Core Insights - Teraco, a Digital Realty Company, has commenced construction on a 120-megawatt utility-scale solar power plant in South Africa, marking a significant step in the global data center industry's commitment to renewable energy [1][2]. Group 1: Project Details - The solar power plant is expected to begin generating electricity in late 2026, with an output projected to meet the annual electricity needs of approximately 110,000 South African homes [2]. - This initiative represents the first ownership of a solar power plant by a global data center company, allowing Teraco to wheel renewable energy directly to its data centers [2]. Group 2: Commitment to Sustainability - Digital Realty emphasizes its commitment to sustainability, with over 150 data centers now powered by 100% renewable electricity, showcasing leadership in sustainable data center solutions [4]. - The company will have more than 1.5 gigawatts of contracted solar and wind capacity, reinforcing its dedication to reducing carbon footprints and promoting sustainable business practices globally [4][3].

Core Viewpoint - Digital Realty Trust, Inc. has announced a private offering of $1 billion in exchangeable senior notes with a 1.875% interest rate, maturing in 2029, to strengthen its financial position and support various corporate purposes [1][6]. Group 1: Offering Details - The offering consists of $1,000,000,000 aggregate principal amount of 1.875% exchangeable senior notes due 2029, with a settlement date of November 12, 2024 [1]. - The notes will accrue interest at a rate of 1.875% per annum, payable semi-annually starting May 15, 2025, and maturing on November 15, 2029 [2]. - An option for initial purchasers to buy an additional $150,000,000 principal amount of notes is available within 13 days of the initial issuance [1]. Group 2: Exchange and Redemption Features - Noteholders can exchange their notes under specific conditions before August 15, 2029, and at any time thereafter until the maturity date, with an initial exchange rate of 4.7998 shares per $1,000 principal amount [2]. - The initial exchange price of approximately $208.34 per share represents a 20% premium over the last reported sale price of $173.62 on November 6, 2024 [2]. - The notes are redeemable at Digital Realty L.P.'s option starting November 22, 2027, under certain conditions related to the stock price [3]. Group 3: Use of Proceeds - Digital Realty L.P. estimates net proceeds of approximately $979.3 million, or $1,126.8 million if the additional notes option is fully exercised, to be used for repaying borrowings, acquiring properties, funding development, and general corporate purposes [6]. Group 4: Corporate Structure and Operations - Digital Realty is the largest global provider of cloud- and carrier-neutral data center solutions, with over 300 facilities across 50+ metros in 25+ countries [9]. - The company aims to deliver a secure data meeting place and manage data challenges through its global data center platform, PlatformDIGITAL® [9].

Core Viewpoint - Digital Realty Trust, Inc. announced a private offering of $1 billion in exchangeable senior notes due 2029, with an option for an additional $150 million, aimed at qualified institutional buyers [1][6]. Group 1: Offering Details - The notes will be senior, unsecured obligations of Digital Realty L.P., accruing interest payable semi-annually and maturing on November 15, 2029 [2]. - Noteholders can exchange their notes under certain conditions, with settlements in cash and potentially shares of Digital Realty's common stock [2][5]. - The notes are redeemable at Digital Realty L.P.'s option starting November 22, 2027, under specific conditions related to the stock price [3]. Group 2: Repurchase and Registration Rights - In the event of a "fundamental change," noteholders may require Digital Realty L.P. to repurchase their notes for cash at the principal amount plus accrued interest [4]. - The notes will have a registration rights agreement for the resale of shares of Digital Realty's common stock upon exchange, subject to limitations [5][7]. Group 3: Use of Proceeds - The net proceeds from the offering will be used to repay borrowings, acquire properties or businesses, fund development opportunities, and for general corporate purposes [6]. Group 4: Company Overview - Digital Realty is the largest global provider of cloud- and carrier-neutral data center solutions, with over 300 facilities in more than 50 metros across 25 countries [8].

