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EX-23.1 - CONSENT OF KPMG LLP, INDEPENDENT AUDITORS - Digital Realty Trust, Inc.d416961dex231.htm
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K/A

 

 

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): July 11, 2012

 

 

DIGITAL REALTY TRUST, INC.

DIGITAL REALTY TRUST, L.P.

(Exact name of registrant as specified in its charter)

 

 

 

Maryland

Maryland

 

001-32336

000-54023

 

26-0081711

20-2402955

(State or other jurisdiction

of incorporation)

 

(Commission

File Number)

 

(I.R.S. Employer

Identification No.)

 

Four Embarcadero Center, Suite 3200

San Francisco, California

  94111
(Address of principal executive offices)   (Zip Code)

(415) 738-6500

(Registrant’s telephone number, including area code)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 


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This Form 8-K/A amends our Form 8-K filed on July 17, 2012 to provide additional financial information in connection with the acquisition of the Sentrum Portfolio. The following financial statements are filed as part of this report:

Item 9.01 Financial Statements and Exhibits.

 

     Page  

(a) Financial Statements under Rule 3-14 of Regulation S-X

  

Independent Auditors’ Report

     3   

Combined Statement of Revenue and Certain Expenses for the Six Months Ended June  30, 2012 (unaudited) and for the Year Ended December 31, 2011

     4   

Notes to the Combined Statement of Revenue and Certain Expenses

     5   

(b) Unaudited Pro Forma Condensed Consolidated Information

  

Digital Realty Trust, Inc.

  

Pro Forma Condensed Consolidated Financial Statements

     7   

Pro Forma Condensed Consolidated Balance Sheet as of June 30, 2012

     8   

Pro Forma Condensed Consolidated Income Statements for the Six Months Ended June  30, 2012 and for the Year Ended December 31, 2011

     9   

Notes to Pro Forma Condensed Consolidated Financial Statements

     11   

Digital Realty Trust, L.P.

  

Pro Forma Condensed Consolidated Financial Statements

     15   

Pro Forma Condensed Consolidated Balance Sheet as of June 30, 2012

     16   

Pro Forma Condensed Consolidated Income Statements for the Six Months Ended June  30, 2012 and for the Year Ended December 31, 2011

     17   

Notes to Pro Forma Condensed Consolidated Financial Statements

     19   

(d) Exhibits

 

Exhibit No.

  

Description

23.1    Consent of KPMG LLP, Independent Auditors.

 

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Independent Auditors’ Report

The Board of Directors

Digital Realty Trust, Inc.

Digital Realty Trust, L.P:

We have audited the accompanying combined statement of revenue and certain expenses of the Sentrum Portfolio (the Portfolio) for the year ended December 31, 2011. This combined statement is the responsibility of management. Our responsibility is to express an opinion on this combined statement based on our audit.

We conducted our audit in accordance with generally accepted auditing standards as established by the Auditing Standards Board (United States) and in accordance with the auditing standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Portfolio is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Portfolio’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the statement, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the statement. We believe that our audit provides a reasonable basis for our opinion.

The accompanying combined statement of revenue and certain expenses was prepared for the purpose of complying with the rules and regulations of the U.S. Securities and Exchange Commission, as described in note 1 to the combined statement of revenue and certain expenses. It is not intended to be a complete presentation of the Portfolio’s combined revenue and expenses.

In our opinion, the combined statement of revenue and certain expenses referred to above present fairly, in all material respects, the combined revenue and certain expenses described in note 1 of the Sentrum Portfolio for the year ended December 31, 2011, in conformity with U.S. generally accepted accounting principles.

/s/ KPMG LLP

San Francisco, California

September 25, 2012

 

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Sentrum Portfolio

Combined Statement of Revenue and Certain Expenses

 

     Six months ended
June 30, 2012
(unaudited)
     Year ended
December 31,
2011
 

Revenue:

     

Rental

   £ 29,864       £ 55,468   

Tenant reimbursements

     7,442         11,401   
  

 

 

    

 

 

 
     37,306         66,869   

Certain expenses:

     

Utilities

     7,948         10,888   

Property operating costs

     2,996         5,281   

Property taxes

     1,083         2,051   

Insurance

     439         858   
  

 

 

    

 

 

 
     12,466         19,078   
  

 

 

    

 

 

 

Revenue in excess of certain expenses

   £ 24,840       £ 47,791   
  

 

 

    

 

 

 

See accompanying notes to the combined statement of revenue and certain expenses.

 

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Sentrum Portfolio

Notes to the Combined Statement of Revenue and Certain Expenses

For the Year Ended December 31, 2011

(1) Basis of Presentation

The accompanying combined statement of revenue and certain expenses includes the revenue and certain expenses of the Sentrum Portfolio, a three-property data center portfolio located in the greater London area (the “Portfolio”). The Portfolio comprises approximately 761,000 square feet across three data centers located in Woking, Watford and Croydon, and a related service entity all located in the greater London, United Kingdom, metropolitan area.

The Portfolio was owned by Sentrum Holdings Limited (the “Seller”) for the periods presented. The accompanying combined statement of revenue and certain expenses includes the accounts of the Portfolio, and all significant intercompany amounts have been eliminated.

Digital Realty Trust, Inc., through its consolidated operating partnership, Digital Realty Trust, L.P. (collectively, the “Company”), acquired the Portfolio on July 11, 2012 for a purchase price of approximately 715.9 million pounds Sterling (equivalent to $1.1 billion based on the July 11, 2012 exchange rate of £1.00 to $1.55) (subject to additional earn-out payments based on a multiple of the net operating income from the lease-up of currently vacant space in the portfolio during the next three years).

The accompanying combined statement of revenue and certain expenses has been prepared for the purpose of complying with Rule 3-14 of Regulation S-X of the U.S. Securities and Exchange Commission for the acquisition of one or more real estate properties which in aggregate are significant and, accordingly, are not representative of the actual results of operations for the periods presented. The Portfolio is considered a group of related properties as the individual properties were under common control and management by the Seller, and the acquisition of a single property in the Portfolio was conditional on the acquisition of the other properties. Therefore, a single combined statement of revenue and certain expenses is presented. The combined statement of revenue and certain expenses excludes the following expenses which may not be comparable to the proposed future operations of the Portfolio:

 

   

Depreciation and amortization

 

   

Income taxes

 

   

Interest expense

 

   

Management fees paid to related parties

 

   

Payroll and other costs not directly related to the proposed future operations of the Portfolio.

