Financial Data and Key Metrics Changes - The company reported Core FFO per share of $1.86 for Q4 2025 and $7.39 for the full year, representing a 10% increase over 2024 [5][25] - Core FFO per share grew by 8% year-over-year in Q4 2025, reflecting strong core growth and continued growth in fee income [19][25] - Same capital cash NOI growth was 8.6% year-over-year in Q4, driven by an 8.2% increase in data center revenue [26] Business Line Data and Key Metrics Changes - The 0-1 MW-plus interconnection product set posted nearly $340 million in bookings, a record and 35%+ increase over 2024 levels [9] - The company signed leases representing $400 million of annualized rent in Q4, with strong demand for both larger capacity blocks and smaller colocation capacity [20] - The 0-1 MW-plus interconnection category set a new quarterly leasing record of $96 million, 7% higher than the previous record [21] Market Data and Key Metrics Changes - New leasing activity was particularly strong in the Americas, accounting for 65% of bookings in Q4 [20] - Interconnection bookings increased by 22% year-over-year, driven by record bookings in EMEA and momentum within the ServiceFabric product [22] - Hyperscale leasing exceeded $800 million in 2025, indicating strong demand in the Americas [10] Company Strategy and Development Direction - The company aims to evolve its funding strategy to support the growth of hyperscale data center capacity, with over $3.2 billion in LP equity commitments to its closed-end fund [6][31] - The strategy focuses on a global, full-spectrum, and connectivity-rich platform, emphasizing operational excellence and disciplined capital allocation [8] - The company is expanding its footprint in the APAC region, with recent investments in Indonesia and Malaysia to strengthen its presence in fast-growing markets [12][80] Management's Comments on Operating Environment and Future Outlook - Management noted that data centers have gained prominence due to accelerated AI adoption and cloud platform scaling, with power becoming a primary constraint in the industry [8] - The company anticipates continued strong demand for cloud and AI services, with infrastructure needs evolving to support low-latency, secure, and cost-efficient AI workflows [15] - Management expressed confidence in the company's ability to meet future demand, citing a robust backlog of nearly $1.4 billion [23][33] Other Important Information - The company plans to enhance its reporting by transitioning to power-based metrics, aligning occupancy reporting with IT load [26] - The total development pipeline is valued at over $10 billion, with an expected stabilized yield of 11.9% [29] - The company raised EUR 1.4 billion in a dual tranche green Eurobond offering to support its capital needs [30] Q&A Session Summary Question: Insights on hyperscaler activity and bookings - Management noted a significant increase in hyperscaler demand, particularly in Northern Virginia, Charlotte, Atlanta, and Dallas, with customers looking further out for power capacity [38] Question: Context around inference scaling in 2026 - Management indicated that both hyperscale and enterprise businesses are seeing increased demand for AI-related capacity, with a mix of cloud and AI use cases becoming a priority [41] Question: Impact of industry capacity growth on bookings - Management stated that while there is a significant amount of capacity coming online in 2027 and 2028, demand remains strong, and the company is well-positioned to meet this demand [66] Question: Disconnect between public and private data center valuations - Management discussed that asset mix influences valuations and emphasized the company's strong backlog and execution, which positions it well for future growth [72][74] Question: Investments in new markets and interconnection-focused facilities - Management highlighted strategic acquisitions in Malaysia, Indonesia, and Portugal, focusing on network-dense, highly connected assets to support growth [78]

