Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

369K characters. Original on sec.gov · Markdown

Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEX TO THE CONSOLIDATED FINANCIAL STATEMENTS


		Page No.
Management’s Reports on Internal Control over Financial Reporting		98
Reports of Independent Registered Public Accounting Firm		99
Consolidated Financial Statements of Digital Realty Trust, Inc.
Consolidated Balance Sheets as of December 31, 2020 and 2019		104
Consolidated Income Statements for each of the years in the three-year period ended December 31, 2020		105
Consolidated Statements of Comprehensive Income for each of the years in the three-year period ended December 31, 2020		106
Consolidated Statements of Equity for each of the years in the three-year period ended December 31, 2020		108
Consolidated Statements of Cash Flows for each of the years in the three-year period ended December 31, 2020		110
Consolidated Financial Statements of Digital Realty Trust, L.P.
Consolidated Balance Sheets as of December 31, 2020 and 2019		113
Consolidated Income Statements for each of the years in the three-year period ended December 31, 2020		114
Consolidated Statements of Comprehensive Income for each of the years in the three-year period ended December 31, 2020		115
Consolidated Statements of Capital for each of the years in the three-year period ended December 31, 2020		116
Consolidated Statements of Cash Flows for each of the years in the three-year period ended December 31, 2020		119
Consolidated Financial Statements of Digital Realty Trust, Inc. and Digital Realty Trust, L.P.
Notes to Consolidated Financial Statements		122
Supplemental Schedule—Schedule III—Properties and Accumulated Depreciation		186
Notes to Schedule III—Properties and Accumulated Depreciation		187

Index to Financial Statements

Management’s Report on Internal Control over Financial Reporting

The management of Digital Realty Trust, Inc. (the Company) is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15(d)-15(f). Our internal control system was designed to provide reasonable assurance to the Company’s management and board of directors regarding the preparation and fair presentation of published financial statements.

All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

Under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, we assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2020. In making this assessment, we used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control—Integrated Framework (2013). We acquired Interxion and subsidiaries during the year ended December 31, 2020. We have excluded from our overall assessment of the Company's internal control over financial reporting as of December 31, 2020, internal control over financial reporting associated with Interxion and subsidiaries' total assets of $12 billion and total revenues of $691 million. Based on our assessment, management concluded that as of December 31, 2020, the Company’s internal control over financial reporting was effective based on those criteria.

Our independent registered public accounting firm has issued an audit report on the Company’s internal control over financial reporting. This report appears on page 101.

Management’s Report on Internal Control over Financial Reporting

The management of Digital Realty Trust, L.P. (the Operating Partnership) is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15(d)-15(f). Our internal control system was designed to provide reasonable assurance to the Operating Partnership’s management regarding the preparation and fair presentation of published financial statements.

Under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer of our general partner, we assessed the effectiveness of the Operating Partnership’s internal control over financial reporting as of December 31, 2020. In making this assessment, we used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control—Integrated Framework (2013). We acquired Interxion and subsidiaries during the year ended December 31, 2020. We have excluded from our overall assessment of the Operating Partnership's internal control over financial reporting as of December 31, 2020, internal control over financial reporting associated with Interxion and subsidiaries' total assets of $12 billion and total revenues of $691 million. Based on our assessment, management concluded that as of December 31, 2020, the Operating Partnership’s internal control over financial reporting was effective based on those criteria.

Index to Financial Statements

Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors

Digital Realty Trust, Inc.:

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Digital Realty Trust, Inc. and subsidiaries (the Company) as of December 31, 2020 and 2019, the related consolidated income statements, and statements of comprehensive income, equity, and cash flows for each of the years in the three-year period ended December 31, 2020, and the related notes and financial statement schedule III, properties and accumulated depreciation (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2020, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2020, based on the criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated March 1, 2021 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

Change in Accounting Principle

The Company has changed its method of accounting for leases as of January 1, 2019 due to the adoption of ASU No. 2016-02 Leases and related accounting standards updates (collectively Topic 842).

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Evaluation of lease revenue

As discussed in Note 2 to the consolidated financial statements, the Company records rental revenue on a straight-line basis if the Company determines on a lease-by-lease basis it is probable substantially all lease payments over the term of the lease will be collected. Whenever the results of that assessment, indicate that it is not probable that the Company will be able to collect substantially all lease payments over the remaining term of the lease, the Company records a reduction to rental revenue equal to the then-current combined balance of the deferred rent and amounts contractually due but unpaid for the lease (rent receivable), and ceases recognizing rental revenue on a straight-line basis and commences recognizing rental revenue on a cash collected basis. Rental and other services revenue was $3.9 billion for the year ended December 31, 2020 and deferred rent and rent receivable, net was $528.2 million and $358.0 million, respectively, as of December 31, 2020.

We identified the evaluation of the probability of collection of lease payments as a critical audit matter. Evaluating the Company’s probability assessment of collection of substantially all the lease payments for its leases required significant auditor judgment because of the subjective nature of the evidence obtained. Specifically, evaluating the creditworthiness of the customer and any guarantors required significant auditor judgment.

Index to Financial Statements

The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls over the Company’s probability assessment of lease payment collection process, including the assessment of the creditworthiness of the customer and any guarantors. For a selection of the Company’s leases, we evaluated the Company’s determination of the collectibility of substantially all of the lease payments by: (i) comparing the legal name of customer and any guarantor to the underlying lease agreements and third-party credit rating report, (ii) evaluating the creditworthiness of the customer by assessing their credit rating, (iii) reading publicly available information, including the customer’s financial statements, analyst reports, recent public filings, and news articles, and (iv) inquiring of Company employees to obtain evidence regarding creditworthiness of the customers.

Fair value measurement of customer relationship value and building and improvements acquired in the Interxion business combination

As discussed in Note 3 to the consolidated financial statements, on March 9, 2020, the Company acquired Interxion Holding, N.V. (Interxion) in a business combination for total purchase consideration of $6,876 million. In connection with the transaction, the Company recorded tangible and intangible assets and liabilities at fair value, including customer relationship value (CRV) and building and improvements. The fair value of CRV and building and improvements was $1,002 million and $3,247 million, respectively, as of the acquisition date.

We identified the evaluation of the fair value measurement of CRV and building and improvements acquired in the Interxion business combination as a critical audit matter. The recorded value of CRV and building and improvements was sensitive to changes to the inputs and assumptions in the purchase price allocation as of the acquisition date. The inputs and assumptions that resulted in a higher degree of subjectivity and required complex auditor judgment related to CRV included the discount rate, projected revenue growth from existing customers, and the attrition rate. The inputs and assumptions that resulted in a higher degree of subjectivity and required complex auditor judgement related to building and improvements included replacement cost new per square foot and estimated physical depreciation.

The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls over the Company’s valuation of CRV and building and improvements including controls related to the inputs and assumptions listed above. We evaluated the Company’s inputs and assumptions listed above by: (1) identifying and considering the relevancy, reliability, and sufficiency of the sources of data used by the Company in developing these assumptions and (2) comparing to relevant industry market data if available or to historical Company data and (3) performing sensitivity analyses to understand the impact of changes in these assumptions on the fair value estimate. In addition, we involved valuation professionals with specialized skills and knowledge, who assisted in evaluating:

‒The discount rate assumption used to value CRV by independently developing a range of rates using publicly available market interest rate data and comparing the independent ranges to the rate used by the Company,

‒certain projected revenue growth rate assumptions used to value CRV to macro-economic trend data or publicly available market data, and

‒replacement cost new per square foot assumption used to value building and improvements by developing an estimated range of replacement cost new per square foot using historical Company cost data for similar recently completed data centers and comparing to the value used by the Company.

.
		/s/ KPMG LLP

We have served as the Company’s auditor since 2004.

San Francisco, California
March 1, 2021

Index to Financial Statements

Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors

Digital Realty Trust, Inc.:

Opinion on Internal Control Over Financial Reporting

We have audited Digital Realty Trust, Inc. and subsidiaries (the Company) internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2020 and 2019, the related consolidated income statements and consolidated statements of comprehensive income, equity, and cash flows for each of the years in the three-year period ended December 31, 2020, and the related notes and financial statement schedule III, properties and accumulated depreciation (collectively, the consolidated financial statements), and our report dated March 1, 2021 expressed an unqualified opinion on those consolidated financial statements.

The Company acquired Interxion Holding N.V. and subsidiaries during the year ended December 31, 2020, and management excluded from its assessment of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2020, Interxion Holding N.V. and subsidiaries’ internal control over financial reporting associated with total assets of $12 billion and total revenues of $691 million included in the consolidated financial statements of the Company as of and for the year ended December 31, 2020. Our audit of internal control over financial reporting of the Company also excluded an evaluation of the internal control over financial reporting of Interxion Holding N.V. and subsidiaries.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed 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. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.


		/s/ KPMG LLP
San Francisco, California
March 1, 2021

Index to Financial Statements

Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors of the General Partner and Partners

Digital Realty Trust, L.P.:

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Digital Realty Trust, L.P. and subsidiaries (the Operating Partnership) as of December 31, 2020 and 2019, the related consolidated income statements and consolidated statements of comprehensive income, capital, and cash flows for each of the years in the three-year period ended December 31, 2020, and the related notes and financial statement schedule III, properties and accumulated depreciation (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Operating Partnership as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2020, in conformity with U.S. generally accepted accounting principles.

Change in Accounting Principle

The Operating Partnership has changed its method of accounting for leases as of January 1, 2019 due to the adoption of ASU No. 2016-02 Leases and related accounting standards updates (collectively Topic 842).

Basis for Opinion

These consolidated financial statements are the responsibility of the Operating Partnership’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Operating Partnership in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Operating Partnership is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Operating Partnership’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

Evaluation of lease revenue

As discussed in Note 2 to the consolidated financial statements, the Operating Partnership records rental revenue on a straight-line basis if the Operating Partnership determines on a lease-by-lease basis it is probable substantially all lease payments over the term of the lease will be collected. Whenever the results of that assessment, indicate that it is not probable that the Operating Partnership will be able to collect substantially all lease payments over the remaining term of the lease, the Operating Partnership records a reduction to rental revenue equal to the then-current combined balance of the deferred rent and amounts contractually due but unpaid for the lease (rent receivable), and ceases recognizing rental revenue on a straight-line basis and commences recognizing rental revenue on a cash collected basis. Rental and other services revenue was $3.9 billion for the year ended December 31, 2020 and deferred rent and rent receivable, net was $528.2 million and $358.0 million, respectively, as of December 31, 2020.

Index to Financial Statements

We identified the evaluation of the probability of collection of lease payments as a critical audit matter. Evaluating the Operating Partnership’s probability assessment of collection of substantially all the lease payments for its leases required significant auditor judgment because of the subjective nature of the evidence obtained. Specifically, evaluating the creditworthiness of the customer and any guarantors required significant auditor judgment.

The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls over the Operating Partnership’s probability assessment of lease payment collection process, including the assessment of the creditworthiness of the customer and any guarantors. For a selection of the Operating Partnership’s leases, we evaluated the Operating Partnership’s determination of the collectibility of substantially all of the lease payments by: (i) comparing the legal name of customer and any guarantor to the underlying lease agreements and third-party credit rating report, (ii) evaluating the creditworthiness of the customer by assessing their credit rating, (iii) reading publicly available information, including the customer’s financial statements, analyst reports, recent public filings, and news articles, and (iv) inquiring of Operating Partnership employees to obtain evidence regarding creditworthiness of the customers.

Fair value measurement of customer relationship value and building and improvements acquired in the Interxion business combination

As discussed in Note 3 to the consolidated financial statements, on March 9, 2020, the Operating Partnership acquired Interxion Holding, N.V. (Interxion) in a business combination for total purchase consideration of $6,876 million. In connection with the transaction, the Operating Partnership recorded tangible and intangible assets and liabilities at fair value, including customer relationship value (CRV) and building and improvements. The fair value of CRV and building and improvements was $1,002 million and $3,247 million, respectively, as of the acquisition date.

The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls over the Operating Partnership’s valuation of CRV and building and improvements including controls related to the inputs and assumptions listed above. We evaluated the Operating Partnership’s inputs and assumptions listed above by: (1) identifying and considering the relevancy, reliability, and sufficiency of the sources of data used by the Operating Partnership in developing these assumptions and (2) comparing to relevant industry market data if available or to historical Operating Partnership data and (3) performing sensitivity analyses to understand the impact of changes in these assumptions on the fair value estimate. In addition, we involved valuation professionals with specialized skills and knowledge, who assisted in evaluating:

‒certain projected revenue growth rate assumptions used to value CRV to macro-economic trend data or publicly available market data, and

_‒_replacement cost new per square foot assumption used to value building and improvements by developing an estimated range of replacement cost new per square foot using historical Operating Partnership cost data for similar recently completed data centers and comparing to the value used by the Operating Partnership.


		/s/ KPMG LLP

We have served as the Operating Partnership’s auditor since 2004.

San Francisco, California
March 1, 2021

Index to Financial Statements

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)


	December 31,		December 31,
	2020		2019
ASSETS
Investments in real estate:
Investments in properties, net		20,582,954		14,230,575
Investments in unconsolidated joint ventures		1,148,158		1,287,109
Net investments in real estate		21,731,112		15,517,684
Operating lease right-of-use assets, net		1,386,959		628,681
Cash and cash equivalents		108,501		89,817
Accounts and other receivables, net		603,111		305,501
Deferred rent		528,180		478,744
Goodwill		8,330,996		3,363,070
Customer relationship value, deferred leasing costs and other intangibles, net		3,122,904		2,195,324
Assets held for sale		—		229,934
Other assets		264,528		259,376
Total assets	$	36,076,291	$	23,068,131
LIABILITIES AND EQUITY
Global revolving credit facilities, net	$	531,905	$	234,105
Unsecured term loans, net		536,580		810,219
Unsecured senior notes, net of discount		11,997,010		8,973,190
Secured debt, including premiums		239,222		104,934
Operating lease liabilities		1,468,712		693,539
Accounts payable and other accrued liabilities		1,420,162		1,009,154
Deferred tax liabilities, net		698,308		147,381
Accrued dividends and distributions		324,386		234,620
Security deposits and prepaid rents		371,659		208,724
Obligations associated with assets held for sale		—		2,700
Total liabilities		17,587,944		12,418,566

Redeemable noncontrolling interests		42,011		41,465
Commitments and contingencies
Equity:
Stockholders’ Equity:
Preferred Stock: $0.01 par value per share, 110,000,000 shares authorized; $956,250 and $1,456,250 liquidation preference ($25.00 per share), 38,250,000 and 58,250,000 shares issued and outstanding as of December 31, 2020 and December 31, 2019, respectively		950,940		1,434,420
Common Stock: $0.01 par value per share, 392,000,000 and 315,000,000 shares authorized and 280,289,726 and 208,900,758 shares issued and outstanding as of December 31, 2020 and December 31, 2019, respectively		2,788		2,073
Additional paid-in capital		20,626,897		11,577,320
Accumulated dividends in excess of earnings		(3,997,938)		(3,046,579)
Accumulated other comprehensive income (loss), net		135,010		(87,922)
Total stockholders’ equity		17,717,697		9,879,312
Noncontrolling Interests:
Noncontrolling interests in operating partnership		608,980		708,163
Noncontrolling interests in consolidated joint ventures		119,659		20,625
Total noncontrolling interests		728,639		728,788
Total equity		18,446,336		10,608,100
Total liabilities and equity	$	36,076,291	$	23,068,131

See accompanying notes to the consolidated financial statements.

Index to Financial Statements

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

CONSOLIDATED INCOME STATEMENTS

(in thousands, except share and per share data)


	Year Ended December 31,
	2020		2019		2018
Operating Revenues:
Rental and other services	$	3,886,546	$	3,196,356	$	2,412,076
Tenant reimbursements		—		—		624,637
Fee income and other		17,063		12,885		9,765
Total operating revenues		3,903,609		3,209,241		3,046,478
Operating Expenses:
Rental property operating and maintenance		1,331,493		1,020,578		957,065
Property taxes and insurance		182,623		172,183		140,918
Depreciation and amortization		1,366,379		1,163,774		1,186,896
General and administrative		351,369		211,097		163,667
Transactions and integration		106,662		27,925		45,327
Impairment of investments in real estate		6,482		5,351		—
Other		1,075		14,118		2,818
Total operating expenses		3,346,083		2,615,026		2,496,691
Operating income		557,526		594,215		549,787
Other Income (Expenses):
Equity in (loss) earnings of unconsolidated joint ventures		(57,629)		8,067		32,979
Gain on disposition of properties, net		316,894		267,651		80,049
Gain on deconsolidation, net		—		67,497		—
Interest and other income, net		20,222		66,000		3,481
Interest expense		(333,021)		(353,057)		(321,529)
Loss from early extinguishment of debt		(103,215)		(39,157)		(1,568)
Income tax expense		(38,047)		(11,995)		(2,084)
Net income		362,730		599,221		341,115
Net income attributable to noncontrolling interests		(6,332)		(19,460)		(9,869)
Net income attributable to Digital Realty Trust, Inc.		356,398		579,761		331,246
Preferred stock dividends, including undeclared dividends		(76,536)		(74,990)		(81,316)
Issuance costs associated with redeemed preferred stock		(16,520)		(11,760)		—
Net income available to common stockholders	$	263,342	$	493,011	$	249,930
Net income per share available to common stockholders:
Basic	$	1.01	$	2.37	$	1.21
Diluted	$	1.00	$	2.35	$	1.21
Weighted average common shares outstanding:
Basic		260,098,978		208,325,823		206,035,408
Diluted		262,522,508		209,462,247		206,673,471

See accompanying notes to the consolidated financial statements.

Index to Financial Statements

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)


	Year Ended December 31,
	2020		2019		2018
Net income	$	362,730	$	599,221	$	341,115
Other comprehensive income (loss):
Foreign currency translation adjustments		230,340		23,975		(11,736)
Reclassification of foreign currency translation adjustment due to deconsolidation of Ascenty		—		21,687		—
(Decrease) increase in fair value of interest rate swaps		(12,425)		(9,232)		8,197
Reclassification to interest expense from interest rate swaps		8,294		(7,446)		(3,969)
Other comprehensive income (loss)		226,209		28,984		(7,508)
Comprehensive income		588,939		628,205		333,607
Comprehensive income attributable to noncontrolling interests		(9,610)		(20,719)		(9,576)
Comprehensive income attributable to Digital Realty Trust, Inc.	$	579,329	$	607,486	$	324,031

See accompanying notes to the consolidated financial statements.

Index to Financial Statements

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EQUITY (continued)

(in thousands, except share data)


												Accumulated
										Accumulated		Other				Noncontrolling		Noncontrolling
	Redeemable				Number of			Additional		Dividends in		Comprehensive		Total		Interests in		Interests in		Total
	Noncontrolling		Preferred		Common	Common		Paid-in		Excess of		Income (Loss),		Stockholders’		Operating		Consolidated		Noncontrolling		Total
	Interests		Stock		Shares	Stock		Capital		Earnings		net		Equity		Partnership		Joint Ventures		Interests		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		—		—	711,892		7		61,997		—		—		62,004		(62,004)		—		(62,004)		—
Issuance of unvested restricted stock, net of forfeitures		—		—	220,765		—		—		—		—		—		—		—		—		—
Common stock offering costs		—		—	—		—		1,194		—		—		1,194		—		—		—		1,194
Shares issued under employee stock purchase plan		—		—	69,532		1		5,873		—		—		5,874		—		—		—		5,874
Shares repurchased and retired to satisfy tax withholding upon vesting		—		—	(46,833)		(1)		(5,054)		—		—		(5,055)		—		—		—		(5,055)
Units issued in connection with Ascenty Acquisition		—		—	—		—		—		—		—		—		253,837		25,000		278,837		278,837
Amortization of unearned compensation on share-based awards		—		—	—		—		32,456		—		—		32,456		—		—		—		32,456
Reclassification of vested share-based awards		—		—	—		—		(3,772)		—		—		(3,772)		3,772		—		3,772		—
Adjustment to redeemable noncontrolling interests		(37,274)		—	—		—		1,596		—		—		1,596		35,678		—		35,678		37,274
Dividends declared on preferred stock		—		—	—		—		—		(81,316)		—		(81,316)		—		—		—		(81,316)
Dividends and distributions on common stock and common and incentive units		(1,271)		—	—		—		—		(833,364)		—		(833,364)		(32,311)		—		(32,311)		(865,675)
Contributions from noncontrolling interests in consolidated joint ventures, net of distributions		—		—	—		—		—		—		—		—		—		66,124		66,124		66,124
Cumulative effect adjustment from adoption of new accounting standard		—		—	—		—		—		5,915				5,915		—		—		—		5,915
Net income		475		—	—		—		—		331,246		—		331,246		9,705		(311)		9,394		340,640
Other comprehensive loss—foreign currency translation adjustments		—		—	—		—		—		—		(11,279)		(11,279)		(457)		—		(457)		(11,736)
Other comprehensive income—fair value of interest rate swaps		—		—	—		—		—		—		7,890		7,890		307		—		307		8,197
Other comprehensive loss—reclassification of accumulated other comprehensive income to interest expense		—		—	—		—		—		—		(3,826)		(3,826)		(143)		—		(143)		(3,969)
Balance as of December 31, 2018	$	15,832	$	1,249,560	206,425,656	$	2,051	$	11,355,751	$	(2,633,071)	$	(115,647)	$	9,858,644	$	906,510	$	93,056	$	999,566	$	10,858,210

See accompanying notes to the consolidated financial statements.

Index to Financial Statements

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EQUITY (continued)

(in thousands, except share data)


												Accumulated
										Accumulated		Other				Noncontrolling		Noncontrolling
	Redeemable				Number of			Additional		Dividends in		Comprehensive		Total		Interests in		Interests in		Total
	Noncontrolling		Preferred		Common	Common		Paid-in		Excess of		Income (Loss),		Stockholders’		Operating		Consolidated		Noncontrolling		Total
	Interests		Stock		Shares	Stock		Capital		Earnings		net		Equity		Partnership		Joint Ventures		Interests		Equity
Balance as of December 31, 2018	$	15,832	$	1,249,560	206,425,656	$	2,051	$	11,355,751	$	(2,633,071)	$	(115,647)	$	9,858,644	$	906,510	$	93,056	$	999,566	$	10,858,210
Conversion of common units to common stock		—		—	2,154,460		22		190,492		—		—		190,514		(190,514)		—		(190,514)		—
Issuance of unvested restricted stock, net of forfeitures		—		—	256,868		—		—		—		—		—		—		—		—		—
Common stock offering costs		—		—	—		—		(2,530)		—		—		(2,530)		—		—		—		(2,530)
Shares issued under employee stock purchase plan		—		—	63,774		—		5,462		—		—		5,462		—		—		—		5,462
Issuance of series K preferred stock, net of offering costs		—		203,264	—		—		—		—		—		203,264		—		—		—		203,264
Issuance of series L preferred stock, net of offering costs		—		334,886	—		—		—		—		—		334,886		—		—		—		334,886
Redemption of series H preferred stock		—		(353,290)	—		—		—		(11,760)		—		(365,050)		—		—		—		(365,050)
Amortization of unearned compensation on share-based awards		—		—	—		—		38,662		—		—		38,662		—		—		—		38,662
Reclassification of vested share-based awards		—		—	—		—		(8,458)		—		—		(8,458)		8,458		—		8,458		—
Adjustment to redeemable noncontrolling interests		25,937		—	—		—		(2,059)		—		—		(2,059)		—		(23,878)		(23,878)		(25,937)
Dividends declared on preferred stock		—		—	—		—		—		(74,990)		—		(74,990)		—		—		—		(74,990)
Dividends and distributions on common stock and common and incentive units		(676)		—	—		—		—		(900,201)		—		(900,201)		(38,278)		—		(38,278)		(938,479)
Contributions from noncontrolling interests in consolidated joint ventures, net of distributions		—		—	—		—		—		—		—		—		—		63,173		63,173		63,173
Deconsolidation of consolidated joint venture		—		—	—		—		—		—		—		—		—		(110,086)		(110,086)		(110,086)
Cumulative effect adjustment from adoption of new accounting standard		—		—	—		—		—		(6,318)		—		(6,318)		—		—		—		(6,318)
Net income		372		—	—		—		—		579,761		—		579,761		20,728		(1,640)		19,088		598,849
Other comprehensive income—foreign currency translation adjustments		—		—	—		—		—		—		43,702		43,702		1,960		—		1,960		45,662
Other comprehensive loss—fair value of interest rate swaps		—		—	—		—		—		—		(8,839)		(8,839)		(393)		—		(393)		(9,232)
Other comprehensive loss—reclassification of accumulated other comprehensive income to interest expense		—		—	—		—		—		—		(7,138)		(7,138)		(308)		—		(308)		(7,446)
Balance as of December 31, 2019	$	41,465	$	1,434,420	208,900,758	$	2,073	$	11,577,320	$	(3,046,579)	$	(87,922)	$	9,879,312	$	708,163	$	20,625	$	728,788	$	10,608,100

See accompanying notes to the consolidated financial statements.

