization | (709,645 | ) | (613,948 | ) | |||
Net | $ | 754,816 | $ | 859,567 | |||
Tenant relationship value: | |||||||
Gross amount | $ | 1,971,915 | $ | 1,978,277 | |||
Accumulated amortization | (231,111 | ) | (169,919 | ) | |||
Net | $ | 1,740,804 | $ | 1,808,358 | |||
Acquired above-market leases: | |||||||
Gross amount | $ | 281,263 | $ | 294,514 | |||
Accumulated amortization | (131,179 | ) | (110,139 | ) | |||
Net | $ | 150,084 | $ | 184,375 | |||
Acquired below-market leases: | |||||||
Gross amount | $ | 445,551 | $ | 469,119 | |||
Accumulated amortization | (229,031 | ) | (219,654 | ) | |||
Net | $ | 216,520 | $ | 249,465 |
(Amounts in thousands) | |||
Remainder of 2018 | $ | (13,782 | ) |
2019 | (16,399 | ) | |
2020 | (4,146 | ) | |
2021 | 1,159 | ||
2022 | 8,243 | ||
Thereafter | 91,361 | ||
Total | $ | 66,436 |
(Amounts in thousands) | |||
Remainder of 2018 | $ | 98,083 | |
2019 | 147,579 | ||
2020 | 111,714 | ||
2021 | 87,152 | ||
2022 | 65,258 | ||
Thereafter | 245,030 | ||
Total | $ | 754,816 |
(Amounts in thousands) | |||
Remainder of 2018 | $ | 61,693 | |
2019 | 123,386 | ||
2020 | 123,386 | ||
2021 | 123,386 | ||
2022 | 123,386 | ||
Thereafter | 1,185,567 | ||
Total | $ | 1,740,804 |
Indebtedness | Interest Rate at June 30, 2018 | Maturity Date | Principal Outstanding at June 30, 2018 | Principal Outstanding at December 31, 2017 | ||||||||
Global revolving credit facility | Various | (1) | Jan 15, 2020 | $ | 472,438 | (2) | $ | 558,191 | (2) | |||
Deferred financing costs, net | (5,467 | ) | (7,245 | ) | ||||||||
Global revolving credit facility, net | 466,971 | 550,946 | ||||||||||
Unsecured Term Loans | ||||||||||||
Unsecured term loan — 5-year | Various | (3)(4) | Jan 15, 2021 | 1,080,867 | (5) | 1,125,117 | (5) | |||||
Unsecured term loan — 7-year | Various | (3)(4) | Jan 15, 2023 | 300,000 | (5) | 300,000 | (5) | |||||
Deferred financing costs, net | (4,083 | ) | (4,784 | ) | ||||||||
Unsecured term loan, net | 1,376,784 | 1,420,333 | ||||||||||
Floating rate notes due 2019 | EURIBOR + 0.500% | May 22, 2019 | 146,050 | (6) | 150,063 | (6) | ||||||
5.875% notes due 2020 | 5.875% | Feb 1, 2020 | 500,000 | 500,000 | ||||||||
3.400% notes due 2020 | 3.400% | Oct 1, 2020 | 500,000 | 500,000 | ||||||||
5.250% notes due 2021 | 5.250% | Mar 15, 2021 | 400,000 | 400,000 | ||||||||
3.950% notes due 2022 | 3.950% | Jul 1, 2022 | 500,000 | 500,000 | ||||||||
3.625% notes due 2022 | 3.625% | Oct 1, 2022 | 300,000 | 300,000 | ||||||||
2.750% notes due 2023 | 2.750% | Feb 1, 2023 | 350,000 | 350,000 | ||||||||
4.750% notes due 2023 | 4.750% | Oct 13, 2023 | 396,210 | (7) | 405,390 | (7) | ||||||
2.625% notes due 2024 | 2.625% | Apr 15, 2024 | 701,040 | (6) | 720,300 | (6) | ||||||
2.750% notes due 2024 | 2.750% | Jul 19, 2024 | 330,175 | (7) | 337,825 | (7) | ||||||
4.250% notes due 2025 | 4.250% | Jan 17, 2025 | 528,280 | (7) | 540,520 | (7) | ||||||
4.750% notes due 2025 | 4.750% | Oct 1, 2025 | 450,000 | 450,000 | ||||||||
3.700% notes due 2027 | 3.700% | Aug 15, 2027 | 1,000,000 | 1,000,000 | ||||||||
4.450% notes due 2028 | 4.450% | Jul 15, 2028 | 650,000 | — | ||||||||
3.300% notes due 2029 | 3.300% | Jul 19, 2029 | 462,245 | (7) | 472,955 | (7) | ||||||
Unamortized discounts | (17,509 | ) | (18,508 | ) | ||||||||
Total senior notes, net of discount | 7,196,491 | 6,608,545 | ||||||||||
Deferred financing costs, net | (40,407 | ) | (37,788 | ) | ||||||||
Total unsecured senior notes, net of discount and deferred financing costs | 7,156,084 | 6,570,757 |
Indebtedness | Interest Rate at June 30, 2018 | Maturity Date | Principal Outstanding June 30, 2018 | Principal Outstanding December 31, 2017 | ||||||||
Mortgage loans: | ||||||||||||
731 East Trade Street | 8.22% | Jul 1, 2020 | $ | 2,080 | $ | 2,370 | ||||||
Secured note due 2023 | LIBOR + 1.100% | (4) | Mar 1, 2023 | 104,000 | 104,000 | |||||||
Unamortized net premiums | 194 | 241 | ||||||||||
Total mortgage loans, including premiums | 106,274 | 106,611 | ||||||||||
Deferred financing costs, net | (29 | ) | (29 | ) | ||||||||
Total mortgage loans, including premiums and net of deferred financing costs | 106,245 | 106,582 | ||||||||||
Total indebtedness | $ | 9,106,084 | $ | 8,648,618 |
(1) | The interest rate for borrowings under the global revolving credit facility equals the applicable index plus a margin of 100 basis points, which is based on the current credit ratings of our long-term debt. An annual facility fee of 20 basis points, which is based on the credit ratings of our long-term debt, is due and payable quarterly on the total commitment amount of the facility. Two six-month extensions are available, which we may exercise if certain conditions are met. |
(2) | Balances as of June 30, 2018 and December 31, 2017 are as follows (balances, in thousands): |
Denomination of Draw | Balance as of June 30, 2018 | Weighted-average interest rate | Balance as of December 31, 2017 | Weighted-average interest rate | |||||||||
Floating Rate Borrowing (a) | |||||||||||||
U.S. dollar ($) | $ | 205,000 | 3.09 | % | $ | 400,000 | 2.48 | % | |||||
British pound sterling (£) | — | — | % | 18,918 | (d) | 1.50 | % | ||||||
Euro (€) | 60,757 | (c) | 0.63 | % | 31,213 | (d) | 0.62 | % | |||||
Australian dollar (AUD) | 27,917 | (c) | 2.94 | % | — | — | % | ||||||
Hong Kong dollar (HKD) | 6,741 | (c) | 2.88 | % | 4,100 | (d) | 2.20 | % | |||||
Japanese yen (JPY) | 106,827 | (c) | 0.92 | % | 65,890 | (d) | 0.96 | % | |||||
Singapore dollar (SGD) | 3,523 | (c) | 2.42 | % | — | — | % | ||||||
Canadian dollar (CAD) | 61,673 | (c) | 2.64 | % | 23,070 | (d) | 2.36 | % | |||||
Total | $ | 472,438 | 2.21 | % | $ | 543,191 | 2.15 | % | |||||
Base Rate Borrowing (b) | |||||||||||||
U.S. dollar ($) | $ | — | — | % | $ | 15,000 | 4.50 | % | |||||
Total borrowings | $ | 472,438 | 2.21 | % | $ | 558,191 | 2.21 | % |
(a) | The interest rates for floating rate borrowings under the global revolving credit facility equal the applicable index plus a margin of 100 basis points, which is based on the credit ratings of our long-term debt. |
(b) | The interest rates for base rate borrowings under the global revolving credit facility equal the U.S. Prime Rate. |
(c) | Based on exchange rates of $1.17 to €1.00, $0.74 to 1.00 AUD, $0.13 to 1.00 HKD, $0.01 to 1.00 JPY, $0.73 to 1.00 SGD and $0.76 to 1.00 CAD, respectively, as of June 30, 2018. |
(d) | Based on exchange rates of $1.35 to £1.00, $1.20 to €1.00, $0.13 to 1.00 HKD, $0.01 to 1.00 JPY and $0.80 to 1.00 CAD, respectively, as of December 31, 2017. |
(3) | Interest rates are based on our current senior unsecured debt ratings and are 110 basis points and 155 basis points over the applicable index for floating rate advances for the 5-Year Term Loan and the 7-Year Term Loan, respectively. |
(4) | We have entered into interest rate swap agreements as a cash flow hedge for interest generated by the U.S. dollar, British pound sterling and Canadian dollar tranches of the unsecured term loans and the secured note due 2023. See Note 14 "Derivative Instruments" for further information. |
(5) | Balances as of June 30, 2018 and December 31, 2017 are as follows (balances, in thousands): |
Denomination of Draw | Balance as of June 30, 2018 | Weighted-average interest rate | Balance as of December 31, 2017 | Weighted-average interest rate | ||||||||||
U.S. dollar ($) | $ | 606,911 | 3.39 | % | (b) | $ | 606,911 | 2.78 | % | (d) | ||||
British pound sterling (£) | 223,825 | (a) | 1.61 | % | (b) | 229,011 | (c) | 1.59 | % | (d) | ||||
Singapore dollar (SGD) | 207,914 | (a) | 2.49 | % | 233,788 | (c) | 2.17 | % | ||||||
Australian dollar (AUD) | 170,537 | (a) | 3.02 | % | 179,841 | (c) | 2.79 | % | ||||||
Hong Kong dollar (HKD) | 85,028 | (a) | 2.75 | % | 85,762 | (c) | 2.20 | % | ||||||
Canadian dollar (CAD) | 74,998 | (a) | 2.74 | % | (b) | 78,357 | (c) | 2.44 | % | (d) | ||||
Japanese yen (JPY) | 11,654 | (a) | 1.02 | % | 11,447 | (c) | 1.05 | % | ||||||
Total | $ | 1,380,867 | 2.82 | % | (b) | $ | 1,425,117 | 2.42 | % | (d) |
(a) | Based on exchange rates of $1.32 to £1.00, $0.73 to 1.00 SGD, $0.74 to 1.00 AUD, $0.13 to 1.00 HKD, $0.76 to 1.00 CAD and $0.01 to 1.00 JPY, respectively, as of June 30, 2018. |
(b) | As of June 30, 2018, the weighted-average interest rate reflecting interest rate swaps was 2.72% (U.S. dollar), 1.89% (British pound sterling), 1.88% (Canadian dollar) and 2.53% (Total). See Note 14 "Derivative Instruments" for further discussion on interest rate swaps. |
(c) | Based on exchange rates of $1.35 to £1.00, $0.75 to 1.00 SGD, $0.78 to 1.00 AUD,$0.13 to 1.00 HKD, $0.80 to 1.00 CAD and $0.01 to 1.00 JPY, respectively, as of December 31, 2017. |
(d) | As of December 31, 2017, the weighted-average interest rate reflecting interest rate swaps was 2.72% (U.S. dollar), 1.89% (British pound sterling), 1.88% (Canadian dollar) and 2.41% (Total). |
(6) | Based on exchange rates of $1.17 to €1.00 as of June 30, 2018 and $1.20 to €1.00 as of December 31, 2017. |
(7) | Based on exchange rates of $1.32 to £1.00 as of June 30, 2018 and $1.35 to £1.00 as of December 31, 2017. |
Global Revolving Credit Facility(1) | Unsecured Term Loans | Unsecured Senior Notes | Mortgage Loans | Total Debt | |||||||||||||||
Remainder of 2018 | $ | — | $ | — | $ | — | $ | 303 | $ | 303 | |||||||||
2019 | — | — | 146,050 | 644 | 146,694 | ||||||||||||||
2020 | 472,438 | — | 1,000,000 | 1,133 | 1,473,571 | ||||||||||||||
2021 | — | 1,080,867 | 400,000 | — | 1,480,867 | ||||||||||||||
2022 | — | — | 800,000 | — | 800,000 | ||||||||||||||
Thereafter | — | 300,000 | 4,867,950 | 104,000 | 5,271,950 | ||||||||||||||
Subtotal | $ | 472,438 | $ | 1,380,867 | $ | 7,214,000 | $ | 106,080 | $ | 9,173,385 | |||||||||
Unamortized discount | — | — | (17,509 | ) | — | (17,509 | ) | ||||||||||||
Unamortized premium | — | — | — | 194 | 194 | ||||||||||||||
Total | $ | 472,438 | $ | 1,380,867 | $ | 7,196,491 | $ | 106,274 | $ | 9,156,070 |
(1) | Subject to two six-month extension options exercisable by us. The bank group is obligated to grant the extension options provided we give proper notice, we make certain representations and warranties and no default exists under the global revolving credit facility. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Net income available to common stockholders | $ | 65,134 | $ | 57,837 | $ | 151,432 | $ | 123,982 | |||||||
Weighted average shares outstanding—basic | 205,956,005 | 160,832,889 | 205,835,757 | 160,069,201 | |||||||||||
Potentially dilutive common shares: | |||||||||||||||
Unvested incentive units | 151,265 | 161,553 | 150,864 | 151,807 | |||||||||||
Forward equity offering | — | 216,526 | — | 251,119 | |||||||||||
Market performance-based awards | 455,809 | 570,899 | 473,549 | 587,400 | |||||||||||
Weighted average shares outstanding—diluted | 206,563,079 | 161,781,867 | 206,460,170 | 161,059,527 | |||||||||||
Income per share: | |||||||||||||||
Basic | $ | 0.32 | $ | 0.36 | $ | 0.74 | $ | 0.77 | |||||||
Diluted | $ | 0.32 | $ | 0.36 | $ | 0.73 | $ | 0.77 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||
Weighted average of Operating Partnership common units not owned by Digital Realty Trust, Inc. | 8,332,194 | 2,244,710 | 8,313,432 | 2,211,476 | |||||||
Potentially dilutive Series C Cumulative Redeemable Perpetual Preferred Stock | 1,898,314 | — | 1,932,872 | — | |||||||
Potentially dilutive Series F Cumulative Redeemable Preferred Stock | — | 70,119 | — | 926,601 | |||||||
Potentially dilutive Series G Cumulative Redeemable Preferred Stock | 2,353,805 | 2,157,221 | 2,396,655 | 2,297,648 | |||||||
Potentially dilutive Series H Cumulative Redeemable Preferred Stock | 3,449,255 | 3,161,182 | 3,512,048 | 3,366,963 | |||||||
Potentially dilutive Series I Cumulative Redeemable Preferred Stock | 2,356,559 | 2,159,745 | 2,399,459 | 2,300,337 | |||||||
Potentially dilutive Series J Cumulative Redeemable Preferred Stock | 1,880,144 | — | 1,914,371 | — | |||||||
Total | 20,270,271 | 9,792,977 | 20,468,837 | 11,103,025 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Net income available to common unitholders | $ | 67,834 | $ | 58,644 | $ | 157,612 | $ | 125,693 | |||||||
Weighted average units outstanding—basic | 214,288,199 | 163,077,599 | 214,149,188 | 162,280,678 | |||||||||||
Potentially dilutive common units: | |||||||||||||||
Unvested incentive units | 151,265 | 161,553 | 150,864 | 151,807 | |||||||||||
Forward equity offering | — | 216,526 | — | 251,119 | |||||||||||
Market performance-based awards | 455,809 | 570,899 | 473,549 | 587,400 | |||||||||||
Weighted average units outstanding—diluted | 214,895,273 | 164,026,577 | 214,773,601 | 163,271,004 | |||||||||||
Income per unit: | |||||||||||||||
Basic | $ | 0.32 | $ | 0.36 | $ | 0.74 | $ | 0.77 | |||||||
Diluted | $ | 0.32 | $ | 0.36 | $ | 0.73 | $ | 0.77 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||
Potentially dilutive Series C Cumulative Redeemable Perpetual Preferred Units | 1,898,314 | — | 1,932,872 | — | |||||||
Potentially dilutive Series F Cumulative Redeemable Preferred Units | — | 70,119 | — | 926,601 | |||||||
Potentially dilutive Series G Cumulative Redeemable Preferred Units | 2,353,805 | 2,157,221 | 2,396,655 | 2,297,648 | |||||||
Potentially dilutive Series H Cumulative Redeemable Preferred Units | 3,449,255 | 3,161,182 | 3,512,048 | 3,366,963 | |||||||
Potentially dilutive Series I Cumulative Redeemable Preferred Units | 2,356,559 | 2,159,745 | 2,399,459 | 2,300,337 | |||||||
Potentially dilutive Series J Cumulative Redeemable Preferred Units | 1,880,144 | — | 1,914,371 | — | |||||||
Total | 11,938,077 | 7,548,267 | 12,155,405 | 8,891,549 |
June 30, 2018 | December 31, 2017 | ||||||||||
Number of units | Percentage of total | Number of units | Percentage of total | ||||||||
Digital Realty Trust, Inc. | 206,055,117 | 96.0 | % | 205,470,300 | 96.0 | % | |||||
Noncontrolling interests consist of: | |||||||||||
Common units held by third parties | 6,531,727 | 3.1 | % | 6,899,094 | 3.2 | % | |||||
Incentive units held by employees and directors (see Note 14) | 1,966,305 | 0.9 | % | 1,590,001 | 0.8 | % | |||||
214,553,149 | 100.0 | % | 213,959,395 | 100.0 | % |
Common Units | Incentive Units | Total | ||||||
As of December 31, 2017 | 6,899,094 | 1,590,001 | 8,489,095 | |||||
Redemption of common units for shares of Digital Realty Trust, Inc. common stock (1) | (367,367 | ) | — | (367,367 | ) | |||
Conversion of incentive units held by employees and directors for shares of Digital Realty Trust, Inc. common stock (1) | — | (39,272 | ) | (39,272 | ) | |||
Incentive units issued upon achievement of market performance condition | — | 326,947 | 326,947 | |||||
Grant of incentive units to employees and directors | — | 105,800 | 105,800 | |||||
Cancellation / forfeitures of incentive units held by employees and directors | — | (17,171 | ) | (17,171 | ) | |||
As of June 30, 2018 | 6,531,727 | 1,966,305 | 8,498,032 |
(1) | Redemption of common units were recorded as a reduction to noncontrolling interests in the Operating Partnership and an increase to common stock and additional paid in capital based on the book value per unit in the accompanying condensed consolidated balance sheet of Digital Realty Trust, Inc. |
Date dividend declared | Dividend payment date | Series C Preferred Stock | Series G Preferred Stock | Series H Preferred Stock | Series I Preferred Stock | Series J Preferred Stock | Common Stock | ||||||||||||||||||
March 1, 2018 | March 30, 2018 | $ | 3,333 | $ | 3,672 | $ | 6,730 | $ | 3,969 | $ | 2,625 | $ | 208,015 | ||||||||||||
May 8, 2018 | June 29, 2018 | 3,333 | 3,672 | 6,730 | 3,969 | 2,625 | 208,071 | ||||||||||||||||||
$ | 6,666 | $ | 7,344 | $ | 13,460 | $ | 7,938 | $ | 5,250 | $ | 416,086 | ||||||||||||||
Annual rate of dividend per share | $ | 1.65625 | $ | 1.46875 | $ | 1.84375 | $ | 1.58750 | $ | 1.31250 | $ | 4.04000 |
Foreign currency translation adjustments | Cash flow hedge adjustments | Foreign currency net investment hedge adjustments | Accumulated other comprehensive income (loss), net | ||||||||||||
Balance as of December 31, 2017 | $ | (147,370 | ) | $ | 13,200 | $ | 25,738 | $ | (108,432 | ) | |||||
Net current period change | (10,550 | ) | 12,891 | — | 2,341 | ||||||||||
Reclassification to interest expense from interest rate swaps | — | (979 | ) | — | (979 | ) | |||||||||
Balance as of June 30, 2018 | $ | (157,920 | ) | $ | 25,112 | $ | 25,738 | $ | (107,070 | ) |
Date distribution declared | Distribution payment date | Series C Preferred Units | Series G Preferred Units | Series H Preferred Units | Series I Preferred Units | Series J Preferred Units | Common Units | ||||||||||||||||||
March 1, 2018 | March 30, 2018 | $ | 3,333 | $ | 3,672 | $ | 6,730 | $ | 3,969 | $ | 2,625 | $ | 216,953 | ||||||||||||
May 8, 2018 | June 29, 2018 | 3,333 | 3,672 | 6,730 | 3,969 | 2,625 | 216,789 | ||||||||||||||||||
$ | 6,666 | $ | 7,344 | $ | 13,460 | $ | 7,938 | $ | 5,250 | $ | 433,742 | ||||||||||||||
Annual rate of distribution per unit | $ | 1.65625 | $ | 1.46875 | $ | 1.84375 | $ | 1.58750 | $ | 1.31250 | $ | 4.04000 |
Foreign currency translation adjustments | Cash flow hedge adjustments | Foreign currency net investment hedge adjustments | Accumulated other comprehensive loss | ||||||||||||
Balance as of December 31, 2017 | $ | (151,795 | ) | $ | 12,758 | $ | 26,152 | $ | (112,885 | ) | |||||
Net current period change | (10,976 | ) | 13,411 | — | 2,435 | ||||||||||
Reclassification to interest expense from interest rate swaps | — | (1,018 | ) | — | (1,018 | ) | |||||||||
Balance as of June 30, 2018 | $ | (162,771 | ) | $ | 25,151 | $ | 26,152 | $ | (111,468 | ) |
Deferred Compensation | Unearned Compensation | Expected period to recognize unearned compensation (in years) | ||||||||||||||||||||||||
Expensed | Capitalized | As of June 30, 2018 | As of December 31, 2017 | |||||||||||||||||||||||
Three Months Ended June 30, | ||||||||||||||||||||||||||
Type of incentive award | 2018 | 2017 | 2018 | 2017 | ||||||||||||||||||||||
Long-term incentive units | $ | 2.9 | $ | 1.9 | $ | (0.1 | ) | $ | 0.4 | $ | 13.2 | $ | 6.9 | 3.0 | ||||||||||||
Market performance-based awards | 3.5 | 2.6 | 0.4 | 0.5 | 34.8 | 24.7 | 2.5 | |||||||||||||||||||
Restricted stock | 1.7 | 1.1 | 1.1 | 0.8 | 26.5 | 17.5 | 2.9 | |||||||||||||||||||
Six Months Ended June 30, | ||||||||||||||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||||||||||||
Long-term incentive units | $ | 3.8 | $ | 2.6 | $ | 0.1 | $ | 0.8 | ||||||||||||||||||
Market performance-based awards | 6.6 | 4.6 | 0.7 | 1.2 | ||||||||||||||||||||||
Restricted stock | 3.2 | 2.1 | 2.1 | 1.7 |
Unvested Long-term Incentive Units | Units | Weighted-Average Grant Date Fair Value | ||||
Unvested, beginning of period | 99,295 | $ | 90.59 | |||
Granted | 105,800 | 99.71 | ||||
Vested | (32,575 | ) | 97.49 | |||
Cancelled or expired | (15,356 | ) | 83.93 | |||
Unvested, end of period | 157,164 | $ | 95.76 |
Level | RMS Relative Market Performance | Market Performance Vesting Percentage |
Below Threshold Level | ≤ -300 basis points | 0% |
Threshold Level | -300 basis points | 25% |
Target Level | 100 basis points | 50% |
High Level | > 500 basis points | 100% |
Award Date | Expected Stock Price Volatility | Risk-Free Interest rate | ||
January 1, 2017 | 25% | 1.49% | ||
February 28, 2017 | 23% | 1.43% | ||
January 1, 2018 | 22% | 1.98% | ||
March 1, 2018 | 22% | 2.34% | ||
March 9, 2018 | 22% | 2.42% |
Unvested Restricted Stock | Shares | Weighted-Average Grant Date Fair Value | ||||
Unvested, beginning of period | 259,422 | $ | 90.54 | |||
Granted | 162,310 | 99.59 | ||||
Vested | (83,468 | ) | 82.28 | |||
Cancelled or expired | (24,184 | ) | 96.79 | |||
Unvested, end of period | 314,080 | $ | 96.95 |
Notional Amount | Fair Value at Significant Other Observable Inputs (Level 2) | |||||||||||||||||||||||
As of June 30, 2018 | As of December 31, 2017 | Type of Derivative | Strike Rate | Effective Date | Expiration Date | As of June 30, 2018 (5) | As of December 31, 2017 (5) | |||||||||||||||||
Currently-paying contracts | ||||||||||||||||||||||||
$ | 206,000 | (1) | $ | 206,000 | (1) | Swap | 1.611 | Jun 15, 2017 | Jan 15, 2020 | $ | 2,882 | $ | 1,409 | |||||||||||
54,905 | (1) | 54,905 | (1) | Swap | 1.605 | Jun 6, 2017 | Jan 6, 2020 | 756 | 374 | |||||||||||||||
75,000 | (1) | 75,000 | (1) | Swap | 1.016 | Apr 6, 2016 | Jan 6, 2021 | 3,023 | 2,260 | |||||||||||||||
75,000 | (1) | 75,000 | (1) | Swap | 1.164 | Jan 15, 2016 | Jan 15, 2021 | 2,778 | 1,947 | |||||||||||||||
300,000 | (2) | 300,000 | (2) | Swap | 1.435 | Jan 15, 2016 | Jan 15, 2023 | 16,779 | 9,978 | |||||||||||||||
223,826 | (3) | 229,012 | (3) | Swap | 0.792 | Jan 15, 2016 | Jan 15, 2019 | (158 | ) | (430 | ) | |||||||||||||
74,998 | (4) | 78,357 | (4) | Swap | 0.779 | Jan 15, 2016 | Jan 15, 2021 | 2,786 | 3,034 | |||||||||||||||
$ | 1,009,729 | $ | 1,018,274 | $ | 28,846 | $ | 18,572 | |||||||||||||||||
(1) | Represents portions of the U.S. dollar tranche of the 5-Year Term Loan. |
(2) | Represents the U.S. dollar tranche of the 7-Year Term Loan. |
(3) | Represents the British pound sterling tranche of the 5-Year Term Loan. Translation to U.S. dollars is based on exchange rates of $1.32 to £1.00 as of June 30, 2018 and $1.35 to £1.00 as of December 31, 2017. |
(4) | Represents the Canadian dollar tranche of the 5-Year Term Loan. Translation to U.S. dollars is based on exchange rates of $0.76 to 1.00 CAD as of June 30, 2018 and $0.80 to 1.00 CAD as of December 31, 2017. |
(5) | Balance recorded in other assets in the consolidated balance sheets if positive and recorded in accounts payable and other accrued liabilities in the consolidated balance sheets if negative. |
Categorization under the fair value hierarchy | As of June 30, 2018 | As of December 31, 2017 | |||||||||||||||
Estimated Fair Value | Carrying Value | Estimated Fair Value | Carrying Value | ||||||||||||||
