Digital Realty Trust(DLR) - 2025 Q1 - Quarterly Report

Financial Performance - Total operating revenues for the three months ended March 31, 2025, increased by approximately $76.5 million, reaching$ 1,407,637, compared to $1,331,143 in the same period in 2024, representing a 5.7% increase[193] - Stabilized rental and other services revenue increased by$ 30.9 million to $1,053,488, while non-stabilized rental and other services revenue rose by$ 38.7 million to $333,373, marking increases of 3.0% and 13.1% respectively[194] - Funds from Operations (FFO) for Q1 2025 was$ 570,716,000, an increase of 26.4% from $451,274,000 in Q1 2024[267] - GAAP Net Income Available to Common Stockholders decreased to$ 99,793,000 in Q1 2025 from $271,327,000 in Q1 2024, representing a decline of 63.3%[267] - Basic FFO per share increased to$ 1.67 in Q1 2025 from $1.42 in Q1 2024, reflecting a growth of 17.6%[267] Occupancy Rates - As of March 31, 2025, the consolidated portfolio occupancy rate was 82.4%, down from 82.9% as of December 31, 2024[172] - The occupancy rate for the North America region was 85.0%, slightly down from 85.5% in the previous quarter[172] - The Europe region's occupancy rate was 76.9%, down from 77.3% as of December 31, 2024[172] - The Asia Pacific region reported an occupancy rate of 81.8%, up from 81.2% in the previous quarter[172] Debt and Liquidity - The company targets a debt-to-Adjusted EBITDA ratio around 5.5x and a fixed charge coverage of greater than three times[168] - Outstanding consolidated indebtedness as of March 31, 2025, was$ 17.2 billion, with fixed-rate debt comprising 93.0% of total debt[249] - The effective interest rate as of March 31, 2025, was 2.65%, with fixed-rate debt having an effective interest rate of 2.59%[249] - The company expects to meet liquidity requirements with approximately $3.1 billion available under Global Revolving Credit Facilities as of April 28, 2025[242] - The ratio of debt to total enterprise value was approximately 25.4% as of March 31, 2025[249] Capital Expenditures and Investments - Expected capital expenditures for the remainder of 2025 are projected to be between$ 2.3 billion and $2.8 billion[8] - Current investment in construction projects as of March 31, 2025, totals$ 5,349,847, with future investments expected to reach $5,612,741[9] - Capital expenditures for the three months ended March 31, 2025, totaled$ 727.5 million, an increase of 20.2% from $604.9 million in the same period of 2024[237] - Net cash used in investing activities increased by$ 909.8 million, primarily due to higher spending on development projects and contributions to investments in unconsolidated entities[256] Joint Ventures and Partnerships - A joint venture was formed with Bersama Digital Infrastructure Asia to develop data centers in Indonesia, with a 50% interest acquired for approximately $94.7 million[170] - The joint venture with Mitsubishi Corporation involved a contribution value of approximately$ 261 million for two data centers, with Mitsubishi holding an 80% interest after additional capital contributions[244] Operating Expenses - Total operating expenses for the three months ended March 31, 2025, were $1,211,887, an increase of$ 30,111 or 2.5% compared to the same period in 2024[1] - Total property level operating expenses for the three months ended March 31, 2025, were $605,324, an increase of$ 12,535 or 2.1% from $592,789 in the same period in 2024[195] - Total stabilized utilities expenses decreased by approximately$ 10.7 million primarily due to lower power pricing in EMEA and APAC regions[196] - Total stabilized rental property operating and maintenance expenses (excluding utilities) increased by approximately $11.2 million, driven by higher building operations and data center labor costs[199] - Total non-stabilized rental property operating and maintenance expenses (excluding utilities) increased by approximately$ 3.0 million, primarily due to increased data center labor expenses[200] Cash Flow - Net cash provided by operating activities increased by $46.8 million, reaching$ 399.1 million in Q1 2025 compared to $352.3 million in Q1 2024[254] Market Outlook - The company aims for sustainable long-term growth in earnings and funds from operations per share and unit[165] - The company expects average aggregate rental rates on renewed data center leases for 2025 expirations to be positive compared to current rates, although future results cannot be assured[180] - The company anticipates that near-term single asset acquisitions will comprise a smaller percentage of growth due to lower capitalization rates driven by private institutional investors[240] Foreign Currency and Interest Rate Risk - The company is exposed to foreign currency exchange risk primarily with the Euro, Japanese yen, and British pound sterling, which may impact future costs and cash flows[273] - Interest rate sensitivity analysis indicated a potential increase of$ 3,000,000 in annual interest expense on variable rate debt following a 10% increase in interest rates[271] - The company utilizes interest rate swap agreements to mitigate exposure to interest rate movements, with fixed rate debt accounting for a significant portion of total debt[271]