Financial Data and Key Metrics Changes - The company reported Core FFO per share of $1.86 for Q4 2025 and $7.39 for the full year, representing a 10% increase over 2024 [5][25] - Core FFO per share grew by 8% year-over-year in Q4 2025, reflecting strong core growth and continued growth in fee income [20][25] - Same capital cash NOI growth was 8.6% year-over-year in Q4, driven by an 8.2% increase in data center revenue [26] Business Line Data and Key Metrics Changes - The company signed over $1 billion in new leases for the second consecutive year, with bookings of $1.2 billion in 2025, nearly 70% above the average of the previous five years [9][20] - The 0-1 MW-plus interconnection product set posted nearly $340 million in bookings, a record and 35% higher than 2024 levels [9][20] - The greater-than-1 MW category saw $78 million in bookings, with pricing remaining strong at over $180 per kilowatt [22] Market Data and Key Metrics Changes - Demand for data center capacity remained robust, particularly in the Americas, which accounted for 65% of bookings in Q4 [21] - The company expanded its footprint in the APAC region, entering Indonesia and acquiring a highly connected data center in Malaysia [12][78] - The total backlog reached a record of nearly $1.4 billion at year-end, reflecting strong data center fundamentals [23] Company Strategy and Development Direction - The company focuses on a global, full-spectrum, and connectivity-rich platform, emphasizing operational excellence and disciplined capital allocation [8] - The strategy includes expanding into emerging markets and enhancing interconnection capabilities to support AI and cloud demands [12][78] - The company aims to deliver AI-ready infrastructure in tier-one metros, addressing the growing demand for AI inference workloads [11][16] Management's Comments on Operating Environment and Future Outlook - Management noted that data centers have gained prominence due to accelerated AI adoption and cloud platform scaling, with power becoming a primary constraint [7][8] - The outlook for 2026 anticipates continued growth in cloud and AI demand, with expectations for total revenue and Adjusted EBITDA growth of over 10% [33] - Management highlighted the importance of securing power capacity and maintaining a strong track record of on-time delivery to meet customer needs [17][66] Other Important Information - The company raised EUR 1.4 billion in a dual tranche green Eurobond offering to support its growth strategy [30] - The balance sheet remains robust with nearly $7 billion in liquidity and approximately $15 billion in dry powder for hyperscale data center development [31] - The company plans to enhance its reporting metrics to focus more on power-based metrics, aligning with how the business is managed [26] Q&A Session Summary Question: Insights on hyperscaler activity and bookings - Management noted a significant increase in hyperscaler demand, particularly in Northern Virginia, Charlotte, Atlanta, and Dallas, with customers looking further out for power capacity [36][38] Question: Context around AI inference scaling - Management indicated that both hyperscale and enterprise businesses are seeing increased demand for AI-related infrastructure, with a notable rise in enterprise AI use cases [41][42] Question: Impact of industry capacity growth on bookings - Management expressed confidence in continued strong demand despite upcoming industry capacity growth, emphasizing their proactive development strategy [65][67] Question: Disconnect between public and private data center valuations - Management discussed the importance of asset mix in valuation discrepancies and highlighted their strategy to leverage both private and public capital for growth [69][72] Question: Investments in new markets - Management explained their strategy of acquiring highly connected assets in emerging markets like Malaysia and Indonesia, focusing on interconnection capabilities [77][78]

Digital Realty Trust (NYSE:DLR) Q4 2025 Earnings call February 05, 2026 05:00 PM ET Speaker4Afternoon and welcome to the Digital Realty Fourth Quarter 2025 earnings call. Please note that this event is being recorded. During today's presentation, all participants will be in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. Callers will be limited to one question, and we will aim to conclude at the top of the hour. I would now like to turn the call over to Jordan ...

Group 1 - Digital Realty has signed an agreement to acquire CSF Advisers, entering the Malaysian market and expanding its PlatformDIGITAL® in one of Southeast Asia's fastest-growing digital markets [2][4] - The acquisition includes the TelcoHub 1 data center in Cyberjaya, which is one of the most mature data center hubs in the Greater Kuala Lumpur area, featuring a capacity of 1.5 megawatts and over 6,000 fiber strands [3][4] - The acquisition is expected to be completed in the first half of 2026, subject to customary closing conditions, and will integrate the Malaysian facility into Digital Realty's global data center platform [3][5] Group 2 - Digital Realty plans to enhance its local team to support future business growth and operational scalability, with the current management team from CSF Advisers joining the company [5] - Malaysia's total data center capacity is projected to grow from 1.26 gigawatts in 2025 to 2.53 gigawatts by 2030, driven by increasing demand for cloud services and AI applications [5] - The company aims to collaborate closely with the Malaysian government and industry stakeholders to support the national digital strategy and promote energy-efficient data center practices [5][6] Group 3 - Digital Realty's expansion into Malaysia builds on its existing operations in Singapore and Jakarta, as the company continues to evaluate opportunities for capacity and partnerships in the region [6] - The acquisition will enhance Digital Realty's ability to support local customers and businesses operating in the Southeast Asian market, providing complementary capacity and interconnection services [4][5] - The company emphasizes its commitment to sustainable development and long-term investment in Malaysia's digital infrastructure ecosystem [5][6]

Core Insights - Digital Realty (DLR) is set to enhance its portfolio by acquiring CSF Advisers, which owns the TelcoHub 1 data center in Cyberjaya, Malaysia, a key data center hub in the Greater Kuala Lumpur area [1][6]. Group 1: Acquisition Details - TelcoHub 1 is recognized as Malaysia's largest dark fiber interconnected hub, featuring over 6,000 crores of regional and long-haul fiber, and operates with a capacity of 1.5 megawatts [2]. - DLR plans to acquire adjacent land that can support an additional 14 megawatts of IT load, facilitating future capacity expansion [2][8]. - The acquisition is expected to be finalized in the first half of 2026, pending customary closing conditions, with over 40 skilled professionals joining DLR to support CSF's customer base [4]. Group 2: Strategic Integration and Market Outlook - DLR intends to integrate the Malaysian campus into its global data center platform, PlatformDIGITAL, and will introduce its interconnection solution, ServiceFabric, to enhance customer infrastructure deployment [3]. - The Malaysian digital infrastructure market is projected to grow significantly, with data center capacity expected to increase from 1.26 gigawatts in 2025 to 2.53 gigawatts by 2030, driven by rising demand for cloud services and supportive government policies [5]. - DLR's expansion into Malaysia complements its existing Southeast Asia operations in Singapore and Jakarta, reinforcing its long-term investment strategy in the region [6]. Group 3: Financial Performance and Analyst Sentiment - DLR's shares have increased by 6.6% over the past month, outperforming the industry growth of 4.8% [6]. - Analysts have raised the Zacks Consensus Estimate for DLR's 2025 FFO per share by 1.9% to $7.35 and for 2026 by 2.2% to $7.91 [7].