Index to Financial Statements

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EQUITY (continued)

(in thousands, except share data)


										Accumulated		Accumulated				Noncontrolling		Noncontrolling
					Number of			Additional		Dividends in		Other		Total		Interests in		Interests in		Total
	Redeemable		Preferred		Common	Common		Paid-in		Excess of		Comprehensive		Stockholders’		Operating		Consolidated		Noncontrolling
	Noncontrolling Interests		Stock		Shares	Stock		Capital		Earnings		Income (Loss), Net		Equity		Partnership		Joint Ventures		Interests		Total Equity

Balance as of December 31, 2019	$	41,465	$	1,434,420	208,900,758	$	2,073	$	11,577,320	$	(3,046,579)	$	(87,922)	$	9,879,312	$	708,163	$	20,625	$	728,788	$	10,608,100
Conversion of common units to common stock		—		—	1,070,014		10		92,543		—		—		92,553		(92,553)		—		(92,553)		—
Common stock and share-based awards issued in connection with business combinations		—		—	54,487,997		545		7,012,675		—		—		7,013,220		—		—		—		7,013,220
Issuance of common stock, net of costs		—		—	15,920,893		160		1,888,366		—		—		1,888,526		—		—		—		1,888,526
Shares issued under employee stock purchase plan		—		—	58,136		—		6,503		—		—		6,503		—		—		—		6,503
Shares repurchased and retired to satisfy tax withholding upon vesting		—		—	—		—		(8,570)		—		—		(8,570)		—		—		—		(8,570)
Amortization of share-based compensation		—		—	—		—		78,757		—		—		78,757		—		—		—		78,757
Vesting of restricted stock, net		—		—	(148,072)		—		—		—		—		—		—		—		—		—
Reclassification of vested share-based awards		—		—	—		—		(17,611)		—		—		(17,611)		17,611		—		17,611		—
Redemption of series G preferred stock		—		(241,468)	—		—		—		(8,532)		—		(250,000)		—		—		—		(250,000)
Redemption of series I preferred stock		—		(242,012)	—		—		—		(7,988)		—		(250,000)		—		—		—		(250,000)
Adjustment to redeemable noncontrolling interests		3,086		—	—		—		(3,086)		—		—		(3,086)		—		—		—		(3,086)
Dividends declared on preferred stock		—		—	—		—		—		(76,536)		—		(76,536)		—		—		—		(76,536)
Dividends and distributions on common stock and common and incentive units		(700)		—	—		—		—		(1,214,701)		—		(1,214,701)		(37,147)		—		(37,147)		(1,251,848)
Contributions from noncontrolling interests		2,089		—	—		—		—		—		—		—		—		97,914		97,914		97,914
Net income (loss)		(4,417)		—	—		—		—		356,398		—		356,398		9,629		1,120		10,749		367,147
Other comprehensive income—foreign currency translation adjustments		488		—	—		—		—		—		226,849		226,849		3,491		—		3,491		230,340
Other comprehensive loss—fair value of interest rate swaps		—		—	—		—		—		—		(11,980)		(11,980)		(445)		—		(445)		(12,425)
Other comprehensive income— reclassification of accumulated other comprehensive loss to interest expense		—		—	—		—		—		—		8,063		8,063		231		—		231		8,294

Balance as of December 31, 2020	$	42,011	$	950,940	280,289,726	$	2,788	$	20,626,897	$	(3,997,938)	$	135,010	$	17,717,697	$	608,980	$	119,659	$	728,639	$	18,446,336

See accompanying notes to the consolidated financial statements.

Index to Financial Statements

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)


	Year Ended December 31,
	2020		2019		2018
Cash flows from operating activities:
Net income	$	362,730	$	599,221	$	341,115
Adjustments to reconcile net income to net cash provided by operating activities:
Gain on disposition of properties / deconsolidation, net		(316,894)		(335,148)		(80,049)
Gain on sale of marketable equity security		(17,883)		—		—
Unrealized gain on marketable equity security		(577)		(46,492)		(1,631)
Impairment of investments in real estate		6,482		5,351		—
Equity in loss (earnings) of unconsolidated joint ventures		57,629		(8,067)		(32,979)
Distributions from unconsolidated joint ventures		39,878		44,293		21,905
Write-off due to early lease terminations		9		11,400		2,818
Depreciation and amortization of buildings and improvements, tenant improvements and acquired ground leases		1,010,538		809,472		770,275
Amortization of customer relationship value, acquired in-place lease value and deferred leasing costs		355,841		354,302		416,621
Amortization of share-based compensation		74,577		34,905		27,159
Non-cash amortization of terminated swaps		1,046		1,047		1,120
Allowance for doubtful accounts		6,480		2,159		6,304
Amortization of deferred financing costs		15,286		13,362		11,537
Loss from early extinguishment of debt		103,215		39,157		1,568
Amortization of debt discount/premium		3,916		2,260		3,538
Amortization of acquired above-market leases and acquired below-market leases, net		12,686		17,097		26,530
Changes in assets and liabilities:
Accounts and other receivables		2,432		(8,435)		(21,318)
Deferred rent		(30,430)		(47,858)		(39,905)
Deferred leasing costs		(60,966)		(31,270)		(72,104)
Other assets		(14,363)		(15,599)		(9,145)
Accounts payable, operating lease liabilities and other accrued liabilities		72,280		77,597		63,476
Deferred tax liability, net		10,545		(9,442)		(24,284)
Security deposits and prepaid rents		12,084		4,505		(27,227)
Net cash provided by operating activities		1,706,541		1,513,817		1,385,324
Cash flows from investing activities:
Improvements to investments in real estate		(2,064,066)		(1,436,902)		(1,325,162)
Cash paid for acquisitions		(1,029,652)		(75,704)		(2,090,542)
Deconsolidation of Ascenty cash		—		(97,081)		—
Proceeds from joint venture transactions		—		1,494,881		—
Proceeds from sale of marketable equity security		70,019		—		—
Cash assumed in acquisitions		121,085		—		116,000
Proceeds from sale of assets, net of sales costs		564,615		—		286,204
Investments in unconsolidated joint ventures		(144,323)		(101,101)		(673)
Prepaid construction costs and other investments		(86,887)		(20,672)		(13,254)

See accompanying notes to the consolidated financial statements.

Index to Financial Statements

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)

(in thousands)


	Year Ended December 31,
	2020		2019		2018
Improvement advances to tenants		(114,614)		(66,078)		(48,502)
Collection of improvement advances to tenants		84,476		27,665		39,936
Net cash used in investing activities		(2,599,347)		(274,992)		(3,035,993)
Cash flows from financing activities:
Borrowings on global revolving credit facilities	$	3,638,932	$	3,099,685	$	3,046,245
Repayments on global revolving credit facilities		(3,476,821)		(4,512,073)		(1,945,594)
Borrowings on unsecured term loans		—		—		467,922
Repayments on unsecured term loans		(300,000)		(375,000)		(674,332)
Borrowings on unsecured senior notes		3,573,120		2,869,240		1,169,006
Repayments on unsecured senior notes		(2,623,383)		(1,539,613)		—
Borrowings on secured debt		—		—		600,000
Principal payments on secured debt		(5,541)		(688)		(594)
Payment of loan fees and costs		(23,921)		(20,944)		(44,299)
Premium paid for early extinguishment of debt		(96,124)		(35,067)		—
Capital contributions from noncontrolling interests in consolidated joint ventures, net		102,285		63,173		66,124
Proceeds from common and preferred stock offerings, net		1,879,957		535,620		(3,861)
Redemption of preferred stock		(500,000)		(365,050)		—
Proceeds from equity plans		6,503		5,462		5,874
Proceeds from forward swap contract		—		—		1,560
Payment of dividends to preferred stockholders		(76,536)		(74,990)		(81,316)
Payment of dividends to common stockholders and distributions to noncontrolling interests in operating partnership		(1,162,782)		(921,776)		(849,466)
Net cash provided by (used in) financing activities		935,689		(1,272,021)		1,757,269
Net increase (decrease) in cash, cash equivalents and restricted cash		42,883		(33,196)		106,600
Effect of exchange rate changes on cash, cash equivalents and restricted cash		(16,484)		(4,773)		15,441
Cash, cash equivalents and restricted cash at beginning of year		97,253		135,222		13,181
Cash, cash equivalents and restricted cash at end of year	$	123,652	$	97,253	$	135,222

See accompanying notes to the consolidated financial statements.

Index to Financial Statements

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)

(in thousands)


	Year Ended December 31,
	2020		2019		2018
Supplemental disclosure of cash flow information:
Cash paid for interest, net of amounts capitalized	$	301,938	$	312,848	$	288,643
Cash paid for income taxes		20,055		14,607		11,224
Supplementary disclosure of noncash investing and financing activities:
Change in net assets related to foreign currency translation adjustments	$	230,340	$	45,662	$	(11,736)
(Decrease) increase in other assets related to change in fair value of interest rate swaps		(12,425)		(9,232)		8,197
Noncontrolling interests in operating partnership converted to shares of common stock		92,553		190,514		149,547
Accrual for additions to investments in real estate and tenant improvement advances included in accounts payable and other accrued liabilities		358,694		197,665		189,508
Assumption of capital lease obligations upon acquisition		—		—		75,030
Non-cash derecognition of capital lease obligation		—		—		17,294
Decrease to goodwill and deferred tax liability		—		(9,436)		—
Allocation of purchase price of other business combinations and asset acquisitions:
Investment in real estate	$	945,144	$	74,903	$	410,712
Cash and cash equivalents		12,537		—		—
Account receivables		8,509		76		—
Operating lease right-of-use assets		1,332		—		—
Goodwill		188,654		—		—
Customer relationship value and other intangibles		68,406		725		—
Other assets		1,326		—		—
Secured debt		(139,569)		—		—
Accounts payable and other accrued liabilities		(20,717)		—		—
Operating lease liabilities		(1,384)		—		—
Security deposits and prepaid rents		(703)		—		—
Common stock issued		(28,168)		—		—
Noncontrolling interests in consolidated joint venture		(5,715)		—		—
Cash paid for acquisition of real estate	$	1,029,652	$	75,704	$	410,712

Allocation of purchase price to business combinations:
Land	$	190,970	$	—	$	—
Building and improvements		3,166,988		—		425,000
Construction in progress and space held for development		397,825		—		—
Operating lease right-of-use assets		553,987		—		—
Goodwill		4,338,711		—		982,667
Customer relationship value and other intangibles		1,052,811		—		495,000
Debt assumed		(1,662,276)		—		—
Operating lease liabilities		(47,797)		—		—
Finance lease obligations		(553,987)		—		—
Other working capital liabilities, net		(24,738)		—		(60,000)
Deferred tax liability		(535,990)		—		—
Noncontrolling interests in operating partnership		—		—		(253,837)
Noncontrolling interests in consolidated joint venture		—		—		(25,000)
Total purchase consideration		6,876,504		—		1,563,830
Assumed cash and cash equivalents		108,548				116,000
Total equity consideration (2020) or cash paid (2018)	$	6,985,052	$	—	$	1,679,830

Deconsolidation of Ascenty:
Investment in real estate	$	—	$	(362,951)	$	—
Account receivables		—		(24,977)		—
Acquired in-place lease value, deferred leasing costs and intangibles		—		(480,128)		—
Goodwill		—		(967,189)		—
Other assets		—		(31,099)		—
Secured debt		—		571,873		—
Accounts payable and other accrued liabilities		—		72,449		—
Accumulated other comprehensive loss		—		(21,687)		—
Deconsolidation of Ascenty cash		—		(97,081)		—
Net carrying value of Ascenty assets and liabilities deconsolidated	$	—	$	(1,340,790)	$	—

Recognition of retained investment in unconsolidated Ascenty joint venture	$	—	$	727,439	$	—

See accompanying notes to the consolidated financial statements.

Index to Financial Statements

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except unit and per unit data)


	December 31,		December 31,
	2020		2019
ASSETS
Investments in real estate:
Investments in properties, net		20,582,954		14,230,575
Investments in unconsolidated joint ventures		1,148,158		1,287,109
Net investments in real estate		21,731,112		15,517,684
Operating lease right-of-use assets, net		1,386,959		628,681
Cash and cash equivalents		108,501		89,817
Accounts and other receivables, net		603,111		305,501
Deferred rent		528,180		478,744
Goodwill		8,330,996		3,363,070
Customer relationship value, deferred leasing costs and other intangibles, net		3,122,904		2,195,324
Assets held for sale		—		229,934
Other assets		264,528		259,376
Total assets	$	36,076,291	$	23,068,131
LIABILITIES AND CAPITAL
Global revolving credit facilities, net	$	531,905	$	234,105
Unsecured term loans, net		536,580		810,219
Unsecured senior notes, net		11,997,010		8,973,190
Secured debt, including premiums		239,222		104,934
Operating lease liabilities		1,468,712		693,539
Accounts payable and other accrued liabilities		1,420,162		1,009,154
Deferred tax liabilities, net		698,308		147,381
Accrued dividends and distributions		324,386		234,620
Security deposits and prepaid rents		371,659		208,724
Obligations associated with assets held for sale		—		2,700
Total liabilities		17,587,944		12,418,566

Redeemable noncontrolling interests		42,011		41,465
Commitments and contingencies
Capital:
Partners’ capital:
General Partner:
Preferred units, $956,250 and $1,456,250 liquidation preference ($25.00 per unit), 38,250,000 and 58,250,000 units issued and outstanding as of December 31, 2020 and December 31, 2019, respectively		950,940		1,434,420
Common units, 280,289,726 and 208,900,758 units issued and outstanding as of December 31, 2020 and December 31, 2019, respectively		16,631,747		8,532,814
Limited Partners, 8,046,267 and 8,843,155 units issued and outstanding as of December 31, 2020 and December 31, 2019, respectively		609,190		711,650
Accumulated other comprehensive income (loss)		134,800		(91,409)
Total partners’ capital		18,326,677		10,587,475
Noncontrolling interests in consolidated joint ventures		119,659		20,625
Total capital		18,446,336		10,608,100
Total liabilities and capital	$	36,076,291	$	23,068,131

See accompanying notes to the consolidated financial statements.

Index to Financial Statements

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

CONSOLIDATED INCOME STATEMENTS

(in thousands, except unit and per unit data)


	Year Ended December 31,
	2020		2019		2018
Operating Revenues:
Rental and other services	$	3,886,546	$	3,196,356	$	2,412,076
Tenant reimbursements		—		—		624,637
Fee income and other		17,063		12,885		9,765
Total operating revenues		3,903,609		3,209,241		3,046,478
Operating Expenses:
Rental property operating and maintenance		1,331,493		1,020,578		957,065
Property taxes and insurance		182,623		172,183		140,918
Depreciation and amortization		1,366,379		1,163,774		1,186,896
General and administrative		351,369		211,097		163,667
Transactions and integration		106,662		27,925		45,327
Impairment of investments in real estate		6,482		5,351		—
Other		1,075		14,118		2,818
Total operating expenses		3,346,083		2,615,026		2,496,691
Operating income		557,526		594,215		549,787
Other Income (Expenses):
Equity in (loss) earnings of unconsolidated joint ventures		(57,629)		8,067		32,979
Gain on disposition of properties, net		316,894		267,651		80,049
Gain on deconsolidation, net		—		67,497		—
Interest and other income, net		20,222		66,000		3,481
Interest expense		(333,021)		(353,057)		(321,529)
Loss from early extinguishment of debt		(103,215)		(39,157)		(1,568)
Income tax expense		(38,047)		(11,995)		(2,084)
Net income		362,730		599,221		341,115
Net loss attributable to noncontrolling interests		3,168		1,640		311
Net income attributable to Digital Realty Trust, L.P.		365,898		600,861		341,426
Preferred units distributions, including undeclared distributions		(76,536)		(74,990)		(81,316)
Issuance costs associated with redeemed preferred units		(16,520)		(11,760)		—
Net income available to common unitholders	$	272,842	$	514,111	$	260,110
Net income per unit available to common unitholders:
Basic	$	1.02	$	2.37	$	1.21
Diluted	$	1.01	$	2.35	$	1.21
Weighted average common units outstanding:
Basic		268,072,983		217,284,755		214,312,871
Diluted		270,496,513		218,421,179		214,950,934

See accompanying notes to the consolidated financial statements.

Index to Financial Statements

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)


	Year Ended December 31,
	2020		2019		2018
Net income	$	362,730	$	599,221	$	341,115
Other comprehensive income (loss):
Foreign currency translation adjustments		230,340		23,975		(11,736)
Reclassification of foreign currency translation adjustment due to deconsolidation of Ascenty		—		21,687		—
(Decrease) increase in fair value of interest rate swaps		(12,425)		(9,232)		8,197
Reclassification to interest expense from interest rate swaps		8,294		(7,446)		(3,969)
Other comprehensive income (loss)		226,209		28,984		(7,508)
Comprehensive income	$	588,939	$	628,205	$	333,607
Comprehensive loss attributable to noncontrolling interests		3,168		1,640		311
Comprehensive income attributable to Digital Realty Trust, L.P.	$	592,107	$	629,845	$	333,918

See accompanying notes to the consolidated financial statements.

Index to Financial Statements

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CAPITAL (continued)

(in thousands, except unit data)


												Accumulated		Noncontrolling
	Redeemable		General Partner						Limited Partners			Other		Interests in
	Noncontrolling		Preferred Units			Common Units			Common Units			Comprehensive		Consolidated
	Interests		Units	Amount		Units	Amount		Units	Amount		Income (Loss)		Joint Ventures		Total Capital
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		—	—		—	711,892		62,004	(711,892)		(62,004)		—		—		—
Issuance of unvested restricted common units, net of forfeitures		—	—		—	220,765		—	—		—		—		—		—
Common unit offering costs		—	—		—	—		1,194	—		—		—		—		1,194
Issuance of units in connection with Ascenty Acquisition		—	—		—	—		—	2,338,874		253,837		—		25,000		278,837
Issuance of common units, net of forfeitures		—	—		—	—		—	464,807		—		—		—		—
Units issued in connection with employee stock purchase plan		—	—		—	69,532		5,874	—		—		—		—		5,874
Units repurchased and retired to satisfy tax withholding upon vesting		—	—		—	(46,833)		(5,055)	—		—		—		—		(5,055)
Amortization of unearned compensation on share-based awards		—	—		—	—		32,456	—		—		—		—		32,456
Reclassification of vested share-based awards		—	—		—	—		(3,772)	—		3,772		—		—		—
Adjustment to redeemable noncontrolling interests		(37,274)	—		—	—		1,596	—		35,678		—		—		37,274
Distributions		(1,271)	—		(81,316)	—		(833,364)	—		(32,311)		—		—		(946,991)
Contributions from noncontrolling interests in consolidated joint ventures, net of distributions		—	—		—	—		—	—		—		—		66,124		66,124
Cumulative effect adjustment from adoption of new accounting standard		—	—		—	—		5,915	—		—		—		—		5,915
Net income		475	—		81,316	—		249,930	—		9,705		—		(311)		340,640
Other comprehensive income - foreign currency translation adjustments		—	—		—	—		—	—		—		(11,736)		—		(11,736)
Other comprehensive loss - fair value of interest rate swaps		—	—		—	—		—	—		—		8,197		—		8,197
Other comprehensive income – reclassification of accumulated other comprehensive income to interest expense		—	—		—	—		—	—		—		(3,969)		—		(3,969)
Balance as of December 31, 2018	$	15,832	50,650,000	$	1,249,560	206,425,656	$	8,724,731	10,580,884	$	911,256	$	(120,393)	$	93,056	$	10,858,210

See accompanying notes to the consolidated financial statements.

Index to Financial Statements

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CAPITAL (continued)

(in thousands, except unit data)


												Accumulated		Noncontrolling
	Redeemable		General Partner						Limited Partners			Other		Interests in
	Noncontrolling		Preferred Units			Common Units			Common Units			Comprehensive		Consolidated
	Interests		Units	Amount		Units	Amount		Units	Amount		Income (Loss)		Joint Ventures		Total Capital
Balance as of December 31, 2018	$	15,832	50,650,000	$	1,249,560	206,425,656	$	8,724,731	10,580,884	$	911,256	$	(120,393)	$	93,056	$	10,858,210
Conversion of limited partner common units to general partner common units		—	—		—	2,154,460		190,514	(2,154,460)		(190,514)		—		—		—
Issuance of unvested restricted common units, net of forfeitures		—	—		—	256,868		—	—		—		—		—		—
Common unit offering costs		—	—		—	—		(2,530)	—		—		—		—		(2,530)
Issuance of common units, net of forfeitures		—	—		—	—		—	416,731		—		—		—		—
Units issued in connection with employee stock purchase plan		—	—		—	63,774		5,462	—		—		—		—		5,462
Issuance of series K preferred units, net of offering costs		—	8,400,000		203,264	—		—	—		—		—		—		203,264
Issuance of series L preferred units, net of offering costs		—	13,800,000		334,886	—		—	—		—		—		—		334,886
Redemption of series H preferred units		—	(14,600,000)		(353,290)	—		(11,760)	—		—		—		—		(365,050)
Amortization of unearned compensation on share-based awards		—	—		—	—		38,662	—		—		—		—		38,662
Reclassification of vested share-based awards		—	—		—	—		(8,458)	—		8,458		—		—		—
Adjustment to redeemable noncontrolling interests		25,937	—		—	—		(2,059)	—		—		—		(23,878)		(25,937)
Distributions		(676)	—		(74,990)	—		(900,201)	—		(38,278)		—		—		(1,013,469)
Contributions from noncontrolling interests in consolidated joint ventures, net of distributions		—	—		—	—		—	—		—		—		63,173		63,173
Deconsolidation of consolidated joint venture		—	—		—	—		—	—		—		—		(110,086)		(110,086)
Cumulative effect adjustment from adoption of new accounting standard		—	—		—	—		(6,318)	—		—		—		—		(6,318)
Net income		372	—		74,990	—		504,771	—		20,728		—		(1,640)		598,849
Other comprehensive income - foreign currency translation adjustments		—	—		—	—		—	—		—		45,662		—		45,662
Other comprehensive loss - fair value of interest rate swaps		—	—		—	—		—	—		—		(9,232)		—		(9,232)
Other comprehensive income – reclassification of accumulated other comprehensive income to interest expense		—	—		—	—		—	—		—		(7,446)		—		(7,446)
Balance as of December 31, 2019	$	41,465	58,250,000	$	1,434,420	208,900,758	$	8,532,814	8,843,155	$	711,650	$	(91,409)	$	20,625	$	10,608,100

See accompanying notes to the consolidated financial statements.

Index to Financial Statements

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CAPITAL (continued)

(in thousands, except unit data)


												Accumulated				Noncontrolling
	Redeemable		General Partner						Limited Partners			Other		Total		Interests in
	Limited Partner		Preferred Units			Common Units			Common Units			Comprehensive		Partners'		Consolidated Joint
	Common Units		Units	Amount		Units	Amount		Units	Amount		Income (Loss)		Capital		Ventures		Total Capital

Balance as of December 31, 2019	$	41,465	58,250,000	$	1,434,420	208,900,758	$	8,532,814	8,843,155	$	711,650	$	(91,409)	$	10,587,475	$	20,625	$	10,608,100
Conversion of limited partner common units to general partner common units		—	—		—	1,070,014		92,553	(1,070,014)		(92,553)		—		—		—		—
Common units and share-based awards issued in connection with business combinations		—	—		—	54,487,997		7,013,220	—		—		—		7,013,220		—		7,013,220
Issuance of common units, net of offering costs		—	—		—	15,920,893		1,888,526	—		—		—		1,888,526		—		1,888,526
Issuance of common units, net of forfeitures		—	—		—	—		—	273,126		—		—		—		—		—
Units issued in connection with employee stock purchase plan		—	—		—	58,136		6,503	—		—		—		6,503		—		6,503
Units repurchased and retired to satisfy tax withholding upon vesting		—	—		—	—		(7,320)	—		—		—		(7,320)		—		(7,320)
Amortization of share-based compensation		—	—		—	—		77,507	—		—		—		77,507		—		77,507
Vesting of restricted common units, net		—	—		—	(148,072)		—	—		—		—		—		—		—
Reclassification of vested share-based awards		—	—		—	—		(17,611)	—		17,611		—		—		—		—
Redemption of series G preferred units		—	(10,000,000)		(241,468)	—		(8,532)	—		—		—		(250,000)		—		(250,000)
Redemption of series I preferred units		—	(10,000,000)		(242,012)	—		(7,988)	—		—		—		(250,000)		—		(250,000)
Adjustment to redeemable partnership units		3,086	—		—	—		(3,086)	—		—		—		(3,086)		—		(3,086)
Distributions		(700)	—		—	—		(1,214,701)	—		(37,147)		—		(1,251,848)		—		(1,251,848)
Contributions from noncontrolling interests in consolidated joint ventures		2,089	—		—	—		—	—		—		—		—		97,914		97,914
Net income (loss)		(4,417)	—		—	—		279,862	—		9,629		—		289,491		1,120		290,611
Other comprehensive income—foreign currency translation adjustments		488	—		—	—		—	—		—		230,340		230,340		—		230,340
Other comprehensive loss—fair value of interest rate swaps		—	—		—	—		—	—		—		(12,425)		(12,425)		—		(12,425)
Other comprehensive income—reclassification of accumulated other comprehensive loss to interest expense		—	—		—	—		—	—		—		8,294		8,294		—		8,294

Balance as of December 31, 2020	$	42,011	38,250,000	$	950,940	280,289,726	$	16,631,747	8,046,267	$	609,190	$	134,800	$	18,326,677	$	119,659	$	18,446,336

See accompanying notes to the consolidated financial statements.

Index to Financial Statements

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)


	Year Ended December 31,
	2020		2019		2018
Cash flows from operating activities:
Net income	$	362,730	$	599,221	$	341,115
Adjustments to reconcile net income to net cash provided by operating activities:
Gain on disposition of properties / deconsolidation, net		(316,894)		(335,148)		(80,049)
Gain on sale of marketable equity security		(17,883)		—		—
Unrealized gain on marketable equity security		(577)		(46,492)		(1,631)
Impairment of investments in real estate		6,482		5,351		—
Equity in loss of unconsolidated joint ventures		57,629		(8,067)		(32,979)
Distributions from unconsolidated joint ventures		39,878		44,293		21,905
Write-off due to early lease terminations		9		11,400		2,818
Depreciation and amortization of buildings and improvements, tenant improvements and acquired ground leases		1,010,538		809,472		770,275
Amortization of customer relationship value, acquired in-place lease value and deferred leasing costs		355,841		354,302		416,621
Amortization of share-based compensation		74,577		34,905		27,159
Non-cash amortization of terminated swaps		1,046		1,047		1,120
Allowance for doubtful accounts		6,480		2,159		6,304
Amortization of deferred financing costs		15,286		13,362		11,537
Loss from early extinguishment of debt		103,215		39,157		1,568
Amortization of debt discount/premium		3,916		2,260		3,538
Amortization of acquired above-market leases and acquired below-market leases, net		12,686		17,097		26,530
Changes in assets and liabilities:
Accounts and other receivables		2,432		(8,435)		(21,318)
Deferred rent		(30,430)		(47,858)		(39,905)
Deferred leasing costs		(60,966)		(31,270)		(72,104)
Other assets		(14,363)		(15,599)		(9,145)
Accounts payable, operating lease liabilities and other accrued liabilities		72,280		77,597		63,476
Deferred tax liability, net		10,545		(9,442)		(24,284)
Security deposits and prepaid rents		12,084		4,505		(27,227)
Net cash provided by operating activities		1,706,541		1,513,817		1,385,324
Cash flows from investing activities:
Improvements to investments in real estate		(2,064,066)		(1,436,902)		(1,325,162)
Cash paid for acquisitions		(1,029,652)		(75,704)		(2,090,542)
Deconsolidation of Ascenty cash		—		(97,081)		—
Proceeds from joint venture transactions		—		1,494,881		—
Proceeds from sale of marketable equity security		70,019		—		—
Cash assumed in acquisitions		121,085		—		116,000
Proceeds from sale of assets, net of sales costs		564,615		—		286,204
Investments in unconsolidated joint ventures		(144,323)		(101,101)		(673)
Prepaid construction costs and other investments		(86,887)		(20,672)		(13,254)
Improvement advances to tenants		(114,614)		(66,078)		(48,502)
Collection of improvement advances to tenants		84,476		27,665		39,936
Net cash used in investing activities		(2,599,347)		(274,992)		(3,035,993)

Index to Financial Statements

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)

(in thousands)


	Year Ended December 31,
	2020		2019		2018
Cash flows from financing activities:
Borrowings on global revolving credit facilities	$	3,638,932	$	3,099,685	$	3,046,245
Repayments on global revolving credit facilities		(3,476,821)		(4,512,073)		(1,945,594)
Borrowings on unsecured term loans		—		—		467,922
Repayments on unsecured term loans		(300,000)		(375,000)		(674,332)
Borrowings on unsecured senior notes		3,573,120		2,869,240		1,169,006
Repayments on unsecured senior notes		(2,623,383)		(1,539,613)		—
Borrowings on secured debt		—		—		600,000
Principal payments on secured debt		(5,541)		(688)		(594)
Payment of loan fees and costs		(23,921)		(20,944)		(44,299)
Premium paid for early extinguishment of debt		(96,124)		(35,067)		—
Capital contributions from noncontrolling interests in consolidated joint ventures, net		102,285		63,173		66,124
General partner contributions		1,886,460		541,082		2,013
General partner distributions		(500,000)		(365,050)		—
Proceeds from forward swap contract		—		—		1,560
Payment of distributions to preferred unitholders		(76,536)		(74,990)		(81,316)
Payment of distributions to common unitholders		(1,162,782)		(921,776)		(849,466)
Net cash provided by (used in) financing activities		935,689		(1,272,021)		1,757,269
Net increase (decrease) in cash, cash equivalents and restricted cash		42,883		(33,196)		106,600
Effect of exchange rate changes on cash, cash equivalents and restricted cash		(16,484)		(4,773)		15,441
Cash, cash equivalents and restricted cash at beginning of year		97,253		135,222		13,181
Cash, cash equivalents and restricted cash at end of year	$	123,652	$	97,253	$	135,222

Index to Financial Statements

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)

(in thousands)


	Year Ended December 31,
	2020		2019		2018
Supplemental disclosure of cash flow information:
Cash paid for interest, net of amounts capitalized	$	301,938	$	312,848	$	288,643
Cash paid for income taxes		20,055		14,607		11,224
Supplementary disclosure of noncash investing and financing activities:
Change in net assets related to foreign currency translation adjustments	$	230,340	$	45,662	$	(11,736)
(Decrease) increase in other assets related to change in fair value of interest rate swaps		(12,425)		(9,232)		8,197
Limited Partner common units converted to General Partner common units		92,553		190,514		149,547
Accrual for additions to investments in real estate and tenant improvement advances included in accounts payable and other accrued liabilities		358,694		197,665		189,508
Assumption of capital lease obligations upon acquisition		—		—		75,030
Non-cash derecognition of capital lease obligation		—		—		17,294
Decrease to goodwill and deferred tax liability		—		(9,436)		—

Allocation of purchase price of real estate/investment in partnership to:
Investments in real estate	$	945,144	$	74,903	$	410,712
Cash and cash equivalents		12,537		—		—
Account receivables		8,509		76		—
Operating lease right-of-use assets		1,332		—		—
Goodwill		188,654		—		—
Customer relationship value and other intangibles		68,406		725		—
Other assets		1,326		—		—
Secured debt		(139,569)		—		—
Accounts payable and other accrued liabilities		(20,717)		—		—
Operating lease liabilities		(1,384)		—		—
Security deposits and prepaid rents		(703)		—		—
Common units issued		(28,168)		—		—
Noncontrolling interests in consolidated joint venture		(5,715)		—		—
Cash paid for acquisition of real estate	$	1,029,652	$	75,704	$	410,712

Allocation of purchase price to business combinations:
Land	$	190,970	$	—	$	—
Building and improvements		3,166,988		—		425,000
Construction in progress and space held for development		397,825		—		—
Operating lease right-of-use assets		553,987		—		—
Goodwill		4,338,711		—		982,667
Customer relationship value and other intangibles		1,052,811		—		495,000
Debt assumed		(1,662,276)		—		—
Operating lease liabilities		(47,797)		—		—
Finance lease obligations		(553,987)		—		—
Other working capital liabilities, net		(24,738)		—		(60,000)
Deferred tax liability		(535,990)		—		—
Noncontrolling interests in operating partnership		—		—		(253,837)
Noncontrolling interests in consolidated joint venture		—		—		(25,000)
Total purchase consideration		6,876,504		—		1,563,830
Assumed cash and cash equivalents		108,548		—		116,000
Total equity consideration (2020) or cash paid (2018)	$	6,985,052	$	—	$	1,679,830

Deconsolidation of Ascenty:
Investment in real estate	$	-	$	(362,951)	$	—
Account receivables		-		(24,977)		—
Acquired in-place lease value, deferred leasing costs and intangibles		-		(480,128)		—
Goodwill		-		(967,189)		—
Other assets		-		(31,099)		—
Secured debt		-		571,873		—
Accounts payable and other accrued liabilities		-		72,449		—
Accumulated other comprehensive loss		-		(21,687)		—
Deconsolidation of Ascenty cash		-		(97,081)		—
Net carrying value of Ascenty assets and liabilities deconsolidated	$	-	$	(1,340,790)	$	—

Recognition of retained investment in unconsolidated Ascenty joint venture	$	-	$	727,439	$	—

See accompanying notes to the consolidated financial statements.

Index to Financial Statements

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-

December 31, 2020 and 2019

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 December 31, 2020 and 2019 is as follows:


	Data Centers
	As of December 31, 2020				As of December 31, 2019
			Unconsolidated				Unconsolidated
Region	Operating		Joint Ventures	Total	Operating	Held for Sale (2)	Joint Ventures	Total
United States	123		16	139	119	11	17	147
Europe	107	(1)	—	107	41	—	—	41
Latin America	—		22	22	—	—	19	19
Asia	7		5	12	5	—	5	10
Australia	6		—	6	5	—	—	5
Africa	3	(1)	—	3	—	—	—	—
Canada	2		—	2	2	1	—	3
Total	248		43	291	172	12	41	225

(1)	Includes 62 data centers in Europe and three data centers in Africa that were acquired as part of the Interxion Combination.

(2)	Includes 10 Powered Base Building® properties, which comprise 12 data centers, that were held for sale to a third party as of December 31, 2019 and subsequently sold in January 2020 (see Note 5).

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, Athens, Brussels, Copenhagen, Dublin, Dusseldorf, Frankfurt, London, Madrid, Marseille, Paris, Stockholm, Vienna, Zagreb and Zurich metropolitan areas in Europe, the Fortaleza, Querétaro, Rio de Janeiro, Santiago and São Paulo metropolitan areas in Latin America, and the Hong Kong, Melbourne, Osaka, Seoul, 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 December 31, 2020, Digital Realty Trust, Inc. owns a 97.2% common interest and a 100.0% preferred interest in the Operating Partnership. As of December 31, 2019, Digital Realty Trust, Inc. owned a 95.9% 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.

Index to Financial Statements

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)

December 31, 2020 and 201****9

As used in these Notes: “Ascenty Acquisition” refers to the acquisition of Ascenty by the Operating Partnership and Stellar Participações S.A. (formerly Stellar Participações Ltda.), a Brazilian subsidiary of the Operating Partnership; “Ascenty joint venture” refers to the joint venture, which owns and operates Ascenty, formed with Brookfield Infrastructure; “Brookfield” refers to Brookfield Infrastructure, an affiliate of Brookfield Asset Management; “DFT” refers to DuPont Fabros Technology, Inc.; “DFT Merger” refers to the Company’s acquisition of DuPont Fabros Technology, Inc.; “DFT Operating Partnership” refers to DuPont Fabros Technology, L.P.; “European Portfolio Acquisition” refers to the Company’s acquisition of a portfolio of eight data centers in Europe; “Interxion” refers to InterXion Holding N.V.; “Interxion Combination” refers to the Company’s combination with InterXion Holding N.V.; and “Telx Acquisition” refers to the Company’s acquisition of Telx Holdings, Inc.

Summary of Significant Accounting Policies

(a) Principles of Consolidation and Basis of Presentation

The accompanying 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 notes to the consolidated financial statements of Digital Realty Trust, Inc. and the Operating Partnership have been combined to provide the following benefits:

	●	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.

There are few differences between the Company and the Operating Partnership, which are reflected in these 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.

Index to Financial Statements

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)

December 31, 2020 and 201****9

The presentation of noncontrolling interests in operating partnership, stockholders’ equity and partners’ capital are the main areas of difference between the 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 consolidated financial statements and as noncontrolling interests in operating partnership within equity in Digital Realty Trust, Inc.’s 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 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 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:

	●	consolidated face financial statements; and

	●	the following notes to the consolidated financial statements:

	●	"Debt of the Company" and "Debt of the Operating Partnership";

	●	"Income per Share" and "Income per Unit";

	●	"Equity and Accumulated Other Comprehensive Loss, Net of the Company" and Capital and Accumulated Other Comprehensive Loss of the Operating Partnership"; and

	●	"Quarterly Financial Information".

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, Cash Equivalents and Restricted Cash

For the purpose of the consolidated statements of cash flows, we consider short-term investments with original maturities of 90 days or less to be cash equivalents. As of December 31, 2020 and 2019, cash equivalents consist of investments in money market instruments. Restricted cash primarily consists of contractual capital expenditures plus other deposits.

Cash, cash equivalents, and restricted cash balances as of December 31, 2020, 2019 and 2018:


	Balance as of
(Amounts in thousands)	December 31, 2020		December 31, 2019		December 31, 2018
Cash and cash equivalents	$	108,501	$	89,817	$	126,700
Restricted cash (included in other assets)		15,151		7,436		8,522
Total	$	123,652	$	97,253	$	135,222

Index to Financial Statements

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)

December 31, 2020 and 201****9

Investments in real estate are stated at cost, less accumulated depreciation and amortization. Land is not depreciated. Depreciation and amortization are recorded on a straight-line basis over the estimated useful lives as follows:


Acquired ground leases		Terms of the related lease
Buildings and improvements		5-39 years
Machinery and equipment		7-15 years
Furniture and fixtures		3-5 years
Leasehold improvements		Shorter of the estimated useful lives or the terms of the related leases
Tenant improvements		Shorter of the estimated useful lives or the terms of the related leases

Improvements and replacements are capitalized when they extend the useful life, increase capacity, or improve the efficiency of the asset. Repairs and maintenance are charged to expense as incurred.

Assets that are classified as held for sale are recorded at the lower of their carrying value or fair value less costs to dispose. We classify an asset as held for sale once management has the authority to approve and commits to a plan to sell, the asset is available for immediate sale, an active program to locate a buyer has commenced and the sale of the asset is probable and transfer of the asset is expected to occur within one year. Upon the classification of assets as held for sale or sold, the depreciation and amortization of the assets will cease.

(d) Investments in Unconsolidated Joint Ventures

The Company’s investments in unconsolidated joint ventures are accounted for using the equity method. We use the equity method when we have the ability to exercise significant influence over operating and financial policies of the venture but do not have control of the entity. Under the equity method, we initially recognize these investments in the balance sheet at our cost or proportionate share of fair value. We subsequently adjust the accounts to reflect our proportionate share of net earnings or losses recognized and other comprehensive income or loss, distributions received, contributions made and certain other adjustments, as appropriate. 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 result in income being equal to cash distributions received. 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 investment 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. In the event the underlying asset is goodwill, the difference is not amortized. The amortization of this difference was immaterial for each of the years ended December 31, 2020, 2019 and 2018.

(e) Impairment of Long-Lived and Finite-Lived Intangible Assets

We review each of our properties for indicators that its carrying amount may not be recoverable. Examples of such indicators may include a significant decrease in the market price of the property, a change in the expected holding period for the property, a significant adverse change in how the property is being used or expected to be used based on the underwriting at the time of acquisition, an accumulation of costs significantly in excess of the amount originally

Index to Financial Statements

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)

December 31, 2020 and 201****9

expected for the acquisition or development of the property, or a history of operating or cash flow losses of the property. When such impairment indicators exist, we review an estimate of the future undiscounted net cash flows (excluding interest charges) expected to result from the property’s or asset group’s use and eventual disposition and compare that estimate to the carrying value of the property or the asset group. We consider factors such as future operating income, trends and prospects, as well as the effects of leasing demand, competition and other factors. If our future undiscounted net cash flow evaluation indicates that we are unable to recover the carrying value of a property or asset group, an impairment loss is recorded to the extent that the carrying value exceeds the estimated fair value of the property or fair value of the properties within the asset group. The evaluation of anticipated cash flows is highly subjective and is based in part on assumptions regarding future occupancy, rental rates and capital requirements that could differ materially from actual results in future periods. If we determine that the asset fails the recoverability test, the affected assets must be reduced to their fair value.

We generally estimate the fair value of rental properties utilizing a discounted cash flow analysis that includes projections of future revenues, expenses and capital improvement costs that a market participant would use based on the highest and best use of the asset, which is similar to the income approach that is commonly utilized by appraisers. In certain cases, we may supplement this analysis by obtaining outside broker opinions of value.

In considering whether to classify a property as held for sale or contribution, the Company considers whether: (i) management has committed to a plan to sell or contribute the property; (ii) the property is available for immediate sale or contribution in its present condition; (iii) the Company has initiated a program to locate a buyer or joint venture partner; (iv) the Company believes that the sale or contribution of the property is probable; (v) the Company is actively marketing the property for sale or contribution at a price that is reasonable in relation to its current value; and (vi) actions required for the Company to complete the plan indicate that it is unlikely that any significant changes will be made to the plan.

If all the above criteria are met, the Company classifies the property as held for sale or contribution. Assets classified as held for sale are expected to be sold to a third party and assets classified as held for contribution are expected to be contributed to an unconsolidated joint venture or to a third party within twelve months. At such time, the respective assets and liabilities are presented separately in the consolidated balance sheets and depreciation is no longer recognized. Assets held for sale or contribution are reported at the lower of their carrying amount or their estimated fair value less the costs to sell or contribute. Only those assets held for sale or contribution that constitute a strategic shift that has or will have a major effect on our operations are classified as discontinued operations. To date we have had no property dispositions or assets classified as held for sale or contribution that would meet the definition of discontinued operations.

If impairment indicators arise with respect to intangible assets with finite useful lives, we evaluate impairment by comparing the carrying amount of the asset to the estimated future undiscounted net cash flows expected to be generated by the asset. If estimated future undiscounted net cash flows are less than the carrying amount of the asset, then we estimate the fair value of the asset and compare the estimated fair value to the intangible asset’s carrying value. We recognize any shortfall from carrying value as an impairment loss in the current period.

(f) Acquisition Accounting

Acquisition accounting is applied to the assets and liabilities acquired from third parties. The Company evaluates the nature of the purchase to determine whether the purchase is a business combination or an asset acquisition. Transaction costs associated with business combinations are expensed as incurred while transaction costs associated with an asset acquisition are included in the total costs of the acquisition and are allocated on a pro-rata basis to the carrying

Index to Financial Statements

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)

December 31, 2020 and 201****9

value of the assets and liabilities recognized in connection with the acquisition. The following accounting policies related to valuing the acquired tangible and intangible assets and liabilities are applicable to both business combinations and asset acquisitions. However, in the event the purchase is an asset acquisition, no goodwill or gain is permitted to be recognized. In an asset acquisition, the difference between the sum of the identified tangible and intangible assets and liabilities and the total purchase price (including transactions costs) is allocated to the identified tangible and intangible assets and liabilities on a relative fair value basis. In accordance with current accounting guidance_,_ the fair value of the real estate acquired is allocated to the acquired tangible assets, consisting primarily of land, building and tenant improvements, and identified intangible assets and liabilities, consisting of the value of above-market and below-market leases, value of in-place leases, acquired ground leases and customer relationship value, based in each case on their fair values. Loan premiums, in the case of above-market rate loans, or loan discounts, in the case of below-market loans, are recorded based on the fair value of any loans assumed in connection with acquiring the real estate. When we obtain control of an unconsolidated entity that we previously held as an equity method investment and the acquisition qualifies as a business combination, we account for the acquisition in accordance with the guidance for a business combination achieved in stages. We remeasure our previously held interest in the unconsolidated entity at its acquisition-date fair value, derecognize the book value associated with that interest, and recognize any resulting gain or loss in earnings. If the acquisition qualifies as an asset acquisition, we account for the acquisition under a cost accumulation model, with the cost of the acquisition, including transaction costs allocated to the assets acquired on the basis of relative fair values.

The fair values of the tangible assets of an acquired property are determined based on comparable land sales for land and replacement costs adjusted for physical and market obsolescence for the improvements. The fair values of the tangible assets of an acquired property in an asset acquisition are also determined by valuing the property as if it were vacant, and the “as-if-vacant” value is then allocated to land, building and tenant improvements based on management’s determination of the relative fair values of these assets. Management determines the as-if-vacant fair value of a property based on assumptions that a market participant would use, which is similar to methods used by independent appraisers. Factors considered by management in performing these analyses include an estimate of carrying costs during the expected lease-up periods considering current market conditions and costs to execute similar leases. In estimating carrying costs, management includes real estate taxes, insurance and other operating expenses and estimates of lost rental revenue during the expected lease-up periods based on current market demand. Management also estimates costs to execute similar leases including leasing commissions, tenant improvements, legal and other related costs.

In allocating the fair value of the identified intangible assets and liabilities of an acquired property, above-market and below-market in-place lease values are recorded based on the present value (using an interest rate which reflects the risks associated with the leases acquired) of the difference between (i) the contractual amounts to be paid pursuant to the in-place leases and (ii) estimated fair market lease rates from the perspective of a market participant for the corresponding in-place leases, measured, for above-market leases, over a period equal to the remaining non-cancelable term of the lease and, for below-market leases, over a period equal to the initial term plus any below-market fixed rate renewal periods. The leases we have acquired do not currently include any below-market fixed rate renewal periods. The capitalized above-market lease values are amortized as a reduction of rental income over the remaining non-cancelable terms of the respective leases. The capitalized below-market lease values, also referred to as acquired lease obligations, are amortized as an increase to rental income over the initial terms of the respective leases and any below-market fixed rate renewal periods.

In addition to the intangible value for above-market leases and the intangible negative value for below-market leases, there is intangible value related to having tenants leasing space in the purchased property, which is referred to as in-place lease value. Such value results primarily from the buyer of a leased property avoiding the costs associated with leasing the property and also avoiding rent losses and unreimbursed operating expenses during the lease-up period. Factors to be considered by management in its analysis of in-place lease values include an estimate of carrying costs

Index to Financial Statements

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)

December 31, 2020 and 201****9

during hypothetical expected lease-up periods considering current market conditions, and costs to execute similar leases. In estimating carrying costs, management includes real estate taxes, insurance and other operating expenses and estimates of lost rental revenue at market rates during the expected lease-up periods, depending on local market conditions. In estimating costs to execute similar leases, management considers leasing commissions, legal and other related expenses. The value of in-place leases is amortized to expense over the remaining initial terms of the respective leases.

