AUSTIN,
Texas, April 27, 2023 /PRNewswire/
-- Digital Realty (NYSE: DLR), the largest global
provider of cloud- and carrier-neutral data center, colocation and
interconnection solutions, announced today financial results for
the first quarter of 2023. All per share results are presented on a
fully diluted basis.
Highlights
- Reported net income available to common stockholders of
$0.19 per share in 1Q23, compared to
$0.22 in 1Q22
- Reported FFO per share of $1.60
in 1Q23, compared to $1.60 in
1Q22
- Reported Core FFO per share of $1.66 and Constant-Currency Core FFO per share of
$1.69 in 1Q23, compared to
$1.67 in 1Q22
- Reported "Same-Capital" cash NOI growth of 3.4% in 1Q23
- Reported rental rate increases on renewal leases of 4.5% on a
cash basis in 1Q23
- Signed total bookings during 1Q23 that are expected to generate
$83 million of annualized GAAP rental
revenue, including a $34 million
contribution from the 0-1 megawatt category and a record
$14 million contribution from
interconnection
- Maintained 2023 Core FFO per share outlook of $6.65 - $6.75
Financial Results
Digital Realty reported revenues for the first quarter of 2023
of $1.3 billion, a 9% increase from
the previous quarter and a 19% increase from the same quarter last
year.
The company delivered first quarter of 2023 net income of
$69 million, and net income / (loss)
available to common stockholders of $59
million, or $0.19 per diluted
share, compared to ($0.02) per
diluted share in the previous quarter and $0.22 per diluted share in the same quarter last
year.
Digital Realty generated first quarter of 2023 Adjusted EBITDA
of $668 million, a 5% increase from
the previous quarter and an 11% increase over the same quarter last
year.
The company reported first quarter of 2023 funds from operations
(FFO) of $485 million, or
$1.60 per share, compared to
$1.45 per share in the previous
quarter and $1.60 per share in the
same quarter last year.
Excluding certain items that do not represent core expenses or
revenue streams, Digital Realty delivered first quarter of 2023
Core FFO per share of $1.66, compared
to $1.65 per share in the previous
quarter and $1.67 per share in the
same quarter last year. Digital Realty delivered Constant-Currency
Core FFO per share of $1.69 for the
first quarter of 2023.
Leasing Activity
In the first quarter, Digital Realty signed total bookings that
are expected to generate $83 million
of annualized GAAP rental revenue, including a $34 million contribution from the 0-1 megawatt
category and a record $14 million
contribution from interconnection.
"Our first quarter results demonstrate the inflection we have
been anticipating in our operating business, driven by a
combination of steady, broad-based demand across our segments and
markets, as well as reduced data center availability," said Digital
Realty President & Chief Executive Officer Andy Power. "Improving fundamentals, along with
continued focus and execution on PlatformDIGITAL®'s customer value
proposition, put Digital Realty firmly on the path toward
sustainable, organic core growth."
The weighted-average lag between new leases signed during the
first quarter of 2023 and the contractual commencement date was
sixteen months.
In addition to new leases signed, Digital Realty also signed
renewal leases representing $155
million of annualized GAAP rental revenue during the
quarter. Rental rates on renewal leases signed during the first
quarter of 2023 rolled up 4.5% on a cash basis and up 6.4% on a
GAAP basis.
New leases signed during the first quarter of 2023 are
summarized by region as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annualized GAAP
|
|
|
|
|
|
|
|
|
|
|
|
|
Base Rent
|
|
Square Feet
|
|
GAAP Base Rent
|
|
|
|
GAAP Base Rent
|
The
Americas
|
|
(in thousands)
|
|
(in thousands)
|
|
per Square Foot
|
|
Megawatts
|
|
per Kilowatt
|
0-1 MW
|
|
|
$12,265
|
|
60
|
|
|
$204
|
|
3.6
|
|
|
$281
|
> 1
MW
|
|
|
27,464
|
|
189
|
|
|
145
|
|
19.7
|
|
|
116
|
Other
(1)
|
|
|
581
|
|
19
|
|
|
30
|
|
—
|
|
|
—
|
Total
|
|
|
$40,310
|
|
269
|
|
|
$150
|
|
23.3
|
|
|
$142
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EMEA
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0-1 MW
|
|
|
$20,273
|
|
73
|
|
|
$278
|
|
5.5
|
|
|
$308
|
> 1
MW
|
|
|
7,357
|
|
59
|
|
|
125
|
|
5.5
|
|
|
111
|
Other
(1)
|
|
|
17
|
|
1
|
|
|
33
|
|
—
|
|
|
—
|
Total
|
|
|
$27,647
|
|
132
|
|
|
$209
|
|
11.0
|
|
|
$209
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asia Pacific
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0-1 MW
|
|
|
$1,252
|
|
8
|
|
|
$156
|
|
0.5
|
|
|
$225
|
> 1
MW
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
Other
(1)
|
|
|
21
|
|
—
|
|
|
44
|
|
—
|
|
|
—
|
Total
|
|
|
$1,273
|
|
8
|
|
|
$149
|
|
0.5
|
|
|
$225
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Regions
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0-1 MW
|
|
|
$33,790
|
|
141
|
|
|
$239
|
|
9.6
|
|
|
$294
|
> 1
MW
|
|
|
34,821
|
|
248
|
|
|
140
|
|
25.2
|
|
|
115
|
Other
(1)
|
|
|
619
|
|
20
|
|
|
30
|
|
—
|
|
|
—
|
Total
|
|
|
$69,230
|
|
410
|
|
|
$169
|
|
34.8
|
|
|
$164
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interconnection
|
|
|
$14,063
|
|
N/A
|
|
|
N/A
|
|
N/A
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Grand
Total
|
|
|
$83,293
|
|
410
|
|
|
$169
|
|
34.8
|
|
|
$164
|
|
Note: Totals may
not foot due to rounding differences.
|
(1) Other
includes Powered Base Building® shell capacity as
well as storage and office space within fully improved data center
facilities.
|
(2) Based on
quarterly average exchange rates during the three months ended
March 31, 2023.
|
Investment Activity
During the first quarter, a venture jointly owned by Digital
Realty and a third party disposed of a stabilized data center in
Ashburn, Virginia.
During the first quarter, MC Digital Realty acquired a
three-acre land parcel, which could support up to 24MW of IT load
in Osaka, Japan, for ¥950 million
or $7 million.
Also during the first quarter, Teraco acquired a freehold
interest of the Cape Town 1 site,
a land and building shell, which they had previously leased.
Balance Sheet
Digital Realty had approximately $17.9
billion of total debt outstanding as of March 31, 2023, comprised of $17.3 billion of unsecured debt and approximately
$0.6 billion of secured debt and
other. At the end of the first quarter of 2023, net
debt-to-Adjusted EBITDA was 7.1x, debt-plus-preferred-to-total
enterprise value was 38.9% and fixed charge coverage was 4.4x.
During the first quarter of 2023, Digital Realty
completed a $740 million two-year U.S. dollar term loan
with an initial maturity date of March 31,
2025 and a one-year extension option.