Core Insights - Digital Realty (DLR) has launched the Digital Realty Innovation Lab (DRIL) to facilitate testing of AI and hybrid cloud workloads before large-scale deployment [1][5][7] - DRIL is located at a live colocation data center in Northern Virginia, allowing customers to validate and optimize their workloads in a lab environment [2][3] - The lab aims to simplify the testing process for businesses, providing tools for performance optimization and quick connections to cloud providers through its ServiceFabric platform [3][4] Features of DRIL - DRIL supports high-density colocation of up to 150kW per cabinet, catering to AI infrastructure needs for power, cooling, and GPU resources [4] - It offers direct cloud connectivity for hybrid cloud validation and tools for orchestrating AI workloads across Digital Realty's Private AI Exchange (AIPx) [4] - Enterprises can test latency across various locations and cloud destinations to ensure reliable performance [4] Strategic Implications - The introduction of DRIL is expected to attract new clients and enhance leasing activity, particularly with the growing demand for AI infrastructure [5] - Over the past six months, DLR's shares have increased by 14.7%, outperforming the industry growth of 0.4% [5] - Analysts have revised the Zacks Consensus Estimate for DLR's 2025 AFFO per share upward by 2.1% to $7.20 [6]

Financial Data and Key Metrics Changes - The company achieved a record $1 billion in total leasing completed in 2024, marking a significant increase in leasing activity [6][10] - Core FFO per share grew by 6% year-over-year in the fourth quarter, indicating strong financial performance [8][39] - The leverage ratio was reduced to 4.8 times by year-end, down from 6.2 times, enhancing the company's financial stability [7][32] Business Line Data and Key Metrics Changes - The 0 to 1 megawatt plus interconnection segment saw a record $76 million in bookings for the fourth quarter, a 16% sequential increase [14][35] - Lease renewal activity approached $1 billion in 2024, with cash rents rolling up by an average of 9% [10][37] - The company expanded its total portfolio capacity by over 200 megawatts in 2024, with a development pipeline that is 70% pre-leased [11][41] Market Data and Key Metrics Changes - Strong growth was observed in both the Americas and EMEA regions, with record bookings achieved in both areas [14][15] - The backlog of booked but not yet billed leases increased to approximately $800 million at year-end, providing strong revenue visibility for 2025 and beyond [18] - The company reported a healthy mix of various-sized deployments within the 0 to 1 megawatt business, reflecting a diverse customer base [15][87] Company Strategy and Development Direction - The company aims to enhance its customer value proposition and diversify capital sources to support growth and reduce leverage [9][12] - New products and services were rolled out, including high-density Colo 2.0% and private AI Exchange, to meet evolving customer needs [11][12] - The company is focused on organic development opportunities while maintaining flexibility for potential inorganic activities [81][83] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the robust demand for data center capacity, particularly driven by AI and digital transformation [13][20] - The company anticipates continued strong growth in core FFO and revenue, with guidance for 2025 indicating a 5.7% year-over-year growth [46][47] - Management highlighted the importance of maintaining a strong balance sheet and liquidity to capitalize on future opportunities [34][45] Other Important Information - The company is committed to sustainability, with initiatives including the construction of a solar power plant and AI-driven water conservation solutions [26][30] - Digital Realty was awarded NAREIT's Leader in the Light award for the eighth consecutive year, reflecting its commitment to sustainability [31] Q&A Session Summary Question: Insights on DeepSeek and its impact on Digital Realty's outlook - Management noted that the demand for AI infrastructure remains strong, with significant investments expected from top customers [55][56] Question: Cash renewal outlook and potential for exceeding guidance - Management indicated that while the guidance for cash renewals is set at 4% to 6%, there is potential for outperformance similar to the previous year [63][64] Question: Future bookings expectations - Management acknowledged the lumpiness of bookings but expressed confidence in maintaining a strong pipeline, particularly in the 0 to 1 megawatt segment [66][71] Question: Factors influencing core FFO growth - Management highlighted that while mid-single-digit growth is expected for 2025, there are opportunities for acceleration in subsequent years due to a strong backlog and development pipeline [75][78] Question: Characteristics of the under 1 megawatt business - Management noted broad-based momentum in the under 1 megawatt segment, with strong demand from both enterprise and service provider customers [81][87] Question: Capital recycling and joint ventures - Management provided a breakdown of expected capital recycling activities, emphasizing a focus on non-core asset dispositions and private capital expansion [125][126] Question: Potential derailments to growth thesis - Management acknowledged that while demand is strong, execution in filling vacancies and managing large capacity blocks will be critical for maintaining growth [129][130]