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Cover and table of contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended September 30, 2024

☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Transition Period From to .

Commission file number 001-32336 (Digital Realty Trust, Inc.)

000-54023 (Digital Realty Trust, L.P.)

DIGITAL REALTY TRUST, INC.

DIGITAL REALTY TRUST, L.P.

(Exact name of registrant as specified in its charter)



Maryland (Digital Realty Trust, Inc.)			26-0081711
Maryland (Digital Realty Trust, L.P.)			20-2402955
(State or other jurisdiction of			(IRS employer
incorporation or organization)			identification number)

5707 Southwest Parkway, Building 1, Suite 275
Austin, Texas 78735
(Address of principal executive offices)

(737) 281-0101

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common Stock	DLR	New York Stock Exchange
Series J Cumulative Redeemable Preferred Stock	DLR Pr J	New York Stock Exchange
Series K Cumulative Redeemable Preferred Stock	DLR Pr K	New York Stock Exchange
Series L Cumulative Redeemable Preferred Stock	DLR Pr L	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.


Digital Realty Trust, Inc.		Yes ⌧ No ◻
Digital Realty Trust, L.P.		Yes ⌧ No ◻

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).


Digital Realty Trust, Inc.		Yes ⌧ No ◻
Digital Realty Trust, L.P.		Yes ⌧ No ◻

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Digital Realty Trust, Inc.:


Large accelerated filer ⌧		Accelerated filer ◻

Non-accelerated filer ◻		Smaller reporting company ☐

		Emerging growth company ☐

Digital Realty Trust, L.P.:


Large accelerated filer ◻		Accelerated filer ◻

Non-accelerated filer ⌧		Smaller reporting company ☐

		Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.


Digital Realty Trust, Inc.		◻
Digital Realty Trust, L.P.		◻

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).


Digital Realty Trust, Inc.		Yes ☐ No ⌧
Digital Realty Trust, L.P.		Yes ☐ No ⌧

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Digital Realty Trust, Inc.:



Class		Outstanding at October 28, 2024
Common Stock, $.01 par value per share		331,712,606

EXPLANATORY NOTE

This report combines the quarterly reports on Form 10-Q for the quarter ended September 30, 2024 of Digital Realty Trust, Inc., a Maryland corporation, and Digital Realty Trust, L.P., a Maryland limited partnership, of which Digital Realty Trust, Inc. is the sole general partner. Unless otherwise indicated or unless the context requires otherwise, all references in this report to “we,” “us,” “our,” “our Company”, or “the Company” refer to Digital Realty Trust, Inc. together with its consolidated subsidiaries, including Digital Realty Trust, L.P. In statements regarding qualification as a REIT, such terms refer solely to Digital Realty Trust, Inc. Unless otherwise indicated or unless the context requires otherwise, all references to the “Parent” refer to Digital Realty Trust, Inc., and all references to “our Operating Partnership,” “the Operating Partnership” or “the OP” refer to Digital Realty Trust, L.P. together with its consolidated subsidiaries.

The Parent is a real estate investment trust, or REIT, and the sole general partner of the OP. As of September 30, 2024, the Parent owned an approximate 98.1% common general partnership interest in Digital Realty Trust, L.P. The remaining approximate 1.9% of the common limited partnership interests of Digital Realty Trust, L.P. are owned by non-affiliated third parties and certain directors and officers of the Parent. As of September 30, 2024, the Parent owned all of the preferred limited partnership interests of Digital Realty Trust, L.P. As the sole general partner of Digital Realty Trust, L.P., the Parent has the full, exclusive and complete responsibility for the OP’s day-to-day management and control.

We believe combining the quarterly reports on Form 10-Q of the Parent and the OP into this single report results in the following benefits:

	●	enhancing investors’ understanding of the Parent and the OP 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 Parent and the OP; and

	●	creating time and cost efficiencies through the preparation of one combined report instead of two separate reports.

It is important to understand the few differences between the Parent and the OP in the context of how we operate the Company. The Parent does not conduct business itself, other than acting as the sole general partner of the OP and issuing public equity from time to time and guaranteeing certain unsecured debt of the OP and certain of its subsidiaries and affiliates. The OP holds substantially all the assets of the business, directly or indirectly. The OP conducts the operations of the business and is structured as a partnership with no publicly traded equity. Except for net proceeds from equity issuances by the Parent, which are generally contributed to the OP in exchange for partnership units, the OP generates the capital required by the business through the OP’s operations, incurrence of indebtedness and issuance of partnership units to third parties.

The presentation of noncontrolling interests, stockholders’ equity and partners’ capital are the main areas of difference between the consolidated financial statements of the Parent and those of the OP. The differences in the presentations between stockholders’ equity and partners’ capital result from the differences in the equity and capital issuances in the Parent and in the OP.

To highlight the differences between the Parent and the OP, separate sections in this report, as applicable, individually discuss the Parent and the OP, including separate financial statements and separate Exhibit 31 and 32 certifications. In the sections that combine disclosure of the Parent and the OP, this report refers to actions or holdings as being actions or holdings of the Company.

As general partner with control of the OP, the Parent consolidates the OP for financial reporting purposes, and it does not have significant assets other than its investment in the OP. Therefore, the assets and liabilities of the Parent and the OP are the same on their respective condensed consolidated financial statements. The separate discussions of the Parent and the OP in this report should be read in conjunction with each other to understand the results of the Company on a consolidated basis and how management operates the Company.

In this report, “properties” and “buildings” refer to all or any of the buildings in our portfolio, including data centers and non-data centers, and “data centers” refers only to the properties or buildings in our portfolio that contain data center space. In this report, “Global Revolving Credit Facility” refers to our Operating Partnership’s $4.2 billion equivalent senior unsecured revolving credit facility and global senior credit agreement; “Yen Revolving Credit Facility” refers to our Operating Partnership’s ¥42,511,000,000 (approximately $296 million based on exchange rates at September 30, 2024) senior unsecured revolving credit facility and Yen credit agreement; and “Global Revolving Credit Facilities” refer to our Global Revolving Credit Facility and our Yen Revolving Credit Facility, collectively.

In this report, the “Euro Term Loan Agreement” refers to a term loan agreement which governs (i) a €375,000,000 three-year senior unsecured term loan facility (the “2025 Term Facility”), the entire amount of which was funded on such date, and (ii) a €375,000,000 five-year senior unsecured term loan facility (the “2025-27 Term Facility” and, together with the 2025 Term Facility, collectively, the “Euro Term Loan Facilities”), comprised of €125,000,000 of initial term loans, the entire amount of which was funded on such date, and €250,000,000 of delayed draw term loan commitments that were funded on September 9, 2023.

In this report, the “USD Term Loan Agreement” refers to a term loan agreement for a $740 million senior unsecured term loan facility (the “USD Term Loan Facility”).

DIGITAL REALTY TRUST, INC. AND DIGITAL REALTY TRUST, L.P.

FORM 10-Q

FOR THE QUARTER ENDED SEPTEMBER 30, 2024

TABLE OF CONTENTS

		Page Number
PART I.	FINANCIAL INFORMATION

ITEM 1.	Condensed Consolidated Financial Statements of Digital Realty Trust, Inc.:

	Condensed Consolidated Balance Sheets as of September 30, 2024 (unaudited) and December 31, 2023 (unaudited)	5

	Condensed Consolidated Income Statements for the three and nine months ended September 30, 2024 and 2023 (unaudited)	6

	Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended September 30, 2024 and 2023 (unaudited)	7

	Condensed Consolidated Statement of Equity for the three and nine months ended September 30, 2024 and 2023 (unaudited)	8

	Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2024 and 2023 (unaudited)	12

	Condensed Consolidated Financial Statements of Digital Realty Trust, L.P.:

	Condensed Consolidated Balance Sheets as of September 30, 2024 (unaudited) and December 31, 2023 (unaudited)	13

	Condensed Consolidated Income Statements for the three and nine months ended September 30, 2024 and 2023 (unaudited)	14

	Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended September 30, 2024 and 2023 (unaudited)	15

	Condensed Consolidated Statement of Capital for the three and nine months ended September 30, 2024 and 2023 (unaudited)	16

	Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2024 and 2023 (unaudited)	20

	Notes to Condensed Consolidated Financial Statements of Digital Realty Trust, Inc. and Digital Realty Trust, L.P. (unaudited)	21

ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	43

ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	66

ITEM 4.	Controls and Procedures (Digital Realty Trust, Inc.)	67

	Controls and Procedures (Digital Realty Trust, L.P.)	68

PART II.	OTHER INFORMATION	69

ITEM 1.	Legal Proceedings	69

ITEM 1A.	Risk Factors	69

ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	69

ITEM 3.	Defaults Upon Senior Securities	69

ITEM 4.	Mine Safety Disclosures	69

ITEM 5.	Other Information	69

ITEM 6.	Exhibits	70

	Signatures	71

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited, in thousands, except per share data)


	September 30,		December 31,
	2024		2023
ASSETS
Investments in real estate:
Investments in properties, net	$	25,230,214	$	24,236,088
Investments in unconsolidated entities		2,456,448		2,295,889
Net investments in real estate		27,686,662		26,531,977
Operating lease right-of-use assets, net		1,228,507		1,414,256
Cash and cash equivalents		2,175,605		1,625,495
Accounts and other receivables, net		1,274,460		1,278,110
Deferred rent, net		641,778		624,427
Goodwill		9,395,233		9,239,871
Customer relationship value, deferred leasing costs and other intangibles, net		2,367,467		2,500,237
Assets held for sale		—		478,503
Other assets		525,679		420,382
Total assets	$	45,295,391	$	44,113,258
LIABILITIES AND EQUITY
Global revolving credit facilities, net	$	1,786,921	$	1,812,287
Unsecured term loans, net		913,733		1,560,305
Unsecured senior notes, net of discount		13,528,061		13,422,342
Secured and other debt, net of discount		757,831		630,973
Operating lease liabilities		1,343,903		1,542,094
Accounts payable and other accrued liabilities		2,140,763		2,168,984
Deferred tax liabilities, net		1,223,771		1,151,096
Accrued dividends and distributions		—		387,988
Security deposits and prepaid rents		423,797		401,867
Obligations associated with assets held for sale		—		39,001
Total liabilities		22,118,780		23,116,937

Redeemable noncontrolling interests		1,465,636		1,394,814
Commitments and contingencies
Equity:
Stockholders’ Equity:
Preferred Stock: $0.01 par value per share, 110,000 shares authorized; $755,000 liquidation preference ($25.00 per share), 30,200 shares issued and outstanding as of September 30, 2024 and December 31, 2023		731,690		731,690
Common Stock: $0.01 par value per share, 392,000 shares authorized; 331,347 and 311,608 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively		3,285		3,088
Additional paid-in capital		27,229,143		24,396,797
Accumulated dividends in excess of earnings		(6,060,642)		(5,262,648)
Accumulated other comprehensive loss, net		(657,365)		(751,393)
Total stockholders’ equity		21,246,111		19,117,534
Noncontrolling interests		464,864		483,973
Total equity		21,710,975		19,601,507
Total liabilities and equity	$	45,295,391	$	44,113,258

See accompanying notes to the condensed consolidated financial statements.

