Equity and Accumulated Other Comprehensive Loss, Net

(a) Equity Distribution Agreements

On June 29, 2011, Digital Realty Trust, Inc. entered into equity distribution agreements, which we refer to as the 2011 Equity Distribution Agreements, with each of Merrill Lynch, Pierce, Fenner & Smith Incorporated, Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc. and Morgan Stanley & Co. LLC, or the Agents, under which it could issue and sell shares of its common stock having an aggregate offering price of up to $400.0 million from time to time through, at its discretion, any of the Agents as its sales agents. The sales of common stock made under the 2011 Equity Distribution Agreements will be made in “at the market” offerings as defined in Rule 415 of the Securities Act. To date, Digital Realty Trust, Inc. has generated net proceeds of approximately $342.7 million from the issuance of approximately 5.7 million common shares under the 2011 Equity Distribution Agreements at an average price of $60.35 per share after payment of approximately $3.5 million of commissions to the sales agents and before offering expenses. No sales were made under the program during the years ended December 31, 2018 and 2017. As of December 31, 2018, shares of common stock having an aggregate offering price of $53.8 million remained available for offer and sale under the program. The 2011 Equity Distribution Agreements were terminated in connection with the entry into the 2019 Equity Distribution Agreements (defined and discussed below) on January 4, 2019.

On January 4, 2019, Digital Realty Trust, Inc. and Digital Realty Trust, L.P. entered into equity distribution agreements, which we refer to as the 2019 Equity Distribution Agreements, with each of Merrill Lynch, Pierce, Fenner & Smith Incorporated, Barclays Capital Inc., BTIG, LLC, Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc., J.P. Morgan Securities LLC, Mizuho Securities USA LLC, Morgan Stanley & Co. LLC, MUFG Securities Americas Inc., PNC Capital Markets LLC, Raymond James & Associates, Inc., RBC Capital Markets, LLC, Scotia Capital (USA) Inc., SMBC Nikko Securities America, Inc., SunTrust Robinson Humphrey, Inc., TD Securities (USA) LLC, and Wells Fargo Securities, LLC, or the Agents, under which it could issue and sell shares of its common stock having an aggregate offering price of up to $1.0 billion from time to time through, at its discretion, any of the Agents as its sales agents or as principals. Sales may also be made on a forward basis pursuant to separate forward sale agreements. The sales of common stock made under the 2019 Equity Distribution Agreements will be made in “at the market” offerings as defined in Rule 415 of the Securities Act. To date, no sales have been made under the program.

(b) Forward Equity Sale

On September 27, 2018, Digital Realty Trust, Inc. completed an underwritten public offering of 9,775,000 shares of its common stock (including 1,275,000 shares from the exercise in full of the underwriters' option to purchase additional shares), all of which were offered in connection with forward sale agreements it entered into with certain financial institutions acting as forward purchasers. The forward purchasers borrowed and sold an aggregate of 9,775,000 shares of Digital Realty Trust, Inc.’s common stock in the public offering. Digital Realty Trust, Inc. did not receive any proceeds from the sale of its common stock by the forward purchasers in the public offering. The Company expects to receive net proceeds of approximately $1.1 billion (net of fees and estimated expenses) upon full physical settlement of the forward sale agreements, which is anticipated to be no later than September 27, 2019.

On May 20, 2016, Digital Realty Trust, Inc. completed an underwritten public offering of 12,500,000 shares of its common stock, all of which were offered in connection with forward sale agreements it entered into with certain financial institutions acting as forward purchasers. On June 2, 2016, the underwriters exercised their option in full to purchase an additional 1,875,000 shares of Digital Realty Trust, Inc.’s common stock from the forward purchasers. The forward purchasers borrowed and sold an aggregate of 14,375,000 shares of Digital Realty Trust, Inc.’s common stock in the public offering. Digital Realty Trust, Inc. did not receive any proceeds from the sale of our common stock by the forward purchasers in the public offering. On September 27, 2016, we physically settled a portion of the forward sale agreements by issuing an aggregate of 12,000,000 shares of our common stock to the forward purchasers in exchange for net proceeds of approximately $1.1 billion. On May 19, 2017, we physically settled and issued the remaining 2,375,000 shares of our common stock to the forward purchasers in exchange for net proceeds of approximately $211.1 million.



