Digital Realty Announces Tax Treatment of 2023 Dividends

Rhea-AI Summary

Digital Realty (NYSE: DLR) has announced the tax treatment of its 2023 dividends for common stock and preferred stock. The 2023 taxable dividend for common stock is $5.264529 per share, while the taxable dividends for preferred stocks range from $1.300000 to $1.462500 per share. Shareholders are urged to consult with their tax advisors as to their specific tax treatment of Digital Realty's dividends.

Tax Advisor

Understanding the tax implications of dividend distributions is crucial for investors, particularly in the case of a Real Estate Investment Trust (REIT) like Digital Realty. The announcement details the breakdown of ordinary income and capital gains distributions, which have different tax treatments. Ordinary income is taxed at the individual's income tax rate, while the capital gain distribution, which represents profit from the sale of assets, is typically taxed at a lower rate.

The disclosure of the tax treatment before the filing of the company's federal income tax return indicates a proactive approach to transparency, allowing shareholders to plan their tax strategies effectively. The mention of Section 199A dividends is significant because it implies that shareholders could be eligible for a deduction of up to 20% on these dividends, a substantial tax advantage introduced by the Tax Cuts and Jobs Act of 2017.

REIT Analyst

For REITs like Digital Realty, the distribution of dividends is a core aspect of their business model, as they are required to distribute at least 90% of their taxable income to shareholders. The high percentage of the dividend classified as capital gain distribution reflects the company's ability to realize gains from its property portfolio, which could be indicative of effective asset management and profitable disposition of properties.

The capital gains distribution is also a key indicator of the company's overall financial health and its ability to generate value for shareholders. It is important to note that the capital gains reported may affect the stock's attractiveness to certain investors who are looking for specific tax advantages.

Financial Analyst

The announcement of dividend tax treatment can have implications for the stock's desirability among investors. The allocation of a significant portion of Digital Realty's dividends to capital gains could be appealing to investors in higher tax brackets, as these are taxed at a lower rate than ordinary income. Moreover, the detailed breakdown of dividends, including sections specific to nonresident aliens and foreign corporations (Section 897), as well as disclosures related to Section 1061, provides transparency and could potentially reduce uncertainty for investors with complex tax considerations.

Investors may also consider the timing of the dividend distributions and their tax implications when making investment decisions. The advance notice of tax treatment allows for more informed financial planning and could influence investor sentiment and the stock's performance in the market.

AUSTIN, Texas, Jan. 25, 2024 /PRNewswire/ -- Digital Realty (NYSE: DLR), a leading global provider of cloud- and carrier-neutral data center, colocation and interconnection solutions, announced today the tax treatment of its 2023 dividends for common stock and preferred stock.  The information below has been prepared using the best available information to date.  Digital Realty's federal income tax return for the year ended December 31, 2023 has not yet been filed.  Please note that federal tax laws affect taxpayers differently, and we cannot advise you on how distributions should be reported on your federal income tax return.  Please also note that state and local taxation of REIT distributions vary and may not be the same as the federal rules.  Shareholders are urged to consult with their tax advisors as to their specific tax treatment of Digital Realty's dividends. 

Digital Realty Trust, Inc. Common Stock Dividends
CUSIP # 253868103
Ticker Symbol: DLR

Digital Realty's 2023 taxable dividend of $5.264529 per share includes one quarterly distribution declared in 2022 and paid in January 2023, three quarterly distributions declared and paid in 2023, and a portion (32%) of one quarterly distribution declared in 2023 and paid in January 2024.  Digital Realty's 2023 taxable dividend will be reported on Form 1099-DIV as follows:  $2.085936 per share (40%) as ordinary income and $3.178593 per share (60%) as capital gain distribution.

The following table contains this information on a quarterly basis: 

Record Dates	Payment Dates (1)	Cash Distribution ($ per share) (1)	Taxable Dividend ($ per share) (1)	Box 1a Ordinary Dividend ($ per share)	Box 1b Qualified Dividend ($ per share)	Box 2a  Long-Term Capital Gain  ($ per share)	Box 2b Unrecaptured Section 1250 Gain  ($ per share)	Box 2f Section 897 Capital Gain ($ per share) (2)	Box 5 Section 199A Dividend ($ per share) (3)	Section 1061 One-Year Capital Gain ($ per share) (4)	Section 1061 Three-Year Capital Gain ($ per share) (4)
12/15/2022	01/13/2023	$1.220000	$1.220000	$0.483394	$0.032350	$0.736606	$0.148736	$0.763829	$0.451044	$0.013545	$0.013545
03/15/2023	03/31/2023	$1.220000	$1.220000	$0.483394	$0.032350	$0.736606	$0.148736	$0.763829	$0.451044	$0.013545	$0.013545
06/15/2023	06/30/2023	$1.220000	$1.220000	$0.483394	$0.032350	$0.736606	$0.148736	$0.763829	$0.451044	$0.013545	$0.013545
09/15/2023	09/29/2023	$1.220000	$1.220000	$0.483394	$0.032350	$0.736606	$0.148736	$0.763829	$0.451044	$0.013545	$0.013545
12/15/2023	01/19/2024	$1.220000	$0.384529	$0.152360	$0.010196	$0.232169	$0.046880	$0.240749	$0.142164	$0.004269	$0.004269
		$6.10000	$5.264529	$2.085936	$0.139596	$3.178593	$0.641824	$3.296065	$1.946340	$0.058449	$0.058449