The Company uses the multi-period excess earnings method to value customer relationship value, if any. Such value exists in transactions that involve the acquisition of customers that are expected to generate recurring revenues beyond existing in-place lease terms. The primary factors to be considered by management in its analysis of customer relationship value include projected revenue growth from existing customers, historical customer lease renewals and attrition rates, rental renewal probabilities and related market terms, estimated operating costs, and discount rate. Customer relationship value is amortized to expense ratably over the anticipated life of substantially all of the customer relationships generating excess earnings, which is the primary period that generated this intangible asset.

(g) 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 January 2017, the FASB issued new accounting guidance on simplifying the test for goodwill impairment. Prior to 2020, the standard required an entity to perform a two-step test to determine the amount, if any, of goodwill impairment. In Step 1, an entity compared the fair value of a reporting unit with its carrying amount, including goodwill. If the carrying amount of the reporting unit exceeded its fair value, the entity performed Step 2 and compared the implied fair value of goodwill with the carrying amount of that goodwill for that reporting unit. An impairment charge equal to the amount by which the carrying amount of goodwill for the reporting unit exceeded the implied fair value of that goodwill is recorded, limited to the amount of goodwill allocated to that reporting unit. The new guidance removes Step 2. Under the new guidance, an entity will apply a one-step quantitative test and record the amount of goodwill impairment as the excess of a reporting unit’s carrying amount over its fair value, not to exceed the total amount of goodwill allocated to the reporting unit. The new guidance does not amend the optional qualitative assessment of goodwill impairment. The new guidance was effective for us in the first quarter of 2020 and was adopted on a prospective basis. The adoption of this guidance had no significant impact on our consolidated financial statements. 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 currency exchange rates.

Index to Financial Statements

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)

December 31, 2020 and 201****9

The following is a summary of goodwill activity for the years ended December 31, 2020 and 2019 (in thousands):


	Balance as of								Impact of Change		Balance as of
	December 31,		Merger /				Goodwill		in Foreign		December 31,
Merger / Portfolio Acquisition	2019		Acquisition		Deconsolidation		Adjustments		Exchange Rates		2020

Telx Acquisition	$	330,845	$	—	$	—	$	—	$	—	$	330,845
European Portfolio Acquisition		440,079		—		—		—		23,075		463,154
DFT Merger		2,592,146		—		—		—		—		2,592,146
Interxion Combination		—		4,338,711		—		—		380,156		4,718,867
Other combinations		—		215,949						10,035		225,984
Total	$	3,363,070	$	4,554,660	$	—	$	—	$	413,266	$	8,330,996

	Balance as of								Impact of Change		Balance as of
	December 31,		Merger /				Goodwill		in Foreign		December 31,
	2018		Acquisition		Deconsolidation		Adjustments (1)		Exchange Rates		2019

Telx Acquisition	$	330,845	$	—	$	—	$	—	$	—	$	330,845
European Portfolio Acquisition		442,349		—		—		(9,436)		7,166		440,079
DFT Merger		2,592,146		—		—		—		—		2,592,146
Ascenty Acquisition		982,667		—		(967,189)		—		(15,478)		—
Total	$	4,348,007	$	—	$	(967,189)	$	(9,436)	$	(8,312)	$	3,363,070

(1)	As a result of a subsequent reduction to an acquired deferred tax liability that would not have impacted consideration paid, goodwill was adjusted.

(h) 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. During the development period, all costs including the associated land are classified to construction in progress and space held for development. Upon completion of the development period for a project, accumulated construction in progress costs including the land related to a project are allocated to the specific components of a project that are benefited.

Index to Financial Statements

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)

December 31, 2020 and 201****9

Construction in progress and space held for development includes the cost of land, the cost of construction of buildings, improvements and fixed equipment, and costs for design and engineering. Other costs, such as interest, legal, property taxes and corporate project supervision, which can be directly associated with the project during construction, are also included in construction in progress and space held for development. Land held for development includes parcels of land owned by the Company, upon which the Company intends to develop and own data centers, but has yet to commence development.

During the years ended December 31, 2020, 2019 and 2018, we capitalized interest of approximately $47.3 million, $40.2 million and $34.7 million, respectively. During the years ended December 31, 2020, 2019 and 2018, we capitalized amounts relating to compensation and other overhead expense of employees direct and incremental to construction activities of approximately $53.7 million, $46.5 million and $39.2 million, respectively.

(i) Deferred Leasing Costs

Leasing commissions and other direct and indirect costs associated with the acquisition of tenants are capitalized and amortized on a straight-line basis over the terms of the related leases. During the years ended December 31, 2020, 2019 and 2018, we capitalized amounts relating to variable compensation of employees direct and incremental to successful leasing activities of approximately $40.8 million, $30.8 million and $27.2 million, respectively. Deferred leasing costs is included in customer relationship value, deferred leasing costs and intangibles on the consolidated balance sheet and amounted to approximately $272.3 million and $291.8 million, net of accumulated amortization of $401.4 million and $329.5 million, as of December 31, 2020 and 2019, respectively. Amortization expense on leasing costs was approximately $76.0 million, $75.3 million, and $72.9 million for the years ended December 31, 2020, 2019 and 2018, respectively.

(j) Marketable Equity Securities

The Company reports its marketable equity securities at fair value, based on quoted market prices (Level 1, as defined by the FASB standard for fair value measurements). Unrealized gains and losses in marketable equity securities are included in interest and other income (expense), net on the consolidated income statements.

As of December 31, 2020 and 2019, marketable equity securities consisted of common stock traded on a public stock exchange.

In June 2020, net proceeds from the sale of marketable equity securities totaled approximately $70.0 million, which resulted in a $17.9 million gain from the mark to market valuation as of March 31, 2020. There were no sales for the years ended December 31, 2019 and 2018. For the years ended December 31, 2020, 2019 and 2018, the portion of marketable equity security unrealized gains that were recognized in income totaled $0.6 million, $46.5 million and $1.6 million, respectively, and were included in interest and other income, net on the Company's consolidated income statements.

(k) Foreign Currency Translation

Assets and liabilities of our subsidiaries outside the United States with non-U.S. dollar functional currencies are translated into U.S. dollars using exchange rates as of the balance sheet dates. Income and expenses are translated using the average exchange rates for the reporting period. Foreign currency translation adjustments are recorded as a component of other comprehensive income. In the statement of cash flows, cash flows denominated in foreign currencies

Index to Financial Statements

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)

December 31, 2020 and 201****9

are translated using the exchange rates in effect at the time of the cash flows or an average exchange rate for the period, depending on the nature of the cash flow item.

(l) Deferred Financing Costs

Loan fees and costs are recorded as an adjustment to the carrying amount of the related debt and amortized over the life of the related loans on a straight-line basis, which approximates the effective interest method. Such amortization is included as a component of interest expense.

(m) Offering Costs

Underwriting commissions and other offering costs are reflected as a reduction in additional paid-in capital, or in the case of preferred stock, as a reduction of the carrying value of preferred stock.

(n) 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 15) 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 is not adjusted based on actual achievement of the market condition.

(o) 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 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.

Index to Financial Statements

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)

December 31, 2020 and 201****9

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 16 for further discussion on derivative instruments.

(p) 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 U.S. 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 U.S. 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, local and foreign income taxes to the extent there is taxable income. Accordingly, the Company recognizes current and deferred income taxes for the Company and its taxable REIT subsidiaries, including for U.S. federal, state, local and foreign jurisdictions, as applicable.

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 December 31, 2020 and 2019, we have 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 consolidated income statements. For the years ended December 31, 2020, 2019 and 2018, we had no such interest or penalties. The tax year 2017 and thereafter remain open to examination by the major taxing jurisdictions with which the Company files tax returns.

See Note 12 for further discussion on income taxes.

(q) 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.

(r) 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 consolidated balance sheets. The amounts of consolidated net income attributable to the Company and to the noncontrolling interests are presented on the Company’s consolidated income statements.

Index to Financial Statements

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)

December 31, 2020 and 201****9

(s) Lease Accounting

Transition

On January 1, 2019, we adopted ASU No. 2016-02 “Leases” and the several additional ASU’s intended to clarify certain aspects of ASU 2016-02 and to provide certain practical expedients entities can elect upon adoption (collectively “Topic 842”). Topic 842 sets out the principles for the recognition, measurement, presentation, and disclosure of leases for both parties to a lease agreement (i.e. lessees and lessors). Upon adoption of the new lease accounting standard, we elected the following practical expedients and accounting policies provided by this lease standard:

	●	Package (“all or nothing” expedients) - requires us not to reevaluate our existing or expired leases as of January 1, 2019, under Topic 842;

	●	Optional transition method - requires us to apply Topic 842 prospectively from the effective date of adoption (i.e., January 1, 2019);

	●	Land easements - requires us to account for land easements existing as of January 1, 2019, under the accounting standards applied to them prior to January 1, 2019;

	●	Lease and non-lease components (lessee) - requires us to account for lease and non-lease components associated with that lease under Topic 842 as a single lease component, for all classes of underlying assets;

	●	Lease and non-lease components (lessor) - requires us to account for lease and non-lease components associated with that lease under Topic 842 as a single lease component, if certain criteria are met, for all classes of underlying assets; and

	●	Short-term leases practical expedient (lessee) - for leases with a term of 12 months or less in which we are the lessee, this expedient requires us not to record on our balance sheets the related lease liabilities and right-of-use assets.

Our election of the package of practical expedients and the optional transition method allowed us not to reassess:

	●	Whether any expired or existing contracts as of January 1, 2019 are or contain leases as defined in Topic 842;

	●	The lease classification for any expired or existing leases as of January 1, 2019; and

	●	Treatment of initial direct costs relating to any existing leases as of January 1, 2019.

We applied the package of practical expedients consistently to all leases (i.e., in which we are the lessee or the lessor) that commenced before January 1, 2019. The election of this package permits us to “run off” our leases that commenced before January 1, 2019, for the remainder of their lease terms and to apply the new lease accounting standard to leases commencing or modified after January 1, 2019.

For our leases that commenced prior to January 1, 2019, under the package of practical expedients and optional transition method, we are not required to reassess whether initial direct leasing costs capitalized prior to the adoption of the new lease accounting standard in connection with such leases qualify for capitalization under the new lease accounting standard. Therefore, we continue to amortize these initial direct leasing costs over their respective lease terms.

In addition, we applied the modified retrospective transition method to build-to-suit leases for which assets and liabilities have been recognized solely as a result of the transactions’ build-to-suit designation in accordance with Topic

Index to Financial Statements

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)

December 31, 2020 and 201****9

Therefore, we derecognized those assets and liabilities at the effective date of adoption for build-to-suit leases where construction had completed, with the difference of approximately $6.3 million recorded as an increase to accumulated dividends in excess of earnings at the adoption date. We accounted for the leases therefrom, following lessee transition guidance. The remainder of our capital leases were classified as finance leases and there was no change in their carrying value or classification at the adoption date.

Under the package of practical expedients that we elected upon adoption of the new lease accounting standard, all of our operating leases existing as of January 1, 2019, in which we are the lessee, continue to be classified as operating leases subsequent to the adoption of the new lease accounting standard. In accordance with the new lease accounting standard, we were required to record an operating lease liability in our consolidated balance sheet equal to the present value of remaining future rental payments in which we are the lessee existing as of January 1, 2019 and the related operating lease right-of-use asset. Consequently, on January 1, 2019, we recorded an operating lease liability aggregating $757.2 million, which included approximately $73.3 million reclassified out of the deferred rent liabilities balance in accordance with the new lease standard. We have also recorded a corresponding operating lease right-of-use asset of $683.9 million. The present value of the remaining lease payments was calculated for each operating lease existing as of January 1, 2019, in which we were the lessee by using each respective remaining lease term and a corresponding estimated incremental borrowing rate. The incremental borrowing rate is the interest rate that we estimated we would have to pay to borrow on a collateralized basis over a similar term for an amount equal to the lease payments.

Subsequent application of the new lease accounting guidance

Definition of a lease

Effective January 1, 2019, when we enter into a contract or amend an existing contract, we evaluate whether the contract meets the definition of a lease. To meet the definition of a lease, the contract must meet all three criteria:

i.		One party (lessor) must hold an identified asset;

ii.		The counterparty (lessee) must have the right to obtain substantially all of the economic benefits from the use of the asset throughout the period of the contract; and

iii.		The counterparty (lessee) must have the right to direct the use of the identified asset throughout the period of the contract.

Lease classification

The new lease accounting standard also sets new criteria for determining the classification of finance leases for lessees and sales-type leases for lessors. The criteria to determine whether a lease should be accounted for as a finance/sales-type lease include any of the following:

i.		Ownership is transferred from lessor to lessee by the end of the lease term;

ii.		An option to purchase is reasonably certain to be exercised;

iii.		The lease term is for the major part of the underlying asset’s remaining economic life;

iv.		The present value of lease payments equals or exceeds substantially all of the fair value of the underlying asset; or

v.		The underlying asset is specialized and is expected to have no alternative use at the end of the lease term.

Index to Financial Statements

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)

December 31, 2020 and 201****9

If any of these criteria is met, a lease is classified as a finance lease by the lessee and as a sales-type lease by the lessor. If none of the criteria are met, a lease is classified as an operating lease by the lessee but may still qualify as a direct financing lease or an operating lease for the lessor. The existence of a residual value guarantee from an unrelated third party other than the lessee may qualify the lease as a direct financing lease by the lessor. Otherwise, the lease is classified as an operating lease by the lessor. Therefore, under the new lease accounting standard, lessees apply a dual approach by classifying leases as either finance or operating leases based on the principle of whether the lease is effectively a financed purchase of the leased asset by the lessee. This classification will determine whether the lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease, which corresponds to a similar evaluation performed by lessors.

Lessor accounting

Costs to execute leases

The new lease accounting standard requires that lessors (and, if applicable, lessees) capitalize, as initial direct costs, only incremental costs of a lease that would not have been incurred if the lease had not been obtained. Costs that we incur to negotiate or arrange a lease, regardless of its outcome, such as for fixed employee compensation, tax, or legal advice to negotiate lease terms, and other costs, are expensed as incurred.

Operating leases

We account for the revenue from our lease contracts by utilizing the single component accounting policy. This policy requires us to account for, by class of underlying asset, the lease component and non-lease component(s) associated with each lease as a single component if two criteria are met:

i.		The timing and pattern of transfer of the lease component and the non-lease component(s) are the same; and

ii.		The lease component would be classified as an operating lease if it were accounted for separately.

Lease components consist primarily of fixed rental payments, which represent scheduled rental amounts due under our leases, and contingent rental payments. Non-lease components consist primarily of customer recoveries representing reimbursements of rental operating expenses under our triple net lease structure, including recoveries for utilities, repairs and maintenance, and common area expenses. If a lessee makes payments for taxes and insurance directly to a third party on behalf of a lessor, lessors are required to exclude them from variable payments and from recognition in the lessors’ income statements. Otherwise, customer recoveries for taxes and insurance are classified as additional lease revenue recognized by the lessor on a gross basis in their income statements.

On January 1, 2019, we adopted the practical expedient that allowed us to not separate expenses reimbursed by our customers (“rental recoveries”) from the associated rental revenue if certain criteria were met. We assessed these criteria and concluded that the timing and pattern of transfer for rental revenue and the associated rental recoveries are the same and as our leases qualify as operating leases, we accounted for and presented rental revenue and rental recoveries as a single component under rental and other services in our consolidated income statements. Tenant recoveries are recognized as revenue in the period during which the applicable expenses are incurred and the tenant’s obligation to reimburse us arises.

Index to Financial Statements

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)

December 31, 2020 and 201****9

If the lease component is the predominant component, we account for all revenues under such lease as a single component in accordance with the new lease accounting standard. Conversely, if the non-lease component is the predominant component, all revenues under such lease are accounted for in accordance with the revenue recognition accounting standard. Our operating leases qualify for the single component accounting, and the lease component in each of our leases is predominant. Therefore, we account for all revenues from our operating leases under the new lease accounting standard and classify these revenues as rental and other services in our consolidated income statements.

We commence recognition of income from rentals related to the operating leases at the date the property is ready for its intended use by the tenant and the tenant takes possession, or controls the physical use, of the leased asset. 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 consolidated balance sheets and contractually due but unpaid rents are included in accounts and other receivables. As of December 31, 2020 and 2019, the balance of rent receivable, net of allowance, was $358.0 million and $186.8 million, respectively. Amounts received currently but recognized as revenue in future periods are classified in accounts payable and other accrued liabilities in our consolidated balance sheets. The allowance for doubtful accounts as of December 31, 2020 and 2019 was approximately $18.8 million and $13.8 million, respectively.

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. 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.

We make subjective estimates as to the probability of collection of substantially all lease payments over the term of a lease. We specifically analyze customer creditworthiness, accounts receivable and historical bad debts and current economic trends when evaluating the probability of collection. If collection of substantially all lease payments over the term of a lease is deemed not probable, rental revenue would be recognized when payment is received and revenue would not be recognized on a straight-line basis. We monitor the probability of collection over the lease term and in the event the collection of substantially all lease payments is no longer probable, we cease recognizing revenue on a straight-line basis and write-off the balance of all deferred rent related to the lease and commence recording rental revenue on a cash collected basis. In addition, we record a full valuation allowance on the balance of any rent receivable, less the balance of any security deposits or letters of credit. In the event that we subsequently determine the collection is probable, we resume recognizing rental revenue on a straight-line basis and record the incremental revenue such that the cumulative rental revenue is equal to the amount of revenue that would have been recorded on a straight-line basis since the inception of the lease. We also would reverse the allowance for bad debt recorded on the balance of accounts receivable.

The Company is closely monitoring the impact of the COVID-19 pandemic on all aspects of its business and geographies, including how it is impacting its customers and business partners. While the Company did not incur significant disruptions during the year ended December 31, 2020 from the COVID-19 pandemic, it is unable to predict the impact that the COVID-19 pandemic will have on its financial condition, results of operations and cash flows due to numerous uncertainties.

(t) Revenue Recognition

Interconnection services are included in rental and other services on the consolidated income statements and are generally provided on a month-to-month, one-year or multi-year term. Interconnection services include port and cross-

Index to Financial Statements

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)

December 31, 2020 and 201****9

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 whether 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.

The majority of our revenue is derived from lease arrangements, which we account for in accordance with Topic 842. Upon the adoption of Topic 842, we elected the practical expedient that requires us to account for lease and non-lease components associated with that lease as a single lease component and which are recorded within rental and other services. Revenue recognized as a result of applying Topic 606 was less than 6% of total operating revenue for the years ended December 31, 2020, 2019 and 2018.

(u) 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.

Index to Financial Statements

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)

December 31, 2020 and 201****9

(v) 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.

(w) Gains on Disposition of Properties

As of January 1, 2018, we began accounting for the sale or contribution 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 gain and loss recognition based on transfer of ownership. We recognize gains on the disposition of real estate when the recognition criteria have been met, generally at the time the risks and rewards and title have transferred, and we no longer have substantial continuing involvement with the real estate sold. We recognize losses from the disposition of real estate when known.

(x) Gain on Deconsolidation

We deconsolidate our subsidiaries in accordance with ASC 810, Consolidation, as of the date we cease to have a controlling financial interest in our subsidiaries. We account for the deconsolidation of our subsidiaries by recognizing a gain or loss in accordance with ASC 810. This gain or loss is measured at the date our subsidiaries are deconsolidated as the difference between (a) the aggregate of the fair value of any consideration received, the fair value of any retained non-controlling interest in our subsidiaries being deconsolidated, and the carrying amount of any non-controlling interest in our subsidiaries being deconsolidated, including any accumulated other comprehensive income/loss attributable to the non-controlling interest, and (b) the carrying amount of the assets and liabilities of our subsidiaries being deconsolidated.

(y) 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, customer relationship value, goodwill, accounts receivable and deferred rent, 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.

Index to Financial Statements

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)

December 31, 2020 and 201****9

(z) Segment and Geographic Information

The Company is managed on a consolidated basis based on customer demand considerations. Deployment of capital is geared to satisfy this demand. In this regard, the sale and delivery of our products is consistent throughout the portfolio. Services are provided to customers typical of the data center industry. Rent and the cost of services are billed and collected. The Company has one operating segment and therefore one reporting segment.

Operating revenues from properties in the United States were $2.6 billion, $2.6 billion and $2.5 billion and outside the United States were $1.3 billion, $0.6 billion and $0.6 billion for the years ended December 31, 2020, 2019 and 2018, respectively. We had investments in real estate located in the United States of $11.3 billion, $10.6 billion and $11.1 billion and outside the United States of $9.3 billion, $3.7 billion and $3.8 billion as of December 31, 2020, 2019 and 2018, respectively.

Index to Financial Statements

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)

December 31, 2020 and 201****9

(aa) New Accounting Pronouncements

New Accounting Standards Adopted

Standard/Description	Effective Date and Adoption Considerations	Effect on Financial Statements or Other Significant Matters
ASU 2016-13, Measurement of Credit Losses on Financial Instruments. This standard requires financial assets measured on an amortized cost basis, including trade receivables, to be presented at the net amount expected to be collected.	We adopted the new standard as of January 1, 2020.	The adoption of the new standard did not have a material effect on our consolidated financial statements.
ASU 2017-04, Intangibles – Goodwill and Other: Simplifying the Test for Goodwill Impairment. This standard 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.	We adopted the new standard as of January 1, 2020.	The adoption of the new standard did not have a material effect on our consolidated financial statements.
ASU 2020-04, Reference Rate Reform - Facilitation of the Effects of Reference Rate Reform on Financial Reporting. This standard contains optional practical expedients and exceptions for applying Generally Accepted Accounting Principles (“GAAP”) to contracts, hedging relations, and other transactions affected by reference rate reform if certain criteria are met.	We elected certain optional practical expedients as of January 1, 2020	The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur. As of January 1, 2020, we have elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the presentation of derivatives consistent with past presentation. We continue to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in the market occur.

We determined that all other recently issued accounting pronouncements that have yet to be adopted by the Company will not have a material impact on our consolidated financial statements or do not apply to our operations.

(bb) Reclassification

We have reclassified certain items in the December 31, 2019 consolidated balance sheet to conform to the current year presentation.

Index to Financial Statements

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)

December 31, 2020 and 201****9

Business Combinations and Deconsolidation

Interxion Combination

We obtained control of Interxion on March 9, 2020 and completed the Interxion Combination on March 12, 2020 for total equity consideration of approximately $7.0 billion, including approximately $108.5 million of assumed cash and cash equivalents.

The following table summarizes the acquired assets and liabilities recorded at their fair values as of the acquisition date (in thousands):


	Final
	Amounts
Land	$	190,970
Build and improvements		3,166,988
Construction in progress and space held for development		397,825
Operating lease right-of-use assets		553,987
Goodwill		4,338,711
Customer relationship value and other intangibles (1)		1,052,811
Debt assumed		(1,662,276)
Finance lease obligations		(47,797)
Operating lease liabilities		(553,987)
Deferred tax liability, net		(535,990)
Working capital liabilities, net		(24,738)
Total purchase consideration		6,876,504
Assumed cash and cash equivalents		108,548
Total equity consideration	$	6,985,052

(1) The weighted average amortization life for customer relationship value is 20 years.

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 the acquisition. As shown above, we recorded approximately $4.3 billion of goodwill related to the Interxion Combination. The goodwill is not expected to be deductible for local tax purposes. The strategic benefits of the acquisition include the Company’s ability to continue its strategy to provide solutions on a global basis with a diversified product offering of data center solutions for both small and large footprint deployments as well as interconnection services. These factors contributed to the goodwill that was recorded upon consummation of the transaction.

The unaudited pro forma financial information set forth below is based on our historical consolidated income statements for the years ended December 31, 2020 and 2019, adjusted to give effect to the Interxion Combination as if it occurred on January 1, 2019. The pro forma adjustments primarily relate to merger expenses, depreciation expense on acquired buildings and improvements, amortization of acquired intangibles, and estimated interest expense related to financing transactions, the proceeds of which were used to fund the repayment of Interxion debt in connection with the Interxion Combination.