Management is not aware of any material factors relating to the Portfolio other than those already described above that would cause the reported financial information not to be necessarily indicative of future operating results.

(2) Summary of Significant Accounting Policies and Practices

(a) Revenue Recognition

Rental revenue is recognized on a straight-line basis over the term of the respective leases. The straight-line rent adjustment for minimum rents increased rental revenue by £4.0 million for the year ended December 31, 2011.

(b) Use of Estimates

Management has made a number of estimates and assumptions relating to the reporting and disclosure of revenue and certain expenses during the reporting period to prepare the combined statement of revenue and certain expenses in conformity with U.S. generally accepted accounting principles. Actual results could differ from those estimates.

 

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(c) Unaudited Interim Combined Statements

The combined statement of revenue and certain expenses for the six months ended June 30, 2012 is unaudited. In the opinion of management, the statement reflects all adjustments necessary for a fair presentation of the results of the interim period. All such adjustments are of a normal recurring nature.

(d) Foreign Currency

The Portfolio is located in the greater London, United Kingdom area, as such, all transactions are denominated in the British Pound Sterling (GBP).

(3) Minimum Future Lease Payments

Future minimum lease payments to be received under non-cancelable agreements in effect as of December 31, 2011 are as follows:

 

Year ended December 31: (in thousands)       

2012

   £ 56,800   

2013

     56,159   

2014

     56,733   

2015

     54,583   

2016

     55,230   

Thereafter

     206,432   
  

 

 

 

Total

   £ 485,937   
  

 

 

 

(4) Tenant Concentrations

The top two tenants accounted for approximately £12.9 million and £5.7 million, or 23.3% and 10.2%, respectively, of the Portfolio’s combined rental revenue and service charge for the year ended December 31, 2011. No other tenant comprised more than 10% of the Portfolio’s combined rental revenue and service charge for the year ended December 31, 2011.

(5) Certain Expenses

Certain expenses include only those costs expected to be comparable to the proposed future operations of the property, such as utilities expense, property operating costs, property taxes, and insurance costs.

(6) Subsequent Events

The Company has evaluated subsequent events related to the Portfolio for recognition or disclosure through September 25, 2012, which is the date the combined statement was available to be issued and determined that there are no other items to disclose.

 

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DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

Pro Forma Condensed Consolidated Financial Statements

(Unaudited)

The following unaudited pro forma condensed consolidated financial statements give effect to the acquisition of the Sentrum Portfolio, a three-property data center and related service entity portfolio located in the greater London area (the “Sentrum Portfolio”). The Sentrum Portfolio comprises approximately 761,000 square feet across three data centers located in Woking, Watford and Croydon, United Kingdom.

The unaudited pro forma condensed consolidated balance sheet of Digital Realty Trust, Inc. and subsidiaries (the “Company”) as of June 30, 2012 is presented as if the acquisition of the Sentrum Portfolio along with the related financings occurred on June 30, 2012. The acquisition closed on July 11, 2012. The related financings consisted of a common stock offering in July 2012 along with additional borrowings under our global revolving credit facility.

The unaudited pro forma condensed consolidated income statements for the six months ended June 30, 2012 and the year ended December 31, 2011 are presented as if the acquisition of the Sentrum Portfolio that closed on July 11, 2012 along with the related financings occurred on January 1, 2011.

This pro forma information should be read in conjunction with the historical consolidated financial statements of the Company as of June 30, 2012 and December 31, 2011, and the notes thereto. The unaudited pro forma condensed consolidated financial statements are prepared for informational purposes only and are not necessarily indicative of what the actual financial position or results of operations would have been had we completed these transactions as of the beginning of the periods presented, nor is it necessarily indicative of future results. In addition, the pro forma condensed consolidated balance sheet includes pro forma allocations of the purchase price of the Sentrum Portfolio based upon preliminary estimates of the fair value of the assets and liabilities acquired in connection with the acquisition. As of June 30, 2012, the allocation of the purchase price of the Sentrum Portfolio is preliminary pending the receipt of information necessary to complete the valuation of certain tangible and intangible assets and liabilities.

 

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DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

Pro Forma Condensed Consolidated Balance Sheet

June 30, 2012

(unaudited, in thousands)

 

     Company
Historical
    Acquisition of
Sentrum
Portfolio
    Financing
Transactions
     Company
Pro Forma
 
     (A)     (B)     (C)         

Assets

         

Net investments in real estate

   $ 5,795,798      $ 1,201,868      $ —         $ 6,997,666   

Cash and cash equivalents

     47,777        (1,138,650     1,138,650         47,777   

Accounts and other receivables, net

     96,609        —          —           96,609   

Deferred rent

     279,971        —          —           279,971   

Acquired above market leases, net

     25,367        44,371        —           69,738   

Acquired in place lease value and deferred leasing costs, net

     370,179        107,180        —           477,359   

Deferred financing costs, net

     31,024        —          —           31,024   

Restricted cash

     35,322        —          —           35,322   

Other assets

     35,066        —          —           35,066   
  

 

 

   

 

 

   

 

 

    

 

 

 

Total assets

   $ 6,717,113      $ 214,769      $ 1,138,650       $ 8,070,532   
  

 

 

   

 

 

   

 

 

    

 

 

 
         

Liabilities and Equity

         

Global revolving credit facility

   $ 324,476      $ —        $ 341,810       $ 666,286   

Unsecured term loan

     520,942        —          —           520,942   

Unsecured senior notes, net of discount

     1,441,569        —          —           1,441,569   

Exchangeable senior debentures

     266,400        —          —           266,400   

Mortgage loans, net of premiums

     846,825        —          —           846,825   

Accounts payable and other accrued liabilities

     372,974        176,587        —           549,561   

Acquired below market leases, net

     112,891        38,182        —           151,073   

Security deposits and prepaid rents

     92,852        —          —           92,852   
  

 

 

   

 

 

   

 

 

    

 

 

 

Total liabilities

     3,978,929        214,769        341,810         4,535,508   
  

 

 

   

 

 

   

 

 

    

 

 

 