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED INCOME STATEMENTS

(unaudited, in thousands, except per share data)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Operating Revenues:
Rental and other services	$	1,413,727	$	1,394,613	$	4,069,966	$	4,075,008
Fee income and other		17,487		7,819		49,140		32,414
Total operating revenues		1,431,214		1,402,432		4,119,106		4,107,422
Operating Expenses:
Rental property operating and maintenance		605,859		607,544		1,707,699		1,778,465
Property taxes and insurance		50,502		76,568		148,727		172,450
Depreciation and amortization		459,997		420,613		1,316,442		1,274,384
General and administrative		117,602		110,721		353,207		332,257
Transactions and integration		24,194		14,465		82,105		44,496
Provision for impairment		—		113,000		168,303		113,000
Other		4,774		1,295		15,081		1,950
Total operating expenses		1,262,928		1,344,206		3,791,564		3,717,002
Operating income		168,286		58,226		327,542		390,420
Other Income (Expenses):
Equity in (loss) earnings of unconsolidated entities		(26,486)		(19,793)		(83,937)		163
(Loss) gain on disposition of properties, net		(556)		810,688		450,940		900,634
Other income, net		37,756		24,812		109,726		18,162
Interest expense		(123,803)		(110,767)		(348,094)		(324,103)
Loss on debt extinguishment and modifications		(2,636)		—		(3,706)		—
Income tax expense		(12,427)		(17,228)		(49,832)		(54,855)
Net income		40,134		745,938		402,639		930,421
Net loss (income) attributable to noncontrolling interests		11,059		(12,320)		10,282		(9,893)
Net income attributable to Digital Realty Trust, Inc.		51,193		733,618		412,921		920,528
Preferred stock dividends		(10,181)		(10,181)		(30,543)		(30,543)
Net income available to common stockholders	$	41,012	$	723,437	$	382,378	$	889,985
Net income per share available to common stockholders:
Basic	$	0.13	$	2.40	$	1.20	$	3.00
Diluted	$	0.09	$	2.31	$	1.10	$	2.87
Weighted average common shares outstanding:
Basic		327,977		301,827		319,965		296,184
Diluted		336,249		311,341		328,641		306,735

See accompanying notes to the condensed consolidated financial statements.

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(unaudited, in thousands)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Net income	$	40,134	$	745,938	$	402,639	$	930,421
Other comprehensive income (loss):
Foreign currency translation adjustments		405,845		(190,425)		182,448		(478,792)
(Decrease) increase in fair value of derivatives		(81,458)		48,580		28,802		61,730
Reclassification to interest expense from derivatives		(9,236)		(9,349)		(29,661)		(23,387)
Other comprehensive income (loss)		315,151		(151,194)		181,589		(440,449)
Comprehensive income		355,285		594,744		584,228		489,972
Comprehensive (income) loss attributable to noncontrolling interests		(72,895)		(2,354)		(75,186)		142,605
Comprehensive income attributable to Digital Realty Trust, Inc.	$	282,390	$	592,390	$	509,042	$	632,577

See accompanying notes to the condensed consolidated financial statements.

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF EQUITY

(unaudited, in thousands, except share data)


										Accumulated		Accumulated
	Redeemable				Number of			Additional		Dividends in		Other
	Noncontrolling		Preferred		Common	Common		Paid-in		Excess of		Comprehensive		Noncontrolling
Three Months Ended September 30, 2024	Interests		Stock		Shares	Stock		Capital		Earnings		Loss, Net		Interests		Total Equity

Balance as of June 30, 2024	$	1,399,889	$	731,690	325,885,279	$	3,231	$	26,388,393	$	(5,701,096)	$	(884,715)	$	470,313	$	21,007,816
Conversion of common units to common stock		—		—	79,944		—		5,791		—		—		(5,791)		—
Vesting of restricted stock, net		—		—	60,004		—		—		—		—		—		—
Issuance of common stock, net of costs		—		—	5,213,737		54		806,047		—		—		—		806,101
Shares issued under equity plans, net of share settlement to satisfy tax withholding upon vesting		—		—	108,000		—		4,787		—		—		—		4,787
Reclassification of vested share-based awards		—		—	—		—		(1,631)		—		—		1,631		—
Amortization of unearned compensation regarding share-based awards		—		—	—		—		23,435		—		—		—		23,435
Adjustment to redeemable noncontrolling interests		1,526		—	—		—		(1,526)		—		—		—		(1,526)
Dividends declared on preferred stock		—		—	—		—		—		(10,181)		—		—		(10,181)
Dividends and distributions on common stock and common and incentive units		(190)		—	—		—		—		(400,659)		—		(7,728)		(408,387)
Contributions from (distributions to) noncontrolling interests		—		—	—		—		—		—		—		(2,045)		(2,045)
Net income (loss)		(9,898)		—	—		—		—		51,193		—		(1,161)		50,032
Other comprehensive income (loss)		74,309		—	—		—		3,847		—		227,350		9,645		240,842
Balance as of September 30, 2024	$	1,465,636	$	731,690	331,346,964	$	3,285	$	27,229,143	$	(6,060,642)	$	(657,365)	$	464,864	$	21,710,975

See accompanying notes to the condensed consolidated financial statements.

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF EQUITY

(unaudited, in thousands, except share data)


										Accumulated		Accumulated
	Redeemable				Number of			Additional		Dividends in		Other
	Noncontrolling		Preferred		Common	Common		Paid-in		Excess of		Comprehensive		Noncontrolling
Nine Months Ended September 30, 2024	Interests		Stock		Shares	Stock		Capital		Earnings		Loss, Net		Interests		Total Equity

Balance as of December 31, 2023	$	1,394,814	$	731,690	311,607,580	$	3,088	$	24,396,797	$	(5,262,648)	$	(751,393)	$	483,973	$	19,601,507
Conversion of common units to common stock		—		—	290,795		—		21,044		—		—		(21,044)		—
Vesting of restricted stock, net		—		—	165,675		—		—		—		—		—		—
Issuance of common stock, net of costs		—		—	19,126,996		197		2,729,880		—		—		—		2,730,077
Shares issued under equity plans, net of share settlement to satisfy tax withholding upon vesting		—		—	155,918		—		5,621		—		—		—		5,621
Reclassification of vested share-based awards		—		—	—		—		(26,551)		—		—		26,551		—
Amortization of unearned compensation regarding share-based awards		—		—	—		—		64,551		—		—		—		64,551
Adjustment to redeemable noncontrolling interests		4,252		—	—		—		(4,252)		—		—		—		(4,252)
Dividends declared on preferred stock		—		—	—		—		—		(30,543)		—		—		(30,543)
Dividends and distributions on common stock and common and incentive units		(570)		—	—		—		—		(1,180,473)		—		(23,488)		(1,203,961)
Sale of noncontrolling interest in property to DCRU		—		—	—		—		39,960		—		—		12,115		52,075
Contributions from (distributions to) noncontrolling interests		—		—	—		—		—		—		—		(21,289)		(21,289)
Net income (loss)		(22,232)		—	—		—		—		412,921		—		11,950		424,871
Other comprehensive income (loss)		89,372		—	—		—		2,093		—		94,028		(3,904)		92,217
Balance as of September 30, 2024	$	1,465,636	$	731,690	331,346,964	$	3,285	$	27,229,143	$	(6,060,642)	$	(657,365)	$	464,864	$	21,710,975

See accompanying notes to the condensed consolidated financial statements.

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF EQUITY

(unaudited, in thousands, except share data)


										Accumulated		Accumulated
	Redeemable				Number of			Additional		Dividends in		Other
	Noncontrolling		Preferred		Common	Common		Paid-in		Excess of		Comprehensive		Noncontrolling
Three Months Ended September 30, 2023	Interests		Stock		Shares	Stock		Capital		Earnings		Loss, Net		Interests		Total Equity

Balance as of June 30, 2023	$	1,367,422	$	731,690	299,240,366	$	2,967	$	22,882,200	$	(5,253,917)	$	(741,484)	$	483,702	$	18,105,158
Conversion of common units to common stock		—		—	15,435		1		1,150		—		—		(1,151)		—
Vesting of restricted stock, net		—		—	66,419		—		—		—		—		—		—
Issuance of common stock, net of costs		—		—	3,454,148		34		335,279		—		—		—		335,313
Shares issued under equity plans, net of share settlement to satisfy tax withholding upon vesting		—		—	69,658		—		3,551		—		—		—		3,551
Amortization of unearned compensation regarding share-based awards		—		—	—		—		19,230		—		—		—		19,230
Reclassification of vested share-based awards		—		—	—		—		(1,490)		—		—		1,490		—
Adjustment to redeemable noncontrolling interests		1,116		—	—		—		(1,116)		—		—		—		(1,116)
Dividends declared on preferred stock		—		—	—		—		—		(10,181)		—		—		(10,181)
Dividends and distributions on common stock and common and incentive units		(190)		—	—		—		—		(370,278)		—		(7,823)		(378,101)
Contributions from (distributions to) noncontrolling interests		—		—	—		—		—		—		—		(64)		(64)
Net income		(2,657)		—	—		—		—		733,618		—		14,977		748,595
Other comprehensive income (loss)		(5,383)		—	—		—		284		—		(141,512)		(4,583)		(145,811)
Balance as of September 30, 2023	$	1,360,308	$	731,690	302,846,026	$	3,002	$	23,239,088	$	(4,900,758)	$	(882,996)	$	486,548	$	18,676,574

See accompanying notes to the condensed consolidated financial statements.

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF EQUITY

(unaudited, in thousands, except share data)


										Accumulated		Accumulated
	Redeemable				Number of			Additional		Dividends in		Other
	Noncontrolling		Preferred		Common	Common		Paid-in		Excess of		Comprehensive		Noncontrolling
Nine Months Ended September 30, 2023	Interests		Stock		Shares	Stock		Capital		Earnings		Loss, Net		Interests		Total Equity

Balance as of December 31, 2022	$	1,514,679	$	731,690	291,148,222	$	2,887	$	22,142,868	$	(4,698,313)	$	(595,798)	$	524,131	$	18,107,465
Conversion of common units to common stock		—		—	77,432		2		5,590		—		—		(5,592)		—
Vesting of restricted stock, net		—		—	221,907		—		—		—		—		—		—
Issuance of common stock, net of costs		—		—	11,274,926		112		1,077,426		—		—		—		1,077,538
Shares issued under equity plans, net of share settlement to satisfy tax withholding upon vesting		—		—	123,539		1		(23)		—		—		—		(22)
Amortization of unearned compensation regarding share-based awards		—		—	—		—		54,785		—		—		—		54,785
Reclassification of vested share-based awards		—		—	—		—		(37,567)		—		—		37,567		—
Adjustment to redeemable noncontrolling interests		3,238		—	—		—		(3,238)		—		—		—		(3,238)
Dividends declared on preferred stock		—		—	—		—		—		(30,543)		—		—		(30,543)
Dividends and distributions on common stock and common and incentive units		(570)		—	—		—		—		(1,092,430)		—		(23,204)		(1,115,634)
Contributions from (distributions to) noncontrolling interests		129		—	—		—		—		—		—		4,441		4,441
Deconsolidation of noncontrolling interests in consolidated entities		—		—	—		—		—		—		—		(65,358)		(65,358)
Net income		(9,386)		—	—		—		—		920,528		—		19,279		939,807
Other comprehensive income (loss)		(147,782)		—	—		—		(753)		—		(287,198)		(4,716)		(292,667)
Balance as of September 30, 2023	$	1,360,308	$	731,690	302,846,026	$	3,002	$	23,239,088	$	(4,900,758)	$	(882,996)	$	486,548	$	18,676,574

See accompanying notes to the condensed consolidated financial statements.

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in thousands)


	Nine Months Ended September 30,
	2024		2023
Cash flows from operating activities:
Net income	$	402,639	$	930,421
Adjustments to reconcile net income to net cash provided by operating activities:
Gain on disposition of properties, net		(450,940)		(900,634)
Provision for impairment		168,303		113,000
Equity in loss (earnings) of unconsolidated entities		83,937		(163)
Distributions from unconsolidated entities		67,325		51,068
Depreciation and amortization		1,316,442		1,274,384
Amortization of share-based compensation		60,675		54,785
Loss on debt extinguishment and modifications		3,706		—
Straight-lined rents and amortization of above and below market leases		(19,950)		(18,597)
Amortization of deferred financing costs and debt discount / premium		24,373		19,705
Other operating activities, net		349		(20,345)
Changes in assets and liabilities:
Increase in accounts receivable and other assets		(228,896)		(343,767)
Increase in accounts payable and other liabilities		64,039		12,618
Net cash provided by operating activities		1,492,002		1,172,475
Cash flows from investing activities:
Improvements to investments in real estate		(2,096,330)		(2,466,462)
Cash paid for business combination / asset acquisitions, net of cash acquired		(317,297)		(45,856)
Investments in and advances to unconsolidated entities		(234,362)		(12,421)
Return of investment from unconsolidated entities		99,864		—
Proceeds from sale of assets		1,246,351		2,470,684
Other investing activities, net		(92,393)		(44,651)
Net cash used in investing activities		(1,394,167)		(98,706)
Cash flows from financing activities:
Proceeds from credit facilities		1,162,180		2,256,973
Payments on credit facilities		(1,192,606)		(2,700,310)
Borrowings on secured / unsecured debt		1,027,507		827,759
Repayments on secured / unsecured debt		(1,616,353)		(3,081)
Capital (distribution to) contributions from noncontrolling interests, net		(21,289)		4,570
Proceeds from issuance of common stock, net		2,730,178		1,077,538
Payments of dividends and distributions		(1,623,062)		(1,510,463)
Other financing activities, net		55,379		(61,261)
Net cash provided by (used in) financing activities		521,934		(108,275)
Net increase in cash, cash equivalents and restricted cash		619,769		965,494
Effect of exchange rate changes on cash, cash equivalents and restricted cash		(74,131)		(43,745)
Cash, cash equivalents and restricted cash at beginning of period		1,636,470		150,696
Cash, cash equivalents and restricted cash at end of period	$	2,182,108	$	1,072,445

See accompanying notes to the condensed consolidated financial statements.

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited, in thousands, except per unit data)


	September 30,		December 31,
	2024		2023
ASSETS
Investments in real estate:
Investments in properties, net	$	25,230,214	$	24,236,088
Investments in unconsolidated entities		2,456,448		2,295,889
Net investments in real estate		27,686,662		26,531,977
Operating lease right-of-use assets, net		1,228,507		1,414,256
Cash and cash equivalents		2,175,605		1,625,495
Accounts and other receivables, net		1,274,460		1,278,110
Deferred rent, net		641,778		624,427
Goodwill		9,395,233		9,239,871
Customer relationship value, deferred leasing costs and other intangibles, net		2,367,467		2,500,237
Assets held for sale		—		478,503
Other assets		525,679		420,382
Total assets	$	45,295,391	$	44,113,258
LIABILITIES AND CAPITAL
Global revolving credit facilities, net	$	1,786,921	$	1,812,287
Unsecured term loans, net		913,733		1,560,305
Unsecured senior notes, net of discount		13,528,061		13,422,342
Secured and other debt, net of discount		757,831		630,973
Operating lease liabilities		1,343,903		1,542,094
Accounts payable and other accrued liabilities		2,140,763		2,168,984
Deferred tax liabilities, net		1,223,771		1,151,096
Accrued dividends and distributions		—		387,988
Security deposits and prepaid rents		423,797		401,867
Obligations associated with assets held for sale		—		39,001
Total liabilities		22,118,780		23,116,937

Redeemable noncontrolling interests		1,465,636		1,394,814
Commitments and contingencies
Capital:
Partners’ capital:
General Partner:
Preferred units, $755,000 liquidation preference ($25.00 per unit), 30,200 units issued and outstanding as of September 30, 2024 and December 31, 2023		731,690		731,690
Common units, 331,347 and 311,608 units issued and outstanding as of September 30, 2024 and December 31, 2023, respectively		21,171,786		19,137,237
Limited Partners, 6,397 and 6,449 units issued and outstanding as of September 30, 2024 and December 31, 2023, respectively		447,573		459,356
Accumulated other comprehensive loss		(677,007)		(772,668)
Total partners’ capital		21,674,042		19,555,615
Noncontrolling interests in consolidated entities		36,933		45,892
Total capital		21,710,975		19,601,507
Total liabilities and capital	$	45,295,391	$	44,113,258

See accompanying notes to the condensed consolidated financial statements.

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED INCOME STATEMENTS

(unaudited, in thousands, except per unit data)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Operating Revenues:
Rental and other services	$	1,413,727	$	1,394,613	$	4,069,966	$	4,075,008
Fee income and other		17,487		7,819		49,140		32,414
Total operating revenues		1,431,214		1,402,432		4,119,106		4,107,422
Operating Expenses:
Rental property operating and maintenance		605,859		607,544		1,707,699		1,778,465
Property taxes and insurance		50,502		76,568		148,727		172,450
Depreciation and amortization		459,997		420,613		1,316,442		1,274,384
General and administrative		117,602		110,721		353,207		332,257
Transactions and integration		24,194		14,465		82,105		44,496
Provision for impairment		—		113,000		168,303		113,000
Other		4,774		1,295		15,081		1,950
Total operating expenses		1,262,928		1,344,206		3,791,564		3,717,002
Operating income		168,286		58,226		327,542		390,420
Other Income (Expenses):
Equity in (loss) earnings of unconsolidated entities		(26,486)		(19,793)		(83,937)		163
(Loss) gain on disposition of properties, net		(556)		810,688		450,940		900,634
Other income, net		37,756		24,812		109,726		18,162
Interest expense		(123,803)		(110,767)		(348,094)		(324,103)
Loss on debt extinguishment and modifications		(2,636)		—		(3,706)		—
Income tax expense		(12,427)		(17,228)		(49,832)		(54,855)
Net income		40,134		745,938		402,639		930,421
Net loss attributable to noncontrolling interests		12,059		3,980		18,982		10,407
Net income attributable to Digital Realty Trust, L.P.		52,193		749,918		421,621		940,828
Preferred units distributions		(10,181)		(10,181)		(30,543)		(30,543)
Net income available to common unitholders	$	42,012	$	739,737	$	391,078	$	910,285
Net income per unit available to common unitholders:
Basic	$	0.13	$	2.40	$	1.20	$	3.01
Diluted	$	0.09	$	2.32	$	1.10	$	2.88
Weighted average common units outstanding:
Basic		334,103		308,024		326,154		302,316
Diluted		342,375		317,538		334,830		312,867

See accompanying notes to the condensed consolidated financial statements.

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(unaudited, in thousands)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Net income	$	40,134	$	745,938	$	402,639	$	930,421
Other comprehensive income (loss):
Foreign currency translation adjustments		405,845		(190,425)		182,448		(478,792)
(Decrease) increase in fair value of derivatives		(81,458)		48,580		28,802		61,730
Reclassification to interest expense from derivatives		(9,236)		(9,349)		(29,661)		(23,387)
Other comprehensive income (loss)		315,151		(151,194)		181,589		(440,449)
Comprehensive income	$	355,285	$	594,744	$	584,228	$	489,972
Comprehensive (income) loss attributable to noncontrolling interests		(67,309)		10,772		(67,155)		156,348
Comprehensive income attributable to Digital Realty Trust, L.P.	$	287,976	$	605,516	$	517,073	$	646,320

See accompanying notes to the condensed consolidated financial statements.

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CAPITAL

(unaudited, in thousands, except unit data)


												Accumulated
	Redeemable		General Partner						Limited Partners			Other
	Limited Partner		Preferred Units			Common Units			Common Units			Comprehensive		Noncontrolling
Three Months Ended September 30, 2024	Common Units		Units	Amount		Units	Amount		Units	Amount		Loss, Net		Interests		Total Capital

Balance as of June 30, 2024	$	1,399,889	30,200,000	$	731,690	325,885,279	$	20,690,528	6,460,947	$	458,481	$	(908,943)	$	36,060	$	21,007,816
Conversion of limited partner common units to general partner common units		—	—		—	79,944		5,791	(79,944)		(5,791)		—		—		—
Vesting of restricted common units, net		—	—		—	60,004		—	—		—		—		—		—
Issuance of common units, net of costs		—	—		—	5,213,737		806,202	—		—		—		—		806,202
Issuance of limited partner common units, net		—	—		—	—		—	15,529		—		—		—		—
Units issued under equity plans, net of unit settlement to satisfy tax withholding upon vesting		—	—		—	108,000		4,787	—		—		—		—		4,787
Amortization of share-based compensation		—	—		—	—		23,435	—		—		—		—		23,435
Reclassification of vested share-based awards		—	—		—	—		(1,631)	—		1,631		—		—		—
Adjustment to redeemable partnership units		1,526	—		—	—		(1,526)	—		—		—		—		(1,526)
Distributions		(190)	—		(10,181)	—		(400,659)	—		(7,728)		—		—		(418,568)
Contributions from (distributions to) noncontrolling interests in consolidated entities		—	—		—	—		—	—		—		—		(2,045)		(2,045)
Net income (loss)		(9,898)	—		10,181	—		41,012	—		980		—		(2,141)		50,032
Other comprehensive income (loss)		74,309	—		—	—		3,847	—		—		231,936		5,059		240,842
Balance as of September 30, 2024	$	1,465,636	30,200,000	$	731,690	331,346,964	$	21,171,786	6,396,532	$	447,573	$	(677,007)	$	36,933	$	21,710,975

See accompanying notes to the condensed consolidated financial statements.

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CAPITAL

(unaudited, in thousands, except unit data)


												Accumulated
	Redeemable		General Partner						Limited Partners			Other
	Limited Partner		Preferred Units			Common Units			Common Units			Comprehensive		Noncontrolling
Nine Months Ended September 30, 2024	Common Units		Units	Amount		Units	Amount		Units	Amount		Loss, Net		Interests		Total Capital

Balance as of December 31, 2023	$	1,394,814	30,200,000	$	731,690	311,607,580	$	19,137,237	6,448,987	$	459,356	$	(772,668)	$	45,892	$	19,601,507
Conversion of limited partner common units to general partner common units		—	—		—	290,795		21,044	(290,795)		(21,044)		—		—		—
Vesting of restricted common units, net		—	—		—	165,675		—	—		—		—		—		—
Issuance of common units, net of costs		—	—		—	19,126,996		2,730,178	—		—		—		—		2,730,178
Issuance of limited partner common units, net		—	—		—	—		—	238,340		—		—		—		—
Units issued under equity plans, net of unit settlement to satisfy tax withholding upon vesting		—	—		—	155,918		5,621	—		—		—		—		5,621
Amortization of share-based compensation		—	—		—	—		64,551	—		—		—		—		64,551
Reclassification of vested share-based awards		—	—		—	—		(26,551)	—		26,551		—		—		—
Adjustment to redeemable partnership units		4,252	—		—	—		(4,252)	—		—		—		—		(4,252)
Distributions		(570)	—		(30,543)	—		(1,180,473)	—		(23,488)		—		—		(1,234,504)
Sale of noncontrolling interest in property to DCRU		—	—		—	—		39,960	—		—		—		12,115		52,075
Contributions from (distributions to) noncontrolling interests in consolidated entities		—	—		—	—		—	—		—		—		(21,289)		(21,289)
Net income (loss)		(22,232)	—		30,543	—		382,378	—		8,500		—		3,450		424,871
Other comprehensive income (loss)		89,372	—		—	—		2,093	—		(2,302)		95,661		(3,235)		92,217
Balance as of September 30, 2024	$	1,465,636	30,200,000	$	731,690	331,346,964	$	21,171,786	6,396,532	$	447,573	$	(677,007)	$	36,933	$	21,710,975

See accompanying notes to the condensed consolidated financial statements.

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CAPITAL

(unaudited, in thousands, except unit data)


												Accumulated
	Redeemable		General Partner						Limited Partners			Other
	Limited Partner		Preferred Units			Common Units			Common Units			Comprehensive		Noncontrolling
Three Months Ended September 30, 2023	Common Units		Units	Amount		Units	Amount		Units	Amount		Loss, Net		Interests		Total Capital

Balance as of June 30, 2023	$	1,367,422	30,200,000	$	731,690	299,240,366	$	17,631,250	6,483,064	$	457,107	$	(762,492)	$	47,603	$	18,105,158
Conversion of limited partner common units to general partner common units		—	—		—	15,435		1,151	(15,435)		(1,151)		—		—		—
Vesting of restricted common units, net		—	—		—	66,419		—	—		—		—		—		—
Issuance of common units, net of costs		—	—		—	3,454,148		335,313	—		—		—		—		335,313
Issuance of limited partner common units, net		—	—		—	—		—	11,765		—		—		—		—
Units issued under equity plans, net of unit settlement to satisfy tax withholding upon vesting		—	—		—	69,658		3,551	—		—		—		—		3,551
Amortization of share-based compensation		—	—		—	—		19,230	—		—		—		—		19,230
Reclassification of vested share-based awards		—	—		—	—		(1,490)	—		1,490		—		—		—
Adjustment to redeemable partnership units		1,116	—		—	—		(1,116)	—		—		—		—		(1,116)
Distributions		(190)	—		(10,181)	—		(370,278)	—		(7,823)		—		—		(388,282)
Contributions from noncontrolling interests in consolidated entities		—	—		—	—		—	—		—		—		(64)		(64)
Net income		(2,657)	—		10,181	—		723,437	—		15,925		—		(948)		748,595
Other comprehensive income (loss)		(5,383)	—		—	—		284	—		—		(144,686)		(1,409)		(145,811)
Balance as of September 30, 2023	$	1,360,308	30,200,000	$	731,690	302,846,026	$	18,341,332	6,479,394	$	465,548	$	(907,178)	$	45,182	$	18,676,574

See accompanying notes to the condensed consolidated financial statements.

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CAPITAL

(unaudited, in thousands, except unit data)


												Accumulated
	Redeemable		General Partner						Limited Partners			Other
	Limited Partner		Preferred Units			Common Units			Common Units			Comprehensive		Noncontrolling
Nine Months Ended September 30, 2023	Common Units		Units	Amount		Units	Amount		Units	Amount		Loss, Net		Interests		Total Capital

Balance as of December 31, 2022	$	1,514,679	30,200,000	$	731,690	291,148,222	$	17,447,442	6,288,669	$	436,942	$	(613,423)	$	104,814	$	18,107,465
Conversion of limited partner common units to general partner common units		—	—		—	77,432		5,592	(77,432)		(5,592)		—		—		—
Vesting of restricted common units, net		—	—		—	221,907		—	—		—		—		—		—
Issuance of common units, net of costs		—	—		—	11,274,926		1,077,539	—		—		—		—		1,077,539
Issuance of limited partner common units, net		—	—		—	—		—	268,157		—		—		—		—
Units issued under equity plans, net of unit settlement to satisfy tax withholding upon vesting		—	—		—	123,539		(23)	—		—		—		—		(23)
Amortization of share-based compensation		—	—		—	—		54,785	—		—		—		—		54,785
Reclassification of vested share-based awards		—	—		—	—		(37,567)	—		37,567		—		—		—
Adjustment to redeemable partnership units		3,238	—		—	—		(3,238)	—		—		—		—		(3,238)
Distributions		(570)	—		(30,543)	—		(1,092,430)	—		(23,204)		—		—		(1,146,177)
Contributions from noncontrolling interests in consolidated entities		129	—		—	—		—	—		—		—		4,441		4,441
Deconsolidation of noncontrolling interest in consolidated entities		—	—		—	—		—	—		—		—		(65,358)		(65,358)
Net income		(9,386)	—		30,543	—		889,985	—		19,835		—		(556)		939,807
Other comprehensive income (loss)		(147,782)	—		—	—		(753)	—		—		(293,755)		1,841		(292,667)
Balance as of September 30, 2023	$	1,360,308	30,200,000	$	731,690	302,846,026	$	18,341,332	6,479,394	$	465,548	$	(907,178)	$	45,182	$	18,676,574

See accompanying notes to the condensed consolidated financial statements.

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in thousands)


	Nine Months Ended September 30,
	2024		2023
Cash flows from operating activities:
Net income	$	402,639	$	930,421
Adjustments to reconcile net income to net cash provided by operating activities:
Gain on disposition of properties, net		(450,940)		(900,634)
Provision for impairment		168,303		113,000
Equity in loss (earnings) of unconsolidated entities		83,937		(163)
Distributions from unconsolidated entities		67,325		51,068
Depreciation and amortization		1,316,442		1,274,384
Amortization of share-based compensation		60,675		54,785
Loss on debt extinguishment and modifications		3,706		—
Straight-lined rents and amortization of above and below market leases		(19,950)		(18,597)
Amortization of deferred financing costs and debt discount / premium		24,373		19,705
Other operating activities, net		349		(20,345)
Changes in assets and liabilities:
Increase in accounts receivable and other assets		(228,896)		(343,767)
Increase in accounts payable and other liabilities		64,039		12,618
Net cash provided by operating activities		1,492,002		1,172,475
Cash flows from investing activities:
Improvements to investments in real estate		(2,096,330)		(2,466,462)
Cash paid for business combination / asset acquisitions, net of cash acquired		(317,297)		(45,856)
Investments in and advances to unconsolidated entities		(234,362)		(12,421)
Return of investment from unconsolidated entities		99,864		—
Proceeds from sale of assets		1,246,351		2,470,684
Other investing activities, net		(92,393)		(44,651)
Net cash used in investing activities		(1,394,167)		(98,706)
Cash flows from financing activities:
Proceeds from credit facilities		1,162,180		2,256,973
Payments on credit facilities		(1,192,606)		(2,700,310)
Borrowings on secured / unsecured debt		1,027,507		827,759
Repayments on secured / unsecured debt		(1,616,353)		(3,081)
Capital (distribution to) contributions from noncontrolling interests, net		(21,289)		4,570
General partner contributions		2,730,178		1,077,538
Payments of dividends and distributions		(1,623,062)		(1,510,463)
Other financing activities, net		55,379		(61,261)
Net cash provided by (used in) financing activities		521,934		(108,275)
Net increase in cash, cash equivalents and restricted cash		619,769		965,494
Effect of exchange rate changes on cash, cash equivalents and restricted cash		(74,131)		(43,745)
Cash, cash equivalents and restricted cash at beginning of period		1,636,470		150,696
Cash, cash equivalents and restricted cash at end of period	$	2,182,108	$	1,072,445

See accompanying notes to the condensed consolidated financial statements.

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

General

Organization and Description of Business. Digital Realty Trust, Inc. (the Parent), through its controlling interest in Digital Realty Trust, L.P. (the Operating Partnership or the OP) and the subsidiaries of the OP (collectively, we, our, us or the Company), is a leading global provider of data center (including colocation and interconnection) solutions for customers across a variety of industry verticals ranging from cloud and information technology services, social networking and communications to financial services, manufacturing, energy, healthcare, and consumer products. The OP, a Maryland limited partnership, is the entity through which the Parent, a Maryland corporation, conducts its business of owning, acquiring, developing and operating data centers. The Parent operates as a REIT for U.S. federal income tax purposes.

The Parent’s only material asset is its ownership of partnership interests of the OP. The Parent generally does not conduct business itself, other than acting as the sole general partner of the OP, issuing public securities from time to time and guaranteeing certain unsecured debt of the OP and certain of its subsidiaries and affiliates. The Parent has not issued any debt but guarantees the unsecured debt of the OP and certain of its subsidiaries and affiliates.

The OP holds substantially all the assets of the Company. The OP conducts the operations of the business and has no publicly traded equity. Except for net proceeds from public equity issuances by the Parent, which are generally contributed to the OP in exchange for partnership units, the OP generally generates the capital required by the Company’s business primarily through the OP’s operations, by the OP’s or its affiliates’ direct or indirect incurrence of indebtedness or through the issuance of partnership units.

Accounting Principles and Basis of Presentation. The accompanying unaudited interim condensed consolidated financial statements and accompanying notes (the “Financial Statements”) are prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”) and are presented in our reporting currency, the U.S. dollar. All of the accounts of the Parent, the OP, and the subsidiaries of the OP are included in the accompanying Financial Statements. All material intercompany transactions with consolidated entities have been eliminated. In the opinion of management, the unaudited interim consolidated financial statements reflect all adjustments of a normal recurring nature that are necessary for a fair statement of the results for the interim periods presented. Interim results are not always indicative of results for a full year. The information included in this Form 10-Q should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2023 (“2023 Form 10-K”), as filed with the U.S. Securities and Exchange Commission (“SEC”), our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2024, and June 30, 2024, as filed with the SEC, and other filings with the SEC.

Management Estimates and Assumptions. U.S. GAAP requires us to make estimates and assumptions that affect reported amounts of revenue and expenses during the reporting period, reported amounts for assets and liabilities as of the date of the financial statements, and disclosures of contingent assets and liabilities as of the date of the financial statements. Although we believe the estimates and assumptions we made are reasonable and appropriate, as discussed in the applicable sections throughout the consolidated financial statements, different assumptions and estimates could materially impact our reported results. Actual results and outcomes may differ from our assumptions.

New Accounting Pronouncements. Recently issued accounting pronouncements that have yet to be adopted by the Company are not expected to have a material impact to the condensed consolidated financial statements.

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Investments in Properties

A summary of our investments in properties is below (in thousands):


Property Type	As of September 30, 2024		As of December 31, 2023
Land	$	1,175,270	$	1,087,278
Acquired ground lease		92		91
Buildings and improvements		26,725,546		25,388,788
Tenant improvements		907,862		830,211
		28,808,770		27,306,368
Accumulated depreciation and amortization		(8,777,002)		(7,823,685)
Investments in operating properties, net		20,031,768		19,482,683
Construction in progress and space held for development		5,175,054		4,635,215
Land held for future development		23,392		118,190
Investments in properties, net	$	25,230,214	$	24,236,088

Acquisitions

In January 2024, we acquired a 16-acre site in Paris for $80 million. Prior to the acquisition, we leased the land, which consisted of two completed data centers and two data centers under construction. As a result of the land acquisition, we derecognized the right-of-use assets and lease liabilities of $145 million and $150 million, respectively.

In July 2024, the Company acquired two data centers located in the Slough Trading Estate for $200 million. The newly acquired campus features two individual data centers with a combined capacity of 15 megawatts (MW).

Dispositions

On January 11, 2024, we formed a joint venture with Blackstone Inc. to develop four hyperscale data center campuses across Frankfurt, Paris and Northern Virginia. The campuses are planned to support the construction of 10 data centers with approximately 500 megawatts of potential IT load capacity. The first phase of the joint venture closed on hyperscale data center campuses in Paris and Northern Virginia, while the second phase is scheduled to close in the fourth quarter of 2024, subject to obtaining the required approvals. We received approximately $231 million of net proceeds from the contribution of our data centers to the first phase of the joint venture and retained a 20% interest in the joint venture. As a result of transferring control, we derecognized the data centers and recognized a loss on disposition of approximately $0.3 million.

In January 2024, we closed on the sale of our interest in four data centers to Brookfield Infrastructure Partners L.P., or Brookfield, for approximately $271 million. Two of the data centers were consolidated by us; while two of the data centers were owned by Digital Core REIT (see Note 5. “Investments in Unconsolidated Entities”). The sale was completed subsequent to Brookfield’s November 2023 acquisition of one of our customers, Cyxtera Technologies. The acquisition was part of Cyxtera’s plan of reorganization under its Chapter 11 bankruptcy proceedings. In conjunction with the sale, we bought out Cyxtera’s leases in three data centers located in Singapore and Frankfurt for approximately $57 million. In addition, Brookfield assumed the leases on three facilities previously leased to Cyxtera and amended the leases on three additional data centers in North America, accelerating the expiration date to September 2024. As a result of the sale, we recognized a total gain on disposition of approximately $203.1 million, of which $194.2 million is included within Gain on disposition of properties, net and $8.9 million is included within Equity in (loss) earnings of unconsolidated entities on our condensed consolidated income statements.

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

On March 1, 2024, we formed a joint venture with Mitsubishi Corporation, or Mitsubishi, to support the development of two data centers in the Dallas metro area. The facilities were 100% pre-leased prior to construction. We contributed the two data center buildings at a contribution value of approximately $261 million. We received approximately $153 million of gross proceeds from the contribution of our data centers to the joint venture and retained a 35% interest in the joint venture. Mitsubishi paid such cash in exchange for a 65% interest in the joint venture. As a result of transferring control, we derecognized the data centers and recognized a gain on disposition of approximately $7.1 million.

On April 16, 2024, we expanded our existing joint venture with GI Partners with the sale to GI Partners of a 75% interest in a third facility on the same hyperscale data center campus in Chicago. We contributed the data center at a value of approximately $453 million. We received approximately $386 million of net proceeds from the contribution of our data center to the joint venture and the associated financing and retained a 25% interest in the joint venture. As a result of transferring control, we derecognized the data center and recognized a gain on disposition of approximately $172 million.

During our second quarter 2024 impairment review, we determined that certain non-core properties in secondary U.S. markets had carrying amounts that may not be fully recoverable as we determined that we no longer intend to hold these properties long-term. Accordingly, the recorded amounts were reduced to reflect management’s estimate of fair value based on sales of similar properties and ongoing negotiations with third parties. During the nine months ended September 30, 2024, we recorded a provision for impairment on real estate investments of $168.3 million.

Leases

Lessor Accounting

We generate most of our revenue by leasing operating properties to customers under operating lease agreements. We recognize the total minimum lease payments provided for under the leases on a straight-line basis over the lease term if we determine that it is probable that substantially all of the lease payments will be collected over the lease term. Otherwise, rental revenue is recognized based on the amount contractually due. Generally, under the terms of our leases, some of our rental expenses, including common area maintenance, real estate taxes and insurance, are recovered from our customers. We record amounts reimbursed by customers in the period the applicable expenses are incurred, which is generally ratably throughout the term of the lease. Reimbursements are recognized in rental and other services revenue in the condensed consolidated income statements as we are the primary obligor with respect to purchasing and selecting goods and services from third-party vendors and bearing the associated credit risk. Our largest customer’s total revenue approximates 11% of our total revenue base. No other individual customer makes up more than 6% of our total revenue.

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 September 30, 2024, certain of our data centers, primarily in Europe and Singapore, are subject to ground leases. As of September 30, 2024, the termination dates of these ground leases generally range from 2038 to 2073. In addition, our corporate headquarters along with several regional office locations are subject to leases with termination dates ranging from 2024 to 2036.

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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. Rent expense related to operating leases included in rental property operating and maintenance expense in the condensed consolidated income statements amounted to approximately $39.2 million and $37.4 million for the three months ended September 30, 2024 and 2023, respectively, and approximately $112.6 million and $114.1 million for the nine months ended September 30, 2024 and 2023, respectively.

Receivables

Accounts and Other Receivables, Net

Accounts and Other Receivables, net is primarily comprised of contractual rents and other lease-related obligations currently due from customers. These amounts (net of an allowance for estimated uncollectible amounts) are shown in the subsequent table as Accounts receivable – trade, net. Other receivables shown separately from Accounts receivable – trade, net consist primarily of amounts that have not yet been billed to customers, such as for utility reimbursements and installation fees.


	Balance as of		Balance as of
(Amounts in thousands):	September 30, 2024		December 31, 2023
Accounts receivable – trade	$	686,058	$	694,252
Allowance for doubtful accounts		(56,353)		(41,204)
Accounts receivable – trade, net		629,705		653,048

Accounts receivable – customer recoveries		204,014		233,499
Value-added tax receivables		187,929		257,911
Accounts receivable – installation fees		127,355		65,203
Other receivables		125,457		68,449
Accounts and other receivables, net	$	1,274,460	$	1,278,110

Deferred Rent, Net

Deferred rent, net represents rental income that has been recognized as revenue under ASC 842, but which is not yet due from customers under their existing rental agreements. The Company recognizes an allowance against deferred rent receivables to the extent it becomes no longer probable that a customer or group of customers will be able to make substantially all of their required cash rental payments over the entirety of their respective lease terms.


	Balance as of		Balance as of
(Amounts in thousands):	September 30, 2024		December 31, 2023
Deferred rent receivables	$	648,930	$	657,009
Allowance for deferred rent receivables		(7,152)		(32,582)
Deferred rent, net	$	641,778	$	624,427

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Investments in Unconsolidated Entities

A summary of the Company’s investments in unconsolidated entities accounted for under the equity method of accounting is shown below (in thousands):


	Balance as of		Balance as of
		September 30, 2024		December 31, 2023
Americas (1)(5)	$	1,425,199	$	1,363,226
APAC (2)		613,748		569,996
EMEA (3)		113,975		28,334
Global (4)		303,526		334,333
Total	$	2,456,448	$	2,295,889

Includes the following unconsolidated entities along with our ownership percentage:

(1)	Ascenty (51%), Blackstone (20%), Clise (50%), GI Partners (20%), Mapletree (20%), Menlo (20%), Mitsubishi (35%), Realty Income (20%), TPG Real Estate (20%), and Walsh (85%).

(2)	Digital Connexion (33%), Lumen (50%), and MC Digital Realty (50%).

(3)	Blackstone (20%), Medallion (60%), and Mivne (50%).

(4)	Digital Core REIT (38%).

(5)	In May 2024, we liquidated our 17% interest in Colovore, generating gross proceeds of approximately $35 million. We realized a gain of approximately $27 million on our original investments, made in 2015 and 2017. The gain is included within Other income, net on our condensed consolidated income statements.

Generally, we serve as the managing member responsible for operations in the ordinary course of business of the joint ventures. We perform the day-to-day accounting and property management functions for the joint ventures and, as such, will earn management fees. However, certain approval rights are granted through the terms of the joint venture agreements and require unanimous consent of both members with respect to any major decisions. Generally, major decisions are defined to include the annual plan which sets out joint venture and property level budgets, including lease revenues, operating expenses, and capital expenditures. As such, we concluded we do not own a controlling interest and accounted for our interest in the joint ventures under the equity method of accounting.

GI Partners Joint Venture – On July 13, 2023, we formed a joint venture with GI Partners, and GI Partners acquired a 65% interest in two stabilized hyperscale data center buildings in the Chicago metro area that we contributed. We retained a 35% interest in the joint venture. As a result of transferring control, we derecognized the data centers. In addition, GI Partners had a call option to increase their ownership interest in the joint venture from 65% to 80%. The call option top-up election notice was delivered to the Company on December 21, 2023. On January 12, 2024, GI Partners made an additional cash capital contribution, pursuant to the exercise of such call option, in the amount of $68 million, resulting in such additional 15% ownership in the joint venture. Currently, GI Partners has an 80% interest in the joint venture, and we have retained a 20% interest. We also granted GI Partners an option to purchase an interest in the third facility on the same hyperscale data center campus in Chicago. On April 16, 2024, we expanded our existing joint venture with GI Partners with the sale to GI Partners of a 75% interest in this third facility, see Note 2. “Investments in Properties”.

TPG Real Estate Joint Venture – On July 25, 2023, we formed a joint venture with TPG Real Estate, and TPG Real Estate acquired an 80% interest in three stabilized hyperscale data center buildings in Northern Virginia that we contributed. We retained a 20% interest in the joint venture. As a result of transferring control, we derecognized the data centers.

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Realty Income Joint Venture – On November 10, 2023, we formed a joint venture with Realty Income to support the development of two data centers in Northern Virginia. We retained a 20% interest in the joint venture. Realty Income contributed such cash to the joint venture in exchange for an 80% interest in the joint venture. Each partner funded its pro rata share of the remaining estimated development cost for the first phase of the project, which was completed in mid-2024.

Blackstone Joint Venture - On January 11, 2024, we formed a joint venture with Blackstone Inc. to develop four hyperscale data center campuses across Frankfurt, Paris and Northern Virginia. The campuses are planned to support the construction of 10 data centers with approximately 500 megawatts of potential IT load capacity. The first phase of the joint venture closed on hyperscale data center campuses in Paris and Northern Virginia, while the second phase is scheduled to close in the fourth quarter of 2024, subject to obtaining the required approvals. We retained a 20% interest in the joint venture. Each partner funded its pro rata share of the remaining $3.0 billion estimated development cost for the first phase of the joint venture, which is slated for completion in various stages, contingent on customer demand, which began in the first quarter of 2024.

Mitsubishi Joint Venture - On March 1, 2024, we formed a joint venture with Mitsubishi Corporation, or Mitsubishi, to support the development of two data centers in the Dallas metro area. We retained a 35% interest in the joint venture. Each partner funded its pro rata share of the remaining $140 million estimated development cost for the first phase of the project, of which one project has been completed in June 2024 and another is slated for completion in late 2024.

DCREIT – Digital Core REIT is a standalone real estate investment trust formed under Singapore law, which is publicly traded on the Singapore Exchange under the ticker symbol “DCRU”. Digital Core REIT owns 10 operating data center properties. The Company’s ownership interest in the units of DCRU, as well as its ownership interest in the operating properties of DCRU are collectively referred to as the Company’s investment in DCREIT.

As of September 30, 2024, the Company held 32% of the outstanding DCRU units and separately owned a 10% direct retained interest in the underlying North American operating properties. DCREIT has a 49.9% interest in a consolidated asset in Frankfurt which we account for as noncontrolling interest.

The Company’s 32% interest in DCRU consisted of 414 million units and 406 million units as of September 30, 2024 and December 31, 2023, respectively. Based on the closing price per unit of $0.62 and $0.65 as of September 30, 2024 and December 31, 2023, respectively, the fair value of the units the Company owned in DCRU was approximately $257 million and $264 million as of September 30, 2024 and December 31, 2023, respectively.

Pursuant to contractual agreements with DCRU and its operating properties, the Company will earn fees for asset and property management services as well as fees for aiding in future acquisition, disposition and development activities. Certain of these fees are payable to the Company in the form of additional units in DCRU or in cash. The Company earned fees pursuant to these contractual agreements of approximately $0.8 million and $2.4 million for the three months ended September 30, 2024 and 2023, respectively, and $6.8 million and $7.3 million for the nine months ended September 30, 2024 and 2023, respectively, which is recorded as fee income and other on the condensed consolidated income statement.

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

On April 19, 2024, we completed the sale of an additional 24.9% interest in a data center facility in Frankfurt, Germany to DCREIT for total consideration of approximately $126 million, and DCREIT now has a 49.9% interest in the Frankfurt data center. Because the Company still controls this asset, no gain or loss was recorded on this 49.9% interest. In connection with this transaction, DCREIT loaned the consolidated subsidiary that owns the data center approximately $80 million. As of September 30, 2024, DCREIT has loaned $160.4 million, which is secured by the Frankfurt data center and is recorded in our condensed consolidated balance sheets within Accounts payable and other accrued liabilities.

Ascenty – The Company’s ownership interest in Ascenty includes an approximate 2% interest held by one of the Company’s noncontrolling interest holders. This 2% interest had a carrying value of approximately $12 million and $18 million as of September 30, 2024 and December 31, 2023, respectively. Ascenty is a variable interest entity (“VIE”) and the Company’s maximum exposure to loss related to this VIE is limited to our equity investment in the entity.

Debt – The debt of our unconsolidated entities generally is non-recourse to us, except for customary exceptions pertaining to matters such as intentional misuse of funds, environmental conditions, and material misrepresentations.

Goodwill

Goodwill represents the excess of the purchase price over the fair value of net tangible and intangible assets acquired in a business combination. Changes in the value of goodwill at September 30, 2024 as compared to December 31, 2023 were primarily driven by changes in exchange rates associated with goodwill balances denominated in foreign currencies.

Acquired Intangible Assets and Liabilities

The following table summarizes our acquired intangible assets and liabilities:


	Balance as of
	September 30, 2024						December 31, 2023
(Amounts in thousands)		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Customer relationship value	$	2,926,388	$	(1,068,137)	$	1,858,251	$	2,926,808	$	(952,943)	$	1,973,865
Acquired in-place lease value		1,080,649		(871,818)		208,831		1,089,743		(859,167)		230,576
Other		126,624		(37,654)		88,970		108,744		(33,483)		75,261
Acquired above-market leases		136,757		(131,780)		4,977		153,205		(150,344)		2,861
Acquired below-market leases		(266,513)		225,398		(41,115)		(273,951)		226,840		(47,111)

Amortization of customer relationship value, acquired in-place lease value and other intangibles (a component of depreciation and amortization expense) was approximately $61.5 million and $59.8 million for the three months ended September 30, 2024 and 2023, respectively, and approximately $178.0 million and $194.4 million for the nine months ended September 30, 2024 and 2023, respectively.

Amortization of acquired below-market leases, net of acquired above-market leases, resulted in an increase in rental and other services revenue of $1.2 million and $1.6 million for the three months ended September 30, 2024 and 2023, respectively, and approximately $4.0 million and $5.1 million for the nine months ended September 30, 2024 and 2023, respectively.

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Estimated annual amortization for each of the five succeeding years and thereafter, commencing October 1, 2024 is as follows:


(Amounts in thousands)		Customer relationship value		Acquired in-place lease value		Other (1)		Acquired above-market leases		Acquired below-market leases
2024	$	45,679	$	15,486	$	743	$	310	$	(1,568)
2025		178,648		56,363		2,970		1,242		(6,242)
2026		178,011		55,202		2,970		1,124		(5,441)
2027		177,619		45,304		2,970		988		(4,796)
2028		155,174		24,631		2,989		986		(4,591)
Thereafter		1,123,120		11,845		7,330		327		(18,477)
Total	$	1,858,251	$	208,831	$	19,972	$	4,977	$	(41,115)

(1)	Excludes power grid rights in the amount of approximately $69.0 million that are currently not being amortized. Amortization of these assets will begin once the data centers associated with the power grid rights are placed into service.

Debt of the Operating Partnership

All debt is currently held by the OP or its consolidated subsidiaries, and the Parent is the guarantor or co-guarantor of the Global Revolving Credit Facility and the Yen Revolving Credit Facility (together, referred to as the “Global Revolving Credit Facilities”), the unsecured term loans and the unsecured senior notes. A summary of outstanding indebtedness is as follows (in thousands):


	September 30, 2024				December 31, 2023
	Weighted-				Weighted-
	average		Amount		average		Amount
	interest rate		Outstanding		interest rate		Outstanding
Global Revolving Credit Facilities	3.76	%	$	1,814,927	4.33	%	$	1,825,228
Unsecured term loans	4.29	%		917,563	4.76	%		1,567,925
Unsecured senior notes	2.33	%		13,610,252	2.24	%		13,507,427
Secured and other debt	8.48	%		766,304	8.07	%		637,072
Total	2.86	%	$	17,109,046	2.89	%	$	17,537,652

The weighted-average interest rates shown represent interest rates at the end of the periods for the debt outstanding and include the impact of designated interest rate swaps, which effectively fix the interest rates on certain variable rate debt, along with cross-currency interest rate swaps, which effectively convert a portion of our U.S. dollar-denominated fixed-rate debt to foreign currency-denominated fixed-rate debt in order to hedge the currency exposure associated with our net investment in foreign subsidiaries.

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

We primarily borrow in the functional currencies of the countries where we invest. Included in the outstanding balances were borrowings denominated in the following currencies (in thousands, U.S. dollars):


	September 30, 2024				December 31, 2023
	Amount				Amount
Denomination of Draw	Outstanding		% of Total		Outstanding		% of Total
U.S. dollar ($)	$	2,550,614	14.9	%	$	2,784,875	15.9	%
British pound sterling (£)		1,738,750	10.2	%		1,973,305	11.2	%
Euro (€)		10,748,658	62.8	%		10,835,878	61.8	%
Other		2,071,024	12.1	%		1,943,594	11.1	%
Total	$	17,109,046			$	17,537,652

The table below summarizes debt maturities and principal payments as of September 30, 2024 (in thousands):


	Global Revolving		Unsecured		Unsecured		Secured and
	Credit Facilities (1)(2)		Term Loans(3)(4)(5)		Senior Notes		Other Debt		Total Debt
2024	$	—	$	—	$	—	$	140	$	140
2025		—		917,563		1,258,775		853		2,177,191
2026		—		—		1,522,211		127,129		1,649,340
2027		—		—		1,177,381		242,371		1,419,752
2028		—		—		2,106,750		378,106		2,484,856
Thereafter		1,814,927		—		7,545,135		17,705		9,377,767
Subtotal	$	1,814,927	$	917,563	$	13,610,252	$	766,304	$	17,109,046
Unamortized net discounts		—		—		(30,652)		(3,992)		(34,644)
Unamortized deferred financing costs		(28,006)		(3,830)		(51,539)		(4,481)		(87,856)
Total	$	1,786,921	$	913,733	$	13,528,061	$	757,831	$	16,986,546

(1)	Includes amounts outstanding for the Global Revolving Credit Facilities.

(2)	The Global Revolving Credit Facilities are subject to two six-month extension options exercisable by us; provided that the Operating Partnership must pay a 0.0625% extension fee based on each lender’s revolving commitments then outstanding (whether funded or unfunded).

(3)

A €375.0 million senior unsecured term loan facility is subject to two maturity extension options of one year each, provided that the Operating Partnership must pay a 0.125% extension fee based on the then-outstanding principal amount of such facility commitments then outstanding. Our U.S. term loan facility of $500 million currently is subject to one twelve-month extension, provided that the Operating Partnership must pay a 0.1875% extension fee based on the then-outstanding principal amount of the term loans.

(4)	On January 9, 2024, we paid down $240 million on the U.S. term loan facility, leaving $500 million outstanding. The paydown resulted in an early extinguishment charge of approximately $1.1 million during the nine months ended September 30, 2024.

(5)	On September 13, 2024, we paid down €375 million on the Euro Term Loan Facilities, leaving €375 million outstanding. The paydown resulted in an early extinguishment charge of approximately $1.6 million during the nine months ended September 30, 2024.

On September 24, 2024, we refinanced our Global Revolving Credit Facilities. Below are key terms for our Global Revolving Credit Facility and Yen Revolving Credit Facility.

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Global Revolving Credit Facility

We have a Global Revolving Credit Facility under which we may draw up to $4.2 billion equivalent on a revolving basis (subject to currency fluctuations). The Global Revolving Credit Facility can be drawn in Australian dollars, British pounds sterling, Canadian dollars, Euros, Hong Kong dollars, Indonesian rupiah, Japanese yen, Korean won, Singapore dollars, Swiss francs and U.S. dollars (with the ability to add other currencies in the future).

We have the ability to increase the size of the Global Revolving Credit Facility by up to $1.8 billion, subject to the receipt of lender commitments and the satisfaction of certain customary conditions precedent. Other key terms of the Global Revolving Credit Facility are as follows:

	●	Maturity date: January 24, 2029, with two six-month extension options available. 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 Facilities.

	●	Interest rate: the applicable index plus a margin which is based on the credit ratings of our long-term debt and is currently 85 basis points (subject to a sustainability-linked pricing component).

	●	Annual facility fee: based on the total commitment amount of the facility and the credit ratings of our long-term debt is currently 20 basis points (subject to a sustainability-linked pricing component) and is payable quarterly.

	●	Sustainability-linked pricing component: pricing can increase by up to 5 basis points or decrease by up to 5 basis points depending on whether or not the OP or its subsidiaries meet certain sustainability performance targets.

Yen Revolving Credit Facility

In addition to the Global Revolving Credit Facility, we have a revolving credit facility that provides for borrowings in Japanese Yen of up to ¥42.5 billion (approximately $296.8 million based on the exchange rate on September 24, 2024), hereafter referred to as the “Yen Revolving Credit Facility”). We have the ability from time to time to increase the size of the Yen Revolving Credit Facility to up to ¥102.5 billion, subject to receipt of lender commitments and other conditions precedent. Other key terms of the Yen Revolving Credit Facility are as follows:

	●	Maturity date: January 24, 2029, with two six-month extension options available. 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 Facilities.

	●	Interest rate: the applicable index plus a margin which is based on the credit ratings of our long-term debt and is currently 50 basis points (subject to a sustainability-linked pricing component).

	●	Quarterly unused commitment fee: currently is 10 basis points (subject to a sustainability-linked pricing component), calculated using the average daily unused revolving credit commitment and is based on the credit ratings of our long-term debt.

	●	Sustainability-linked pricing component: pricing can increase by up to 5 basis points or decrease by up to 5 basis points depending on whether or not the OP or its subsidiaries meet certain sustainability performance targets.

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Unsecured Senior Notes

The following table provides details of our unsecured senior notes (balances in thousands):


	Aggregate Principal Amount at Issuance					Balance as of
	Borrowing Currency		USD		Maturity Date	September 30, 2024		December 31, 2023
2.625% notes due 2024(1)	€	600,000	$	677,040	Apr 15, 2024	$	—	$	662,340
2.750% notes due 2024(2)	£	250,000	$	324,925	Jul 19, 2024		—		318,275
4.250% notes due 2025	£	400,000	$	634,480	Jan 17, 2025		535,000		509,240
0.625% notes due 2025	€	650,000	$	720,980	Jul 15, 2025		723,775		717,535
2.500% notes due 2026	€	1,075,000	$	1,224,640	Jan 16, 2026		1,197,013		1,186,693
0.200% notes due 2026	CHF	275,000	$	298,404	Dec 15, 2026		325,198		326,826
1.700% notes due 2027	CHF	150,000	$	162,465	Mar 30, 2027		177,381		178,269
3.700% notes due 2027(3)	$	1,000,000	$	1,000,000	Aug 15, 2027		1,000,000		1,000,000
5.550% notes due 2028(3)	$	900,000	$	900,000	Jan 15, 2028		900,000		900,000
1.125% notes due 2028	€	500,000	$	548,550	Apr 09, 2028		556,750		551,950
4.450% notes due 2028	$	650,000	$	650,000	Jul 15, 2028		650,000		650,000
0.550% notes due 2029	CHF	270,000	$	292,478	Apr 16, 2029		319,285		320,884
3.600% notes due 2029	$	900,000	$	900,000	Jul 01, 2029		900,000		900,000
3.300% notes due 2029	£	350,000	$	454,895	Jul 19, 2029		468,125		445,585
1.500% notes due 2030	€	750,000	$	831,900	Mar 15, 2030		835,125		827,925
3.750% notes due 2030	£	550,000	$	719,825	Oct 17, 2030		735,625		700,205
1.250% notes due 2031	€	500,000	$	560,950	Feb 01, 2031		556,750		551,950
0.625% notes due 2031	€	1,000,000	$	1,220,700	Jul 15, 2031		1,113,500		1,103,900
1.000% notes due 2032	€	750,000	$	874,500	Jan 15, 2032		835,125		827,925
1.375% notes due 2032	€	750,000	$	849,375	Jul 18, 2032		835,125		827,925
3.875% notes due 2033	€	850,000	$	941,375	Sep 13, 2033		946,475		—
						$	13,610,252	$	13,507,427
Unamortized discounts, net of premiums							(30,652)		(33,324)
Deferred financing costs, net							(51,539)		(51,761)
Total unsecured senior notes, net of discount and deferred financing costs						$	13,528,061	$	13,422,342

(1)	Paid at maturity on April 15, 2024.

(2)	Paid at maturity on July 19, 2024.

(3)	Subject to cross-currency swaps.

Restrictive Covenants in Unsecured Senior Notes

The indentures governing our 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. The covenants also require us to maintain total unencumbered assets of not less than 150% of the aggregate principal amount of unsecured debt. At September 30, 2024, we were in compliance with each of these financial covenants.

Issuance of Unsecured Senior Notes

On September 13, 2024, Digital Dutch Finco B.V., an indirect wholly owned finance subsidiary of the Operating Partnership, issued and sold €850 million aggregate principal amount of 3.875% Guaranteed Notes due 2033 (the “2033 Notes”). Net proceeds from the offering were approximately €843 million (approximately $933 million based on the exchange rate on September 13, 2024) after deducting managers’ discounts and estimated offering expenses.

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

9. Earnings per Common Share or Unit

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

Digital Realty Trust, Inc. Earnings per Common Share


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Numerator:
Net income available to common stockholders	$	41,012	$	723,437	$	382,378	$	889,985
Loss attributable to redeemable noncontrolling interest (1)		(9,918)		(3,032)		(22,432)		(9,851)
Net income available to common stockholders - diluted EPS		31,094		720,405		359,946		880,134

Denominator:
Weighted average shares outstanding—basic		327,977		301,827		319,965		296,184
Potentially dilutive common shares:
Unvested incentive units		77		97		67		78
Unvested restricted stock		69		43		39		3
Forward equity offering		—		209		—		253
Market performance-based awards		228		166		285		90
Redeemable noncontrolling interest shares (1)		7,898		8,999		8,285		10,127
Weighted average shares outstanding—diluted		336,249		311,341		328,641		306,735
Income per share:
Basic	$	0.13	$	2.40	$	1.20	$	3.00
Diluted	$	0.09	$	2.31	$	1.10	$	2.87

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Digital Realty Trust, L.P. Earnings per Unit


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Numerator:
Net income available to common unitholders	$	42,012	$	739,737	$	391,078	$	910,285
Loss attributable to redeemable noncontrolling interest (1)		(9,918)		(3,032)		(22,432)		(9,851)
Net income available to common unitholders - diluted EPS		32,094		736,705		368,646		900,434

Denominator:
Weighted average units outstanding—basic		334,103		308,024		326,154		302,316
Potentially dilutive common units:
Unvested incentive units		77		97		67		78
Unvested restricted units		69		43		39		3
Forward equity offering		—		209		—		253
Market performance-based awards		228		166		285		90
Redeemable noncontrolling interest shares (1)		7,898		8,999		8,285		10,127
Weighted average units outstanding—diluted		342,375		317,538		334,830		312,867
Income per unit:
Basic	$	0.13	$	2.40	$	1.20	$	3.01
Diluted	$	0.09	$	2.32	$	1.10	$	2.88

(1)

As part of the acquisition of Teraco in 2022, certain of Teraco's minority indirect shareholders (“Rollover Shareholders”) have the right to put their shares in an upstream parent company of Teraco (“Remaining Interest”) to the Company in exchange for cash or the equivalent value of shares of the Company common stock, or a combination thereof. Under U.S. GAAP, diluted earnings per share must be reflected in a manner that assumes such put right was exercised at the beginning of the respective periods and settled entirely in shares. The amounts shown represent the redemption value of the Remaining Interest of Teraco divided by Digital Realty Trust, Inc.’s average share price for the respective periods. The put right is exercisable by the Rollover Shareholders for a two-year period commencing on February 1, 2026.

The below table shows the securities that would be antidilutive or not dilutive to the calculation of earnings per share and unit. Common units of the Operating Partnership not owned by Digital Realty Trust, Inc. were excluded only from the calculation of earnings per share as they are not applicable to the calculation of earnings per unit. All other securities shown below were excluded from the calculation of both earnings per share and earnings per unit (in thousands).


	Three Months Ended September 30,		Nine Months Ended September 30,
	2024	2023	2024	2023
Shares subject to Forward Equity Offering	—	3,454	—	3,454
Weighted average of Operating Partnership common units not owned by Digital Realty Trust, Inc.	6,125	6,197	6,189	6,132
Potentially dilutive Series J Cumulative Redeemable Preferred Stock	1,264	1,647	1,355	1,891
Potentially dilutive Series K Cumulative Redeemable Preferred Stock	1,329	1,732	1,425	1,988
Potentially dilutive Series L Cumulative Redeemable Preferred Stock	2,180	2,841	2,337	3,261
Total	10,898	15,871	11,306	16,726

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Equity and Capital

Equity Distribution Agreement

Digital Realty Trust, Inc. and Digital Realty Trust, L.P. were parties to an ATM Equity OfferingSM Sales Agreement dated August 4, 2023 (the “2023 Sales Agreement”). Pursuant to the 2023 Sales Agreement, Digital Realty Trust, Inc. could issue and sell common stock having an aggregate offering price of up to $1.5 billion through various named agents from time to time. From January 1, 2024 through February 23, 2024, Digital Realty Trust, Inc. generated net proceeds of approximately $99 million from the issuance of approximately 0.6 million common shares under the 2023 Sales Agreement at an average price of $133.43 per share after payment of approximately $0.6 million of commissions to the agents.

The 2023 Sales Agreement was amended on February 23, 2024 (the “2024 Sales Agreement Amendment”). At the time of the amendment, $258.3 million remained unsold under the 2023 Sales Agreement. Pursuant to the 2024 Sales Agreement Amendment, Digital Realty Trust, Inc. can issue and sell common stock having an aggregate offering price of up to $2.0 billion through various named agents from time to time. During the nine months ended September 30, 2024, Digital Realty Trust, Inc. generated net proceeds of approximately $983 million from the issuance of approximately 6.4 million common shares under the 2024 Sales Agreement Amendment at an average price of $154.84 per share before payment of approximately $9.9 million of commissions to the agents. Subsequent to September 30, 2024, Digital Realty Trust, Inc. generated net proceeds of approximately $62 million from the issuance of approximately 0.4 million common shares under the 2024 Sales Agreement Amendment at an average price of $160.81 per share after payment of approximately $0.6 million of commissions to the agents. As of October 30, 2024, approximately $0.9 billion remains available for future sales under the 2024 Sales Agreement Amendment.

Equity Offering

On May 7, 2024, Digital Realty Trust, Inc. and Digital Realty Trust, L.P. entered into an underwriting agreement with BofA Securities, Inc., Citigroup Global Markets Inc. and J.P. Morgan Securities LLC, as representatives of the several underwriters relating to the sale of up to approximately 12.1 million shares of common stock (including approximately 1.6 million shares that the underwriters had the option to purchase, and which option was exercised in full on May 8, 2024), at a purchase price to the underwriters of $136.66 per share. The offering closed on May 10, 2024, and we received net proceeds of approximately $1.7 billion.

Noncontrolling Interests in Operating Partnership

Noncontrolling interests in the Operating Partnership relate to the proportion of entities consolidated by the Company that are owned by third parties. The following table shows the ownership interest in the Operating Partnership as of September 30, 2024 and December 31, 2023 (in thousands):


	September 30, 2024			December 31, 2023
	Number of	Percentage of		Number of	Percentage of
(Units in thousands)	units	total		units	total
Digital Realty Trust, Inc.	331,347	98.1	%	311,608	98.0	%
Noncontrolling interests consist of:
Common units held by third parties	4,254	1.3	%	4,343	1.3	%
Incentive units held by employees and directors (see Note 12. ''Incentive Plans'')	2,143	0.6	%	2,106	0.7	%
	337,744	100.0	%	318,057	100.0	%

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Limited partners have the right to require the Operating Partnership to redeem all or a portion 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 its 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. The common units and incentive units of the Operating Partnership are classified within equity, except for certain common units issued to certain former DuPont Fabros Technology, L.P. unitholders in the Company’s acquisition of DuPont Fabros Technology, Inc., which are subject to certain restrictions and, accordingly, are not presented as permanent equity in the condensed balance sheet.

The redemption value of the noncontrolling Operating Partnership common units and the vested incentive units was approximately $1,004.4 million and $834.1 million based on the closing market price of Digital Realty Trust, Inc. common stock on September 30, 2024 and December 31, 2023, respectively.

The following table shows activity for noncontrolling interests in the Operating Partnership for the nine months ended September 30, 2024 (in thousands):


(Units in thousands)	Common Units	Incentive Units	Total
As of December 31, 2023	4,343	2,106	6,449
Conversion of incentive units held by employees and directors for shares of Digital Realty Trust, Inc. common stock (1)	(89)	(201)	(290)
Incentive units issued upon achievement of market performance condition	—	88	88
Grant of incentive units to employees and directors	—	154	154
Cancellation / forfeitures of incentive units held by employees and directors	—	(4)	(4)
As of September 30, 2024	4,254	2,143	6,397

(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.

Dividends and Distributions

Digital Realty Trust, Inc. Dividends

We have declared and paid the following dividends on our common and preferred stock for the nine months ended September 30, 2024 (in thousands, except per share data):


		Series J		Series K		Series L
		Preferred		Preferred		Preferred		Common
Date dividend declared	Dividend payment date	Stock		Stock		Stock		Stock
February 28, 2024	March 28, 2024	$	2,625	$	3,071	$	4,485	$	382,208
May 8, 2024	June 28, 2024		2,625		3,071		4,485		397,429
August 7, 2024	September 30, 2024		2,625		3,071		4,485		400,659
		$	7,875	$	9,213	$	13,455	$	1,180,296
Annual rate of dividend per share		$	1.31250	$	1.46250	$	1.30000	$	4.88000

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Digital Realty Trust, L.P. Distributions

All distributions on the Operating Partnership’s units are at the discretion of Digital Realty Trust, Inc.’s Board of Directors. The table below shows the distributions declared and paid by the Operating Partnership on its common and preferred units for the nine months ended September 30, 2024 (in thousands, except for per unit data):


		Series J		Series K		Series L
		Preferred		Preferred		Preferred		Common
Date distribution declared	Distribution payment date	Units		Units		Units		Units
February 28, 2024	March 28, 2024	$	2,625	$	3,071	$	4,485	$	390,356
May 8, 2024	June 28, 2024		2,625		3,071		4,485		405,421
August 7, 2024	September 30, 2024		2,625		3,071		4,485		408,577
		$	7,875	$	9,213	$	13,455	$	1,204,354
Annual rate of distribution per unit		$	1.31250	$	1.46250	$	1.30000	$	4.88000

Accumulated Other Comprehensive Income (Loss), Net

The accumulated balances for each item within accumulated other comprehensive income (loss) are shown below (in thousands) for Digital Realty Trust, Inc. and separately for Digital Realty Trust, L.P.:

Digital Realty Trust, Inc.


	Foreign currency		Increase (decrease) in		Accumulated other
	translation		fair value of derivatives,		comprehensive
	adjustments		net of reclassification		income (loss), net
Balance as of December 31, 2023	$	(638,583)	$	(112,810)	$	(751,393)
Net current period change		94,952		(924)		94,028
Balance as of September 30, 2024	$	(543,631)	$	(113,734)	$	(657,365)

Digital Realty Trust, L.P.


	Foreign currency		Increase (decrease) in		Accumulated other
	translation		fair value of derivatives,		comprehensive
	adjustments		net of reclassification		income (loss)
Balance as of December 31, 2023	$	(656,063)	$	(116,605)	$	(772,668)
Net current period change		96,519		(858)		95,661
Balance as of September 30, 2024	$	(559,544)	$	(117,463)	$	(677,007)

Incentive Plans

2014 Incentive Award Plan

The Company provides incentive awards in the form of common stock or awards convertible into common stock pursuant to the Digital Realty Trust, Inc., Digital Services, Inc. and Digital Realty Trust, L.P. 2014 Incentive Award Plan, as amended (the “Incentive Plan”). The major categories of awards that have been issued under the Incentive Plan include:

Long-Term Incentive Units (“LTIP Units”): LTIP Units, in the form of profits interest units of the Operating Partnership, may be issued to eligible participants for the performance of services to or for the benefit of the Operating Partnership. LTIP Units (other than Class D units), whether vested or not, receive the same quarterly per-unit distributions as Operating Partnership common units. Initially, LTIP Units do not have full parity with common units with respect to liquidating distributions. However, if such parity is reached, vested LTIP Units may be converted into an equal number of common units of the Operating Partnership at any time. The awards generally vest over periods between two and four years.

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Service-Based Restricted Stock Units: Service-based Restricted Stock Units, which vest over periods between two and four years, convert to shares of Digital Realty Trust, Inc.’s common stock upon vesting.

Performance-Based Awards (“the Performance Awards”): Performance-based Class D units of the Operating Partnership and performance-based Restricted Stock Units of Digital Realty Trust, Inc.’s common stock may be issued to officers and employees of the Company. The Performance Awards include performance-based and time-based vesting criteria. Depending on the type of award, the total number of units that qualify to fully vest is determined based on either a market performance criterion (“Market-Based Performance Awards”) or financial performance criterion (“Financial-Based Performance Awards”), in each case, subject to time-based vesting.

Market-Based Performance Awards.

The market performance criterion compares Digital Realty Trust, Inc.’s total shareholder return (“TSR”) relative to the MSCI US REIT Index (“RMS”) over a three-year performance period (“Market Performance Period”), subject to continued service, in order to determine the percentage of the total eligible pool of units that qualifies to be awarded. Following the completion of the Market Performance Period, the awards then have a time-based vesting element pursuant to which 50% of the performance-vested units fully vest in the February immediately following the end of the Market Performance Period and 50% of the performance-vested units fully vest in the subsequent February.

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 as is shown in the subsequent table (the “RMS Relative Market Performance”).


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

If the RMS Relative Market Performance falls between the levels specified in the above table, 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.

2021 Awards

	●	In January 2024, the RMS Relative Market Performance fell between the threshold and target levels for the 2021 awards and, accordingly, 71,926 Class D units and 7,066 Restricted Stock Units performance vested and qualified for time-based vesting.

	●	The Class D units included 5,131 distribution equivalent units that immediately vested on December 31, 2023.

	●	On February 27, 2024, 50% of the 2021 awards vested and the remaining 50% will vest on February 27, 2025, subject to continued employment through the applicable vesting date.

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The grant date fair value of the Market-Based Performance Awards was approximately $9.8 million and $8.2 million for the nine months ended September 30, 2024 and 2023, respectively. This amount will be recognized as compensation expense on a straight-line basis over the expected service period of approximately four years.

Financial-Based Performance Awards.

On January 1, 2024, the Company granted Financial-Based Performance Awards, which vest based on growth in same-store cash net operating income during the three-year period commencing on January 1, 2024. The awards have a time-based vesting element consistent with the Market-Based Performance Awards discussed above. For these awards, fair value is based on market value on the date of grant and compensation cost is recognized based on the probable achievement of the performance condition at each reporting period. The grant date fair value of these awards was $9.8 million, based on Digital Realty Trust, Inc.’s closing stock price at the grant date.

As of September 30, 2024, approximately 3.7 million shares of common stock, including awards that can be converted to or exchanged for shares of common stock, remained available for future issuance under the Incentive Plan.

Each LTIP unit and each Class D unit issued under the Incentive Plan counts as one share of common stock for purposes of calculating the limit on shares that may be issued under the Incentive Plan and the individual award limits set forth therein.

Below is a summary of our compensation expense and our unearned compensation (in millions):


													Expected
													period to
	Deferred Compensation								Unearned Compensation				recognize
	Expensed				Capitalized				As of		As of		unearned

	Three Months Ended September 30,								September 30,		December 31,		compensation
Type of incentive award	2024		2023		2024		2023		2024		2023		(in years)
Long-term incentive units	$	4.0	$	3.7	$	—	$	0.1	$	26.0	$	16.6	2.4
Performance-based awards		3.5		3.1		—		0.1		27.6		19.9	—
Service-based restricted stock units		9.2		8.2		0.8		1.8		78.3		66.4	2.6
Interxion awards		—		0.3		—		—		—		—	—

	Nine Months Ended September 30,
	2024		2023		2024		2023
Long-term incentive units	$	11.5	$	10.1	$	0.1	$	0.1
Performance-based awards		9.2		8.6		0.1		0.2
Service-based restricted stock units		25.6		24.1		3.6		4.4
Interxion awards		—		1.6		0.1		0.1

Activity for LTIP Units and service-based Restricted Stock Units for the nine months ended September 30, 2024 is shown below.


		Weighted-Average
		Grant Date Fair
Unvested LTIP Units	Units	Value
Unvested, beginning of period	238,360	$	121.99
Granted	279,670		137.04
Vested	(197,869)		131.41
Cancelled or expired	(49,997)		135.75
Unvested, end of period	270,164	$	128.12

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)


		Weighted-Average
		Grant Date Fair
Unvested Restricted Stock Units	Shares	Value
Unvested, beginning of period	621,863	$	132.07
Granted	370,447		142.10
Vested	(221,850)		124.79
Cancelled or expired	(100,111)		123.85
Unvested, end of period	670,349	$	141.25

Derivative Instruments

Derivatives Designated as Hedging Instruments

Net Investment Hedges

In September 2022, we entered into cross-currency interest rate swaps, which effectively convert a portion of our U.S. dollar-denominated fixed-rate debt to foreign currency-denominated fixed-rate debt in order to hedge the currency exposure associated with our net investment in foreign subsidiaries. As of September 30, 2024, we had cross-currency interest rate swaps outstanding with notional amounts of $1.7 billion and maturity dates ranging through 2028.

The effect of these net investment hedges on accumulated other comprehensive loss and the condensed consolidated income statements for the three and nine months ended September 30, 2024 and 2023 was as follows (in thousands):


		Three Months Ended September 30,				Nine Months Ended September 30,
		2024		2023		2024		2023
Cross-currency interest rate swaps (included component) (1)		$	(83,624)	$	52,698	$	(5,616)	$	53,853
Cross-currency interest rate swaps (excluded component) (2)			12,121		(14,006)		12,748		(28,423)
Total		$	(71,503)	$	38,692	$	7,132	$	25,430

	Location of	Three Months Ended September 30,				Nine Months Ended September 30,
	gain or (loss)	2024		2023		2024		2023
Cross-currency interest rate swaps (excluded component) (2)	Interest expense	$	5,205	$	5,505	$	17,314	$	16,699

(1)	Included component represents foreign exchange spot rates.

(2)	Excluded component represents cross-currency basis spread and interest rates.

Cash Flow Hedges

As of September 30, 2024, we had derivatives designated as cash flow hedges on the Euro Term Loan Facilities (€375 million notional amount) and the USD Term Loan ($500 million notional amount). Amounts reported in Accumulated other comprehensive loss related to interest rate swaps are reclassified to interest expense as interest payments are made on our debt. As of September 30, 2024, we estimate that an additional $1.6 million will be reclassified as a decrease to interest expense during the twelve months ended September 30, 2025, when the hedged forecasted transactions impact earnings.

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The effect of these cash flow hedges on accumulated other comprehensive income and the condensed consolidated income statements for the three and nine months ended September 30, 2024 and 2023 was as follows (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Interest rate swaps	$	(19,191)	$	538	$	(7,991)	$	12,912


	Location of	Three Months Ended September 30,				Nine Months Ended September 30,
	gain or (loss)	2024		2023		2024		2023
Interest rate swaps	Interest expense	$	4,031	$	3,845	$	12,348	$	6,688

Fair Value of Derivative Instruments

The subsequent table presents the fair value of derivative instruments recognized in our condensed consolidated balance sheets as of September 30, 2024 and December 31, 2023 (in thousands):


	September 30, 2024				December 31, 2023
	Assets (1)		Liabilities (2)		Assets (1)		Liabilities (2)
Cross-currency interest rate swaps	$	4,246	$	153,867	$	—	$	156,753
Interest rate swaps		7,786		16,300		8,538		—
	$	12,032	$	170,167	$	8,538	$	156,753

(1)	As presented in our condensed consolidated balance sheets within Other assets.

(2)	As presented in our condensed consolidated balance sheets within Accounts payable and other accrued liabilities.

Fair Value of Financial Instruments

There have been no significant changes in our policy for fair value measurements from what was disclosed in our 2023 Form 10-K.

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. The carrying value of our Global Revolving Credit Facilities, Euro Term Loan Facilities and USD Term Loan Facility approximates estimated fair value, because these liabilities have variable interest rates and our credit ratings have remained stable. Differences between the carrying value and fair value of our unsecured senior notes and secured and other debt are caused by differences in interest rates or borrowing spreads that were available to us on September 30, 2024 and December 31, 2023 as compared to those in effect when the debt was issued or assumed.

We calculate the fair value of our secured and other debt 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.

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The aggregate estimated fair value and carrying value of our Global Revolving Credit Facilities, Euro Term Loan Facilities and USD Term Loan Facility, unsecured senior notes and secured and other debt as of the respective periods is shown below (in thousands):


	Categorization	As of September 30, 2024				As of December 31, 2023
	under the fair value	Estimated Fair				Estimated Fair
	hierarchy	Value		Carrying Value		Value		Carrying Value
Global Revolving Credit Facilities (1)	Level 2	$	1,814,927	$	1,814,927	$	1,825,228	$	1,825,228
Unsecured term loans (1)	Level 2		917,563		917,563		1,567,925		1,567,925
Unsecured senior notes (2)	Level 2		10,866,916		13,610,252		12,417,619		13,507,427
Secured and other debt (2)	Level 2		759,197		766,304		625,473		637,072
		$	14,358,603	$	17,109,046	$	16,436,245	$	17,537,652

(1)	The carrying value of our Global Revolving Credit Facilities and unsecured term loans approximates estimated fair value, due to the variability of interest rates and the stability of our credit ratings.

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

During the nine months ended September 30, 2024, we recorded an impairment charge of $168.3 million related to Investments in properties, net, on certain non-core properties in secondary U.S. markets. Management estimated the fair values of these investments based on sales of similar properties and ongoing negotiations with third parties. The significant inputs and assumptions used in the estimate of fair value included comparable sales values ranging from $69 per square foot to $151 per square foot. These measurements were classified within Level 3 of the fair value hierarchy as they are not observable.

15. Commitments and Contingencies

Our properties require periodic investments of capital for tenant-related capital expenditures and for general capital improvements including ground up construction. From time to time in the normal course of our business, we enter into various construction contracts with third parties that may obligate us to make payments. At September 30, 2024, we had open commitments, including amounts reimbursable by customers of approximately $62.5 million, related to construction contracts of approximately $1.9 billion.

Legal Proceedings – Although the Company is involved in legal proceedings arising in the ordinary course of business, as of September 30, 2024, 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.

As disclosed previously, the Division of Enforcement of the U.S. Securities and Exchange Commission (SEC) is conducting an investigation into the adequacy of our disclosures of cybersecurity risks and our related disclosure controls and procedures. We are cooperating with the SEC and are not aware of any cybersecurity issue or event that caused the Staff to open this matter. Responding to an investigation of this type can be costly and time-consuming. While we are unable to predict the likely outcome of this matter or the potential cost or exposure or duration of the process, based on the information we currently possess, we do not expect the total potential cost to be material to our financial condition. If the SEC believes that violations occurred, it could seek remedies including, but not limited to, civil monetary penalties and injunctive relief, and/or file litigation against the Company.

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Supplemental Cash Flow Information

Cash, cash equivalents, and restricted cash balances as of September 30, 2024, and December 31, 2023:


	Balance as of
(Amounts in thousands)	September 30, 2024		December 31, 2023
Cash and cash equivalents	$	2,175,605	$	1,625,495
Restricted cash (included in Other assets)		6,503		10,975
Total	$	2,182,108	$	1,636,470

We paid $391.6 million and $345.8 million for interest, net of amounts capitalized, for the nine months ended September 30, 2024 and 2023, respectively.

We paid $53.4 million and $60.1 million for income taxes, net of refunds, for the nine months ended September 30, 2024 and 2023, respectively.

Accrued construction related costs totaled $504.4 million and $607.6 million as of September 30, 2024 and 2023, respectively.

17. Segment and Geographic Information

A majority of the Company’s largest customers are global entities that transact with the Company across multiple geographies worldwide. In order to better address the needs of these global customers, the Company manages critical decisions around development, operations, and leasing globally based on customer demand considerations. In this regard, the Company manages customer relationships on a global basis in order to achieve consistent sales and delivery experience of our products for our customers throughout the global portfolio. In order to best accommodate the needs of global customers (and customers that might one day become global), the Company manages its operations as a single global business – with one operating segment and therefore one reporting segment.


	Operating Revenues
	Three Months Ended September 30,						Nine Months Ended September 30,
(Amounts in millions)	2024			2023			2024			2023
Inside the United States	$	740.2		$	727.4		$	2,159.7		$	2,144.0
Outside the United States		691.0			675.0			1,959.4			1,963.4
Revenue Outside of U.S. %		48.3	%		48.1	%		47.6	%		47.8	%


	Investments in Properties, net				Operating lease right-of-use assets, net
	As of September 30,		As of December 31,		As of September 30,		As of December 31,
(Amounts in millions)	2024		2023		2024		2023
Inside the United States	$	10,309.7	$	10,429.2	$	561.9	$	610.2
Outside the United States		14,920.5		13,806.9		666.6		804.1

Net Assets in Foreign Operations	$	8,229.4	$	6,778.4

Next: Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS