Digital Realty Reports Fourth Quarter 2025 Results

Core Insights - Digital Realty reported strong financial results for Q4 2025, with revenues of $1.6 billion, marking a 4% increase from the previous quarter and a 14% increase year-over-year [3][6] - The company achieved a net income of $96 million for the quarter, translating to $0.24 per share, compared to $0.15 per share in Q3 2025 and $0.51 per share in Q4 2024 [3][9] - Adjusted EBITDA for the quarter was $857 million, a slight decrease of 1% from the previous quarter but a 14% increase from the same quarter last year [4][6] Financial Performance - Total revenues for Q4 2025 were $1.634 billion, with a year-over-year increase in rental revenues to $1.075 billion [30] - Funds From Operations (FFO) reached $658 million, or $1.89 per share, up from $1.65 per share in Q3 2025 and $1.61 per share in Q4 2024 [4][9] - Core FFO per share was reported at $1.86, slightly down from $1.89 in the previous quarter but up from $1.73 in the same quarter last year [5][9] Leasing Activity - In Q4 2025, Digital Realty signed total bookings expected to generate $400 million in annualized GAAP rental revenue, with the company's share amounting to $175 million [7][9] - The backlog of signed-but-not-commenced leases at the end of the quarter was $817 million in annualized GAAP base rent [8][9] - Renewal leases signed during the quarter represented $269 million in annualized cash rental revenue, with rental rates increasing by 6.1% on a cash basis and 12.0% on a GAAP basis [9] Investment Activity - Digital Realty sold a non-core data center in Dallas for approximately $33 million and established a joint venture in Israel to develop an 18-megawatt campus [12][14] - The company also acquired land in Portland and Lisbon, supporting future capacity expansions [14][15] - Subsequent to the quarter, an agreement was made to acquire the TelcoHub 1 data center in Malaysia, enhancing Digital Realty's footprint in the region [15] Balance Sheet - As of December 31, 2025, Digital Realty had approximately $18.4 billion in total debt, with a net debt-to-Adjusted EBITDA ratio of 4.9x [16][19] - The company issued €600 million in notes due 2033 and €800 million in notes due 2037, raising approximately €1.4 billion [17][19] - Early repayment of €1.075 billion in senior notes due 2026 was completed in December 2025 [18] 2026 Outlook - Digital Realty provided a 2026 Core FFO per share outlook of $7.90 to $8.00, with total revenue expected to be between $6.600 billion and $6.700 billion [19][22] - The company anticipates rental rate increases on renewal leases in the range of 6.0% to 8.0% on a cash basis and 8.5% to 10.5% on a GAAP basis [20][22] - Development capital expenditures are projected to be between $3.250 billion and $3.750 billion, with average stabilized yields expected to exceed 10% [20][22]