Equity:

         

Stockholders’ Equity:

         

Preferred

     621,775        —          —           621,775   

Common

     1,098        —          115         1,213   

Additional paid-in capital

     2,687,065        —          796,725         3,483,790   

Dividends in excess of earnings

     (566,273     —          —           (566,273

Accumulated other comprehensive loss, net

     (55,701     —          —           (55,701
  

 

 

   

 

 

   

 

 

    

 

 

 

Total stockholders’ equity

     2,687,964        —          796,840         3,484,804   
  

 

 

   

 

 

   

 

 

    

 

 

 

Noncontrolling interests in operating partnership

     46,273        —          —           46,273   

Noncontrolling interest in consolidated join ventures

     3,947        —          —           3,947   
  

 

 

   

 

 

   

 

 

    

 

 

 

Total equity

     2,738,184        —          796,840         3,535,024   
  

 

 

   

 

 

   

 

 

    

 

 

 

Total liabilities and equity

   $ 6,717,113      $ 214,769      $ 1,138,650       $ 8,070,532   
  

 

 

   

 

 

   

 

 

    

 

 

 

See accompanying notes to the pro forma condensed consolidated financial statements.

 

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DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

Pro Forma Condensed Consolidated Income Statement

For the Six Months Ended June 30, 2012

(unaudited)

(in thousands, except share and per share data)

 

     Company
Historical
    Acquisition
of Sentrum
Portfolio
     Financing
Transactions
    Noncontrolling
Interests
    Company
Pro Forma
 
     (AA)     (BB)      (CC)     (DD)        

Operating Revenues:

           

Rental

   $ 457,757      $ 46,902       $ —        $ —        $ 504,659   

Tenant reimbursements

     118,284        11,738         —          —          130,022   

Construction management

     4,406        —           —          —          4,406   

Other

     6,405        —           —          —          6,405   
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Total operating revenues

     586,852        58,640         —          —          645,492   

Operating Expenses:

           

Rental property operating and maintenance

     167,421        17,263         —          —          184,684   

Property taxes

     31,811        1,708         —          —          33,519   

Insurance

     4,490        692         —          —          5,182   

Construction management

     789        —           —          —          789   

Depreciation and amortization

     172,995        25,135         —          —          198,130   

General and administrative

     29,359        —           —          —          29,359   

Transactions

     5,285        —           —          —          5,285   

Other

     337        —           —          —          337   
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Total operating expenses

     412,487        44,798         —          —          457,285   
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Operating income

     174,365        13,842         —          —          188,207   

Other Income (Expenses):

           

Equity in earnings of unconsolidated joint ventures

     4,882        —           —          —          4,882   

Interest and other income

     1,925        —           —          —          1,925   

Interest expense

     (75,711     —           (3,340     —          (79,051

Tax expense

     (1,927     —           —          —          (1,927

Loss from early extinguishment of debt

     (303     —           —          —          (303
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Net income

     103,231        13,842         (3,340     —          113,733   

Net income attributable to noncontrolling interests

     (2,855     —           —          (407     (3,262
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Net income attributable to Digital Realty Trust, Inc.

     100,376        13,842         (3,340     (407     110,471   

Preferred stock dividends

     (19,144     —           —          —          (19,144
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Net income available to common stockholders

   $ 81,232      $ 13,842       $ (3,340   $ (407   $ 91,327   
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Pro forma net income per share available to common stockholders:

           

Basic

            $ 0.76   

Diluted

            $ 0.76   

Pro forma weighted average common shares outstanding(1):

           

Basic

              119,930,437   

Diluted

              120,309,574   

See accompanying notes to the pro forma condensed consolidated financial statements.

 

(1) Includes historical basic and diluted weighted average common shares outstanding for June 30, 2012 of 108,430,437 and 108,809,574, respectively, and the sale of 11,500,000 shares of our common stock which closed on July 2, 2012.

 

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DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

Pro Forma Condensed Consolidated Income Statement

For the Year Ended December 31, 2011

(unaudited)

(in thousands, except share and per share data)

 

     Company
Historical
    Acquisition
of Sentrum
Portfolio
     Financing
Transactions
    Noncontrolling
Interests
    Company
Pro Forma
 
     (AA)     (BB)      (CC)     (DD)        

Operating Revenues:

           

Rental

   $ 820,711      $ 88,564       $ —        $ —        $ 909,275   

Tenant reimbursements

     211,811        18,288         —          —          230,099   

Construction management

     29,286        —           —          —          29,286   

Other

     902        —           —          —          902   
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Total operating revenues

     1,062,710        106,852         —          —          1,169,562   
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Operating Expenses:

           

Rental property operating and maintenance

     307,922        25,936         —          —          333,858   

Property taxes

     49,946        3,290         —          —          53,236   

Insurance

     8,024        1,376         —          —          9,400   

Construction management

     22,715        —           —          —          22,715   

Depreciation and amortization

     310,425        50,057         —          —          360,482   

General and administrative

     53,624        —           —          —          53,624   

Transactions

     5,654        —           —          —          5,654   

Other

     90        —           —          —          90   
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Total operating expenses

     758,400        80,659         —          —          839,059   
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Operating income

     304,310        26,193         —          —          330,503   

Other Income (Expenses):

           

Equity in earnings of unconsolidated joint ventures

     4,952        —           —          —          4,952   

Interest and other income

     3,260        —           —          —          3,260   

Interest expense

     (149,350     —           (6,504     —          (155,854

Tax expense

     42        —           —          —          42   

Loss from early extinguishment of debt

     (1,088     —           —          —          (1,088
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Net income

     162,126        26,193         (6,504     —          181,815   

Net income attributable to noncontrolling interests

     (5,861     —           —          (893     (6,754
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Net income attributable to Digital Realty Trust, Inc.

     156,265        26,193         (6,504     (893     175,061   

Preferred stock dividends

     (25,397     —           —          —          (25,397
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Net income available to common stockholders

   $ 130,868      $ 26,193       $ (6,504   $ (893   $ 149,664   
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Pro forma net income per share available to common stockholders:

           

Basic

            $ 1.36   

Diluted

            $ 1.35   

Pro forma weighted average common shares outstanding(1):

           

Basic

              109,905,375   

Diluted

              110,669,749   

See accompanying notes to the pro forma condensed consolidated financial statements.

