|
|
|
|
|
Maryland
|
|
001-32336
|
|
26-0081711
|
Maryland
|
|
000-54023
|
|
20-2402955
|
(State or other jurisdiction
of incorporation)
|
|
(Commission
File Number)
|
|
(IRS Employer
Identification No.)
|
☑
|
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))
|
Title of each class
|
Trading symbol(s)
|
Name of each exchange on which registered
|
Common Stock
|
DLR
|
New York Stock Exchange
|
Series C Cumulative Redeemable Perpetual Preferred Stock
|
DLR Pr C
|
New York Stock Exchange
|
Series G Cumulative Redeemable Preferred Stock
|
DLR Pr G
|
New York Stock Exchange
|
Series I Cumulative Redeemable Preferred Stock
|
DLR Pr I
|
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
|
Digital Realty Trust, Inc.
|
Emerging growth company
|
|
☐
|
Digital Realty Trust, L.P.
|
Emerging growth company
|
|
☐
|
Digital Realty Trust, Inc.
|
|
☐
|
Digital Realty Trust, L.P.
|
|
☐
|
Exhibit No.
|
|
Description
|
23.1
|
|
|
99.1
|
|
|
99.2
|
|
|
99.3
|
|
|
99.4
|
|
|
99.5
|
|
|
99.6
|
|
|
104
|
|
Cover Page Interactive Data File (embedded within the Inline XBRL document).
|
|
|
Digital Realty Trust, Inc.
|
|
|
|
|
By:
|
/s/ JOSHUA A. MILLS
|
|
|
Joshua A. Mills
Executive Vice President, General Counsel
and Secretary
|
|
|
Digital Realty Trust, L.P.
|
|
By:
|
Digital Realty Trust, Inc., its general partner
|
|
|
|
|
By:
|
/s/ JOSHUA A. MILLS
|
|
|
Joshua A. Mills
Executive Vice President, General Counsel
and Secretary
|
•
|
the accompanying notes to the pro forma financial statements;
|
•
|
the historical audited consolidated financial statements of DLR and the related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in the combined Annual Report on Form 10-K of DLR and the Operating Partnership for the fiscal year ended December 31, 2018, as filed with the Securities and Exchange Commission, or the SEC, on February 25, 2019;
|
•
|
the historical unaudited condensed consolidated financial statements of DLR and the related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in the combined Quarterly Report on Form 10-Q of DLR and the Operating Partnership for the quarterly period ended September 30, 2019, as filed with the SEC on November 8, 2019;
|
•
|
the historical audited consolidated financial statements of INXN and the related notes included in its Annual Report on Form 20-F for the fiscal year ended December 31, 2018, as filed with the SEC on April 30, 2019, which are included in the Current Report on Form 8-K to which these unaudited pro forma condensed combined financial statements are an exhibit; and
|
•
|
the historical unaudited condensed consolidated financial statements of INXN and the related notes included in its Report on Form 6-K for the quarterly period ended September 30, 2019, as furnished to the SEC on November 7, 2019, which are included in the Current Report on Form 8-K to which these unaudited pro forma condensed combined financial statements are an exhibit.
|
|
Historical
|
|
|
|
|
|
|
||||||||||
|
Digital Realty Trust, Inc.
|
|
InterXion (See Note 2(A))
|
|
Other Pro Forma Adjustments
|
|
Note Reference
|
|
Pro Forma Combined Company
|
||||||||
ASSETS
|
|
|
|
|
|
|
|
|
|
||||||||
Investments in real estate:
|
|
|
|
|
|
|
|
|
|
||||||||
Properties:
|
|
|
|
|
|
|
|
|
|
||||||||
Land
|
$
|
790,821
|
|
|
$
|
154,910
|
|
|
$
|
118,676
|
|
|
2(B)(i)
|
|
$
|
1,064,407
|
|
Acquired ground leases
|
10,133
|
|
|
—
|
|
|
—
|
|
|
|
|
10,133
|
|
||||
Buildings and improvements
|
14,998,062
|
|
|
2,392,192
|
|
|
99,820
|
|
|
2(B)(i)
|
|
17,490,074
|
|
||||
Tenant improvements
|
608,064
|
|
|
—
|
|
|
—
|
|
|
|
|
608,064
|
|
||||
Total investments in properties
|
16,407,080
|
|
|
2,547,102
|
|
|
218,496
|
|
|
|
|
19,172,678
|
|
||||
Accumulated depreciation and amortization
|
(4,298,629
|
)
|
|
(868,873
|
)
|
|
868,873
|
|
|
2(C)
|
|
(4,298,629
|
)
|
||||
Net investments in properties
|
12,108,451
|
|
|
1,678,229
|
|
|
1,087,369
|
|
|
|
|
14,874,049
|
|
||||
Construction in progress
|
1,647,130
|
|
|
497,927
|
|
|
—
|
|
|
|
|
2,145,057
|
|
||||
Land held for future development
|
150,265
|
|
|
—
|
|
|
—
|
|
|
|
|
150,265
|
|
||||
Net investments in properties
|
13,905,846
|
|
|
2,176,156
|
|
|
1,087,369
|
|
|
|
|
17,169,371
|
|
||||
Investment in unconsolidated joint ventures
|
1,035,861
|
|
|
3,720
|
|
|
—
|
|
|
|
|
1,039,581
|
|
||||
Net investments in real estate
|
14,941,707
|
|
|
2,179,876
|
|
|
1,087,369
|
|
|
|
|
18,208,952
|
|
||||
Operating lease right-of-use assets
|
634,085
|
|
|
445,964
|
|
|
—
|
|
|
|
|
1,080,049
|
|
||||
Cash and cash equivalents
|
7,190
|
|
|
224,334
|
|
|
—
|
|
|
|
|
231,524
|
|
||||
Accounts and other receivables, net of allowance for doubtful accounts
|
304,712
|
|
|
197,111
|
|
|
—
|
|
|
|
|
501,823
|
|
||||
Deferred rent
|
471,516
|
|
|
15,120
|
|
|
(15,120
|
)
|
|
2(C)
|
|
471,516
|
|
||||
Acquired above-market leases, net
|
84,315
|
|
|
—
|
|
|
—
|
|
|
|
|
84,315
|
|
||||
Goodwill
|
3,338,168
|
|
|
42,397
|
|
|
3,808,272
|
|
|
2(B)(iii)
|
|
7,188,837
|
|
||||
Acquired in-place lease value, deferred leasing costs and intangibles, net
|
2,245,017
|
|
|
76,574
|
|
|
1,352,300
|
|
|
2(B)(ii)
|
|
3,673,891
|
|
||||
Assets held for sale
|
967,527
|
|
|
—
|
|
|
—
|
|
|
|
|
967,527
|
|
||||
Other assets
|
178,528
|
|
|
87,473
|
|
|
—
|
|
|
|
|
266,001
|
|
||||
Total assets
|
$
|
23,172,765
|
|
|
$
|
3,268,849
|
|
|
$
|
6,232,821
|
|
|
|
|
$
|
32,674,435
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
|
|
|
|
|
||||||||
Global revolving credit facilities, net
|
$
|
1,833,512
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
$
|
1,833,512
|
|
Unsecured term loans, net
|
796,232
|
|
|
—
|
|
|
—
|
|
|
|
|
796,232
|
|
||||
Unsecured senior notes, net
|
8,189,138
|
|
|
1,296,378
|
|
|
112,805
|
|
|
2(D)
|
|
9,598,321
|
|
||||
Secured debt, including premiums, net
|
105,153
|
|
|
71,140
|
|
|
—
|
|
|
|
|
176,293
|
|
||||
Operating lease liabilities
|
699,381
|
|
|
459,524
|
|
|
—
|
|
|
|
|
1,158,905
|
|
||||
Accounts payable and other accrued liabilities
|
938,740
|
|
|
357,907
|
|
|
600,000
|
|
|
2(B)(iii)
|
|
1,896,647
|
|
||||
Acquired below-market leases, net
|
153,422
|
|
|
—
|
|
|
—
|
|
|
|
|
153,422
|
|
||||
Security deposits and prepaid rents
|
203,708
|
|
|
21,403
|
|
|
—
|
|
|
|
|
225,111
|
|
||||
Obligations associated with assets held for sale
|
23,534
|
|
|
—
|
|
|
—
|
|
|
|
|
23,534
|
|
||||
Total liabilities
|
12,942,820
|
|
|
2,206,352
|
|
|
712,805
|
|
|
|
|
15,861,977
|
|
||||
Redeemable noncontrolling interests – operating partnership
|
19,090
|
|
|
—
|
|
|
—
|
|
|
|
|
19,090
|
|
||||
Commitments and contingencies
|
|
|
|
|
|
|
|
|
|
||||||||
Equity:
|
|
|
|
|
|
|
|
|
|
||||||||
Stockholders’ Equity:
|
|
|
|
|
|
|
|
|
|
||||||||
Preferred Stock
|
1,099,534
|
|
|
—
|
|
|
—
|
|
|
|
|
1,099,534
|
|
||||
Common Stock
|
2,069
|
|
|
—
|
|
|
549
|
|
|
2(E)
|
|
2,618
|
|
||||
Additional paid-in capital
|
11,540,980
|
|
|
1,062,497
|
|
|
5,519,467
|
|
|
2(E)
|
|
18,122,944
|
|
||||
Accumulated dividends in excess of earnings
|
(3,136,668
|
)
|
|
—
|
|
|
—
|
|
|
|
|
(3,136,668
|
)
|
||||
Accumulated other comprehensive loss, net
|
(68,625
|
)
|
|
—
|
|
|
—
|
|
|
|
|
(68,625
|
)
|
||||
Total stockholders’ equity
|
9,437,290
|
|
|
1,062,497
|
|
|
5,520,016
|
|
|
2(E)
|
|
16,019,803
|
|
||||
Noncontrolling Interests:
|
|
|
|
|
|
|
|
|
|
Noncontrolling interests in operating partnership
|
731,216
|
|
|
—
|
|
|
—
|
|
|
|
|
731,216
|
|
||||
Noncontrolling interests in consolidated joint ventures
|
42,349
|
|
|
—
|
|
|
—
|
|
|
|
|
42,349
|
|
||||
Total noncontrolling interests
|
773,565
|
|
|
—
|
|
|
—
|
|
|
|
|
773,565
|
|
||||
Total equity
|
10,210,855
|
|
|
1,062,497
|
|
|
5,520,016
|
|
|
|
|
16,793,368
|
|
||||
Total liabilities and equity
|
$
|
23,172,765
|
|
|
$
|
3,268,849
|
|
|
$
|
6,232,821
|
|
|
|
|
$
|
32,674,435
|
|
|
Historical
|
|
|
|
|
|
|
||||||||||
|
Digital Realty Trust, Inc.
|
|
InterXion
(See Note 3(A)) |
|
Other Pro Forma Adjustments
|
|
Note Reference
|
|
Pro Forma Combined Company
|
||||||||
Operating Revenues:
|
|
|
|
|
|
|
|
|
|
||||||||
Rental and other services
|
$
|
2,413,888
|
|
|
$
|
527,293
|
|
|
$
|
—
|
|
|
|
|
$
|
2,941,181
|
|
Fee income and other
|
7,890
|
|
|
13
|
|
|
—
|
|
|
|
|
7,903
|
|
||||
Total operating revenues
|
2,421,778
|
|
|
527,306
|
|
|
—
|
|
|
|
|
2,949,084
|
|
||||
Operating Expenses:
|
|
|
|
|
|
|
|
|
|
||||||||
Rental property operating and maintenance
|
766,417
|
|
|
203,147
|
|
|
—
|
|
|
|
|
969,564
|
|
||||
Property taxes and insurance
|
126,587
|
|
|
3,555
|
|
|
—
|
|
|
|
|
130,142
|
|
||||
Depreciation and amortization
|
888,766
|
|
|
123,944
|
|
|
60,056
|
|
|
3(B)
|
|
1,072,766
|
|
||||
General and administrative
|
156,427
|
|
|
97,805
|
|
|
—
|
|
|
|
|
254,232
|
|
||||
Transactions and integration
|
10,819
|
|
|
1,601
|
|
|
(2,666
|
)
|
|
3(C)
|
|
9,754
|
|
||||
Impairment of investments in real estate
|
5,351
|
|
|
—
|
|
|
—
|
|
|
|
|
5,351
|
|
||||
Other
|
12,129
|
|
|
—
|
|
|
—
|
|
|
|
|
12,129
|
|
||||
Total operating expenses
|
1,966,496
|
|
|
430,052
|
|
|
57,390
|
|
|
|
|
2,453,938
|
|
||||
Operating income
|
455,282
|
|
|
97,254
|
|
|
(57,390
|
)
|
|
|
|
495,146
|
|
||||
Other Income (Expenses):
|
|
|
|
|
|
|
|
|
|
||||||||
Equity in losses of unconsolidated joint ventures
|
(3,090
|
)
|
|
(311
|
)
|
|
—
|
|
|
|
|
(3,401
|
)
|
||||
Gain on deconsolidation
|
67,497
|
|
|
—
|
|
|
—
|
|
|
|
|
67,497
|
|
||||
Interest and other income, net
|
55,266
|
|
|
5,726
|
|
|
—
|
|
|
|
|
60,992
|
|
||||
Interest expense
|
(272,177
|
)
|
|
(49,369
|
)
|
|
12,087
|
|
|
3(E)
|
|
(309,459
|
)
|
||||
Tax expense
|
(13,726
|
)
|
|
(16,740
|
)
|
|
12,005
|
|
|
3(F)
|
|
(18,461
|
)
|
||||
Loss from early extinguishment of debt
|
(39,157
|
)
|
|
—
|
|
|
—
|
|
|
|
|
(39,157
|
)
|
||||
Net income
|
249,895
|
|
|
36,560
|
|
|
(33,298
|
)
|
|
|
|
253,157
|
|
||||
Net income attributable to noncontrolling interests
|
(6,418
|
)
|
|
—
|
|
|
—
|
|
|
|
|
(6,418
|
)
|
||||
Net income attributable to Digital Realty Trust, Inc.
|
243,477
|
|
|
36,560
|
|
|
(33,298
|
)
|
|
|
|
246,739
|
|
||||
Preferred stock dividends
|
(54,283
|
)
|
|
—
|
|
|
—
|
|
|
|
|
(54,283
|
)
|
||||
Issuance costs associated with redeemed preferred stock
|
(11,760
|
)
|
|
—
|
|
|
—
|
|
|
|
|
(11,760
|
)
|
||||
Net income available to common stockholders
|
$
|
177,434
|
|
|
$
|
36,560
|
|
|
$
|
(33,298
|
)
|
|
|
|
$
|
180,696
|
|
Net income per share available to common stockholders:
|
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.85
|
|
|
$
|
0.50
|
|
|
|
|
|
|
$
|
0.69
|
|
||
Diluted
|
$
|
0.85
|
|
|
$
|
0.49
|
|
|
|
|
|
|
$
|
0.68
|
|
||
Weighted average shares of common stock:
|
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
208,173,995
|
|
|
73,429,000
|
|
|
54,927,513
|
|
|
3(G)
|
|
263,101,508
|
|
||||
Diluted
|
209,199,535
|
|
|
74,015,000
|
|
|
54,927,513
|
|
|
3(G)
|
|
264,127,048
|
|
|
Historical
|
|
|
|
|
|
|
||||||||||
|
Digital Realty Trust, Inc.
|
|
InterXion
(See Note 3(A))
|
|
Other Pro Forma Adjustments
|
|
Note Reference
|
|
Pro Forma Combined Company
|
||||||||
Operating Revenues:
|
|
|
|
|
|
|
|
|
|
||||||||
Rental and other services
|
$
|
2,412,076
|
|
|
$
|
663,307
|
|
|
$
|
—
|
|
|
|
|
$
|
3,075,383
|
|
Tenant reimbursements
|
624,637
|
|
|
—
|
|
|
—
|
|
|
|
|
624,637
|
|
||||
Fee income and other
|
9,765
|
|
|
—
|
|
|
—
|
|
|
|
|
9,765
|
|
||||
Total operating revenues
|
3,046,478
|
|
|
663,307
|
|
|
—
|
|
|
|
|
3,709,785
|
|
||||
Operating Expenses:
|
|
|
|
|
|
|
|
|
|
||||||||
Rental property operating and maintenance
|
957,065
|
|
|
235,533
|
|
|
—
|
|
|
|
|
1,192,598
|
|
||||
Property taxes and insurance
|
140,918
|
|
|
5,137
|
|
|
—
|
|
|
|
|
146,055
|
|
||||
Depreciation and amortization
|
1,186,896
|
|
|
160,464
|
|
|
94,501
|
|
|
3(B)(D)
|
|
1,441,861
|
|
||||
General and administrative
|
163,667
|
|
|
115,073
|
|
|
—
|
|
|
|
|
278,740
|
|
||||
Transactions and integration
|
45,327
|
|
|
5,894
|
|
|
(6,492
|
)
|
|
3(C)
|
|
44,729
|
|
||||
Other
|
2,818
|
|
|
—
|
|
|
—
|
|
|
|
|
2,818
|
|
||||
Total operating expenses
|
2,496,691
|
|
|
522,101
|
|
|
88,009
|
|
|
|
|
3,106,801
|
|
||||
Operating income
|
549,787
|
|
|
141,206
|
|
|
(88,009
|
)
|
|
|
|
602,984
|
|
||||
Other Income (Expenses):
|
|
|
|
|
|
|
|
|
|
||||||||
Equity in earnings of unconsolidated joint ventures
|
32,979
|
|
|
—
|
|
|
—
|
|
|
|
|
32,979
|
|
||||
Gain on sale of properties
|
80,049
|
|
|
—
|
|
|
—
|
|
|
|
|
80,049
|
|
||||
Interest and other income, net
|
3,481
|
|
|
4,383
|
|
|
—
|
|
|
|
|
7,864
|
|
||||
Interest expense
|
(321,529
|
)
|
|
(76,069
|
)
|
|
8,730
|
|
|
3(E)
|
|
(388,868
|
)
|
||||
Tax expense
|
(2,084
|
)
|
|
(21,655
|
)
|
|
21,009
|
|
|
3(F)
|
|
(2,730
|
)
|
||||
Loss from early extinguishment of debt
|
(1,568
|
)
|
|
(11,073
|
)
|
|
—
|
|
|
|
|
(12,641
|
)
|
||||
Net income
|
341,115
|
|
|
36,792
|
|
|
(58,270
|
)
|
|
|
|
319,637
|
|
||||
Net income attributable to noncontrolling interests
|
(9,869
|
)
|
|
—
|
|
|
—
|
|
|
|
|
(9,869
|
)
|
||||
Net income attributable to Digital Realty Trust, Inc.
|
331,246
|
|
|
36,792
|
|
|
(58,270
|
)
|
|
|
|
309,768
|
|
||||
Preferred stock dividends
|
(81,316
|
)
|
|
—
|
|
|
—
|
|
|
|
|
(81,316
|
)
|
||||
Net income available to common stockholders
|
$
|
249,930
|
|
|
$
|
36,792
|
|
|
$
|
(58,270
|
)
|
|
|
|
$
|
228,452
|
|
Net income per share available to common stockholders:
|
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
1.21
|
|
|
$
|
0.51
|
|
|
|
|
|
|
$
|
0.88
|
|
||
Diluted
|
$
|
1.21
|
|
|
$
|
0.51
|
|
|
|
|
|
|
$
|
0.87
|
|
||
Weighted average shares of common stock:
|
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
206,035,408
|
|
|
71,562,000
|
|
|
54,927,513
|
|
|
3(G)
|
|
260,962,921
|
|
||||
Diluted
|
206,673,471
|
|
|
72,056,000
|
|
|
54,927,513
|
|
|
3(G)
|
|
261,600,984
|
|
1.
|
Description of the transaction and basis of pro forma presentation
|
(A)
|
InterXion classified certain amounts differently than Digital Realty in its condensed consolidated balance sheet. The following schedule summarizes the necessary material adjustments to conform InterXion’s unaudited condensed consolidated balance sheet as of September 30, 2019 to U.S. GAAP and to reclassify certain amounts to conform to Digital Realty’s balance sheet presentation. In addition, InterXion’s unaudited condensed consolidated balance sheet has been translated into U.S. dollars at a rate of $1.0899 to €1.00, the average exchange rate on September 30, 2019 (in thousands):
|
As of September 30, 2019
|
Local Currency - Euro (€)
|
|
USD ($)
|
||||||||||||||||||||
|
IFRS
InterXion |
|
Reclassification
Adjustments |
|
U.S. GAAP
Adjustments |
|
U.S. GAAP
InterXion |
|
U.S. GAAP
InterXion |
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Property, plant and equipment
|
€
|
1,969,757
|
|
|
€
|
(1,969,757
|
)
|
|
(i)(a)
|
|
€
|
—
|
|
|
|
|
€
|
—
|
|
|
$
|
—
|
|
Land
|
—
|
|
|
142,132
|
|
|
(i)(a)
|
|
—
|
|
|
|
|
142,132
|
|
|
154,910
|
|
|||||
Buildings and improvements
|
—
|
|
|
2,167,973
|
|
|
(i)(a)
|
|
26,900
|
|
|
(ii)
|
|
2,194,873
|
|
|
2,392,192
|
|
|||||
Construction in progress
|
—
|
|
|
456,856
|
|
|
(i)(a)
|
|
—
|
|
|
|
|
456,856
|
|
|
497,927
|
|
|||||
Accumulated depreciation and amortization
|
—
|
|
|
(797,204
|
)
|
|
(i)(a)
|
|
—
|
|
|
|
|
(797,204
|
)
|
|
(868,873
|
)
|
|||||
Investments in unconsolidated joint ventures
|
—
|
|
|
3,413
|
|
|
(i)(e)
|
|
—
|
|
|
|
|
3,413
|
|
|
3,720
|
|
|||||
Right-of-use assets
|
436,079
|
|
|
—
|
|
|
|
|
(26,900
|
)
|
|
(ii)
|
|
409,179
|
|
|
445,964
|
|
|||||
Trade receivables and other current assets
|
231,278
|
|
|
(50,426
|
)
|
|
(i)(b)
|
|
—
|
|
|
|
|
180,852
|
|
|
197,111
|
|
|||||
Cash and cash equivalents
|
205,830
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
205,830
|
|
|
224,334
|
|
|||||
Deferred rent
|
—
|
|
|
13,873
|
|
|
(i)(b)
|
|
—
|
|
|
|
|
13,873
|
|
|
15,120
|
|
|||||
Intangible assets
|
70,258
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
70,258
|
|
|
76,574
|
|
|||||
Goodwill
|
38,900
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
38,900
|
|
|
42,397
|
|
|||||
Deferred tax assets
|
26,913
|
|
|
(26,913
|
)
|
|
(i)(c)
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|||||
Investment in associate
|
3,413
|
|
|
(3,413
|
)
|
|
(i)(e)
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|||||
Other non-current assets
|
16,792
|
|
|
(16,792
|
)
|
|
(i)(d)
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|||||
Other assets
|
—
|
|
|
80,258
|
|
|
(i)(b)(c)(d)
|
|
—
|
|
|
|
|
80,258
|
|
|
87,473
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total assets
|
€
|
2,999,220
|
|
|
€
|
—
|
|
|
|
|
€
|
—
|
|
|
|
|
€
|
2,999,220
|
|
|
$
|
3,268,849
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Shareholders’ equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Share capital
|
€
|
7,716
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
€
|
7,716
|
|
|
$
|
8,410
|
|
||
Share premium
|
855,116
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
855,116
|
|
|
931,990
|
|
|||||
Foreign currency translation reserve
|
4,626
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
4,626
|
|
|
5,042
|
|
|||||
Hedging reserve, net of tax
|
(264
|
)
|
|
—
|
|
|
|
|
—
|
|
|
|
|
(264
|
)
|
|
(288
|
)
|
|||||
Accumulated profit
|
107,664
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
107,664
|
|
|
117,343
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total shareholders' equity
|
974,858
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
974,858
|
|
|
1,062,497
|
|
|||||
Non-current liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Borrowings
|
1,249,837
|
|
|
(1,249,837
|
)
|
|
(i)(f)
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|||||
Unsecured senior notes, net
|
—
|
|
|
1,189,447
|
|
|
(i)(f)
|
|
—
|
|
|
|
|
1,189,447
|
|
|
1,296,378
|
|
|||||
Secured debt, including premiums, net
|
—
|
|
|
65,272
|
|
|
(i)(f)
|
|
—
|
|
|
|
|
65,272
|
|
|
71,140
|
|
|||||
Accounts payable and other accrued liabilities
|
—
|
|
|
296,613
|
|
|
(i)(g)
|
|
31,772
|
|
|
(ii)
|
|
328,385
|
|
|
357,907
|
|
|||||
Lease liabilities
|
425,315
|
|
|
28,077
|
|
|
(i)(i)
|
|
(31,772
|
)
|
|
(ii)
|
|
421,620
|
|
|
459,524
|
|
|||||
Security deposits and prepaid rents
|
—
|
|
|
19,638
|
|
|
(i)(h)
|
|
—
|
|
|
|
|
19,638
|
|
|
21,403
|
|
|||||
Deferred tax liabilities
|
18,162
|
|
|
(18,162
|
)
|
|
(i)(g)
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|||||
Other non-current liabilities
|
16,652
|
|
|
(16,652
|
)
|
|
(i)(g)
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|||||
Current liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Trade payables and other current liabilities
|
272,841
|
|
|
(272,841
|
)
|
|
(i)(g)(h)
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|||||
Lease liabilities
|
28,077
|
|
|
(28,077
|
)
|
|
(i)(i)
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|||||
Income tax liabilities
|
8,596
|
|
|
(8,596
|
)
|
|
(i)(g)
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|||||
Borrowings, current portion
|
4,882
|
|
|
(4,882
|
)
|
|
(i)(f)
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total liabilities
|
2,024,362
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
2,024,362
|
|
|
2,206,352
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total liabilities and shareholders’ equity
|
€
|
2,999,220
|
|
|
€
|
—
|
|
|
|
|
€
|
—
|
|
|
|
|
€
|
2,999,220
|
|
|
$
|
3,268,849
|
|
(i)
|
Reflects certain reclassifications to conform to Digital Realty’s financial statement presentation.
|
(a)
|
Property plant and equipment was reclassified as follows to conform to Digital Realty’s balance sheet presentation (in thousands):
|
Property, plant and equipment
|
|
€
|
(1,969,757
|
)
|
Land
|
|
142,132
|
|
|
Buildings and improvements
|
|
2,167,973
|
|
|
Construction in progress
|
|
456,856
|
|
|
Accumulated depreciation and amortization
|
|
(797,204
|
)
|
(b)
|
Trade receivables and other current assets of €50.4 million was reclassified to deferred rent of €13.9 million and other assets of €36.5 million, respectively, to conform to Digital Realty’s balance sheet presentation.
|
(c)
|
Deferred tax assets of €26.9 million was reclassified to other assets, to conform to Digital Realty’s balance sheet presentation.
|
(d)
|
Other non-current assets of €16.8 million was reclassified to other assets, to conform to Digital Realty’s balance sheet presentation.
|
(e)
|
Investment in associate of €3.4 million was reclassified to investments in unconsolidated joint ventures to conform to Digital Realty’s balance sheet presentation.
|
(f)
|
Borrowings and borrowings, current portion of €1.25 billion and €4.9 million, respectively, were reclassified to unsecured senior notes, net (€1.19 billion) and secured debt, including premiums, net (€65.2 million) to conform to Digital Realty’s balance sheet presentation.
|
(g)
|
Trade payables and other current liabilities, deferred tax liabilities, other non-current liabilities and income tax liabilities of €253.2 million, €18.2 million, €16.7 million and €8.6 million, respectively, were reclassified to accounts payable and other accrued liabilities to conform to Digital Realty’s balance sheet presentation.
|
(h)
|
Trade payables and other current liabilities of €19.6 million was reclassified to security deposits and prepaid rents to conform to Digital Realty’s balance sheet presentation.
|
(i)
|
Lease liabilities, current portion of €28.1 million was reclassified to operating lease liabilities to conform to Digital Realty’s balance sheet presentation.
|
(ii)
|
IFRS to U.S. GAAP adjustments reclassify finance leases out of right of use assets and liabilities into buildings and improvements and accounts payable and other accrued liabilities, respectively. The IFRS 16 to ASC 842 adjustment classifies the majority of INXN leases as operating leases under ASC 842. Under ASC 842, leases continue to be subject to a lease classification test. There are two INXN leases that are classified as finance leases as of September 30, 2019 under U.S. GAAP and the balance related to these leases has been reclassified. All other INXN leases under ASC 842 are classified as operating leases.
|
(B)
|
The transaction represents a total value of approximately $6.6 billion for all INXN shares based on the closing price per share of DLR's common stock of $119.84 on November 21, 2019 (in thousands, except for shares and share price):
|
Estimated number of shares of DLR common stock issued
|
|
54,927,513
|
|
|
Price of shares of DLR common stock on November 21, 2019 (1)
|
|
$
|
119.84
|
|
Estimated fair value of DLR common stock issued in InterXion combination
|
|
$
|
6,582,513
|
|
(1)
|
Based on the last reported sales price of shares of DLR common stock on the New York Stock Exchange on November 21, 2019.
|
(Unaudited, in thousands, except for the
estimated share price)
|
|
% increase / decrease
|
|
Estimated Share Price
|
|
Estimated Purchase Consideration
|
|||||
As presented in the pro forma combined results
|
|
|
|
$
|
119.84
|
|
|
$
|
6,582,513
|
|
|
20% decrease in the estimated share price
|
|
(20
|
)%
|
|
95.87
|
|
|
5,266,010
|
|
||
10% decrease in the estimated share price
|
|
(10
|
)%
|
|
107.86
|
|
|
5,924,262
|
|
||
10% increase in the estimated share price
|
|
10
|
%
|
|
131.82
|
|
|
7,240,764
|
|
||
20% increase in the estimated share price
|
|
20
|
%
|
|
143.81
|
|
|
7,899,016
|
|
|
|
|
|
Weighted Average Estimated Useful Life (in years)
|
||
Investment in properties:
|
|
|
|
|
||
Land
|
|
$
|
273,586
|
|
(i)
|
|
Buildings and improvements
|
|
2,492,012
|
|
(i)
|
15
|
|
Construction in progress
|
|
497,927
|
|
|
|
|
Investment in unconsolidated joint ventures
|
|
3,720
|
|
|
|
|
Intangible assets:
|
|
|
|
|
||
Customer relationships
|
|
1,273,700
|
|
(ii)
|
21
|
|
Trade names
|
|
78,600
|
|
(ii)
|
10
|
|
Other intangible assets acquired
|
|
76,574
|
|
|
|
|
Goodwill
|
|
3,850,669
|
|
(iii)
|
|
|
Cash and cash equivalents
|
|
224,334
|
|
|
|
|
Accounts and other receivables
|
|
197,111
|
|
|
|
|
Operating lease right-of-use assets
|
|
445,964
|
|
|
|
|
Other assets
|
|
87,473
|
|
|
|
|
|
|
|
|
|
||
Total assets acquired
|
|
9,501,670
|
|
|
|
|
|
|
|
|
|
||
Unsecured senior notes, net
|
|
1,409,183
|
|
|
|
|
Secured debt, net
|
|
71,140
|
|
|
|
|
Accounts payable and other accrued liabilities
|
|
357,907
|
|
|
|
|
Deferred tax liabilities, net
|
|
600,000
|
|
(iii)
|
|
|
Lease liabilities
|
|
459,524
|
|
|
|
|
Security deposits and prepaid rents
|
|
21,403
|
|
|
|
|
|
|
|
|
|
||
Net assets acquired
|
|
$
|
6,582,513
|
|
|
|
(i)
|
Represents the following adjustments to investment in properties (in thousands):
|
|
|
Fair Value
|
|
Carrying Amount of InterXion Tangible Assets
|
|
Step-up in Value
|
||||||
Fair value adjustment to InterXion's investment in properties:
|
|
|
|
|
|
|
||||||
Land
|
|
$
|
273,586
|
|
|
$
|
(154,910
|
)
|
|
$
|
118,676
|
|
Buildings and improvements
|
|
2,492,012
|
|
|
(2,392,192
|
)
|
|
99,820
|
|
|||
|
|
$
|
2,765,598
|
|
|
$
|
(2,547,102
|
)
|
|
$
|
218,496
|
|
(ii)
|
Represents a fair value of $1.4 billion of INXN’s intangible assets, comprised of the following (dollars in thousands):
|
|
|
Fair Value
|
|
Weighted Average Estimated Useful Life (in years)
|
||
Customer relationship value
|
|
$
|
1,273,700
|
|
|
21
|
Trade names
|
|
78,600
|
|
|
10
|
|
Total
|
|
$
|
1,352,300
|
|
|
|
(iii)
|
A preliminary estimate of approximately $3.9 billion has been allocated to goodwill. Goodwill represents the excess of the purchase price over the fair value of the net tangible and intangible assets acquired and liabilities assumed. It is attributable to planned growth in the existing and new markets and synergies expected to be achieved from the combined operations of DLR and InterXion. The preliminary purchase price allocation for InterXion is subject to revision as more detailed analysis is completed and additional information on the fair values of InterXion’s assets and liabilities becomes available. Any changes in the fair value of the net assets of InterXion will change the amount of the purchase price allocable to goodwill. Additionally, changes in InterXion’s working capital, including the results of operations from September 30, 2019 through the date the InterXion combination is completed, will also change the amount of goodwill recorded. Final purchase accounting adjustments may, therefore, differ materially from the pro forma adjustments presented here.
|
Goodwill from the InterXion combination
|
|
$
|
3,250,669
|
|
Elimination of InterXion goodwill balance
|
|
(42,397
|
)
|
|
Deferred tax liability adjustments, net
|
|
600,000
|
|
|
Total goodwill adjustments
|
|
$
|
3,808,272
|
|
(C)
|
Represents the elimination on InterXion historical balances.
|
(D)
|
Represents a fair value adjustment related to InterXion's unsecured debt. Fair value of debt is based on quoted market prices for the identical liability when traded as an asset in an active market. In anticipation of recording the assumed debt at fair value, a $112.8 million pro forma debt premium was recorded to recognize the long-term debt at fair value.
|
(E)
|
Represents the following adjustments in stockholders’ equity (in thousands):
|
Estimated fair value of shares of DLR common stock issued (1)
|
|
$
|
549
|
|
Estimated additional paid-in capital (1)
|
|
6,581,964
|
|
|
Elimination of InterXion’s historical stockholders’ equity
|
|
(1,062,497
|
)
|
|
Total stockholders’ equity adjustments
|
|
$
|
5,520,016
|
|
(1)
|
Based on the last reported sales price of shares of DLR common stock on the New York Stock Exchange on November 21, 2019.
|
(A)
|
InterXion classified certain amounts differently than Digital Realty in its condensed consolidated income statements. The following schedule summarizes the necessary material adjustments to conform InterXion’s unaudited condensed consolidated income statement for the nine months ended September 30, 2019 and audited condensed consolidated income statement for the year ended December 31, 2018 to U.S. GAAP and to reclassify certain amounts to conform to Digital Realty’s basis of presentation. In addition, InterXion’s unaudited condensed consolidated income statement for the nine months ended September 30, 2019 has been translated into U.S. dollars at a rate of $1.12 to €1.00, the average exchange rate for the nine months ended September 30, 2019, and InterXion’s condensed consolidated income statement for the year ended December 31, 2018 has been translated into U.S. dollars at a rate of $1.18 to €1.00, the average exchange rate for the year ended December 31, 2018 (in thousands):
|
For the nine months ended September 30, 2019
|
|
Local Currency -- Euro (€)
|
|
USD ($)
|
||||||||||||||||||||
|
|
IFRS
|
|
|
|
|
|
|
|
|
|
US GAAP
|
|
US GAAP
|
||||||||||
|
|
InterXion
|
|
Reclassification Adjustments
|
|
Total GAAP Adjustments
|
|
InterXion
|
|
InterXion
|
||||||||||||||
Revenues
|
|
€
|
469,400
|
|
|
€
|
(69
|
)
|
|
(i)(a)(b)
|
|
€
|
—
|
|
|
|
|
€
|
469,331
|
|
|
$
|
527,293
|
|
Fee income and other
|
|
—
|
|
|
12
|
|
|
(i)(b)
|
|
—
|
|
|
|
|
12
|
|
|
13
|
|
|||||
|
|
469,400
|
|
|
(57
|
)
|
|
|
|
—
|
|
|
|
|
469,343
|
|
|
527,306
|
|
|||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cost of sales
|
|
159,261
|
|
|
(159,261
|
)
|
|
(i)(a)(c)(d)(e)
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|||||
Sales and marketing costs
|
|
27,288
|
|
|
(27,288
|
)
|
|
(i)(f)
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|||||
General and administrative costs
|
|
192,169
|
|
|
(105,115
|
)
|
|
(i)(e)(f)(g)(h)
|
|
—
|
|
|
|
|
87,054
|
|
|
97,805
|
|
|||||
Rental property operating and maintenance
|
|
—
|
|
|
155,723
|
|
|
(i)(c)
|
|
25,093
|
|
|
(iv)
|
|
180,816
|
|
|
203,147
|
|
|||||
Property taxes and insurance
|
|
—
|
|
|
3,164
|
|
|
(i)(d)
|
|
—
|
|
|
|
|
3,164
|
|
|
3,555
|
|
|||||
Depreciation and amortization
|
|
—
|
|
|
131,295
|
|
|
(i)(g)
|
|
(20,975
|
)
|
|
(iv)
|
|
110,320
|
|
|
123,944
|
|
|||||
Transactions and integration
|
|
—
|
|
|
1,425
|
|
|
(i)(h)
|
|
—
|
|
|
|
|
1,425
|
|
|
1,601
|
|
|||||
Total operating expenses
|
|
378,718
|
|
|
(57
|
)
|
|
|
|
4,118
|
|
|
|
|
382,779
|
|
|
430,052
|
|
|||||
Operating income
|
|
90,682
|
|
|
—
|
|
|
|
|
(4,118
|
)
|
|
|
|
86,564
|
|
|
97,254
|
|
|||||
Finance income
|
|
16,131
|
|
|
(16,131
|
)
|
|
(i)(i)
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|||||
Finance expense
|
|
(53,173
|
)
|
|
53,173
|
|
|
(i)(j)
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|||||
Share of result of equity-accounted investees, net of tax
|
|
(277
|
)
|
|
277
|
|
|
(i)(l)
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|||||
Equity in losses of unconsolidated joint ventures
|
|
—
|
|
|
(277
|
)
|
|
(i)(l)
|
|
—
|
|
|
|
|
(277
|
)
|
|
(311
|
)
|
|||||
Interest and other income, net
|
|
—
|
|
|
16,131
|
|
|
(i)(i)
|
|
(11,034
|
)
|
|
(iii)
|
|
5,097
|
|
|
5,726
|
|
|||||
Interest expense
|
|
—
|
|
|
(53,173
|
)
|
|
(i)(j)
|
|
9,231
|
|
|
(iv)
|
|
(43,942
|
)
|
|
(49,369
|
)
|
|||||
Net income before income tax expense
|
|
53,363
|
|
|
—
|
|
|
|
|
(5,921
|
)
|
|
|
|
47,442
|
|
|
53,300
|
|
|||||
Tax expense
|
|
—
|
|
|
(14,900
|
)
|
|
(i)(m)
|
|
—
|
|
|
|
|
(14,900
|
)
|
|
(16,740
|
)
|
|||||
Income tax expense
|
|
(14,900
|
)
|
|
14,900
|
|
|
(i)(m)
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|||||
Net income
|
|
€
|
38,463
|
|
|
€
|
—
|
|
|
|
|
€
|
(5,921
|
)
|
|
|
|
€
|
32,542
|
|
|
$
|
36,560
|
|
For the year ended December 31, 2018
|
|
Local Currency -- Euro (€)
|
|
USD ($)
|
||||||||||||||||||||
|
|
IFRS
|
|
|
|
|
|
|
|
|
|
US GAAP
|
|
US GAAP
|
||||||||||
|
|
InterXion
|
|
Reclassification Adjustments
|
|
Total GAAP Adjustments
|
|
InterXion
|
|
InterXion
|
||||||||||||||
Revenues
|
|
€
|
561,752
|
|
|
€
|
(174
|
)
|
|
(i)(a)
|
|
€
|
—
|
|
|
|
|
€
|
561,578
|
|
|
$
|
663,307
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cost of sales
|
|
219,462
|
|
|
(219,462
|
)
|
|
(i)(a)(c)(d)(e)
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|||||
Sales and marketing costs
|
|
36,494
|
|
|
(36,494
|
)
|
|
(i)(f)
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|||||
General and administrative costs
|
|
194,646
|
|
|
(97,221
|
)
|
|
(i)(e)(f)(g)(h)
|
|
—
|
|
|
|
|
97,425
|
|
|
115,073
|
|
|||||
Rental property operating and maintenance
|
|
—
|
|
|
214,710
|
|
|
(i)(c)
|
|
(15,300
|
)
|
|
(ii)
|
|
199,410
|
|
|
235,533
|
|
|||||
Property taxes and insurance
|
|
—
|
|
|
4,349
|
|
|
(i)(d)
|
|
—
|
|
|
|
|
4,349
|
|
|
5,137
|
|
|||||
Depreciation and amortization
|
|
—
|
|
|
128,954
|
|
|
(i)(g)
|
|
6,900
|
|
|
(ii)
|
|
135,854
|
|
|
160,464
|
|
|||||
Transactions and integration
|
|
—
|
|
|
4,990
|
|
|
(i)(h)
|
|
—
|
|
|
|
|
4,990
|
|
|
5,894
|
|
|||||
Total operating expenses
|
|
450,602
|
|
|
(174
|
)
|
|
|
|
(8,400
|
)
|
|
|
|
442,028
|
|
|
522,101
|
|
|||||
Operating income
|
|
111,150
|
|
|
—
|
|
|
|
|
8,400
|
|
|
|
|
119,550
|
|
|
141,206
|
|
|||||
Finance income
|
|
4,180
|
|
|
(4,180
|
)
|
|
(i)(i)
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|||||
Finance expense
|
|
(65,878
|
)
|
|
65,878
|
|
|
(i)(j)(k)
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|||||
Interest and other income, net
|
|
—
|
|
|
4,180
|
|
|
(i)(i)
|
|
(469
|
)
|
|
(iii)
|
|
3,711
|
|
|
4,383
|
|
|||||
Interest expense
|
|
—
|
|
|
(56,503
|
)
|
|
(i)(j)
|
|
(7,900
|
)
|
|
(ii)
|
|
(64,403
|
)
|
|
(76,069
|
)
|
|||||
Loss from early extinguishment of debt
|
|
—
|
|
|
(9,375
|
)
|
|
(i)(k)
|
|
—
|
|
|
|
|
(9,375
|
)
|
|
(11,073
|
)
|
|||||
Net income before income tax expense
|
|
49,452
|
|
|
—
|
|
|
|
|
31
|
|
|
|
|
49,483
|
|
|
58,447
|
|
|||||
Tax expense
|
|
—
|
|
|
(18,334
|
)
|
|
(i)(m)
|
|
|
|
|
|
(18,334
|
)
|
|
(21,655
|
)
|
||||||
Income tax expense
|
|
(18,334
|
)
|
|
18,334
|
|
|
(i)(m)
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|||||
Net income
|
|
€
|
31,118
|
|
|
€
|
—
|
|
|
|
|
€
|
31
|
|
|
|
|
€
|
31,149
|
|
|
$
|
36,792
|
|
(i)
|
Reclassification adjustments to reclassify revenue and operating expenses to conform to Digital Realty’s presentation:
|
(a)
|
To reclassify INXN’s bad debt expense from cost of sales of €174 thousand for the year ended December 31, 2018 and €57 thousand for the nine months ended September 30, 2019 to Digital Realty’s rental and other services.
|
(b)
|
To reclassify INXN’s revenue of €12 thousand for the nine months ended September 30, 2019 to Digital Realty’s fee income and other.
|
(c)
|
To reclassify INXN’s cost of sales of €214.7 million for the year ended December 31, 2018 and €155.7 million for the nine months ended September 30, 2019 to Digital Realty’s rental property operating and maintenance expense.
|
(d)
|
To reclassify INXN’s cost of sales of €4.3 million for the year ended December 31, 2018 and €3.2 million for the nine months ended September 30, 2019 to Digital Realty’s property taxes and insurance expense.
|
(e)
|
To reclassify INXN’s cost of sales of €0.2 million for the year ended December 31, 2018 and €0.3 million for the nine months ended September 30, 2019 to Digital Realty’s general and administrative expense.
|
(f)
|
To reclassify INXN’s sales and marketing costs of €36.5 million for the year ended December 31, 2018 and €27.3 million for the nine months ended September 30, 2019 to Digital Realty’s general and administrative expense.
|
(g)
|
To reclassify INXN’s general and administrative costs of €129.0 million for the year ended December 31, 2018 and €131.3 million for the nine months ended September 30, 2019 to Digital Realty’s depreciation and amortization expense.
|
(h)
|
To reclassify INXN’s general and administrative costs of €5.0 million for the year ended December 31, 2018 and €1.4 million for the nine months ended September 30, 2019 to Digital Realty’s transactions and integration expense.
|
(i)
|
To reclassify INXN’s finance income of €4.1 million for the year ended December 31, 2018 and €16.1 million for the nine months ended September 30, 2019 to Digital Realty’s interest and other income, net.
|
(j)
|
To reclassify INXN’s finance expense of €56.5 million for the year ended December 31, 2018 and €53.2 million for the nine months ended September 30, 2019 to Digital Realty’s interest expense.
|
(k)
|
To reclassify INXN’s finance expense of €9.4 million for the year ended December 31, 2018 to Digital Realty’s loss from early extinguishment of debt.
|
(l)
|
To reclassify INXN’s share of result of equity-accounted investees, net of tax for the nine months ended September 30, 2019 to Digital Realty’s equity in losses of unconsolidated joint ventures.
|
(m)
|
To reclassify presentation of income tax expense to Digital Realty's income statement presentation.
|
(ii)
|
IFRS to U.S. GAAP adjustment for the year ended December 31, 2018 reflects a shift in costs between rental property operating and maintenance expense, depreciation and amortization expense and interest expense. In 2018, the in-place U.S. GAAP lessee accounting guidance was under ASC 840. In 2018, the majority of INXN locations were deemed build-to-suit leases, which should be accounted as financing transactions under U.S. GAAP as a result of the involvement of INXN during the construction of such real estate assets and its significant continuing involvement in relation to such real estate assets upon completion of their construction activities. These leases were accounted as operating leases under IFRS. U.S. GAAP authoritative guidance changed to ASC 842 on January 1, 2019.
|
(iii)
|
IFRS to U.S. GAAP adjustment related to removal of IFRS mark to market accounting on a convertible loan between INXN and its investment in associate. Under IFRS the instrument has been carried at market value with changes in market value flowing through profit and loss. Under U.S. GAAP the instrument does not require bifurcation and does not need to be marked to market as it is not a marketable equity security.
|
(iv)
|
IFRS to U.S. GAAP lessee accounting adjustment for the nine months ended September 30, 2019 reflects a decrease in interest expense and depreciation and amortization expense and an increase in rental property operating and maintenance expense. IFRS 16 and ASC 842 became effective January 1, 2019. The IFRS 16 to ASC 842 adjustment classifies the majority of INXN leases as operating leases under ASC 842. IFRS 16 eliminates the classification of leases as either operating leases or finance leases for a lessee.
|
(B)
|
Represents the following adjustments to depreciation and amortization (in thousands):
|
|
|
Nine months ended
September 30, 2019 |
|
Year ended December 31, 2018
|
||||
Depreciation adjustment in connection with the fair value of investment in properties
|
|
$
|
124,602
|
|
|
$
|
166,134
|
|
Amortization adjustment in connection with the fair value of intangible assets
|
|
51,384
|
|
|
68,512
|
|
||
Elimination of InterXion depreciation and amortization, excluding other intangibles acquired
|
|
(115,930
|
)
|
|
(151,445
|
)
|
||
Total depreciation and amortization adjustments
|
|
$
|
60,056
|
|
|
$
|
83,201
|
|
(C)
|
Reflects the elimination of approximately $2.7 million and $6.5 million of non-recurring transaction costs that were incurred and recorded by DLR and INXN during the nine months ended September 30, 2019 and the year ended December 31, 2018, respectively, that are directly related to the InterXion combination. Expenses related to the InterXion combination do not have a continuing impact on the results of operations of DLR following the InterXion combination, and therefore, such transaction expenses are excluded from the unaudited pro forma condensed combined income statements. DLR estimates that the total transaction costs related to the InterXion combination will be approximately $200 million. The actual amount may vary. DLR also expects to incur other financing costs and integration costs associated with the InterXion combination. Given the uncertainty of the amounts involved, such financing costs and integration costs are not reasonably estimatable.
|
(D)
|
In 2018, Digital Realty applied U.S. GAAP lease accounting guidance under ASC 840. These adjustments reflect the purchase accounting impact on the building values used to account for the build-to-suit leases discussed in Note 3(A)(ii) pursuant to ASC 840, assuming the purchase event was on January 1, 2018 and that all leases commenced on that date. This adjustment increases depreciation and amortization expense by $11.3 million.
|
(E)
|
To recognize accretion of the pro forma debt premium of approximately $12.1 million and $8.7 million for the nine months ended September 30, 2019 and the year ended December 31, 2018, respectively, from Digital Realty's assumption of INXN’s existing long-term debt, which was originally issued on June 18, 2018.
|
(F)
|
Reflects the foreign income tax impact of pro forma adjustments, assuming a blended foreign income tax rate of 26.5% for both the nine months ended September 30, 2019 and the year ended December 31, 2018. The effective tax rate of the combined company could be significantly different depending upon post-combination activities and changes to enacted income tax rates in the countries in which INXN operates.
|
(G)
|
The calculation of basic and diluted income per share of DLR common stock are as follows:
|
|
|
Nine months ended September 30, 2019
|
||||||||||
|
|
(in thousands, except per share data)
|
||||||||||
|
|
DLR
Historical
|
|
InterXion
Historical
|
|
Pro Forma
Combined
Company
|
||||||
Net income available to common stockholders, basic and diluted
|
|
$
|
177,434
|
|
|
$
|
36,560
|
|
|
$
|
180,696
|
|
Weighted average shares of common stock outstanding, basic (i)
|
|
208,174
|
|
|
73,429
|
|
|
263,102
|
|
|||
Weighted average shares of common stock outstanding, diluted (i)
|
|
209,199
|
|
|
74,015
|
|
|
264,127
|
|
|||
Net income per share available to common stockholders, basic
|
|
$
|
0.85
|
|
|
$
|
0.50
|
|
|
$
|
0.69
|
|
Net income per share available to common stockholders, diluted
|
|
$
|
0.85
|
|
|
$
|
0.49
|
|
|
$
|
0.68
|
|
|
|
|
|
|
|
|
||||||
|
|
Year ended December 31, 2018
|
||||||||||
|
|
(in thousands, except per share data)
|
||||||||||
|
|
DLR
Historical
|
|
InterXion
Historical
|
|
Pro Forma
Combined
Company
|
||||||
Net income available to common stockholders, basic and diluted
|
|
$
|
249,930
|
|
|
$
|
36,792
|
|
|
$
|
228,452
|
|
Weighted average shares of common stock outstanding, basic (i)
|
|
206,035
|
|
|
71,562
|
|
|
260,963
|
|
|||
Weighted average shares of common stock outstanding, diluted (i)
|
|
206,673
|
|
|
72,056
|
|
|
261,601
|
|
|||
Net income per share available to common stockholders, basic
|
|
$
|
1.21
|
|
|
$
|
0.51
|
|
|
$
|
0.88
|
|
Net income per share available to common stockholders, diluted
|
|
$
|
1.21
|
|
|
$
|
0.51
|
|
|
$
|
0.87
|
|
(i)
|
The pro forma weighted average shares of common stock assume that the shares of DLR common stock issued in the InterXion combination were issued as of January 1, 2018.