Joint Ventures and Partnerships - Company formed a joint venture with Blackstone Inc. to develop four hyperscale data center campuses, receiving approximately $231 million in net proceeds and retaining a 20% interest[172] - Company formed a joint venture with Mitsubishi Corporation to develop two data centers in the Dallas metro area, contributing data centers valued at approximately $261 million and retaining a 35% interest[174] - Company expanded its joint venture with GI Partners by selling a 75% interest in a third facility in Chicago, contributing the data center at a value of approximately $453 million and retaining a 25% interest[175] - GI Partners increased its ownership in a joint venture from 65% to 80% through a $68 million capital contribution, reducing the company's stake to 20%[254] - The company formed a joint venture with Blackstone Inc. to develop four hyperscale data center campuses, with an estimated development cost of $3.0 billion for the first phase[256] - The company formed a joint venture with Mitsubishi Corporation to develop two data centers in Dallas, contributing $261 million and retaining a 35% interest[258] - The company expanded its joint venture with GI Partners, selling a 75% interest in a third facility for approximately $386 million and retaining a 25% interest[259] Asset Sales and Dispositions - Company sold its interest in four data centers to Brookfield Infrastructure Partners L.P. for approximately $271 million, recognizing a total gain on disposition of approximately $203.1 million[173] - Company sold an additional 24.9% interest in a Frankfurt data center to DCREIT for approximately $126 million, with DCREIT now holding a 49.9% interest[176] - The company recognized a total gain of $194.2 million from the sale of its interest in four data centers to Brookfield Infrastructure Partners L.P. in January 2024[209] - The company recognized a total gain of $172 million from the contribution of a data center to the joint venture with GI Partners in April 2024[212] - The company sold its interest in four data centers to Brookfield for approximately $271 million, recognizing a total gain on disposition of approximately $203.1 million[257] Debt and Financing Activities - Company issued and sold €850 million aggregate principal amount of 3.875% Guaranteed Notes due 2033, receiving net proceeds of approximately €843 million[178] - Company refinanced its Global Revolving Credit Facility and Yen Revolving Credit Facility, providing for borrowings up to $4.5 billion with maturity on January 24, 2029[179] - Company completed a common stock offering, selling approximately 12.1 million shares at $136.66 per share, receiving net proceeds of approximately $1.7 billion[177] - Digital Realty Trust, Inc. generated net proceeds of approximately $99 million from the issuance of 0.6 million common shares at an average price of $133.43 per share under the 2023 Sales Agreement[223] - Digital Realty Trust, Inc. generated net proceeds of approximately $983 million from the issuance of 6.4 million common shares at an average price of $154.84 per share under the 2024 Sales Agreement Amendment[224] - As of October 30, 2024, approximately $0.9 billion remains available for future sales under the 2024 Sales Agreement Amendment[224] - Digital Realty Trust, Inc. received net proceeds of approximately $1.7 billion from the sale of 12.1 million shares of common stock at a purchase price of $136.66 per share[226] - The company issued €850 million in 3.875% Guaranteed Notes due 2033, with net proceeds of approximately €843 million ($933 million) used to repay debt and for general corporate purposes[253] - Net cash provided by financing activities increased by $630.2 million, primarily due to higher proceeds from short-term borrowings and issuance of common stock, offset by debt repayments[268] - The company issued approximately 7.0 million shares of common stock under its ATM program, raising $1.1 billion, and 12.1 million shares through an equity offering, raising $1.7 billion[268] - Debt repayments included $240 million on the U.S. term loan facility, $637 million on Euro notes, $324 million on 2.750% notes, and $415 million on Euro Term Loan Facilities[268] Financial Performance and Metrics - Company targets a debt-to-Adjusted EBITDA ratio around 5.5x, fixed charge coverage greater than three times, and floating rate debt at less than 20% of total outstanding debt[170] - Total operating revenues increased by $28.8 million and $11.7 million in the three and nine months ended September 30, 2024, respectively, compared to the same periods in 2023[198] - Stabilized rental and other services revenue decreased by $35.8 million (3.2%) and $59.4 million (1.8%) in the three and nine months ended September 30, 2024, respectively, compared to the same periods in 2023[199] - Non-stabilized rental and other services revenue increased by $54.9 million (20.1%) and $54.3 million (6.8%) in the three and nine months ended September 30, 2024, respectively, compared to the same periods in 2023[199] - Total stabilized utilities expenses decreased by $58.1 million (17.1%) and $148.4 million (15.6%) in the three and nine months ended September 30, 2024, respectively, compared to the same periods in 2023[201][202] - Total non-stabilized utilities expenses increased by $29.7 million (67.7%) and $38.5 million (24.6%) in the three and nine months ended September 30, 2024, respectively, compared to the same periods in 2023[201][203] - Total stabilized rental property operating and maintenance expenses (excluding utilities) increased by $16.1 million (9.7%) and $34.8 million (6.9%) in the three and nine months ended September 30, 2024, respectively, compared to the same periods in 2023[206] - Total non-stabilized property taxes and insurance decreased by $22.6 million (70.3%) and $37.6 million (57.8%) in the three and nine months ended September 30, 2024, respectively, compared to the same periods in 2023[207] - Gain on disposition of properties decreased by $811.2 million and $449.7 million for the three and nine months ended September 30, 2024, respectively, compared to the same periods in 2023[209] - Interest expense increased by $13.0 million and $24.0 million in the three and nine months ended September 30, 2024, respectively, compared to the same periods in 2023[215] - Income tax expense decreased by $4.8 million and $5.0 million for the