								Shares Outstanding as of December 31,		Balance (in thousands, net of issuance costs) as of December 31,
Preferred Stock ⁽¹⁾	Date(s) Issued	Initial Date to Redeem ⁽²⁾	Share Cap ⁽³⁾	Total Liquidation Value (in thousands) ⁽⁴⁾		Annual Dividend Rate ⁽⁵⁾		2018	2017	2018		2017
6.625% Series C Cumulative Redeemable Perpetual Preferred Stock	Sep 14, 2017	May 15, 2021	0.6389035	$	201,250	$	1.65625	8,050,000	8,050,000	$	219,250	$	219,250
5.875% Series G Cumulative Redeemable Preferred Stock	Apr 9, 2013	Apr 9, 2018	0.7532000	250,000		1.46875		10,000,000	10,000,000	241,468		241,468
7.375% Series H Cumulative Redeemable Preferred Stock	Mar 26, 2014	Mar 26, 2019	0.9632000	365,000		1.84375		14,600,000	14,600,000	353,290		353,290
6.350% Series I Cumulative Redeemable Preferred Stock	Aug 24, 2015	Aug 24, 2020	0.7623100	250,000		1.58750		10,000,000	10,000,000	242,012		242,012
5.250% Series J Cumulative Redeemable Preferred Stock	Aug 7, 2017	Aug 7, 2022	0.4252100	200,000		1.31250		8,000,000	8,000,000	193,540		193,540
				$	1,266,250			50,650,000	50,650,000	$	1,249,560	$	1,249,560

(1)

All series of preferred stock do not have a stated maturity date and are not subject to any sinking fund or mandatory redemption provisions. Upon liquidation, dissolution or winding up, each series of preferred stock will rank senior to Digital Realty Trust, Inc. common stock and on parity with the other series of preferred stock. Holders of each series of preferred stock generally have no voting rights except for limited voting rights if Digital Realty Trust, Inc. fails to pay dividends for six or more quarterly periods (whether or not consecutive) and in certain other circumstances.


(2)	Except in limited circumstances, reflects earliest date that Digital Realty Trust Inc. may exercise its option to redeem the preferred stock, at a redemption price of $25.00 per share, plus accrued and unpaid dividends up to but excluding the date of redemption.

(3)

Upon the occurrence of specified changes of control, as a result of which neither Digital Realty Trust, Inc.’s common stock nor the common securities of the acquiring or surviving entity (or American Depositary Receipts representing such securities) is listed on the New York Stock Exchange, the NYSE MKT, LLC or the NASDAQ Stock Market or listed or quoted on a successor exchange or quotation system, each holder of preferred stock will have the right (unless, prior to the change of control conversion date specified in the applicable Articles Supplementary governing the preferred stock, Digital Realty Trust, Inc. has provided or provides notice of its election to redeem the preferred stock) to convert some or all of the preferred stock held by it into a number of shares of Digital Realty Trust, Inc.’s common stock per share of preferred stock to be converted equal to the lesser of (i) the quotient obtained by dividing (a) the sum of the $25.00 liquidation preference plus the amount of any accrued and unpaid dividends to, but not including, the change of control conversion date (unless the change of control conversion date is after a record date for a preferred stock dividend payment and prior to the corresponding dividend payment date, in which case no additional amount for such accrued and unpaid dividend will be included in this sum) by (b) the common stock price specified in the applicable Articles Supplementary governing the preferred stock; and (ii) and the Share Cap, subject to certain adjustments; subject, in each case, to provisions for the receipt of alternative consideration as described in the applicable Articles Supplementary governing the preferred stock. Except in connection with specified change of control transactions, the preferred stock is not convertible into or exchangeable for any other property or securities of Digital Realty Trust, Inc.


