Digital Realty Trust(US:DLR)2023-11-08 16:00Financial Performance - Total operating revenues for the nine months ended September 30, 2023, increased by $648.7 million, or 18.8%, compared to the same period in 2022, reaching $4,107.4 million[183]. - Stabilized rental and other services revenue increased by $391.2 million, or 14.7%, for the nine months ended September 30, 2023, compared to the same period in 2022[184]. - Non-stabilized rental and other services revenue increased by $246.5 million, or 31.5%, for the nine months ended September 30, 2023, compared to the same period in 2022[184]. - Total property level operating expenses for the nine months ended September 30, 2023, increased by $470.9 million, or 31.8%, compared to the same period in 2022, totaling $1,950.9 million[185]. - Gain on disposition of properties increased by approximately $636.7 million and $723.9 million for the three and nine months ended September 30, 2023, respectively[194]. - Funds from operations (FFO) available to common stockholders for the nine months ended September 30, 2023, was $1,432,117 thousand, compared to $1,379,668 thousand in 2022[251]. - Basic FFO per share for the nine months ended September 30, 2023, was $4.74, unchanged from the previous year[251]. Debt and Financing - The company targets a debt-to-Adjusted EBITDA ratio of 5.5x and aims for a fixed charge coverage of greater than three times[163]. - As of September 30, 2023, total outstanding debt was $16,987.7 million, with fixed rate debt comprising 85.5% of the total[234]. - The effective interest rate for total debt was 2.89%, with fixed rate debt at 2.54% and variable rate debt at 4.99%[234]. - The ratio of debt to total enterprise value was approximately 31% as of September 30, 2023[234]. - The weighted average term to initial maturity of the debt was approximately 4.3 years[235]. - As of September 30, 2023, the pro-rata share of secured debt of unconsolidated entities was approximately $1,463.2 million[236]. - A 10% increase in interest rates would lead to an increase in annual interest expense of $10.6 million on variable rate debt not subject to swaps[257]. - A 10% decrease in interest rates would increase the fair value of fixed rate debt by $2,294.6 million, while a 10% increase would decrease it by $2,719.4 million[257]. Asset Management and Operations - The company completed the sale of three non-core assets for gross proceeds of approximately $340 million, resulting in a net gain of approximately $85 million[165]. - A joint venture with GI Partners was formed, resulting in gross proceeds of approximately $0.7 billion and a gain on disposition of approximately $238 million[165]. - Another joint venture with TPG Real Estate generated approximately $1.3 billion in gross proceeds and a gain on disposition of approximately $577 million[165]. - The company continues to manage day-to-day operations of the assets in joint ventures while retaining significant ownership interests[165]. - The total portfolio consists of 312 buildings with a net rentable square footage of 39,542 thousand square feet and an overall occupancy rate of 82.8%[167]. - As of September 30, 2023, the average remaining lease term was approximately five years[169]. - The company expects average aggregate rental rates on renewed data center leases for 2023 expirations to be positive compared to current rates[172]. Capital Expenditures and Investments - The company expects to incur approximately $0.6 billion to $0.8 billion in capital expenditures for development programs during the three months ending December 31, 2023[215]. - Total capital expenditures for the nine months ended September 30, 2023, were $2,311.4 million, compared to $1,647.2 million for the same period in 2022, representing a year-over-year increase of approximately 40.3%[219]. - The company had open commitments related to construction contracts of approximately $2.6 billion as of September 30, 2023[214]. - The company expects to deliver 8.7 million square feet of Turn Key Flex® and Powered Base Building® product within 12 months[218]. Cash Flow and Liquidity - As of September 30, 2023, the company had $1,062.1 million in cash and cash equivalents, excluding $10.4 million of restricted cash[213]. - Net cash provided by operating activities for the nine months ended September 30, 2023, was $1,202,964 thousand, a decrease of $30,489 thousand compared to the same period in 2022[239]. - Net cash used in investing activities decreased by $3,629,228 thousand, primarily due to an increase in cash provided by proceeds from the sale of real estate amounting to $2,266,689 thousand[241]. Risk Management - The company is exposed to foreign currency exchange risks primarily related to the Euro, Japanese yen, British pound sterling, Singapore dollar, and South African rand[258]. - The company mitigates currency fluctuation risks by financing investments in local currencies and utilizing cross-currency interest rate swaps[258]. - The company maintains a strategy to manage market risks associated with interest rates and foreign currency fluctuations[267]. Corporate Governance - There have been no changes in the company's internal control over financial reporting that materially affected its effectiveness during the most recent fiscal quarter[261]. - The company's disclosure controls and procedures were evaluated and deemed effective at the reasonable assurance level by its CEO and CFO[260]. - The company does not use derivatives for trading or speculative purposes, focusing instead on contracts with major financial institutions[267].