three and nine months ended September 30, 2024, respectively, compared to the same periods in 2023[216] - Net cash provided by operating activities for the nine months ended September 30, 2024 increased to $1.49 billion from $1.17 billion in 2023[265] - FFO available to common stockholders and unitholders was $520.4 million for Q3 2024, up from $481.5 million in Q3 2023[274] - Basic FFO per share and unit was $1.56 for Q3 2024, unchanged from Q3 2023[274] Occupancy and Portfolio Metrics - Company's revenue primarily consists of rental income from data centers, with occupancy rates being a key factor in revenue generation[181] - North America data center occupancy decreased from 85.4% to 83.8% from September 30, 2024, to December 31, 2023, with net rentable square feet increasing slightly from 20,003 to 20,150[182] - Europe data center occupancy dropped from 77.3% to 75.8%, with net rentable square feet decreasing from 9,363 to 8,873 during the same period[182] - Asia Pacific data center occupancy fell from 81.8% to 76.7%, while net rentable square feet remained stable at 1,667 and 1,652 respectively[182] - The company's consolidated portfolio occupancy decreased from 82.6% to 79.8%, with net rentable square feet dropping from 32,644 to 32,203[182] - Average remaining lease term as of September 30, 2024, was approximately five years, reflecting the long-term nature of data center operations[184] - Renewals for leases >1 MW showed a significant rental rate increase of 31.9%, from $133 to $175 per square foot[185] - Northern Virginia accounted for 18.5% of total annualized rent as of September 30, 2024, making it the largest contributor among metropolitan areas[189] - The stabilized portfolio increased from 22,600 to 24,642 net rentable square feet, while the non-stabilized portfolio decreased from 9,603 to 8,002 from December 31, 2023, to September 30, 2024[196] Capital Expenditures and Investments - The company expects to incur approximately $0.4 billion to $0.6 billion of capital expenditures for consolidated development programs during the remainder of 2024[239] - Cumulative investments in current development projects as of September 30, 2024, totaled $5,198,446, with future investments estimated at $4,340,581[243] - Capitalized interest for the nine months ended September 30, 2024 increased to $84.4 million from $83.8 million in 2023 due to higher qualifying activities and interest rates[246] - Total capital expenditures (excluding indirect costs) for the nine months ended September 30, 2024 were $1.93 billion, down from $2.31 billion in 2023[251] Debt and Interest Rate Exposure - Total outstanding debt as of September 30, 2024 was $17.1 billion, consisting of $15.2 billion fixed rate debt and $1.9 billion variable rate debt[279] - A 10% increase in interest rates would increase annual interest expense on variable rate debt by $6 million[280] - A 10% decrease in interest rates would decrease the fair value of fixed rate debt by $153 million[280] - The company's consolidated debt as of September 30, 2024, was $17.109 billion, with fixed rate debt (including interest rate swaps) at $15.187 billion and variable rate debt at $1.922 billion[279] - A 10% increase in interest rates would result in a $2 million increase in the fair value of interest rate swaps and a $6 million increase in annual interest expense on variable rate debt not subject to swaps[280] - A 10% decrease in interest rates would lead to a $2 million decrease in the fair value of interest rate swaps and a $6 million decrease in annual interest expense on variable rate debt not subject to swaps[280] Foreign Currency and Risk Management - The company's primary currency exposures are to the Euro, Japanese yen, British pound, Singapore dollar, South African rand, and Brazilian real, with limited exposure to the Brazilian real through its share of the Ascenty entity's financial position[282] - The company uses cross-currency interest rate swaps and foreign currency forwards or options to hedge against currency fluctuations, but there is no assurance these will be effective[282] - The company is exposed to foreign currency exchange risks, primarily to the Euro, Japanese yen, British pound, Singapore dollar, South African rand, and Brazilian real, which may affect future costs and cash flows[282] - The company mitigates foreign exchange risk by financing in local currencies and using cross-currency interest rate swaps and foreign currency forwards or options[282] Internal Controls and Legal Proceedings - The company maintains disclosure controls and procedures to ensure timely and accurate reporting of required information, but recognizes that these controls can only provide reasonable assurance of achieving desired objectives[282] - The company's chief executive officer and chief financial officer concluded that its disclosure controls and procedures were effective at the reasonable assurance level as of the end of the quarter covered by the report[282] - There were no material changes in the company's internal control over financial reporting during its most recent fiscal quarter[282] - The company is not currently a party to any legal proceedings that would have a material adverse effect on its operations or financial position as of September 30, 2024[287] - The company's disclosure controls and procedures are designed to ensure timely and accurate reporting of required information under the Securities Exchange Act of 1934[282][283] - The company's management, including the chief executive officer and chief financial officer, concluded that the disclosure controls and procedures were effective at the reasonable assurance level[282][284] - There have been no material changes in the company's internal control over financial reporting during the most recent fiscal quarter[282][285] - The company has investments in unconsolidated entities, which are accounted for using the equity method of accounting, and its disclosure controls and procedures for these entities are more limited[282][283] - As of September 30, 2024, the company was not a party to any legal proceedings that would have a material adverse effect on its operations or financial position[287] Derivatives and Hedging - The company does not use derivatives for trading or speculative purposes and only enters into contracts with major financial institutions based on their credit ratings and other factors[278]