|
•
|
the accompanying notes to the pro forma financial statements;
|
•
|
the historical audited consolidated financial statements of DLR OP and the related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in the combined Annual Report on Form 10-K of DLR and DLR OP for the fiscal year ended December 31, 2018, as filed with the Securities and Exchange Commission, or the SEC, on February 25, 2019;
|
•
|
the historical unaudited condensed consolidated financial statements of DLR OP and the related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in the combined Quarterly Report on Form 10-Q of DLR and DLR OP for the quarterly period ended September 30, 2019, as filed with the SEC on November 8, 2019;
|
•
|
the historical audited consolidated financial statements of INXN and the related notes included in its Annual Report on Form 20-F for the fiscal year ended December 31, 2018, as filed with the SEC on April 30, 2019, which are included in the Current Report on Form 8-K to which these unaudited pro forma condensed combined financial statements are an exhibit; and
|
•
|
the historical unaudited condensed consolidated financial statements of INXN and the related notes included in its Report on Form 6-K for the quarterly period ended September 30, 2019, as furnished to the SEC on November 7, 2019, which are included in the Current Report on Form 8-K to which these unaudited pro forma condensed combined financial statements are an exhibit.
|
|
Historical
|
|
|
|
|
|
|
||||||||||
|
Digital Realty Trust, L.P.
|
|
InterXion (See Note 2(A))
|
|
Other Pro Forma Adjustments
|
|
Note Reference
|
|
Pro Forma Combined Company
|
||||||||
ASSETS
|
|
|
|
|
|
|
|
|
|
||||||||
Investments in real estate:
|
|
|
|
|
|
|
|
|
|
||||||||
Properties:
|
|
|
|
|
|
|
|
|
|
||||||||
Land
|
$
|
790,821
|
|
|
$
|
154,910
|
|
|
$
|
118,676
|
|
|
2(B)(i)
|
|
$
|
1,064,407
|
|
Acquired ground leases
|
10,133
|
|
|
—
|
|
|
—
|
|
|
|
|
10,133
|
|
||||
Buildings and improvements
|
14,998,062
|
|
|
2,392,192
|
|
|
99,820
|
|
|
2(B)(i)
|
|
17,490,074
|
|
||||
Tenant improvements
|
608,064
|
|
|
—
|
|
|
—
|
|
|
|
|
608,064
|
|
||||
Total investments in properties
|
16,407,080
|
|
|
2,547,102
|
|
|
218,496
|
|
|
|
|
19,172,678
|
|
||||
Accumulated depreciation and amortization
|
(4,298,629
|
)
|
|
(868,873
|
)
|
|
868,873
|
|
|
2(C)
|
|
(4,298,629
|
)
|
||||
Net investments in properties
|
12,108,451
|
|
|
1,678,229
|
|
|
1,087,369
|
|
|
|
|
14,874,049
|
|
||||
Construction in progress
|
1,647,130
|
|
|
497,927
|
|
|
—
|
|
|
|
|
2,145,057
|
|
||||
Land held for future development
|
150,265
|
|
|
—
|
|
|
—
|
|
|
|
|
150,265
|
|
||||
Net investments in properties
|
13,905,846
|
|
|
2,176,156
|
|
|
1,087,369
|
|
|
|
|
17,169,371
|
|
||||
Investment in unconsolidated joint ventures
|
1,035,861
|
|
|
3,720
|
|
|
—
|
|
|
|
|
1,039,581
|
|
||||
Net investments in real estate
|
14,941,707
|
|
|
2,179,876
|
|
|
1,087,369
|
|
|
|
|
18,208,952
|
|
||||
Operating lease right-of-use assets
|
634,085
|
|
|
445,964
|
|
|
—
|
|
|
|
|
1,080,049
|
|
||||
Cash and cash equivalents
|
7,190
|
|
|
224,334
|
|
|
—
|
|
|
|
|
231,524
|
|
||||
Accounts and other receivables, net of allowance for doubtful accounts
|
304,712
|
|
|
197,111
|
|
|
—
|
|
|
|
|
501,823
|
|
||||
Deferred rent
|
471,516
|
|
|
15,120
|
|
|
(15,120
|
)
|
|
2(C)
|
|
471,516
|
|
||||
Acquired above-market leases, net
|
84,315
|
|
|
—
|
|
|
—
|
|
|
|
|
84,315
|
|
||||
Goodwill
|
3,338,168
|
|
|
42,397
|
|
|
3,808,272
|
|
|
2(B)(iii)
|
|
7,188,837
|
|
||||
Acquired in-place lease value, deferred leasing costs and intangibles, net
|
2,245,017
|
|
|
76,574
|
|
|
1,352,300
|
|
|
2(B)(ii)
|
|
3,673,891
|
|
||||
Assets held for sale
|
967,527
|
|
|
—
|
|
|
—
|
|
|
|
|
967,527
|
|
||||
Other assets
|
178,528
|
|
|
87,473
|
|
|
—
|
|
|
|
|
266,001
|
|
||||
Total assets
|
$
|
23,172,765
|
|
|
$
|
3,268,849
|
|
|
$
|
6,232,821
|
|
|
|
|
$
|
32,674,435
|
|
LIABILITIES AND CAPITAL
|
|
|
|
|
|
|
|
|
|
||||||||
Global revolving credit facilities, net
|
$
|
1,833,512
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
$
|
1,833,512
|
|
Unsecured term loans, net
|
796,232
|
|
|
—
|
|
|
—
|
|
|
|
|
796,232
|
|
||||
Unsecured senior notes, net
|
8,189,138
|
|
|
1,296,378
|
|
|
112,805
|
|
|
2(D)
|
|
9,598,321
|
|
||||
Secured debt, including premiums, net
|
105,153
|
|
|
71,140
|
|
|
—
|
|
|
|
|
176,293
|
|
||||
Operating lease liabilities
|
699,381
|
|
|
459,524
|
|
|
—
|
|
|
|
|
1,158,905
|
|
||||
Accounts payable and other accrued liabilities
|
938,740
|
|
|
357,907
|
|
|
600,000
|
|
|
2(B)(iii)
|
|
1,896,647
|
|
||||
Acquired below-market leases, net
|
153,422
|
|
|
—
|
|
|
—
|
|
|
|
|
153,422
|
|
||||
Security deposits and prepaid rents
|
203,708
|
|
|
21,403
|
|
|
—
|
|
|
|
|
225,111
|
|
||||
Obligations associated with assets held for sale
|
23,534
|
|
|
—
|
|
|
—
|
|
|
|
|
23,534
|
|
||||
Total liabilities
|
12,942,820
|
|
|
2,206,352
|
|
|
712,805
|
|
|
|
|
15,861,977
|
|
||||
Redeemable limited partner common units
|
19,090
|
|
|
—
|
|
|
—
|
|
|
|
|
19,090
|
|
||||
Commitments and contingencies
|
|
|
|
|
|
|
|
|
|
||||||||
Capital:
|
|
|
|
|
|
|
|
|
|
||||||||
Partners’ Capital:
|
|
|
|
|
|
|
|
|
|
||||||||
General Partner:
|
|
|
|
|
|
|
|
|
|
||||||||
Preferred units
|
1,099,534
|
|
|
—
|
|
|
—
|
|
|
|
|
1,099,534
|
|
||||
Common units
|
8,406,381
|
|
|
1,062,497
|
|
|
5,520,016
|
|
|
2(E)
|
|
14,988,894
|
|
||||
Limited Partners
|
733,907
|
|
|
—
|
|
|
—
|
|
|
|
|
733,907
|
|
||||
Accumulated other comprehensive loss
|
(71,316
|
)
|
|
—
|
|
|
—
|
|
|
|
|
(71,316
|
)
|
||||
Total partners’ capital
|
10,168,506
|
|
|
1,062,497
|
|
|
5,520,016
|
|
|
2(E)
|
|
16,751,019
|
|
||||
|
|
|
|
|
|
|
|
|
|
Noncontrolling interests in consolidated joint ventures
|
42,349
|
|
|
—
|
|
|
—
|
|
|
|
|
42,349
|
|
||||
Total capital
|
10,210,855
|
|
|
1,062,497
|
|
|
5,520,016
|
|
|
|
|
16,793,368
|
|
||||
Total liabilities and capital
|
$
|
23,172,765
|
|
|
$
|
3,268,849
|
|
|
$
|
6,232,821
|
|
|
|
|
$
|
32,674,435
|
|
|
Historical
|
|
|
|
|
|
|
||||||||||
|
Digital Realty Trust, L.P.
|
|
InterXion
(See Note 3(A)) |
|
Other Pro Forma Adjustments
|
|
Note Reference
|
|
Pro Forma Combined Company
|
||||||||
Operating Revenues:
|
|
|
|
|
|
|
|
|
|
||||||||
Rental and other services
|
$
|
2,413,888
|
|
|
$
|
527,293
|
|
|
$
|
—
|
|
|
|
|
$
|
2,941,181
|
|
Fee income and other
|
7,890
|
|
|
13
|
|
|
—
|
|
|
|
|
7,903
|
|
||||
Total operating revenues
|
2,421,778
|
|
|
527,306
|
|
|
—
|
|
|
|
|
2,949,084
|
|
||||
Operating Expenses:
|
|
|
|
|
|
|
|
|
|
||||||||
Rental property operating and maintenance
|
766,417
|
|
|
203,147
|
|
|
—
|
|
|
|
|
969,564
|
|
||||
Property taxes and insurance
|
126,587
|
|
|
3,555
|
|
|
—
|
|
|
|
|
130,142
|
|
||||
Depreciation and amortization
|
888,766
|
|
|
123,944
|
|
|
60,056
|
|
|
3(B)
|
|
1,072,766
|
|
||||
General and administrative
|
156,427
|
|
|
97,805
|
|
|
—
|
|
|
|
|
254,232
|
|
||||
Transactions and integration
|
10,819
|
|
|
1,601
|
|
|
(2,666
|
)
|
|
3(C)
|
|
9,754
|
|
||||
Impairment of investments in real estate
|
5,351
|
|
|
—
|
|
|
—
|
|
|
|
|
5,351
|
|
||||
Other
|
12,129
|
|
|
—
|
|
|
—
|
|
|
|
|
12,129
|
|
||||
Total operating expenses
|
1,966,496
|
|
|
430,052
|
|
|
57,390
|
|
|
|
|
2,453,938
|
|
||||
Operating income
|
455,282
|
|
|
97,254
|
|
|
(57,390
|
)
|
|
|
|
495,146
|
|
||||
Other Income (Expenses):
|
|
|
|
|
|
|
|
|
|
||||||||
Equity in losses of unconsolidated joint ventures
|
(3,090
|
)
|
|
(311
|
)
|
|
—
|
|
|
|
|
(3,401
|
)
|
||||
Gain on deconsolidation
|
67,497
|
|
|
—
|
|
|
—
|
|
|
|
|
67,497
|
|
||||
Interest and other income, net
|
55,266
|
|
|
5,726
|
|
|
—
|
|
|
|
|
60,992
|
|
||||
Interest expense
|
(272,177
|
)
|
|
(49,369
|
)
|
|
12,087
|
|
|
3(E)
|
|
(309,459
|
)
|
||||
Tax expense
|
(13,726
|
)
|
|
(16,740
|
)
|
|
12,005
|
|
|
3(F)
|
|
(18,461
|
)
|
||||
Loss from early extinguishment of debt
|
(39,157
|
)
|
|
—
|
|
|
—
|
|
|
|
|
(39,157
|
)
|
||||
Net income
|
249,895
|
|
|
36,560
|
|
|
(33,298
|
)
|
|
|
|
253,157
|
|
||||
Net loss attributable to noncontrolling interests in
consolidated joint ventures |
1,582
|
|
|
—
|
|
|
—
|
|
|
|
|
1,582
|
|
||||
Net income attributable to Digital Realty Trust, L.P.
