Digital Realty Trust(DLR) - 2025 Q2 - Quarterly Results

Overview Corporate Information Digital Realty operates a global portfolio of 310 data centers and holds investment-grade credit ratings from major agencies - Digital Realty owns, acquires, develops, and operates 310 data centers globally, with a portfolio of approximately 42.5 million square feet, serving a diverse customer base across various industries[7] Credit Ratings as of Q2 2025 | Agency | Rating | Outlook | | :--- | :--- | :--- | | Standard & Poor's | BBB | Stable | | Moody's | Baa2 | Stable | | Fitch | BBB | Stable | Common Stock (DLR) Performance - Q2 2025 | Metric | Value | | :--- | :--- | | Closing Price (30-Jun-25) | $174.33 | | High Price (Q2 2025) | $178.85 | | Low Price (Q2 2025) | $129.95 | | Indicated Annual Dividend | $4.88 | | Closing Annual Dividend Yield | 2.8% | Key Quarterly Financial Data The company reported strong Q2 2025 results with $1.49 billion in revenue, significant net income, and improved Core FFO per share Key Financial Performance (Q2 2025 vs. Q2 2024) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Total Operating Revenues | $1,493.2M | $1,356.7M | | Net Income | $1,046.9M | $74.7M | | Core FFO per Share | $1.87 | $1.65 | | Adjusted EBITDA | $823.3M | $726.9M | Enterprise Value and Leverage (as of June 30, 2025) | Metric | Value | | :--- | :--- | | Total Enterprise Value | $79,637.6M | | Total Debt | $18,452.1M | | Total Debt / Total Enterprise Value | 23.2% | | Net Debt-to-Adjusted EBITDA | 5.1x | Portfolio Statistics (as of June 30, 2025) | Metric | Value | | :--- | :--- | | Data Centers | 310 | | Net Rentable Square Feet | 42,529k | | Occupancy at End of Quarter | 84.8% | | Space Under Active Development | 9,848k sqft | | Weighted Avg. Remaining Lease Term | 5.1 years | Consolidated Statements of Operations Earnings Release Q2 2025 featured strong revenue and EBITDA growth, record bookings, positive renewal spreads, and an increased full-year outlook Q2 2025 Financial Highlights | Metric | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | Revenue | $1.49B | $1.36B (approx) | +10% | | Adjusted EBITDA | $823M | $727M (approx) | +13% | | Net Income per Share | $2.94 | $0.20 | +1370% | | Core FFO per Share | $1.87 | $1.65 | +13.3% | - Signed total bookings expected to generate $135 million of annualized GAAP rental revenue at Digital Realty's share, including a record $90 million from the 0-1 megawatt plus interconnection category[27][30] - Rental rates on renewal leases signed during the quarter increased by 7.3% on a cash basis and 9.9% on a GAAP basis[29] - Acquired land parcels in Atlanta, Dallas, and Chicago to support future development of over 700 megawatts and raised over $3 billion for its U.S. Hyperscale Data Center Fund[34][35] 2025 Outlook The company raised its full-year 2025 guidance for revenue, Adjusted EBITDA, and Core FFO per share, reflecting strong performance Updated 2025 Full-Year Outlook (as of July 24, 2025) | Metric | Previous Outlook (Apr 24) | Current Outlook (Jul 24) | | :--- | :--- | :--- | | Total Revenue | $5.825 - $5.925B | $5.925 - $6.025B | | Adjusted EBITDA | $3.125 - $3.225B | $3.200 - $3.300B | | Core FFO per Share | $7.05 - $7.15 | $7.15 - $7.25 | | Constant-Currency Core FFO / Share | $7.05 - $7.15 | $7.10 - $7.20 | | Renewal Rental Rates (GAAP) | 6.0% - 8.0% | 7.0% - 8.0% | Consolidated Quarterly Statements of Operations Q2 2025 operating revenues reached $1.49 billion, with a substantial net income of $1.05 billion driven by gains on asset sales Q2 2025 vs. Q2 2024 Statement of Operations Highlights | Line Item (in thousands) | Three Months Ended 30-Jun-25 | Three Months Ended 30-Jun-24 | | :--- | :--- | :--- | | Total Operating Revenues | $1,493,150 | $1,356,749 | | Operating Income | $211,697 | $9,889 | | Gain / (loss) on sale of investments | $931,830 | $173,709 | | Net Income | $1,046,946 | $74,668 | | Net Income Available to Common Stockholders | $1,021,975 | $70,039 | | Net income / (loss) per share - diluted | $2.94 | $0.20 | Funds From Operations and Core Funds From Operations Core FFO per share grew to $1.87 in Q2 2025, up from $1.65 in the prior-year period, indicating strong core business growth FFO and Core FFO per Diluted Share (Q2 2025 vs. Q2 2024) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Funds From Operations (FFO) | $1.75 | $1.57 | | Core Funds From Operations (Core FFO) | $1.87 | $1.65 | Adjusted Funds From Operations (AFFO) AFFO per diluted share was $1.68 for Q2 2025, with a corresponding diluted AFFO payout ratio of 72.8% AFFO Performance and Payout Ratio (Q2 2025) | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | AFFO per diluted share | $1.68 | $1.78 | $1.56 | | Dividends per share | $1.22 | $1.22 | $1.22 | | Diluted AFFO Payout Ratio | 72.8% | 68.6% | 78.1% | Balance Sheet Information Consolidated Balance Sheets Total assets grew to $48.7 billion as of June 30, 2025, supported by a strong cash position and increased investments in real estate Consolidated Balance Sheet Highlights (in billions) | Account | June 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Net Investments in Real Estate | $29.3 | $26.3 | | Cash and cash equivalents | $3.6 | $2.3 | | Total Assets | $48.7 | $43.6 | | Total Debt (net) | $18.5 | $16.3 | | Total Liabilities | $23.9 | $21.2 | | Total Equity | $23.4 | $21.0 | Components of Net Asset Value (NAV) The company's NAV is supported by over $3.3 billion in annualized cash NOI and significant assets in development and cash Key Components of Net Asset Value (in thousands) | Component | Value | | :--- | :--- | | Assets | | | Total Consolidated Cash NOI, Annualized | $3,071,438 | | Digital Realty's Pro Rata Share of Unconsolidated Entities Cash NOI | $313,235 | | Development CIP | $5,080,701 | | Cash and cash equivalents | $3,554,126 | | Liabilities | | | Total Debt (Unsecured + Secured) | $18,603,387 | | Preferred stock | $755,000 | | Digital Realty's share of unconsolidated entities debt | $2,044,648 | Debt Maturities The company maintains a well-staggered debt maturity profile of $18.6 billion with a weighted average maturity of 4.6 years Total Debt Maturities by Year (in thousands) | Year | Amount Maturing | | :--- | :--- | | 2025 | $766,574 | | 2026 | $1,729,991 | | 2027 | $1,871,457 | | 2028 | $2,518,438 | | 2029 | $2,888,792 | | Thereafter | $8,828,135 | - Total debt outstanding is $18.6 billion with a weighted average maturity of 4.6 years[72] Debt Analysis and Covenant Compliance The company remained in full compliance with all debt covenants, demonstrating strong financial health and significant headroom Debt Covenant Compliance (as of June 30, 2025) | Covenant Ratio | Required | Actual (Senior Notes) | Actual (Credit Facilities) | | :--- | :--- | :--- | :--- | | Total outstanding debt / total assets | < 60% | 44% | 33% | | Secured debt / total assets | < 40% | 5% | 4% | | Fixed charge coverage | > 1.50x | N/A | 4.6x | Internal Growth Same-Capital Operating Trend Summary The Same-Capital portfolio showed solid internal growth, with a 6.1% increase in NOI and a 4.4% increase in Cash NOI year-over-year Same-Capital Performance (Q2 2025 vs Q2 2024) | Metric | % Change (YoY) | | :--- | :--- | | Total Revenue | +4.9% | | Net Operating Income (NOI) | +6.1% | | Cash Net Operating Income (Cash NOI) | +4.4% | | Constant Currency Cash NOI | +1.8% | Summary of Leasing Activity - Signed The company signed new leases in Q2 2025 expected to generate $118.0 million in annualized GAAP rent, driven by the 0-1 MW segment New Leasing Activity - Q2 2025 | Category | Annualized GAAP Rent (in thousands) | Kilowatts Leased | NRSF Leased (in thousands) | | :--- | :--- | :--- | :--- | | 0-1 MW | $72,517 | 21,727 | 240 | | > 1 MW | $45,038 | 23,290 | 152 | | Total | $117,974 | 45,017 | 401 | Summary of Leasing Activity - Renewed Lease renewals in Q2 2025 featured strong positive rent re-leasing spreads of 7.3% on a cash basis and a high retention ratio Lease Renewal Rent Change - Q2 2025 | Rent Basis | % Change (Total Portfolio) | | :--- | :--- | | Cash Rent | +7.3% | | GAAP Rent | +9.9% | - The company achieved a retention ratio of 82.2% (by square feet) and a low churn rate of 1.0% for the quarter[88] Lease Expirations - By Size The lease expiration schedule is well-distributed, with 13.0% of annualized rent expiring in the remainder of 2025 and 19.8% in 2026 Upcoming Lease Expirations (% of Total Annualized Rent) | Year | % of Annualized Rent Expiring | | :--- | :--- | | 2025 (remainder) | 13.0% | | 2026 | 19.8% | | 2027 | 11.2% | | 2028 | 8.3% | | 2029 | 10.2% | Top 20 Customers by Annualized Rent Revenue is concentrated, with the top 20 customers accounting for 50.8% of annualized rent and providing stable, long-term cash flows - The top 20 customers account for 50.8% of annualized recurring revenue, with a weighted average remaining lease term of 6.0 years[96] Top 3 Customers by Annualized Rent | Rank | Customer | % of Annualized Recurring Revenue | | :--- | :--- | :--- | | 1 | Fortune 50 Software Company | 11.7% | | 2 | Oracle Corporation | 8.2% | | 3 | Social Content Platform | 5.3% | Occupancy Analysis Total portfolio occupancy increased to 84.8% in Q2 2025, with North America leading at 84.7% for its consolidated portfolio Portfolio Occupancy by Region (as of June 30, 2025) | Region | Occupancy % | | :--- | :--- | | North America (Consolidated) | 84.7% | | EMEA (Consolidated) | 79.2% | | Asia Pacific (Consolidated) | 81.4% | | Total Portfolio | 84.8% | - Total portfolio occupancy increased to 84.8% from 84.0% in the prior quarter[102] External Growth Development Lifecycle The company has a substantial $8.9 billion development pipeline that is 61% pre-leased and expected to yield 12.2% Development Pipeline Summary (100% Share) | Region | IT Capacity (MW) | Total Expected Investment | % Leased | Estimated Yield | | :--- | :--- | :--- | :--- | :--- | | Americas | 464 | $5,305.4M | 78% | 13.5% | | EMEA | 216 | $3,066.0M | 26% | 11.3% | | APAC | 53 | $548.5M | 52% | 9.6% | | Total | 734 | $8,919.9M | 61% | 12.2% | Construction Projects in Progress (CIP) Total construction in progress and land held for development represents a total expected investment of $16.0 billion Construction in Progress Summary (100% Share, in millions) | Category | Current Investment | Future Investment | Total Investment | | :--- | :--- | :--- | :--- | | Future Development Capacity | $3,522.1 | $2,747.6 | $6,269.7 | | Data Center Construction | $3,515.7 | $5,404.2 | $8,919.9 | | Total Land Held and Development CIP | $7,614.9 | $8,299.8 | $15,914.7 | Historical Capital Expenditures and Investments in Real Estate Total real estate investments in Q2 2025 were $704.3 million, primarily driven by $575.4 million in non-recurring capital expenditures Capital Expenditures - Q2 2025 (in thousands) | Category | Amount | | :--- | :--- | | Non-Recurring Capital Expenditures (Development, etc.) | $575,402 | | Recurring Capital Expenditures | $62,083 | | Indirect Capital Expenditures (Interest, Overhead) | $66,838 | | Total Improvements to and Investments in Real Estate | $704,323 | Acquisitions / Dispositions / Joint Ventures Q2 2025 activities included strategic land acquisitions for future growth and significant asset contributions to a joint venture - Acquired land in Atlanta, GA ($120M), Dallas, TX ($11M), and Chicago, IL ($5.7M) for future development[118] - Contributed assets to the U.S. Hyperscale Data Center Fund with a contribution price of $1.6 billion[120] Unconsolidated Entities Unconsolidated joint ventures generated $227.2 million in NOI for Q2 2025, contributing significantly to the company's earnings Digital Realty's Pro Rata Share from Unconsolidated Entities (Q2 2025) | Metric | Amount (in thousands) | | :--- | :--- | | Share of Debt | $2,044,648 | | Share of Net Operating Income (NOI) | $85,494 | | Share of Cash NOI | $78,309 | | Share of Core FFO | $52,184 | | Fee Income Earned | $22,409 | Additional Information Reconciliation of Earnings Before Interest, Taxes, Depreciation & Amortization and Financial Ratios The company's key credit metrics, including a Net Debt-to-Adjusted EBITDA ratio of 5.1x, reflect a strong and stable financial profile Key Financial Ratios (as of June 30, 2025) | Ratio | Value | | :--- | :--- | | Net Debt-to-Adjusted EBITDA | 5.1x | | Interest coverage ratio | 5.0x | | Fixed charge coverage ratio | 4.7x | | Debt-plus-preferred-stock-to-total-enterprise-value | 24.1% | Management Statements on Non-GAAP Measures This section defines non-GAAP measures like FFO and EBITDA, explaining their use as supplemental performance evaluation tools Forward-Looking Statements This section provides a safe harbor statement, outlining potential risks and uncertainties that could affect future results