 

(1) Includes historical basic and diluted weighted average common shares outstanding for December 31, 2011 of 98,405,375 and 99,169,749, respectively, and the sale of 11,500,000 shares of our common stock which closed on July 2, 2012.

 

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DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

Notes to Pro Forma Condensed Consolidated Financial Statements (unaudited)

(Dollar amounts in thousands)

1. Adjustments to the Pro Forma Condensed Consolidated Balance Sheet

Digital Realty Trust, Inc. through its controlling interest in Digital Realty Trust, L.P. (the “Operating Partnership”) and the subsidiaries of the Operating Partnership (collectively, “we” or the “Company”) is engaged in the business of owning, acquiring, developing, redeveloping and managing technology-related real estate. The Company is focused on providing Turn-Key FlexSM and Powered Base Building® datacenter solutions for domestic and international tenants across a variety of industry verticals ranging from information technology and Internet enterprises, to manufacturing and financial services.

Our pro forma condensed consolidated balance sheet is presented as if the acquisition of the Sentrum Portfolio, which closed on July 11, 2012, occurred on June 30, 2012 along with the related financings. The related financings consisted of our common stock offering in July 2012 along with borrowings under our global revolving credit facility. The adjustments to our pro forma condensed consolidated balance sheet as of June 30, 2012 are as follows:

(A) Company Historical

Company historical reflects our historical condensed consolidated balance sheet as of June 30, 2012.

(B) Acquisition of the Sentrum Portfolio

Reflects our acquisition of the Sentrum Portfolio. The pro forma adjustments, based on our preliminary estimates for allocation of the purchase price, are as follows (in thousands):

 

Assets acquired:

  

Investments in real estate, net

   $ 1,201,868   

Acquired above market leases

     44,371   

Acquired in place lease value

     107,180   

Liabilities acquired:

  

Acquired below market leases

     (38,182

Accounts payable and other accrued liabilities

     (176,587
  

 

 

 

Cash paid to acquire the portfolio

   $ 1,138,650   
  

 

 

 

(C) Financing Transactions

Reflects proceeds and related financing costs of the sale of 11.5 million shares of our common stock which was completed on July 2, 2012 and additional borrowings under our existing global revolving credit facility in connection with the acquisition of the Sentrum Portfolio as follows (in thousands, except share and per share amounts):

 

     Total  

Proceeds from the stock offering

   $ 830,875   

Less costs of the initial public offering:

  

Underwriters’ discounts and commissions

     33,235   

Other costs

     800   
  

 

 

 

Net proceeds from sale of common stock

     796,840   

Increase in borrowings from global revolving credit facility

     341,810   
  

 

 

 

Net cash proceeds

   $ 1,138,650   
  

 

 

 

Common stock, 11,500,000 shares, $.01 per share

   $ 115   

Additional paid in capital

     796,725   
  

 

 

 

Net proceeds from sale of common stock

   $ 796,840   
  

 

 

 

 

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2. Adjustments to Pro Forma Condensed Consolidated Income Statements for the six months ended June 30, 2012 and for the year ended December 31, 2011

Our pro forma condensed consolidated income statements for the six months ended June 30, 2012 and the year ended December 31, 2011 are presented as if the acquisition of the Sentrum Portfolio that closed on July 11, 2012 along with the related financings, occurred on January 1, 2011. Our financings consist of our common stock offering in July 2012 along with additional borrowings under our global revolving credit facility. The pro forma adjustments to our condensed consolidated income statements for the six months ended June 30, 2012 and the year ended December 31, 2011 are as follows:

(AA) Company Historical

Reflects our historical condensed consolidated income statements for the six months ended June 30, 2012 and for the year ended December 31, 2011.

(BB) Acquisition of the Sentrum Portfolio

The pro forma adjustments to the condensed consolidated income statement for the six months ended June 30, 2012 reflect the acquisition of the Sentrum Portfolio, which closed on July 11, 2012, as if the acquisition closed on January 1, 2011. The pro forma adjustments are as follows (in thousands):

Sentrum Portfolio

Six Months Ended June 30, 2012

 

     Historical
combined
revenue and
certain
expenses (1)
     Adjustments
resulting from
purchasing
the Sentrum
Portfolio
         Pro Forma
Adjustments
 

Operating Revenues:

          

Rental

   $ 47,105       $ (203 )(2)(4)      $ 46,902   

Tenant reimbursements

     11,738         —             11,738   
  

 

 

    

 

 

      

 

 

 

Total operating revenues

     58,843         (203        58,640   
  

 

 

    

 

 

      

 

 

 

Operating Expenses:

          

Rental property operating and maintenance

     17,263         —             17,263   

Property taxes

     1,708         —             1,708   

Insurance

     692         —             692   

Depreciation and amortization

     —           25,135 (3)(4)        25,135   
  

 

 

    

 

 

      

 

 

 

Total operating expenses

     19,663         25,135           44,798   
  

 

 

    

 

 

      

 

 

 

Operating income

   $ 39,180       $ (25,338      $ 13,842   
  

 

 

    

 

 

      

 

 

 

 

(1) Historical combined statement of revenue and certain expenses reported in accordance with Rule 3-14 of Regulation S-X, as translated based on the average exchange rate for the six month period ended June 30, 2012 of £1.00 to $1.58.
(2) Reflects a ($1.0) million adjustment to amortize acquired above and below market lease intangibles and a $0.8 million adjustment to reflect straight-line revenue as if the Sentrum Portfolio had been acquired on January 1, 2011.
(3) Includes a $9.3 million adjustment to amortize acquired in place lease value intangible assets and a $15.8 million adjustment to record depreciation expense on acquired tangible assets as if the Sentrum Portfolio had been acquired on January 1, 2011.
(4) Depreciation and amortization are recorded on a straight-line basis over the estimated useful lives as follows: buildings over 39 years, and acquired ground leases, tenant improvements, above market leases, below market leases and acquired in place lease value over the terms of the lease.