|
251,477
|
|
|
36,560
|
|
|
(33,298
|
)
|
|
|
|
254,739
|
|
||||
Preferred units distributions
|
(54,283
|
)
|
|
—
|
|
|
—
|
|
|
|
|
(54,283
|
)
|
||||
Issuance costs associated with redeemed preferred units
|
(11,760
|
)
|
|
—
|
|
|
—
|
|
|
|
|
(11,760
|
)
|
||||
Net income available to common unitholders
|
$
|
185,434
|
|
|
$
|
36,560
|
|
|
$
|
(33,298
|
)
|
|
|
|
$
|
188,696
|
|
Net income per share available to common unitholders:
|
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.85
|
|
|
$
|
0.50
|
|
|
|
|
|
|
$
|
0.69
|
|
||
Diluted
|
$
|
0.85
|
|
|
$
|
0.49
|
|
|
|
|
|
|
$
|
0.69
|
|
||
Weighted average common units outstanding:
|
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
217,254,811
|
|
|
73,429,000
|
|
|
54,927,513
|
|
|
3(G)
|
|
272,182,324
|
|
||||
Diluted
|
218,280,351
|
|
|
74,015,000
|
|
|
54,927,513
|
|
|
3(G)
|
|
273,207,864
|
|
|
Historical
|
|
|
|
|
|
|
||||||||||
|
Digital Realty Trust, L.P.
|
|
InterXion
(See Note 3(A))
|
|
Other Pro Forma Adjustments
|
|
Note Reference
|
|
Pro Forma Combined Company
|
||||||||
Operating Revenues:
|
|
|
|
|
|
|
|
|
|
||||||||
Rental and other services
|
$
|
2,412,076
|
|
|
$
|
663,307
|
|
|
$
|
—
|
|
|
|
|
$
|
3,075,383
|
|
Tenant reimbursements
|
624,637
|
|
|
—
|
|
|
—
|
|
|
|
|
624,637
|
|
||||
Fee income and other
|
9,765
|
|
|
—
|
|
|
—
|
|
|
|
|
9,765
|
|
||||
Total operating revenues
|
3,046,478
|
|
|
663,307
|
|
|
—
|
|
|
|
|
3,709,785
|
|
||||
Operating Expenses:
|
|
|
|
|
|
|
|
|
|
||||||||
Rental property operating and maintenance
|
957,065
|
|
|
235,533
|
|
|
—
|
|
|
|
|
1,192,598
|
|
||||
Property taxes and insurance
|
140,918
|
|
|
5,137
|
|
|
—
|
|
|
|
|
146,055
|
|
||||
Depreciation and amortization
|
1,186,896
|
|
|
160,464
|
|
|
94,501
|
|
|
3(B)(D)
|
|
1,441,861
|
|
||||
General and administrative
|
163,667
|
|
|
115,073
|
|
|
—
|
|
|
|
|
278,740
|
|
||||
Transactions and integration
|
45,327
|
|
|
5,894
|
|
|
(6,492
|
)
|
|
3(C)
|
|
44,729
|
|
||||
Other
|
2,818
|
|
|
—
|
|
|
—
|
|
|
|
|
2,818
|
|
||||
Total operating expenses
|
2,496,691
|
|
|
522,101
|
|
|
88,009
|
|
|
|
|
3,106,801
|
|
||||
Operating income
|
549,787
|
|
|
141,206
|
|
|
(88,009
|
)
|
|
|
|
602,984
|
|
||||
Other Income (Expenses):
|
|
|
|
|
|
|
|
|
|
||||||||
Equity in earnings of unconsolidated joint ventures
|
32,979
|
|
|
—
|
|
|
—
|
|
|
|
|
32,979
|
|
||||
Gain on sale of properties
|
80,049
|
|
|
—
|
|
|
—
|
|
|
|
|
80,049
|
|
||||
Interest and other income, net
|
3,481
|
|
|
4,383
|
|
|
—
|
|
|
|
|
7,864
|
|
||||
Interest expense
|
(321,529
|
)
|
|
(76,069
|
)
|
|
8,730
|
|
|
3(E)
|
|
(388,868
|
)
|
||||
Tax expense
|
(2,084
|
)
|
|
(21,655
|
)
|
|
21,009
|
|
|
3(F)
|
|
(2,730
|
)
|
||||
Loss from early extinguishment of debt
|
(1,568
|
)
|
|
(11,073
|
)
|
|
—
|
|
|
|
|
(12,641
|
)
|
||||
Net income
|
341,115
|
|
|
36,792
|
|
|
(58,270
|
)
|
|
|
|
319,637
|
|
||||
Net loss attributable to noncontrolling interests in
consolidated joint ventures |
311
|
|
|
—
|
|
|
—
|
|
|
|
|
311
|
|
||||
Net income attributable to Digital Realty Trust, L.P.
|
341,426
|
|
|
36,792
|
|
|
(58,270
|
)
|
|
|
|
319,948
|
|
||||
Preferred units distributions
|
(81,316
|
)
|
|
—
|
|
|
—
|
|
|
|
|
(81,316
|
)
|
||||
Net income available to common unitholders
|
$
|
260,110
|
|
|
$
|
36,792
|
|
|
$
|
(58,270
|
)
|
|
|
|
$
|
238,632
|
|
Net income per share available to common unitholders:
|
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
1.21
|
|
|
$
|
0.51
|
|
|
|
|
|
|
$
|
0.89
|
|
||
Diluted
|
$
|
1.21
|
|
|
$
|
0.51
|
|
|
|
|
|
|
$
|
0.88
|
|
||
Weighted average common units outstanding:
|
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
214,312,871
|
|
|
71,562,000
|
|
|
54,927,513
|
|
|
3(G)
|
|
269,240,384
|
|
||||
Diluted
|
214,950,934
|
|
|
72,056,000
|
|
|
54,927,513
|
|
|
3(G)
|
|
269,878,447
|
|
1.
|
Description of the transaction and basis of pro forma presentation
|
(A)
|
InterXion classified certain amounts differently than DLR OP in its condensed consolidated balance sheet. The following schedule summarizes the necessary material adjustments to conform InterXion’s unaudited condensed consolidated balance sheet as of September 30, 2019 to U.S. GAAP and to reclassify certain amounts to conform to DLR OP’s balance sheet presentation. In addition, InterXion’s unaudited condensed consolidated balance sheet has been translated into U.S. dollars at a rate of $1.0899 to €1.00, the average exchange rate on September 30, 2019 (in thousands):
|
As of September 30, 2019
|
Local Currency - Euro (€)
|
|
USD ($)
|
||||||||||||||||||||
|
IFRS
InterXion |
|
Reclassification
Adjustments |
|
U.S. GAAP
Adjustments |
|
U.S. GAAP
InterXion |
|
U.S. GAAP
InterXion |
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Property, plant and equipment
|
€
|
1,969,757
|
|
|
€
|
(1,969,757
|
)
|
|
(i)(a)
|
|
€
|
—
|
|
|
|
|
€
|
—
|
|
|
$
|
—
|
|
Land
|
—
|
|
|
142,132
|
|
|
(i)(a)
|
|
—
|
|
|
|
|
142,132
|
|
|
154,910
|
|
|||||
Buildings and improvements
|
—
|
|
|
2,167,973
|
|
|
(i)(a)
|
|
26,900
|
|
|
(ii)
|
|
2,194,873
|
|
|
2,392,192
|
|
|||||
Construction in progress
|
—
|
|
|
456,856
|
|
|
(i)(a)
|
|
—
|
|
|
|
|
456,856
|
|
|
497,927
|
|
|||||
Accumulated depreciation and amortization
|
—
|
|
|
(797,204
|
)
|
|
(i)(a)
|
|
—
|
|
|
|
|
(797,204
|
)
|
|
(868,873
|
)
|
|||||
Investments in unconsolidated joint ventures
|
—
|
|
|
3,413
|
|
|
(i)(e)
|
|
—
|
|
|
|
|
3,413
|
|
|
3,720
|
|
|||||
Right-of-use assets
|
436,079
|
|
|
—
|
|
|
|
|
(26,900
|
)
|
|
(ii)
|
|
409,179
|
|
|
445,964
|
|
|||||
Trade receivables and other current assets
|
231,278
|
|
|
(50,426
|
)
|
|
(i)(b)
|
|
—
|
|
|
|
|
180,852
|
|
|
197,111
|
|
|||||
Cash and cash equivalents
|
205,830
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
205,830
|
|
|
224,334
|
|
|||||
Deferred rent
|
—
|
|
|
13,873
|
|
|
(i)(b)
|
|
—
|
|
|
|
|
13,873
|
|
|
15,120
|
|
|||||
Intangible assets
|
70,258
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
70,258
|
|
|
76,574
|
|
|||||
Goodwill
|
38,900
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
38,900
|
|
|
42,397
|
|
|||||
Deferred tax assets
|
26,913
|
|
|
(26,913
|
)
|
|
(i)(c)
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|||||
Investment in associate
|
3,413
|
|
|
(3,413
|
)
|
|
(i)(e)
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|||||
Other non-current assets
|
16,792
|
|
|
(16,792
|
)
|
|
(i)(d)
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|||||
Other assets
|
—
|
|
|
80,258
|
|
|
(i)(b)(c)(d)
|
|
—
|
|
|
|
|
80,258
|
|
|
87,473
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total assets
|
€
|
2,999,220
|
|
|
€
|
—
|
|
|
|
|
€
|
—
|
|
|
|
|
€
|
2,999,220
|
|
|
$
|
3,268,849
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Shareholders’ equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Share capital
|
€
|
7,716
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
€
|
7,716
|
|
|
$
|
8,410
|
|
||
Share premium
|
855,116
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
855,116
|
|
|
931,990
|
|
|||||
Foreign currency translation reserve
|
4,626
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
4,626
|
|
|
5,042
|
|
|||||
Hedging reserve, net of tax
|
(264
|
)
|
|
—
|
|
|
|
|
—
|
|
|
|
|
(264
|
)
|
|
(288
|
)
|
|||||
Accumulated profit
|
107,664
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
107,664
|
|
|
117,343
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total shareholders' equity
|
974,858
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
974,858
|
|
|
1,062,497
|
|
|||||
Non-current liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Borrowings
|
1,249,837
|
|
|
(1,249,837
|
)
|
|
(i)(f)
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|||||
Unsecured senior notes, net
|
—
|
|
|
1,189,447
|
|
|
(i)(f)
|
|
—
|
|
|
|
|
1,189,447
|
|
|
1,296,378
|
|
|||||
Secured debt, including premiums, net
|
—
|
|
|
65,272
|
|
|
(i)(f)
|
|
—
|
|
|
|
|
65,272
|
|
|
71,140
|
|
|||||
Accounts payable and other accrued liabilities
|
—
|
|
|
296,613
|
|
|
(i)(g)
|
|
31,772
|
|
|
(ii)
|
|
328,385
|
|
|
357,907
|
|
|||||
Lease liabilities
|
425,315
|
|
|
28,077
|
|
|
(i)(i)
|
|
(31,772
|
)
|
|
(ii)
|
|
421,620
|
|
|
459,524
|
|
|||||
Security deposits and prepaid rents
|
—
|
|
|
19,638
|
|
|
(i)(h)
|
|
—
|
|
|
|
|
19,638
|
|
|
21,403
|
|
|||||
Deferred tax liabilities
|
18,162
|
|
|
(18,162
|
)
|
|
(i)(g)
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|||||
Other non-current liabilities
|
16,652
|
|
|
(16,652
|
)
|
|
(i)(g)
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|||||
Current liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Trade payables and other current liabilities
|
272,841
|
|
|
(272,841
|
)
|
|
(i)(g)(h)
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|||||
Lease liabilities
|
28,077
|
|
|
(28,077
|
)
|
|
(i)(i)
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|||||
Income tax liabilities
|
8,596
|
|
|
(8,596
|
)
|
|
(i)(g)
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|||||
Borrowings, current portion
|
4,882
|
|
|
(4,882
|
)
|
|
(i)(f)
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total liabilities
|
2,024,362
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
2,024,362
|
|
|
2,206,352
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total liabilities and shareholders’ equity
|
€
|
2,999,220
|
|
|
€
|
—
|
|
|
|
|
€
|
—
|
|
|
|
|
€
|
2,999,220
|
|
|
$
|
3,268,849
|
|
(i)
|
Reflects certain reclassifications to conform to DLR OP’s financial statement presentation.
|
(a)
|
Property plant and equipment was reclassified as follows to conform to DLR OP’s balance sheet presentation (in thousands):
|
Property, plant and equipment
|
|
€
|
(1,969,757
|
)
|
Land
|
|
142,132
|
|
|
Buildings and improvements
|
|
2,167,973
|
|
|
Construction in progress
|
|
456,856
|
|
|
Accumulated depreciation and amortization
|
|
(797,204
|
)
|
(b)
|
Trade receivables and other current assets of €50.4 million was reclassified to deferred rent of €13.9 million and other assets of €36.5 million, respectively, to conform to DLR OP’s balance sheet presentation.