2023 Outlook
Digital Realty maintained its 2023 Core FFO per share and
constant-currency Core FFO per share outlook of $6.65 - $6.75. The
assumptions underlying the outlook are summarized in the following
table.
|
|
|
|
|
|
|
As of
|
|
As of
|
Top-Line and
Cost Structure
|
|
February 16,
2023
|
|
April 27,
2023
|
Total
revenue
|
|
$5.700 - $5.800
billion
|
|
$5.500 - $5.600
billion
|
Net non-cash rent
adjustments (1)
|
|
($55 - $60
million)
|
|
($55 - $60
million)
|
Adjusted
EBITDA
|
|
$2.675 - $2.725
billion
|
|
$2.675 - $2.725
billion
|
G&A
|
|
$425 - $435
million
|
|
$425 - $435
million
|
|
|
|
|
|
Internal
Growth
|
|
|
|
|
Rental rates on renewal
leases
|
|
|
|
|
Cash basis
|
|
Greater than
3.0%
|
|
Greater than
3.0%
|
GAAP basis
|
|
Greater than
3.0%
|
|
Greater than
3.0%
|
Year-end portfolio
occupancy
|
|
85.0% -
86.0%
|
|
85.0% -
86.0%
|
"Same-capital" cash NOI
growth (2)
|
|
3.0% - 4.0%
|
|
3.0% - 4.0%
|
|
|
|
|
|
Foreign Exchange
Rates
|
|
|
|
|
U.S. Dollar / Pound
Sterling
|
|
$1.20 -
$1.25
|
|
$1.20 -
$1.25
|
U.S. Dollar /
Euro
|
|
$1.00 -
$1.05
|
|
$1.05 -
$1.10
|
|
|
|
|
|
External
Growth
|
|
|
|
|
Dispositions / Joint
Venture Capital
|
|
|
|
|
Dollar
volume
|
|
$1.5 - $2.5
billion
|
|
$1.5 - $2.5
billion
|
Cap rate
|
|
0.0% - 10.0%
|
|
0.0% - 10.0%
|
Development
|
|
|
|
|
CapEx (3)
|
|
$2.3 - $2.5
billion
|
|
$2.3 - $2.5
billion
|
Average stabilized
yields
|
|
9.0% - 15.0%
|
|
9.0% - 15.0%
|
Enhancements and other
non-recurring CapEx (4)
|
|
$15 - $20
million
|
|
$15 - $20
million
|
Recurring CapEx +
capitalized leasing costs (5)
|
|
$230 - $240
million
|
|
$230 - $240
million
|
|
|
|
|
|
Balance
Sheet
|
|
|
|
|
Long-term debt
issuance
|
|
|
|
|
Dollar
amount
|
|
$1.0 - $1.5
billion
|
|
$1.0 - $1.5
billion
|
Pricing
|
|
4.5% - 5.5%
|
|
5.5% - 6.0%
|
Timing
|
|
First Half
2023
|
|
First Half
2023
|
|
|
|
|
|
Net income per
diluted share
|
|
$1.15 -
$1.25
|
|
$1.15 -
$1.25
|
Real estate
depreciation and (gain) / loss on sale
|
|
$5.25 -
$5.25
|
|
$5.25 -
$5.25
|
Funds From
Operations / share (NAREIT-Defined)
|
|
$6.40 -
$6.50
|
|
$6.40 -
$6.50
|
Non-core expenses and
revenue streams
|
|
$0.25 -
$0.25
|
|
$0.25 -
$0.25
|
Core Funds
From Operations / share
|
|
$6.65 -
$6.75
|
|
$6.65 -
$6.75
|
Foreign currency
translation adjustments
|
|
$0.00 -
$0.00
|
|
$0.00 -
$0.00
|
Constant-Currency Core Funds From Operations
/ share
|
|
$6.65 -
$6.75
|
|
$6.65 -
$6.75
|
|
|
(1)
|
Net non-cash rent
adjustments represent the sum of straight-line rental revenue and
straight-line rental expense, as well as the amortization of above-
and below-market leases (i.e., ASC 805
adjustments).
|
(2)
|
The "same-capital" pool
includes properties owned as of December 31, 2021 with less than 5%
of total rentable square feet under development. It excludes
properties that were undergoing, or were expected to undergo,
development activities in 2022-2023, properties classified as held
for sale, and properties sold or contributed to joint ventures for
all periods presented.
|
(3)
|
Includes land
acquisitions.
|
(4)
|
Other non-recurring
CapEx represents costs incurred to enhance the capacity or
marketability of operating properties, such as network fiber
initiatives and software development costs.
|
(5)
|
Recurring CapEx
represents non-incremental improvements required to maintain
current revenues, including second-generation tenant improvements
and leasing commissions.
|
|
|
Note: The Company does
not provide a reconciliation for non-GAAP estimates on a
forward-looking basis, where it is unable to provide a meaningful
or accurate calculation or estimation of reconciling items and the
information is not available without unreasonable effort. Please
see Non-GAAP Financial Measures in this document for further
discussion.
|
Non-GAAP Financial Measures
This document contains non-GAAP financial measures, including
FFO, Core FFO, Adjusted FFO, Net Operating Income (NOI),
"Same-Capital" Cash NOI and Adjusted EBITDA. A reconciliation from
U.S. GAAP net income available to common stockholders to FFO, a
reconciliation from FFO to Core FFO, and definitions of FFO and
Core FFO are included as an attachment to this document. A
reconciliation from U.S. GAAP net income available to common
stockholders to Adjusted EBITDA, a definition of Adjusted EBITDA
and definitions of net debt-to-Adjusted EBITDA,
debt-plus-preferred-to-total enterprise value, cash NOI, and fixed
charge coverage ratio are included as an attachment to this
document.
The Company does not provide a reconciliation for non-GAAP
estimates on a forward-looking basis, where it is unable to provide
a meaningful or accurate calculation or estimation of reconciling
items and the information is not available without unreasonable
effort. This is due to the inherent difficulty of forecasting the
timing and/or amount of various items that would impact net income
attributable to common stockholders per diluted share, which is the
most directly comparable forward-looking GAAP financial measure.
This includes, for example, external growth factors, such as
dispositions, and balance sheet items, such as debt issuances, that
have not yet occurred, are out of the Company's control and/or
cannot be reasonably predicted. For the same reasons, the Company
is unable to address the probable significance of the unavailable
information. Forward-looking non-GAAP financial measures provided
without the most directly comparable GAAP financial measures may
vary materially from the corresponding GAAP financial measures.
Investor Conference Call
Prior to Digital Realty's investor conference call at
5:00 p.m. ET / 4:00 p.m. CT on April 27,
2023, a presentation will be posted to the Investors section
of the company's website at https://investor.digitalrealty.com/.
The presentation is designed to accompany the discussion of the
company's first quarter 2023 financial results and operating
performance. The conference call will feature President & Chief
Executive Officer Andy Power and
Chief Financial Officer Matt
Mercier.
To participate in the live call, investors are invited to dial
+1 (888) 317-6003 (for domestic callers) or +1 (412) 317-6061 (for
international callers) and reference the conference ID# 4681490 at
least five minutes prior to start time. A live webcast of the call
will be available via the Investors section of Digital Realty's
website at https://investor.digitalrealty.com/.
Telephone and webcast replays will be available after the call
until May 27, 2023. The telephone
replay can be accessed by dialing +1 (877) 344-7529 (for domestic
callers) or +1 (412) 317-0088 (for international callers) and
providing the conference ID# 9334829. The webcast replay can be
accessed on Digital Realty's website.
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 communities that matter to them with a global data
center footprint of 300+ facilities in 50+ metros across 28
countries on six continents. To learn more about Digital Realty,
please visit digitalrealty.com or follow us on
LinkedIn and Twitter.