Global revolving credit facility (1)(5) | Level 2 | $ | 472,438 | $ | 472,438 | $ | 558,191 | $ | 558,191 | ||||||||
Unsecured term loans (2)(6) | Level 2 | 1,380,867 | 1,380,867 | 1,425,117 | 1,425,117 | ||||||||||||
Unsecured senior notes (3)(4)(7) | Level 2 | 7,347,309 | 7,196,491 | 6,976,603 | 6,608,545 | ||||||||||||
Mortgage loans (3)(8) | Level 2 | 106,174 | 106,274 | 106,523 | 106,611 | ||||||||||||
$ | 9,306,788 | $ | 9,156,070 | $ | 9,066,434 | $ | 8,698,464 |
(1) | The carrying value of our global revolving credit facility approximates estimated fair value, due to the variability of interest rates and the stability of our credit ratings. |
(2) | The carrying value of our unsecured term loans approximates estimated fair value, due to the variability of interest rates and the stability of our credit ratings. |
(3) | Valuations for our unsecured senior notes and mortgage loans are determined based on the expected future payments discounted at risk-adjusted rates. The 2019 Notes, 5.875% 2020 Notes, 3.400% 2020 Notes, 2021 Notes, 3.950% 2022 Notes, 3.625% 2022 Notes, 4.750% 2023 Notes, 2.750% 2023 Notes, 2.625% 2024 Notes, 2.750% 2024 Notes, 4.750% 2025 Notes, 4.250% 2025 Notes, 2027 Notes, 2028 Notes and 2029 Notes are valued based on quoted market prices. |
(4) | The carrying value of the 5.875% 2020 Notes, 3.400% 2020 Notes, 2021 Notes, 3.625% 2022 Notes, 3.950% 2022 Notes, 4.750% 2023 Notes, 2.750% 2023 Notes, 2.625% 2024 Notes, 2.750% 2024 Notes, 4.250% 2025 Notes, 2027 Notes, 2028 Notes and 2029 Notes are net of discount of $17.5 million and $18.5 million in the aggregate as of June 30, 2018 and December 31, 2017, respectively. |
(5) | The estimated fair value and carrying value are exclusive of deferred financing costs of $5.5 million and $7.2 million as of June 30, 2018 and December 31, 2017, respectively. |
(6) | The estimated fair value and carrying value are exclusive of deferred financing costs of $4.1 million and $4.8 million as of June 30, 2018 and December 31, 2017, respectively. |
(7) | The estimated fair value and carrying value are exclusive of deferred financing costs of $40.4 million and $37.8 million as of June 30, 2018 and December 31, 2017, respectively. |
(8) | The estimated fair value and carrying value are exclusive of deferred financing costs of $0.0 million and $0.0 million as of June 30, 2018 and December 31, 2017, respectively. |
Metropolitan Area | Data Center Buildings | Net Rentable Square Feet (1) | Space Under Active Development (2) | Space Held for Development (3) | ||||||||
North America | ||||||||||||
Northern Virginia | 30 | 5,199,047 | 1,115,062 | 90,998 | ||||||||
Dallas | 21 | 3,365,709 | 201,669 | 81,206 | ||||||||
Chicago | 10 | 2,960,731 | 382,892 | 231,839 | ||||||||
Silicon Valley | 19 | 2,185,341 | 65,680 | — | ||||||||
New York | 12 | 1,907,206 | 34,821 | 278,170 | ||||||||
Phoenix | 4 | 990,385 | — | 108,926 | ||||||||
San Francisco | 5 | 989,490 | — | 13,753 | ||||||||
Los Angeles | 4 | 818,479 | — | — | ||||||||
Atlanta | 5 | 775,606 | — | 313,581 | ||||||||
Boston | 5 | 534,249 | — | 50,649 | ||||||||
Houston | 6 | 392,816 | — | 13,969 | ||||||||
Denver | 2 | 371,500 | — | — | ||||||||
Minneapolis / St. Paul | 1 | 328,765 | — | — | ||||||||
Toronto, Canada | 3 | 256,369 | 644,469 | — | ||||||||
Miami | 2 | 205,797 | 20,517 | — | ||||||||
Charlotte | 3 | 95,499 | — | — | ||||||||
Austin | 1 | 85,688 | — | — | ||||||||
Portland | 1 | 48,574 | — | — | ||||||||
Seattle | 1 | 40,480 | — | 75,466 | ||||||||
North America Total | 135 | 21,551,731 | 2,465,110 | 1,258,557 | ||||||||
Europe | ||||||||||||
London, United Kingdom | 16 | 1,432,248 | 65,902 | 129,099 | ||||||||
Amsterdam, Netherlands | 9 | 471,338 | 91,859 | 68,185 | ||||||||
Dublin, Ireland | 5 | 307,775 | 49,051 | — | ||||||||
Paris, France | 3 | 185,994 | — | — | ||||||||
Frankfurt, Germany | 2 | 83,981 | 83,818 | — | ||||||||
Geneva, Switzerland | 1 | 59,190 | — | — | ||||||||
Manchester, United Kingdom | 1 | 38,016 | — | — | ||||||||
Europe Total | 37 | 2,578,542 | 290,630 | 197,284 | ||||||||
Asia Pacific | ||||||||||||
Singapore | 2 | 465,519 | 75,119 | — | ||||||||
Sydney, Australia | 3 | 138,207 | 176,150 | — | ||||||||
Melbourne, Australia | 2 | 125,329 | 21,241 | — | ||||||||
Osaka, Japan | 1 | — | 239,999 | — | ||||||||
Asia Pacific Total | 8 | 729,055 | 512,509 | — | ||||||||
Non-Data Center Properties | — | 584,212 | — | — | ||||||||
Managed Unconsolidated Joint Ventures | ||||||||||||
Northern Virginia | 4 | 546,572 | — | — | ||||||||
Silicon Valley | 4 | 326,305 | — | — | ||||||||
Dallas | 3 | 319,876 | — | — |
Metropolitan Area | Data Center Buildings | Net Rentable Square Feet (1) | Space Under Active Development (2) | Space Held for Development (3) | ||||||||
Hong Kong | 1 | 129,457 | 56,843 | — | ||||||||
New York | 1 | 108,336 | — | — | ||||||||
13 | 1,430,546 | 56,843 | — | |||||||||
Non-Managed Unconsolidated Joint Ventures | ||||||||||||
Seattle | 2 | 451,369 | — | — | ||||||||
Tokyo, Japan | 2 | 430,277 | — | — | ||||||||
Osaka, Japan | 1 | 92,087 | — | — | ||||||||
5 | 973,733 | — | — | |||||||||
Total | 198 | 27,847,819 | 3,325,092 | 1,455,841 |
(1) | Current net rentable square feet as of June 30, 2018, which represents the current square feet under lease as specified in the applicable lease agreements plus management’s estimate of space available for lease based on engineering drawings. Includes customers’ proportional share of common areas but excludes space under active development and space held for development. |
(2) | Space under active development includes current base building and data center projects in progress, and excludes space held for development. For additional information on the current and future investment for space under active development, see “—Liquidity and Capital Resources of the Operating Partnership—Construction”. |
(3) | Space held for development includes space held for future data center development, and excludes space under active development. For additional information on the current investment for space held for development, see “—Liquidity and Capital Resources of the Operating Partnership—Construction”. |
Rentable Square Feet (1) | Expiring Rates (2) | New Rates (2) | Rental Rate Changes | TI’s/Lease Commissions Per Square Foot | Weighted Average Lease Terms (years) | ||||||||||||||||
Leasing Activity (3)(4) | |||||||||||||||||||||
Renewals Signed | |||||||||||||||||||||
Turn-Key Flex ® | 381,931 | $ | 136.43 | $ | 153.53 | 12.5 | % | $ | 7.58 | 4.7 | |||||||||||
Powered Base Building ® | 45,300 | $ | 59.28 | $ | 69.02 | 16.4 | % | $ | 18.64 | 8.5 | |||||||||||
Colocation | 239,176 | $ | 276.17 | $ | 284.54 | 3.0 | % | $ | — | 1.4 | |||||||||||
Non-technical | 146,314 | $ | 17.03 | $ | 18.44 | 8.3 | % | $ | 1.26 | 3.6 | |||||||||||
New Leases Signed (5) | |||||||||||||||||||||
Turn-Key Flex ® | 896,971 | — | $ | 135.01 | — | $ | 36.06 | 7.5 | |||||||||||||
Powered Base Building ® | 199,103 | — | $ | 24.42 | — | $ | 2.20 | 10.0 | |||||||||||||
Colocation | 45,758 | — | $ | 300.36 | — | $ | 30.00 | 1.7 | |||||||||||||
Non-technical | 30,826 | — | $ | 23.77 | — | $ | 5.42 | 5.7 | |||||||||||||
Leasing Activity Summary | |||||||||||||||||||||
Turn-Key Flex ® | 1,278,902 | $ | 140.54 | ||||||||||||||||||
Powered Base Building ® | 244,403 | $ | 32.69 | ||||||||||||||||||
Colocation | 284,934 | $ | 287.08 | ||||||||||||||||||
Non-technical | 177,140 | $ | 19.37 |
(1) | For some of our properties, we calculate square footage based on factors in addition to contractually leased square feet, including power, required support space and common area. |
(2) | Rental rates represent annual estimated cash rent per rentable square foot adjusted for straight-line rents in accordance with GAAP. GAAP rental rates are inclusive of tenant concessions, if any. |
(3) | Excludes short-term leases. |
(4) | Commencement dates for the leases signed range from 2018 to 2019. |
(5) | Includes leases signed for new and re-leased space. |
Metropolitan Area | Percentage of June 30, 2018 total annualized rent (1) | |
Northern Virginia | 22.7 | % |
Chicago | 12.6 | % |
Silicon Valley | 9.1 | % |
London, United Kingdom | 9.1 | % |
New York | 8.7 | % |
Dallas | 8.1 | % |
Phoenix | 3.9 | % |
Singapore | 3.2 | % |
San Francisco | 3.2 | % |
Seattle | 2.4 | % |
Atlanta | 2.4 | % |
Amsterdam, Netherlands | 2.0 | % |
Los Angeles | 1.7 | % |
Other | 10.9 | % |
Total | 100.0 | % |
(1) | Annualized rent is monthly contractual rent (defined as cash base rent before abatements) under existing leases as of June 30, 2018 multiplied by 12. The aggregate amount of abatements for the six months ended June 30, 2018 was approximately $19.9 million. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Income Statement Data: | |||||||||||||||
Total operating revenues | $ | 754,919 | $ | 565,989 | $ | 1,499,287 | $ | 1,116,558 | |||||||
Total operating expenses | (610,857 | ) | (435,332 | ) | (1,211,412 | ) | (848,618 | ) | |||||||
Operating income | 144,062 | 130,657 | 287,875 | 267,940 | |||||||||||
Other expenses, net | (55,903 | ) | (51,086 | ) | (89,621 | ) | (103,806 | ) | |||||||
Net income | $ | 88,159 | $ | 79,571 | $ | 198,254 | $ | 164,134 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
2018 | 2017 | Change | 2018 | 2017 | Change | ||||||||||||||||||
Rental and other services | $ | 596,326 | $ | 470,877 | $ | 125,449 | $ | 1,188,624 | $ | 932,228 | $ | 256,396 | |||||||||||
Tenant reimbursements | 155,723 | 93,342 | 62,381 | 305,802 | 180,630 | 125,172 | |||||||||||||||||
Fee income | 2,343 | 1,429 | 914 | 3,476 | 3,324 | 152 | |||||||||||||||||
Other | 527 | 341 | 186 | 1,385 | 376 | 1,009 | |||||||||||||||||
Total operating revenues | $ | 754,919 | $ | 565,989 | $ | 188,930 | $ | 1,499,287 | $ | 1,116,558 | $ | 382,729 |
Stabilized | Pre-Stabilized and Other | |||||||||||||||||||||||||
Three Months Ended June 30, | Three Months Ended June 30, | |||||||||||||||||||||||||
2018 | 2017 | $ Change | % Change | 2018 | 2017 | Change | ||||||||||||||||||||
Rental and other services | $ | 350,933 | $ | 349,348 | $ | 1,585 | 0.5 | % | $ | 245,393 | $ | 121,529 | $ | 123,864 | ||||||||||||
Tenant reimbursements | 66,626 | 61,989 | 4,637 | 7.5 | % | 89,097 | 31,353 | 57,744 | ||||||||||||||||||
$ | 417,559 | $ | 411,337 | $ | 6,222 | 1.5 | % | $ | 334,490 | $ | 152,882 | $ | 181,608 |
Stabilized | Pre-Stabilized and Other | |||||||||||||||||||||||||
Six Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||
2018 | 2017 | $ Change | % Change | 2018 | 2017 | Change | ||||||||||||||||||||
Rental and other services | $ | 703,242 | $ | 694,512 | $ | 8,730 | 1.3 | % | $ | 485,382 | $ | 237,716 | $ | 247,666 | ||||||||||||
Tenant reimbursements | 126,446 | 121,931 | 4,515 | 3.7 | % | 179,356 | 58,699 | 120,657 | ||||||||||||||||||
$ | 829,688 | $ | 816,443 | $ | 13,245 | 1.6 | % | $ | 664,738 | $ | 296,415 | $ | 368,323 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
2018 | 2017 | Change | 2018 | 2017 | Change | ||||||||||||||||||
Rental property operating and maintenance | $ | 230,322 | $ | 174,716 | $ | 55,606 | $ | 455,962 | $ | 344,055 | $ | 111,907 | |||||||||||
Property taxes | 27,284 | 28,161 | (877 | ) | 62,547 | 55,080 | 7,467 | ||||||||||||||||
Insurance | 2,606 | 2,576 | 30 | 6,337 | 5,168 | 1,169 | |||||||||||||||||
Depreciation and amortization | 298,788 | 178,111 | 120,677 | 593,577 | 354,577 | 239,000 | |||||||||||||||||
General and administrative | 46,099 | 37,509 | 8,590 | 82,622 | 72,156 | 10,466 | |||||||||||||||||
Transaction and integration expenses | 5,606 | 14,235 | (8,629 | ) | 9,784 | 17,558 | (7,774 | ) | |||||||||||||||
Other | 152 | 24 | 128 | 583 | 24 | 559 | |||||||||||||||||
Total operating expenses | $ | 610,857 | $ | 435,332 | $ | 175,525 | $ | 1,211,412 | $ | 848,618 | $ | 362,794 | |||||||||||
Interest expense | $ | 78,810 | $ | 57,582 | $ | 21,228 | $ | 155,795 | $ | 113,032 | $ | 42,763 |
Stabilized | Pre-Stabilized and Other | |||||||||||||||||||||||||
Three Months Ended June 30, | Three Months Ended June 30, | |||||||||||||||||||||||||
2018 | 2017 | $ Change | % Change | 2018 | 2017 | Change | ||||||||||||||||||||
Rental property operating and maintenance | $ | 122,669 | $ | 122,450 | $ | 219 | 0.2 | % | $ | 107,653 | $ | 52,266 | $ | 55,387 | ||||||||||||
Property taxes | 14,844 | 18,697 | (3,853 | ) | (20.6 | )% | 12,440 | 9,464 | 2,976 | |||||||||||||||||
Insurance | 2,025 | 2,211 | (186 | ) | (8.4 | )% | 581 | 365 | 216 | |||||||||||||||||
$ | 139,538 | $ | 143,358 | $ | (3,820 | ) | (2.7 | )% | $ | 120,674 | $ | 62,095 | $ | 58,579 |
Stabilized | Pre-Stabilized and Other | |||||||||||||||||||||||||
Six Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||
2018 | 2017 | $ Change | % Change | 2018 | 2017 | Change | ||||||||||||||||||||
Rental property operating and maintenance | $ | 243,475 | $ | 242,214 | $ | 1,261 | 0.5 | % | $ | 212,487 | $ | 101,841 | $ | 110,646 | ||||||||||||
Property taxes | 35,019 | 37,301 | (2,282 | ) | (6.1 | )% | 27,528 | 17,779 | 9,749 | |||||||||||||||||
Insurance | 4,234 | 4,280 | (46 | ) | (1.1 | )% | 2,103 | 888 | 1,215 | |||||||||||||||||
$ | 282,728 | $ | 283,795 | $ | (1,067 | ) | (0.4 | )% | $ | 242,118 | $ | 120,508 | $ | 121,610 |
Date dividend declared | Dividend payment date | Series C Preferred Stock | Series G Preferred Stock | Series H Preferred Stock | Series I Preferred Stock | Series J Preferred Stock | Common Stock | ||||||||||||||||||
March 1, 2018 | March 30, 2018 | $ | 3,333 | $ | 3,672 | $ | 6,730 | $ | 3,969 | $ | 2,625 | $ | 208,015 | ||||||||||||
May 8, 2018 | June 29, 2018 | 3,333 | 3,672 | 6,730 | 3,969 | 2,625 | 208,071 | ||||||||||||||||||
$ | 6,666 | $ | 7,344 | $ | 13,460 | $ | 7,938 | $ | 5,250 | $ | 416,086 | ||||||||||||||
Annual rate of dividend per share | $ | 1.65625 | $ | 1.46875 | $ | 1.84375 | $ | 1.58750 | $ | 1.31250 | $ | 4.04000 |
Development Lifecycle | As of June 30, 2018 | As of December 31, 2017 | |||||||||||||||||||||||||||
(dollars in thousands) | Net Rentable Square Feet (1) | Current Investment (2) | Future Investment (3) | Total Cost | Net Rentable Square Feet (1) | Current Investment (4) | Future Investment (3) | Total Cost | |||||||||||||||||||||
Development Construction in Progress | |||||||||||||||||||||||||||||
Space Held for Development (5) | 1,455,841 | $ | 342,865 | $ | — | $ | 342,865 | 1,573,758 | $ | 416,553 | $ | — | $ | 416,553 | |||||||||||||||
Base Building Construction | 1,971,211 | 343,300 | 240,707 | 584,007 | 1,333,763 | 222,093 | 149,507 | 371,600 | |||||||||||||||||||||
Data Center Construction | 1,297,038 | 631,212 | 615,618 | 1,246,830 | 1,366,393 | 748,006 | 500,674 | 1,248,680 | |||||||||||||||||||||
Equipment Pool & Other Inventory | 4,163 | — | 4,163 | 7,245 | — | 7,245 | |||||||||||||||||||||||
Campus, Tenant Improvements & Other | 2,458 | 8,978 | 11,436 | 5,787 | 8,360 | 14,147 | |||||||||||||||||||||||
Total Development Construction in Progress | 4,724,090 | 1,323,998 | 865,303 | 2,189,301 | 4,273,914 | 1,399,684 | 658,541 | 2,058,225 | |||||||||||||||||||||
Land Inventory | (6) | 261,368 | — | 261,368 | (6) | 352,406 | — | 352,406 | |||||||||||||||||||||
Enhancement & Other | 12,858 | 28,730 | 41,588 | 8,416 | 27,209 | 35,625 | |||||||||||||||||||||||
Recurring | 12,165 | 18,904 | 31,069 | 23,985 | 29,184 | 53,169 | |||||||||||||||||||||||
Total Construction in Progress | $ | 1,610,389 | $ | 912,937 | $ | 2,523,326 | $ | 1,784,491 | $ | 714,934 | $ | 2,499,425 |
(1) | Square footage is based on current estimates and project plans, and may change upon completion of the project or due to remeasurement. |
(2) | Represents balances incurred through June 30, 2018 and included in land and building and improvements in the condensed consolidated balance sheets. |
(3) | Represents estimated cost to complete specific scope of work pursuant to contract, budget or approved capital plan. |
(4) | Represents balances incurred through December 31, 2017 and included in land and building and improvements in the condensed consolidated balance sheets. |
(5) | Excludes space held for development related to unconsolidated joint ventures and properties held for sale. |
(6) | Represents approximately 530 acres as of June 30, 2018 and approximately 539 acres as of December 31, 2017. |
Six Months Ended June 30, | |||||||
2018 | 2017 | ||||||
Development projects | $ | 492,007 | $ | 370,870 | |||
Enhancement and improvements | 9,048 | 4,538 | |||||
Recurring capital expenditures | 61,775 | 56,328 | |||||
Total capital expenditures (excluding indirect costs) | $ | 562,830 | $ | 431,736 |
Date distribution declared | Distribution payment date | Series C Preferred Units | Series G Preferred Units | Series H Preferred Units | Series I Preferred Units | Series J Preferred Units | Common Units | ||||||||||||||||||
March 1, 2018 | March 30, 2018 | $ | 3,333 | $ | 3,672 | $ | 6,730 | $ | 3,969 | $ | 2,625 | $ | 216,953 | ||||||||||||
May 8, 2018 | June 29, 2018 | 3,333 | 3,672 | 6,730 | 3,969 | 2,625 | 216,789 | ||||||||||||||||||
$ | 6,666 | $ | 7,344 | $ | 13,460 | $ | 7,938 | $ | 5,250 | $ | 433,742 | ||||||||||||||
Annual rate of distribution per unit | $ | 1.65625 | $ | 1.46875 | $ | 1.84375 | $ | 1.58750 | $ | 1.31250 | $ | 4.04000 |
Debt Summary: | |||
Fixed rate | $ | 7,070.1 | |
Variable rate debt subject to interest rate swaps | 1,009.7 | ||
Total fixed rate debt (including interest rate swaps) | 8,079.8 | ||
Variable rate—unhedged | 1,093.6 | ||
Total | $ | 9,173.4 | |
Percent of Total Debt: | |||
Fixed rate (including swapped debt) | 88.1 | % | |
Variable rate | 11.9 | % | |
Total | 100.0 | % | |
Effective Interest Rate as of June 30, 2018 (1) | |||
Fixed rate (including hedged variable rate debt) | 3.76 | % | |
Variable rate | 2.14 | % | |
Effective interest rate | 3.57 | % |
(1) | Excludes impact of deferred financing cost amortization. |
Six Months Ended June 30, | |||||||||||
2018 | 2017 | Change | |||||||||
Net cash provided by operating activities | $ | 673,088 | $ | 519,312 | $ | 153,776 | |||||
Net cash used in investing activities | (525,580 | ) | (463,464 | ) | (62,116 | ) | |||||
Net cash used in financing activities | (133,839 | ) | (19,435 | ) | (114,404 | ) | |||||
Net increase in cash, cash equivalents and restricted cash | $ | 13,669 | $ | 36,413 | $ | (22,744 | ) |
Six Months Ended June 30, | |||||||||||
2018 | 2017 | Change | |||||||||
Improvements to investments in real estate | $ | (613,841 | ) | $ | (476,070 | ) | $ | (137,771 | ) | ||
Acquisitions of real estate | (76,286 | ) | (34,829 | ) | (41,457 | ) | |||||
Prepaid construction costs and other investments | (27,869 | ) | — | (27,869 | ) | ||||||
Proceeds from sale of properties, net of sales costs | 195,385 | — | 195,385 | ||||||||
Excess proceeds from forward contracts | — | 51,308 | (51,308 | ) | |||||||
Other | (2,969 | ) | (3,873 | ) | 904 | ||||||
Net cash used in investing activities | $ | (525,580 | ) | $ | (463,464 | ) | $ | (62,116 | ) |
Six Months Ended June 30, | |||||||||||
2018 | 2017 | Change | |||||||||
Repayments of borrowings, net of proceeds | $ | (108,013 | ) | $ | 288,488 | $ | (396,501 | ) | |||
Net proceeds from issuance of common and preferred stock, including equity plans | 1,857 | 214,493 | (212,636 | ) | |||||||
Redemption of preferred stock | — | (182,500 | ) | 182,500 | |||||||
Proceeds from unsecured senior notes | 649,038 | 140,463 | 508,575 | ||||||||
Dividend and distribution payments | (673,625 | ) | (480,117 | ) | (193,508 | ) | |||||
Other | (3,096 | ) | (262 | ) | (2,834 | ) | |||||
Net cash used in financing activities | $ | (133,839 | ) | $ | (19,435 | ) | $ | (114,404 | ) |
Six Months Ended June 30, | |||||||||||
2018 | 2017 | Change | |||||||||
Repayments of borrowings, net of proceeds | $ | (108,013 | ) | $ | 288,488 | $ | (396,501 | ) | |||
General partner contributions, net | 1,857 | 31,993 | (30,136 | ) | |||||||
Proceeds from unsecured senior notes | 649,038 | 140,463 | 508,575 | ||||||||
Distribution payments | (673,625 | ) | (480,117 | ) | (193,508 | ) | |||||
Other | (3,096 | ) | (262 | ) | (2,834 | ) | |||||
Net cash used in financing activities | $ | (133,839 | ) | $ | (19,435 | ) | $ | (114,404 | ) |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Net income available to common stockholders | $ | 65,134 | $ | 57,837 | $ | 151,432 | $ | 123,982 | |||||||
Adjustments: | |||||||||||||||
Noncontrolling interests in operating partnership | 2,700 | 807 | 6,180 | 1,711 | |||||||||||
Real estate related depreciation and amortization (1) | 295,750 | 175,010 | 587,436 | 348,457 | |||||||||||
Real estate related depreciation and amortization related to investments in unconsolidated joint ventures | 3,722 | 2,754 | 7,198 | 5,510 | |||||||||||
(Gain) loss on sale of properties | (14,192 | ) | (380 | ) | (53,465 | ) | 142 | ||||||||
FFO available to common stockholders and unitholders (2) | $ | 353,114 | $ | 236,028 | $ | 698,781 | $ | 479,802 | |||||||
Basic FFO per share and unit | $ | 1.65 | $ | 1.45 | $ | 3.26 | $ | 2.96 | |||||||
Diluted FFO per share and unit (2) | $ | 1.64 | $ | 1.44 | $ | 3.25 | $ | 2.94 | |||||||
Weighted average common stock and units outstanding | |||||||||||||||
Basic | 214,288 | 163,078 | 214,149 | 162,281 | |||||||||||
Diluted (2) | 214,895 | 164,027 | 214,774 | 163,271 | |||||||||||
(1) Real estate related depreciation and amortization was computed as follows: | |||||||||||||||
Depreciation and amortization per income statement | $ | 298,788 | $ | 178,111 | 593,577 | 354,577 | |||||||||
Non-real estate depreciation | (3,038 | ) | (3,101 | ) | (6,141 | ) | (6,120 | ) | |||||||
$ | 295,750 | $ | 175,010 | $ | 587,436 | $ | 348,457 |