Index to Financial Statements

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)

December 31, 2020 and 201****9


	Pro forma (unaudited, in thousands)
	Year Ended December 31,
Digital Realty Trust, Inc.	2020		2019
Total revenue	$	4,051,608	$	3,758,054
Net income available to common stockholders (1)	$	323,889	$	267,600



	Pro forma (unaudited, in thousands)
	Year Ended December 31,
Digital Realty Trust, L.P.	2020		2019
Total revenue	$	4,051,608	$	3,758,054
Net income available to common unitholders (1)	$	333,389	$	288,700

(1)	Pro forma net income available to common stockholders/unitholders was adjusted to exclude $65.7 million of merger-related costs incurred by the Company during the year ended December 31, 2020 and to include these charges for the year ended December 31, 2019.

Revenues of approximately $691.4 million and net income of approximately $59.4 million associated with the Interxion Combination are included in the consolidated income statement for the year ended December 31, 2020.

In addition to Interxion, we acquired controlling interests in Icolo, Altus IT, and Lamda Hellix in 2020. These business combinations were immaterial to our consolidated financial statements – both individually and in the aggregate.

Ascenty Deconsolidation

On March 29, 2019, we formed a joint venture with Brookfield Infrastructure, an affiliate of Brookfield Asset Management. Brookfield invested approximately $702 million in exchange for approximately 49% of the total equity interests and a subsidiary of the Operating Partnership retained the remaining 51% equity interests (including an approximate 2% ownership interest held by a non-controlling interest in our entity that holds the investment in the Ascenty joint venture) in the joint venture which owns and operates Ascenty. The governing documents related to the Ascenty joint venture provide Brookfield and the Company share power to direct the activities of the Ascenty joint venture that most significantly impact the Ascenty joint venture's economic performance. As a result of the formation of the joint venture, the Company determined that the joint venture is a variable interest entity (VIE) since the Ascenty joint venture's equity investment at risk is not sufficient to finance the Ascenty joint venture's ongoing data center development activities without additional subordinated financial support. The Company concluded that it is not the primary beneficiary because power is shared and it does not have substantive kick-out rights to obtain control and deconsolidated Ascenty. We recognized a gain of approximately $67.5 million (net of the accumulated foreign currency translation loss related to Ascenty) on the deconsolidation and subsequent recognition of our subsidiary's 51% equity investment in the Ascenty joint venture at its estimated fair value of $727 million on March 29, 2019. The fair value of the Company’s retained equity investment is based on Level 2 measurements within the fair value hierarchy based on the cash price paid by Brookfield for their 49% interest. The gain was calculated based on the: (i) the sum of the cash proceeds of $702 million received from Brookfield for its 49% interest and the estimated fair value of $727 million for our 51% retained interest less (ii) the carrying value of the Ascenty assets and liabilities deconsolidated as of March 29, 2019. The gain related to the remeasurement of the Company's retained equity interests to fair value was approximately $43.7 million. The reported gain of $67.5 million was net of a foreign currency translation loss of approximately $21.7 million previously included in accumulated other comprehensive loss, net, which accumulated during the period the Company consolidated Ascenty and translated the Brazilian real, Ascenty's functional currency,

Index to Financial Statements

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)

December 31, 2020 and 201****9

into the Company's functional currency. The Company has no other subsidiaries or businesses with the Brazilian real as its functional currency and, therefore, the deconsolidation of Ascenty resulted in the reclassification out of accumulated other comprehensive loss into a component of income from continuing operations in the 2019 consolidated income statement. The Ascenty deconsolidation did not meet the criteria to be presented as a discontinued operation in accordance with ASC 205-20, Presentation of Financial Statements Discontinued Operations, because the deconsolidation of Ascenty does not represent a strategic shift in and does not have a major effect on the Company's operations, as defined by ASC 205-20.

4. Leases

Lessee accounting

We lease space at certain of our data centers from third parties and certain equipment under noncancelable lease agreements. Leases for our data centers expire at various dates through 2069. As of December 31, 2020, certain of our data centers, primarily in Europe and Singapore, are subject to ground leases. As of December 31, 2020, the termination dates of these ground leases range from 2041 to 2981. In addition, our corporate headquarters along with several regional office locations are subject to leases with termination dates ranging from 2021 to 2028. The leases generally require us to make fixed rental payments that increase at defined intervals during the term of the lease plus pay our share of common area, real estate and utility expenses as incurred. The leases neither contain residual value guarantees nor impose material restrictions or covenants on us. Further, the leases have been classified and accounted for as either operating or finance leases.

In July 2020, we acquired the freehold to the land under the Hanauer Landstraße campus in Frankfurt along with leasehold agreements to nine of our data centers within the campus (see Note 5) and, as a result, the leases were terminated and right-of-use assets and related lease liabilities of approximately $24.7 million were written off.

Index to Financial Statements

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)

December 31, 2020 and 201****9

Supplemental balance sheet information related to leases as of December 31, 2020 and 2019 was as follows (in thousands):


	Balance Sheet	Balance as of
	Classification	December 31, 2020		December 31, 2019
Assets:
Operating lease assets	Operating lease right-of-use assets, net (1)	$	1,386,959	$	628,681
Finance lease assets	Buildings and improvements, net (2)		181,753		131,072
Total leased assets		$	1,568,712	$	759,753

Liabilities:
Operating lease liabilities	Operating lease liabilities	$	1,468,712	$	693,539
Finance lease liabilities	Accounts payable and other accrued liabilities		233,350		178,086
Total lease liabilities		$	1,702,062	$	871,625

_________________________

(1) Net of accumulated depreciation and amortization of $148.4 million and $51.7 million as of December 31, 2020 and 2019, respectively.

(2) Net of accumulated depreciation and amortization of $12.5 million and $4.9 million as of December 31, 2020 and 2019, respectively.

The components of lease expense for the years ended December 31, 2020 and 2019 were as follows (in thousands):


		Years Ended
Lease cost	Income Statement Classification	December 31, 2020		December 31, 2019

Finance lease cost:
Amortization of right-of-use assets	Depreciation and amortization	$	7,222	$	5,074
Interest on lease liabilities	Interest expense		7,060		6,044
Operating lease cost	Rental property operating and maintenance / General and administrative		129,399		90,980
Total lease cost		$	143,681	$	102,098

As of December 31, 2020, the weighted average remaining lease term for our operating leases and finance leases was 13 years and 22 years, respectively. We do not include renewal options in the lease term for calculating the lease liability unless we are reasonably certain we will exercise the option or the lessor has the sole ability to exercise the option. The weighted average incremental borrowing rate was 2.8% for operating leases and 3.2% for finance leases at December 31, 2020. We assigned a collateralized interest rate to each lease based on the term of the lease and the currency in which the lease is denominated.

Index to Financial Statements

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)

December 31, 2020 and 201****9

Maturities of lease liabilities as of December 31, 2020 were as follows (in thousands):


	Operating		Finance
	lease liabilities		lease liabilities
2021	$	137,324	$	12,578
2022		143,183		13,099
2023		143,606		33,288
2024		144,303		12,039
2025		145,162		12,094
Thereafter		1,046,233		244,675
Total undiscounted future cash flows		1,759,811		327,773
Less: Imputed interest		(291,099)		(94,423)
Present value of undiscounted future cash flows	$	1,468,712	$	233,350

Lessor accounting

The following table summarizes the minimum lease payments due from our customers on leases with lease periods greater than one year for space in our operating properties, prestabilized development properties and leases of land subject to ground leases at December 31, 2020 (in thousands):


	Operating leases
2021	$	2,874,204
2022		2,126,375
2023		1,760,337
2024		1,457,784
2025		1,155,144
Thereafter		3,907,635
Total	$	13,281,479

These amounts do not reflect future rental revenues from the renewal or replacement of existing leases unless we are reasonably certain we will exercise the option or the lessee has the sole ability to exercise the option. We exclude reimbursements of operating expenses and rental increases that are not fixed.

Index to Financial Statements

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)

December 31, 2020 and 201****9

Investments in Properties

A summary of our investments in properties as of December 31, 2020 and 2019 is as follows:


	As of December 31,
Property Type	2020		2019
Land	$	1,106,392	$	804,830
Acquired ground lease		10,308		10,725
Buildings and improvements		21,335,396		15,449,884
Tenant improvements		690,892		621,153
		23,142,988		16,886,592
Accumulated depreciation and amortization		(5,555,221)		(4,536,169)
Investments in operating properties, net		17,587,767		12,350,423
Construction in progress and space held for development		2,768,325		1,732,555
Land held for future development		226,862		147,597
Investments in properties, net	$	20,582,954	$	14,230,575

Acquisitions

For the year ended December 31, 2020, we acquired real estate for approximately $830.0 million in the aggregate (excluding business combinations discussed in Note 3). Acquisitions for the year ended December 31, 2019 were immaterial to our financial statements – both individually and in the aggregate. The table below reflects the purchase price allocation for the real estate acquired in 2020 (in thousands):


Description	Amount		Weighted average remaining intangible amortization life (in years)

Investment in properties	$	897,181
Customer relationship value and in-place leases		68,850	15
Working capital, net		7,224
Below-market leases		(2,540)	15
Secured debt		(135,000)
Noncontrolling interests in consolidated joint ventures		(5,715)
Acquisition date fair value	$	830,000

Index to Financial Statements

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)

December 31, 2020 and 201****9

Dispositions

We sold the following real estate properties during the years ended December 31, 2020, 2019 and 2018:

2020 Dispositions


				Gross Proceeds		Gain on Sale
Location / Portfolio	Metro Area	Date Sold		(in millions)		(in millions)
Mapletree portfolio (1)	Various		Jan 14, 2020	$	557.0	$	306.5
Liverpoolweg 10	Amsterdam		Jul 17, 2020		21.5		10.4
Naritaweg 52	Amsterdam		Dec 30, 2020		6.1		—
				$	584.6	$	316.9

2019 Dispositions


				Fair Value		Gain on contribution
Location / Portfolio	Metro Area	Date Sold		(in millions)		(in millions)
Mapletree portfolio (2)	Northern Virginia		Nov 1, 2019	$	996.6	$	266.0

2018 Dispositions


					Gross Proceeds		Gain on Sale
Location	Metro Area		Date Sold		(in millions)		(in millions)
200 Quannapowitt Parkway		Boston		Jan 25, 2018	$	15.0	$	(0.4)
34551 Ardenwood Boulevard		Silicon Valley		Feb 9, 2018		73.3		25.3
3065 Gold Camp Drive		Sacramento		Mar 14, 2018		14.2		5.4
11085 Sun Center Drive		Sacramento		Mar 14, 2018		36.8		9.1
Austin Portfolio		Austin		Apr 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
360 Spear Street		San Francisco		Sep 21, 2018		92.3		26.7
					$	291.7	$	80.4

(3)

On September 16, 2019, we announced the proposed sale of 10 Powered Base Building® properties, which comprise 12 data centers, in North America to Mapletree Investments Pte Ltd (“Mapletree Investments”) and Mapletree Industrial Trust (“MIT” and together with Mapletree Investments, “Mapletree”), at a purchase consideration of approximately $557.0 million. As of December 31, 2019, these 12 data centers had an aggregate carrying value of $229.9 million within total assets and $2.7 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. The 12 data centers were not representative of a significant component of our portfolio, nor did the sale represent a significant shift in our strategy. In January 2020, we closed on the sale of the 12 data centers for a gain of approximately $303.3 million. We provided transitional property management services for one year from the closing date at a customary market rate.

(4)	Consists of three data centers that were contributed to a joint venture with Mapletree.

Index to Financial Statements

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)

December 31, 2020 and 201****9

6. Investments in Unconsolidated Joint Ventures

As of December 31, 2020 and 2019, our investments in unconsolidated joint ventures accounted for under the equity method of accounting presented in our consolidated balance sheets consist of the following (in thousands):


	Year Joint	# of	Metropolitan			Balance as of		Balance as of
Joint Venture	Venture Formed	Data Centers	Area	% Ownership		December 31, 2020		December 31, 2019

Ascenty (1)	2019	22	Brazil / Chile / Mexico	51	% (2)	$	567,192	$	787,026
Mapletree	2019	3	Northern Virginia	20	%		184,890		196,181
Mitsubishi	2017	4	Osaka / Tokyo	50	%		278,947		200,652
CenturyLink	2012	1	Hong Kong	50	%		86,600		88,647
Other	Various	13	U.S.	Various			30,529		14,603
Total		43				$	1,148,158	$	1,287,109

(1) Our maximum exposure to loss related to this unconsolidated variable interest entity (VIE) is limited to our equity investment in this VIE.

(2) Includes an approximate 2% ownership interest held by a non-controlling interest in our entity that holds the investment in the Ascenty joint venture, which has a carrying value as of December 31, 2020 and 2019 of approximately $21.9 million and $23.9 million, respectively, and is classified within redeemable noncontrolling interests in our consolidated balance sheet.

Index to Financial Statements

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)

December 31, 2020 and 201****9

The following tables present summarized financial information for our unconsolidated joint ventures for the years ended December 31, 2020, 2019, and 2018 (in thousands):


															Property		Net		Net
	%		Net Investment		Total		Mortgage		Total						Operating		Operating		Income
2020	Ownership		in Properties		Assets		Loans		Liabilities		Equity		Revenues		Expense		Income		(Loss)
Unconsolidated Joint Ventures
2020 Fifth Avenue	50.00	%	$	43,255	$	52,435	$	47,748	$	48,119	$	4,316	$	10,107	$	(2,887)	$	7,220	$	4,393
CenturyLink	50.00	%		142,596		181,464		—		8,264		173,200		25,006		(10,241)		14,765		5,581
Mitsubishi	50.00	%		734,362		968,957		243,911		358,749		610,208		154,114		(71,001)		83,113		43,746
Ascenty	51.00	%		594,322		1,862,402		720,623		833,801		1,028,601		165,680		(60,640)		105,040		(191,161)
Mapletree	20.00	%		723,678		985,900		—		38,140		947,760		106,966		(40,904)		66,062		(11,473)
PREI ®	20.00	%		359,706		409,836		211,205		278,645		131,191		41,459		(9,182)		32,277		9,446
GCEAR	20.00	%		106,316		117,573		89,300		90,709		26,864		21,401		(6,787)		14,614		4,642
Other	Various			19,261		24,371		3,563		3,876		20,495		10,508		(6,945)		3,563		(271)
Total Unconsolidated Joint Ventures			$	2,723,496	$	4,602,938	$	1,316,350	$	1,660,303	$	2,942,635	$	535,241	$	(208,587)	$	326,654	$	(135,097)
Our investment in and share of equity in loss of unconsolidated joint ventures											$	1,148,158							$	(57,629)


															Property		Net		Net
	%		Net Investment		Total		Mortgage		Total		Equity /				Operating		Operating		Income
2019	Ownership		in Properties		Assets		Loans		Liabilities		(Deficit)		Revenues		Expense			Income	(Loss)
Unconsolidated Joint Ventures
2001 Sixth Avenue	50.00	%	$	30,748	$	47,485	$	134,583	$	140,354	$	(92,869)	$	56,266	$	(19,254)	$	37,012	$	27,422
2020 Fifth Avenue	50.00	%		43,918		54,325		48,000		48,703		5,622		9,868		(2,544)		7,324		4,649
CenturyLink	50.00	%		148,941		187,241		—		9,947		177,294		24,680		(9,251)		15,429		6,712
Mitsubishi	50.00	%		554,828		753,743		231,046		303,130		450,613		84,344		(39,300)		45,044		18,751
Ascenty	51.00	%		548,114		2,178,663		629,500		764,603		1,414,060		112,052		(40,250)		71,802		(54,606)
Mapletree	20.00	%		765,443		1,042,661		—		23,796		1,018,865		17,852		(6,774)		11,078		(1,872)
PREI ®	20.00	%		365,993		421,635		210,915		281,344		140,291		42,157		(9,918)		32,239		9,968
GCEAR	20.00	%		109,803		127,444		101,902		104,363		23,081		21,120		(9,073)		12,047		(2,636)
Other	7%-17	%		59,901		64,553		4,438		4,706		59,847		11,261		(6,779)		4,482		(31)
Total Unconsolidated Joint Ventures			$	2,627,689	$	4,877,750	$	1,360,384	$	1,680,946	$	3,196,804	$	379,600	$	(143,143)	$	236,457	$	8,357
Our investment in and share of equity in earnings of unconsolidated joint ventures											$	1,287,109							$	8,067

Index to Financial Statements

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)

December 31, 2020 and 201****9


															Property		Net		Net
	%		Net Investment		Total		Mortgage		Total		Equity /				Operating		Operating		Income
2018	Ownership		in Properties		Assets		Loans		Liabilities		(Deficit)		Revenues		Expense		Income		(Loss)
Unconsolidated Joint Ventures
2001 Sixth Avenue	50.00	%	$	32,786	$	49,278	$	134,527	$	139,569	$	(90,291)	$	52,806	$	(17,264)	$	35,542	$	25,612
2020 Fifth Avenue	50.00	%		44,644		54,855		48,000		48,333		6,522		9,417		(2,156)		7,261		4,689
CenturyLink	50.00	%		151,256		201,527		—		9,337		192,190		21,394		(7,164)		14,230		6,958
Mitsubishi	50.00	%		332,373		469,159		228,075		285,424		183,735		59,300		(26,360)		32,940		15,884
PREI ®	20.00	%		375,016		433,024		210,626		283,899		149,125		42,058		(8,457)		33,601		(4,159)
GCEAR	20.00	%		111,909		139,268		101,885		104,268		35,000		20,457		(8,546)		11,911		(2,177)
Other	17.00	%		22,677		24,320		5,225		5,327		18,993		9,383		(5,879)		3,504		415
Total Unconsolidated Joint Ventures			$	1,070,661	$	1,371,431	$	728,338	$	876,157	$	495,274	$	214,815	$	(75,826)	$	138,989	$	47,222
Our investment in and share of equity in earnings of unconsolidated joint ventures											$	175,108							$	32,979

The amounts reflected in the tables above, except for our investment in and share of equity in earnings (loss) of unconsolidated joint ventures, are based on the historical financial information of the individual joint ventures. The debt of our unconsolidated joint ventures generally is non-recourse to us, except for customary exceptions pertaining to such matters as intentional misuse of funds, environmental conditions, and material misrepresentations.

Index to Financial Statements

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)

December 31, 2020 and 201****9

Acquired Intangible Assets and Liabilities

The following summarizes our acquired intangible assets and intangible liabilities as of December 31, 2020 and 2019.


	Balance as of
(Amounts in thousands)	December 31, 2020		December 31, 2019
Intangible Assets:
Customer relationship value:
Gross amount	$	2,993,093	$	1,845,949
Accumulated amortization		(570,886)		(400,570)
Net	$	2,422,207	$	1,445,379
Acquired in-place lease value:
Gross amount	$	1,382,563	$	1,357,190
Accumulated amortization		(1,004,421)		(899,071)
Net	$	378,142	$	458,119
Other (1):
Gross amount	$	57,370	$	—
Accumulated amortization		(7,107)		—
Net	$	50,263	$	—
Acquired above-market leases (2):
Gross amount	$	280,216	$	279,048
Accumulated amortization		(236,922)		(204,233)
Net	$	43,294	$	74,815
Acquired below-market leases (3):
Gross amount	$	401,539	$	396,509
Accumulated amortization		(270,649)		(247,735)
Net	$	130,890	$	148,774

(1)	Included in customer relationship value, deferred leasing costs and other intangibles on the consolidated balance sheet.

(2)	Included in other assets on the consolidated balance sheet.

(3)	Included in accounts payable and other accrued liabilities on the consolidated balance sheet.

Amortization of acquired below-market lease value, net of acquired above-market lease value, resulted in a decrease in rental and other services revenue of $(10.5) million, $(17.1) million and $(27.3) million for the years ended December 31, 2020, 2019 and 2018, respectively. The expected average remaining lives for acquired below-market leases and acquired above-market leases was 7.2 years and 2.0 years, respectively, as of December 31, 2020. Estimated annual

Index to Financial Statements

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)

December 31, 2020 and 201****9

amortization of acquired below-market lease value, net of acquired above-market lease value, for each of the five succeeding years and thereafter, commencing January 1, 2021 is as follows:


(Amounts in thousands)
2021	$	(2,865)
2022		4,977
2023		9,741
2024		10,393
2025		9,631
Thereafter		55,721
Total	$	87,598

Amortization of acquired in-place lease value (a component of depreciation and amortization expense) was $99.7 million, $143.0 million and $211.0 million for the years ended December 31, 2020, 2019 and 2018, respectively. The expected average amortization period for acquired in-place lease value was 5.7 years as of December 31, 2020. The weighted average remaining contractual life for acquired leases excluding renewals or extensions was 5.5 years as of December 31, 2020. Estimated annual amortization of acquired in-place lease value for each of the five succeeding years and thereafter, commencing January 1, 2021 is as follows:


(Amounts in thousands)
2021	$	79,868
2022		60,129
2023		48,911
2024		41,604
2025		35,765
Thereafter		111,865
Total	$	378,142

Amortization of customer relationship value (a component of depreciation and amortization expense) was approximately $166.5 million, $128.4 million and $123.5 million for the years ended December 31, 2020, 2019 and 2018, respectively. As of December 31, 2020, the weighted average remaining contractual life for customer relationship value was 14.7 years. Estimated annual amortization of customer relationship value for each of the five succeeding years and thereafter, commencing January 1, 2021 is as follows:


(Amounts in thousands)
2021	$	177,383
2022		176,611
2023		175,943
2024		175,363
2025		174,861
Thereafter		1,542,046
Total	$	2,422,207

Index to Financial Statements

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)

December 31, 2020 and 201****9

Debt of the Company

In this Note 8, the “Company” refers only to Digital Realty Trust, Inc. and not to any of its subsidiaries.

The Company itself does not have any indebtedness. All debt is held directly or indirectly by the Operating Partnership.



Unsecured Senior Notes	Defined Name	Initial Issuer (1)
Floating Rate Notes due 2022	2022 Notes	Digital Dutch Finco B.V. (2)
0.125% Notes due 2022	0.125% 2022 Notes	Digital Dutch Finco B.V. (2)
2.750% Notes due 2023	2.750% 2023 Notes	Digital Realty Trust, L.P.
2.625% Notes due 2024	2.625% 2024 Notes	Digital Euro Finco, LLC (2)
2.750% Notes due 2024	2.750% 2024 Notes	Digital Stout Holding, LLC (3)
4.250% Notes due 2025	4.250% 2025 Notes	Digital Stout Holding, LLC (3)
0.625% Notes due 2025	0.625% 2025 Notes	Digital Dutch Finco B.V. (2)
4.750% Notes due 2025	4.750% 2025 Notes	Digital Delta Holdings, LLC (4)
2.500% Notes due 2026	2.500% 2026 Notes	Digital Euro Finco, LLC (2)
3.700% Notes due 2027	3.700% 2027 Notes	Digital Realty Trust, L.P.
1.125% Notes due 2028	1.125% 2028 Notes	Digital Euro Finco, LLC (2)
4.450% Notes due 2028	4.450% 2028 Notes	Digital Realty Trust, L.P.
3.600% Notes due 2029	3.600% 2029 Notes	Digital Realty Trust, L.P.
3.300% Notes due 2029	3.300% 2029 Notes	Digital Stout Holding, LLC (3)
1.500% Notes due 2030	1.500% 2030 Notes	Digital Dutch Finco B.V. (2)
3.750% Notes due 2030	3.750% 2030 Notes	Digital Stout Holding, LLC (3)
1.250% Notes due 2031	1.250% 2031 Notes	Digital Dutch Finco B.V. (2)
1.000% Notes due 2032	1.000% Notes 2032	Digital Dutch Finco B.V. (2)

(1)	Digital Realty Trust, Inc. guarantees the senior notes issued by Digital Realty Trust, L.P. Both Digital Realty Trust, L.P. and Digital Realty Trust, Inc. guarantee the senior notes issued by Digital Stout Holding, LLC, Digital Euro Finco, LLC and Digital Dutch Finco, B.V.

(2)	An indirect wholly owned finance subsidiary of Digital Realty Trust, L.P.

(3)	A wholly owned subsidiary of Digital Realty Trust, L.P.