Core Viewpoint - The article emphasizes the importance of conducting personal in-depth research and due diligence before making investment decisions, highlighting the inherent risks involved in trading [3]. Group 1 - The analysis is intended solely for informational purposes and should not be interpreted as professional investment advice [3]. - There is a clear disclaimer regarding the lack of any stock, option, or derivative positions in the companies mentioned, indicating a neutral stance [2]. - The article expresses that past performance does not guarantee future results, reinforcing the need for careful consideration by investors [4].

Core Insights - Digital Realty Trust (DLR) reported third-quarter 2024 core funds from operations (FFO) per share of $1.67, matching the Zacks Consensus Estimate and showing an increase from $1.62 per share a year ago [1] - The company experienced healthy leasing activity, with over $520 million in new leasing, more than double the previous record set in the first quarter, leading to a backlog increase of nearly 60% [2] - Operating revenues for the quarter were $1.43 billion, slightly below the Zacks Consensus Estimate of $1.44 billion, but up 2.1% year over year [1][3] Leasing and Revenue Details - Total signed bookings in the third quarter are estimated to generate $521 million of annualized GAAP rental revenue, with significant contributions from the 0-1 megawatt category and interconnection [2] - Renewal leases signed during the quarter accounted for $258 million of annualized cash rental revenues, with rental rates on renewal leases increasing by 15.2% on a cash basis and 27.5% on a GAAP basis [3] Financial Performance - Adjusted EBITDA for the quarter was $758.3 million, reflecting a 10.5% year-over-year increase [3] - Rental property operating expenses rose by 12% to $249.8 million, while interest expenses increased by 11.8% to $123.8 million [3] Balance Sheet Overview - As of September 30, 2024, Digital Realty had cash and cash equivalents of $2.18 billion, down from $2.28 billion at the end of the second quarter [4] - The company reported total debt of $17 billion, with a net debt-to-adjusted EBITDA ratio of 5.4X and a fixed charge coverage ratio of 4.1X [4] 2024 Guidance - Digital Realty raised its guidance for 2024 core FFO per share to a range of $6.65-$6.75, while lowering total revenue expectations to $5.55-$5.60 billion [5]

Financial Highlights - Record leasing and backlog reached $521 million[1] and $859 million[1] respectively - Total bookings amounted to $520.9 million[8], with >1 MW bookings contributing $449.7 million, representing 86% of total bookings[8] - Strong pricing environment with renewal spreads of 15.2% cash and 27.5% GAAP[14], driven by >1MW - Signed renewals representing $258 million of annualized rental revenue[14] Operational Performance - Added a record 149 new logos in 3Q24[3] - Record 3Q bookings from 0-1MW + Interconnection reached $66 million[3] - Record 3Q bookings in the 0-500kW tranche reached $40 million[3] - Increased development pipeline by approximately 50% QoQ[1] Sustainability Initiatives - Contracted 1.4 GW of renewable capacity[4] - Issued €850 million in green bonds in September 2024[4] - Refinanced and upsized sustainability-linked credit facility to $4.5 billion[5] Global Capacity - Total buildable IT capacity exceeds 3,000 MW[2] - IT capacity under construction is 644 MW[2] - Delivered 36 MW in 3Q and started 244 MW of new projects in 3Q[2] - In-place IT capacity is approximately 2,700 MW[2]

Financial Data and Key Metrics Changes - New leasing volume reached $521 million, surpassing previous records and expectations, with a backlog of nearly $860 million in signed but not commenced leases [3][4][17] - Core FFO was reported at $1.67 per share, with data center revenue growing by 7.5% year-over-year [20][21] - Adjusted EBITDA increased by 11% year-over-year, driven by improved pricing and higher revenues [21][25] Business Line Data and Key Metrics Changes - Greater than 1 megawatt leasing volume was a significant driver, with bookings in North America up more than 75% from the previous record [7][16] - The 0-1 megawatt interconnection segment saw record bookings of over $66 million, a 20% increase from the prior record [8][9] - Cash renewal spreads increased by 15.2% on a cash basis, with overall renewal spreads at 10.5% year-to-date [18][19] Market Data and Key Metrics Changes - The development pipeline increased by nearly 50% to 644 megawatts under construction, with 74% pre-leased at an average expected yield of 12% [4][23] - The backlog now represents 20% of the quarter's annualized data center revenues, with significant future commencements scheduled [17][25] Company Strategy and Development Direction - The company is focused on capitalizing on strong demand for data center capacity, particularly in core markets, and enhancing its value proposition [5][6] - Digital Realty aims to maintain a robust land bank to support over 3 gigawatts of incremental development [6][10] - The company continues to lead in ESG initiatives, issuing a EUR850 million green bond and achieving various sustainability certifications [14][15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term demand for data center capacity, driven by cloud and digital transformation trends [5][11] - The company anticipates continued strong performance in the fourth quarter, although it may not match the record set in Q3 due to seasonal factors [28][44] - Future growth is expected to accelerate beyond 2024 levels, supported by a strong backlog and favorable market conditions [25][28] Other Important Information - The company has strengthened its balance sheet, raising over $800 million in equity and maintaining nearly $5 billion in total liquidity [24] - The weighted average interest rate on debt is 2.8%, with 89% of net debt being fixed rate [24] Q&A Session Summary Question: Demand Risks and Power Readiness - Management indicated that while there may be some pull forward in demand, significant capacity remains available for future leasing [30][31] Question: AI Use Cases and Build Costs - Approximately 50% of bookings were attributed to AI use cases, with build costs experiencing inflationary trends but remaining manageable relative to rental rate increases [34][35] Question: New Normal for Bookings - Management highlighted that the current demand fundamentals remain strong, with a backlog that supports future growth [41][44] Question: Future CapEx Levels - CapEx for 2024 is expected to remain within the current range, with a focus on maintaining leverage targets [46][48] Question: Large Package Deals - Management noted that while large package deals are episodic, they contribute positively to cash mark-to-market rates [50][51] Question: Power Delivery and Capacity Blocks - Updates on power delivery indicated that significant capacity blocks are nearing completion, with a long runway for growth [54][55] Question: Enterprise Segment Performance - The enterprise segment saw improved bookings due to a strong value proposition and effective go-to-market strategies [71][72]

For the quarter ended September 2024, Digital Realty Trust (DLR) reported revenue of $1.43 billion, up 2.1% over the same period last year. EPS came in at $1.67, compared to $2.33 in the year-ago quarter. The reported revenue compares to the Zacks Consensus Estimate of $1.44 billion, representing a surprise of -0.28%. The company has not delivered EPS surprise, with the consensus EPS estimate being $1.67. While investors scrutinize revenue and earnings changes year-over-year and how they compare with Wall S ...

Digital Realty Trust (DLR) came out with quarterly funds from operations (FFO) of $1.67 per share, in line with the Zacks Consensus Estimate. This compares to FFO of $1.62 per share a year ago. These figures are adjusted for non-recurring items.A quarter ago, it was expected that this real estate investment trust would post FFO of $1.63 per share when it actually produced FFO of $1.65, delivering a surprise of 1.23%.Over the last four quarters, the company has surpassed consensus FFO estimates two times.Dig ...