Digital Realty's Q1 Core FFO Tops Estimates, 2025 View Raised

Core Insights - Digital Realty Trust (DLR) reported first-quarter 2025 core funds from operations (FFO) per share of $1.77, exceeding the Zacks Consensus Estimate of $1.73, with a year-over-year increase of 6% [1] - The company raised its 2025 core FFO guidance range to $7.05-$7.15 from the previous range of $7.00-$7.10, with the Zacks Consensus Estimate of $7.06 falling within this range [12] Financial Performance - Operating revenues for the first quarter were $1.41 billion, slightly below the Zacks Consensus Estimate of $1.42 billion, but up 5.7% year-over-year [2] - Same-Capital cash net operating income (NOI) grew by 3.9% [2] - Total operating expenses increased by 2.5% year-over-year to $1.21 billion, driven by various operational costs [5] - Adjusted EBITDA for the quarter was $791.2 million, reflecting an 11.3% year-over-year increase [5] Leasing and Revenue Growth - Total bookings signed in the first quarter are expected to generate $242 million in annualized GAAP rental revenues, with significant contributions from various categories [3] - Renewal leases signed during the quarter accounted for $147 million in annualized cash rental revenues, with rental rates increasing by 5.6% on a cash basis and 7.1% on a GAAP basis [4] Portfolio Expansion - Digital Realty acquired three land parcels in Charlotte, NC, for a total of $36 million, enhancing its IT capacity significantly [6][7] - The company entered the Indonesian market through a 50-50 joint venture for $95 million, aiming to develop data centers in the region [8] - Following the quarter end, DLR acquired approximately 100 acres of land in the Atlanta metro area for $120 million, expected to support over 200 megawatts of IT capacity [9] Balance Sheet and Debt Management - As of March 31, 2025, DLR had cash and cash equivalents of $2.32 billion, down from $3.87 billion at the end of 2024 [10] - The company reported total debt of $17 billion, with a net debt-to-adjusted EBITDA ratio of 5.1X and a fixed charge coverage of 4.9X [10][11] Future Guidance - DLR projects total revenues between $5.825 billion and $5.925 billion, with adjusted EBITDA expected in the range of $505 million to $515 million [13] - The company anticipates rental rates on renewal leases to increase by 4-6% on a cash basis and 6-8% on a GAAP basis, with year-end portfolio occupancy expected to rise by 100-200 basis points [13]