(4)	Liquidation preference is $25.00 per share.


(5)	Dividends on preferred shares are cumulative and payable quarterly in arrears.

(d) 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 interest in the Operating Partnership as of December 31, 2018 and 2017:



	December 31, 2018			December 31, 2017
	Number of units	Percentage of total		Number of units	Percentage of total
Digital Realty Trust, Inc.	206,425,656	95.1	%	205,470,300	96.0	%
Noncontrolling interests consist of:
Common units held by third parties	6,297,272	2.9	%	6,899,094	3.2	%
Issuance of units in connection with Ascenty Acquisition	2,338,874	1.1	%	—	—	%
Incentive units held by employees and directors (see note 14)	1,944,738	0.9	%	1,590,001	0.8	%
	217,006,540	100.0	%	213,959,395	100.0	%

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 DFT Operating Partnership unitholders in the DFT Merger, which are subject to certain restrictions and, accordingly, are not presented as permanent equity in the 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 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 $1,076.9 million and $887.0 million based on the closing market price of Digital Realty Trust, Inc. common stock on December 31, 2018 and 2017, respectively.

The following table shows activity for the noncontrolling interests in the Operating Partnership for the years ended December 31, 2018, 2017 and 2016:



	Common Units		Incentive Units		Total
As of December 31, 2015	1,421,314		1,412,012		2,833,326
Redemption of common units for shares of Digital Realty Trust, Inc. common stock ⁽¹⁾	(279,500	)	—		(279,500	)
Conversion of incentive units held by employees and directors for shares of Digital Realty Trust, Inc. common stock ⁽¹⁾	—		(150,993	)	(150,993	)
Grant of incentive units to employees and directors	—		74,246		74,246
Cancellation of incentive units held by employees and directors	—		(1,416	)	(1,416	)
As of December 31, 2016	1,141,814		1,333,849		2,475,663
Common units issued in connection with the DFT merger	6,111,770		—		6,111,770
Redemption of common units for shares of Digital Realty Trust, Inc. common stock ⁽¹⁾	(354,490	)	—		(354,490	)
Conversion of incentive units held by employees and directors for shares of Digital Realty Trust, Inc. common stock ⁽¹⁾	—		(208,092	)	(208,092	)
Incentive units issued upon achievement of market performance condition	—		390,795		390,795
Grant of incentive units to employees and directors	—		73,449		73,449
As of December 31, 2017	6,899,094		1,590,001		8,489,095
Common units issued in connection with the Ascenty Acquisition	2,338,874		—		2,338,874
Redemption of common units for shares of Digital Realty Trust, Inc. common stock (1)	(601,822	)	—		(601,822	)
Conversion of incentive units held by employees and directors for shares of Digital Realty Trust, Inc. common stock (1)	—		(110,070	)	(110,070	)
Incentive units issued upon achievement of market performance condition	—		357,956		357,956
Grant of incentive units to employees and directors	—		128,986		128,986
Cancellation of incentive units held by employees and directors	—		(22,135	)	(22,135	)
As of December 31, 2018	8,636,146		1,944,738		10,580,884


(1)	These redemptions and conversions 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 consolidated balance sheet of Digital Realty Trust, Inc.