(4)

Initially a wholly owned subsidiary of Digital Realty Trust, Inc., pursuant to the terms of the indenture, following the consummation of the Telx Acquisition, on October 13, 2015, Digital Delta Holdings, LLC merged with and into Digital Realty Trust, L.P., with Digital Realty Trust, L.P. surviving the merger and assuming Digital Delta Holdings, LLC’s obligations under the 4.750% 2025 Notes, the related indenture and registration rights agreement by operation of law.


					Digital Dutch Finco B.V. (2)
					Digital Dutch Finco B.V. (2)

Index to Financial Statements

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)

December 31, 2020 and 201****9

Debt of the Operating Partnership

A summary of outstanding indebtedness of the Operating Partnership as of December 31, 2020 and 2019 is as follows (in thousands):


	Interest Rate at					Principal			Principal
	December 31,					Outstanding at			Outstanding at
Indebtedness	2020		Maturity Date			December 31, 2020			December 31, 2019
Global revolving credit facilities	Various	(1)		Jan 24, 2023	(1)	$	540,184	(2)	$	245,766	(2)
Deferred financing costs, net							(8,279)			(11,661)
Global revolving credit facilities, net							531,905			234,105
Unsecured Term Loans
2023 Term Loan	Various	(3)(4)		Jan 15, 2023			—	(5)(9)		300,000	(5)
2024 Term Loan	Various	(3)(4)		Jan 24, 2023			537,470	(5)(12)		513,205	(5)
Deferred financing costs, net							(890)			(2,986)
Unsecured term loans, net							536,580			810,219
Unsecured senior notes:
Senior Notes:
3.950% notes due 2022	3.950	%		Jul 1, 2022			—	(10)		500,000
Floating rate notes due 2022	EURIBOR + 0.500	%		Sep 23, 2022			366,480	(6)		—
3.625% notes due 2022	3.625	%		Oct 1, 2022			—	(10)		300,000
0.125% notes due 2022	0.125	%		Oct 15, 2022			366,480	(6)		—
2.750% notes due 2023	2.750	%		Feb 1, 2023			350,000	(13)		350,000
4.750% notes due 2023	4.750	%		Oct 13, 2023			—	(11)		397,710	(7)
2.625% notes due 2024	2.625	%		Apr 15, 2024			732,960	(6)		672,780	(6)
2.750% notes due 2024	2.750	%		Jul 19, 2024			341,750	(7)		331,425	(7)
4.250% notes due 2025	4.250	%		Jan 17, 2025			546,800	(7)		530,280	(7)
0.625% notes due 2025	0.625	%		Jul 15, 2025			794,040	(6)		—
4.750% notes due 2025	4.750	%		Oct 1, 2025			450,000			450,000
2.500% notes due 2026	2.500	%		Jan 16, 2026			1,313,219	(6)		1,205,398	(6)
3.700% notes due 2027	3.700	%		Aug 15, 2027			1,000,000			1,000,000
1.125% notes due 2028	1.125	%		Apr 9, 2028			610,800	(6)		560,650	(6)
4.450% notes due 2028	4.450	%		Jul 15, 2028			650,000			650,000
3.600% notes due 2029	3.600	%		Jul 1, 2029			900,000			900,000
3.300% notes due 2029	3.300	%		Jul 19, 2029			478,450	(7)		463,995	(7)
1.500% notes due 2030	1.500	%		Mar 15, 2030			916,200	(6)		—
3.750% notes due 2030	3.750	%		Oct 17, 2030			751,850	(7)		729,135	(7)
1.250% notes due 2031	1.250	%		Feb 1, 2031			610,800	(6)		—
1.000% notes due 2032	1.000	%		Jan 15, 2032			916,200	(6)		—
Unamortized discounts, net of premiums							(34,988)			(16,145)
Total senior notes, net of discount							12,061,041			9,025,228
Deferred financing costs, net							(64,031)			(52,038)
Total unsecured senior notes, net of discount and deferred financing costs							11,997,010			8,973,190

Secured Debt:
731 East Trade Street	8.22	%		Jul 1, 2020		$	—	(8)	$	1,089
Secured note due March 2023	LIBOR + 1.000	% (4)		Mar 1, 2023			104,000			104,000
Westin	3.290	%		Jul 11, 2027			135,000			—
Other secured debt							330			—
Unamortized net (discounts) / premiums							(4)			54
Total secured debt, including premiums							239,326			105,143
Deferred financing costs, net							(104)			(209)
Total secured debt, including premiums and net of deferred financing costs							239,222			104,934
Total indebtedness						$	13,304,717		$	10,122,448

(1)

The interest rate for borrowings under the global revolving credit facility equals the applicable index plus a margin of 90 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

Index to Financial Statements

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)

December 31, 2020 and 201****9

	conditions are met. The interest rate for borrowings under the Yen revolving credit facility equals the applicable index plus a margin of 50 basis points, which is based on the current credit ratings of our long-term debt.

(2)	Balances as of December 31, 2020 and December 31, 2019 are as follows (balances, in thousands):


	Balance as of			Weighted-		Balance as of			Weighted-
	December 31,			average		December			average
Denomination of Draw	2020			interest rate		31, 2019			interest rate
Global Revolving Credit Facility
Floating Rate Borrowing (a) (d)
U.S. dollar ($)	$	40,000		1.05	%	$	—		—	%
British pound sterling (£)		47,845	(b)	0.93	%		—		—	%
Euro (€)		284,633	(b)	0.90	%		44,852	(c)	0.90	%
Australian dollar (AUD)		—		—	%		1,264	(c)	1.74	%
Singapore dollar (SGD)		111,340	(b)	1.02	%		53,199	(c)	2.46	%
Canadian dollar (CAD)		9,423	(b)	1.36	%		—		—	%
Total	$	493,241		0.95	%	$	99,315		1.75	%

Yen Revolving Credit Facility (a)	$	46,943	(e)	0.50	%	$	146,451	(e)	0.50	%

Total borrowings	$	540,184		0.91	%	$	245,766		1.00	%

	(a)	The interest rates for floating rate borrowings under the global revolving credit facility currently equal the applicable index, subject to a zero floor, plus a margin of 90 basis points, which is based on the current credit rating of our long-term debt. The interest rate for borrowings under the Yen revolving credit facility equals the applicable index, subject to a zero floor, plus a margin of 50 basis points, which is based on the current credit rating of our long-term debt.

	(b)	Based on exchange rates of $1.37 to £1.00, $1.22 to €1.00, $0.76 to 1.00 SGD and $0.79 to 1.00 CAD, respectively, as of December 31, 2020.

	(c)	Based on exchange rates of $1.12 to €1.00, $0.70 to 1.00 AUD and $0.74 to 1.00 SGD, respectively, as of December 31, 2019.

	(d)	As of December 31, 2020, approximately $60.8 million of letters of credit were issued.

	(e)	Based on exchange rates of $0.01 to 1.00 JPY for December 31, 2020 and 2019.

(3)	Interest rates are based on our current senior unsecured debt ratings and is currently 100 basis points over the applicable index for floating rate advances for the 2023 Term Loan and the 2024 Term Loan.

(4)	We have entered into interest rate swap agreements as a cash flow hedge for interest generated by a portion of U.S. dollar and Canadian dollar borrowings under the 2023 Term Loan and 2024 Term Loan, and the secured note due March 2023. See Note 16. "Derivative Instruments" for further information.

Index to Financial Statements

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)

December 31, 2020 and 201****9

(5)	Balances as of December 31, 2020 and December 31, 2019 are as follows (balances, in thousands):


	Balance as of			Weighted-		Balance as of			Weighted-
	December 31,			average		December 31,			average
Denomination of Draw	2020			interest rate		2019			interest rate
U.S. dollar ($)	$	—		—	%	$	300,000		2.74	% (d)
Singapore dollar (SGD)		150,699	(a)	1.14	%		147,931	(c)	2.68	%
Australian dollar (AUD)		223,357	(a)	1.02	%		203,820	(c)	1.85	%
Hong Kong dollar (HKD)		86,062	(a)	1.27	%		85,629	(c)	3.60	%
Canadian dollar (CAD)		77,352	(a)	1.47	% (b)		75,825	(c)	3.00	% (d)
Total	$	537,470		1.16	% (b)	$	813,205		2.62	% (d)

	(a)	Based on exchange rates of $0.76 to 1.00 SGD, $0.77 to 1.00 AUD, $0.13 to 1.00 HKD and $0.79 to 1.00 CAD, respectively, as of December 31, 2020.

	(b)	As of December 31, 2020, the weighted-average interest rate reflecting interest rate swaps was 1.78% (Canadian dollar) and 1.20% (Total). See Note 16 for further discussion on interest rate swaps.

	(c)	Based on exchange rates of $0.74 to 1.00 SGD, $0.70 to 1.00 AUD, $0.13 to 1.00 HKD and $0.77 to 1.00 CAD, respectively, as of December 31, 2019.

	(d)	As of December 31, 2019, the weighted-average interest rate reflecting interest rate swaps was 2.44% (U.S. dollar), 1.78% (Canadian dollar) and 2.39% (Total). See Note 16 for further discussion on interest rate swaps.

(6)	Based on exchange rates of $1.22 to €1.00 as of December 31, 2020 and $1.12 to €1.00 as of December 31, 2019.

(7)	Based on exchange rates of $1.37 to £1.00 as of December 31, 2020 and $1.33 to £1.00 as of December 31, 2019.

(8)	Debt was repaid in full on April 13, 2020.

(9)	Debt was repaid in full on September 24, 2020. The payment resulted in an early extinguishment charge of approximately $0.9 million during the three months ended September 30, 2020.

(10)	The 3.950% 2022 Notes and 3.625% 2022 Notes were redeemed in full on August 3, 2020. The redemption resulted in an early extinguishment charge of approximately $52.1 million during the three months ended September 30, 2020.

(11)	The 4.750% 2023 Notes were redeemed in full on October 14, 2020. The redemption resulted in an early extinguishment charge of approximately $49.8 million during the three months ended December 31, 2020.

(12)	Debt was repaid in full on January 15, 2021.

(13)	The 2.750% 2023 Notes were redeemed in full on February 4, 2021. The redemption will result in an early extinguishment charge of approximately $17.5 million during the three months ending March 31, 2021.

Global Revolving Credit Facilities

On October 24, 2018, we refinanced our global revolving credit facility and entered into a global senior credit agreement for a $2.35 billion senior unsecured revolving credit facility, which we refer to as the 2018 global revolving credit facility, that replaced the $2.0 billion revolving credit facility executed on January 15, 2016. In addition, we have the ability from time to time to increase the size of the global revolving credit facility and the unsecured term loans (discussed below), in any combination, by up to $1.25 billion, subject to the receipt of lender commitments and other conditions precedent. The 2018 global revolving credit facility matures on January 24, 2023, with two six-month extension options available. The interest rate for borrowings under the 2018 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 90 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. The 2018 global revolving credit facility provides for borrowings in U.S., Canadian, Singapore, Australian and Hong Kong dollars, as well as Euro, British pound sterling and Japanese yen and

Index to Financial Statements

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)

December 31, 2020 and 201****9

includes the ability to add additional currencies in the future. As of December 31, 2020, interest rates are based on 1-month EURIBOR, 1-month HIBOR, 1-month SOR and 1-month CDOR, plus a margin of 0.90%. We have used and intend to use available borrowings under the 2018 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.

The 2018 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 2018 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 December 31, 2020, we were in compliance with all of such covenants.

On October 24, 2018, we entered into a credit agreement for a ¥33.3 billion (approximately $296.5 million based on the exchange rate on October 24, 2018) senior unsecured revolving credit facility, which we refer to as the Yen revolving credit facility. The Yen revolving credit facility provides for borrowings in Japanese yen. In addition, we have the ability from time to time to increase the size of the Yen revolving credit facility to up to ¥93.3 billion (approximately $831.1 million based on the exchange rate on October 24, 2018), subject to receipt of lender commitments and other conditions precedent. The Yen revolving credit facility matures on January 24, 2024. The interest rate for borrowings under the Yen 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 50 basis points. A quarterly unused commitment fee, which is calculated using the average daily unused revolving credit commitment, is based on the credit ratings of our long-term debt, and is currently 10 basis points.

The Yen 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 Yen 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 December 31, 2020, we were in compliance with all of such covenants.

Unsecured Term Loans

On October 24, 2018, we refinanced our senior unsecured multi-currency term loan facility and entered into an amended and restated term loan agreement, which we refer to as the 2018 term loan agreement, which governs (i) a $300.0 million 5-year senior unsecured term loan, which we refer to as the 2023 Term Loan, and (ii) an approximately $512 million 5-year senior unsecured term loan, which we refer to as the 2024 Term Loan. The 2018 term loan agreement replaced the $1.55 billion term loan agreement executed on January 15, 2016. The 2023 Term Loan matures on January 15, 2023 and the 2024 Term Loan matures on January 24, 2023 with two six-month extension options. In addition, we have the ability from time to time to increase the aggregate size of lending under the 2018 term loan agreement and the 2018 global revolving credit facility (discussed above), in any combination, by up to $1.25 billion, subject to receipt of lender commitments and other conditions precedent. Interest rates are based on our senior unsecured debt ratings and are currently 100 basis points over the applicable index for floating rate advances for the 2023 Term

Index to Financial Statements

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)

December 31, 2020 and 201****9

Loan and the 2024 Term Loan. Funds may be drawn in U.S., Canadian, Singapore, Australian and Hong Kong dollars. On September 24, 2020, the 2023 Term Loan was repaid in full. Based on exchange rates in effect at December 31, 2020, the balance outstanding is approximately $537.5 million, 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 2024 Term Loan are consistent with our 2018 global revolving credit facility and, as of December 31, 2020, we were in compliance with all of such covenants.

Unsecured Senior Notes


			Amount
			Issued (in
Unsecured Senior Notes and Annual		Maturity	millions, local		Net Proceeds		Interest Payment
Interest Rate	Date Issued	Date	currency)		(in millions) (1)		Dates	Initial Issuer (2)
Floating Rate Notes due 2022	Sep 23, 2020	Sep 23, 2022	€	300.0		348.7	Quarterly, commencing December 23, 2020	Digital Dutch Finco B.V. (3)
0.125% Notes due 2022	Jan 17, 2020	Oct 15, 2022	€	300.0		330.8	Annually, commencing October 15, 2020	Digital Dutch Finco B.V. (3)
2.750% Notes due 2023	Aug 7, 2017	Feb 1, 2023	$	350.0		346.9	Semi-annually, commencing February 1, 2018	Digital Realty Trust, L.P.
2.625% Notes due 2024	Apr 15, 2016	Apr 15, 2024	€	600.0		670.3	Annually, commencing April 15, 2017	Digital Euro Finco, LLC (3)
2.750% Notes due 2024	Jul 21, 2017	Jul 19, 2024	£	250.0		321.3	Annually, commencing July 19, 2018	Digital Stout Holding, LLC (4)
4.250% Notes due 2025	Jan 18, 2013	Jan 17, 2025	£	400.0		624.2	Semi-annually, commencing July 17, 2013	Digital Stout Holding, LLC (4)
0.625% Notes due 2025	Jan 17, 2020	Jul 15, 2025	€	650.0		712.0	Annually, commencing July 15, 2020	Digital Dutch Finco B.V. (3)
4.750% Notes due 2025	Oct 1, 2015	Oct 1, 2025	$	450.0		445.8	Semi-annually, commencing April 1, 2016	Digital Delta Holdings, LLC (5)
2.500% Notes due 2026	Jan 16, 2019	Jan 16, 2026	€	1,075.0		1,218.6	Annually, commencing January 16, 2020	Digital Euro Finco, LLC (3)
3.700% Notes due 2027	Aug 7, 2017	Aug 15, 2027	$	1,000.0		991.0	Semi-annually, commencing February 15, 2018	Digital Realty Trust, L.P.
1.125% Notes due 2028	Oct 9, 2019	Apr 9, 2028	€	500.0		539.7	Annually, commencing April 9, 2020	Digital Euro Finco, LLC (3)
4.450% Notes due 2028	Jun 21, 2018	Jul 15, 2028	$	650.0		643.3	Semi-annually, commencing January 15, 2019	Digital Realty Trust, L.P.
3.600% Notes due 2029	Jun 14, 2019	Jul 1, 2029	$	900.0		890.6	Semi-annually, commencing January 1, 2020	Digital Realty Trust, L.P.
3.300% Notes due 2029	Jul 21, 2017	Jul 19, 2029	£	350.0		448.6	Annually, commencing July 19, 2018	Digital Stout Holding, LLC (4)
1.500% Notes due 2030	Jan 17, 2020	Mar 15, 2030	€	750.0		819.1	Annually, commencing March 15, 2021	Digital Dutch Finco B.V. (3)
3.750% Notes due 2030	Oct 17, 2018 and Mar 9, 2019	Oct 17, 2030	£	550.0		716.8	Annually, commencing October 17, 2019	Digital Stout Holding, LLC (4)
1.250% Notes due 2031	Jun 26, 2020	Feb 1, 2031	€	500.0		553.2	Annually, commencing February 1, 2021	Digital Dutch Finco B.V. (3)
1.000% Notes due 2032	Sep 23, 2020	Jan 15, 2032	€	750.0		860.0	Annually, commencing January 15, 2021	Digital Dutch Finco B.V. (3)

(1)	Amounts are in U.S. dollars, based on the exchange rate on the date of issuance. Net proceeds are equal to principal amount less initial purchaser discount and other debt issuance costs.

(2)	Digital Realty Trust, Inc. guarantees the senior notes issued by Digital Realty Trust, L.P. Both Digital Realty Trust, L.P. and Digital Realty Trust, Inc. guarantee the senior notes issued by Digital Stout Holding, LLC, Digital Euro Finco, LLC and Digital Dutch Finco, B.V.

(3)	An indirect wholly owned finance subsidiary of Digital Realty Trust, L.P.

(4)	A wholly owned subsidiary of Digital Realty Trust, L.P.

Index to Financial Statements

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)

December 31, 2020 and 201****9

(5)

The indentures governing each of the senior notes contain 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 December 31, 2020, we were in compliance with each of these financial covenants.

The table below summarizes our debt maturities and principal payments as of December 31, 2020 (in thousands):


	Global Revolving		Unsecured
	Credit Facilities(1)		Term Loans(1)		Senior Notes		Secured Debt		Total Debt
2021	$	—	$	—	$	—	$	—	$	—
2022		—		—		732,960		330		733,290
2023		493,241		537,470		350,000		104,000		1,484,711
2024		46,943		—		1,074,710		—		1,121,653
2025		—		—		1,790,840		—		1,790,840
Thereafter		—		—		8,147,519		135,000		8,282,519
Subtotal	$	540,184	$	537,470	$	12,096,029	$	239,330	$	13,413,013
Unamortized discount		—		—		(40,915)		(4)		(40,919)
Unamortized premium		—		—		5,927		—		5,927
Total	$	540,184	$	537,470	$	12,061,041	$	239,326	$	13,378,021

(1)	The global revolving credit facility and the 2024 unsecured term loan are 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 or the 2024 unsecured term loan, as applicable.

Index to Financial Statements

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)

December 31, 2020 and 201****9

Income per Share

The following is a summary of basic and diluted income per share (in thousands, except share and per share amounts):


	Year Ended December 31,
	2020		2019		2018
Net income available to common stockholders	$	263,342	$	493,011	$	249,930
Weighted average shares outstanding—basic		260,098,978		208,325,823		206,035,408
Potentially dilutive common shares:
Unvested incentive units		120,775		165,185		141,260
Unvested restricted stock		177,244		—		—
Forward equity offering		1,596,476		813,073		33,315
Market performance-based awards		529,035		158,166		463,488
Weighted average shares outstanding—diluted		262,522,508		209,462,247		206,673,471
Income per share:
Basic	$	1.01	$	2.37	$	1.21
Diluted	$	1.00	$	2.35	$	1.21

We have excluded the following potentially dilutive securities in the calculations above as they would be antidilutive or not dilutive:


	Year Ended December 31,
	2020	2019	2018
Weighted average of Operating Partnership common units not owned by Digital Realty Trust, Inc.	7,974,005	8,958,932	8,227,463
Potentially dilutive Series C Cumulative Redeemable Perpetual Preferred Stock	1,489,983	1,695,765	1,876,584
Potentially dilutive Series G Cumulative Redeemable Preferred Stock	1,452,809	2,102,655	2,326,861
Potentially dilutive Series H Cumulative Redeemable Preferred Stock	—	789,846	3,409,772
Potentially dilutive Series I Cumulative Redeemable Preferred Stock	1,269,035	2,105,116	2,329,584
Potentially dilutive Series J Cumulative Redeemable Preferred Stock	1,475,721	1,679,534	1,858,622
Potentially dilutive Series K Cumulative Redeemable Preferred Stock	1,551,801	1,334,691	—
Potentially dilutive Series L Cumulative Redeemable Preferred Stock	2,543,639	670,823	—
Total	17,756,993	19,337,362	20,028,886

Index to Financial Statements

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)

December 31, 2020 and 201****9

Income per Unit

The following is a summary of basic and diluted income per unit (in thousands, except unit and per unit amounts):


	Year Ended December 31,
	2020		2019		2018
Net income available to common unitholders	$	272,842	$	514,111	$	260,110
Weighted average units outstanding—basic		268,072,983		217,284,755		214,312,871
Potentially dilutive common units:
Unvested incentive units		120,775		165,185		141,260
Unvested restricted units		177,244		—		—
Forward equity offering		1,596,476		813,073		33,315
Market performance-based awards		529,035		158,166		463,488
Weighted average units outstanding—diluted		270,496,513		218,421,179		214,950,934
Income per unit:
Basic	$	1.02	$	2.37	$	1.21
Diluted	$	1.01	$	2.35	$	1.21

We have excluded the following potentially dilutive securities in the calculations above as they would be antidilutive or not dilutive:


	Year Ended December 31,
	2020	2019	2018
Potentially dilutive Series C Cumulative Redeemable Perpetual Preferred Units	1,489,983	1,695,765	1,876,584
Potentially dilutive Series G Cumulative Redeemable Preferred Units	1,452,809	2,102,655	2,326,861
Potentially dilutive Series H Cumulative Redeemable Preferred Units	—	789,846	3,409,772
Potentially dilutive Series I Cumulative Redeemable Preferred Units	1,269,035	2,105,116	2,329,584
Potentially dilutive Series J Cumulative Redeemable Preferred Units	1,475,721	1,679,534	1,858,622
Potentially dilutive Series K Cumulative Redeemable Preferred Units	1,551,801	1,334,691	—
Potentially dilutive Series L Cumulative Redeemable Preferred Units	2,543,639	670,823	—
Total	9,782,988	10,378,430	11,801,423

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. As such, no provision for federal income taxes has been included in the Company’s accompanying consolidated financial statements for the years ended December 31, 2020, 2019 and 2018.

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 consolidated financial statements.

Index to Financial Statements

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)

December 31, 2020 and 201****9

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 years ended December 31, 2020, 2019 and 2018.

For our TRS entities and foreign subsidiaries that are subject to U.S. federal, state, local 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 years ended December 31, 2020, 2019 and 2018. As of December 31, 2020 and 2019, we had deferred tax liabilities net of deferred tax assets of approximately $737.3 million and $143.4 million, respectively, primarily related to our foreign properties, classified in accounts payable and other accrued expenses in the consolidated balance sheet. The majority of our net deferred tax liability relates to differences between foreign tax basis and book basis of the assets acquired in the Interxion Combination in March 2020, the European Portfolio Acquisition in July 2016 and the Sentrum portfolio acquisition during 2012. The valuation allowance against the deferred tax assets at December 31, 2020 and 2019 relate primarily to net operating loss carryforwards that we do not expect to utilize attributable to certain foreign jurisdictions.

Deferred income tax assets and liabilities as of December 31, 2020 and 2019 were as follows (in thousands):


	2020		2019
Gross deferred tax assets:
Net operating loss carryforwards	$	164,294	$	63,280
Basis difference - real estate property		748,411		9,955
Basis difference - intangibles		2,368		1,071
Straight-line rent		1,121		1,404
Other - temporary differences		60,840		17,624
Total gross deferred tax assets		977,034		93,334
Valuation allowance		(108,060)		(40,795)
Total deferred tax assets, net of valuation allowance		868,974		52,539
Gross deferred tax liabilities:
Basis difference - real estate property		1,338,612		162,095
Basis difference - equity investments		4,000		4,000
Basis difference - intangibles		246,950		1,547
Straight-line rent		6,884		8,044
Other - temporary differences		9,805		20,218
Total gross deferred tax liabilities		1,606,251		195,904
Net deferred tax liabilities	$	737,277	$	143,365

Index to Financial Statements

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)

December 31, 2020 and 201****9

Equity and Accumulated Other Comprehensive Income (Loss), Net

(a) Equity Distribution Agreements

On May 11, 2020, Digital Realty Trust, Inc. and Digital Realty Trust, L.P. entered into an amendment, which we refer to as the 2020 Amendment, to our ATM equity offering sales agreement dated January 4, 2019, which, as amended, we refer to as the Sales Agreement, with BofA Securities, Inc., Barclays Capital Inc., BTIG, LLC, Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc., Jefferies LLC, J.P. Morgan Securities LLC, Mizuho Securities USA LLC, Morgan Stanley & Co. LLC, MUFG Securities Americas Inc., 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, to increase the number of shares of common stock Digital Realty Trust, Inc. could issue and sell 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. In accordance with the Sales Agreement, following the date of the 2020 Amendment, Digital Realty Trust, Inc. may offer and sell shares of its common stock having an aggregate offering price of up to $1.0 billion. Prior to the 2020 Amendment, Digital Realty Trust, Inc. had offered and sold shares of its common stock having an aggregate gross sales price of approximately $652.2 million. The sales of common stock made under the Sales Agreement will be made in “at the market” offerings as defined in Rule 415 of the Securities Act. For the year ended December 31, 2020, Digital Realty Trust, Inc. generated net proceeds of approximately $893.8 million from the issuance of approximately 6.1 million common shares under the Sales Agreement at an average price of $146.90 per share after payment of approximately $9.0 million of commissions to the Agents, and approximately $749.4 million remains available for future sales under the program. For the year ended December 31, 2019, there were no sales 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. On September 17, 2019, the Company amended the forward sale agreements to extend the maturity date of such forward sales agreements from September 27, 2019 to September 25, 2020. On September 24, 2020, we physically settled the forward sale agreements in full by issuing an aggregate of 9,775,000 shares of our common stock to the forward purchasers in exchange for net proceeds of approximately $1.0 billion.

Index to Financial Statements

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)

December 31, 2020 and 201****9


				Total
				Liquidation		Annual		Shares Outstanding as of		Balance (in thousands, net of
	Date(s)	Initial Date to		Value (in		Dividend		December 31,		issuance costs) as of December 31,
Preferred Stock (1)	Issued	Redeem (2)	Share Cap (3)	thousands) (4)		Rate (5)		2020	2019	2020		2019
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		—		1.46875	—	10,000,000		—		241,468
6.350% Series I Cumulative Redeemable Preferred Stock	Aug 24, 2015	Aug 24, 2020	0.7623100		—		1.58750	—	10,000,000		—		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
5.850% Series K Cumulative Redeemable Preferred Stock	Mar 13, 2019	Mar 13, 2024	0.4361100		210,000		1.46250	8,400,000	8,400,000		203,264		203,264
5.200% Series L Cumulative Redeemable Preferred Stock	Oct 10, 2019	Oct 10, 2024	0.3851800		345,000		1.30000	13,800,000	13,800,000		334,886		334,886
				$	956,250			38,250,000	58,250,000	$	950,940	$	1,434,420

(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) the Share Cap, subject to certain adjustments; subject, in each case, to provisions for the

Index to Financial Statements

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)

December 31, 2020 and 201****9

	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, 2020 and 2018:


	December 31, 2020			December 31, 2019
	Number of	Percentage of		Number of	Percentage of
	units	total		units	total
Digital Realty Trust, Inc.	280,289,726	97.2	%	208,900,758	95.9	%
Noncontrolling interests consist of:
Common units held by third parties	6,212,369	2.2	%	6,820,201	3.2	%
Incentive units held by employees and directors (see Note 15)	1,833,898	0.6	%	2,022,954	0.9	%
	288,335,993	100.0	%	217,743,913	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

Index to Financial Statements

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)

December 31, 2020 and 201****9

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 $1,078.9 million and $997.6 million based on the closing market price of Digital Realty Trust, Inc. common stock on December 31, 2020 and 2019, respectively.

The following table shows activity for the noncontrolling interests in the Operating Partnership for the years ended December 31, 2020, 2019 and 2018:


	Common Units	Incentive Units	Total
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 / forfeitures 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
Redemption of common units for shares of Digital Realty Trust, Inc. common stock (1)	(1,815,945)	—	(1,815,945)
Conversion of incentive units held by employees and directors for shares of Digital Realty Trust, Inc. common stock (1)	—	(338,515)	(338,515)
Incentive units issued upon achievement of market performance condition	—	319,279	319,279
Grant of incentive units to employees and directors	—	120,368	120,368
Cancellation / forfeitures of incentive units held by employees and directors	—	(22,916)	(22,916)
As of December 31, 2019	6,820,201	2,022,954	8,843,155
Redemption of common units for shares of Digital Realty Trust, Inc. common stock (1)	(607,832)	—	(607,832)
Conversion of incentive units held by employees and directors for shares of Digital Realty Trust, Inc. common stock (1)	—	(461,912)	(461,912)
Incentive units issued upon achievement of market performance condition	—	147,570	147,570
Grant of incentive units to employees and directors	—	128,049	128,049
Cancellation / forfeitures of incentive units held by employees and directors	—	(2,763)	(2,763)
As of December 31, 2020	6,212,369	1,833,898	8,046,267

(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.

Index to Financial Statements

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)

December 31, 2020 and 201****9

(e) Dividends

We have declared and paid the following dividends on our common and preferred stock for the years ended December 31, 2020, 2019 and 2018 (in thousands):


		Series C		Series G			Series H			Series I			Series J		Series K			Series L
		Preferred		Preferred			Preferred			Preferred			Preferred		Preferred			Preferred			Common
Date dividend declared	Dividend payment date	Stock		Stock			Stock			Stock			Stock		Stock			Stock			Stock
March 1, 2018	March 30, 2018	$	3,333	$	3,672		$	6,730		$	3,969		$	2,625	$	—		$	—		$	208,015	(1)
May 8, 2018	June 29, 2018		3,333		3,672			6,730			3,969			2,625		—			—			208,071	(1)
August 14, 2018	September 28, 2018		3,333		3,672			6,730			3,969			2,625		—			—			208,166	(1)
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	(1)
		$	13,332	$	14,688		$	26,920		$	15,876		$	10,500	$	—		$	—		$	832,667
February 21, 2019	March 29, 2019	$	3,333	$	3,672		$	6,730		$	3,969		$	2,625	$	—		$	—		$	224,802	(4)
May 13, 2019	June 28, 2019		3,333		3,672			—	(2)		3,969			2,625		3,686	(3)		—			224,895	(4)
August 13, 2019	September 30, 2019		3,333		3,672			—			3,969			2,625		3,071			—			225,188	(4)
November 19, 2019	December 31, 2019 for Preferred Stock; January 15, 2020 for Common Stock		3,333		3,672			—			3,969			2,625		3,071			4,036	(5)		225,488	(4)
		$	13,332	$	14,688		$	6,730		$	15,876		$	10,500	$	9,828		$	4,036		$	900,373

February 26, 2020	March 31, 2020	$	3,333	$	3,672		$	—		$	3,969		$	2,625	$	3,071		$	4,485		$	295,630	(8)
May 12, 2020	June 30, 2020		3,333		3,672			—			3,969			2,625		3,071			4,485			301,005	(8)
August 11, 2020	September 30, 2020		3,333		3,672			—			—	(7)		2,625		3,071			4,485			303,006	(8)
November 10, 2020	December 31, 2020 for Preferred Stock; January 15, 2021 for Common Stock		3,333		—	(6)		—			—			2,625		3,071			4,485			314,280	(8)
		$	13,332	$	11,016		$	—		$	7,938		$	10,500	$	12,284		$	17,940		$	1,213,921
Annual rate of dividend per share		$	1.65625	$	1.46875		$	1.84375		$	1.58750		$	1.31250	$	1.46250		$	1.30000

(1)	$4.040 annual rate of dividend per share.

(2)	Redeemed on April 1, 2019 for $25.00 per share, or a redemption price of $25.00 per share, plus accrued and unpaid dividends up to but not including the redemption date. In connection with the redemption, the previously incurred offering costs of approximately $11.8 million were recorded as a reduction to net income available to common stockholders.

(3)	Represents a pro rata dividend from and including the original issue date to and including June 30, 2019.

(4)	$4.320 annual rate of dividend per share.

(5)	Represents a pro rata dividend from and including the original issue date to and including December 31, 2019.

(6)	Redeemed on October 15, 2020 for $25.057118 per share, or a redemption price of $25.00 per share, plus accrued and unpaid dividends up to but not including the redemption date. In connection with the redemption, the previously incurred offering costs of approximately $8.2 million were recorded as a reduction to net income available to common stockholders.

(7)	Redeemed on September 8, 2020 for $25.29545 per share, or a redemption price of $25.00 per share, plus accrued and unpaid dividends up to but not including the redemption date. In connection with the redemption, the previously incurred offering costs of approximately $8.0 million were recorded as a reduction to net income available to common stockholders.

(8)	$4.480 annual rate of dividend per share.

Index to Financial Statements

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)

December 31, 2020 and 201****9

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		Cash flow		Foreign currency net		Accumulated other
	translation		hedge		investment hedge		comprehensive
	adjustments		adjustments		adjustments		income (loss), net
Balance as of December 31, 2018	$	(158,649)	$	17,264	$	25,738	$	(115,647)
Net current period change		22,015		(8,839)		—		13,176
Reclassification of foreign currency translation adjustment due to deconsolidation of Ascenty		21,687		—		—		21,687
Reclassification to interest expense from interest rate swaps		—		(7,138)		—		(7,138)
Balance as of December 31, 2019	$	(114,947)	$	1,287	$	25,738	$	(87,922)
Net current period change		213,707		(11,980)		13,142		214,869
Reclassification to interest expense from interest rate swaps		—		8,063		—		8,063
Balance as of December 31, 2020	$	98,760	$	(2,630)	$	38,880	$	135,010

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 15(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) Equity Distribution Agreement

On May 11, 2020, Digital Realty Trust, Inc. and Digital Realty Trust, L.P. entered into the 2020 Amendment to increase the number of shares of common stock Digital Realty Trust, Inc. could issue and sell from time to time through,

Index to Financial Statements

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)

December 31, 2020 and 201****9

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. In accordance with the Sales Agreement, following the date of the 2020 Amendment, Digital Realty Trust, Inc. may offer and sell shares of its common stock having an aggregate offering price of up to $1.0 billion. Prior to the 2020 Amendment, Digital Realty Trust, Inc. had offered and sold shares of its common stock having an aggregate gross sales price of approximately $652.2 million. The sales of common stock made under the Sales Agreement will be made in “at the market” offerings as defined in Rule 415 of the Securities Act. For the year ended December 31, 2020, Digital Realty Trust, Inc. generated net proceeds of approximately $893.8 million from the issuance of approximately 6.1 million common shares under the Sales Agreement at an average price of $146.90 per share after payment of approximately $9.0 million of commissions to the Agents and approximately $749.4 million remains available for future sales under the program. The proceeds from the issuances for the year ended December 31, 2020 were contributed to our Operating Partnership in exchange for the issuance of approximately 6.1 million common units to Digital Realty Trust, Inc.

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. On September 17, 2019, Digital Realty Trust, Inc. amended the forward sale agreements to extend the maturity date of such forward sales agreements from September 27, 2019 to September 25, 2020. On September 24, 2020, Digital Realty Trust, Inc. physically settled the forward sale agreements in full by issuing an aggregate of 9,775,000 shares of its common stock to the forward purchasers in exchange for net proceeds of approximately $1.0 billion. Upon physical settlement of the forward sale agreements, the Operating Partnership issued 9,775,000 partnership units to Digital Realty Trust, Inc. in exchange for contribution of the net proceeds.

Index to Financial Statements

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)

December 31, 2020 and 201****9

(d) Redeemable Preferred Units


			Total
			Liquidation		Annual		Units Outstanding as		Balance (in thousands, net of
	Date(s)	Initial Date to	Value (in		Distribution		of December 31,		issuance costs) as of December 31,
Preferred Units (1)	Issued	Redeem (2)	thousands) (3)		Rate (4)		2020	2019	2020		2019
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		—		1.46875	—	10,000,000		—		241,468
6.350% Series I Cumulative Redeemable Preferred Units	Aug 24, 2015	Aug 24, 2020		—		1.58750	—	10,000,000		—		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
5.850% Series K Cumulative Redeemable Preferred Units	Mar 13, 2019	Mar 13, 2024		210,000		1.46250	8,400,000	8,400,000		203,264		203,264
5.200% Series L Cumulative Redeemable Preferred Units	Oct 10, 2019	Oct 10, 2024		345,000		1.30000	13,800,000	13,800,000		334,886		334,886
			$	956,250			38,250,000	58,250,000	$	950,940	$	1,434,420

(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 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.

(e) 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

Index to Financial Statements

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)

December 31, 2020 and 201****9

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 $1,078.9 million and $997.6 million based on the closing market price of Digital Realty Trust, Inc.’s common stock on December 31, 2020 and 2019, respectively.

(f) 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, 2020, 2019 and 2018 (in thousands):


		Series C		Series G			Series H			Series I			Series J		Series K			Series L
		Preferred		Preferred			Preferred			Preferred			Preferred		Preferred			Preferred			Common
Date distribution declared	Distribution payment date	Units		Units			Units			Units			Units		Units			Units			Units
Mar 1, 2018	March 30, 2018	$	3,333	$	3,672		$	6,730		$	3,969		$	2,625	$	—		$	—		$	216,953	(1)
May 8, 2018	June 29, 2018		3,333		3,672			6,730			3,969			2,625		—			—			216,789	(1)
Aug 14, 2018	September 28, 2018		3,333		3,672			6,730			3,969			2,625		—			—			216,825	(1)
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	(1)
		$	13,332	$	14,688		$	26,920		$	15,876		$	10,500	$	—		$	—		$	867,405
February 21, 2019	March 29, 2019	$	3,333	$	3,672		$	6,730		$	3,969		$	2,625	$	—		$	—		$	235,256	(4)
May 13, 2019	June 28, 2019		3,333		3,672			—	(2)		3,969			2,625		3,686	(3)		—			235,142	(4)
August 13, 2019	September 30, 2019		3,333		3,672			—			3,969			2,625		3,071			—			235,164	(4)
November 19, 2019	December 31, 2019 for Preferred Units; January 15, 2020 for Common Units		3,333		3,672			—			3,969			2,625		3,071			4,036	(5)		235,154	(4)
		$	13,332	$	14,688		$	6,730		$	15,876		$	10,500	$	9,828		$	4,036		$	940,716

February 26, 2020	March 31, 2020	$	3,333	$	3,672		$	—		$	3,969		$	2,625	$	3,071		$	4,485		$	305,267	(8)
May 12, 2020	June 30, 2020		3,333		3,672			—			3,969			2,625		3,071			4,485			310,421	(8)
August 11, 2020	September 30, 2020		3,333		3,672			—			—	(7)		2,625		3,071			4,485			312,262	(8)
November 10, 2020	December 31, 2020 for Preferred Units; January 15, 2021 for Common Units		3,333		—	(6)		—			—			2,625		3,071			4,485			323,453	(8)
		$	13,332	$	11,016		$	—		$	7,938		$	10,500	$	12,284		$	17,940		$	1,251,403

Annual rate of distribution per unit		$	1.65625	$	1.46875		$	1.84375		$	1.58750		$	1.31250	$	1.46250		$	1.30000

(1)	$4.040 annual rate of distribution per unit.

(2)	Redeemed on April 1, 2019 for $25.00 per unit, or a redemption price of $25.00 per unit, plus accrued and unpaid distributions up to but not including the redemption date. In connection with the redemption, the previously incurred offering costs of approximately $11.8 million were recorded as a reduction to net income available to common unitholders.

(3)	Represents a pro rata distribution from and including the original issue date to and including June 30, 2019.

(4)	$4.320 annual rate of distribution per unit.

(5)	Represents a pro rata distribution from and including the original issue date to and including December 31, 2019.

(6)	Redeemed on October 15, 2020 for $25.057118 per unit, or a redemption price of $25.00 per unit, plus accrued and unpaid distributions up to but not including the redemption date. In connection with the redemption, the previously

Index to Financial Statements

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)

December 31, 2020 and 201****9

	incurred offering costs of approximately $8.2 million were recorded as a reduction to net income available to common unitholders.

(7)	Redeemed on September 8, 2020 for $25.29545 per unit, or a redemption price of $25.00 per unit, plus accrued and unpaid distributions up to but not including the redemption date. In connection with the redemption, the previously incurred offering costs of approximately $8.0 million were recorded as a reduction to net income available to common unitholders

(8)	$4.480 annual rate of distribution per unit.

(g) Accumulated Other Comprehensive Income (Loss)

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



	Foreign currency				Foreign currency net		Accumulated other
	translation		Cash flow hedge		investment hedge		comprehensive
	adjustments		adjustments		adjustments		income (loss)
Balance as of December 31, 2018	$	(163,531)	$	16,986	$	26,152	$	(120,393)
Net current period change		23,975		(9,232)		—		14,743
Reclassification of foreign currency translation adjustment due to deconsolidation of Ascenty		21,687		—		—		21,687
Reclassification to interest expense from interest rate swaps		—		(7,446)		—		(7,446)
Balance as of December 31, 2019	$	(117,869)	$	308	$	26,152	$	(91,409)
Net current period change		216,815		(12,425)		13,525		217,915
Reclassification to interest expense from interest rate swaps		—		8,294		—		8,294
Balance as of December 31, 2020	$	98,946	$	(3,823)	$	39,677	$	134,800

Index to Financial Statements

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)

December 31, 2020 and 201****9

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 of Stockholders, 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 3.7 million shares that may be issued pursuant to the 2014 Incentive Award Plan.

On March 9, 2020, in connection with the Interxion Combination, certain outstanding awards granted under the InterXion Holding N.V. 2013 Amended International Equity Based Incentive Plan and the InterXion Holding N.V. 2017 Executive Director Long Term Incentive Plan (together, the “InterXion Equity Plans”) were assumed by Digital Realty Trust, Inc. and converted into adjusted equity-based awards of Digital Realty Trust, Inc. common stock in accordance with the terms of the Purchase Agreement for the Interxion Combination. All such awards will continue to be governed by the terms of the applicable Interxion Equity Plan and underlying award agreement evidencing such award. On March 9, 2020, Digital Realty Trust, Inc. registered the 0.6 million shares of Digital Realty Trust, Inc. common stock issuable pursuant to such awards.

As of December 31, 2020, approximately 6.0 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.

Index to Financial Statements

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)

December 31, 2020 and 201****9

Below is a summary of our compensation expense for the years ended December 31, 2020, 2019 and 2018 and our unearned compensation as of December 31, 2020 and December 31, 2019 (in millions):


																	Expected
																	period to
	Deferred Compensation												Unearned Compensation				recognize
	Expensed						Capitalized						As of		As of		unearned
	Year Ended December 31,						Year Ended December 31,						December 31,		December 31,		compensation
Type of incentive award	2020		2019		2018		2020		2019		2018		2020		2019		(in years)
Long-term incentive units	$	12.8	$	8.7	$	6.8	$	0.2	$	0.2	$	0.2	$	15.1	$	15.4	2.1
Performance-based awards (1)		24.8		13.0		12.7		0.6		0.8		0.8		34.4		28.4	2.4
Restricted stock		15.1		11.5		6.1		3.2		2.8		4.2		41.5		29.1	2.3
Interxion awards		19.7		—		—		—		—		—		27.2		—	2.2

(1)

In addition to the market performance-based awards and long-term incentive awards described in Notes 15(a) and 15(b), this also includes one-time grants of 58,561 performance-based Class D units and 6,148 performance-based restricted stock units, subject to attainment of performance metrics related to successful integration of the Interxion Combination, and one-time grants of 22,426 time-based profits interest units and 3,209 time-based restricted stock units subject to the closing of the Interxion Combination and continued service to certain of the Company’s executive officers and other employees. 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 between two and three years, the current vesting period of these awards.

The following table sets forth the weighted-average fair value of for each type of incentive award at the date of grant for the years ended December 31, 2020, 2019 and 2018:


	Weighted-Average Fair Value at Date of Grant
Type of incentive award	2020		2019		2018
Long-term incentive units	$	134.55	$	116.22	$	101.86
Performance-based awards		159.34		114.97		119.29
Restricted stock		138.82		115.25		100.33
Interxion awards		120.67		—		—

Index to Financial Statements

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)

December 31, 2020 and 201****9

(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.

In order to achieve full parity with common units, long-term incentive units must be fully vested and the holder’s capital account balance in respect of such long-term incentive units must be equal to the capital account balance of a holder of an equivalent number of common units. The capital account balance attributable to each common unit is generally expected to be the same, in part because of the amount credited to a partner’s capital account upon the partner’s contribution of property to the Operating Partnership, and in part because the partnership agreement provides, in most cases, that allocations of income, gain, loss and deduction (which will adjust the partner’s capital accounts) are to be made to the common units on a proportionate basis. As a result, with respect to a number of long-term incentive units, it is possible to determine the capital account balance of an equivalent number of common units by multiplying the number of long-term incentive units by the capital account balance with respect to a common unit.

A partner’s initial capital account balance is equal to the amount the partner paid (or contributed to the Operating Partnership) for the partner’s units and is subject to subsequent adjustments, including with respect to the partner’s share of income, gain or loss of the Operating Partnership. Because a holder of long-term incentive units generally will not pay for the long-term incentive units, the initial capital account balance attributable to such long-term incentive units will be zero. However, the Operating Partnership is required to allocate income, gain, loss and deduction to the partner’s capital accounts in accordance with the terms of the partnership agreement, subject to applicable Treasury Regulations. The partnership agreement provides that holders of long-term incentive units will receive special allocations of gain in the event of a sale or “hypothetical sale” of assets of the Operating Partnership prior to the allocation of gain to Digital Realty Trust, Inc. or other limited partners with respect to their common units. The amount of any such allocation will, to the extent of any such gain, be equal to the difference between the capital account balance of a holder of long-term incentive units attributable to such units and the capital account balance attributable to an equivalent number of common units. If and when such gain allocation is fully made, a holder of long-term incentive units will have achieved full parity with holders of common units. To the extent that, upon an actual sale or a “hypothetical sale” of the Operating Partnership’s assets as described above, there is not sufficient gain to allocate to a holder’s capital account with respect to long-term incentive units, or if such sale or “hypothetical sale” does not occur, such units will not achieve parity with common units.

Index to Financial Statements

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)

December 31, 2020 and 201****9

The term “hypothetical sale” refers to circumstances that are not actual sales of the Operating Partnership’s assets but that require certain adjustments to the value of the Operating Partnership’s assets and the partners’ capital account balances. Specifically, the partnership agreement provides that, from time to time, in accordance with applicable Treasury Regulations, the Operating Partnership will adjust the value of its assets to equal their respective fair market values, and adjust the partners’ capital accounts, in accordance with the terms of the partnership agreement, as if the Operating Partnership sold its assets for an amount equal to their value. Such adjustments will generally be made upon the liquidation of the Operating Partnership, the acquisition of an additional interest in the Operating Partnership by a new or existing partner in exchange for more than a de minimis capital contribution, the distribution by the Operating Partnership to a partner of more than a de minimis amount of partnership property as consideration for an interest in the Operating Partnership, the grant of an interest in the Operating Partnership (other than a de minimis interest) as consideration for the performance of services to or for the benefit of the Operating Partnership (including the grant of a long-term incentive unit), and at such other times as may be desirable or required to comply with the Treasury Regulations.

Below is a summary of our long-term incentive unit activity for the year ended December 31, 2020.