(2) | For all periods presented, we have excluded the effect of dilutive series C, series F, series G, series H, series I and series J preferred stock, as applicable, that may be converted upon the occurrence of specified change in control transactions as described in the articles supplementary governing the series C, series F, series G, series H, series I and series J preferred stock, as applicable, which we consider highly improbable. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||
Weighted average common stock and units outstanding | 214,288 | 163,078 | 214,149 | 162,281 | |||||||
Add: Effect of dilutive securities | 607 | 949 | 625 | 990 | |||||||
Weighted average common stock and units outstanding—diluted | 214,895 | 164,027 | 214,774 | 163,271 |
Carrying Value | Estimated Fair Value | ||||||
Fixed rate debt | $ | 7,070.1 | $ | 7,203.5 | |||
Variable rate debt subject to interest rate swaps | 1,009.7 | 1,009.7 | |||||
Total fixed rate debt (including interest rate swaps) | 8,079.8 | 8,213.2 | |||||
Variable rate debt | 1,093.6 | 1,093.6 | |||||
Total outstanding debt | $ | 9,173.4 | $ | 9,306.8 |
Notional Amount | Fair Value at Significant Other Observable Inputs (Level 2) | |||||||||||||||||||||||
As of June 30, 2018 | As of December 31, 2017 | Type of Derivative | Strike Rate | Effective Date | Expiration Date | As of June 30, 2018 (5) | As of December 31, 2017 (5) | |||||||||||||||||
Currently-paying contracts | ||||||||||||||||||||||||
$ | 206,000 | (1) | $ | 206,000 | (1) | Swap | 1.611 | Jun 15, 2017 | Jan 15, 2020 | $ | 2,882 | $ | 1,409 | |||||||||||
54,905 | (1) | 54,905 | (1) | Swap | 1.605 | Jun 6, 2017 | Jan 6, 2020 | 756 | 374 | |||||||||||||||
75,000 | (1) | 75,000 | (1) | Swap | 1.016 | Apr 6, 2016 | Jan 6, 2021 | 3,023 | 2,260 | |||||||||||||||
75,000 | (1) | 75,000 | (1) | Swap | 1.164 | Jan 15, 2016 | Jan 15, 2021 | 2,778 | 1,947 | |||||||||||||||
300,000 | (2) | 300,000 | (2) | Swap | 1.435 | Jan 15, 2016 | Jan 15, 2023 | 16,779 | 9,978 | |||||||||||||||
223,826 | (3) | 229,012 | (3) | Swap | 0.792 | Jan 15, 2016 | Jan 15, 2019 | (158 | ) | (430 | ) | |||||||||||||
74,998 | (4) | 78,357 | (4) | Swap | 0.779 | Jan 15, 2016 | Jan 15, 2021 | 2,786 | 3,034 | |||||||||||||||
$ | 1,009,729 | $ | 1,018,274 | $ | 28,846 | $ | 18,572 | |||||||||||||||||
(1) | Represents portions of the U.S. dollar tranche of the 5-Year Term Loan. |
(2) | Represents the U.S. dollar tranche of the 7-Year Term Loan. |
(3) | Represents the British pound sterling tranche of the 5-Year Term Loan. Translation to U.S. dollars is based on exchange rates of $1.32 to £1.00 as of June 30, 2018 and $1.35 to £1.00 as of December 31, 2017. |
(4) | Represents the Canadian dollar tranche of the 5-Year Term Loan. Translation to U.S. dollars is based on exchange rates of $0.76 to 1.00 CAD as of June 30, 2018 and $0.80 to 1.00 CAD as of December 31, 2017. |
(5) | Balance recorded in other assets in the consolidated balance sheets if positive and recorded in accounts payable and other accrued liabilities in the consolidated balance sheets if negative. |
Assumed event | Change ($ millions) | |||
Increase in fair value of interest rate swaps following an assumed 10% increase in interest rates | $ | 4.9 | ||
Decrease in fair value of interest rate swaps following an assumed 10% decrease in interest rates | (5.0 | ) | ||
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 | 2.4 | |||
Decrease in annual interest expense on our debt that is variable rate and not subject to swapped interest following a 10% decrease in interest rates | (2.4 | ) | ||
Increase in fair value of fixed rate debt following a 10% decrease in interest rates | 75.5 | |||
Decrease in fair value of fixed rate debt following a 10% increase in interest rates | (70.3 | ) |
Exhibit Number | Description | |
3.1 | ||
3.2 | ||
3.3 | ||
3.4 | ||
10.1† | ||
12.1 | ||
31.1 | ||
31.2 | ||
31.3 | ||
31.4 | ||
32.1 | ||
32.2 | ||
32.3 | ||
32.4 | ||
101 | The following financial statements from Digital Realty Trust, Inc.’s and Digital Realty Trust, L.P.’s Form 10-Q for the quarter ended June 30, 2018, formatted in XBRL interactive data files: (i) Condensed Consolidated Balance Sheets as of June 30, 2018 and December 31, 2017; (ii) Condensed Consolidated Income Statements for the three and six months ended June 30, 2018 and 2017; (iii) Condensed Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2018 and 2017; (iv) Condensed Consolidated Statements of Equity/Capital for the six months ended June 30, 2018; (v) Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2018 and 2017; and (vi) Notes to Condensed Consolidated Financial Statements. |
DIGITAL REALTY TRUST, INC. | |||
August 7, 2018 | /S/ A. WILLIAM STEIN | ||
A. William Stein Chief Executive Officer (principal executive officer) | |||
August 7, 2018 | /S/ ANDREW P. POWER | ||
Andrew P. Power Chief Financial Officer (principal financial officer) | |||
August 7, 2018 | /S/ EDWARD F. SHAM | ||
Edward F. Sham Chief Accounting Officer (principal accounting officer) |
DIGITAL REALTY TRUST, L.P. | |||
By: Digital Realty Trust, Inc. Its general partner | |||
By: | |||
August 7, 2018 | /S/ A. WILLIAM STEIN | ||
A. William Stein Chief Executive Officer (principal executive officer) | |||
August 7, 2018 | /S/ ANDREW P. POWER | ||
Andrew P. Power Chief Financial Officer (principal financial officer) | |||
August 7, 2018 | /s/ EDWARD F. SHAM | ||
Edward F. Sham Chief Accounting Officer (principal accounting officer) |
DIGITAL REALTY TRUST, INC., |
a Maryland corporation |
By: /s/ Joshua A. Mills |
Name: Joshua A. Mills |
DLR LLC, |
a Maryland limited liability company |
By: Digital Realty Trust, L.P. |
Its: Managing Member |
By: Digital Realty Trust, Inc. |
Its: General Partner |
By: /s/ Joshua A. Mills |
Name: Joshua A. Mills |
Title: Senior Vice President, General Counsel and Secretary |
Grant Date | Award ID | Type of Award | Number of Units Awarded | Status as of Termination Date |
Feb. 24, 2015 | 4175 | Performance-based Profits Interest Units | 48,868 | 26,842 units vested 22,026 units unvested |
Jan. 1, 2016 | 4506 | Performance-based Profits Interest Units | 23,971 | 23,971 units unvested |
Feb. 16, 2016 | 4947 | Time-based Profits Interest Units | 2,488 | 1,244 units vested 1,244 units unvested |
Jan. 1, 2017 | 5599 | Performance-based Profits Interest Units | 13,692 | 13,692 units unvested |
Feb. 28, 2017 | 7353 | Performance-based Profits Interest Units | 1,968 | 1,968 units unvested |
Feb. 28, 2017 | 6906 | Time-based Profits Interest Units | 6,111 | 1,527 units vested 4,584 units unvested |
Jan. 1, 2018 | 10013 | Performance-based Profits Interest Units | 14,238 | 14,238 units unvested |
Mar. 2, 2018 | 10049 | Time-based Profits Interest Units | 6,719 | 6,719 units unvested |
Mar. 2, 2018 | 10054 | Time-based Profits Interest Units | 2,927 | 2,927 units unvested |
Mar. 9, 2018 | 10062 | Performance-based Profits Interest Units | 4,769 | 4,769 units unvested |
Note: Performance-Based Profits Interest Units granted in 2016 and after are shown at target. |
Six Months Ended June 30, | Year Ended December 31, | |||||||||||||||||||||||||||
2018 | 2017 | 2017 | 2016 | 2015 | 2014 | 2013 | ||||||||||||||||||||||
Income from continuing operations before noncontrolling interests | $ | 198,254 | $ | 164,134 | $ | 256,267 | $ | 431,852 | $ | 301,591 | $ | 203,415 | $ | 320,449 | ||||||||||||||
Interest expense | 155,795 | 113,032 | 258,642 | 236,480 | 201,435 | 191,085 | 189,399 | |||||||||||||||||||||
Interest within rental expense (1) | 13,986 | 14,448 | 27,490 | 27,879 | 8,208 | 5,393 | 7,687 | |||||||||||||||||||||
Noncontrolling interests in consolidated joint ventures | 16 | (234 | ) | (4,238 | ) | (367 | ) | (460 | ) | (465 | ) | (595 | ) | |||||||||||||||
Earnings available to cover fixed charges | $ | 368,051 | $ | 291,380 | $ | 538,161 | $ | 695,844 | $ | 510,774 | $ | 399,428 | $ | 516,940 | ||||||||||||||
Fixed charges: | ||||||||||||||||||||||||||||
Interest expense | $ | 155,795 | $ | 113,032 | $ | 258,642 | $ | 236,480 | $ | 201,435 | $ | 191,085 | $ | 189,399 | ||||||||||||||
Interest within rental expense (1) | 13,986 | 14,448 | 27,490 | 27,879 | 8,208 | 5,393 | 7,687 | |||||||||||||||||||||
Capitalized interest | 15,549 | 8,384 | 21,714 | 16,324 | 12,851 | 20,373 | 26,277 | |||||||||||||||||||||
Total fixed charges | 185,330 | 135,864 | 307,846 | 280,683 | 222,494 | 216,851 | 223,363 | |||||||||||||||||||||
Preferred stock dividends | 40,658 | 31,898 | 68,802 | 83,771 | 79,423 | 67,465 | 42,905 | |||||||||||||||||||||
Fixed charges and preferred stock dividends | $ | 225,988 | $ | 167,762 | $ | 376,648 | $ | 364,454 | $ | 301,917 | $ | 284,316 | $ | 266,268 | ||||||||||||||
Ratio of earnings to fixed charges | 1.99 | 2.14 | 1.75 | 2.48 | 2.30 | 1.84 | 2.31 | |||||||||||||||||||||
Ratio of earnings to fixed charges and preferred stock dividends | 1.63 | 1.74 | 1.43 | 1.91 | 1.69 | 1.40 | 1.94 |
(1) | Interest within rental expense represents one-third of rental expense (the approximate portion of rental expense representing interest). |
Six Months Ended June 30, | Year Ended December 31, | |||||||||||||||||||||||||||
2018 | 2017 | 2017 | 2016 | 2015 | 2014 | 2013 | ||||||||||||||||||||||
Income from continuing operations before noncontrolling interests | $ | 198,254 | $ | 164,134 | $ | 256,267 | $ | 431,852 | $ | 300,226 | $ | 203,415 | $ | 320,449 | ||||||||||||||
Interest expense | 155,795 | 113,032 | 258,642 | 236,480 | 202,800 | 191,085 | 189,399 | |||||||||||||||||||||
Interest within rental expense (1) | 13,986 | 14,448 | 27,490 | 27,879 | 8,208 | 5,393 | 7,687 | |||||||||||||||||||||
Noncontrolling interests in consolidated joint ventures | 16 | (234 | ) | (4,238 | ) | (367 | ) | (460 | ) | (465 | ) | (595 | ) | |||||||||||||||
Earnings available to cover fixed charges | $ | 368,051 | $ | 291,380 | $ | 538,161 | $ | 695,844 | $ | 510,774 | $ | 399,428 | $ | 516,940 | ||||||||||||||
Fixed charges: | ||||||||||||||||||||||||||||
Interest expense | $ | 155,795 | $ | 113,032 | $ | 258,642 | $ | 236,480 | $ | 202,800 | $ | 191,085 | $ | 189,399 | ||||||||||||||
Interest within rental expense (1) | 13,986 | 14,448 | 27,490 | 27,879 | 8,208 | 5,393 | 7,687 | |||||||||||||||||||||
Capitalized interest | 15,549 | 8,384 | 21,714 | 16,324 | 12,851 | 20,373 | 26,277 | |||||||||||||||||||||
Total fixed charges | 185,330 | 135,864 | 307,846 | 280,683 | 223,859 | 216,851 | 223,363 | |||||||||||||||||||||
Preferred unit distributions | 40,658 | 31,898 | 68,802 | 83,771 | 79,423 | 67,465 | 42,905 | |||||||||||||||||||||
Fixed charges and preferred unit distributions | $ | 225,988 | $ | 167,762 | $ | 376,648 | $ | 364,454 | $ | 303,282 | $ | 284,316 | $ | 266,268 | ||||||||||||||
Ratio of earnings to fixed charges | 1.99 | 2.14 | 1.75 | 2.48 | 2.28 | 1.84 | 2.31 | |||||||||||||||||||||
Ratio of earnings to fixed charges and preferred unit distributions | 1.63 | 1.74 | 1.43 | 1.91 | 1.68 | 1.40 | 1.94 |
(1) | Interest within rental expense represents one-third of rental expense (the approximate portion of rental expense representing interest). |
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 officer(s) 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 Rules 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 officer(s) 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: | August 7, 2018 |
By: | /s/ A. WILLIAM STEIN |
A. William Stein | |
Chief Executive Officer | |
(Principal Executive Officer) |
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 officer(s) 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 Rules 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 officer(s) 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: | August 7, 2018 |
By: | /s/ ANDREW P. POWER |
Andrew P. Power | |
Chief Financial Officer | |
(Principal Financial Officer) |
1. | I have reviewed this quarterly report on Form 10-Q of Digital Realty Trust, L.P.; |
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 officer(s) 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 Rules 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 officer(s) 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: | August 7, 2018 |
By: | /s/ A. WILLIAM STEIN |
A. William Stein | |
Chief Executive Officer | |
(Principal Executive Officer) | |
Digital Realty Trust, Inc., sole general partner of | |
Digital Realty Trust, L.P. |
1. | I have reviewed this quarterly report on Form 10-Q of Digital Realty Trust, L.P.; |
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 officer(s) 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 Rules 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 officer(s) 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: | August 7, 2018 |
By: | /s/ ANDREW P. POWER |
Andrew P. Power | |
Chief Financial Officer | |
(Principal Financial Officer) | |
Digital Realty Trust, Inc., sole general partner of | |
Digital Realty Trust, L.P. |
(i) | the accompanying Quarterly Report on Form 10-Q of the Company for the quarterly period ended June 30, 2018 (the “Report”) fully complies with the requirements of Section 13(a) or Section 15(d) 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 at the dates and for the periods indicated. |
Dated: | August 7, 2018 |
/s/ A. WILLIAM STEIN | |
A. William Stein | |
Chief Executive Officer | |
(Principal Executive Officer) |
(i) | the accompanying Quarterly Report on Form 10-Q of the Company for the quarterly period ended June 30, 2018 (the “Report”) fully complies with the requirements of Section 13(a) or Section 15(d) 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 at the dates and for the periods indicated. |
Dated: | August 7, 2018 |
/s/ ANDREW P. POWER | |
Andrew P. Power | |
Chief Financial Officer | |
(Principal Financial Officer) |
(i) | the accompanying Quarterly Report on Form 10-Q of the Operating Partnership for the quarterly period ended June 30, 2018 (the “Report”) fully complies with the requirements of Section 13(a) or Section 15(d) 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 Operating Partnership at the dates and for the periods indicated. |
Dated: | August 7, 2018 |
/s/ A. WILLIAM STEIN | |
A. William Stein | |
Chief Executive Officer | |
(Principal Executive Officer) | |
Digital Realty Trust, Inc., sole general partner of | |
Digital Realty Trust, L.P. |
(i) | the accompanying Quarterly Report on Form 10-Q of the Operating Partnership for the quarterly period ended June 30, 2018 (the “Report”) fully complies with the requirements of Section 13(a) or Section 15(d) 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 Operating Partnership at the dates and for the periods indicated. |
Dated: | August 7, 2018 |
/s/ ANDREW P. POWER | |
Andrew P. Power | |
Chief Financial Officer | |
(Principal Financial Officer) | |
Digital Realty Trust, Inc., sole general partner of | |
Digital Realty Trust, L.P. |
Document and Entity Information - shares |
6 Months Ended | |
---|---|---|
Jun. 30, 2018 |
Aug. 03, 2018 |
|
Entity Information [Line Items] | ||
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2018 | |
Document Fiscal Year Focus | 2018 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false | |
Entity Registrant Name | Digital Realty Trust, Inc. | |
Entity Central Index Key | 0001297996 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 206,097,243 | |
Digital Realty Trust, L.P. | ||
Entity Information [Line Items] | ||
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2018 | |
Document Fiscal Year Focus | 2018 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false | |
Entity Registrant Name | Digital Realty Trust, L.P. | |
Entity Central Index Key | 0001494877 | |
Entity Filer Category | Non-accelerated Filer |
Organization and Description of Business |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization and Description Of Business | 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, our, us or the Company) is a leading global provider of data center, colocation and interconnection solutions for customers across a variety of industry verticals ranging from cloud and information technology services, communications and social networking to financial services, manufacturing, energy, healthcare, and consumer products. The Operating Partnership, a Maryland limited partnership, is the entity through which Digital Realty Trust, Inc., a Maryland corporation, conducts its business of owning, acquiring, developing and operating data centers. Digital Realty Trust, Inc. operates as a REIT for federal income tax purposes. A summary of our data center portfolio as of June 30, 2018 and December 31, 2017 is as follows:
We are diversified in major metropolitan areas where data center and technology customers are concentrated, including the Atlanta, Boston, Chicago, Dallas, Los Angeles, New York, Northern Virginia, Phoenix, San Francisco, Seattle, Silicon Valley and Toronto metropolitan areas in North America, the Amsterdam, Dublin, Frankfurt, London and Paris metropolitan areas in Europe and the Hong Kong, Melbourne, Osaka, Singapore, Sydney, and Tokyo metropolitan areas in the Asia Pacific region. The portfolio consists of data centers, Internet gateway facilities and office and other non-data center space. The Operating Partnership was formed on July 21, 2004 in anticipation of Digital Realty Trust, Inc.’s initial public offering (IPO) on November 3, 2004 and commenced operations on that date. As of June 30, 2018, Digital Realty Trust, Inc. owns a 96.0% common interest and a 100.0% preferred interest in the Operating Partnership. As of December 31, 2017, Digital Realty Trust, Inc. owned a 96.0% common interest and a 100.0% preferred interest in the Operating Partnership. As sole general partner of the Operating Partnership, Digital Realty Trust, Inc. has the full, exclusive and complete responsibility for the Operating Partnership’s day-to-day management and control. The limited partners of the Operating Partnership do not have rights to replace Digital Realty Trust, Inc. as the general partner nor do they have participating rights, although they do have certain protective rights. |
Summary of Significant Accounting Policies |
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Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies (a) Principles of Consolidation and Basis of Presentation The accompanying interim condensed consolidated financial statements include all of the accounts of Digital Realty Trust, Inc., the Operating Partnership and the subsidiaries of the Operating Partnership. Intercompany balances and transactions have been eliminated. The accompanying interim condensed consolidated 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 necessary for a fair presentation have been included. All such adjustments are considered to be of a normal recurring nature, except as otherwise indicated. 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, 2017. The notes to the condensed consolidated financial statements of Digital Realty Trust, Inc. and the Operating Partnership have been combined to provide the following benefits:
There are a few differences between the Company and the Operating Partnership, which are reflected in these condensed consolidated financial statements. We believe it is important to understand the differences between the Company and the Operating Partnership in the context of how we operate as an interrelated consolidated company. Digital Realty Trust, Inc.’s only material asset is its ownership of partnership interests of the Operating Partnership. As a result, Digital Realty Trust, Inc. generally does not conduct business itself, other than acting as the sole general partner of the Operating Partnership, issuing public securities from time to time and guaranteeing certain unsecured debt of the Operating Partnership and certain of its subsidiaries and affiliates. Digital Realty Trust, Inc. itself has not issued any indebtedness but guarantees the unsecured debt of the Operating Partnership and certain of its subsidiaries and affiliates, as disclosed in these notes. The Operating Partnership holds substantially all the assets of the Company and holds the ownership interests in the Company’s joint ventures. The Operating Partnership conducts the operations of the business and is structured as a partnership with no publicly traded equity. Except for net proceeds from public equity issuances by Digital Realty Trust, Inc., which are generally contributed to the Operating Partnership in exchange for partnership units, the Operating Partnership generally generates the capital required by the Company’s business primarily through the Operating Partnership’s operations, by the Operating Partnership’s or its affiliates' direct or indirect incurrence of indebtedness or through the issuance of partnership units. The presentation of noncontrolling interests in operating partnership, stockholders’ equity and partners’ capital are the main areas of difference between the condensed consolidated financial statements of Digital Realty Trust, Inc. and those of the Operating Partnership. The common limited partnership interests held by the limited partners in the Operating Partnership are presented as limited partners’ capital within partners’ capital in the Operating Partnership’s condensed consolidated financial statements and as noncontrolling interests in operating partnership within equity in Digital Realty Trust, Inc.’s condensed consolidated financial statements. The common and preferred partnership interests held by Digital Realty Trust, Inc. in the Operating Partnership are presented as general partner’s capital within partners’ capital in the Operating Partnership’s condensed consolidated financial statements and as preferred stock, common stock, additional paid-in capital and accumulated dividends in excess of earnings within stockholders’ equity in Digital Realty Trust, Inc.’s condensed consolidated financial statements. The differences in the presentations between stockholders’ equity and partners’ capital result from the differences in the equity issued at the Digital Realty Trust, Inc. and the Operating Partnership levels. To help investors understand the significant differences between the Company and the Operating Partnership, these consolidated financial statements present the following separate sections for each of the Company and the Operating Partnership:
