Digital Realty Trust(US:DLR)2024-08-02 21:17Joint Ventures and Sales - In January 2024, the 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[147]. - 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[148]. - In March 2024, a joint venture with Mitsubishi Corporation was formed to develop two pre-leased data centers in Dallas, with a contribution value of approximately $261 million and the company retaining a 35% interest[149]. - The company expanded its joint venture with GI Partners by selling a 75% interest in a facility valued at approximately $453 million, receiving approximately $386 million in net proceeds and recognizing a gain on disposition of approximately $172 million[150]. - An additional 24.9% interest in a Frankfurt data center was sold to DCREIT for approximately $126 million, with DCREIT now holding a 49.9% interest[151]. - The joint venture with GI Partners resulted in a cash capital contribution of $68 million, increasing GI Partners' ownership interest in the joint venture to 80%[203]. - The joint venture with Blackstone Inc. is expected to incur an estimated development cost of $3.0 billion for the first phase, with the company retaining a 20% interest[205]. - The company recognized a total gain of approximately $194.2 million from the sale of four data centers to Brookfield Infrastructure Partners L.P. in January 2024[175]. Financial Performance - The company's revenue primarily consists of rental income from its data center portfolio, with occupancy rates being a key factor for revenue growth[153]. - Total operating revenues decreased by approximately $9.5 million and $17.1 million in the three and six months ended June 30, 2024, respectively, compared to the same periods in 2023[166]. - Stabilized rental and other services revenue decreased by $16.3 million and $23.5 million in the three and six months ended June 30, 2024, primarily due to a decrease in utility reimbursement of $52.6 million and $95.4 million[166]. - New leasing and renewals across all regions contributed an increase of $23.4 million and $49.0 million in stabilized rental revenue for the same periods[166]. - Total operating revenues for the three months ended June 30, 2024, were $1,356,749, a decrease of $9,518 or (0.7)% compared to $1,366,267 in the same period of 2023[167]. - The company reported a net income available to common stockholders of $70.039 million for the three months ended June 30, 2024, compared to $108.003 million for the same period in 2023, representing a decrease of approximately 35.1%[222]. - Funds from Operations (FFO) for the three months ended June 30, 2024, was $168.303 million, compared to $165.843 million for the same period in 2023, reflecting a year-over-year increase of approximately 0.88%[222]. - Basic FFO per share for the three months ended June 30, 2024, was $1.57, slightly up from $1.54 in the same period of 2023, indicating a growth of about 1.94%[222]. Occupancy and Leasing - As of June 30, 2024, the total net rentable square feet was 41,220, with an occupancy rate of 82.9%[154]. - The average remaining lease term was approximately five years, indicating a long-term commitment from customers[155]. - The geographic concentration of total annualized rent as of June 30, 2024, showed Northern Virginia at 18.9% and Chicago at 7.9%[159]. - The company expects average aggregate rental rates on renewed data center leases for 2024 expirations to be positive compared to current rates[156]. Expenses and Operating Costs - Operating expenses are expected to increase as the company continues to expand its data center operations[160]. - Total stabilized utilities expenses decreased by approximately $58.8 million (15.9%) in the three months ended June 30, 2024, compared to the same period in 2023[170]. - Total rental property operating and maintenance expenses (excluding utilities) increased by approximately $18.8 million (5.7%) in the three months ended June 30, 2024, compared to the same period in 2023[172]. - Total property level operating expenses decreased by $43,523 (6.7%) in the three months ended June 30, 2024, compared to the same period in 2023[176]. - Total stabilized property taxes and insurance increased by approximately $9.6 million (39.9%) in the three months ended June 30, 2024, compared to the same period in 2023[172]. Capital Expenditures and Debt - The company expects to incur approximately $0.9 billion to $1.4 billion in capital expenditures for its consolidated development programs during the remainder of 2024[194]. - Total capital expenditures for the six months ended June 30, 2024, were $1,204.4 million, compared to $1,266.6 million for the same period in 2023[198]. - The total outstanding consolidated indebtedness as of June 30, 2024, was $16,438 million, with fixed-rate debt comprising 85.6% of the total[209]. - The effective interest rate as of June 30, 2024, was 2.87%, with fixed-rate debt having an effective interest rate of 2.61%[209]. - The company paid down $240 million on the U.S. term loan facility, resulting in an early extinguishment charge of approximately $1.1 million during the six months ended June 30, 2024[178]. - The company’s ratio of debt to total enterprise value was approximately 24% as of June 30, 2024[210]. Cash and Liquidity - As of June 30, 2024, Digital Realty Trust, Inc. had $2,282.1 million in cash and cash equivalents, excluding $5.2 million of restricted cash[191]. - The company reported a net increase in cash, cash equivalents, and restricted cash of $697,850 for the six months ended June 30, 2024[213]. - As of July 31, 2024, the company had approximately $1.8 billion of borrowings available under its Global Revolving Credit Facilities[202]. - The Global Revolving Credit Facilities provide for borrowings up to $3.9 billion, with an additional $750 million available subject to lender commitments[192]. Interest Rate and Currency Risks - The company utilized interest rate swap agreements to manage exposure to interest rate movements, with fixed rate debt totaling $11.182 billion as of June 30, 2024[225]. - The company expects to mitigate foreign currency exchange risk through local currency financing and cross-currency interest rate swaps[228]. - The company is exposed to foreign currency exchange risks primarily with the Euro, Japanese yen, British pound sterling, Singapore dollar, South African rand, and Brazilian real[228]. - The company mitigates currency fluctuation risks by financing investments in local currencies and using cross-currency interest rate swaps[228]. - The company's analysis indicates that a 10% increase in interest rates would lead to an increase of $3 million in annual interest expense on variable rate debt not subject to swaps[226]. - The effectiveness of hedging strategies, such as foreign currency forwards or options, cannot be guaranteed[228]. - Changes in foreign currency relations to the U.S. dollar may impact revenues, operating margins, and stockholders' equity[228]. - The company's exposure to the Brazilian real is limited to its share of the Ascenty entity's operations[228].