(1)	Please note that of the $1.22 quarterly distribution paid in January 2024, $0.384529 is included in the 2023 taxable dividend and $0.835471 will be considered as 2024 reportable dividend for federal income tax purposes.
(2)	Represents Section 897 gain attributable to disposition of U.S. real property interests included in Box 2a Long-Term Capital Gain. Section 897 is applicable to nonresident alien individuals and foreign corporations.
(3)	Beginning in 2018, the Tax Cuts and Jobs Act of 2017 added Section 199A to allow for a new tax deduction based on certain qualified business income.  Section 199A provides eligible individual taxpayers a deduction of up to 20% of their qualified real estate investment trust dividends (Box 5 of the Form 1099-DIV).
(4)	For purposes of Section 1061 of the Internal Revenue Code, Digital Realty is disclosing two additional capital gain categories.  Section 1061 is generally applicable to direct and indirect holders of "applicable partnership interests."  Please consult your tax advisor with respect to the two additional categories disclosed herein.

Series J Cumulative Redeemable Preferred Stock Dividends
CUSIP # 253868855
Ticker Symbol: DLRPRJ

The 2023 taxable dividend for Digital Realty Trust, Inc.'s Series J Cumulative Redeemable Preferred Stock is $1.312500 per share.  For tax reporting purposes, $0.520044 per share (40%) will be reported on Form 1099-DIV as ordinary income and $0.792456 per share (60%) as capital gain distribution. 

The following table contains this information on a quarterly basis:  

Record Dates	Payment Dates	Cash Distribution ($ per share)	Taxable Dividend ($ per share)	Box 1a Ordinary Dividend ($ per share)	Box 1b Qualified Dividend ($ per share)	Box 2a Long-Term Capital Gain  ($ per share)	Box 2b Unrecaptured Section 1250 Gain  ($ per share)	Box 2f Section 897 Capital Gain ($ per share)	Box 5 Section 199A Dividend ($ per share)	Section 1061 One-Year Amounts Disclosure ($ per share)	Section 1061 Three-Year Amounts Disclosure  ($ per share)
03/15/2023	03/31/2023	$0.328125	$0.328125	$0.130011	$0.008701	$0.198114	$0.040003	$0.205436	$0.121310	$0.003643	$0.003643
06/15/2023	06/30/2023	$0.328125	$0.328125	$0.130011	$0.008701	$0.198114	$0.040003	$0.205436	$0.121310	$0.003643	$0.003643
09/15/2023	09/29/2023	$0.328125	$0.328125	$0.130011	$0.008701	$0.198114	$0.040003	$0.205436	$0.121310	$0.003643	$0.003643
12/15/2023	12/29/2023	$0.328125	$0.328125	$0.130011	$0.008701	$0.198114	$0.040003	$0.205436	$0.121310	$0.003643	$0.003643
		$1.312500	$1.312500	$0.520044	$0.034804	$0.792456	$0.160012	$0.821744	$0.485240	$0.014572	$0.014572

Series K Cumulative Redeemable Preferred Stock Dividends
CUSIP # 253868830
Ticker Symbol: DLRPRK

The 2023 taxable dividend for Digital Realty Trust, Inc.'s Series K Cumulative Redeemable Preferred Stock is $1.462500 per share.  For tax reporting purposes, $0.579480 per share (40%) will be reported on Form 1099-DIV as ordinary income and $0.883020 per share (60%) as capital gain distribution. 

The following table contains this information on a quarterly basis:  

Record Dates	Payment Dates	Cash Distribution ($ per share)	Taxable Dividend ($ per share)	Box 1a Ordinary Dividend ($ per share)	Box 1b Qualified Dividend ($ per share)	Box 2a Long-Term Capital Gain  ($ per share)	Box 2b Unrecaptured Section 1250 Gain  ($ per share)	Box 2f Section 897 Capital Gain ($ per share)	Box 5 Section 199A Dividend ($ per share)	Section 1061 One-Year Amounts Disclosure ($ per share)	Section 1061 Three-Year Amounts Disclosure ($ per share)
03/15/2023	03/31/2023	$0.365625	$0.365625	$0.144870	$0.009695	$0.220755	$0.044575	$0.228914	$0.135175	$0.004059	$0.004059
06/15/2023	06/30/2023	$0.365625	$0.365625	$0.144870	$0.009695	$0.220755	$0.044575	$0.228914	$0.135175	$0.004059	$0.004059
09/15/2023	09/29/2023	$0.365625	$0.365625	$0.144870	$0.009695	$0.220755	$0.044575	$0.228914	$0.135175	$0.004059	$0.004059
12/15/2023	12/29/2023	$0.365625	$0.365625	$0.144870	$0.009695	$0.220755	$0.044575	$0.228914	$0.135175	$0.004059	$0.004059
		$1.462500	$1.462500	$0.579480	$0.038780	$0.883020	$0.178300	$0.915656	$0.540700	$0.016236	$0.016236