Contact Information
Matt Mercier
Chief Financial Officer
Digital Realty
(737) 281-0101
Jordan Sadler / Jim Huseby
Investor Relations
Digital Realty
(737) 281-0101
Consolidated
Quarterly Statements of Operations
|
|
|
Unaudited and
Dollars in Thousands, Except Per Share Data
|
First Quarter
2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
31-Mar-23
|
|
|
31-Dec-22
|
|
|
30-Sep-22
|
|
|
30-Jun-22
|
|
|
31-Mar-22
|
Rental
revenues
|
|
|
$870,975
|
|
|
$834,374
|
|
|
$787,839
|
|
|
$767,313
|
|
|
$751,962
|
Tenant reimbursements -
Utilities
|
|
|
317,148
|
|
|
247,725
|
|
|
251,420
|
|
|
218,198
|
|
|
224,547
|
Tenant reimbursements -
Other
|
|
|
40,150
|
|
|
46,045
|
|
|
49,419
|
|
|
52,688
|
|
|
51,511
|
Interconnection &
other
|
|
|
101,695
|
|
|
97,286
|
|
|
95,486
|
|
|
93,338
|
|
|
93,530
|
Fee income
|
|
|
7,868
|
|
|
7,508
|
|
|
6,169
|
|
|
5,072
|
|
|
5,757
|
Other
|
|
|
887
|
|
|
168
|
|
|
1,749
|
|
|
2,713
|
|
|
15
|
Total Operating
Revenues
|
|
|
$1,338,724
|
|
|
$1,233,108
|
|
|
$1,192,082
|
|
|
$1,139,321
|
|
|
$1,127,323
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Utilities
|
|
|
$346,364
|
|
|
$268,561
|
|
|
$271,844
|
|
|
$223,426
|
|
|
$241,239
|
Rental property
operating
|
|
|
224,861
|
|
|
222,430
|
|
|
205,886
|
|
|
198,076
|
|
|
194,354
|
Property
taxes
|
|
|
40,424
|
|
|
42,032
|
|
|
39,860
|
|
|
47,213
|
|
|
46,526
|
Insurance
|
|
|
4,355
|
|
|
4,578
|
|
|
4,002
|
|
|
3,836
|
|
|
3,698
|
Depreciation &
amortization
|
|
|
421,198
|
|
|
430,130
|
|
|
388,704
|
|
|
376,967
|
|
|
382,132
|
General &
administration
|
|
|
107,766
|
|
|
104,452
|
|
|
95,792
|
|
|
101,991
|
|
|
96,435
|
Severance, equity
acceleration, and legal expenses
|
|
|
4,155
|
|
|
15,980
|
|
|
1,655
|
|
|
3,786
|
|
|
2,077
|
Transaction and
integration expenses
|
|
|
12,267
|
|
|
17,350
|
|
|
25,862
|
|
|
13,586
|
|
|
11,968
|
Impairment of
investments in real estate
|
|
|
—
|
|
|
3,000
|
|
|
—
|
|
|
—
|
|
|
—
|
Other
expenses
|
|
|
—
|
|
|
3,615
|
|
|
1,096
|
|
|
70
|
|
|
7,657
|
Total Operating
Expenses
|
|
|
$1,161,388
|
|
|
$1,112,127
|
|
|
$1,034,701
|
|
|
$968,950
|
|
|
$986,087
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Income
|
|
|
$177,335
|
|
|
$120,981
|
|
|
$157,381
|
|
|
$170,371
|
|
|
$141,236
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in earnings /
(loss) of unconsolidated joint ventures
|
|
|
14,897
|
|
|
(28,112)
|
|
|
(12,254)
|
|
|
(34,088)
|
|
|
60,958
|
Gain / (loss) on sale
of investments
|
|
|
—
|
|
|
(6)
|
|
|
173,990
|
|
|
—
|
|
|
2,770
|
Interest and other
income / (expense), net
|
|
|
280
|
|
|
(22,894)
|
|
|
15,752
|
|
|
13,008
|
|
|
3,051
|
Interest
(expense)
|
|
|
(102,220)
|
|
|
(86,882)
|
|
|
(76,502)
|
|
|
(69,023)
|
|
|
(66,725)
|
Income tax benefit /
(expense)
|
|
|
(21,454)
|
|
|
17,676
|
|
|
(19,576)
|
|
|
(16,406)
|
|
|
(13,244)
|
Loss from early
extinguishment of debt
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(51,135)
|
Net
Income
|
|
|
$68,839
|
|
|
$763
|
|
|
$238,791
|
|
|
$63,862
|
|
|
$76,911
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income / (loss)
attributable to noncontrolling interests
|
|
|
(111)
|
|
|
3,326
|
|
|
(1,716)
|
|
|
(436)
|
|
|
(3,629)
|
Net Income
Attributable to Digital Realty Trust, Inc.
|
|
|
$68,728
|
|
|
$4,089
|
|
|
$237,075
|
|
|
$63,426
|
|
|
$73,282
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock
dividends, including undeclared dividends
|
|
|
(10,181)
|
|
|
(10,181)
|
|
|
(10,181)
|
|
|
(10,181)
|
|
|
(10,181)
|
Net Income /
(Loss) Available to Common Stockholders
|
|
|
$58,547
|
|
|
($6,093)
|
|
|
$226,894
|
|
|
$53,245
|
|
|
$63,101
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average shares
outstanding - basic
|
|
|
291,218,549
|
|
|
289,364,739
|
|
|
286,693,071
|
|
|
284,694,064
|
|
|
284,525,992
|
Weighted-average shares
outstanding - diluted
|
|
|
303,064,832
|
|
|
301,712,082
|
|
|
296,414,726
|
|
|
285,109,903
|
|
|
285,025,099
|
Weighted-average fully
diluted shares and units
|
|
|
309,026,076
|
|
|
307,546,353
|
|
|
302,257,518
|
|
|
290,944,163
|
|
|
290,662,421
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income / (loss) per
share - basic
|
|
|
$0.20
|
|
|
($0.02)
|
|
|
$0.79
|
|
|
$0.19
|
|
|
$0.22
|
Net income / (loss) per
share - diluted
|
|
|
$0.19
|
|
|
($0.02)
|
|
|
$0.75
|
|
|
$0.19
|
|
|
$0.22
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Funds From
Operations and Core Funds From Operations
|
|
|
Unaudited and in
Thousands, Except Per Share Data
|
|
First Quarter
2023
|
|
|
|
|
|
Three Months
Ended
|
Reconciliation of
Net Income to Funds From Operations (FFO)
|
|
|
31-Mar-23
|
|
|
31-Dec-22
|
|
|
30-Sep-22
|
|
|
30-Jun-22
|
|
|
31-Mar-22
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income /
(Loss) Available to Common Stockholders
|
|
|
$58,547
|
|
|
($6,093)
|
|
|
$226,894
|
|
|
$53,245
|
|
|
$63,101
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-controlling
interest in operating partnership
|
|
|
1,500
|
|
|
(586)
|
|
|
5,400
|
|
|
1,500
|
|
|
1,600
|
Real estate related
depreciation & amortization (1)
|
|
|
412,192
|
|
|
422,951
|
|
|
381,425
|
|
|
369,327
|
|
|
374,162
|
Depreciation related to
non-controlling interests
|
|
|
(13,388)
|
|
|
(13,856)
|
|
|
(8,254)
|
|
|
-
|
|
|
-
|
Unconsolidated JV real
estate related depreciation & amortization
|
|
|
33,719
|
|
|
33,927
|
|
|
30,831
|
|
|
29,022
|
|
|
29,320
|
(Gain) / loss on real
estate transactions
|
|
|
(7,825)
|
|
|
572
|
|
|
(173,990)
|
|
|
(1,144)
|
|
|
(2,770)
|
Impairment of
investments in real estate
|
|
|
-
|
|
|
3,000
|
|
|
-
|
|
|
-
|
|
|
-
|
Funds From
Operations - diluted
|
|
|
$484,745
|
|
|
$439,915
|
|
|
$462,306
|
|
|
$451,949
|
|
|
$465,412
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average shares
and units outstanding - basic
|
|
|
297,180
|
|
|
295,199
|
|
|
292,536
|
|
|
290,528
|
|
|
290,163
|
Weighted-average shares
and units outstanding - diluted (2)(3)
|
|
|
309,026
|
|
|
307,546
|
|
|
302,258
|
|
|
290,944
|
|
|
290,662
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Funds From
Operations per share - basic
|
|
|
$1.63
|
|
|
$1.49
|
|
|
$1.58
|
|
|
$1.56
|
|
|
$1.60
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Funds From
Operations per share - diluted (2)(3)
|
|
|
$1.60
|
|
|
$1.45
|
|
|
$1.55
|
|
|
$1.55
|
|
|
$1.60
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
Reconciliation of
FFO to Core FFO
|
|
|
31-Mar-23
|
|
|
31-Dec-22
|
|
|
30-Sep-22
|
|
|
30-Jun-22
|
|
|
31-Mar-22
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Funds From
Operations - diluted
|
|
|
$484,745
|
|
|
$439,915
|
|
|
$462,306
|
|
|
$451,949
|
|
|
$465,412
|
Other non-core revenue
adjustments
|
|
|
(887)
|
|
|
(3,786)
|
|
|
(1,818)
|
|
|
456
|
|
|
13,916
|
Transaction and
integration expenses
|
|
|
12,267
|
|
|
17,350
|
|
|
25,862
|
|
|
13,586
|
|
|
11,968
|
Loss from early
extinguishment of debt
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
51,135
|
Severance, equity
acceleration, and legal expenses (4)
|
|
|
4,155
|
|
|
15,980
|
|
|
1,655
|
|
|
3,786
|
|
|
2,077
|
(Gain) / Loss on FX
revaluation
|
|
|
(6,778)
|
|
|
14,564
|
|
|
(1,120)
|
|
|
29,539
|
|
|
(67,676)
|
Other non-core expense
adjustments
|
|
|
-
|
|
|
3,615
|
|
|
1,046
|
|
|
70
|
|
|
7,657
|
Core Funds From