(e) Dividends

We have declared and paid the following dividends on our common and preferred stock for the years ended December 31, 2018, 2017 and 2016 (in thousands):



Date dividend declared	Dividend payable date	Series C Preferred Stock			Series E Preferred Stock			Series F Preferred Stock			Series G Preferred Stock		Series H Preferred Stock		Series I Preferred Stock		Series J Preferred Stock			Common Stock
February 17, 2016	March 31, 2016	$	—		$	5,031		$	3,023		$	3,672	$	6,730	$	3,969	$	—		$	131,587	⁽¹⁾
May 11, 2016	June 30, 2016	—			5,031			3,023			3,672		6,730		3,969		—			131,607		⁽¹⁾
August 10, 2016	September 30, 2016	—			—		⁽²⁾	3,023			3,672		6,730		3,969		—			131,657		⁽¹⁾
November 9, 2016	December 30, 2016 for Preferred Stock; January 13, 2017 for Common Stock	—			—			3,023			3,672		6,730		3,969		—			141,882		⁽¹⁾
		$	—		$	10,062		$	12,092		$	14,688	$	26,920	$	15,876	$	—		$	536,733
March 1, 2017	March 31, 2017	$	—		$	—		$	3,023		$	3,672	$	6,730	$	3,969	$	—		$	148,358	⁽³⁾
May 8, 2017	June 30, 2017	—			—			—		⁽⁴⁾	3,672		6,730		3,969		—			150,814		⁽³⁾
August 7, 2017	September 29, 2017	—			—			—			3,672		6,730		3,969		—			191,041		⁽³⁾
November 2, 2017	December 29, 2017 for Preferred Stock; January 12, 2018 for Common Stock	3,963		⁽⁵⁾	—			—			3,672		6,730		3,969		4,200		⁽⁵⁾	191,067		⁽³⁾
		$	3,963		$	—		$	3,023		$	14,688	$	26,920	$	15,876	$	4,200		$	681,280
March 1, 2018	March 30, 2018	$	3,333		$	—		$	—		$	3,672	$	6,730	$	3,969	$	2,625		$	208,015	⁽⁶⁾
May 8, 2018	June 29, 2018	3,333			—			—			3,672		6,730		3,969		2,625			208,071		⁽⁶⁾
August 14, 2018	September 28, 2018	3,333			—			—			3,672		6,730		3,969		2,625			208,166		⁽⁶⁾
November 12, 2018	December 31, 2018 for Preferred Stock; January 15, 2019 for Common Stock	3,333			—			—			3,672		6,730		3,969		2,625			208,415		⁽⁶⁾
		$	13,332		$	—		$	—		$	14,688	$	26,920	$	15,876	$	10,500		$	832,667

Annual rate of dividend per share		$	1.65625		$	1.75000		$	1.65625		$	1.46875	$	1.84375	$	1.58750	$	1.31250


(1)	$3.520 annual rate of dividend per share.

(2)

Redeemed on September 15, 2016 for $25.35972 per share, or a redemption price of $25.00 per share, plus accrued and unpaid dividends up to but not including the redemption date of approximately $4.1 million in the aggregate. In connection with the redemption, the previously incurred offering costs of approximately $10.3 million were recorded as a reduction to net income available to common stockholders.


(3)	$3.720 annual rate of dividend per share.

(4)

Redeemed on April 5, 2017 for $25.01840 per share, or a redemption price of $25.00 per share, plus accrued and unpaid dividends up to but not including the redemption date of approximately $0.1 million in the aggregate. In connection with the redemption, the previously incurred offering costs of approximately $6.3 million were recorded as a reduction to net income available to common stockholders.


(5)	Represents a pro rata dividend from and including the original issue date to and including December 31, 2017.


(6)	$4.040 annual rate of dividend per share.

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.

(f) Accumulated Other Comprehensive Income (Loss), Net

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



	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, 2016	$	(175,642	)	$	4,888		$	35,149		$	(135,605	)
Net current period change	28,272			5,898			(9,411		)	24,759
Reclassification to interest expense from interest rate swaps	—			2,414			—			2,414
Balance as of December 31, 2017	$	(147,370	)	$	13,200		$	25,738		$	(108,432	)
Net current period change	(11,279		)	7,890			—			(3,389		)
Reclassification to interest expense from interest rate swaps	—			(3,826		)	—			(3,826		)
Balance as of December 31, 2018	$	(158,649	)	$	17,264		$	25,738		$	(115,647	)