In the sections that combine disclosure of Digital Realty Trust, Inc. and the Operating Partnership, these notes refer to actions or holdings as being actions or holdings of the Company. Although the Operating Partnership is generally the entity that enters into contracts and joint ventures and holds assets and debt, reference to the Company is appropriate because the business is one enterprise and the Company generally operates the business through the Operating Partnership. (b) Cash Equivalents For the purpose of the condensed consolidated statements of cash flows, we consider short-term investments with original maturities of 90 days or less to be cash equivalents. As of June 30, 2018, cash equivalents consist of investments in money market instruments. (c) Investments in Unconsolidated Joint Ventures The Company’s investments in unconsolidated joint ventures are accounted for using the equity method, whereby our investment is increased for capital contributed and our share of the joint venture's net income and decreased by distributions we receive and our share of any losses of the joint ventures. We do not record losses of the joint ventures in excess of our investment balances unless we are liable for the obligations of the joint venture or are otherwise committed to provide financial support to the joint venture. Likewise, and as long as we have no explicit or implicit obligations to the joint venture, we will suspend equity method accounting to the extent that cash distributions exceed our investment balances until those unrecorded earnings exceed the excess distributions previously recognized in income. In this case, we will apply cost accounting concepts which tie income recognition to the receipt of cash. Cost basis accounting concepts will apply until earnings exceed the excess distributions previously recognized in income. We amortize the difference between the cost of our investments in the joint ventures and the book value of the underlying equity into income on a straight-line basis consistent with the lives of the underlying assets. The amortization of this difference was immaterial for the three and six months ended June 30, 2018 and 2017, respectively. (d) Capitalization of Costs Direct and indirect project costs that are clearly associated with the development of properties are capitalized as incurred. Project costs include all costs directly associated with the development of a property, including construction costs, interest, property taxes, insurance, legal fees and costs of personnel working on the project. Indirect costs that do not clearly relate to the projects under development are not capitalized and are charged to expense as incurred. Capitalization of costs begins when the activities necessary to get the development project ready for its intended use begins, which include costs incurred before the beginning of construction. Capitalization of costs ceases when the development project is substantially complete and ready for its intended use. Determining when a development project commences and when it is substantially complete and ready for its intended use involves a degree of judgment. We generally consider a development project to be substantially complete and ready for its intended use upon receipt of a certificate of occupancy. If and when development of a property is suspended pursuant to a formal change in the planned use of the property, we will evaluate whether the accumulated costs exceed the estimated value of the project and write off the amount of any such excess accumulated costs. For a development project that is suspended for reasons other than a formal change in the planned use of such property, the accumulated project costs are evaluated for impairment consistent with our impairment policies for long-lived assets. Capitalized costs are allocated to the specific components of a project that are benefited. During the three months ended June 30, 2018 and 2017, we capitalized interest of approximately $8.2 million and $3.8 million, respectively. We capitalized interest of approximately $15.5 million and $8.4 million during the six months ended June 30, 2018 and 2017, respectively. We capitalized amounts relating to compensation and other overhead expense of employees direct and incremental to construction and successful leasing activities of approximately $17.4 million and $18.9 million during the three months ended June 30, 2018 and 2017, respectively, and approximately $35.7 million and $37.6 million during the six months ended June 30, 2018 and 2017, respectively. In addition to capitalized cash compensation, approximately $5.5 million and $6.1 million of capitalized costs primarily related to external leasing commissions are included in improvements to and advances for investments in real estate in cash flows from investing activities in the condensed consolidated statements of cash flows for the six months ended June 30, 2018 and 2017, respectively. (e) Goodwill Goodwill represents the excess of the purchase price over the fair value of net tangible and intangible assets acquired and tangible and intangible liabilities assumed in a business combination. Goodwill is not amortized. We perform an annual impairment test for goodwill and between annual tests, we evaluate goodwill for impairment whenever events or changes in circumstances occur that would more likely than not reduce the fair value of a reporting unit below its carrying value. In our impairment tests of goodwill, we first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. If based on this assessment, we determine that the fair value of the reporting unit is not less than its carrying value, then performing the additional two-step impairment test is unnecessary. If our qualitative assessment indicates that goodwill impairment is more likely than not, we perform a two-step impairment test. We test goodwill for impairment under the two-step impairment test by first comparing the book value of net assets including goodwill to the fair value of the reporting unit. If the fair value is determined to be less than the book value of the net assets, including goodwill, a second step is performed to compute the amount of impairment as the difference between the implied fair value of goodwill and its carrying value. We estimate the fair value of the reporting units using discounted cash flows. If the carrying value of goodwill exceeds its implied fair value, an impairment charge is recognized. We have not recognized any goodwill impairments since our inception. Since some of the goodwill is denominated in foreign currencies, changes to the goodwill balance occur over time due to changes in foreign exchange rates. The following is a summary of goodwill activity for the six months ended June 30, 2018 (in thousands):
(f) Share-Based Compensation The Company measures all share-based compensation awards at fair value on the date they are granted to employees and directors, and recognizes compensation cost, net of forfeitures, over the requisite service period for awards with only a service condition. The estimated fair value of the long-term incentive units and Class D units (discussed in Note 13) granted by us is being amortized on a straight-line basis over the expected service period. The fair value of share-based compensation awards that contain a market condition is measured using a Monte Carlo simulation method and not adjusted based on actual achievement of the market condition. (g) Assets and Liabilities Measured at Fair Value Fair value under U.S. GAAP is a market-based measurement, not an entity-specific measurement. Therefore, our fair value measurements are determined based on the assumptions that market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair-value measurements, we use a fair-value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy). Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access. Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs may include quoted prices for similar assets and liabilities in active markets, as well as inputs that are observable for the asset or liability (other than quoted prices), such as interest rates, foreign exchange rates, and yield curves that are observable at commonly quoted intervals. Level 3 inputs are unobservable inputs for the asset or liability which are typically based on an entity’s own assumptions, as there is little, if any, related market activity. In instances where the determination of the fair-value measurement is based on inputs from different levels of the fair-value hierarchy, the lowest level input that is significant would be used to determine the fair-value measurement in its entirety. Our assessment of the significance of a particular input to the fair-value measurement in its entirety requires judgment, and considers factors specific to the asset or liability. (h) Derivative Instruments Derivative financial instruments are employed to manage risks, including foreign currency and interest rate exposures and are not used for trading or speculative purposes. As part of the Company’s risk management program, a variety of financial instruments, such as interest rate swaps and foreign exchange contracts, may be used to mitigate interest rate exposure and foreign currency exposure. The Company recognizes all derivative instruments in the balance sheet at fair value. Changes in the fair value of derivatives are recognized periodically either in earnings or in stockholders’ equity as a component of accumulated other comprehensive income (loss), depending on whether the derivative financial instrument is undesignated or qualifies for hedge accounting, and if so, whether it represents a fair value, cash flow, or net investment hedge. Gains and losses on derivatives designated as cash flow hedges, to the extent they are included in the assessment of effectiveness, are recorded in other comprehensive income (loss) and subsequently reclassified to earnings to offset the impact of the hedged items when they occur. In the event it becomes probable the forecasted transaction to which a cash flow hedge relates will not occur, the derivative would be terminated and the amount in other comprehensive income (loss) would be recognized in earnings. Changes in the fair value of derivatives that are designated and qualify as a hedge of the net investment in foreign operations, to the extent they are included in the assessment of effectiveness, are reported in other comprehensive income (loss) and are deferred until disposal of the underlying assets. Gains and losses representing components excluded from the assessment of effectiveness for cash flow and fair value hedges are recognized in earnings on a straight-line basis in the same caption as the hedged item over the term of the hedge. Gains and losses representing components excluded from the assessment of effectiveness for net investment hedges are recognized in earnings on a straight-line basis over the term of the hedge. The net interest paid or received on interest rate swaps is recognized as interest expense. Gains and losses resulting from the early termination of interest rate swap agreements are deferred and amortized as adjustments to interest expense over the remaining period of the debt originally covered by the terminated swap. See Note 14 for further discussion on derivative instruments. (i) Income Taxes Digital Realty Trust, Inc. has elected to be treated as a real estate investment trust (a “REIT”) for federal income tax purposes. As a REIT, Digital Realty Trust, Inc. generally is not required to pay federal corporate income tax to the extent taxable income is currently distributed to its stockholders. If Digital Realty Trust, Inc. fails to qualify as a REIT in any taxable year, it will be subject to federal income tax (including any applicable alternative minimum tax for taxable years prior to 2018) on its taxable income. The Company is subject to foreign, state and local income taxes in the jurisdictions in which it conducts business. The Company’s taxable REIT subsidiaries are subject to federal, state and foreign income taxes to the extent there is taxable income. Accordingly, the Company recognizes current and deferred income taxes for its taxable REIT subsidiaries, including federal, state and non-U.S. jurisdictions, as appropriate. We assess our significant tax positions in accordance with U.S. GAAP for all open tax years and determine whether we have any material unrecognized liabilities from uncertain tax benefits. If a tax position is not considered “more-likely-than-not” to be sustained solely on its technical merits, no benefits of the tax position are to be recognized (for financial statement purposes). As of June 30, 2018 and December 31, 2017, we had no assets or liabilities for uncertain tax positions. We classify interest and penalties from significant uncertain tax positions as interest expense and operating expense, respectively, in our condensed consolidated income statements. For the three and six months ended June 30, 2018 and 2017, we had no such interest or penalties. The tax year 2014 and thereafter remain open to examination by the major taxing jurisdictions with which the Company files tax returns. See Note 10 for further discussion on income taxes. (j) Presentation of Transactional-based Taxes We account for transactional-based taxes, such as value added tax, or VAT, for our international properties on a net basis. (k) Redeemable Noncontrolling Interests Redeemable noncontrolling interests include amounts related to partnership units issued by consolidated subsidiaries of the Company in which redemption for equity is outside the control of the Company. Partnership units which are determined to be contingently redeemable for cash under the Financial Accounting Standards Board’s "Distinguishing Liabilities from Equity" guidance are classified as redeemable noncontrolling interests and presented in the mezzanine section between total liabilities and stockholder’s equity on the Company’s condensed consolidated balance sheets. The amounts of consolidated net income attributable to the Company and to the noncontrolling interests are presented on the Company’s condensed consolidated income statements. (l) Revenue Recognition The majority of our revenue is derived from lease arrangements, which we account for in accordance with “Leases (Topic 840)”. We account for the non-lease components within our lease arrangements, as well as other sources of revenue, in accordance with “Revenue from Contracts with Customers (Topic 606)”. Revenue recognized as a result of applying Topic 840 was 97% and Topic 606 was 3% of total operating revenue for the six months ended June 30, 2018. Our leases are classified as operating leases and minimum rents are recognized on a straight-line basis over the terms of the leases, which may span multiple years. The excess of rents recognized over amounts contractually due pursuant to the underlying leases is included in deferred rent in the accompanying condensed consolidated balance sheets and contractually due but unpaid rents are included in accounts and other receivables. Tenant reimbursements for real estate taxes, common area maintenance, and other recoverable costs under our leases 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 revenue in the case of above-market leases or an increase to rental revenue in the case of below-market leases. Interconnection services are included in rental and other services on the condensed consolidated income statements and are generally provided on a month-to-month, one-year or multi-year term. Interconnection services include port and cross-connect services. Port services are typically sold on a one-year or multi-year term and revenue is recognized on a recurring monthly basis (straight-line). The Company bills customers on a monthly basis and recognizes the revenue over the period the service is provided. Revenue for cross-connect installations is generally recognized in the period the cross-connect is installed. Interconnection services that are not specific to a particular space are accounted for under Topic 606 and have terms that are generally one year or less. Occasionally, customers engage the Company for certain services. The nature of these services historically involves property management and construction management. The proper revenue recognition of these services can be different, depending on whether the arrangements are service revenue or contractor type revenue. Service revenues are typically recognized on an equal monthly basis based on the minimum fee to be earned. The monthly amounts could be adjusted depending on if certain performance milestones are met. Fee income arises primarily from contractual management agreements with entities in which we have a noncontrolling interest. The management fees are recognized as earned under the respective agreements. Management and other fee income related to partially owned noncontrolled entities are recognized to the extent attributable to the unaffiliated interest. We make subjective estimates as to when our revenue is earned and the collectability 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, customer concentrations, customer creditworthiness and current economic trends when evaluating the adequacy of the allowance for bad debts. These estimates have a direct impact on our net revenue because a higher bad debt allowance would result in lower net revenue, and recognizing rental revenue as earned in one period versus another would result in higher or lower net revenue for a particular period. (m) Transaction and Integration Expense Transaction and integration expense includes business combination expenses, other business development expenses and other expenses to integrate newly acquired investments, which are expensed as incurred. Transaction expenses include closing costs, broker commissions and other professional fees, including legal and accounting fees related to business combinations or acquisitions that were not consummated. Integration costs include transition costs associated with organizational restructuring (such as severance and retention payments and recruiting expenses), third-party consulting expenses directly related to the integration of acquired companies (in areas such as cost savings and synergy realization, technology and systems work), and internal costs such as training, travel and labor, reflecting time spent by Company personnel on integration activities and projects. Recurring costs are recorded in general and administrative expense. (n) Gains on Sale of Properties As of January 1, 2018, we began accounting for the sale of real estate properties under Financial Accounting Standards Board, or FASB, Accounting Standards Update, or ASU, No. 2017-05, Other Income—Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20), which provides for revenue recognition based on transfer of ownership. All properties were non-financial real estate assets and thus not businesses which were sold to noncustomers with no performance obligations subsequent to transfer of ownership. During the six months ended June 30, 2018, the Company sold real estate properties for gross proceeds of $199.4 million, and a recorded net gain of $53.7 million. (o) 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 consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates made. On an on-going basis, we evaluate our estimates, including those related to the valuation of our real estate properties, tenant relationship value, goodwill, contingent consideration, accounts receivable and deferred rent receivable, performance-based equity compensation plans and the completeness of accrued liabilities. We base our estimates on historical experience, current market conditions, and various other assumptions that are believed to be reasonable under the circumstances. Actual results may vary from those estimates and those estimates could vary under different assumptions or conditions. (p) Segment and Geographic Information All of our properties generate similar revenues and expenses related to tenant rent and services and reimbursements and operating expenses. The sale and delivery of our products is consistent across all properties and although services are provided to a wide range of customers, the types of real estate services provided to them are standardized throughout the portfolio. As such, the properties in our portfolio have similar economic characteristics and the nature of the products and services provided to our customers and the method to distribute such services are consistent throughout the portfolio. In addition, the chief operating decision makers evaluate operating performance and make resource allocation decisions for the portfolio as a whole, rather than by property type or revenue stream. Consequently, our properties qualify for aggregation into one reporting segment. Operating revenues from properties in the United States were $614.1 million and $439.1 million and outside the United States were $140.8 million and $126.9 million for the three months ended June 30, 2018 and 2017, respectively. Operating revenues from properties in the United States were $1.2 billion and $0.9 billion and outside the United States were $281.7 million and $248.3 million for the six months ended June 30, 2018 and 2017, respectively. We had investments in real estate located in the