Operations - diluted
|
|
|
$493,500
|
|
|
$487,638
|
|
|
$487,931
|
|
|
$499,386
|
|
|
$484,490
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average shares
and units outstanding - diluted (2)(3)
|
|
|
297,382
|
|
|
295,519
|
|
|
292,830
|
|
|
290,944
|
|
|
290,662
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Core Funds From
Operations per share - diluted (2)
|
|
|
$1.66
|
|
|
$1.65
|
|
|
$1.67
|
|
|
$1.72
|
|
|
$1.67
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Real Estate
Related Depreciation & Amortization
|
|
Three Months
Ended
|
|
|
|
31-Mar-23
|
|
|
31-Dec-22
|
|
|
30-Sep-22
|
|
|
30-Jun-22
|
|
|
31-Mar-22
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation &
amortization per income statement
|
|
|
$421,198
|
|
|
$430,130
|
|
|
$388,704
|
|
|
$376,967
|
|
|
$382,132
|
Non-real estate
depreciation
|
|
|
(9,006)
|
|
|
(7,179)
|
|
|
(7,279)
|
|
|
(7,640)
|
|
|
(7,970)
|
Real Estate Related
Depreciation & Amortization
|
|
|
$412,192
|
|
|
$422,951
|
|
|
$381,425
|
|
|
$369,327
|
|
|
$374,162
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2)
|
Certain of Teraco's
minority indirect shareholders have the right to put their shares
in an upstream parent company of Teraco to Digital Realty in
exchange for
cash or the equivalent value of shares of Digital Realty common
stock, or a combination thereof. US GAAP requires Digital Realty to
assume the put right is settled
in shares for purposes of calculating diluted EPS. This same
approach was utilized to calculate FFO/share. The potential future
dilutive impact associated with this
put right will be excluded from Core FFO and AFFO until settlement
occurs – causing diluted share count to be higher for FFO than for
Core FFO and AFFO. When
calculating diluted FFO, Teraco related minority interest is added
back to the FFO numerator as the denominator assumes all shares
have been put back to Digital
Realty.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
|
|
31-Mar-23
|
|
|
31-Dec-22
|
|
|
30-Sep-22
|
|
|
30-Jun-22
|
|
|
31-Mar-22
|
Teraco noncontrolling
share of FFO
|
|
|
|
|
$11,069
|
|
|
$7,213
|
|
|
$4,706
|
|
|
-
|
|
|
-
|
Teraco related
minority interest
|
|
|
|
|
$11,069
|
|
|
$7,213
|
|
|
$4,706
|
|
|
-
|
|
|
-
|
|
|
(3)
|
For all periods
presented, we have excluded the effect of dilutive series J, series
K and series L preferred stock, as applicable, that may be
converted into
common stock upon the occurrence of specified change in control
transactions as described in the articles supplementary governing
the series J, series K and
series L preferred stock, as applicable, which we consider highly
improbable. See above for calculations of diluted FFO and the share
count detail section that
follows the reconciliation of Core FFO to AFFO for calculations of
weighted average common stock and units outstanding. For
definitions and discussion of FFO
and Core FFO, see the definitions section.
|
|
|
(4)
|
Relates to severance
and other charges related to the departure of company executives
and integration-related severance.
|
Adjusted Funds From
Operations (AFFO)
|
|
|
Unaudited and in
Thousands, Except Per Share Data
|
First Quarter
2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
Reconciliation
of Core FFO to AFFO
|
|
|
31-Mar-23
|
|
|
31-Dec-22
|
|
|
30-Sep-22
|
|
|
30-Jun-22
|
|
|
31-Mar-22
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Core FFO
available to common stockholders and unitholders
|
|
|
$493,500
|
|
|
$487,638
|
|
|
$487,931
|
|
|
$499,386
|
|
|
$484,490
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-real estate
depreciation
|
|
|
9,006
|
|
|
7,179
|
|
|
7,279
|
|
|
7,640
|
|
|
7,970
|
Amortization of
deferred financing costs
|
|
|
4,072
|
|
|
3,753
|
|
|
3,270
|
|
|
3,330
|
|
|
3,634
|
Amortization of debt
discount/premium
|
|
|
1,301
|
|
|
1,276
|
|
|
1,146
|
|
|
1,193
|
|
|
1,214
|
Non-cash stock-based
compensation expense
|
|
|
13,056
|
|
|
16,042
|
|
|
15,948
|
|
|
15,799
|
|
|
14,453
|
Straight-line rental
revenue
|
|
|
(16,194)
|
|
|
(29,392)
|
|
|
(18,123)
|
|
|
(17,278)
|
|
|
(18,810)
|
Straight-line rental
expense
|
|
|
(515)
|
|
|
(208)
|
|
|
2,679
|
|
|
(2,237)
|
|
|
4,168
|
Above- and below-market
rent amortization
|
|
|
(1,226)
|
|
|
(762)
|
|
|
(465)
|
|
|
196
|
|
|
335
|
Deferred tax (benefit)
/ expense
|
|
|
(9,795)
|
|
|
(4,885)
|
|
|
(5,233)
|
|
|
(769)
|
|
|
(1,604)
|
Leasing compensation
& internal lease commissions
|
|
|
11,067
|
|
|
9,578
|
|
|
9,866
|
|
|
9,411
|
|
|
13,261
|
Recurring capital
expenditures (1)
|
|
|
(40,465)
|
|
|
(109,999)
|
|
|
(66,200)
|
|
|
(43,497)
|
|
|
(46,770)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AFFO available to
common stockholders and unitholders (2)
|
|
|
$463,807
|
|
|
$380,220
|
|
|
$438,097
|
|
|
$473,173
|
|
|
$462,341
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average shares
and units outstanding - basic
|
|
|
297,180
|
|
|
295,199
|
|
|
292,536
|
|
|
290,528
|
|
|
290,163
|
Weighted-average shares
and units outstanding - diluted (3)
|
|
|
297,382
|
|
|
295,519
|
|
|
292,830
|
|
|
290,944
|
|
|
290,662
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AFFO per share -
diluted (3)
|
|
|
$1.56
|
|
|
$1.29
|
|
|
$1.50
|
|
|
$1.63
|
|
|
$1.59
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends per
share and common unit
|
|
|
$1.22
|
|
|
$1.22
|
|
|
$1.22
|
|
|
$1.22
|
|
|
$1.22
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted AFFO Payout
Ratio
|
|
|
78.2 %
|
|
|
94.8 %
|
|
|
81.5 %
|
|
|
75.0 %
|
|
|
76.7 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
Share Count
Detail
|
|
|
31-Mar-23
|
|
|
31-Dec-22
|
|
|
30-Sep-22
|
|
|
30-Jun-22
|
|
|
31-Mar-22
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average
Common Stock and Units Outstanding
|
|
|
297,180
|
|
|
295,199
|
|
|
292,536
|
|
|
290,528
|
|
|
290,163
|
Add: Effect of dilutive
securities
|
|
|
202
|
|
|
320
|
|
|
294
|
|
|
416
|
|
|
499
|
Weighted Avg. Common
Stock and Units Outstanding - diluted
|
|
|
297,382
|
|
|
295,519
|
|
|
292,830
|
|
|
290,944
|
|
|
290,662
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Recurring capital
expenditures represent non-incremental building improvements
required to maintain current revenues, including second-generation
tenant improvements and external leasing commissions. Recurring
capital expenditures do not include acquisition costs contemplated
when underwriting the purchase of a building, costs which are
incurred to bring a building up to Digital Realty's operating
standards, or internal leasing commissions.
|
(2)
|
For a definition and
discussion of AFFO, see the definitions section. For a
reconciliation of net income available to common stockholders to
FFO and Core FFO, see above.
|
(3)
|
For all periods
presented, we have excluded the effect of dilutive series J, series
K and series L preferred stock, as applicable, that may be
converted into common stock upon the occurrence of specified change
in control transactions as described in the articles supplementary
governing the series J, series K and series L preferred stock, as
applicable, which we consider highly improbable. See above for
calculations of diluted FFO available to common stockholders and
unitholders and for calculations of weighted average common stock
and units outstanding.