 

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The pro forma adjustments to the condensed consolidated income statement for the year ended December 31, 2011 reflect the acquisition of the Sentrum Portfolio, which closed on July 11, 2012, as if the acquisition closed on January 1, 2011. The pro forma adjustments are as follows (in thousands):

Sentrum Portfolio

Year Ended December 31, 2011

 

     Historical
combined
revenue and
certain
expenses (1)
     Adjustments
resulting from
purchasing
the Sentrum
Portfolio
         Pro Forma
Adjustments
 

Operating Revenues:

          

Rental

   $ 88,976       $ (412 )(2)(4)      $ 88,564   

Tenant reimbursements

     18,288         —             18,288   
  

 

 

    

 

 

      

 

 

 

Total operating revenues

     107,264         (412        106,852   
  

 

 

    

 

 

      

 

 

 

Operating Expenses:

          

Rental property operating and maintenance

     25,936         —             25,936   

Property taxes

     3,290         —             3,290   

Insurance

     1,376         —             1,376   

Depreciation and amortization

     —           50,057 (3)(4)        50,057   
  

 

 

    

 

 

      

 

 

 

Total operating expenses

     30,602         50,057           80,659   
  

 

 

    

 

 

      

 

 

 

Operating income

   $ 76,662       $ (50,469      $ 26,193   
  

 

 

    

 

 

      

 

 

 

 

(1) Historical combined statement of revenue and certain expenses reported in accordance with Rule 3-14 of Regulation S-X, as translated based on the average exchange rate for the twelve month period ended December 31, 2011 of £1.00 to $1.60.
(2) Reflects a ($2.1) million adjustment to amortize acquired above and below market lease intangibles and a $1.7 million adjustment to reflect straight-line revenue as if the Sentrum Portfolio had been acquired on January 1, 2011.
(3) Includes a $18.4 million adjustment to amortize acquired in place lease value intangible assets and a $31.7 million adjustment to record depreciation expense on acquired tangible assets as if the Sentrum Portfolio had been acquired on January 1, 2011.
(4) Depreciation and amortization are recorded on a straight-line basis over the estimated useful lives as follows: buildings over 39 years, and acquired ground leases, tenant improvements, above market leases, below market leases and acquired in place lease value over the terms of the lease.

 

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(CC) Financing transactions

Reflects the pro forma increase in interest expense for the six months ended June 30, 2012 and the year ended December 31, 2011. The purchase price was funded with proceeds from our common stock offering in July 2012 along with additional borrowings under our global revolving credit facility. The adjustments reflect the increase in interest expense as follows (in thousands):

 

Financing

   Principal balance
used in  pro forma
adjustment
    

Interest rate

   Pro forma
interest
expense
adjustment
for the six
months ended
June 30, 2012
     Pro forma
interest
expense
adjustment
for the
year ended
December 31,
2011
 

Net increase in principal balance of global revolving credit facility related to the Sentrum Portfolio

   $ 341,810       1-month GBP LIBOR +1.25%(1)    $ 3,340       $ 6,504   
        

 

 

    

 

 

 

 

(1) The average 1-month GBP LIBOR +1.25% interest rate on our global revolving credit facility was 1.96% for the six months ended June 30, 2012. The average 1-month GBP LIBOR +1.25% interest rate on our global revolving credit facility was 1.90% for the year ended December 31, 2011. A 1/8 percentage point change in the GBP LIBOR rate would result in a combined adjustment to net income for both items above of approximately $214,000 and $427,000 for the six months ended June 30, 2012 and the year ended December 31, 2011, respectively.

(DD) Noncontrolling Interests in Operating Partnership

Noncontrolling interests in the Operating Partnership relate to the Operating Partnership interests that are not owned by us. The following table shows the effect on net income attributable to noncontrolling interests for the six months ended June 30, 2012 and the year ended December 31, 2011 had the acquisition of the Sentrum Portfolio occurred on January 1, 2011 along with the related financing (in thousands):

 

     Pro forma
non-
controlling
interest
adjustments
for the six
months ended
June 30, 2012
    Pro forma
non-
controlling
interest
adjustments
for the year
ended
December 31,
2011
 

Net income effect from:

    

Acquisition of the Sentrum Portfolio

   $ 13,842      $ 26,193   

Financing transactions

     (3,340     (6,504
  

 

 

   

 

 

 
   $ 10,502      $ 19,689   

Average noncontrolling interest percentage

     3.88     4.53
  

 

 

   

 

 

 

Net income attributable to noncontrolling interests

   $ 407      $ 893   
  

 

 

   

 

 

 

 

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DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

Pro Forma Condensed Consolidated Financial Statements

(Unaudited)

The following unaudited pro forma condensed consolidated financial statements give effect to the acquisition of the Sentrum Portfolio, a three-property data center and related service entity portfolio located in the greater London area (the “Sentrum Portfolio”). The Sentrum Portfolio comprises approximately 761,000 square feet across three data centers located in Woking, Watford and Croydon, United Kingdom.

The unaudited pro forma condensed consolidated balance sheet of Digital Realty Trust, L.P. and subsidiaries (the “Company”) as of June 30, 2012 is presented as if the acquisition of the Sentrum Portfolio along with the related financings occurred on June 30, 2012. The acquisition closed on July 11, 2012. The related financings consisted of our parent company’s common unit offering in July 2012 along with borrowings under our global revolving credit facility.

The unaudited pro forma condensed consolidated income statement for the six months ended June 30, 2012 and the year ended December 31, 2011 are presented as if the acquisition of the Sentrum Portfolio that closed on July 11, 2012 along with the related financings occurred on January 1, 2011.

This pro forma information should be read in conjunction with the historical consolidated financial statements of the Company as of June 30, 2012 and December 31, 2011, and the notes thereto. The unaudited pro forma condensed consolidated financial statements are prepared for informational purposes only and are not necessarily indicative of what the actual financial position or results of operations would have been had we completed these transactions as of the beginning of the periods presented, nor is it necessarily indicative of future results. In addition, the pro forma condensed consolidated balance sheet includes pro forma allocations of the purchase price of the Sentrum Portfolio based upon preliminary estimates of the fair value of the assets and liabilities acquired in connection with the acquisition. As of June 30, 2012, the allocation of the purchase price of the Sentrum Portfolio is preliminary pending the receipt of information necessary to complete the valuation of certain tangible and intangible assets and liabilities.