United States of $10.7 billion and $10.5 billion, and outside the United States of $3.2 billion and $3.1 billion, as of June 30, 2018 and December 31, 2017, respectively. Operating revenues from properties located in the United Kingdom were $74.0 million and $67.5 million, or 9.8% and 11.9% of total operating revenues, for the three months ended June 30, 2018 and 2017, respectively. Operating revenues from properties located in the United Kingdom were $149.2 million and $132.7 million, or 10.0% and 11.9% of total operating revenues, for the six months ended June 30, 2018 and 2017, respectively. No other foreign country comprised more than 10% of total operating revenues for each of these periods. We had investments in real estate located in the United Kingdom of $1.7 billion and $1.7 billion, or 11.9% and 12.1% of total long-lived assets, as of June 30, 2018 and December 31, 2017, respectively. No other foreign country comprised more than 10% of total long-lived assets as of June 30, 2018 and December 31, 2017. (q) New Accounting Pronouncements New Accounting Standards Adopted In August 2017, the FASB issued ASU No. 2017-12, "Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities". The new standard amends the hedge accounting recognition and presentation requirements in Accounting Standards Codification, or ASC, 815. As permitted by ASU 2017-12, the Company early adopted this standard in the first quarter of 2018 on a prospective basis. Refer to Note 2(h), Derivative Instruments, for our policy related to the adoption of this standard. In January 2016, the FASB issued ASU No. 2016-01, "Recognition and Measurement of Financial Assets and Financial Liabilities". The guidance requires entities to measure equity investments that do not result in consolidation and are not accounted for under the equity method at fair value and to record changes in instruments specific credit risk for financial liabilities measured under the fair value option in other comprehensive income. The principal effect of ASU 2016-01 on our condensed consolidated financial statements is that, prior to adoption of ASU 2016-01, changes in the fair values of investments in equity securities with readily determinable fair values or redemption values were recognized in other comprehensive income until realized, while under ASU 2016-01 all changes in the fair values of these equity securities are recognized in current earnings. The update is effective for fiscal years beginning after December 15, 2017, and for interim periods therein. We adopted this standard in the first quarter of 2018 and the adoption did not have a material impact on our condensed consolidated financial statements. In May 2014, the FASB issued ASU No. 2014-09, "Revenue from Contracts with Customers (Topic 606)", and since that date has issued several additional ASUs intended to clarify certain aspects of ASU 2014-09 and to provide for certain practical expedients entities may elect upon adoption. Collectively, these ASUs outline a single comprehensive model for entities to use in accounting for revenues arising from contracts with customers. We adopted Topic 606 in the first quarter of 2018 using the modified retrospective transition method and applied Topic 606 to those contracts that were not completed as of January 1, 2018. The results for reporting periods beginning after January 1, 2018 are presented under Topic 606, while prior period amounts are not adjusted and continue to be presented under Topic 605. Our financial statements did not recognize a material effect from the cumulative impact of adopting Topic 606 as the new accounting standard does not impact lessor accounting. Refer to Note 2(l), Revenue Recognition, for the updated policy related to the adoption of this standard. New Accounting Standards Issued but not yet Adopted In February 2016, the FASB issued ASU 2016-02, "Leases (Topic 842)", which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e., lessees and lessors). The new standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification will determine whether lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Accounting for leases with a term of 12 months or less will be similar to existing guidance for operating leases today. The new standard requires lessors to account for leases using an approach that is substantially equivalent to existing guidance for sales-type leases, direct financing leases and operating leases. ASU 2016-02 is expected to impact the Company’s consolidated financial statements for leases where the Company is a lessee, primarily for the Company’s data center operating leases, ground leases and administrative office leases, and the Company will be required to record a lease liability and a right of use asset on its condensed consolidated balance sheet at fair value upon adoption. ASU 2016-02 also limits the capitalization of leasing costs to initial direct costs, which will likely result in a reduction to our capitalized leasing costs and an increase in expenses, though the amount of such change is highly dependent upon the leasing compensation structures in place at the time of adoption. ASU 2016-02 supersedes the previous leases standard, Leases (Topic 840). The standard is effective on January 1, 2019, with early adoption permitted. The new leasing standard requires modified retrospective transition. In March 2018, the FASB affirmed a proposed ASU that would allow entities to elect a simplified transition approach which would require applying the provisions of the new guidance at the effective date as opposed to the earliest period presented under the modified retrospective approach. A set of practical expedients for implementation, which must be elected as a package and for all leases, may also be elected. These practical expedients include relief from re-assessing lease classification at the adoption date for expired or existing leases, although a right-of-use asset and lease liability would still be recorded for such leases. In March 2018, the FASB affirmed a proposed ASU that would include creating a practical expedient that would provide lessors an option not to separate lease and non-lease components when certain criteria are met and instead account for those components as a single component. We will be subject to the requirements of Topic 842 as both a lessor and a lessee. We are currently assessing the method of adoption and the impact that ASU 2016-02, and any subsequent amendments, will have on our consolidated financial statements. In January 2017, the FASB issued guidance codified in ASU Topic 2017-04, "Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment". ASU 2017-04 simplifies the accounting for goodwill impairment by eliminating the process of measuring the implied value of goodwill, known as step two, from the goodwill impairment test. Instead, if the carrying amount of a reporting unit exceeds its fair value, an impairment loss shall be recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit. The standard will be effective for interim and annual reporting periods beginning after December 15, 2019, with early adoption permitted. We do not expect the provisions of ASU 2017-04 to have a material impact on our consolidated financial statements. In June 2018, the FASB issued ASU 2018-07, “Improvements to Nonemployee Share-Based Payment Accounting,” which more closely aligns the accounting for employee and nonemployee share-based payments. The standard will be effective for interim and annual reporting periods beginning after December 15, 2018. Early adoption is permitted, but no earlier than an entity’s adoption date of Topic 606. We do not expect the provisions of ASU 2018-07 to have a material impact on our consolidated financial statements. |
Investments in Real Estate |
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Real Estate [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments In Real Estate | Investments in Real Estate Acquisitions We acquired the following real estate during the six months ended June 30, 2018:
Held for Sale We sold the remaining four properties that met the criteria to be classified as held for sale as of March 31, 2018 during the three months ended June 30, 2018. As of December 31, 2017, we had identified eight properties that met the criteria to be classified as held for sale. As of December 31, 2017, the eight properties had an aggregate carrying value of $139.5 million within total assets and $5.0 million within total liabilities and are shown as assets held for sale and obligations associated with assets held for sale on the consolidated balance sheet, respectively. The properties are not representative of a significant component of our portfolio, nor do the potential sales represent a significant shift in our strategy. Dispositions We sold the following real estate properties during the six months ended June 30, 2018:
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Investments in Unconsolidated Joint Ventures |
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Equity Method Investments and Joint Ventures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments in Unconsolidated Joint Ventures | Investments in Unconsolidated Joint Ventures As of June 30, 2018, our investments in unconsolidated joint ventures consist of effective 50% interests in four joint ventures that own data center buildings in Seattle, Hong Kong, Tokyo and Osaka, 20% interests in two joint ventures, one of which owns 10 data center properties with an investment fund managed by Prudential Real Estate Investors (PREI®) and the other which owns one data center property with an affiliate of Griffin Capital Essential Asset REIT, Inc. (GCEAR), and a 17% interest in a joint venture that owns a data center property in Silicon Valley. The Osaka/Tokyo joint venture was formed on November 1, 2017. The following tables present summarized financial information for our joint ventures as of June 30, 2018 and December 31, 2017 and for the six months ended June 30, 2018 and 2017 (in thousands):
The amounts reflected in the tables above, except for our investment in and share of equity in earnings of unconsolidated joint ventures, are based on the historical financial information of the individual joint ventures. The debt of our unconsolidated joint ventures generally are non-recourse to us, except for customary exceptions pertaining to such matters as intentional misuse of funds, environmental conditions, and material misrepresentations. Differences between the Company’s investment in the joint ventures and the amount of the underlying equity in net assets of the joint ventures are due to basis differences resulting from the Company’s equity investment recorded at its historical basis versus the fair value of the Company’s contributed interest in the joint ventures. Our proportionate share of the earnings or losses related to these unconsolidated joint ventures is reflected as equity in earnings of unconsolidated joint ventures on the accompanying condensed consolidated income statements. |
Acquired Intangible Assets and Liabilities |
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Acquired Intangible Assets And Liabilities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquired Intangible Assets and Liabilities | Acquired Intangible Assets and Liabilities The following summarizes our acquired intangible assets (real estate intangibles, comprised of acquired in-place lease value and tenant relationship value along with acquired above-market lease value) and intangible liabilities (acquired below-market lease value) as of June 30, 2018 and December 31, 2017.
Amortization of acquired below-market leases, net of acquired above-market leases, resulted in a (decrease)/increase in rental revenues of $(7.0) million and $1.9 million for the three months ended June 30, 2018 and 2017, respectively, and $(13.8) million and $3.9 million for the six months ended June 30, 2018 and 2017, respectively. The expected average remaining lives for acquired below-market leases and acquired above-market leases is 8.4 years and 3.3 years, respectively, as of June 30, 2018. Estimated annual amortization of acquired below-market leases, net of acquired above-market leases, for each of the five succeeding years and thereafter, commencing July 1, 2018 is as follows:
Amortization of acquired in-place lease value (a component of depreciation and amortization expense) was $55.1 million and $14.4 million for the three months ended June 30, 2018 and 2017, respectively, and $112.1 million and $28.6 million for the six months ended June 30, 2018 and 2017, respectively. The expected average amortization period for acquired in-place lease value is 6.3 years as of June 30, 2018. The weighted average remaining contractual life for acquired leases excluding renewals or extensions is 5.7 years as of June 30, 2018. Estimated annual amortization of acquired in-place lease value for each of the five succeeding years and thereafter, commencing July 1, 2018 is as follows:
Amortization of tenant relationship value (a component of depreciation and amortization expense) was approximately $30.9 million and $17.5 million for the three months ended June 30, 2018 and 2017, respectively, and $62.0 million and $35.1 million for the six months ended June 30, 2018 and 2017, respectively. As of June 30, 2018, the weighted average remaining contractual life for tenant relationship value was 14.8 years. Estimated annual amortization of tenant relationship value for each of the five succeeding years and thereafter, commencing July 1, 2018 is as follows:
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Debt of the Company |
6 Months Ended |
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Jun. 30, 2018 | |
Debt Disclosure [Abstract] | |
Debt of the Company | Debt of the Company In this Note 6, the “Company” refers only to Digital Realty Trust, Inc. and not to any of its subsidiaries. The Company itself does not currently have any indebtedness. All debt is currently held directly or indirectly by the Operating Partnership. Guarantee of Debt The Company guarantees the Operating Partnership’s obligations with respect to its 5.875% notes due 2020 (5.875% 2020 Notes), 3.400% notes due 2020 (3.400% 2020 Notes), 5.250% notes due 2021 (2021 Notes), 3.950% notes due 2022 (3.950% 2022 Notes), 3.625% notes due 2022 (3.625% 2022 Notes), 2.750% notes due 2023 (2.750% 2023 Notes), 4.750% notes due 2025 (4.750% 2025 Notes), 3.700% notes due 2027 (2027 Notes) and 4.450% notes due 2028 (2028 Notes). The Company and the Operating Partnership guarantee the obligations of Digital Stout Holding, LLC, an indirect, wholly owned subsidiary of the Operating Partnership, with respect to its 4.750% notes due 2023 (4.750% 2023 Notes), 2.750% notes due 2024 (2.750% 2024 Notes), 4.250% notes due 2025 (4.250% 2025 Notes) and 3.300% notes due 2029 (2029 Notes) and the obligations of Digital Euro Finco, LLC, a wholly owned subsidiary of the Operating Partnership, with respect to its 2.625% notes due 2024 (2.625% 2024 Notes) and Floating Rate Guaranteed Notes due 2019 (2019 Notes). The Company is also the guarantor of the Operating Partnership’s and its subsidiary borrowers’ obligations under the global revolving credit facility and unsecured term loans. |
Debt of the Operating Partnership |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Digital Realty Trust, L.P. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt of the Operating Partnership | Debt of the Operating Partnership A summary of outstanding indebtedness of the Operating Partnership as of June 30, 2018 and December 31, 2017 is as follows (in thousands):
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Global Revolving Credit Facility On January 15, 2016, we refinanced our global revolving credit facility and entered into a global senior credit agreement for a $2.0 billion senior unsecured revolving credit facility, which we refer to as the global revolving credit facility, that replaced the $2.0 billion revolving credit facility executed on August 15, 2013, as amended. The global revolving credit facility has an accordion feature that enables us to increase the borrowing capacity of the credit facility to up to $2.5 billion, subject to the receipt of lender commitments and other conditions precedent. The refinanced facility matures on January 15, 2020, with two six-month extension options available. The interest rate for borrowings under the global revolving credit facility equals the applicable index plus a margin which is based on the credit ratings of our long-term debt and is currently 100 basis points. An annual facility fee on the total commitment amount of the facility, based on the credit ratings of our long-term debt, currently 20 basis points, is payable quarterly. Funds may be drawn in U.S., Canadian, Singapore, Australian and Hong Kong dollars, as well as Euro, British pound sterling and Japanese yen. As of June 30, 2018, interest rates are based on 1-month LIBOR, 1-month EURIBOR, 1-month BBR, 1-month HIBOR, 1-month JPY LIBOR, 1-month SOR and 1-month CDOR, plus a margin of 1.00%. We have used and intend to use available borrowings under the global revolving credit facility to acquire additional properties, fund development opportunities and for general working capital and other corporate purposes, including potentially for the repurchase, redemption or retirement of outstanding debt or equity securities. As of June 30, 2018, approximately $22.8 million of letters of credit were issued. The global revolving 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, including with respect to unencumbered assets. In addition, the global revolving credit facility restricts Digital Realty Trust, Inc. from making distributions to its stockholders, or redeeming or otherwise repurchasing shares of its capital stock, after the occurrence and during the continuance of an event of default, except in limited circumstances including as necessary to enable Digital Realty Trust, Inc. to maintain its qualification as a REIT and to minimize the payment of income or excise tax. As of June 30, 2018, we were in compliance with all of such covenants. Unsecured Term Loans On January 15, 2016, we refinanced our senior unsecured multi-currency term loan facility and entered into a term loan agreement, which governs (i) a $1.25 billion 5-year senior unsecured term loan, which we refer to as the 5-Year Term Loan, and (ii) a $300 million 7-year senior unsecured term loan, which we refer to as the 7-Year Term Loan. The 2016 term loan agreement replaced the $1.0 billion term loan agreement executed on April 16, 2012, as amended. The 5-Year Term Loan matures on January 15, 2021 and the 7-Year Term Loan matures on January 15, 2023. In addition, we have the ability from time to time to increase the aggregate size of lending under the 2016 term loan agreement from $1.55 billion to up to $1.8 billion, subject to receipt of lender commitments and other conditions precedent. Interest rates are based on our senior unsecured debt ratings and are currently 110 basis points and 155 basis points over the applicable index for floating rate advances for the 5-Year Term Loan and the 7-Year Term Loan, respectively. Funds may be drawn in U.S., Canadian, Singapore, Australian and Hong Kong dollars, as well as Euro, British pound sterling and Japanese yen. Based on exchange rates in effect at June 30, 2018, the balance outstanding is approximately $1.4 billion, excluding deferred financing costs. We have used borrowings under the term loans for acquisitions, repayment of indebtedness, development, working capital and general corporate purposes. The covenants under the term loans are consistent with our global revolving credit facility and, as of June 30, 2018, we were in compliance with all of such covenants. 4.450% Notes due 2028 On June 21, 2018, the Operating Partnership issued $650.0 million in aggregate principal amount of notes, maturing on July 15, 2028 with an interest rate of 4.450% per annum, which we refer to as the 2028 Notes. The purchase price paid by the initial purchasers was 99.852% of the principal amount. The 2028 Notes are general unsecured senior obligations of the Operating Partnership, rank equally in right of payment with all other senior unsecured indebtedness of the Operating Partnership and are fully and unconditionally guaranteed by Digital Realty Trust, Inc. Interest on the 2028 Notes is payable on January 15 and July 15 of each year, beginning on January 15, 2019. The net proceeds from the offering after deducting the original issue discount of approximately $1.0 million and underwriting commissions and expenses of approximately $5.7 million was approximately $643.3 million. We used the net proceeds from this offering to temporarily repay borrowings under our global revolving credit facility and for general corporate purposes. The 2028 Notes have been reflected net of discount in the condensed consolidated balance sheet. The indenture governing the 2028 Notes contains certain covenants, including (1) a leverage ratio not to exceed 60%, (2) a secured debt leverage ratio not to exceed 40% and (3) an interest coverage ratio of greater than 1.50, and also requires us to maintain total unencumbered assets of not less than 150% of the aggregate principal amount of unsecured debt. At June 30, 2018, we were in compliance with each of these financial covenants. The table below summarizes our debt maturities and principal payments as of June 30, 2018 (in thousands):
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Income per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income per Share | Income per Share The following is a summary of basic and diluted income per share (in thousands, except share and per share amounts):