|
Consolidated Balance
Sheets
|
|
|
Unaudited and in
Thousands, Except Share and Per Share Data
|
First Quarter
2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31-Mar-23
|
|
31-Dec-22
|
|
30-Sep-22
|
|
30-Jun-22
|
|
31-Mar-22
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments in real
estate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate
|
|
$27,052,022
|
|
|
$26,136,057
|
|
|
$24,876,600
|
|
|
$24,065,933
|
|
|
$23,769,712
|
Construction in
progress
|
|
4,563,578
|
|
|
4,789,134
|
|
|
4,222,142
|
|
|
3,362,114
|
|
|
3,523,484
|
Land held for future
development
|
|
194,564
|
|
|
118,452
|
|
|
34,713
|
|
|
37,460
|
|
|
107,003
|
Investments in real
estate
|
|
$31,810,164
|
|
|
$31,043,643
|
|
|
$29,133,455
|
|
|
$27,465,507
|
|
|
$27,400,199
|
Accumulated
depreciation and amortization
|
|
(7,600,559)
|
|
|
(7,268,981)
|
|
|
(6,826,918)
|
|
|
(6,665,118)
|
|
|
(6,467,233)
|
Net Investments in
Properties
|
|
$24,209,605
|
|
|
$23,774,662
|
|
|
$22,306,537
|
|
|
$20,800,389
|
|
|
$20,932,966
|
Investment in
unconsolidated joint ventures
|
|
1,995,576
|
|
|
1,991,426
|
|
|
1,912,958
|
|
|
1,942,549
|
|
|
2,044,074
|
Net Investments in
Real Estate
|
|
$26,205,180
|
|
|
$25,766,088
|
|
|
$24,219,495
|
|
|
$22,742,937
|
|
|
$22,977,040
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$131,406
|
|
|
$141,773
|
|
|
$176,969
|
|
|
$99,226
|
|
|
$157,964
|
Accounts and other
receivables (1)
|
|
1,070,066
|
|
|
969,292
|
|
|
861,117
|
|
|
797,208
|
|
|
774,579
|
Deferred
rent
|
|
627,700
|
|
|
601,590
|
|
|
556,198
|
|
|
554,016
|
|
|
545,666
|
Customer relationship
value, deferred leasing costs & other intangibles,
net
|
|
3,015,291
|
|
|
3,092,627
|
|
|
3,035,861
|
|
|
2,521,390
|
|
|
2,640,795
|
Goodwill
|
|
9,199,636
|
|
|
9,208,497
|
|
|
8,728,105
|
|
|
7,545,107
|
|
|
7,802,440
|
Operating lease
right-of-use assets
|
|
1,317,293
|
|
|
1,351,329
|
|
|
1,253,393
|
|
|
1,310,970
|
|
|
1,361,942
|
Other assets
|
|
386,495
|
|
|
353,802
|
|
|
384,079
|
|
|
385,202
|
|
|
420,119
|
Total
Assets
|
|
$41,953,068
|
|
|
$41,484,998
|
|
|
$39,215,217
|
|
|
$35,956,057
|
|
|
$36,680,546
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Global unsecured
revolving credit facilities
|
|
$2,514,202
|
|
|
$2,150,451
|
|
|
$2,255,139
|
|
|
$1,440,040
|
|
|
$943,325
|
Unsecured term
loans
|
|
1,542,275
|
|
|
797,449
|
|
|
729,976
|
|
|
—
|
|
|
—
|
Unsecured senior notes,
net of discount
|
|
13,258,079
|
|
|
13,120,033
|
|
|
12,281,410
|
|
|
12,695,568
|
|
|
13,284,650
|
Secured debt and other,
net of premiums
|
|
560,955
|
|
|
528,870
|
|
|
491,984
|
|
|
158,699
|
|
|
160,240
|
Operating lease
liabilities
|
|
1,443,994
|
|
|
1,471,044
|
|
|
1,363,712
|
|
|
1,418,540
|
|
|
1,472,510
|
Accounts payable and
other accrued liabilities
|
|
1,923,819
|
|
|
1,868,884
|
|
|
1,621,406
|
|
|
1,619,222
|
|
|
1,572,359
|
Deferred tax
liabilities, net
|
|
1,164,276
|
|
|
1,192,752
|
|
|
1,145,097
|
|
|
611,582
|
|
|
649,112
|
Accrued dividends and
distributions
|
|
—
|
|
|
363,716
|
|
|
—
|
|
|
—
|
|
|
—
|
Security deposits and
prepaid rent
|
|
392,021
|
|
|
369,654
|
|
|
341,552
|
|
|
341,140
|
|
|
346,911
|
Total
Liabilities
|
|
$22,799,620
|
|
|
$21,862,853
|
|
|
$20,230,276
|
|
|
$18,284,791
|
|
|
$18,429,107
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Redeemable
non-controlling interests - operating partnership
|
|
1,448,772
|
|
|
1,514,680
|
|
|
1,429,920
|
|
|
41,047
|
|
|
42,734
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred Stock: $0.01
par value per share, 110,000,000 shares authorized:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Series J Cumulative
Redeemable Preferred Stock (2)
|
|
$193,540
|
|
|
$193,540
|
|
|
$193,540
|
|
|
$193,540
|
|
|
$193,540
|
Series K Cumulative
Redeemable Preferred Stock (3)
|
|
203,264
|
|
|
203,264
|
|
|
203,264
|
|
|
203,264
|
|
|
203,264
|
Series L Cumulative
Redeemable Preferred Stock (4)
|
|
334,886
|
|
|
334,886
|
|
|
334,886
|
|
|
334,886
|
|
|
334,886
|
Common Stock: $0.01 par
value per share, 392,000,000 shares authorized
(5)
|
|
2,888
|
|
|
2,887
|
|
|
2,851
|
|
|
2,824
|
|
|
2,824
|
Additional paid-in
capital
|
|
22,126,379
|
|
|
22,142,868
|
|
|
21,528,384
|
|
|
21,091,364
|
|
|
21,069,391
|
Dividends in excess of
earnings
|
|
(4,995,982)
|
|
|
(4,698,313)
|
|
|
(4,336,201)
|
|
|
(4,211,685)
|
|
|
(3,916,854)
|
Accumulated other
comprehensive (loss), net
|
|
(652,486)
|
|
|
(595,798)
|
|
|
(862,804)
|
|
|
(475,561)
|
|
|
(188,844)
|
Total Stockholders'
Equity
|
|
$17,212,490
|
|
|
$17,583,334
|
|
|
$17,063,920
|
|
|
$17,138,632
|
|
|
$17,698,207
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noncontrolling
Interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noncontrolling interest
in operating partnership
|
|
$444,843
|
|
|
$419,317
|
|
|
$421,484
|
|
|
$432,213
|
|
|
$444,029
|
Noncontrolling interest
in consolidated joint ventures
|
|
47,342
|
|
|
104,814
|
|
|
69,617
|
|
|
59,374
|
|
|
66,470
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Noncontrolling
Interests
|
|
$492,185
|
|
|
$524,131
|
|
|
$491,101
|
|
|
$491,587
|
|
|
$510,499
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Equity
|
|
$17,704,675
|
|
|
$18,107,465
|
|
|
$17,555,021
|
|
|
$17,630,219
|
|
|
$18,208,706
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities
and Equity
|
|
$41,953,068
|
|
|
$41,484,998
|
|
|
$39,215,217
|
|
|
$35,956,057
|
|
|
$36,680,546
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Net of allowance for
doubtful accounts of $36,240 and $33,048 as of March 31, 2023 and
December 31, 2022, respectively.
|
(2)
|
Series J Cumulative
Redeemable Preferred Stock, 5.250%, $200,000 and $200,000
liquidation preference, respectively ($25.00 per share), 8,000,000
and 8,000,000 shares issued and outstanding as of March 31, 2023
and December 31, 2022, respectively.
|
(3)
|
Series K Cumulative
Redeemable Preferred Stock, 5.850%, $210,000 and $210,000
liquidation preference, respectively ($25.00 per share), 8,400,000
and 8,400,000 shares issued and outstanding as of March 31,
2023 and December 31, 2022, respectively.