 

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DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

Pro Forma Condensed Consolidated Balance Sheet

June 30, 2012

(unaudited, in thousands)

 

     Company
Historical
    Acquisition of
Sentrum
Portfolio
    Financing
Transactions
     Company
Pro Forma
 
     (A)     (B)     (C)         

Assets

         

Net investments in real estate

   $ 5,795,798      $ 1,201,868      $ —         $ 6,997,666   

Cash and cash equivalents

     47,777        (1,138,650     1,138,650         47,777   

Accounts and other receivables, net

     96,609        —          —           96,609   

Deferred rent

     279,971        —          —           279,971   

Acquired above market leases, net

     25,367        44,371        —           69,738   

Acquired in place lease value and deferred leasing costs, net

     370,179        107,180        —           477,359   

Deferred financing costs, net

     31,024        —          —           31,024   

Restricted cash

     35,322        —          —           35,322   

Other assets

     35,066        —          —           35,066   
  

 

 

   

 

 

   

 

 

    

 

 

 

Total assets

   $ 6,717,113      $ 214,769      $ 1,138,650       $ 8,070,532   
  

 

 

   

 

 

   

 

 

    

 

 

 

Liabilities and Capital

         

Global revolving credit facility

   $ 324,476      $ —        $ 341,810       $ 666,286   

Unsecured term loan

     520,942        —          —           520,942   

Unsecured senior notes, net of discount

     1,441,569        —          —           1,441,569   

Exchangeable senior debentures

     266,400        —          —           266,400   

Mortgage loans, net of premiums

     846,825        —          —           846,825   

Other secured loan

     —          —          —           —     

Accounts payable and other accrued liabilities

     372,974        176,587        —           549,561   

Acquired below market leases, net

     112,891        38,182        —           151,073   

Security deposits and prepaid rents

     92,852        —          —           92,852   
  

 

 

   

 

 

   

 

 

    

 

 

 

Total liabilities

     3,978,929        214,769        341,810         4,535,508   
  

 

 

   

 

 

   

 

 

    

 

 

 

Capital:

         

Partner’s capital:

         

General partner:

         

Preferred

     621,775        —          —           621,775   

Common

     2,121,890        —          796,840         2,918,730   

Limited partners

     50,436        —          —           50,436   

Accumulated other comprehensive loss, net

     (59,864     —          —           (59,864
  

 

 

   

 

 

   

 

 

    

 

 

 

Total partners’ capital

     2,734,237        —          796,840         3,531,077   
  

 

 

   

 

 

   

 

 

    

 

 

 

Noncontrolling interest in consolidated join ventures

     3,947        —          —           3,947   
  

 

 

   

 

 

   

 

 

    

 

 

 

Total capital

     2,738,184        —          796,840         3,535,024   
  

 

 

   

 

 

   

 

 

    

 

 

 

Total liabilities and capital

   $ 6,717,113      $ 214,769      $ 1,138,650       $ 8,070,532   
  

 

 

   

 

 

   

 

 

    

 

 

 

See accompanying notes to the pro forma condensed consolidated financial statements.

 

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DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

Pro Forma Condensed Consolidated Income Statement

For the Six Months Ended June 30, 2012

(unaudited)

(in thousands, except unit and per unit data)

 

     Company
Historical
    Acquisition
of Sentrum
Portfolio
     Financing
Transactions
    Company
Pro Forma
 
     (AA)     (BB)      (CC)        

Operating Revenues:

         

Rental

   $ 457,757      $ 46,902         —        $ 504,659   

Tenant reimbursements

     118,284        11,738         —          130,022   

Construction management

     4,406        —           —          4,406   

Other

     6,405        —           —          6,405   
  

 

 

   

 

 

    

 

 

   

 

 

 

Total operating revenues

     586,852        58,640         —          645,492   

Operating Expenses:

         

Rental property operating and maintenance

     167,421        17,263         —          184,684   

Property taxes

     31,811        1,708         —          33,519   

Insurance

     4,490        692         —          5,182   

Construction management

     789        —           —          789   

Depreciation and amortization

     172,995        25,135         —          198,130   

General and administrative

     29,359        —           —          29,359   

Transactions

     5,285        —           —          5,285   

Other

     337        —           —          337   
  

 

 

   

 

 

    

 

 

   

 

 

 

Total operating expenses

     412,487        44,798         —          457,285   
  

 

 

   

 

 

    

 

 

   

 

 

 

Operating income

     174,365        13,842         —          188,207   

Other Income (Expenses):

         

Equity in earnings of unconsolidated joint ventures

     4,882        —           —          4,882   

Interest and other income

     1,925        —           —          1,925   

Interest expense

     (75,711     —           (3,340     (79,051

Tax expense

     (1,927     —           —          (1,927

Loss from early extinguishment of debt

     (303     —           —          (303
  

 

 

   

 

 

    

 

 

   

 

 

 

Net income

     103,231        13,842         (3,340     113,733   

Net income attributable to noncontrolling interests in consolidated joint ventures

     392        —           —          392   
  

 

 

   

 

 

    

 

 

   

 

 

 

Net income attributable to Digital Realty Trust, L.P.

     103,623        13,842         (3,340     114,125   

Preferred unit distributions

     (19,144     —           —          (19,144
  

 

 

   

 

 

    

 

 

   

 

 

 

Net income available to common unitholders

   $ 84,479      $ 13,842       $ (3,340   $ 94,981   
  

 

 

   

 

 

    

 

 

   

 

 

 

Pro forma net income per unit available to common unitholders:

         

Basic

          $ 0.76   

Diluted

          $ 0.76   

Pro forma weighted average common units outstanding(1):

         

Basic

            124,266,660   

Diluted

            124,645,797   

See accompanying notes to the pro forma condensed consolidated financial statements.

 

(1) Includes historical basic and diluted weighted average common units outstanding for June 30, 2012 of 112,766,660 and 113,145,797, respectively, and the sale of 11,500,000 units of our common units which closed on July 2, 2012.

 

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Table of Contents

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

Pro Forma Condensed Consolidated Income Statement

For the Year Ended December 31, 2011

(unaudited)

(in thousands, except unit and per unit data)

 

     Company
Historical
    Acquisition
of Sentrum
Portfolio
     Financing
Transactions
    Company
Pro Forma
 
     (AA)     (BB)      (CC)        

Operating Revenues:

         

Rental

   $ 820,711      $ 88,564       $ —        $ 909,275   

Tenant reimbursements

     211,811        18,288         —          230,099   

Construction management

     29,286        —           —          29,286   

Other

     902        —           —          902   
  

 

 

   

 

 

    

 

 

   

 

 

 

Total operating revenues

     1,062,710        106,852         —          1,169,562   
  

 

 

   

 

 

    

 

 

   

 

 

 

Operating Expenses:

         

Rental property operating and maintenance

     307,922        25,936         —          333,858   

Property taxes

     49,946        3,290         —          53,236   

Insurance

     8,024        1,376         —          9,400   

Construction management

     22,715        —           —          22,715   

Depreciation and amortization

     310,425        50,057         —          360,482   

General and administrative

     53,624        —           —          53,624   

Transactions

     5,654        —           —          5,654   

Other

     90        —           —          90   
  

 

 

   

 

 

    

 

 

   

 

 

 

Total operating expenses

     758,400        80,659         —          839,059   
  

 

 

   

 

 

    

 

 

   

 

 

 

Operating income

     304,310        26,193         —          330,503   

Other Income (Expenses):

         

Equity in earnings of unconsolidated joint ventures

     4,952        —           —          4,952   

Interest and other income

     3,260        —           —          3,260   

Interest expense

     (149,350     —           (6,504     (155,854

Tax expense

     42        —           —          42   

Loss from early extinguishment of debt

     (1,088     —           —          (1,088
  

 

 

   

 

 

    

 

 

   

 

 

 

Net income

     162,126        26,193         (6,504     181,815   

Net income attributable to noncontrolling interests in consolidated joint ventures

     324        —           —          324   
  

 

 

   

 

 

    

 

 

   

 

 

 

Net income attributable to Digital Realty Trust, L.P.

     162,450        26,193         (6,504     182,139   

Preferred unit distributions

     (25,397     —           —          (25,397
  

 

 

   

 

 

    

 

 

   

 

 

 

Net income available to common unitholders

   $ 137,053      $ 26,193       $ (6,504   $ 156,742   
  

 

 

   

 

 

    

 

 

   

 

 

 

Pro forma net income per unit available to common unitholders:

         

Basic

          $ 1.36   

Diluted

          $ 1.35   

Pro forma weighted average common units outstanding(1):

         

Basic

            114,553,004   

Diluted

            115,317,378   

See accompanying notes to the pro forma condensed consolidated financial statements.

 

(1) Includes historical basic and diluted weighted average common units outstanding for December 31, 2011 of 103,053,004 and 103,817,378, respectively, and the sale of 11,500,000 units of our common units which closed on July 2, 2012.

 

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Table of Contents

DIGITAL REALTY TRUST, L.P. AND SUBSIDIARIES

Notes to Pro Forma Condensed Consolidated Financial Statements (unaudited)

(Dollar amounts in thousands)

1. Adjustments to the Pro Forma Condensed Consolidated Balance Sheet

Digital Realty Trust, L.P. (the “Operating Partnership”) and the subsidiaries of the Operating Partnership (collectively, “we” or the “Company”) is engaged in the business of owning, acquiring, developing, redeveloping and managing technology-related real estate. The Company is focused on providing Turn-Key FlexSM and Powered Base Building® datacenter solutions for domestic and international tenants across a variety of industry verticals ranging from information technology and Internet enterprises, to manufacturing and financial services.

Our pro forma condensed consolidated balance sheet is presented as if the acquisition of the Sentrum Portfolio, which closed on July 11, 2012, occurred on June 30, 2012 along with the related financings. The related financings consisted of a common stock offering in July 2012 by Digital Realty Trust, Inc. (our parent company) along with borrowings under our global revolving credit facility. The adjustments to our pro forma condensed consolidated balance sheet as of June 30, 2012 are as follows:

(A) Company Historical

Company historical reflects our historical condensed consolidated balance sheet as of June 30, 2012.

(B) Acquisition of the Sentrum Portfolio

Reflects our acquisition of the Sentrum Portfolio. The pro forma adjustments, based on our preliminary estimates for allocation of the purchase price, are as follows (in thousands):

 

Assets acquired:

  

Investments in real estate, net

   $ 1,201,868   

Acquired above market leases

     44,371   

Acquired in place lease value

     107,180   

Liabilities acquired:

  

Acquired below market leases

     (38,182

Accounts payable and other accrued liabilities

     (176,587
  

 

 

 

Cash paid to acquire the portfolio

   $ 1,138,650   
  

 

 

 

(C) Financing Transactions

Reflects proceeds and related financing costs of the issuance of 11.5 million common units in connection with the sale of 11.5 million shares of our parent company’s common stock which was completed on July 2, 2012 and additional borrowings under our existing global revolving credit facility in connection with the acquisition of the Sentrum Portfolio as follows (in thousands):

 

     Total  

Proceeds from the common stock offering

   $ 830,875   

Less costs of the initial public offering:

  

Underwriters’ discounts and commissions

     33,235   

Other costs

     800   
  

 

 

 

Net proceeds from sale of common stock

   $ 796,840   

Increase in borrowings from global revolving credit facility

     341,810   
  

 

 

 

Net cash proceeds

   $ 1,138,650   
  

 

 

 

Common stock

   $ 796,840   
  

 

 

 

 

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2. Adjustments to Pro Forma Condensed Consolidated Income Statements for the six months ended June 30, 2012 and for the year ended December 31, 2011

Our pro forma condensed consolidated income statements for the six months ended June 30, 2012 and the year ended December 31, 2011 are presented as if the acquisition of the Sentrum Portfolio that closed on July 11, 2012 along with the related financings, occurred on January 1, 2011. Our financings consist of our parent company’s common stock offering in July 2012 along with borrowings under our global revolving credit facility. The pro forma adjustments to our condensed consolidated income statements for the six months ended June 30, 2012 and the year ended December 31, 2011 are as follows:

(AA) Company Historical

Reflects our historical condensed consolidated income statements for the six months ended June 30, 2012 and for the year ended December 31, 2011.

(BB) Acquisition of the Sentrum Portfolio

The pro forma adjustments to the condensed consolidated income statement for the six months ended June 30, 2012 reflect the acquisition of the Sentrum Portfolio, which closed on July 11, 2012, as if the acquisition occurred on January 1, 2011. The pro forma adjustments are as follows (in thousands):

Sentrum Portfolio

Six Months Ended June 30, 2012

 

     Historical
combined
revenue and
certain
expenses(1)
     Adjustments
resulting from
purchasing
the Sentrum
Portfolio
    Pro Forma
Adjustments
 

Operating Revenues:

       

Rental

   $ 47,105       $ (203 )(2)(4)   $ 46,902   

Tenant reimbursements

     11,738         —          11,738   
  

 

 

    

 

 

   

 

 

 

Total operating revenues

     58,843         (203     58,640   
  

 

 

    

 

 

   

 

 

 

Operating Expenses:

       

Rental property operating and maintenance

     17,263         —          17,263   

Property taxes

     1,708         —          1,708   

Insurance

     692         —          692   

Depreciation and amortization

     —           25,135 (3)(4)     25,135   
  

 

 

    

 

 

   

 

 

 

Total operating expenses

     19,663         25,135        44,798   
  

 

 

    

 

 

   

 

 

 

Operating income

   $ 39,180       $ (25,338   $ 13,842   
  

 

 

    

 

 

   

 

 

 

 

(1) Historical combined statement of revenue and certain expenses reported in accordance with Rule 3-14 of Regulation S-X, as translated based on the average exchange rate for the six month period ended June 30, 2012 of £1.00 to $1.58.
(2) Reflects a ($1.0) million adjustment to amortize acquired above and below market lease intangibles and a $0.8 million adjustment to reflect straight-line revenue as if the Sentrum Portfolio had been acquired on January 1, 2011.
(3) Includes a $9.3 million adjustment to amortize acquired in place lease value intangible assets and a $15.8 million adjustment to record depreciation expense on acquired tangible assets as if the Sentrum Portfolio had been acquired on January 1, 2011.
(4) Depreciation and amortization are recorded on a straight-line basis over the estimated useful lives as follows: buildings over 39 years, and acquired ground leases, tenant improvements, above market leases, below market leases and acquired in place lease value over the terms of the lease.

 

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The pro forma adjustments to the condensed consolidated income statement for the year ended December 31, 2011 reflect the acquisition of the Sentrum Portfolio, which closed on July 11, 2012, as if the acquisition closed on January 1, 2011. The pro forma adjustments are as follows (in thousands):

Sentrum Portfolio

Year Ended December 31, 2011

 

     Historical
combined
revenue and
certain
expenses(1)
     Adjustments
resulting from
purchasing
the Sentrum
Portfolio
    Pro Forma
Adjustments
 

Operating Revenues:

       

Rental

   $ 88,976       $ (412 )(2)(4)   $ 88,564   

Tenant reimbursements

     18,288         —          18,288   
  

 

 

    

 

 

   

 

 

 

Total operating revenues

     107,264         (412     106,852   
  

 

 

    

 

 

   

 

 

 

Operating Expenses:

       

Rental property operating and maintenance

     25,936         —          25,936   

Property taxes

     3,290         —          3,290   

Insurance

     1,376         —          1,376   

Depreciation and amortization

     —           50,057 (3)(4)     50,057   
  

 

 

    

 

 

   

 

 

 

Total operating expenses

     30,602         50,057        80,659   
  

 

 

    

 

 

   

 

 

 

Operating income

   $ 76,662       $ (50,469   $ 26,193   
  

 

 

    

 

 

   

 

 

 

 

(1) Historical combined statement of revenue and certain expenses reported in accordance with Rule 3-14 of Regulation S-X, as translated based on the average exchange rate for the twelve month period ended December 31, 2011 of £1.00 to $1.60.
(2) Reflects a ($2.1) million adjustment to amortize acquired above and below market lease intangibles and a $1.7 million adjustment to reflect straight-line revenue as if the Sentrum Portfolio had been acquired on January 1, 2011.
(3) Includes a $18.4 million adjustment to amortize acquired in place lease value intangible assets and a $31.7 million adjustment to record depreciation expense on acquired tangible assets as if the Sentrum Portfolio had been acquired on January 1, 2011.
(4) Depreciation and amortization are recorded on a straight-line basis over the estimated useful lives as follows: buildings over 39 years, and acquired ground leases, tenant improvements, above market leases, below market leases and acquired in place lease value over the terms of the lease.

 

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(CC) Financing transactions

Reflects the pro forma increase in interest expense for the six months ended June 30, 2012 and the year ended December 31, 2011. The purchase price was funded with proceeds from our parent company’s common stock offering in July 2012 along with borrowings under our global revolving credit facility. The adjustments reflect the increase in interest expense as follows (in thousands):

Financing

   Principal balance
used in pro forma
adjustment
    

Interest rate

   Pro forma
interest
expense
adjustment
six
months ended
June 30, 2012
     Pro forma
interest
expense
adjustment
year ended
December 31,
2011
 

Net increase in principal balance of global revolving credit facility related to the Sentrum Portfolio

   $ 341,810      

1-month GBP LIBOR

+1.25%(1)

   $ 3,340       $ 6,504   
        

 

 

    

 

 

 

 

(1) The average 1-month GBP LIBOR +1.25% interest rate on our global revolving credit facility was 1.96% for the six months ended June 30, 2012. The average 1-month GBP LIBOR +1.25% interest rate on our global revolving credit facility was 1.90% for the year ended December 31, 2011. A 1/8 percentage point change in the GBP LIBOR rate would result in a combined adjustment to net income for both items above of approximately $214,000 and $427,000 for the six months ended June 30, 2012 and the year ended December 31, 2011, respectively.

 

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrants have duly caused this report to be signed on their behalf by the undersigned hereunto duly authorized.

Date: September 26, 2012

 

Digital Realty Trust, Inc.
By:   /s/    JOSHUA A. MILLS        
  Joshua A. Mills
  Senior Vice President, General Counsel and Assistant Secretary

 

Digital Realty Trust, L.P.
By:  

Digital Realty Trust, Inc.

Its general partner

By:   /s/    JOSHUA A. MILLS        
  Joshua A. Mills
  Senior Vice President, General Counsel and Assistant Secretary

 

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EXHIBIT INDEX

 

Exhibit No.

  

Description

23.1    Consent of KPMG LLP, Independent Auditors.