We have excluded the following potentially dilutive securities in the calculations above as they would be antidilutive or not dilutive:
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Income per Unit |
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Income per Unit | Income per Unit The following is a summary of basic and diluted income per unit (in thousands, except unit and per unit amounts):
We have excluded the following potentially dilutive securities in the calculations above as they would be antidilutive or not dilutive:
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Income Taxes |
6 Months Ended |
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Jun. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes Digital Realty Trust, Inc. has elected to be treated and believes that it has been organized and has operated in a manner that has enabled it to qualify as a REIT for federal income tax purposes. As a REIT, Digital Realty Trust, Inc. is generally not subject to corporate level federal income taxes on taxable income distributed currently to its stockholders. Since inception, Digital Realty Trust, Inc. has distributed at least 100% of its taxable income annually and intends to do so for the tax year ending December 31, 2018. As such, no provision for federal income taxes has been included in the Company's accompanying condensed consolidated financial statements for the three and six months ended June 30, 2018 and 2017. The Operating Partnership is a partnership and is not required to pay federal income tax. Instead, taxable income is allocated to its partners, who include such amounts on their federal income tax returns. As such, no provision for federal income taxes has been included in the Operating Partnership’s accompanying condensed consolidated financial statements. We have elected taxable REIT subsidiary (“TRS”) status for some of our consolidated subsidiaries. In general, a TRS may provide services that would otherwise be considered impermissible for REITs to provide and may hold assets that REITs cannot hold directly. Income taxes for TRS entities were accrued, as necessary, for the three and six months ended June 30, 2018 and 2017. For our TRS entities and foreign subsidiaries that are subject to U.S. federal, state and foreign income taxes, deferred tax assets and liabilities are established for temporary differences between the financial reporting basis and the tax basis of assets and liabilities at the enacted tax rates expected to be in effect when the temporary differences reverse. A valuation allowance for deferred tax assets is provided if we believe it is more likely than not that the deferred tax asset may not be realized, based on available evidence at the time the determination is made. An increase or decrease in the valuation allowance that results from the change in circumstances that causes a change in our judgment about the realizability of the related deferred tax asset is included in the income statement. Deferred tax assets (net of valuation allowance) and liabilities for our TRS entities and foreign subsidiaries were accrued, as necessary, for the three and six months ended June 30, 2018 and 2017. As of June 30, 2018 and December 31, 2017, we had deferred tax liabilities net of deferred tax assets of approximately $161.8 million and $167.0 million, respectively, primarily related to our foreign properties, classified in accounts payable and other accrued expenses in the condensed consolidated balance sheet. The majority of our net deferred tax liability relates to differences between tax basis and book basis of the assets acquired in the Sentrum portfolio acquisition during 2012 and the European portfolio acquisition in July 2016. The valuation allowance against the deferred tax assets at June 30, 2018 and December 31, 2017 relate primarily to net operating loss carryforwards attributable to certain foreign jurisdictions and from the acquisition of Telx, that we do not expect to utilize, and deferred tax assets resulting from certain foreign real estate acquisition costs, which are not depreciated for tax purposes, but are deductible upon ultimate sale of the property. Given the indefinite holding period associated with these assets, realization of these deferred tax assets is not more-likely-than-not as of June 30, 2018 and December 31, 2017. The federal tax legislation enacted on December 22, 2017, commonly known as the Tax Cuts and Jobs Act (the “2017 Tax Legislation”), reduced the corporate federal tax rate in the U.S. to 21%, effective upon January 1, 2018. As such, deferred tax assets and liabilities are remeasured using the lower corporate federal tax rate at December 31, 2017. While we do not expect other material impacts, the new tax rules are complex and lack developed administrative guidance. We continue to work with our tax advisors to analyze and determine the full impact that the 2017 Tax Legislation as a whole will have on us. |
Equity and Accumulated Other Comprehensive Loss, Net |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity and Accumulated Other Comprehensive Loss, Net | Equity and Accumulated Other Comprehensive Loss, Net (a) Noncontrolling Interests in Operating Partnership Noncontrolling interests in the Operating Partnership relate to the interests that are not owned by Digital Realty Trust, Inc. The following table shows the ownership interests in the Operating Partnership as of June 30, 2018 and December 31, 2017:
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 Digital Realty Trust, Inc. common stock at the time of redemption. Alternatively, Digital Realty Trust, Inc. may elect to acquire those common units in exchange for shares of Digital Realty Trust, Inc. 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, Digital Realty Trust, Inc. 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 noncontrolling Operating Partnership common and incentive units. Based on the results of this analysis, we concluded that the common units and incentive units of the Operating Partnership met the criteria to be classified within equity, except for certain common units issued to certain former unitholders in DuPont Fabros Technology, L.P. ("DFT Operating Partnership") in the DuPont Fabros Technology merger ("DFT Merger"), which are subject to certain restrictions and, accordingly, are not presented as permanent equity in the condensed consolidated balance sheet. In connection with the initial public offering of DuPont Fabros Technology, Inc. ("DFT") in 2007, DFT, the DFT Operating Partnership and certain DFT Operating Partnership unitholders entered into a tax protection agreement to assist such unitholders in deferring certain U.S. federal income tax liabilities that may have otherwise resulted from the contribution transactions undertaken in connection with the initial public offering and the ownership of interests in the DFT Operating Partnership and to set forth certain agreements with respect to other tax matters. In connection with the DFT Merger, certain DFT Operating Partnership unitholders entered into a new tax protection agreement with Digital Realty Trust, Inc. and the Operating Partnership that replaced and superseded the DFT tax protection agreement, effective as of the closing of the DFT Merger. Pursuant to the new tax protection agreement, such DFT Operating Partnership unitholders entered into a guarantee of certain debt of a subsidiary of the Operating Partnership. The Operating Partnership must offer such DFT Operating Partnership unitholders a new guarantee opportunity in the event any guaranteed debt is repaid prior to March 1, 2023. If the Operating Partnership fails to offer the guarantee opportunity or to allocate guaranteed debt to any such DFT Operating Partnership unitholder as required under the new tax protection agreement, the Operating Partnership generally would be required to indemnify each such DFT Operating Partnership unitholder for the tax liability resulting from such failure, as determined under the new tax protection agreement. The redemption value of the noncontrolling Operating Partnership common units and the vested incentive units was approximately $894.2 million and $887.0 million based on the closing market price of Digital Realty Trust, Inc. common stock on June 30, 2018 and December 31, 2017, respectively. The following table shows activity for the noncontrolling interests in the Operating Partnership for the six months ended June 30, 2018:
(b) Dividends We have declared and paid the following dividends on our common and preferred stock for the six months ended June 30, 2018 (in thousands, except per share data):
Distributions out of Digital Realty Trust, Inc.’s current or accumulated earnings and profits are generally classified as dividends whereas distributions in excess of its current and accumulated earnings and profits, to the extent of a stockholder’s U.S. federal income tax basis in Digital Realty Trust, Inc.’s stock, are generally classified as a return of capital. Distributions in excess of a stockholder’s U.S. federal income tax basis in Digital Realty Trust, Inc.’s stock are generally characterized as capital gain. Cash provided by operating activities has generally been sufficient to fund all distributions, however, in the future we may also need to utilize borrowings under the global revolving credit facility to fund all or a portion of distributions. (c) Accumulated Other Comprehensive Loss, Net The accumulated balances for each item within other comprehensive income (loss), net are as follows (in thousands):
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Capital and Accumulated Other Comprehensive Loss |
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Capital and Accumulated Other Comprehensive Loss | Capital and Accumulated Other Comprehensive Loss (a) Allocations of Net Income and Net Losses to Partners Except for special allocations to holders of profits interest units described below in Note 13(a) under the heading “Incentive Plan—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, Digital Realty Trust, Inc. 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 noncontrolling Operating Partnership common and incentive units. Based on the results of this analysis, we concluded that the common units and incentive units of the Operating Partnership met the criteria to be classified within capital, except for certain common units issued to certain former DFT Operating Partnership unitholders in the DFT Merger, which are subject to certain restrictions and, accordingly, are not presented as permanent capital in the condensed consolidated balance sheet. In connection with the initial public offering of DFT in 2007, DFT, the DFT Operating Partnership and certain DFT Operating Partnership unitholders entered into a tax protection agreement to assist such unitholders in deferring certain U.S. federal income tax liabilities that may have otherwise resulted from the contribution transactions undertaken in connection with the initial public offering and the ownership of interests in the DFT Operating Partnership and to set forth certain agreements with respect to other tax matters. In connection with the DFT Merger, certain DFT Operating Partnership unitholders entered into a new tax protection agreement with Digital Realty Trust, Inc. and the Operating Partnership that replaced and superseded the DFT tax protection agreement, effective as of the closing of the DFT Merger. Pursuant to the new tax protection agreement, such DFT Operating Partnership unitholders entered into a guarantee of certain debt of a subsidiary of the Operating Partnership. The Operating Partnership must offer such DFT Operating Partnership unitholders a new guarantee opportunity in the event any guaranteed debt is repaid prior to March 1, 2023. If the Operating Partnership fails to offer the guarantee opportunity or to allocate guaranteed debt to any such DFT Operating Partnership unitholder as required under the new tax protection agreement, the Operating Partnership generally would be required to indemnify each such DFT Operating Partnership unitholder for the tax liability resulting from such failure, as determined under the new tax protection agreement. The redemption value of the limited partners’ common units and the vested incentive units was approximately $894.2 million and $887.0 million based on the closing market price of Digital Realty Trust, Inc.’s common stock on June 30, 2018 and December 31, 2017, respectively. (c) 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 six months ended June 30, 2018 (in thousands, except for per unit data):
(d) Accumulated Other Comprehensive Loss The accumulated balances for each item within other comprehensive income are as follows (in thousands):
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Incentive Plan |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Incentive Plan | Incentive Plan On April 28, 2014, our stockholders approved the Digital Realty Trust, Inc., Digital Services, Inc., and Digital Realty Trust, L.P. 2014 Incentive Award Plan (as amended, the 2014 Incentive Award Plan). The 2014 Incentive Award Plan became effective and replaced the Amended and Restated 2004 Incentive Award Plan, as amended, as of the date of such stockholder approval. The material features of the 2014 Incentive Award Plan are described in our definitive Proxy Statement filed on March 19, 2014 in connection with the 2014 Annual Meeting, which description is incorporated herein by reference. Effective as of September 14, 2017, the 2014 Incentive Award Plan was amended to provide that shares which remained available for issuance under DFT’s Amended and Restated 2011 Equity Incentive Plan immediately prior to the closing of the DFT Merger (as adjusted and converted into shares of Digital Realty Trust, Inc.’s common stock) may be used for awards under the 2014 Incentive Award Plan and will not reduce the shares authorized for grant under the 2014 Incentive Award Plan, to the extent that using such shares is permitted without stockholder approval under applicable stock exchange rules. In connection with the amendment to the 2014 Incentive Award Plan, on September 22, 2017, Digital Realty Trust, Inc. registered an additional 3,714,560 shares that may be issued pursuant to the 2014 Incentive Award Plan. As of June 30, 2018, approximately 7.1 million shares of common stock, including awards convertible into or exchangeable for shares of common stock, remained available for future issuance under the 2014 Incentive Award Plan. Each long-term incentive unit and each Class D unit issued under the 2014 Incentive Award Plan counts as one share of common stock for purposes of calculating the limit on shares that may be issued under the 2014 Incentive Award Plan and the individual award limits set forth therein. Below is a summary of our compensation expense for the three and six months ended June 30, 2018 and 2017 and our unearned compensation as of June 30, 2018 and December 31, 2017 (in millions):
(a) Long-Term Incentive Units Long-term incentive units, which are also referred to as profits interest 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 (other than Class D units), whether vested or not, will receive the same quarterly per unit distributions as Operating Partnership common units, which equal the per share distributions on Digital Realty Trust, Inc. common stock. Initially, long-term incentive units do not have full parity with common units with respect to liquidating distributions. 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 and privileges of common units of the Operating Partnership, including redemption rights. For a discussion of how long-term incentive units achieve parity with common units, see Note 14(a) to our consolidated financial statements for the fiscal year ended December 31, 2017, included in our Annual Report on 10-K for the year ended December 31, 2017. Below is a summary of our long-term incentive unit activity for the six months ended June 30, 2018.
The grant date fair values, which equal the market price of Digital Realty Trust, Inc. common stock on the applicable grant date(s), are being expensed on a straight-line basis for service awards over four years, the current vesting period of the long-term incentive units. (b) Market Performance-Based Awards During the six months ended June 30, 2018 and 2017, the Compensation Committee of the Board of Directors of Digital Realty Trust, Inc. approved the grant of market performance-based Class D units of the Operating Partnership and market performance-based restricted stock units, or RSUs, covering shares of Digital Realty Trust, Inc.’s common stock (collectively, the “awards”), under the 2014 Incentive Award Plan to officers and employees of the Company. The awards, which were determined to contain a market condition, utilize total shareholder return, or TSR, over a three-year measurement period as the market performance metric. Awards will vest based on Digital Realty Trust, Inc.’s TSR relative to the MSCI US REIT Index, or RMS, over a three-year market performance period, or the Market Performance Period, commencing in January 2018 or January 2017, as applicable (or, if earlier, ending on the date on which a change in control of the Company occurs), subject to continued services. Vesting with respect to the market condition is measured based on the difference between Digital Realty Trust, Inc.’s TSR percentage and the TSR percentage of the RMS, or the RMS Relative Market Performance. In the event that the RMS Relative Market Performance during the Market Performance Period is achieved at the “threshold,” “target” or “high” level as set forth below, the awards will become vested as to the market condition with respect to the percentage of Class D units or RSUs, as applicable, set forth below:
If the RMS Relative Market Performance falls between the levels specified above, the percentage of the award that will vest with respect to the market condition will be determined using straight-line linear interpolation between such levels. In January 2018, following the completion of the applicable Market Performance Period, the Compensation Committee determined that the high level had been achieved for the 2015 awards and, accordingly, 363,193 class D units (including 36,246 distribution equivalent units that immediately vested on December 31, 2017 upon the high level being achieved) and 49,707 RSUs performance vested, subject to service-based vesting. On February 27, 2018, 50% of the 2015 awards vested and the remaining 50% will vest on February 27, 2019, subject to continued employment through each applicable vesting date. Following the completion of the applicable Market Performance Period, the 2017 awards that satisfy the market condition, if any, will vest 50% on February 27, 2020 and 50% on February 27, 2021, subject to continued employment through each applicable vesting date. Following the completion of the applicable Market Performance Period, the 2018 awards that satisfy the market condition, if any, will vest 50% on February 27, 2021 and 50% on February 27, 2022, subject to continued employment through each applicable vesting date. In the event of a change in control, termination of employment by the Company without cause, or termination of employment by the award recipient for good reason, death, disability or retirement, service-based vesting will be accelerated, in full or on a pro rata basis in any case prior to the completion of the Market Performance Period. However, vesting with respect to the market condition will continue to be measured based on RMS Relative Market Performance during the three-year Market Performance Period (or, in the case of a change in control, shortened Market Performance Period). The fair values of the 2018 awards and 2017 awards granted were measured using a Monte Carlo simulation to estimate the probability of the market vesting condition being satisfied. Digital Realty Trust, Inc.’s achievement of the market vesting condition is contingent on its TSR over a three-year market performance period, relative to the total shareholder return of the RMS. The Monte Carlo simulation is a probabilistic technique based on the underlying theory of the Black-Scholes formula, which was run for 100,000 trials to determine the fair value of the awards. For each trial, the payoff to an award is calculated at the settlement date and is then discounted to the grant date at a risk-free interest rate. The total expected value of the awards on the grant date was determined by multiplying the average value per award over all trials by the number of awards granted. Assumptions used in the valuations are summarized as follows:
These valuations were performed in a risk-neutral framework, so no assumption was made with respect to an equity risk premium. As of June 30, 2018, 2,165,692 Class D units and 590,569 market performance-based RSUs had been awarded to our executive officers and other employees. The number of units granted reflects the maximum number of Class D units or market performance-based RSUs, as applicable, which will become vested assuming the achievement of the highest level of RMS Relative Market Performance under the awards and, in the case of the Class D units, also includes distribution equivalent units. The fair value of these awards of approximately $96.7 million will be recognized as compensation expense on a straight-line basis over the expected service period of approximately four years. If the market conditions are not met, at the end of the applicable performance periods, the unamortized amount will be recognized as an expense at that time. (c) Restricted Stock Below is a summary of our restricted stock activity for the six months ended June 30, 2018.
The grant date fair values, which equal the market price of Digital Realty Trust, Inc. common stock on the grant date, are expensed on a straight-line basis for service awards over the vesting period of the restricted stock, which is generally four years. |
Derivative Instruments |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments | Derivative Instruments Currently, we use interest rate swaps to manage our interest rate risk. The valuation of these instruments is determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves. The fair values of interest rate swaps are determined using the market standard methodology of netting the discounted future fixed cash receipts (or payments) and the discounted expected variable cash payments (or receipts). The variable cash payments (or receipts) are based on an expectation of future interest rates (forward curves) derived from observable market interest rate curves. To comply with the provisions of fair value accounting guidance, we incorporate credit valuation adjustments to appropriately reflect both our own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of our derivative contracts for the effect of nonperformance risk, we have considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts, and guarantees. Although we have determined that the majority of the inputs used to value our derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with our derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by us and our counterparties. However, as of June 30, 2018, we have assessed the significance of the impact of the credit valuation adjustments on the overall valuation of our derivative positions and have determined that the credit valuation adjustments are not significant to the overall valuation of our derivatives. As a result, we have determined that our derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy. We do not have any fair value measurements on a recurring basis using significant unobservable inputs (Level 3) as of June 30, 2018 or December 31, 2017. The Company presents its interest rate derivatives in its condensed consolidated balance sheets on a gross basis as interest rate swap assets (recorded in other assets) and interest rate swap liabilities (recorded in accounts payable and other accrued liabilities). As of June 30, 2018, there was no impact from netting arrangements as the Company did not have any derivatives in liability positions. Cash Flow Hedges of Interest Rate Risk Our objectives in using interest rate derivatives are to add stability to interest expense and to manage our exposure to interest rate movements related to certain floating rate debt obligations. To accomplish this objective, we primarily use interest rate swaps as part of our interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. We record all our interest rate swaps on the condensed consolidated balance sheet at fair value. In determining the fair value of our interest rate swaps, we consider the credit risk of our counterparties. These counterparties are generally larger financial institutions engaged in providing a variety of financial services. These institutions generally face similar risks regarding adverse changes in market and economic conditions, including, but not limited to, fluctuations in interest rates, exchange rates, equity and commodity prices and credit spreads. The recent and pervasive disruptions in the financial markets have heightened the risks to these institutions. As of June 30, 2018 and December 31, 2017, we had the following outstanding interest rate derivatives that were designated as effective cash flow hedges of interest rate risk (in thousands):
As of June 30, 2018, we estimate that an additional $6.6 million will be reclassified as a decrease to interest expense during the twelve months ended June 30, 2019, when the hedged forecasted transactions impact earnings. Foreign Currency Net Investment Hedges During the three months ended June 30, 2016, we entered into a series of forward contracts pursuant to which we agreed to sell an amount of foreign currency for an agreed upon amount of U.S. dollars. These forward contracts were executed to manage foreign currency exposures associated with certain transactions. As of June 30, 2016, the forward contracts did not meet the criteria for hedge accounting under GAAP and had a fair value of approximately $37.8 million. On July 1, 2016, the four forward contracts still in place met the criteria for net investment hedge accounting. During the year ended December 31, 2017, we terminated the four forward contracts with a notional amount of GBP 357.3 million. In connection with the settlement, we received approximately $64.0 million in proceeds and the related amount of approximately $26.2 million of accumulated other comprehensive income (AOCI) will remain in AOCI until the Company sells or liquidates its GBP-denominated investments, which has not occurred as of June 30, 2018. Credit-risk-related Contingent Features We have agreements with each of our derivative counterparties that contain a provision where we could be declared in default on our derivative obligations if repayment of the underlying indebtedness is accelerated by the lender due to our default on the indebtedness. As of June 30, 2018, we did not have any derivatives in a net liability position, and have not posted any collateral related to these agreements. |
Fair Value of Financial Instruments |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value of Financial Instruments | Fair Value of Financial Instruments We disclose fair value information about all financial instruments, whether or not recognized in the condensed consolidated balance sheets, for which it is practicable to estimate fair value. Current accounting guidance requires the Company to disclose fair value information about all financial instruments, whether or not recognized in the balance sheets, for which it is practicable to estimate fair value. The Company’s disclosures of estimated fair value of financial instruments at June 30, 2018 and December 31, 2017 were determined using available market information and appropriate valuation methods. Considerable judgment is necessary to interpret market data and develop estimated fair value. The use of different market assumptions or estimation methods may have a material effect on the estimated fair value amounts. The carrying amounts for cash and cash equivalents, restricted cash, accounts and other receivables, accounts payable and other accrued liabilities, accrued dividends and distributions, security deposits and prepaid rents approximate fair value because of the short-term nature of these instruments. As described in Note 14 "Derivative Instruments", the interest rate swaps are recorded at fair value. We calculate the fair value of our mortgage loans, unsecured term loan and unsecured senior notes based on currently available market rates assuming the loans are outstanding through maturity and considering the collateral and other loan terms. In determining the current market rate for fixed rate debt, a market spread is added to the quoted yields on federal government treasury securities with similar maturity dates to our debt. The carrying value of our global revolving credit facility approximates fair value, due to the variability of interest rates. As of June 30, 2018 and December 31, 2017, the aggregate estimated fair value and carrying value of our global revolving credit facility, unsecured term loans, unsecured senior notes and mortgage loans were as follows (in thousands):
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Commitments and Contingencies |
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Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies (a) Construction Commitments Our properties require periodic investments of capital for tenant-related capital expenditures and for general capital improvements including ground up construction. From time to time in the normal course of our business, we enter into various construction contracts with third parties that may obligate us to make payments. At June 30, 2018, we had open commitments, including amounts reimbursable of approximately $7.4 million, related to construction contracts of approximately $441.3 million. (b) Legal Proceedings The Company is involved in legal proceedings arising in the ordinary course of business from time to time. As of June 30, 2018, the Company is not currently a party to any legal proceedings that it believes would have a material adverse effect on its financial position, results of operations or liquidity nor, to its knowledge, are any such legal proceedings threatened against it. |
Summary of Significant Accounting Policies (Policies) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||
Principles of Consolidation and Basis of Presentation | Principles of Consolidation and Basis of Presentation The accompanying interim condensed consolidated financial statements include all of the accounts of Digital Realty Trust, Inc., the Operating Partnership and the subsidiaries of the Operating Partnership. Intercompany balances and transactions have been eliminated. The accompanying interim condensed consolidated 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 necessary for a fair presentation have been included. All such adjustments are considered to be of a normal recurring nature, except as otherwise indicated. 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, 2017. The notes to the condensed consolidated financial statements of Digital Realty Trust, Inc. and the Operating Partnership have been combined to provide the following benefits:
There are a few differences between the Company and the Operating Partnership, which are reflected in these condensed consolidated financial statements. We believe it is important to understand the differences between the Company and the Operating Partnership in the context of how we operate as an interrelated consolidated company. Digital Realty Trust, Inc.’s only material asset is its ownership of partnership interests of the Operating Partnership. As a result, Digital Realty Trust, Inc. generally does not conduct business itself, other than acting as the sole general partner of the Operating Partnership, issuing public securities from time to time and guaranteeing certain unsecured debt of the Operating Partnership and certain of its subsidiaries and affiliates. Digital Realty Trust, Inc. itself has not issued any indebtedness but guarantees the unsecured debt of the Operating Partnership and certain of its subsidiaries and affiliates, as disclosed in these notes. The Operating Partnership holds substantially all the assets of the Company and holds the ownership interests in the Company’s joint ventures. The Operating Partnership conducts the operations of the business and is structured as a partnership with no publicly traded equity. Except for net proceeds from public equity issuances by Digital Realty Trust, Inc., which are generally contributed to the Operating Partnership in exchange for partnership units, the Operating Partnership generally generates the capital required by the Company’s business primarily through the Operating Partnership’s operations, by the Operating Partnership’s or its affiliates' direct or indirect incurrence of indebtedness or through the issuance of partnership units. The presentation of noncontrolling interests in operating partnership, stockholders’ equity and partners’ capital are the main areas of difference between the condensed consolidated financial statements of Digital Realty Trust, Inc. and those of the Operating Partnership. The common limited partnership interests held by the limited partners in the Operating Partnership are presented as limited partners’ capital within partners’ capital in the Operating Partnership’s condensed consolidated financial statements and as noncontrolling interests in operating partnership within equity in Digital Realty Trust, Inc.’s condensed consolidated financial statements. The common and preferred partnership interests held by Digital Realty Trust, Inc. in the Operating Partnership are presented as general partner’s capital within partners’ capital in the Operating Partnership’s condensed consolidated financial statements and as preferred stock, common stock, additional paid-in capital and accumulated dividends in excess of earnings within stockholders’ equity in Digital Realty Trust, Inc.’s condensed consolidated financial statements. The differences in the presentations between stockholders’ equity and partners’ capital result from the differences in the equity issued at the Digital Realty Trust, Inc. and the Operating Partnership levels. To help investors understand the significant differences between the Company and the Operating Partnership, these consolidated financial statements present the following separate sections for each of the Company and the Operating Partnership:
In the sections that combine disclosure of Digital Realty Trust, Inc. and the Operating Partnership, these notes refer to actions or holdings as being actions or holdings of the Company. Although the Operating Partnership is generally the entity that enters into contracts and joint ventures and holds assets and debt, reference to the Company is appropriate because the business is one enterprise and the Company generally operates the business through the Operating Partnership. |
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Cash Equivalents | Cash Equivalents For the purpose of the condensed consolidated statements of cash flows, we consider short-term investments with original maturities of 90 days or less to be cash equivalents. As of June 30, 2018, cash equivalents consist of investments in money market instruments. |
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Investment in Unconsolidated Joint Ventures | Investments in Unconsolidated Joint Ventures The Company’s investments in unconsolidated joint ventures are accounted for using the equity method, whereby our investment is increased for capital contributed and our share of the joint venture's net income and decreased by distributions we receive and our share of any losses of the joint ventures. We do not record losses of the joint ventures in excess of our investment balances unless we are liable for the obligations of the joint venture or are otherwise committed to provide financial support to the joint venture. Likewise, and as long as we have no explicit or implicit obligations to the joint venture, we will suspend equity method accounting to the extent that cash distributions exceed our investment balances until those unrecorded earnings exceed the excess distributions previously recognized in income. In this case, we will apply cost accounting concepts which tie income recognition to the receipt of cash. Cost basis accounting concepts will apply until earnings exceed the excess distributions previously recognized in income. We amortize the difference between the cost of our investments in the joint ventures and the book value of the underlying equity into income on a straight-line basis consistent with the lives of the underlying assets. The amortization of this difference was immaterial for the three and six months ended June 30, 2018 and 2017, respectively. |
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Capitalization of Costs | Capitalization of Costs Direct and indirect project costs that are clearly associated with the development of properties are capitalized as incurred. Project costs include all costs directly associated with the development of a property, including construction costs, interest, property taxes, insurance, legal fees and costs of personnel working on the project. Indirect costs that do not clearly relate to the projects under development are not capitalized and are charged to expense as incurred. Capitalization of costs begins when the activities necessary to get the development project ready for its intended use begins, which include costs incurred before the beginning of construction. Capitalization of costs ceases when the development project is substantially complete and ready for its intended use. Determining when a development project commences and when it is substantially complete and ready for its intended use involves a degree of judgment. We generally consider a development project to be substantially complete and ready for its intended use upon receipt of a certificate of occupancy. If and when development of a property is suspended pursuant to a formal change in the planned use of the property, we will evaluate whether the accumulated costs exceed the estimated value of the project and write off the amount of any such excess accumulated costs. For a development project that is suspended for reasons other than a formal change in the planned use of such property, the accumulated project costs are evaluated for impairment consistent with our impairment policies for long-lived assets. Capitalized costs are allocated to the specific components of a project that are benefited. |
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Goodwill | Goodwill Goodwill represents the excess of the purchase price over the fair value of net tangible and intangible assets acquired and tangible and intangible liabilities assumed in a business combination. Goodwill is not amortized. We perform an annual impairment test for goodwill and between annual tests, we evaluate goodwill for impairment whenever events or changes in circumstances occur that would more likely than not reduce the fair value of a reporting unit below its carrying value. In our impairment tests of goodwill, we first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. If based on this assessment, we determine that the fair value of the reporting unit is not less than its carrying value, then performing the additional two-step impairment test is unnecessary. If our qualitative assessment indicates that goodwill impairment is more likely than not, we perform a two-step impairment test. We test goodwill for impairment under the two-step impairment test by first comparing the book value of net assets including goodwill to the fair value of the reporting unit. If the fair value is determined to be less than the book value of the net assets, including goodwill, a second step is performed to compute the amount of impairment as the difference between the implied fair value of goodwill and its carrying value. We estimate the fair value of the reporting units using discounted cash flows. If the carrying value of goodwill exceeds its implied fair value, an impairment charge is recognized. We have not recognized any goodwill impairments since our inception. Since some of the goodwill is denominated in foreign currencies, changes to the goodwill balance occur over time due to changes in foreign exchange rates. |
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Share-Based Compensation | Share-Based Compensation The Company measures all share-based compensation awards at fair value on the date they are granted to employees and directors, and recognizes compensation cost, net of forfeitures, over the requisite service period for awards with only a service condition. The estimated fair value of the long-term incentive units and Class D units (discussed in Note 13) granted by us is being amortized on a straight-line basis over the expected service period. The fair value of share-based compensation awards that contain a market condition is measured using a Monte Carlo simulation method and not adjusted based on actual achievement of the market condition. |
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Assets and Liabilities Measured at Fair Value | Assets and Liabilities Measured at Fair Value Fair value under U.S. GAAP is a market-based measurement, not an entity-specific measurement. Therefore, our fair value measurements are determined based on the assumptions that market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair-value measurements, we use a fair-value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy). Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access. Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs may include quoted prices for similar assets and liabilities in active markets, as well as inputs that are observable for the asset or liability (other than quoted prices), such as interest rates, foreign exchange rates, and yield curves that are observable at commonly quoted intervals. Level 3 inputs are unobservable inputs for the asset or liability which are typically based on an entity’s own assumptions, as there is little, if any, related market activity. In instances where the determination of the fair-value measurement is based on inputs from different levels of the fair-value hierarchy, the lowest level input that is significant would be used to determine the fair-value measurement in its entirety. Our assessment of the significance of a particular input to the fair-value measurement in its entirety requires judgment, and considers factors specific to the asset or liability. |
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Derivative Instruments | Derivative Instruments Derivative financial instruments are employed to manage risks, including foreign currency and interest rate exposures and are not used for trading or speculative purposes. As part of the Company’s risk management program, a variety of financial instruments, such as interest rate swaps and foreign exchange contracts, may be used to mitigate interest rate exposure and foreign currency exposure. The Company recognizes all derivative instruments in the balance sheet at fair value. Changes in the fair value of derivatives are recognized periodically either in earnings or in stockholders’ equity as a component of accumulated other comprehensive income (loss), depending on whether the derivative financial instrument is undesignated or qualifies for hedge accounting, and if so, whether it represents a fair value, cash flow, or net investment hedge. Gains and losses on derivatives designated as cash flow hedges, to the extent they are included in the assessment of effectiveness, are recorded in other comprehensive income (loss) and subsequently reclassified to earnings to offset the impact of the hedged items when they occur. In the event it becomes probable the forecasted transaction to which a cash flow hedge relates will not occur, the derivative would be terminated and the amount in other comprehensive income (loss) would be recognized in earnings. Changes in the fair value of derivatives that are designated and qualify as a hedge of the net investment in foreign operations, to the extent they are included in the assessment of effectiveness, are reported in other comprehensive income (loss) and are deferred until disposal of the underlying assets. Gains and losses representing components excluded from the assessment of effectiveness for cash flow and fair value hedges are recognized in earnings on a straight-line basis in the same caption as the hedged item over the term of the hedge. Gains and losses representing components excluded from the assessment of effectiveness for net investment hedges are recognized in earnings on a straight-line basis over the term of the hedge. The net interest paid or received on interest rate swaps is recognized as interest expense. Gains and losses resulting from the early termination of interest rate swap agreements are deferred and amortized as adjustments to interest expense over the remaining period of the debt originally covered by the terminated swap. |
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Income Taxes | Income Taxes Digital Realty Trust, Inc. has elected to be treated as a real estate investment trust (a “REIT”) for federal income tax purposes. As a REIT, Digital Realty Trust, Inc. generally is not required to pay federal corporate income tax to the extent taxable income is currently distributed to its stockholders. If Digital Realty Trust, Inc. fails to qualify as a REIT in any taxable year, it will be subject to federal income tax (including any applicable alternative minimum tax for taxable years prior to 2018) on its taxable income. The Company is subject to foreign, state and local income taxes in the jurisdictions in which it conducts business. The Company’s taxable REIT subsidiaries are subject to federal, state and foreign income taxes to the extent there is taxable income. Accordingly, the Company recognizes current and deferred income taxes for its taxable REIT subsidiaries, including federal, state and non-U.S. jurisdictions, as appropriate. We assess our significant tax positions in accordance with U.S. GAAP for all open tax years and determine whether we have any material unrecognized liabilities from uncertain tax benefits. If a tax position is not considered “more-likely-than-not” to be sustained solely on its technical merits, no benefits of the tax position are to be recognized (for financial statement purposes). |
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Presentation of Transactional-Based Taxes | Presentation of Transactional-based Taxes We account for transactional-based taxes, such as value added tax, or VAT, for our international properties on a net basis. |
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Redeemable Noncontrolling Interest | Redeemable Noncontrolling Interests Redeemable noncontrolling interests include amounts related to partnership units issued by consolidated subsidiaries of the Company in which redemption for equity is outside the control of the Company. Partnership units which are determined to be contingently redeemable for cash under the Financial Accounting Standards Board’s "Distinguishing Liabilities from Equity" guidance are classified as redeemable noncontrolling interests and presented in the mezzanine section between total liabilities and stockholder’s equity on the Company’s condensed consolidated balance sheets. The amounts of consolidated net income attributable to the Company and to the noncontrolling interests are presented on the Company’s condensed consolidated income statements. |
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Revenue Recognition | Revenue Recognition The majority of our revenue is derived from lease arrangements, which we account for in accordance with “Leases (Topic 840)”. We account for the non-lease components within our lease arrangements, as well as other sources of revenue, in accordance with “Revenue from Contracts with Customers (Topic 606)”. Revenue recognized as a result of applying Topic 840 was 97% and Topic 606 was 3% of total operating revenue for the six months ended June 30, 2018. Our leases are classified as operating leases and minimum rents are recognized on a straight-line basis over the terms of the leases, which may span multiple years. The excess of rents recognized over amounts contractually due pursuant to the underlying leases is included in deferred rent in the accompanying condensed consolidated balance sheets and contractually due but unpaid rents are included in accounts and other receivables. Tenant reimbursements for real estate taxes, common area maintenance, and other recoverable costs under our leases 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 revenue in the case of above-market leases or an increase to rental revenue in the case of below-market leases. Interconnection services are included in rental and other services on the condensed consolidated income statements and are generally provided on a month-to-month, one-year or multi-year term. Interconnection services include port and cross-connect services. Port services are typically sold on a one-year or multi-year term and revenue is recognized on a recurring monthly basis (straight-line). The Company bills customers on a monthly basis and recognizes the revenue over the period the service is provided. Revenue for cross-connect installations is generally recognized in the period the cross-connect is installed. Interconnection services that are not specific to a particular space are accounted for under Topic 606 and have terms that are generally one year or less. Occasionally, customers engage the Company for certain services. The nature of these services historically involves property management and construction management. The proper revenue recognition of these services can be different, depending on whether the arrangements are service revenue or contractor type revenue. Service revenues are typically recognized on an equal monthly basis based on the minimum fee to be earned. The monthly amounts could be adjusted depending on if certain performance milestones are met. Fee income arises primarily from contractual management agreements with entities in which we have a noncontrolling interest. The management fees are recognized as earned under the respective agreements. Management and other fee income related to partially owned noncontrolled entities are recognized to the extent attributable to the unaffiliated interest. We make subjective estimates as to when our revenue is earned and the collectability 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, customer concentrations, customer creditworthiness and current economic trends when evaluating the adequacy of the allowance for bad debts. These estimates have a direct impact on our net revenue because a higher bad debt allowance would result in lower net revenue, and recognizing rental revenue as earned in one period versus another would result in higher or lower net revenue for a particular period. |
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Transaction and Integration Expense | Transaction and Integration Expense Transaction and integration expense includes business combination expenses, other business development expenses and other expenses to integrate newly acquired investments, which are expensed as incurred. Transaction expenses include closing costs, broker commissions and other professional fees, including legal and accounting fees related to business combinations or acquisitions that were not consummated. Integration costs include transition costs associated with organizational restructuring (such as severance and retention payments and recruiting expenses), third-party consulting expenses directly related to the integration of acquired companies (in areas such as cost savings and synergy realization, technology and systems work), and internal costs such as training, travel and labor, reflecting time spent by Company personnel on integration activities and projects. Recurring costs are recorded in general and administrative expense. |
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Gains on Sale of Properties | Gains on Sale of Properties As of January 1, 2018, we began accounting for the sale of real estate properties under Financial Accounting Standards Board, or FASB, Accounting Standards Update, or ASU, No. 2017-05, Other Income—Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20), which provides for revenue recognition based on transfer of ownership. All properties were non-financial real estate assets and thus not businesses which were sold to noncustomers with no performance obligations subsequent to transfer of ownership |
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Management's Estimates | 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 consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates made. On an on-going basis, we evaluate our estimates, including those related to the valuation of our real estate properties, tenant relationship value, goodwill, contingent consideration, accounts receivable and deferred rent receivable, performance-based equity compensation plans and the completeness of accrued liabilities. We base our estimates on historical experience, current market conditions, and various other assumptions that are believed to be reasonable under the circumstances. Actual results may vary from those estimates and those estimates could vary under different assumptions or conditions. |
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Segment and Geographic Information | Segment and Geographic Information All of our properties generate similar revenues and expenses related to tenant rent and services and reimbursements and operating expenses. The sale and delivery of our products is consistent across all properties and although services are provided to a wide range of customers, the types of real estate services provided to them are standardized throughout the portfolio. As such, the properties in our portfolio have similar economic characteristics and the nature of the products and services provided to our customers and the method to distribute such services are consistent throughout the portfolio. In addition, the chief operating decision makers evaluate operating performance and make resource allocation decisions for the portfolio as a whole, rather than by property type or revenue stream. Consequently, our properties qualify for aggregation into one reporting segment. |
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New Accounting Pronouncements | New Accounting Pronouncements New Accounting Standards Adopted In August 2017, the FASB issued ASU No. 2017-12, "Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities". The new standard amends the hedge accounting recognition and presentation requirements in Accounting Standards Codification, or ASC, 815. As permitted by ASU 2017-12, the Company early adopted this standard in the first quarter of 2018 on a prospective basis. Refer to Note 2(h), Derivative Instruments, for our policy related to the adoption of this standard. In January 2016, the FASB issued ASU No. 2016-01, "Recognition and Measurement of Financial Assets and Financial Liabilities". The guidance requires entities to measure equity investments that do not result in consolidation and are not accounted for under the equity method at fair value and to record changes in instruments specific credit risk for financial liabilities measured under the fair value option in other comprehensive income. The principal effect of ASU 2016-01 on our condensed consolidated financial statements is that, prior to adoption of ASU 2016-01, changes in the fair values of investments in equity securities with readily determinable fair values or redemption values were recognized in other comprehensive income until realized, while under ASU 2016-01 all changes in the fair values of these equity securities are recognized in current earnings. The update is effective for fiscal years beginning after December 15, 2017, and for interim periods therein. We adopted this standard in the first quarter of 2018 and the adoption did not have a material impact on our condensed consolidated financial statements. In May 2014, the FASB issued ASU No. 2014-09, "Revenue from Contracts with Customers (Topic 606)", and since that date has issued several additional ASUs intended to clarify certain aspects of ASU 2014-09 and to provide for certain practical expedients entities may elect upon adoption. Collectively, these ASUs outline a single comprehensive model for entities to use in accounting for revenues arising from contracts with customers. We adopted Topic 606 in the first quarter of 2018 using the modified retrospective transition method and applied Topic 606 to those contracts that were not completed as of January 1, 2018. The results for reporting periods beginning after January 1, 2018 are presented under Topic 606, while prior period amounts are not adjusted and continue to be presented under Topic 605. Our financial statements did not recognize a material effect from the cumulative impact of adopting Topic 606 as the new accounting standard does not impact lessor accounting. Refer to Note 2(l), Revenue Recognition, for the updated policy related to the adoption of this standard. New Accounting Standards Issued but not yet Adopted In February 2016, the FASB issued ASU 2016-02, "Leases (Topic 842)", which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e., lessees and lessors). The new standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification will determine whether lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Accounting for leases with a term of 12 months or less will be similar to existing guidance for operating leases today. The new standard requires lessors to account for leases using an approach that is substantially equivalent to existing guidance for sales-type leases, direct financing leases and operating leases. ASU 2016-02 is expected to impact the Company’s consolidated financial statements for leases where the Company is a lessee, primarily for the Company’s data center operating leases, ground leases and administrative office leases, and the Company will be required to record a lease liability and a right of use asset on its condensed consolidated balance sheet at fair value upon adoption. ASU 2016-02 also limits the capitalization of leasing costs to initial direct costs, which will likely result in a reduction to our capitalized leasing costs and an increase in expenses, though the amount of such change is highly dependent upon the leasing compensation structures in place at the time of adoption. ASU 2016-02 supersedes the previous leases standard, Leases (Topic 840). The standard is effective on January 1, 2019, with early adoption permitted. The new leasing standard requires modified retrospective transition. In March 2018, the FASB affirmed a proposed ASU that would allow entities to elect a simplified transition approach which would require applying the provisions of the new guidance at the effective date as opposed to the earliest period presented under the modified retrospective approach. A set of practical expedients for implementation, which must be elected as a package and for all leases, may also be elected. These practical expedients include relief from re-assessing lease classification at the adoption date for expired or existing leases, although a right-of-use asset and lease liability would still be recorded for such leases. In March 2018, the FASB affirmed a proposed ASU that would include creating a practical expedient that would provide lessors an option not to separate lease and non-lease components when certain criteria are met and instead account for those components as a single component. We will be subject to the requirements of Topic 842 as both a lessor and a lessee. We are currently assessing the method of adoption and the impact that ASU 2016-02, and any subsequent amendments, will have on our consolidated financial statements. In January 2017, the FASB issued guidance codified in ASU Topic 2017-04, "Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment". ASU 2017-04 simplifies the accounting for goodwill impairment by eliminating the process of measuring the implied value of goodwill, known as step two, from the goodwill impairment test. Instead, if the carrying amount of a reporting unit exceeds its fair value, an impairment loss shall be recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit. The standard will be effective for interim and annual reporting periods beginning after December 15, 2019, with early adoption permitted. We do not expect the provisions of ASU 2017-04 to have a material impact on our consolidated financial statements. In June 2018, the FASB issued ASU 2018-07, “Improvements to Nonemployee Share-Based Payment Accounting,” which more closely aligns the accounting for employee and nonemployee share-based payments. The standard will be effective for interim and annual reporting periods beginning after December 15, 2018. Early adoption is permitted, but no earlier than an entity’s adoption date of Topic 606. We do not expect the provisions of ASU 2018-07 to have a material impact on our consolidated financial statements. |
Organization and Description of Business (Tables) |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Real Estate Properties | A summary of our data center portfolio as of June 30, 2018 and December 31, 2017 is as follows:
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Summary of Significant Accounting Policies (Tables) |
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Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Goodwill | The following is a summary of goodwill activity for the six months ended June 30, 2018 (in thousands):
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Investments in Real Estate (Tables) |
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Real Estate [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Properties Acquired | Acquisitions We acquired the following real estate during the six months ended June 30, 2018:
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Schedule of Properties Sold | We sold the following real estate properties during the six months ended June 30, 2018:
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Investments in Unconsolidated Joint Ventures (Tables) |
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Equity Method Investments and Joint Ventures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Financial Information for Joint Ventures | The following tables present summarized financial information for our joint ventures as of June 30, 2018 and December 31, 2017 and for the six months ended June 30, 2018 and 2017 (in thousands):
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Acquired Intangible Assets and Liabilities (Tables) |
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Acquired Intangible Assets And Liabilities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Acquired Intangible Assets | The following summarizes our acquired intangible assets (real estate intangibles, comprised of acquired in-place lease value and tenant relationship value along with acquired above-market lease value) and intangible liabilities (acquired below-market lease value) as of June 30, 2018 and December 31, 2017.