|
(4)
|
Series L Cumulative
Redeemable Preferred Stock, 5.200%, $345,000 and $345,000
liquidation preference, respectively ($25.00 per share), 13,800,000
and 13,800,000 shares issued and outstanding as of March 31,
2023 and December 31, 2022, respectively.
|
(5)
|
Common Stock:
291,298,610 and 291,148,222 shares issued and outstanding as of
March 31, 2023 and December 31, 2022, respectively.
|
Reconciliation of
Earnings Before Interest, Taxes, Depreciation &
Amortization and Financial Ratios
|
|
|
Unaudited and
Dollars in Thousands
|
First Quarter
2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
Reconciliation of
Earnings Before Interest, Taxes, Depreciation &
Amortization (EBITDA) (1)
|
|
|
31-Mar-23
|
|
|
31-Dec-22
|
|
|
30-Sep-22
|
|
|
30-Jun-22
|
|
|
31-Mar-22
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income / (Loss)
Available to Common Stockholders
|
|
|
$58,547
|
|
|
($6,093)
|
|
|
$226,894
|
|
|
$53,245
|
|
|
$63,101
|
Interest
|
|
|
102,220
|
|
|
86,882
|
|
|
76,502
|
|
|
69,023
|
|
|
66,725
|
Loss from early
extinguishment of debt
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
51,135
|
Income tax expense
(benefit)
|
|
|
21,454
|
|
|
(17,676)
|
|
|
19,576
|
|
|
16,406
|
|
|
13,244
|
Depreciation &
amortization
|
|
|
421,198
|
|
|
430,130
|
|
|
388,704
|
|
|
376,967
|
|
|
382,132
|
EBITDA
|
|
|
$603,419
|
|
|
$493,244
|
|
|
$711,676
|
|
|
$515,642
|
|
|
$576,337
|
Unconsolidated JV real
estate related depreciation & amortization
|
|
|
33,719
|
|
|
33,927
|
|
|
30,831
|
|
|
29,023
|
|
|
29,319
|
Unconsolidated JV
interest expense and tax expense
|
|
|
18,556
|
|
|
53,481
|
|
|
11,948
|
|
|
6,708
|
|
|
21,111
|
Severance, equity
acceleration, and legal expenses
|
|
|
4,155
|
|
|
15,980
|
|
|
1,655
|
|
|
3,786
|
|
|
2,077
|
Transaction and
integration expenses
|
|
|
12,267
|
|
|
17,350
|
|
|
25,862
|
|
|
13,586
|
|
|
11,968
|
(Gain) / loss on sale
of investments
|
|
|
—
|
|
|
6
|
|
|
(173,990)
|
|
|
—
|
|
|
(2,770)
|
Impairment of
investments in real estate
|
|
|
—
|
|
|
3,000
|
|
|
—
|
|
|
—
|
|
|
—
|
Other non-core
adjustments, net
|
|
|
(14,604)
|
|
|
15,127
|
|
|
(94)
|
|
|
31,633
|
|
|
(48,858)
|
Non-controlling
interests
|
|
|
111
|
|
|
(3,326)
|
|
|
1,716
|
|
|
436
|
|
|
3,629
|
Preferred stock
dividends, including undeclared dividends
|
|
|
10,181
|
|
|
10,181
|
|
|
10,181
|
|
|
10,181
|
|
|
10,181
|
(Gain on) / Issuance
costs associated with redeemed preferred stock
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
Adjusted
EBITDA
|
|
|
$667,804
|
|
|
$638,969
|
|
|
$619,786
|
|
|
$610,994
|
|
|
$602,994
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) For definitions and
discussion of EBITDA and Adjusted EBITDA, see the definitions
section.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
Financial
Ratios
|
|
|
|
|
31-Mar-23
|
|
|
31-Dec-22
|
|
|
30-Sep-22
|
|
|
30-Jun-22
|
|
|
31-Mar-22
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total GAAP interest
expense
|
|
|
|
|
$102,220
|
|
|
$86,882
|
|
|
$76,502
|
|
|
$69,023
|
|
|
$66,725
|
Capitalized
interest
|
|
|
|
|
26,771
|
|
|
24,581
|
|
|
17,304
|
|
|
14,131
|
|
|
14,751
|
Change in accrued
interest and other non-cash amounts
|
|
|
|
|
38,137
|
|
|
(67,909)
|
|
|
31,860
|
|
|
(43,952)
|
|
|
52,324
|
Cash Interest
Expense (2)
|
|
|
|
|
$167,128
|
|
|
$43,554
|
|
|
$125,666
|
|
|
$39,202
|
|
|
$133,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred
dividends
|
|
|
|
|
10,181
|
|
|
10,181
|
|
|
10,181
|
|
|
10,181
|
|
|
10,181
|
Total Fixed Charges
(3)
|
|
|
|
|
$139,172
|
|
|
$121,645
|
|
|
$103,987
|
|
|
$93,335
|
|
|
$91,657
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Coverage
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest coverage ratio
(4)
|
|
|
|
|
4.7x
|
|
|
5.3x
|
|
|
6.1x
|
|
|
6.6x
|
|
|
6.1x
|
Cash interest coverage
ratio (5)
|
|
|
|
|
3.7x
|
|
|
11.9x
|
|
|
4.6x
|
|
|
12.6x
|
|
|
4.0x
|
Fixed charge coverage
ratio (6)
|
|
|
|
|
4.4x
|
|
|
4.9x
|
|
|
5.5x
|
|
|
6.0x
|
|
|
5.5x
|
Cash fixed charge
coverage ratio (7)
|
|
|
|
|
3.5x
|
|
|
10.0x
|
|
|
4.3x
|
|
|
10.4x
|
|
|
3.7x
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Leverage
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt to total
enterprise value (8)(9)
|
|
|
|
|
37.3 %
|
|
|
35.2 %
|
|
|
34.5 %
|
|
|
27.1 %
|
|
|
25.5 %
|
Debt plus preferred
stock to total enterprise value (9)(10)
|
|
|
|
|
38.9 %
|
|
|
36.8 %
|
|
|
36.2 %
|
|
|
28.5 %
|
|
|
26.8 %
|
Pre-tax income to
interest expense (11)
|
|
|
|
|
1.7x
|
|
|
1.0x
|
|
|
4.1x
|
|
|
1.9x
|
|
|
2.2x
|
Net Debt to Adjusted
EBITDA (12)
|
|
|
|
|
7.1x
|
|
|
6.9x
|
|
|
6.7x
|
|
|
6.2x
|
|
|
6.3x
|
|
|
(2)
|
Cash interest expense
is interest expense less amortization of debt discount and deferred
financing fees and includes interest that we capitalized. We
consider cash interest expense to be a useful measure of interest
as it excludes non-cash based interest expense.
|
(3)
|
Fixed charges consist
of GAAP interest expense, capitalized interest, and preferred
dividends.
|
(4)
|
Adjusted EBITDA divided
by GAAP interest expense plus capitalized interest (including our
pro rata share of unconsolidated joint venture interest
expense).
|
(5)
|
Adjusted EBITDA divided
by cash interest expense (including our pro rata share of
unconsolidated joint venture interest expense).
|
(6)
|
Adjusted EBITDA divided
by fixed charges (including our pro rata share of unconsolidated
joint venture fixed charges).
|
(7)
|
Adjusted EBITDA divided
by the sum of cash interest expense, and preferred dividends
(including our pro rata share of unconsolidated joint venture cash
fixed charges).
|
(8)
|
Mortgage debt and other
loans divided by market value of common equity plus debt plus
preferred stock.
|
(9)
|
Total enterprise value
defined as market value of common equity plus debt plus preferred
stock.
|
(10)
|
Same as (8), except
numerator includes preferred stock.
|
(11)
|
Calculated as net
income plus interest expense divided by GAAP interest
expense.
|
(12)
|
Calculated as total
debt at balance sheet carrying value, plus capital lease
obligations, plus Digital Realty's pro rata share of unconsolidated
joint venture debt, less cash and cash equivalents (including
Digital Realty's pro rata share of unconsolidated joint venture
cash) divided by the product of Adjusted EBITDA (including Digital
Realty's pro rata share of unconsolidated joint venture EBITDA),
multiplied by four.