		Weighted-Average		Weighted-Average			Aggregate
		Grant Date Fair		Remaining Contractual			Intrinsic Value (1)
Unvested Long-term Incentive Units	Units	Value		Life (Years)			(in thousands)
Unvested, beginning of period	208,287	$	110.00
Granted	128,049		134.55
Vested	(98,038)		98.22
Cancelled or expired	(2,763)		112.82
Unvested, end of period	235,535	$	122.22		2.09	$	32,859

(1)	The intrinsic value is calculated based on the market value of our common stock as of December 31, 2020.

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 between two and four years, the current vesting periods of the long-term incentive units.

The aggregate intrinsic value of long-term incentive units that vested in 2020, 2019 and 2018 was $11.6 million, $5.7 million and $4.2 million, respectively. As of December 31, 2020, we had approximately 0.9 million long-term incentive units that were outstanding and exercisable with an aggregate intrinsic value of approximately $122.0 million (based on the market price of our common stock as of December 31, 2020).

Index to Financial Statements

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)

December 31, 2020 and 201****9

(b) Market Performance-Based Awards

During the years ended December 31, 2020, 2019 and 2018, 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 the Company’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, January 2019 or January 2020, as applicable (or, if earlier, ending on the date on which a change in control of the Company occurs), subject to the applicable employee’s continued service. 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 applicable 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:


			Market
	2018 / 2019	2020	Performance
	RMS Relative	RMS Relative	Vesting
Level	Market Performance	Market Performance	Percentage
Below Threshold Level	≤ -300 basis points	≤ -500 basis points	0	%
Threshold Level	-300 basis points	-500 basis points	25	%
Target Level	100 basis points	0 basis points	50	%
High Level	≥ 500 basis points	≥ 500 basis points	100	%

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 2021, following the completion of the applicable Market Performance Period, the Compensation Committee determined that the high level had been achieved for the 2018 awards and, accordingly, 240,377 Class D units (including 20,725 distribution equivalent units that immediately vested on December 31, 2020) and 63,498 RSUs performance vested, subject to service-based vesting. On February 27, 2021, 50% of the 2018 awards vested and the remaining 50% will vest on February 27, 2022, subject to continued employment through the applicable vesting date.

In January 2020, following the completion of the applicable Market Performance Period, the Compensation Committee determined that the RMS Relative Market Performance fell between the target and high level for the 2017 awards and, accordingly, 137,816 Class D units (including 10,971 distribution equivalent units that immediately vested on December 31, 2019) and 29,141 RSUs performance vested, subject to service-based vesting. On February 27, 2020, 50% of the 2017 awards vested and the remaining 50% vested on February 27, 2021.

Index to Financial Statements

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)

December 31, 2020 and 201****9

In January 2019, following the completion of the applicable Market Performance Period, the Compensation Committee determined that the high level had been achieved for the 2016 awards and, accordingly, 339,317 Class D units (including 31,009 distribution equivalent units that immediately vested on December 31, 2018) and 56,778 RSUs performance vested, subject to service-based vesting. On February 27, 2019, 50% of the 2016 awards vested and the remaining 50% vested on February 27, 2020.

Following the completion of the applicable Market Performance Period, the 2018 awards that have satisfied the market condition, vested 50% on February 27, 2021 and will vest 50% on February 27, 2022, subject to continued employment through each applicable vesting date. Following the completion of the applicable Market Performance Period, the 2019 awards that satisfy the market condition, if any, will vest 50% on February 27, 2022 and 50% on February 27, 2023, subject to continued employment through each applicable vesting date. Following the completion of the applicable Market Performance Period, the 2020 awards that satisfy the market condition, if any, will vest 50% on February 27, 2023 and 50% on February 27, 2024, subject to continued employment through the applicable vesting date.

Service-based vesting will be accelerated, in full or on a pro rata basis, as applicable, 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, in any case, prior to the completion of the applicable Market Performance Period. However, vesting with respect to the market condition will continue to be measured based on RMS Relative Market Performance during the applicable three-year Market Performance Period (or, in the case of a change in control, shortened Market Performance Period).

The fair values of the awards were measured using a Monte Carlo simulation to estimate the probability of the market vesting condition being satisfied. The Company’s achievement of the market vesting condition is contingent on its TSR over a three-year market performance period, relative to the TSR 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:


	Expected Stock Price		Risk-Free Interest
Award Date	Volatility		rate
January 1, 2018	22	%	1.98	%
March 1, 2018	22	%	2.34	%
March 9, 2018	22	%	2.42	%
January 1, 2019	23	%	2.44	%
February 21, 2019	23	%	2.48	%
February 19, 2020	22	%	1.39	%
February 20, 2020	22	%	1.35	%

The expected stock price volatility assumption is calculated based on our historical volatility, which is calculated over a period of time commensurate with the expected term of the awards being valued. The expected dividend yield assumption used in the Monte Carlo simulation represents the percent of return to a stock that is available to the holder of an award. Because the holders of the awards receive dividend equivalents, an expected dividend yield assumption of 0.00% was used in the valuation. These valuations were performed in a risk-neutral framework, and no assumption was made with respect to an equity risk premium.

Index to Financial Statements

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)

December 31, 2020 and 201****9

The grant date fair value of the Class D unit and RSU awards was approximately $17.2. million, $22.3 million and $21.8 million for the years ended December 31, 2020, 2019 and 2018, respectively. We will recognize compensation expense on a straight-line basis over the expected service period of approximately four years.

The aggregate intrinsic value of the Class D unit and RSU awards that vested in 2020, 2019 and 2018 was $24.3 million, $32.7 million and $29.3 million, respectively.

Below is a summary of our restricted stock activity for the year ended December 31, 2020.


		Weighted-Average		Weighted-Average			Aggregate
		Grant Date Fair		Remaining Contractual			Intrinsic Value (2)
Unvested Restricted Stock	Shares	Value		Life (Years)			(in thousands)
Unvested, beginning of period	372,792	$	108.47
Granted (1)	831,606		126.43
Vested	(385,905)		116.19
Cancelled or expired	(35,274)		120.31
Unvested, end of period	783,219	$	123.04		2.28	$	108,797

(1)	Includes 567,810 shares issued pursuant to the converted and adjusted Interxion equity awards as part of the Interxion Combination.

(2)	The intrinsic value is calculated based on the market value of our common stock as of December 31, 2020.

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.

The aggregate intrinsic value of restricted stock that vested in 2020, 2019 and 2018 was $53.4 million, $14.0 million and $10.0 million, respectively.

(d) Defined Contribution Plans

We have a 401(k) plan whereby our U.S. employees may contribute a portion of their compensation to their respective retirement accounts, in an amount not to exceed the maximum allowed under the Code. The 401(k) plan complies with Internal Revenue Service requirements as a 401(k) safe harbor plan whereby matching contributions made by us are 100% vested. The aggregate cost of our contributions to the 401(k) plan was approximately $5.5 million, $5.2 million, and $4.8 million for the years ended December 31, 2020, 2019 and 2018, respectively. Interxion has a defined contribution pension plan for most of its employees. Contributions are made in accordance with the defined contribution pension plan and are expensed as incurred.

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,

Index to Financial Statements

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)

December 31, 2020 and 201****9

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 December 31, 2020, 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 December 31, 2020 or December 31, 2019.

The Company presents its interest rate derivatives in its 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 December 31, 2020, 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 consolidated balance sheets 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.

Index to Financial Statements

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)

December 31, 2020 and 201****9

As of December 31, 2020 and December 31, 2019, we had the following outstanding interest rate derivatives that were designated as cash flow hedges of interest rate risk (in thousands):


										Fair Value at Significant Other
Notional Amount										Observable Inputs (Level 2)
As of			As of							As of		As of
December 31,			December 31,			Type of	Strike	Effective	Expiration	December 31,		December 31,
2020			2019			Derivative	Rate	Date	Date	2020 (3)		2019 (3)
Currently-paying contracts
$	—		$	29,000	(1)	Swap	1.016	Apr 6, 2016	Jan 6, 2021	$	—	$	175
	—			75,000	(1)	Swap	1.164	Jan 15, 2016	Jan 15, 2021		—		345
	104,000	(1)		300,000	(1)	Swap	1.435	Jan 15, 2016	Jan 15, 2023		(2,773)		945
	77,352	(2)		75,825	(2)	Swap	0.779	Jan 15, 2016	Jan 15, 2021		(9)		931
$	181,352		$	479,825						$	(2,782)	$	2,396

(1)	Represents debt which bears interest based on one-month U.S. LIBOR.

(2)	Represents debt which bears interest based on one-month CDOR. Translation to U.S. dollars is based on exchange rates of $0.79 to 1.00 CAD as of December 31, 2020 and $0.77 to 1.00 CAD as of December 31, 2019.

(3)	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.

On September 24, 2020, in connection with the paydown of our 2023 Term Loan, we terminated interest rate swap agreements with notional amounts in the aggregate of $300.0 million. As a result of the termination, the accumulated fair value of the interest rate swaps was reclassified from accumulated other comprehensive income to interest expense on the accompanying consolidated income statements, which resulted in a realized loss of approximately $6.4 million.

Amounts reported in accumulated other comprehensive loss related to interest rate swaps will be reclassified to interest expense as interest payments are made on our debt. As of December 31, 2020, we estimate that an additional $1.5 million will be reclassified as an increase to interest expense during the year ending December 31, 2021, 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 December 31, 2020.

Credit-risk-related Contingent Features

Index to Financial Statements

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)

December 31, 2020 and 201****9

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 December 31, 2020, we did not have any derivatives in a net asset position, and have not posted any collateral related to these agreements.

Fair Value of Instruments

We disclose fair value information about all financial instruments, whether or not recognized in the 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 December 31, 2020 and December 31, 2019 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 16. "Derivative Instruments", the interest rate swaps and foreign currency forward contracts are recorded at fair value.

We calculate the fair value of our mortgage loans, unsecured term loans 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 facilities approximates fair value, due to the variability of interest rates.

As of December 31, 2020 and December 31, 2019, the aggregate estimated fair value and carrying value of our global revolving credit facilities, unsecured term loans, unsecured senior notes and mortgage loans were as follows (in thousands):


	Categorization	As of December 31, 2020				As of December 31, 2019
	under the fair value	Estimated Fair				Estimated Fair
	hierarchy	Value		Carrying Value		Value		Carrying Value
Global revolving credit facilities (1)(4)	Level 2	$	540,184	$	540,184	$	245,766	$	245,766
Unsecured term loans (2)(4)	Level 2		537,470		537,470		813,205		813,205
Unsecured senior notes (3)(4)	Level 2		13,359,960		12,096,029		9,697,166		9,025,229
Secured debt (3)(4)	Level 2		242,051		239,326		105,245		105,143
		$	14,679,665	$	13,413,009	$	10,861,382	$	10,189,343

(1)	The carrying value of our global revolving credit facilities 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.

Index to Financial Statements

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)

December 31, 2020 and 201****9

(3)	Valuations for our unsecured senior notes and secured debt are determined based on the expected future payments discounted at risk-adjusted rates and quoted market prices.

(4)	The carrying value excludes unamortized premiums (discounts) and deferred financing costs (see Note 9).

Commitments and Contingencies

(a) Construction Commitments

Our properties require periodic investments of capital for tenant-related capital expenditures and for general capital improvements and 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 December 31, 2020, we had open commitments, including amounts reimbursable of approximately $37.6 million, related to construction contracts of approximately $1.1 billion.

(b) Legal Proceedings

Although the Company is involved in legal proceedings arising in the ordinary course of business, as of December 31, 2020, the Company is not currently a party to any legal proceedings nor, to its knowledge, is any legal proceeding threatened against it that it believes would have a material adverse effect on its financial position, results of operations or liquidity.

Index to Financial Statements

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)

December 31, 2020 and 201****9

Quarterly Financial Information (Digital Realty Trust, Inc.) (unaudited)

The tables below reflect selected quarterly information for the years ended December 31, 2020 and 2019. Certain amounts have been reclassified to conform to the current year presentation (in thousands, except per share amounts).


	Three Months Ended
	December 31,		September 30,
	2020		2020		June 30, 2020		March 31, 2020
Total operating revenues	$	1,062,609	$	1,024,668	$	992,995	$	823,337
Net income (loss)		59,508		(1,454)		75,978		228,698
Net income (loss) attributable to Digital Realty Trust, Inc.		57,691		(138)		74,831		224,014
Preferred stock dividends and issuance costs associated with redeemed preferred stock		(13,514)		(37,232)		(21,155)		(21,155)
Net income (loss) available to common stockholders	$	44,177	$	(37,370)	$	53,676	$	202,859
Basic net income (loss) per share available to common stockholders	$	0.16	$	(0.14)	$	0.20	$	0.91
Diluted net income (loss) per share available to common stockholders	$	0.16	$	(0.14)	$	0.20	$	0.90


	Three Months Ended
	December 31,		September 30,
	2019		2019		June 30, 2019		March 31, 2019
Total operating revenues	$	787,463	$	806,466	$	800,797	$	814,515
Net income		349,326		67,574		61,324		120,997
Net income attributable to Digital Realty Trust, Inc.		336,284		66,497		60,168		116,812
Preferred stock dividends and issuance costs associated with redeemed preferred stock		(20,707)		(16,670)		(28,430)		(20,943)
Net income available to common stockholders	$	315,577	$	49,827	$	31,738	$	95,869
Basic net income per share available to common stockholders	$	1.51	$	0.24	$	0.15	$	0.46
Diluted net income per share available to common stockholders	$	1.50	$	0.24	$	0.15	$	0.46

Index to Financial Statements

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)

December 31, 2020 and 201****9

Quarterly Financial Information (Digital Realty Trust, L.P.) (unaudited)


	Three Months Ended
	December 31,		September 30,
	2020		2020		June 30, 2020		March 31, 2020
Total operating revenues	$	1,062,609	$	1,024,668	$	992,995	$	823,337
Net income (loss)		59,508		(1,454)		75,978		228,698
Net income (loss) attributable to Digital Realty Trust, L.P.		58,991		(1,138)		76,231		231,814
Preferred unit distributions and issuance costs associated with redeemed preferred units		(13,514)		(37,232)		(21,155)		(21,155)
Net income (loss) available to common unitholders	$	45,477	$	(38,370)	$	55,076	$	210,659
Basic net income (loss) per unit available to common unitholders	$	0.16	$	(0.14)	$	0.20	$	0.91
Diluted net income (loss) per unit available to common unitholders	$	0.16	$	(0.14)	$	0.20	$	0.90


	Three Months Ended
	December 31,		September 30,
	2019		2019		June 30, 2019		March 31, 2019
Total operating revenues	$	787,463	$	806,466	$	800,797	$	814,515
Net income		349,326		67,574		61,324		120,997
Net income attributable to Digital Realty Trust, L.P.		349,384		68,797		61,568		121,112
Preferred unit distributions and issuance costs associated with redeemed preferred units		(20,707)		(16,670)		(28,430)		(20,943)
Net income available to common unitholders	$	328,677	$	52,127	$	33,138	$	100,169
Basic net income per unit available to common unitholders	$	1.51	$	0.24	$	0.15	$	0.46
Diluted net income per unit available to common unitholders	$	1.50	$	0.24	$	0.15	$	0.46

Subsequent Events

On February 4, 2021 (the “Redemption Date”), the Operating Partnership redeemed the $350.0 million aggregate principal amount outstanding of its 2.750% Notes due 2023 (the “2.750% Notes”). The redemption price for the 2.750% Notes was equal to the sum of (a) $1,047.09 per $1,000 principal amount of the 2.750% Notes, or 104.709% of the aggregate principal amount of the 2.750% Notes, plus (b) accrued and unpaid interest to, but excluding, the Redemption Date equal to $0.23 per $1,000 principal amount of the 2.750% Notes. The redemption will result in an early extinguishment charge of approximately $17.5 million during the three months ending March 31, 2021.

On January 12, 2021, Digital Intrepid Holding B.V., an indirect wholly owned holding and finance subsidiary of the Operating Partnership through which the Interxion business is held, issued and sold €1.0 billion aggregate principal amount of 0.625% Guaranteed Notes due 2031 (the “2031 Notes”). The 2031 Notes are senior unsecured obligations of Digital Intrepid Holding B.V. and are fully and unconditionally guaranteed by Digital Realty Trust, Inc. and the Operating Partnership. Net proceeds from the offering were approximately €988.3 million (approximately $1,206.4 million based on the exchange rate on January 12, 2021) after deducting managers’ discounts and estimated offering expenses.

Index to Financial Statements

DIGITAL REALTY TRUST, INC.

DIGITAL REALTY TRUST, L.P.

SCHEDULE III

PROPERTIES AND ACCUMULATED DEPRECIATION

December 31, 2020

(In thousands)


						Costs capitalized
			Initial costs			subsequent to acquisition		Total costs				Accumulated	Date of
				Acquired					Acquired			depreciation	acquisition
	Data Center			ground	Buildings and		Carrying		ground	Buildings and		and	or
	Buildings	Encumbrances	Land	lease	improvements	Improvements	costs	Land	lease	improvements	Total	amortization	construction
North American Markets
Northern Virginia	24	104,000	198,989	—	1,712,144	2,187,605	—	216,041	—	3,882,697	4,098,738	(887,079)	2005 - 2019
Chicago	10	—	95,444	—	1,320,334	977,634	—	105,830	—	2,287,582	2,393,412	(601,875)	2005 - 2017
Silicon Valley	20	—	153,145	—	919,499	537,828	—	150,910	—	1,459,562	1,610,472	(546,797)	2002 - 2018
Dallas	21	—	66,489	—	338,284	1,010,243	—	58,900	—	1,356,116	1,415,016	(535,422)	2002 - 2015
New York	13	—	17,301	—	474,561	756,411	—	17,042	—	1,231,231	1,248,273	(573,828)	2002 - 2015
Phoenix	3	—	17,239	—	416,097	332,714	—	11,859	—	754,191	766,050	(333,416)	2006 - 2015
San Francisco	4	—	41,165	—	358,066	244,015	—	41,478	—	601,768	643,246	(220,149)	2004 - 2015
Seattle	1	135,000	43,110	—	329,283	5,058	—	43,110	—	334,341	377,451	(24,299)	2020
Boston	4	—	19,255	—	259,939	93,660	—	18,029	—	354,825	372,854	(140,488)	2006 - 2011
Toronto	2	—	33,994	—	117,540	216,551	—	21,018	—	347,067	368,085	(30,540)	2013 - 2017
Atlanta	4	—	6,537	—	264,948	65,363	—	6,552	—	330,296	336,848	(79,678)	2011 - 2017
Los Angeles	4	—	40,627	—	126,769	111,501	—	39,933	—	238,964	278,897	(122,487)	2004 - 2015
Portland	2	—	1,689	—	3,131	235,685	—	4,264	—	236,241	240,505	(33,945)	2011 - 2015
Houston	6	—	6,965	—	23,492	148,818	—	6,594	—	172,681	179,275	(91,316)	2006
Austin	1	—	1,177	—	4,877	71,521	—	1,177	—	76,398	77,575	(19,703)	2005
Miami	2	—	2,964	—	29,793	35,202	—	2,964	—	64,995	67,959	(27,534)	2002 - 2015
Minneapolis-St. Paul	1	—	10,190	—	20,054	3,191	—	10,190	—	23,245	33,435	(6,206)	2013
Charlotte	3	—	4,117	—	13,068	13,282	—	4,118	—	26,349	30,467	(15,048)	2005 - 2015
Other	—	—	—	—	-	85,339	—	-	—	85,339	85,339	(12,003)	-
Total North America	125	239,000	760,397	—	6,731,879	7,131,621	—	760,009	—	13,863,888	14,623,897	(4,301,813)

EMEA Markets
London	19	—	138,063	7,355	1,527,932	661,636	—	82,673	6,695	2,245,618	2,334,986	(574,308)	2007 - 2020
Amsterdam	17	—	40,709	3,518	1,001,157	335,317	—	64,074	3,512	1,313,115	1,380,701	(156,730)	2005 - 2020
Frankfurt	21	—	34,621	—	1,032,780	496,372	—	38,085	—	1,525,688	1,563,773	(58,427)	2015 - 2020
Dublin	8	—	11,722	1,444	136,827	181,109	—	8,538	101	322,463	331,102	(108,544)	2006 - 2020
Paris	12	—	69,350	—	277,141	163,419	—	70,354	—	439,556	509,910	(27,337)	2012 - 2020
Marseille	4	—	1,105	—	314,106	26,035	—	1,196	—	340,050	341,246	(10,549)	2020
Vienna	2	—	14,159	—	363,062	12,698	—	14,502	—	375,417	389,919	(13,888)	2020
Zurich	3	—	20,605	—	34,934	127,385	—	22,307	—	160,617	182,924	(3,427)	2020
Stockholm	6	—	—	—	101,470	8,378	—	—	—	109,848	109,848	(7,021)	2020
Madrid	3	—	8,456	—	132,011	9,691	—	8,662	—	141,496	150,158	(4,769)	2020
Copenhagen	3	—	11,665	—	110,925	4,991	—	11,956	—	115,625	127,581	(4,039)	2020
Brussels	2	—	3,874	—	119,077	6,217	—	3,968	—	125,200	129,168	(3,808)	2020
Dusseldorf	2	—	—	—	36,303	2,998	—	—	—	39,301	39,301	(1,710)	2020
Geneva	1	—	—	—	20,071	716	—	—	—	20,787	20,787	(9,869)	2005
Manchester	1	—	—	—	23,918	(7,029)	—	—	—	16,889	16,889	(6,063)	2008
Other metros	6	—	3,144	—	43,046	17,695	—	3,925	—	59,960	63,885	(3,140)	2020
Total EMEA	110	—	357,473	12,317	5,274,760	2,047,628	—	330,240	10,308	7,351,630	7,692,178	(993,629)

APAC Markets
Singapore	3	—	—	—	137,545	418,856	—	—	—	556,401	556,401	(190,246)	2010 - 2015
Sydney	4	—	18,285	—	3,868	125,154	—	12,771	—	134,536	147,307	(29,680)	2011 - 2012
Melbourne	2	—	4,467	—	—	113,896	—	3,372	—	114,991	118,363	(39,651)	2011
Other	4	—	—	—	—	4,842	—	-	—	4,842	4,842	(202)
Total APAC	13	—	22,752	—	141,413	662,748	—	16,143	—	810,770	826,913	(259,779)
Total Portfolio	248	239,000	1,140,622	12,317	12,148,052	9,841,997	—	1,106,392	10,308	22,026,288	23,142,988	(5,555,221)

Index to Financial Statements

DIGITAL REALTY TRUST, INC.

DIGITAL REALTY TRUST, L.P.

SCHEDULE III

PROPERTIES AND ACCUMULATED DEPRECIATION

December 31, 2020

(In thousands)

(1) Tax Cost

The aggregate gross cost of the Company’s properties for federal income tax purposes approximated $32.7 billion (unaudited) as of December 31, 2020.

(2) Historical Cost and Accumulated Depreciation and Amortization

The following table reconciles the historical cost of the Company’s properties for financial reporting purposes for each of the years in the three-year period ended December 31, 2020.


	Year Ended December 31,
	2020		2019		2018
Balance, beginning of year	$	16,886,592	$	17,055,016	$	16,915,936
Additions during period (acquisitions and improvements)		6,514,218		833,836		223,163
Deductions during period (dispositions, impairments and assets held for sale)		(257,822)		(1,002,260)		(84,083)
Balance, end of year	$	23,142,988	$	16,886,592	$	17,055,016

The following table reconciles accumulated depreciation and amortization of the Company’s properties for financial reporting purposes for each of the years in the three-year period ended December 31, 2020.


	Year Ended December 31,
	2020		2019		2018
Balance, beginning of year	$	4,536,169	$	3,935,267	$	3,238,227
Additions during period (depreciation and amortization expense)		1,029,863		805,916		714,336
Deductions during period (dispositions and assets held for sale)		(10,811)		(205,014)		(17,296)
Balance, end of year	$	5,555,221	$	4,536,169	$	3,935,267

Schedules other than those listed above are omitted because they are not applicable or the information required is included in the consolidated financial statements or the notes thereto.

Index to Financial Statements

Previous: Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK · Next: Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE