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

PART I. FINANCIAL INFORMATION ITEM 1. Condensed Consolidated Financial Statements Presents unaudited condensed consolidated financial statements for Digital Realty Trust, Inc. and L.P., detailing financial performance and position Condensed Consolidated Financial Statements of Digital Realty Trust, Inc. Digital Realty Trust, Inc. reported increased revenues and net income, driven by property dispositions, with growth in total assets and liabilities Digital Realty Trust, Inc. - Key Financial Highlights (Six Months Ended June 30) | Financial Metric | 2025 (in thousands) | 2024 (in thousands) | YoY Change | |---|---|---|---| | Total Operating Revenues | $2,900,787 | $2,687,892 | +7.9% | | Operating Income | $407,447 | $159,256 | +155.9% | | Net Income Available to Common Stockholders | $1,121,768 | $341,366 | +228.5% | | Diluted EPS | $3.21 | $1.01 | +217.8% | Digital Realty Trust, Inc. - Balance Sheet Summary (in thousands) | Account | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | |---|---|---| | Total Assets | $48,714,995 | $45,283,616 | | Total Liabilities | $23,853,149 | $22,107,836 | | Total Stockholders' Equity | $22,914,527 | $21,340,397 | Digital Realty Trust, Inc. - Cash Flow Summary (Six Months Ended June 30, in thousands) | Cash Flow Activity | 2025 (in thousands) | 2024 (in thousands) | |---|---|---| | Net Cash from Operating Activities | $1,040,322 | $925,487 | | Net Cash used in Investing Activities | ($741,840) | ($275,220) | | Net Cash (used in) provided by Financing Activities | ($462,166) | $47,583 | Condensed Consolidated Financial Statements of Digital Realty Trust, L.P. Digital Realty Trust, L.P. reported financial results nearly identical to the parent company, with similar revenues, net income, assets, and liabilities Digital Realty Trust, L.P. - Key Financial Highlights (Six Months Ended June 30) | Financial Metric | 2025 (in thousands) | 2024 (in thousands) | YoY Change | |---|---|---|---| | Total Operating Revenues | $2,900,787 | $2,687,892 | +7.9% | | Operating Income | $407,447 | $159,256 | +155.9% | | Net Income Available to Common Unitholders | $1,145,768 | $349,066 | +228.2% | | Diluted EPU | $3.23 | $1.01 | +219.8% | - The Operating Partnership's assets and liabilities mirror the Parent's, with the key financial statement difference being partners' capital versus stockholders' equity[13][15] Notes to Condensed Consolidated Financial Statements Notes detail accounting policies, significant property contributions to funds and joint ventures, resulting in substantial gains, and the company's debt structure - In H1 2025, the company launched a U.S. Hyperscale Data Center Fund, raising over $3 billion in equity and recognizing an $873 million gain from asset contributions[76][93] - The company formed or expanded several joint ventures, including with Blackstone, Bersama Digital Infrastructure, and Mitsubishi, as part of its capital recycling and growth strategy[95][96][97] Debt of the Operating Partnership as of June 30, 2025 (in thousands) | Debt Type | Amount Outstanding (in thousands) | Weighted-Average Interest Rate | |---|---|---| | Global Revolving Credit Facilities | $590,690 | 2.75% | | Unsecured term loans | $442,013 | 2.88% | | Unsecured senior notes | $16,760,675 | 2.36% | | Secured and other debt | $810,009 | 8.74% | | Total | $18,603,387 | 2.66% | - The company is cooperating with an SEC investigation into cybersecurity risk disclosures, with management not expecting a material financial impact[174] ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses financial performance, strategic objectives, and liquidity, highlighting revenue growth, capital recycling, strong leasing, and a conservative capital structure - The company's primary objectives are to maximize sustainable long-term growth in earnings, FFO per share, cash flow, and return on invested capital[191][192] Total Operating Revenues (in thousands) | Period | 2025 (in thousands) | 2024 (in thousands) | $ Change (in thousands) | % Change | |---|---|---|---|---| | Three Months Ended June 30 | $1,493,150 | $1,356,749 | $136,401 | 10.1% | | Six Months Ended June 30 | $2,900,787 | $2,687,892 | $212,895 | 7.9% | - Significant H1 2025 activities included issuing €1.7 billion in Guaranteed Notes, forming an Indonesia JV, and launching a U.S. Hyperscale fund generating $937 million in proceeds[199][200] Leasing Renewal Rate Changes (Six Months Ended June 30, 2025) | Lease Size | Rental Rate Change | |---|---| | 0 – 1 MW | +4.6% | | > 1 MW | +19.4% | | Other | +47.3% | Funds From Operations (FFO) Reconciliation (in thousands, except per share data) | | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | |---|---|---| | GAAP Net Income Available to Common Stockholders | $1,021,975 | $70,039 | | FFO available to common stockholders and unitholders | $600,329 | $510,853 | | Diluted FFO per share and unit | $1.75 | $1.57 | ITEM 3. Quantitative and Qualitative Disclosures About Market Risk The company manages market risks from interest rates and foreign currency, with most debt fixed-rate and hedging strategies in place for currency exposure Debt Composition as of June 30, 2025 (in millions) | Debt Type | Outstanding Balance (in millions) | Percentage of Total | |---|---|---| | Fixed rate (including swapped debt) | $17,498 | 94.1% | | Variable rate | $1,105 | 5.9% | | Total | $18,603 | 100.0% | - A hypothetical 10% increase in interest rates would result in a $3 million increase in annual interest expense on variable-rate debt not subject to swaps[305] - The company mitigates foreign currency risk by financing in local currencies and using cross-currency swaps to hedge net investments, primarily exposed to Euro, Japanese yen, and British pound sterling[307] ITEM 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that disclosure controls and procedures for both Digital Realty Trust, Inc. and L.P. were effective at a reasonable assurance level[309][313] - No material changes in internal control over financial reporting occurred during the most recent fiscal quarter[310][314] PART II. OTHER INFORMATION ITEM 1. Legal Proceedings The company is not a party to any legal proceedings expected to have a material adverse effect on its operations or financial position - The company is not currently a party to any legal proceedings that would have a material adverse effect on its financial position or operations[317] ITEM 1A. Risk Factors No material changes have occurred to the risk factors previously disclosed in the company's Annual Report on Form 10-K - The risk factors discussed in the Annual Report on Form 10-K for the year ended December 31, 2024, continue to apply[318] ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds Digital Realty Trust, L.P. issued partnership units in private placements during Q2 2025, including common units to the parent company for restricted stock awards - In Q2 2025, Digital Realty Trust, L.P. issued partnership units in private placements, including 14,714 common units to the parent company for restricted stock unit awards[320] ITEM 5. Other Information This section discloses the CEO's Rule 10b5-1 trading plan for common stock sales and updates to Federal Income Tax Considerations - On May 5, 2025, CEO Andrew P. Power established a Rule 10b5-1 trading plan to sell 58,000 shares of common stock between August 2025 and February 2026[325]