Series L Cumulative Redeemable Preferred Stock Dividends
CUSIP # 253868822
Ticker Symbol: DLRPRL

The 2023 taxable dividend for Digital Realty Trust, Inc.'s Series L Cumulative Redeemable Preferred Stock is $1.300000 per share.  For tax reporting purposes, $0.515092 per share (40%) will be reported on Form 1099-DIV as ordinary income and $0.784908 per share (60%) as capital gain distribution. 

The following table contains this information on a quarterly basis:  

Record Dates	Payment Dates	Cash Distribution ($ per share)	Taxable Dividend ($ per share)	Box 1a Ordinary Dividend ($ per share)	Box 1b Qualified Dividend ($ per share)	Box 2a Long-Term Capital Gain  ($ per share)	Box 2b Unrecaptured Section 1250 Gain ($ per share)	Box 2f Section 897 Capital Gain ($ per share)	Box 5 Section 199A Dividend ($ per share)	Section 1061 One-Year Amounts Disclosure ($ per share)	Section 1061 Three-Year Amounts Disclosure ($ per share)
03/15/2023	03/31/2023	$0.325000	$0.325000	$0.128773	$0.008618	$0.196227	$0.039622	$0.203479	$0.120155	$0.003608	$0.003608
06/15/2023	06/30/2023	$0.325000	$0.325000	$0.128773	$0.008618	$0.196227	$0.039622	$0.203479	$0.120155	$0.003608	$0.003608
09/15/2023	09/29/2023	$0.325000	$0.325000	$0.128773	$0.008618	$0.196227	$0.039622	$0.203479	$0.120155	$0.003608	$0.003608
12/15/2023	12/29/2023	$0.325000	$0.325000	$0.128773	$0.008618	$0.196227	$0.039622	$0.203479	$0.120155	$0.003608	$0.003608
		$1.300000	$1.300000	$0.515092	$0.034472	$0.784908	$0.158488	$0.813916	$0.480620	$0.014432	$0.014432

Note that ticker symbols may vary by stock quote provider. 

About Digital Realty
Digital Realty brings companies and data together by delivering the full spectrum of data center, colocation and interconnection solutions. PlatformDIGITAL®, the company's global data center platform, provides customers with a secure data meeting place and a proven Pervasive Datacenter Architecture (PDx®) solution methodology for powering innovation and efficiently managing Data Gravity challenges. Digital Realty gives its customers access to the connected data communities that matter to them with a global data center footprint of 300+ facilities in 50+ metros across 25+ countries on six continents. To learn more about Digital Realty, please visit digitalrealty.com or follow us on LinkedIn and X.

Safe Harbor Statement
This press release contains forward-looking statements which are based on current expectations, forecasts and assumptions that involve risks and uncertainties that could cause actual outcomes and results to differ materially, including statements related to the amount and payment of dividends on our common stock and preferred stock.  For a list and description of such risks and uncertainties, see the reports and other filings by the company with the U.S. Securities and Exchange Commission.  The company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. 

For Additional Information

Investor Relations
Jordan Sadler / Jim Huseby
Digital Realty
(737) 281-0101
InvestorRelations@digitalrealty.com

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SOURCE Digital Realty

What is the 2023 taxable dividend per share for Digital Realty's common stock?

The 2023 taxable dividend for common stock is $5.264529 per share.

What is the 2023 taxable dividend per share for Digital Realty's Series J Cumulative Redeemable Preferred Stock?

The 2023 taxable dividend for Series J Cumulative Redeemable Preferred Stock is $1.312500 per share.

What is the 2023 taxable dividend per share for Digital Realty's Series K Cumulative Redeemable Preferred Stock?

The 2023 taxable dividend for Series K Cumulative Redeemable Preferred Stock is $1.462500 per share.

What is the 2023 taxable dividend per share for Digital Realty's Series L Cumulative Redeemable Preferred Stock?

The 2023 taxable dividend for Series L Cumulative Redeemable Preferred Stock is $1.300000 per share.

How should shareholders report Digital Realty's dividends on their federal income tax return?

Shareholders are urged to consult with their tax advisors for specific tax treatment of Digital Realty's dividends.

What is the ticker symbol for Digital Realty?

The ticker symbol for Digital Realty is DLR.