Digital Realty Trust(DLR)2023-09-27 21:23Company and Industry Overview * Company: Digital Realty Trust, Inc. (NYSE: DLR) * Industry: Data Center and Cloud Infrastructure * Event: RBC Global Communications Infrastructure Conference, September 27, 2023 Key Highlights and Trends * Positive Outlook for 2023: Digital Realty experienced a strong start to 2023, driven by positive fundamentals such as improved pricing power, solid demand growth, and constrained supply in various markets. * AI Demand: The rise of AI has further accelerated demand, particularly from larger cloud-related customers. * Occupancy and Development: The company aims to improve occupancy rates in its existing portfolio while developing 375 megawatts of new capacity, with a strong pre-leasing track record. * Deleveraging Efforts: Digital Realty has made significant progress in deleveraging its balance sheet, reducing its leverage ratio from 7x to 6.3x on a pro forma basis. * Development Joint Ventures: The company is exploring development joint ventures to manage capital spend and leverage, particularly in high-growth markets. * Global Expansion: Digital Realty is actively expanding its global footprint, with a focus on regions such as North America, EMEA, and APAC. * Supply Chain and Power Constraints: The company acknowledges the challenges posed by supply chain disruptions and power constraints in certain markets, but maintains a strong position in key locations. Core FFO per Share * Deleveraging Efforts: The company's deleveraging efforts, including asset sales and joint ventures, are expected to offset the positive fundamentals and lead to long-term stabilized growth. * Interest Rate Risk: The company is monitoring interest rate risk and its impact on future periods. * Property Taxes and Power Prices: Other external factors, such as property taxes and power prices, are also being monitored. Development Joint Ventures * Hyperscale Development Joint Ventures: The company is exploring hyperscale development joint ventures, initially targeting a $750 million investment. * Geographic Focus: These joint ventures are expected to be geographically diverse, with the potential for expansion over time. AI Demand * North America-Oriented: The majority of AI demand is currently focused in North America, with growing interest in EMEA and APAC. * Data Sovereignty: Some AI workloads may require deployment within data sovereign regions, particularly in EMEA and other country-oriented markets. Other Key Points * Non-Core Asset Sales: The company has successfully sold non-core assets and stabilized joint ventures, generating significant capital. * Recycling Capital: Digital Realty plans to continue recycling capital and diversifying its capital sources. * Supply Chain and Power Constraints: The company is actively managing supply chain and power constraints, particularly in power-constrained markets. * Renewable Energy: The company is exploring opportunities to incorporate renewable energy into its portfolio.