|
Definitions
Funds From Operations (FFO):
We calculate funds from operations, or FFO, in accordance with
the standards established by the National Association of Real
Estate Investment Trusts, or Nareit, in the Nareit Funds From
Operations White Paper - 2018 Restatement. FFO represents net
income (loss) (computed in accordance with GAAP), excluding gains
(or losses) from real estate transactions, impairment of investment
in real estate, real estate related depreciation and amortization
(excluding amortization of deferred financing costs),
unconsolidated JV real estate related depreciation &
amortization, non-controlling interests in operating partnership
and after adjustments for unconsolidated partnerships and joint
ventures. Management uses FFO as a supplemental performance measure
because, in excluding real estate related depreciation and
amortization and gains and losses from property dispositions and
after adjustments for unconsolidated partnerships and joint
ventures, it provides a performance measure that, when compared
year over year, captures trends in occupancy rates, rental rates
and operating costs. We also believe that, as a widely recognized
measure of the performance of REITs, FFO will be used by investors
as a basis to compare our operating performance with that of other
REITs. However, because FFO excludes depreciation and amortization
and captures neither the changes in the value of our data centers
that result from use or market conditions, nor the level of capital
expenditures and capitalized leasing commissions necessary to
maintain the operating performance of our data centers, all of
which have real economic effect and could materially impact our
financial condition and results from operations, the utility of FFO
as a measure of our performance is limited. Other REITs may not
calculate FFO in accordance with the NAREIT definition and,
accordingly, our FFO may not be comparable to other REITs' FFO. FFO
should be considered only as a supplement to net income computed in
accordance with GAAP as a measure of our performance.
Core Funds from Operations (Core
FFO):
We present core funds from operations, or Core FFO, as a
supplemental operating measure because, in excluding certain items
that do not reflect core revenue or expense streams, it provides a
performance measure that, when compared year over year,
captures trends in our core business operating performance. We
calculate Core FFO by adding to or subtracting from FFO (i) other
non-core revenue adjustments, (ii) transaction and integration
expenses, (iii) loss from early extinguishment of debt, (iv)
gain on / issuance costs associated with redeemed preferred
stock, (v) severance, equity acceleration, and legal expenses,
(vi) gain/loss on FX revaluation, and (vii) other
non-core expense adjustments. Because certain of these adjustments
have a real economic impact on our financial condition and results
from operations, the utility of Core FFO as a measure of our
performance is limited. Other REITs may calculate Core FFO
differently than we do and accordingly, our Core FFO may not be
comparable to other REITs' Core FFO. Core FFO should be considered
only as a supplement to net income computed in accordance with GAAP
as a measure of our performance.
Adjusted Funds from Operations
(AFFO):
We present adjusted funds from operations, or AFFO, as a
supplemental operating measure because, when compared year
over year, it assesses our ability to fund dividend and
distribution requirements from our operating activities. We also
believe that, as a widely recognized measure of the operations of
REITs, AFFO will be used by investors as a basis to assess our
ability to fund dividend payments in comparison to other REITs,
including on a per share and unit basis. We calculate AFFO by
adding to or subtracting from Core FFO (i) non-real estate
depreciation, (ii) amortization of deferred financing costs,
(iii) amortization of debt discount/premium,
(iv) non-cash stock-based compensation expense,
(v) straight-line rental revenue, (vi) straight-line
rental expense, (vii) above- and below-market rent
amortization, (viii) deferred tax expense / (benefit),
(ix) leasing compensation and internal lease commissions, and
(x) recurring capital expenditures. Other REITs may calculate
AFFO differently than we do and, accordingly, our AFFO may not be
comparable to other REITs' AFFO. AFFO should be considered only as
a supplement to net income computed in accordance with GAAP as a
measure of our performance.
EBITDA and Adjusted
EBITDA:
We believe that earnings before interest, loss from early
extinguishment of debt, income taxes, and depreciation and
amortization, or EBITDA, and Adjusted EBITDA (as defined below),
are useful supplemental performance measures because they allow
investors to view our performance without the impact of non-cash
depreciation and amortization or the cost of debt and, with respect
to Adjusted EBITDA, unconsolidated joint venture real estate
related depreciation & amortization, unconsolidated joint
venture interest expense and tax, severance, equity acceleration,
and legal expenses, transaction and integration expenses, gain on
sale / deconsolidation, impairment of investments in real estate,
other non-core adjustments, net, non-controlling interests,
preferred stock dividends, including undeclared dividends, and
issuance costs associated with redeemed preferred stock. Adjusted
EBITDA is EBITDA excluding unconsolidated joint venture real estate
related depreciation & amortization, unconsolidated joint
venture interest expense and tax, severance, equity acceleration,
and legal expenses, transaction and integration expenses, gain on
sale / deconsolidation, impairment of investments in real estate,
other non-core adjustments, net, non-controlling interests,
preferred stock dividends, including undeclared dividends, and gain
on / issuance costs associated with redeemed preferred stock. In
addition, we believe EBITDA and Adjusted EBITDA are frequently used
by securities analysts, investors and other interested parties in
the evaluation of REITs. Because EBITDA and Adjusted EBITDA are
calculated before recurring cash charges including interest expense
and income taxes, exclude capitalized costs, such as leasing
commissions, and are not adjusted for capital expenditures or other
recurring cash requirements of our business, their utility as a
measure of our performance is limited. Other REITs may calculate
EBITDA and Adjusted EBITDA differently than we do and, accordingly,
our EBITDA and Adjusted EBITDA may not be comparable to other
REITs' EBITDA and Adjusted EBITDA. Accordingly, EBITDA and Adjusted
EBITDA should be considered only as supplements to net income
computed in accordance with GAAP as a measure of our financial
performance.
Net Operating Income (NOI) and
Cash NOI:
Net operating income, or NOI, represents rental revenue, tenant
reimbursement revenue and interconnection revenue less utilities
expense, rental property operating expenses, property taxes and
insurance expenses (as reflected in the statement of operations).
NOI is commonly used by stockholders, company management and
industry analysts as a measurement of operating performance of the
company's rental portfolio. Cash NOI is NOI less straight-line
rents and above- and below-market rent amortization. Cash NOI is
commonly used by stockholders, company management and industry
analysts as a measure of property operating performance on a cash
basis. However, because NOI and cash NOI exclude depreciation and
amortization and capture neither the changes in the value of our
data centers that result from use or market conditions, nor the
level of capital expenditures and capitalized leasing commissions
necessary to maintain the operating performance of our data
centers, all of which have real economic effect and could
materially impact our results from operations, the utility of NOI
and cash NOI as measures of our performance is limited. Other REITs
may calculate NOI and cash NOI differently than we do and,
accordingly, our NOI and cash NOI may not be comparable to other
REITs' NOI and cash NOI. NOI and cash NOI should be considered only
as supplements to net income computed in accordance with GAAP as
measures of our performance.
Additional Definitions
Net debt-to-Adjusted EBITDA ratio is calculated as total debt at
balance sheet carrying value, plus capital lease obligations, plus
Digital Realty's pro rata share of unconsolidated joint venture
debt, less cash and cash equivalents (including Digital Realty's
pro rata share of unconsolidated joint venture cash) divided by the
product of Adjusted EBITDA (including Digital Realty's pro rata
share of unconsolidated joint venture EBITDA), multiplied by
four.
Debt-plus-preferred-to-total enterprise value is mortgage debt
and other loans plus preferred stock divided by mortgage debt and
other loans plus the liquidation value of preferred stock and the
market value of outstanding Digital Realty Trust, Inc. common
stock and Digital Realty Trust, L.P. units, assuming the
redemption of Digital Realty Trust, L.P. units for shares of
Digital Realty Trust, Inc. common stock.
Fixed charge coverage ratio is Adjusted EBITDA divided by the
sum of GAAP interest expense, capitalized interest, scheduled debt
principal payments and preferred dividends. For the quarter ended
March 31, 2023, GAAP interest expense
was $102 million, capitalized interest was $27 million and scheduled debt principal payments
and preferred dividends was $10
million.