|
(c)
|
Deferred tax assets of €26.9 million was reclassified to other assets, to conform to DLR OP’s balance sheet presentation.
|
(d)
|
Other non-current assets of €16.8 million was reclassified to other assets, to conform to DLR OP’s balance sheet presentation.
|
(e)
|
Investment in associate of €3.4 million was reclassified to investments in unconsolidated joint ventures to conform to DLR OP’s balance sheet presentation.
|
(f)
|
Borrowings and borrowings, current portion of €1.25 billion and €4.9 million, respectively, were reclassified to unsecured senior notes, net (€1.19 billion) and secured debt, including premiums, net (€65.2 million) to conform to DLR OP’s balance sheet presentation.
|
(g)
|
Trade payables and other current liabilities, deferred tax liabilities, other non-current liabilities and income tax liabilities of €253.2 million, €18.2 million, €16.7 million and €8.6 million, respectively, were reclassified to accounts payable and other accrued liabilities to conform to DLR OP’s balance sheet presentation.
|
(h)
|
Trade payables and other current liabilities of €19.6 million was reclassified to security deposits and prepaid rents to conform to DLR OP’s balance sheet presentation.
|
(i)
|
Lease liabilities, current portion of €28.1 million was reclassified to operating lease liabilities to conform to DLR OP’s balance sheet presentation.
|
(ii)
|
IFRS to U.S. GAAP adjustments reclassify finance leases out of right of use assets and liabilities into buildings and improvements and accounts payable and other accrued liabilities, respectively. The IFRS 16 to ASC 842 adjustment classifies the majority of INXN leases as operating leases under ASC 842. Under ASC 842, leases continue to be subject to a lease classification test. There are two INXN leases that are classified as finance leases as of September 30, 2019 under U.S. GAAP and the balance related to these leases has been reclassified. All other INXN leases under ASC 842 are classified as operating leases.
|
(B)
|
The transaction represents a total value of approximately $6.6 billion for all INXN shares based on the closing price per share of DLR's common stock of $119.84 on November 21, 2019 (in thousands, except for shares and share price):
|
Estimated number of shares of DLR common stock issued (and resulting DLR OP common general partner units issued to DLR)
|
|
54,927,513
|
|
|
Price of shares of DLR common stock on November 21, 2019 (1)
|
|
$
|
119.84
|
|
Estimated fair value of DLR common stock issued (and resulting estimated fair value of DLR OP common general partner units issued to DLR) in InterXion combination
|
|
$
|
6,582,513
|
|
(1)
|
Based on the last reported sales price of shares of DLR common stock on the New York Stock Exchange on November 21, 2019. The price per share for DLR common stock is equal to the estimated fair value per DLR OP common general partner unit.
|
(Unaudited, in thousands, except for the
estimated share price)
|
|
% increase / decrease
|
|
Estimated Share Price
|
|
Estimated Purchase Consideration
|
|||||
As presented in the pro forma combined results
|
|
|
|
$
|
119.84
|
|
|
$
|
6,582,513
|
|
|
20% decrease in the estimated share price
|
|
(20
|
)%
|
|
95.87
|
|
|
5,266,010
|
|
||
10% decrease in the estimated share price
|
|
(10
|
)%
|
|
107.86
|
|
|
5,924,262
|
|
||
10% increase in the estimated share price
|
|
10
|
%
|
|
131.82
|
|
|
7,240,764
|
|
||
20% increase in the estimated share price
|
|
20
|
%
|
|
143.81
|
|
|
7,899,016
|
|
|
|
|
|
Weighted Average Estimated Useful Life (in years)
|
||
Investment in properties:
|
|
|
|
|
||
Land
|
|
$
|
273,586
|
|
(i)
|
|
Buildings and improvements
|
|
2,492,012
|
|
(i)
|
15
|
|
Construction in progress
|
|
497,927
|
|
|
|
|
Investment in unconsolidated joint ventures
|
|
3,720
|
|
|
|
|
Intangible assets:
|
|
|
|
|
||
Customer relationships
|
|
1,273,700
|
|
(ii)
|
21
|
|
Trade names
|
|
78,600
|
|
(ii)
|
10
|
|
Other intangible assets acquired
|
|
76,574
|
|
|
|
|
Goodwill
|
|
3,850,669
|
|
(iii)
|
|
|
Cash and cash equivalents
|
|
224,334
|
|
|
|
|
Accounts and other receivables
|
|
197,111
|
|
|
|
|
Operating lease right-of-use assets
|
|
445,964
|
|
|
|
|
Other assets
|
|
87,473
|
|
|
|
|
|
|
|
|
|
||
Total assets acquired
|
|
9,501,670
|
|
|
|
|
|
|
|
|
|
||
Unsecured senior notes, net
|
|
1,409,183
|
|
|
|
|
Secured debt, net
|
|
71,140
|
|
|
|
|
Accounts payable and other accrued liabilities
|
|
357,907
|
|
|
|
|
Deferred tax liabilities, net
|
|
600,000
|
|
(iii)
|
|
|
Lease liabilities
|
|
459,524
|
|
|
|
|
Security deposits and prepaid rents
|
|
21,403
|
|
|
|
|
|
|
|
|
|
||
Net assets acquired
|
|
$
|
6,582,513
|
|
|
|
(i)
|
Represents the following adjustments to investment in properties (in thousands):
|
|
|
Fair Value
|
|
Carrying Amount of InterXion Tangible Assets
|
|
Step-up in Value
|
||||||
Fair value adjustment to InterXion's investment in properties:
|
|
|
|
|
|
|
||||||
Land
|
|
$
|
273,586
|
|
|
$
|
(154,910
|
)
|
|
$
|
118,676
|
|
Buildings and improvements
|
|
2,492,012
|
|
|
(2,392,192
|
)
|
|
99,820
|
|
|||
|
|
$
|
2,765,598
|
|
|
$
|
(2,547,102
|
)
|
|
$
|
218,496
|
|
(ii)
|
Represents a fair value of $1.4 billion of INXN’s intangible assets, comprised of the following (dollars in thousands):
|
|
|
Fair Value
|
|
Weighted Average Estimated Useful Life (in years)
|
||
Customer relationship value
|
|
$
|
1,273,700
|
|
|
21
|
Trade names
|
|
78,600
|
|
|
10
|
|
Total
|
|
$
|
1,352,300
|
|
|
|
(iii)
|
A preliminary estimate of approximately $3.9 billion has been allocated to goodwill. Goodwill represents the excess of the purchase price over the fair value of the net tangible and intangible assets acquired and liabilities assumed. It is attributable to planned growth in the existing and new markets and synergies expected to be achieved from the combined operations of DLR OP and InterXion. The preliminary purchase price allocation for InterXion is subject to revision as more detailed analysis is completed and additional information on the fair values of InterXion’s assets and liabilities becomes available. Any changes in the fair value of the net assets of InterXion will change the amount of the purchase price allocable to goodwill. Additionally, changes in InterXion’s working capital, including the results of operations from September 30, 2019 through the date the InterXion combination is completed, will also change the amount of goodwill recorded. Final purchase accounting adjustments may, therefore, differ materially from the pro forma adjustments presented here.
|
Goodwill from the InterXion combination
|
|
$
|
3,250,669
|
|
Elimination of InterXion goodwill balance
|
|
(42,397
|
)
|
|
Deferred tax liability adjustments, net
|
|
600,000
|
|
|
Total goodwill adjustments
|
|
$
|
3,808,272
|
|
(C)
|
Represents the elimination on InterXion historical balances.
|
(D)
|
Represents a fair value adjustment related to InterXion's unsecured debt. Fair value of debt is based on quoted market prices for the identical liability when traded as an asset in an active market. In anticipation of recording the assumed debt at fair value, a $112.8 million pro forma debt premium was recorded to recognize the long-term debt at fair value.
|
(E)
|
Represents the following adjustments in partners’ capital (in thousands):
|
Estimated fair value of DLR OP common general partner units issued (1)
|
|
$
|
6,582,513
|
|
Elimination of InterXion’s historical stockholders’ equity
|
|
(1,062,497
|
)
|
|
Total partners’ capital adjustments
|
|
$
|
5,520,016
|
|
(1)
|
Based on the last reported sales price of shares of DLR common stock on the New York Stock Exchange on November 21, 2019. The price per share for DLR common stock is equal to the estimated fair value per DLR OP common general partner unit.
|
(A)
|
InterXion classified certain amounts differently than DLR OP in its condensed consolidated income statements. The following schedule summarizes the necessary material adjustments to conform InterXion’s unaudited condensed consolidated income statement for the nine months ended September 30, 2019 and audited condensed consolidated income statement for the year ended December 31, 2018 to U.S. GAAP and to reclassify certain amounts to conform to DLR OP’s basis of presentation. In addition, InterXion’s unaudited condensed consolidated income statement for the nine months ended September 30, 2019 has been translated into U.S. dollars at a rate of $1.12 to €1.00, the average exchange rate for the nine months ended September 30, 2019, and InterXion’s condensed consolidated income statement for the year ended December 31, 2018 has been translated into U.S. dollars at a rate of $1.18 to €1.00, the average exchange rate for the year ended December 31, 2018 (in thousands):
|
For the nine months ended September 30, 2019
|
|
Local Currency -- Euro (€)
|
|
USD ($)
|
||||||||||||||||||||
|
|
IFRS
|
|
|
|
|
|
|
|
|
|
US GAAP
|
|
US GAAP
|
||||||||||
|
|
InterXion
|
|
Reclassification Adjustments
|
|
Total GAAP Adjustments
|
|
InterXion
|
|
InterXion
|
||||||||||||||
Revenues
|
|
€
|
469,400
|
|
|
€
|
(69
|
)
|
|
(i)(a)(b)
|
|
€
|
—
|
|
|
|
|
€
|
469,331
|
|
|
$
|
527,293
|
|
Fee income and other
|
|
—
|
|
|
12
|
|
|
(i)(b)
|
|
—
|
|
|
|
|
12
|
|
|
13
|
|
|||||
|
|
469,400
|
|
|
(57
|
)
|
|
|
|
—
|
|
|
|
|
469,343
|
|
|
527,306
|
|
|||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cost of sales
|
|
159,261
|
|
|
(159,261
|
)
|
|
(i)(a)(c)(d)(e)
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|||||
Sales and marketing costs
|
|
27,288
|
|
|
(27,288
|
)
|
|
(i)(f)
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|||||
General and administrative costs
|
|
192,169
|
|
|
(105,115
|
)
|
|
(i)(e)(f)(g)(h)
|
|
—
|
|
|
|
|
87,054
|
|
|
97,805
|
|
|||||
Rental property operating and maintenance
|
|
—
|
|
|
155,723
|
|
|
(i)(c)
|
|
25,093
|
|
|
(iv)
|
|
180,816
|
|
|
203,147
|
|
|||||
Property taxes and insurance
|
|
—
|
|
|
3,164
|
|
|
(i)(d)
|
|
—
|
|
|
|
|
3,164
|
|
|
3,555
|
|
|||||
Depreciation and amortization
|
|
—
|
|
|
131,295
|
|
|
(i)(g)
|
|
(20,975
|
)
|
|
(iv)
|
|
110,320
|
|
|
123,944
|
|
|||||
Transactions and integration
|
|
—
|
|
|
1,425
|
|
|
(i)(h)
|
|
—
|
|
|
|
|
1,425
|
|
|
1,601
|
|
|||||
Total operating expenses
|
|
378,718
|
|
|
(57
|
)
|
|
|
|
4,118
|
|
|
|
|
382,779
|
|
|
430,052
|
|
|||||
Operating income
|
|
90,682
|
|
|
—
|
|
|
|
|
(4,118
|
)
|
|
|
|
86,564
|
|
|
97,254
|
|
|||||
Finance income
|
|
16,131
|
|
|
(16,131
|
)
|
|
(i)(i)
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|||||
Finance expense
|
|
(53,173
|
)
|
|
53,173
|
|
|
(i)(j)
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|||||
Share of result of equity-accounted investees, net of tax
|
|
(277
|
)
|
|
277
|
|
|
(i)(l)
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|||||
Equity in losses of unconsolidated joint ventures
|
|
—
|
|
|
(277
|
)
|
|
(i)(l)
|
|
—
|
|
|
|
|
(277
|
)
|
|
(311
|
)
|
|||||
Interest and other income, net
|
|
—
|
|
|
16,131
|
|
|
(i)(i)
|
|
(11,034
|
)
|
|
(iii)
|
|
5,097
|
|
|
5,726
|
|
|||||
Interest expense
|
|
—
|
|
|
(53,173
|
)
|
|
(i)(j)
|
|
9,231
|
|
|
(iv)
|
|
(43,942
|
)
|
|
(49,369
|
)
|
|||||
Net income before income tax expense
|
|
53,363
|
|
|
—
|
|
|
|
|
(5,921
|
)
|
|
|
|
47,442
|
|
|
53,300
|
|
|||||
Tax expense
|
|
—
|
|
|
(14,900
|
)
|
|
(i)(m)
|
|
—
|
|
|
|
|
(14,900
|
)
|
|
(16,740
|
)
|
|||||
Income tax expense
|
|
(14,900
|
)
|
|
14,900
|
|
|
(i)(m)
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|||||
Net income
|
|
€
|
38,463
|
|
|
€
|
—
|
|
|
|
|
€
|
(5,921
|
)
|
|
|
|
€
|
32,542
|
|
|
$
|
36,560
|
|
For the year ended December 31, 2018
|
|
Local Currency -- Euro (€)
|
|
USD ($)
|
||||||||||||||||||||
|
|
IFRS
|
|
|
|
|
|
|
|
|
|
US GAAP
|
|
US GAAP
|
||||||||||
|
|
InterXion
|
|
Reclassification Adjustments
|
|
Total GAAP Adjustments
|
|
InterXion
|
|
InterXion
|
||||||||||||||
Revenues
|
|
€
|
561,752
|
|
|
€
|
(174
|
)
|
|
(i)(a)
|
|
€
|
—
|
|
|
|
|
€
|
561,578
|
|
|
$
|
663,307
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cost of sales
|
|
219,462
|
|
|
(219,462
|
)
|
|
(i)(a)(c)(d)(e)
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|||||
Sales and marketing costs
|
|
36,494
|
|
|
(36,494
|
)
|
|
(i)(f)
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|||||
General and administrative costs
|
|
194,646
|
|
|
(97,221
|
)
|
|
(i)(e)(f)(g)(h)
|
|
—
|
|
|
|
|
97,425
|
|
|
115,073
|
|
|||||
Rental property operating and maintenance
|
|
—
|
|
|
214,710
|
|
|
(i)(c)
|
|
(15,300
|
)
|
|
(ii)
|
|
199,410
|
|
|
235,533
|
|
|||||
Property taxes and insurance
|
|
—
|
|
|
4,349
|
|
|
(i)(d)
|
|
—
|
|
|
|
|
4,349
|
|
|
5,137
|
|
|||||
Depreciation and amortization
|
|
—
|
|
|
128,954
|
|
|
(i)(g)
|
|
6,900
|
|
|
(ii)
|
|
135,854
|
|
|
160,464
|
|
|||||
Transactions and integration
|
|
—
|
|
|
4,990
|
|
|
(i)(h)
|
|
—
|
|
|
|
|
4,990
|
|
|
5,894
|
|
|||||
Total operating expenses
|
|
450,602
|
|
|
(174
|
)
|
|
|
|
(8,400
|
)
|
|
|
|
442,028
|
|
|
522,101
|
|
|||||
Operating income
|
|
111,150
|
|
|
—
|
|
|
|
|
8,400
|
|
|
|
|
119,550
|
|
|
141,206
|
|
|||||
Finance income
|
|
4,180
|
|
|
(4,180
|
)
|
|
(i)(i)
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|||||
Finance expense
|
|
(65,878
|
)
|
|
65,878
|
|
|
(i)(j)(k)
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|||||
Interest and other income, net
|
|
—
|
|
|
4,180
|
|
|
(i)(i)
|
|
(469
|
)
|
|
(iii)
|
|
3,711
|
|
|
4,383
|
|
|||||
Interest expense
|
|
—
|
|
|
(56,503
|
)
|
|
(i)(j)
|
|
(7,900
|
)
|
|
(ii)
|
|
(64,403
|
)
|
|
(76,069
|
)
|
|||||
Loss from early extinguishment of debt
|
|
—
|
|
|
(9,375
|
)
|
|
(i)(k)
|
|
—
|
|
|
|
|
(9,375
|
)
|
|
(11,073
|
)
|
|||||
Net income before income tax expense
|
|
49,452
|
|
|
—
|
|
|
|
|
31
|
|
|
|
|
49,483
|
|
|
58,447
|
|
|||||
Tax expense
|
|
—
|
|
|
(18,334
|
)
|
|
(i)(m)
|
|
|
|
|
|
(18,334
|
)
|
|
(21,655
|
)
|
||||||
Income tax expense
|
|
(18,334
|
)
|
|
18,334
|
|
|
(i)(m)
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|||||
Net income
|
|
€
|
31,118
|
|
|
€
|
—
|
|
|
|
|
€
|
31
|
|
|
|
|
€
|
31,149
|
|
|
$
|
36,792
|
|
(i)
|
Reclassification adjustments to reclassify revenue and operating expenses to conform to DLR OP’s presentation:
|
(a)
|
To reclassify INXN’s bad debt expense from cost of sales of €174 thousand for the year ended December 31, 2018 and €57 thousand for the nine months ended September 30, 2019 to DLR OP’s rental and other services.
|
(b)
|
To reclassify INXN’s revenue of €12 thousand for the nine months ended September 30, 2019 to DLR OP’s fee income and other.
|
(c)
|
To reclassify INXN’s cost of sales of €214.7 million for the year ended December 31, 2018 and €155.7 million for the nine months ended September 30, 2019 to DLR OP’s rental property operating and maintenance expense.
|
(d)
|
To reclassify INXN’s cost of sales of €4.3 million for the year ended December 31, 2018 and €3.2 million for the nine months ended September 30, 2019 to DLR OP’s property taxes and insurance expense.
|
(e)
|
To reclassify INXN’s cost of sales of €0.2 million for the year ended December 31, 2018 and €0.3 million for the nine months ended September 30, 2019 to DLR OP’s general and administrative expense.
|
(f)
|
To reclassify INXN’s sales and marketing costs of €36.5 million for the year ended December 31, 2018 and €27.3 million for the nine months ended September 30, 2019 to DLR OP’s general and administrative expense.
|
(g)
|
To reclassify INXN’s general and administrative costs of €129.0 million for the year ended December 31, 2018 and €131.3 million for the nine months ended September 30, 2019 to DLR OP’s depreciation and amortization expense.
|
(h)
|
To reclassify INXN’s general and administrative costs of €5.0 million for the year ended December 31, 2018 and €1.4 million for the nine months ended September 30, 2019 to DLR OP’s transactions and integration expense.
|
(i)
|
To reclassify INXN’s finance income of €4.1 million for the year ended December 31, 2018 and €16.1 million for the nine months ended September 30, 2019 to DLR OP’s interest and other income, net.
|
(j)
|
To reclassify INXN’s finance expense of €56.5 million for the year ended December 31, 2018 and €53.2 million for the nine months ended September 30, 2019 to DLR OP’s interest expense.
|
(k)
|
To reclassify INXN’s finance expense of €9.4 million for the year ended December 31, 2018 to DLR OP’s loss from early extinguishment of debt.
|
(l)
|
To reclassify INXN’s share of result of equity-accounted investees, net of tax for the nine months ended September 30, 2019 to DLR OP’s equity in losses of unconsolidated joint ventures.
|
(m)
|
To reclassify presentation of income tax expense to DLR OP's income statement presentation.
|
(ii)
|
IFRS to U.S. GAAP adjustment for the year ended December 31, 2018 reflects a shift in costs between rental property operating and maintenance expense, depreciation and amortization expense and interest expense. In 2018, the in-place U.S. GAAP lessee accounting guidance was under ASC 840. In 2018, the majority of INXN locations were deemed build-to-suit leases, which should be accounted as financing transactions under U.S. GAAP as a result of the involvement of INXN during the construction of such real estate assets and its significant continuing involvement in relation to such real estate assets upon completion of their construction activities. These leases were accounted as operating leases under IFRS. U.S. GAAP authoritative guidance changed to ASC 842 on January 1, 2019.
|
(iii)
|
IFRS to U.S. GAAP adjustment related to removal of IFRS mark to market accounting on a convertible loan between INXN and its investment in associate. Under IFRS the instrument has been carried at market value with changes in market value flowing through profit and loss. Under U.S. GAAP the instrument does not require bifurcation and does not need to be marked to market as it is not a marketable equity security.
|
(iv)
|
IFRS to U.S. GAAP lessee accounting adjustment for the nine months ended September 30, 2019 reflects a decrease in interest expense and depreciation and amortization expense and an increase in rental property operating and maintenance expense. IFRS 16 and ASC 842 became effective January 1, 2019. The IFRS 16 to ASC 842 adjustment classifies the majority of INXN leases as operating leases under ASC 842. IFRS 16 eliminates the classification of leases as either operating leases or finance leases for a lessee.
|
(B)
|
Represents the following adjustments to depreciation and amortization (in thousands):
|
|
|
Nine months ended
September 30, 2019 |
|
Year ended December 31, 2018
|
||||
Depreciation adjustment in connection with the fair value of investment in properties
|
|
$
|
124,602
|
|
|
$
|
166,134
|
|
Amortization adjustment in connection with the fair value of intangible assets
|
|
51,384
|
|
|
68,512
|
|
||
Elimination of InterXion depreciation and amortization, excluding other intangibles acquired
|
|
(115,930
|
)
|
|
(151,445
|
)
|
||
Total depreciation and amortization adjustments
|
|
$
|
60,056
|
|
|
$
|
83,201
|
|
(C)
|
Reflects the elimination of approximately $2.7 million and $6.5 million of non-recurring transaction costs that were incurred and recorded by DLR OP and INXN during the nine months ended September 30, 2019 and the year ended December 31, 2018, respectively, that are directly related to the InterXion combination. Expenses related to the InterXion combination do not have a continuing impact on the results of operations of DLR OP following the InterXion combination, and therefore, such transaction expenses are excluded from the unaudited pro forma condensed combined income statements. DLR OP estimates that the total transaction costs related to the InterXion combination will be approximately $200 million. The actual amount may vary. DLR OP also expects to incur other financing costs and integration costs associated with the InterXion combination. Given the uncertainty of the amounts involved, such financing costs and integration costs are not reasonably estimatable.
|
(D)
|
In 2018, DLR OP applied U.S. GAAP lease accounting guidance under ASC 840. These adjustments reflect the purchase accounting impact on the building values used to account for the build-to-suit leases discussed in Note 3(A)(ii) pursuant to ASC 840, assuming the purchase event was on January 1, 2018 and that all leases commenced on that date. This adjustment increases depreciation and amortization expense by $11.3 million.
|
(E)
|
To recognize accretion of the pro forma debt premium of approximately $12.1 million and $8.7 million for the nine months ended September 30, 2019 and the year ended December 31, 2018, respectively, from DLR OP's assumption of INXN’s existing long-term debt, which was originally issued on June 18, 2018.
|
(F)
|
Reflects the foreign income tax impact of pro forma adjustments, assuming a blended foreign income tax rate of 26.5% for both the nine months ended September 30, 2019 and the year ended December 31, 2018. The effective tax rate of the combined company could be significantly different depending upon post-combination activities and changes to enacted income tax rates in the countries in which INXN operates.
|
(G)
|
The calculation of basic and diluted income per unit of DLR OP's common units are as follows:
|
|
|
Nine months ended September 30, 2019
|
||||||||||
|
|
(in thousands, except per unit data)
|
||||||||||
|
|
DLR OP
Historical
|
|
InterXion
Historical
|
|
Pro Forma
Combined
Company
|
||||||
Net income available to common unitholders, basic and diluted
|
|
$
|
185,434
|
|
|
$
|
36,560
|
|
|
$
|
188,696
|
|
Weighted average common units outstanding, basic (i)
|
|
217,255
|
|
|
73,429
|
|
|
272,182
|
|
|||
Weighted average common units outstanding, diluted (i)
|
|
218,280
|
|
|
74,015
|
|
|
273,208
|
|
|||
Net income per unit available to common unitholders, basic
|
|
$
|
0.85
|
|
|
$
|
0.50
|
|
|
$
|
0.69
|
|
Net income per unit available to common unitholders, diluted
|
|
$
|
0.85
|
|
|
$
|
0.49
|
|
|
$
|
0.69
|
|
|
|
|
|
|
|
|
||||||
|
|
Year ended December 31, 2018
|
||||||||||
|
|
(in thousands, except per unit data)
|
||||||||||
|
|
DLR OP
Historical
|
|
InterXion
Historical
|
|
Pro Forma
Combined
Company
|
||||||
Net income available to common unitholders, basic and diluted
|
|
$
|
260,110
|
|
|
$
|
36,792
|
|
|
$
|
238,632
|
|
Weighted average common units outstanding, basic (i)
|
|
214,313
|
|
|
71,562
|
|
|
269,240
|
|
|||
Weighted average common units outstanding, diluted (i)
|
|
214,951
|
|
|
72,056
|
|
|
269,878
|
|
|||
Net income per unit available to common unitholders, basic
|
|
$
|
1.21
|
|
|
$
|
0.51
|
|
|
$
|
0.89
|
|
Net income per unit available to common unitholders, diluted
|
|
$
|
1.21
|
|
|
$
|
0.51
|
|
|
$
|
0.88
|
|
(i)
|
The pro forma weighted average common units outstanding assumes that the number of DLR OP common units issued in the InterXion combination were issued as of January 1, 2018.
|