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Schedule of Estimated Annual Amortization of Below Market Leases | Estimated annual amortization of acquired below-market leases, net of acquired above-market leases, for each of the five succeeding years and thereafter, commencing July 1, 2018 is as follows:
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Schedule of Estimated Annual Amortization of Acquired of Intangible Assets | Estimated annual amortization of tenant relationship value for each of the five succeeding years and thereafter, commencing July 1, 2018 is as follows:
Estimated annual amortization of acquired in-place lease value for each of the five succeeding years and thereafter, commencing July 1, 2018 is as follows:
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Debt of the Operating Partnership (Tables) - Digital Realty Trust, L.P. |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Outstanding Indebtedness of the Operating Partnership | A summary of outstanding indebtedness of the Operating Partnership as of June 30, 2018 and December 31, 2017 is as follows (in thousands):
_________________________________
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Schedule of Debt Maturities and Principal Maturities | The table below summarizes our debt maturities and principal payments as of June 30, 2018 (in thousands):
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Income per Share (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Basic and Diluted Earnings Per Share | The following is a summary of basic and diluted income per share (in thousands, except share and per share amounts):
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Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | We have excluded the following potentially dilutive securities in the calculations above as they would be antidilutive or not dilutive:
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Income per Unit (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class of Stock [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Basic and Diluted Earnings Per Share | The following is a summary of basic and diluted income per share (in thousands, except share and per share amounts):
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Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | We have excluded the following potentially dilutive securities in the calculations above as they would be antidilutive or not dilutive:
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Digital Realty Trust, L.P. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class of Stock [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Basic and Diluted Earnings Per Share | The following is a summary of basic and diluted income per unit (in thousands, except unit and per unit amounts):
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Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | We have excluded the following potentially dilutive securities in the calculations above as they would be antidilutive or not dilutive:
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Equity and Accumulated Other Comprehensive Loss, Net (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ownership Interest In The Operating Partnership | The following table shows the ownership interests in the Operating Partnership as of June 30, 2018 and December 31, 2017:
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Summary of Activity for Noncontrolling Interests in the Operating Partnership | The following table shows activity for the noncontrolling interests in the Operating Partnership for the six months ended June 30, 2018:
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Schedule of Dividends | We have declared and paid the following dividends on our common and preferred stock for the six months ended June 30, 2018 (in thousands, except per share data):
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Schedule of Accumulated Other Comprehensive Income, Net | The accumulated balances for each item within other comprehensive income (loss), net are as follows (in thousands):
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Capital and Accumulated Other Comprehensive Loss (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class of Stock [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Distributions | We have declared and paid the following dividends on our common and preferred stock for the six months ended June 30, 2018 (in thousands, except per share data):
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Schedule of Accumulated Other Comprehensive Income, Net | The accumulated balances for each item within other comprehensive income (loss), net are as follows (in thousands):
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Digital Realty Trust, L.P. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class of Stock [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Distributions | The Operating Partnership has declared and paid the following distributions on its common and preferred units for the six months ended June 30, 2018 (in thousands, except for per unit data):
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Schedule of Accumulated Other Comprehensive Income, Net | The accumulated balances for each item within other comprehensive income are as follows (in thousands):
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Incentive Plan (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Deferred Compensation | Below is a summary of our compensation expense for the three and six months ended June 30, 2018 and 2017 and our unearned compensation as of June 30, 2018 and December 31, 2017 (in millions):
|
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Summary of Long-Term Incentive Unit Activity | Below is a summary of our long-term incentive unit activity for the six months ended June 30, 2018.
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Market Performance Based Awards | In the event that the RMS Relative Market Performance during the Market Performance Period is achieved at the “threshold,” “target” or “high” level as set forth below, the awards will become vested as to the market condition with respect to the percentage of Class D units or RSUs, as applicable, set forth below:
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Schedule Of Valuation Assumptions | Assumptions used in the valuations are summarized as follows:
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Summary of Restricted Stock Activity | Below is a summary of our restricted stock activity for the six months ended June 30, 2018.
|
Derivative Instruments (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Outstanding Derivative Instruments | As of June 30, 2018 and December 31, 2017, we had the following outstanding interest rate derivatives that were designated as effective cash flow hedges of interest rate risk (in thousands):
|
Fair Value of Financial Instruments (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Estimated Fair Value And Carrying Amounts | As of June 30, 2018 and December 31, 2017, the aggregate estimated fair value and carrying value of our global revolving credit facility, unsecured term loans, unsecured senior notes and mortgage loans were as follows (in thousands):
|
Summary of Significant Accounting Policies Summary of Goodwill Activity (Details) $ in Thousands |
6 Months Ended |
---|---|
Jun. 30, 2018
USD ($)
| |
Goodwill [Roll Forward] | |
Goodwill - Beginning Balance | $ 3,389,595 |
Impact of Change in Foreign Exchange Rates | (11,270) |
Goodwill - Ending Balance | 3,378,325 |
Telx Acquisition | |
Goodwill [Roll Forward] | |
Goodwill - Beginning Balance | 330,845 |
Impact of Change in Foreign Exchange Rates | 0 |
Goodwill - Ending Balance | 330,845 |
European Portfolio Acquisition | |
Goodwill [Roll Forward] | |
Goodwill - Beginning Balance | 466,604 |
Impact of Change in Foreign Exchange Rates | (11,270) |
Goodwill - Ending Balance | 455,334 |
DFT Company | |
Goodwill [Roll Forward] | |
Goodwill - Beginning Balance | 2,592,146 |
Impact of Change in Foreign Exchange Rates | 0 |
Goodwill - Ending Balance | $ 2,592,146 |
Investments in Unconsolidated Joint Ventures (Narrative) (Details) |
6 Months Ended | |
---|---|---|
Jun. 30, 2018
property
joint_venture
|
Dec. 31, 2017
property
|
|
Schedule of Equity Method Investments [Line Items] | ||
Number of properties | property | 198 | 205 |
Properties in Seattle, Hong Kong, Tokyo, Osaka | ||
Schedule of Equity Method Investments [Line Items] | ||
Ownership percentage in joint ventures | 50.00% | |
Number of joint ventures | joint_venture | 4 | |
Prudential Real Estate Investors and Griffin Capital Essential Asset REIT, Inc. | ||
Schedule of Equity Method Investments [Line Items] | ||
Number of joint ventures | joint_venture | 2 | |
PREI | ||
Schedule of Equity Method Investments [Line Items] | ||
Ownership percentage in joint ventures | 20.00% | |
Number of joint ventures | joint_venture | 1 | |
Number of properties | property | 10 | |
GCEAR | ||
Schedule of Equity Method Investments [Line Items] | ||
Number of properties | property | 1 | |
Property in Silicon Valley | ||
Schedule of Equity Method Investments [Line Items] | ||
Ownership percentage in joint ventures | 17.00% |
Investments in Unconsolidated Joint Ventures (Summary Of Financial Information For Joint Ventures) (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | 12 Months Ended | ||
---|---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
Dec. 31, 2017 |
|
Equity Method Investments and Joint Ventures [Abstract] | |||||
Net Investment in Properties | $ 1,038,172 | $ 1,061,950 | |||
Total Assets | $ 1,338,870 | 1,338,870 | 1,375,006 | ||
Debt | 717,024 | 717,024 | 712,690 | ||
Total Liabilities | 830,944 | 830,944 | 869,879 | ||
Equity | 507,926 | 507,926 | 505,127 | ||
Our investment in and share of equity in earnings of unconsolidated joint ventures | 167,306 | 167,306 | $ 163,477 | ||
Revenues | 105,759 | $ 71,072 | |||
Property Operating Expense | (38,786) | (21,969) | |||
Net Operating Income | 66,973 | 49,103 | |||
Net Income | 29,897 | 20,615 | |||
Investment in and share of net income (loss) | $ 7,438 | $ 8,388 | $ 14,848 | $ 13,712 |
Acquired Intangible Assets and Liabilities (Summary of Acquired Intangible Assets) (Details) - USD ($) $ in Thousands |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Finite-Lived Intangible Assets [Line Items] | ||
Below-market lease, gross amount | $ 445,551 | $ 469,119 |
Below-market lease, accumulated amortization | (229,031) | (219,654) |
Total | 216,520 | 249,465 |
Acquired in-place lease value | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross amount | 1,464,461 | 1,473,515 |
Accumulated amortization | (709,645) | (613,948) |
Net | 754,816 | 859,567 |
Tenant relationship value | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross amount | 1,971,915 | 1,978,277 |
Accumulated amortization | (231,111) | (169,919) |
Net | 1,740,804 | 1,808,358 |
Acquired above-market leases | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross amount | 281,263 | 294,514 |
Accumulated amortization | (131,179) | (110,139) |
Net | $ 150,084 | $ 184,375 |
Acquired Intangible Assets and Liabilities (Schedule of Estimated Annual Amortization of Below Market Leases) (Details) - Below-Market Leases, Net of Above-Market Leases $ in Thousands |
Jun. 30, 2018
USD ($)
|
---|---|
Finite-Lived Intangible Assets [Line Items] | |
Remainder of 2018 | $ (13,782) |
2019 | (16,399) |
2020 | (4,146) |
2021 | 1,159 |
2022 | 8,243 |
Thereafter | 91,361 |
Total | $ 66,436 |
Acquired Intangible Assets And Liabilities (Schedule of Estimated Annual Amortization of Intangible Assets) (Details) - USD ($) $ in Thousands |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Acquired in-place lease value | ||
Finite-Lived Intangible Assets [Line Items] | ||
Remainder of 2018 | $ 98,083 | |
2019 | 147,579 | |
2020 | 111,714 | |
2021 | 87,152 | |
2022 | 65,258 | |
Thereafter | 245,030 | |
Net | 754,816 | $ 859,567 |
Tenant relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Remainder of 2018 | 61,693 | |
2019 | 123,386 | |
2020 | 123,386 | |
2021 | 123,386 | |
2022 | 123,386 | |
Thereafter | 1,185,567 | |
Net | $ 1,740,804 |
Debt of the Operating Partnership (Global Revolving Credit Facility) (Narrative) (Details) - Global revolving credit facility, net - Digital Realty Trust, L.P. |
6 Months Ended | ||
---|---|---|---|
Jan. 15, 2016
USD ($)
extension
|
Jun. 30, 2018
USD ($)
|
Aug. 15, 2013
USD ($)
|
|
Debt Instrument [Line Items] | |||
Credit facility, maximum borrowing capacity | $ 2,000,000,000.0 | $ 2,000,000,000.0 | |
Number of extension options | extension | 2 | ||
Revolving credit facility commitments extension | 6 months | ||
Interest rate basis spread | 1.00% | ||
Commitment fee percentage | 0.20% | ||
Letter of credit security amount | $ 22,800,000 | ||
Accordian Feature | |||
Debt Instrument [Line Items] | |||
Credit facility, maximum borrowing capacity | $ 2,500,000,000 |
Debt of the Operating Partnership Debt of Operating Partnership (4.450% Notes due 2028) (Details) - 4.450% notes due 2028 |
Jun. 21, 2018
USD ($)
|
Jun. 30, 2018 |
---|---|---|
Digital Realty Trust, L.P. | ||
Debt Instrument [Line Items] | ||
Debt face amount | $ 650,000,000.0 | |
Purchase price paid, percentage of principal | 99.852% | |
Original issue discount on offering | $ 1,000,000 | |
Underwriting commissions and expenses | 5,700,000 | |
Net proceeds from offering | $ 643,300,000 | |
Covenant, leverage ratio percentage, required maximum | 60.00% | |
Covenant, secured leverage ratio, allowable maximum | 40.00% | |
Covenant, interest coverage ratio, required minimum | 1.50 | |
Covenant, unencumbered assets to unsecured debt | 150.00% | |
Senior Notes | ||
Debt Instrument [Line Items] | ||
Stated interest rate | 4.45% | |
Senior Notes | Digital Realty Trust, L.P. | ||
Debt Instrument [Line Items] | ||
Stated interest rate | 4.45% | 4.45% |
Income per Share (Summary of Basic and Diluted Earnings per Share) (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Earnings Per Share [Abstract] | ||||
Net income available to common stockholders | $ 65,134 | $ 57,837 | $ 151,432 | $ 123,982 |
Weighted average shares outstanding-basic (in shares) | 205,956,005 | 160,832,889 | 205,835,757 | 160,069,201 |
Potentially dilutive common shares: | ||||
Unvested incentive units (shares) | 151,265 | 161,553 | 150,864 | 151,807 |
Forward equity offering (shares) | 0 | 216,526 | 0 | 251,119 |
Market performance-based awards (shares) | 455,809 | 570,899 | 473,549 | 587,400 |
Weighted average shares/units outstanding-diluted (shares/units) | 206,563,079 | 161,781,867 | 206,460,170 | 161,059,527 |
Income per share: | ||||
Basic (in dollars per share) | $ 0.32 | $ 0.36 | $ 0.74 | $ 0.77 |
Diluted (in dollars per share) | $ 0.32 | $ 0.36 | $ 0.73 | $ 0.77 |
Income Taxes (Narrative) (Details) - USD ($) $ in Millions |
6 Months Ended | |
---|---|---|
Jun. 30, 2018 |
Dec. 31, 2017 |
|
Income Tax Disclosure [Abstract] | ||
Percentage of income distributed (at least) | 100.00% | |
Net deferred tax liability | $ 161.8 | $ 167.0 |
Capital and Accumulated Other Comprehensive Loss (Partnership Units Narrative) (Details) $ in Millions |
Jun. 30, 2018
USD ($)
|
Dec. 31, 2017
USD ($)
|
---|---|---|
Class of Stock [Line Items] | ||
Common stock conversion ratio | 1 | |
Digital Realty Trust, L.P. | ||
Class of Stock [Line Items] | ||
Common stock conversion ratio | 1 | |
Redeemable noncontrolling interests – operating partnership | $ 894.2 | $ 887.0 |
Incentive Plan (Narrative) (Details) |
6 Months Ended | |
---|---|---|
Sep. 22, 2017
shares
|
Jun. 30, 2018
shares
|
|
2004 Incentive Award Plan | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Additional shares registered for issuance, 2014 Incentive Award Plan | 3,714,560 | |
2014 Incentive Award Plan | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Number of shares remaining for issuance under the Incentive Plan (shares) | 7,100,000 | |
Conversion of units to shares ratio | 1 |
Incentive Plan (Summary of Long-Term Incentive Units) (Details) |
6 Months Ended |
---|---|
Jun. 30, 2018
$ / shares
shares
| |
Units | |
Granted (shares) | 105,800 |
Long-term incentive units | |
Units | |
Unvested beginning of period (shares) | 99,295 |
Granted (shares) | 105,800 |
Vested (shares) | (32,575) |
Cancelled or expired (shares) | (15,356) |
Unvested end of period (shares) | 157,164 |
Weighted-Average Grant Date Fair Value | |
Unvested, beginning of period (in dollars per share) | $ / shares | $ 90.59 |
Granted (in dollars per share) | $ / shares | 99.71 |
Vested (in dollars per share) | $ / shares | 97.49 |
Cancelled or expired (in dollars per share) | $ / shares | 83.93 |
Unvested, end of period (in dollars per share) | $ / shares | $ 95.76 |
Award vesting period | 4 years |
Incentive Plan Incentive Plan (Assumptions Used) (Details) - Market performance-based awards |
Mar. 09, 2018 |
Mar. 01, 2018 |
Jan. 01, 2018 |
Feb. 28, 2017 |
Jan. 01, 2017 |
---|---|---|---|---|---|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Expected Stock Price Volatility | 22.00% | 22.00% | 22.00% | 23.00% | 25.00% |
Risk-Free Interest rate | 2.42% | 2.34% | 1.98% | 1.43% | 1.49% |
Incentive Plan (Summary of Restricted Stock Activity) (Details) |
6 Months Ended |
---|---|
Jun. 30, 2018
$ / shares
shares
| |
Units | |
Granted (shares) | 105,800 |
Restricted stock | |
Units | |
Unvested beginning of period (shares) | 259,422 |
Granted (shares) | 162,310 |
Vested (shares) | (83,468) |
Cancelled or expired (shares) | (24,184) |
Unvested end of period (shares) | 314,080 |
Weighted-Average Grant Date Fair Value | |
Unvested, beginning of period (in dollars per share) | $ / shares | $ 90.54 |
Granted (in dollars per share) | $ / shares | 99.59 |
Vested (in dollars per share) | $ / shares | 82.28 |
Cancelled or expired (in dollars per share) | $ / shares | 96.79 |
Unvested, end of period (in dollars per share) | $ / shares | $ 96.95 |
Restricted stock | Maximum | |
Weighted-Average Grant Date Fair Value | |
Award vesting period | 4 years |
Derivative Instruments (Narrative) (Details) $ in Thousands, £ in Millions |
6 Months Ended | ||||
---|---|---|---|---|---|
Jun. 30, 2018
USD ($)
|
Jun. 30, 2017
USD ($)
|
Jun. 30, 2018
GBP (£)
instrument
|
Jul. 01, 2016
instrument
|
Jun. 30, 2016
USD ($)
|
|
Derivative [Line Items] | |||||
Gain (loss) to be reclassified within twelve months | $ 6,600 | ||||
Proceeds from forward contracts | 0 | $ 51,308 | |||
Designated as Hedging Instrument | Currency forward contracts | |||||
Derivative [Line Items] | |||||
Number of Instruments | instrument | 4 | 4 | |||
Notional amount | £ | £ 357.3 | ||||
Proceeds from forward contracts | 64,000 | ||||
Amount of AOCI to remain in AOCI | $ 26,200 | ||||
Not Designated as Hedging Instrument | Currency forward contracts | |||||
Derivative [Line Items] | |||||
Fair value of derivatives | $ 37,800 |
Commitments and Contingencies (Details) $ in Millions |
Jun. 30, 2018
USD ($)
|
---|---|
Commitments and Contingencies Disclosure [Abstract] | |
Reimbursable amount of commitments related to construction contracts | $ 7.4 |
Commitments related to construction contracts | $ 441.3 |
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