Capital and Accumulated Other Comprehensive Income (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 14(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) 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 our 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. Upon physical settlement of the forward sale agreements, the Operating Partnership is expected to issue partnership units to Digital Realty Trust, Inc. in exchange for contribution of the net proceeds.



							Units Outstanding as of December 31,		Balance (in thousands, net of issuance costs) as of December 31,
Preferred Units ⁽¹⁾	Date(s) Issued	Initial Date to Redeem ⁽²⁾	Total Liquidation Value (in thousands) ⁽³⁾		Annual Distribution Rate ⁽⁴⁾		2018	2017	2018		2017
6.625% Series C Cumulative Redeemable Perpetual Preferred Units	Sep 14, 2017	May 15, 2021	$	201,250	$	1.65625	8,050,000	8,050,000	$	219,250	$	219,250
5.875% Series G Cumulative Redeemable Preferred Units	Apr 9, 2013	Apr 9, 2018	250,000		1.46875		10,000,000	10,000,000	241,468		241,468
7.375% Series H Cumulative Redeemable Preferred Units	Mar 26, 2014	Mar 26, 2019	365,000		1.84375		14,600,000	14,600,000	353,290		353,290
6.350% Series I Cumulative Redeemable Preferred Units	Aug 24, 2015	Aug 24, 2020	250,000		1.58750		10,000,000	10,000,000	242,012		242,012
5.250% Series J Cumulative Redeemable Preferred Units	Aug 7, 2017	Aug 7, 2022	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 units 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 units will rank senior to Digital Realty Trust, Inc. common units and on parity with the other series of preferred units.

(2)

Except in limited circumstances, reflects earliest date that Digital Realty Trust Inc. may exercise its option to redeem the corresponding series of preferred stock, at a redemption price of $25.00 per share, plus accrued and unpaid dividends up to but excluding the date of redemption. The Operating Partnership is required to redeem the corresponding series of preferred units in the event that the General Partner redeems a series of preferred stock.


(3)	Liquidation preference is $25.00 per unit.


(4)	Distributions on preferred units are cumulative and payable quarterly in arrears.

(d) Partnership Units

Limited partners have the right to require the Operating Partnership to redeem part or all of their common units for cash based on the fair market value of an equivalent number of shares of the General Partner’s common stock at the time of redemption. Alternatively, the General Partner may elect to acquire those common units in exchange for shares of the General Partner’s common stock on a one-for-one basis, subject to adjustment in the event of stock splits, stock dividends, issuance of stock rights, specified extraordinary distributions and similar events. Pursuant to authoritative accounting guidance, the Operating Partnership evaluated whether it controls the actions or events necessary to issue the maximum number of shares that could be required to be delivered under the share settlement of the limited partners’ common units and the vested incentive units. Based on the results of this analysis, the Operating Partnership concluded that the common 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 are not presented as permanent capital in the consolidated balance sheet.

The redemption value of the limited partners’ 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.’s common stock on December 31, 2018 and 2017, respectively.

(e) Distributions

All distributions on our units are at the discretion of Digital Realty Trust, Inc.’s board of directors. We have declared and paid the following distributions on our common and preferred units for the years ended December 31, 2018, 2017 and 2016 (in thousands):



Date distribution declared	Distribution payable date	Series C Preferred Units			Series E Preferred Units			Series F Preferred Units			Series G Preferred Units		Series H Preferred Units		Series I Preferred Units		Series J Preferred Units			Common Units
Feb 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⁾
Aug 10, 2016	September 30, 2016	—			—		⁽²⁾	3,023			3,672		6,730		3,969		—			131,657		⁽¹⁾
Nov 9, 2016	December 31, 2016 for Preferred Units; January 13, 2017 for Common Units	—			—			3,023			3,672		6,730		3,969		—			144,193		⁽¹⁾
		$	—		$	10,062		$	12,092		$	14,688	$	26,920	$	15,876	$	—		$	539,044
Mar 1, 2017	March 31, 2017	$	—		$	—		$	3,023		$	3,672	$	6,730	$	3,969	$	—		$	150,968	⁽³⁾
May 8, 2017	June 30, 2017	—			—			—		⁽⁴⁾	3,672		6,730		3,969		—			153,176		⁽³⁾
Aug 7, 2017	September 29, 2017	—			—			—			3,672		6,730		3,969		—			199,049		⁽³⁾
Nov 2, 2017	December 29, 2017 for Preferred Units; January 12, 2018 for Common Units	3,963		⁽⁵⁾	—			—			3,672		6,730		3,969		4,200		⁽⁵⁾	199,061		⁽³⁾
		$	3,963		$	—		$	3,023		$	14,688	$	26,920	$	15,876	$	4,200		$	702,254
Mar 1, 2018	March 30, 2018	$	3,333		$	—		$	—		$	3,672	$	6,730	$	3,969	$	2,625		$	216,953	⁽⁶⁾
May 8, 2018	June 29, 2018	3,333			—			—			3,672		6,730		3,969		2,625			216,789		⁽⁶⁾
Aug 14, 2018	September 28, 2018	3,333			—			—			3,672		6,730		3,969		2,625			216,825		⁽⁶⁾
Nov 12, 2018	December 31, 2018 for Preferred Units; January 15, 2019 for Common Units	3,333			—			—			3,672		6,730		3,969		2,625			216,838		⁽⁶⁾
		$	13,332		$	—		$	—		$	14,688	$	26,920	$	15,876	$	10,500		$	867,405

Annual rate of distribution per unit		$	1.65625		$	1.75000		$	1.65625		$	1.46875	$	1.84375	$	1.58750	$	1.31250


(1)	$3.520 annual rate of distribution per unit.

(2)

Redeemed on September 15, 2016 for $25.35972 per unit, or a redemption price of $25.00 per unit, plus accrued and unpaid distributions 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 unitholders.


(3)	$3.720 annual rate of distribution per unit.

(4)

Redeemed on April 5, 2017 for $25.01840 per unit, or a redemption price of $25.00 per unit, plus accrued and unpaid distributions 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 unitholders.


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


(6)	$4.040 annual rate of distribution per unit.

(f) Accumulated Other Comprehensive Income (Loss)

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



	Foreign currency translation adjustments			Cash flow hedge adjustments			Foreign currency net investment hedge adjustments			Accumulated other comprehensive income (loss)
Balance as of December 31, 2016	$	(180,504	)	$	4,191		$	35,694		$	(140,619	)
Net current period change	28,709			6,108			(9,542		)	25,275
Reclassification to interest expense from interest rate swaps	—			2,459			—			2,459
Balance as of December 31, 2017	$	(151,795	)	$	12,758		$	26,152		$	(112,885	)
Net current period change	(11,736		)	8,197			—			(3,539		)
Reclassification to interest expense from interest rate swaps	—			(3,969		)	—			(3,969		)
Balance as of December 31, 2018	$	(163,531	)	$	16,986		$	26,152		$	(120,393	)