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Net Operating Income (NOI)
|
|
Three Months
Ended
|
(in
thousands)
|
|
31-Mar-23
|
|
31-Dec-22
|
|
31-Mar-22
|
|
|
|
|
|
|
|
|
|
|
Operating
income
|
|
|
$177,335
|
|
|
$120,981
|
|
|
$141,236
|
|
|
|
|
|
|
|
|
|
|
Fee
income
|
|
|
(7,868)
|
|
|
(7,508)
|
|
|
(5,757)
|
Other
income
|
|
|
(887)
|
|
|
(168)
|
|
|
(15)
|
Depreciation and
amortization
|
|
|
421,198
|
|
|
430,130
|
|
|
382,132
|
General and
administrative
|
|
|
107,766
|
|
|
104,452
|
|
|
96,435
|
Severance, equity
acceleration, and legal expenses
|
|
|
4,155
|
|
|
15,980
|
|
|
2,077
|
Transaction
expenses
|
|
|
12,267
|
|
|
17,350
|
|
|
11,968
|
Other
expenses
|
|
|
—
|
|
|
3,615
|
|
|
7,657
|
|
|
|
|
|
|
|
|
|
|
Net Operating
Income
|
|
|
$713,965
|
|
|
$687,831
|
|
|
$635,734
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Net
Operating Income (Cash NOI)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Operating
Income
|
|
|
$713,965
|
|
|
$687,831
|
|
|
$635,734
|
|
|
|
|
|
|
|
|
|
|
Straight-line
rental revenue
|
|
|
(16,327)
|
|
|
(32,226)
|
|
|
(6,530)
|
Straight-line
rental expense
|
|
|
(510)
|
|
|
(680)
|
|
|
3,646
|
Above- and
below-market rent amortization
|
|
|
(1,226)
|
|
|
(762)
|
|
|
335
|
|
|
|
|
|
|
|
|
|
|
Cash Net Operating
Income
|
|
|
$695,902
|
|
|
$654,164
|
|
|
$633,185
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Constant Currency
CFFO Reconciliation
|
|
Three Months
Ended
|
(in
thousands)
|
|
31-Mar-23
|
|
|
|
31-Mar-22
|
|
|
|
|
|
|
|
|
|
|
Core FFO
(1)
|
|
|
$493,500
|
|
|
|
|
|
$484,490
|
Core FFO impact
of holding '22 Exchange Rates Constant (2)
|
|
|
9,413
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
Constant Currency
Core FFO
|
|
|
$502,913
|
|
|
|
|
|
$484,490
|
Weighted-average
shares and units outstanding - diluted
|
|
|
297,382
|
|
|
|
|
|
290,662
|
Constant Currency
CFFO Per Share
|
|
|
$1.69
|
|
|
|
|
|
$1.67
|
|
|
1)
|
As reconciled to net
income above.
|
2)
|
Adjustment calculated
by holding currency translation rates for 2023 constant with
average currency translation rates that were applicable to the same
periods in 2022
|
This document contains forward-looking statements within the
meaning of the federal securities laws, which are based on current
expectations, forecasts and assumptions that involve risks and
uncertainties that could cause actual outcomes and results to
differ materially. Such forward-looking statements include
statements relating to: our economic outlook, our expected
investment and expansion activity, anticipated continued demand for
our products and service, our liquidity, our joint ventures, supply
and demand for data center and colocation space, our acquisition
and disposition activity, pricing and net effective leasing
economics, market dynamics and data center fundamentals, our
strategic priorities, our product offerings, available inventory,
rent from leases that have been signed but have not yet commenced
and other contracted rent to be received in future periods, rental
rates on future leases, lag between signing and commencement, cap
rates and yields, investment activity, the company's FFO, Core FFO,
constant currency Core FFO, adjusted FFO, and net income, 2023
outlook and underlying assumptions, information related to trends,
our strategy and plans, leasing expectations, weighted average
lease terms, the exercise of lease extensions, lease expirations,
debt maturities, annualized rent at expiration of leases, the
effect new leases and increases in rental rates will have on our
rental revenue, our credit ratings, construction and development
activity and plans, projected construction costs, estimated yields
on investment, expected occupancy, expected square footage and IT
load capacity upon completion of development projects, backlog NOI,
NAV components, and other forward-looking financial data. Such
statements are based on management's beliefs and assumptions made
based on information currently available to management. Such
statements are subject to risks, uncertainties and assumptions and
are not guarantees of future performance and may be affected by
known and unknown risks, trends, uncertainties and factors that are
beyond our control. Should one or more of these risks or
uncertainties materialize, or should underlying assumptions prove
incorrect, actual results may vary materially from those
anticipated, estimated or projected. Some of the risks and
uncertainties that may cause our actual results, performance or
achievements to differ materially from those expressed or implied
by forward-looking statements include, among others, the
following:
- reduced demand for data centers or decreases in information
technology spending;
- increased competition or available supply of data center
space;
- decreased rental rates, increased operating costs or increased
vacancy rates;
- the suitability of our data centers and data center
infrastructure, delays or disruptions in connectivity or
availability of power, or failures or breaches of our physical and
information security infrastructure or services;
- our dependence upon significant customers, bankruptcy or
insolvency of a major customer or a significant number of smaller
customers, or defaults on or non-renewal of leases by
customers;
- our ability to attract and retain customers;
- breaches of our obligations or restrictions under our contracts
with our customers;
- our inability to successfully develop and lease new properties
and development space, and delays or unexpected costs in
development of properties;
- the impact of current global and local economic, credit and
market conditions;
- our inability to retain data center space that we lease or
sublease from third parties;
- global supply chain or procurement disruptions, or increased
supply chain costs;
- information security and data privacy breaches;
- difficulty managing an international business and acquiring or
operating properties in foreign jurisdictions and unfamiliar
metropolitan areas;
- our failure to realize the intended benefits from, or
disruptions to our plans and operations or unknown or contingent
liabilities related to, our recent acquisitions;
- our failure to successfully integrate and operate acquired or
developed properties or businesses;
- difficulties in identifying properties to acquire and
completing acquisitions;
- risks related to joint venture investments, including as a
result of our lack of control of such investments;
- risks associated with using debt to fund our business
activities, including re-financing and interest rate risks, our
failure to repay debt when due, adverse changes in our credit
ratings or our breach of covenants or other terms contained in our
loan facilities and agreements;
- our failure to obtain necessary debt and equity financing, and
our dependence on external sources of capital;
- financial market fluctuations and changes in foreign currency
exchange rates;
- adverse economic or real estate developments in our industry or
the industry sectors that we sell to, including risks relating to
decreasing real estate valuations and impairment charges and
goodwill and other intangible asset impairment charges;
- our inability to manage our growth effectively;
- losses in excess of our insurance coverage;
- our inability to attract and retain talent;
- impact on our operations and on the operations of our
customers, suppliers and business partners during a pandemic, such
as COVID-19;
- environmental liabilities, risks related to natural disasters
and our inability to achieve our sustainability goals;
- our inability to comply with rules and regulations applicable
to our company;
- Digital Realty Trust, Inc.'s failure to maintain its status as
a REIT for federal income tax purposes;
- Digital Realty Trust, L.P.'s failure to qualify as a
partnership for federal income tax purposes;
- restrictions on our ability to engage in certain business
activities;
- changes in local, state, federal and international laws and
regulations, including related to taxation, real estate and zoning
laws, and increases in real property tax rates; and
- the impact of any financial, accounting, legal or regulatory
issues or litigation that may affect us.
The risks included here are not exhaustive, and additional
factors could adversely affect our business and financial
performance. Several additional material risks are discussed in our
annual report on Form 10–K for the year ended December 31, 2022 and other filings with the U.S.
Securities and Exchange Commission. Those risks continue to be
relevant to our performance and financial condition. Moreover, we
operate in a very competitive and rapidly changing environment. New
risk factors emerge from time to time and it is not possible for
management to predict all such risk factors, nor can it assess the
impact of all such risk factors on the business or the extent to
which any factor, or combination of factors, may cause actual
results to differ materially from those contained in any
forward-looking statements. We expressly disclaim any
responsibility to update forward-looking statements, whether as a
result of new information, future events or otherwise. Digital
Realty, Digital Realty Trust, the Digital Realty logo, Interxion,
Turn-Key Flex, Powered Base Building, and PlatformDIGITAL®, Data
Gravity Index and Data Gravity Index DGx are registered trademarks
and service marks of Digital Realty Trust, Inc. in the United States and/or other countries. All
other names, trademarks and service marks are the property of their
respective owners.
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SOURCE Digital Realty