AUSTIN, Texas, Feb. 15, 2024  /PRNewswire/ -- Digital Realty (NYSE: DLR), the largest global provider of cloud- and carrier-neutral data center, colocation, and interconnection solutions, announced today financial results for the fourth quarter of 2023. All per share results are presented on a fully diluted basis.

Digital Realty (PRNewsfoto/Digital Realty)

Highlights

  • Reported net income available to common stockholders of $0.08 per share in 4Q23, compared to ($0.02) in 4Q22
  • Reported FFO per share of $1.53 in 4Q23, compared to $1.45 in 4Q22
  • Reported Core FFO per share of $1.63 in 4Q23, compared to $1.65 in 4Q22
  • Reported Constant-Currency Core FFO per share of $1.62 in 4Q23 and $6.57 per share for the twelve months ended December 31, 2023
  • Reported "Same-Capital" cash NOI growth of 9.9% in 4Q23
  • Reported rental rate increases on renewal leases of 8.2% on a cash basis in 4Q23
  • Signed total bookings during 4Q23 that are expected to generate $110 million of annualized GAAP rental revenue, including a $39 million contribution from the 0–1 megawatt category and $13 million contribution from interconnection
  • Introduced 2024 Core FFO per share outlook of $6.60 - $6.75

Financial Results

Digital Realty reported revenues of $1.4 billion in the fourth quarter of 2023, a 2% decrease from the previous quarter and an 11% increase from the same quarter last year. 

The company delivered net income of $20 million in the fourth quarter of 2023, and net income available to common stockholders of $18 million, or $0.08 per diluted share, compared to $2.33 per diluted share in the previous quarter and ($0.02) per diluted share in the same quarter last year. 

Digital Realty generated Adjusted EBITDA of $700 million in the fourth quarter of 2023, a 2% increase from the previous quarter and 9% increase over the same quarter last year. 

The company reported Funds From Operations (FFO) of $484 million in the fourth quarter of 2023, or $1.53 per share, compared to $1.55 per share in the previous quarter and $1.45 per share in the same quarter last year. 

Excluding certain items that do not represent core expenses or revenue streams, Digital Realty delivered Core FFO per share of $1.63 in the fourth quarter of 2023, compared to $1.62 per share in the previous quarter and $1.65 per share in the same quarter last year. Digital Realty delivered Constant-Currency Core FFO per share of $1.62 for the fourth quarter of 2023 and $6.57 per share for the twelve-month period ended December 31, 2023.

"Our fourth quarter results marked the culmination of a transformative year for Digital Realty.  We delivered on our strategic priorities and positioned the company for the growing opportunity that lies ahead," said Digital Realty President & Chief Executive Officer Andy Power. "During the fourth quarter, we bolstered and diversified our capital sources through the formation of two new development joint ventures, while continuing to evolve our portfolio to capture the tremendous opportunities created by AI."

Leasing Activity

In the fourth quarter, Digital Realty signed total bookings that are expected to generate $110 million of annualized GAAP rental revenue, including a $39 million contribution from the 0–1 megawatt category and a $13 million contribution from interconnection.

The weighted-average lag between new leases signed during the fourth quarter of 2023 and the contractual commencement date was 16 months.

In addition to new leases signed, Digital Realty also signed renewal leases representing $210 million of annualized rental revenue during the quarter. Rental rates on renewal leases signed during the fourth quarter of 2023 increased 8.2% on a cash basis and 10.6% on a GAAP basis.

New leases signed during the fourth quarter of 2023 are summarized by region and product as follows:














Annualized GAAP











Base Rent

Square Feet

GAAP Base Rent


GAAP Base Rent

 Americas

(in thousands)

(in thousands)

per Square Foot

Megawatts

per Kilowatt

 0-1 MW

$13,068

57

$228

4.5

$241

 > 1 MW

7,520

66

115

3.9

160

 Other (1)

300

5

62

—

—

Total

$20,887

128

$163

8.4

$204














 EMEA (2)












 0-1 MW

$17,189

87

$198

6.3

$226

 > 1 MW

44,669

306

146

25.7

145

 Other (1)

49

2

28

—

—

Total

$61,908

395

$157

32.0

$161














 Asia Pacific (2)












 0-1 MW

$9,225

27

$343

2.8

$273

 > 1 MW

4,453

28

158

3.0

124

 Other (1)

128

4

30

—

—

Total

$13,806

59

$233

5.8

$196














 All Regions (2)












 0-1 MW

$39,482

171

$231

13.7

$241

 > 1 MW

56,642

400

142

32.6

145

 Other (1)

477

11

44

—

—

Total

$96,601

582

$166

46.3

$173














Interconnection

$13,483

N/A

N/A

N/A

N/A














Grand Total

$110,084

582

$166

46.3

$173

Note:  Totals may not foot due to rounding differences.

(1)       Other includes Powered Base Building® shell capacity as well as storage and office space within fully improved data center facilities.

(2)       Based on quarterly average exchange rates during the three months ended December 31, 2023.

Investment Activity

During the fourth quarter, Digital Realty signed definitive agreements with Brookfield Infrastructure Partners L.P., Cyxtera Technologies and Digital Core REIT to successfully resolve the relationship with Cyxtera. These agreements were completed in conjunction with Brookfield's announced agreement to acquire Cyxtera, pursuant to its Plan of Reorganization under its Chapter 11 proceedings. As part of the agreements, Brookfield would acquire Digital Realty's interest in four data centers for approximately $275 million, Digital Realty would redeploy $55 million to buy out Cyxtera's leases in three Digital Realty data centers in Singapore and Frankfurt, Brookfield would grant Digital Realty a purchase option to acquire a data center outside of London, UK, Brookfield would assume the leases in three data centers previously leased to Cyxtera, and Brookfield would amend the leases in these three data centers in New Jersey and Los Angeles, accelerating the expiration date to September 2024. Subsequent to year end, Digital Realty closed on the transactions and exercised its purchase option to acquire the data center outside of London, UK, which is expected to close at the end of the first quarter.

As previously disclosed, in mid-November, Digital Realty and Realty Income Corporation established a joint venture to support the development of two build-to-suit data centers in Northern Virginia. Realty Income initially invested approximately $200 million to acquire an 80% equity interest in the venture, while Digital Realty maintains a 20% interest. Each partner will fund its pro rata share of the remaining development costs for the two facilities. The build-to-suit facilities are 100% pre-leased and are expected to generate a 6.9% initial cash lease yield upon lease commencement in mid-2024.

Also previously disclosed, in December, Digital Realty and Blackstone Inc. announced a $7 billion joint venture to develop four hyperscale data center campuses across Frankfurt, Paris and Northern Virginia. The campuses are planned to support the construction of 10 data centers with approximately 500 megawatts of potential IT load capacity. Blackstone will initially invest approximately $700 million to acquire an 80% equity interest in the joint venture, while Digital Realty maintains a 20% interest. Digital Realty will manage the development and day-to-day operations of the joint venture, for which it will receive customary fees. Subsequent to year end, the first phase of the joint venture closed on hyperscale data center campuses in Paris and Northern Virginia, while the second phase is scheduled to close later this year, upon obtaining the required regulatory approvals.

Additionally, Digital Realty completed the sale of an option maintained on a second parcel of land in Sydney, Australia with an area of 21 acres for approximately AU$29 million or $20 million.

Further during the fourth quarter, Digital Realty exercised its option to purchase approximately 19 acres of land (PAR 8 – 11) in Paris, France for approximately €70 million or $77 million. The parcel of land, previously leased to Digital Realty, is currently under development to support up to 77 megawatts of IT load. Subsequent to year end, Digital Realty closed on PAR 8 – 11.

In addition, during the fourth quarter, Digital Realty closed on the acquisition of approximately three acres adjacent to its existing campus near Athens, Greece for approximately €6 million or $6 million. This land can support the development of an additional data center (ATH5) with up to 15 megawatts of IT load.

Subsequent to year end, GI Partners executed its option to acquire an additional 15% interest in two stabilized hyperscale data center buildings in Chicago, increasing their interest from the 65% interest acquired in the third quarter to 80%. The top-up, completed at the same terms as the initial closing, resulted in approximately $68 million of gross proceeds to Digital Realty.

Balance Sheet

Digital Realty had approximately $17.4 billion of total debt outstanding as of December 31, 2023, comprised of $16.8 billion of unsecured debt and approximately $0.6 billion of secured debt and other. At the end of the fourth quarter of 2023, net debt-to-Adjusted EBITDA was 6.2x, debt-plus-preferred-to-total enterprise value was 29.8% and fixed charge coverage was 3.8x. Pro forma for the completion of the Blackstone development joint ventures announced in December 2023, the completion of asset sales, and the issuance of common stock subsequent to year end, net debt-to-Adjusted EBITDA was 5.8x.

During the quarter, Digital Realty sold 8.7 million shares of its common stock at a weighted average price of $133.21 per share through its ATM program, for net proceeds of approximately $1.1 billion. Subsequent to year end, the company sold 0.6 million shares of its common stock at a weighted average price of $133.43 per share for net proceeds of approximately $84 million. 

Subsequent to year end, the company retired $240 million of the $740 million U.S. dollar term loan.

2024 Outlook

Digital Realty introduced its 2024 Core FFO per share and Constant-Currency Core FFO per share outlooks of $6.60 - $6.75. The assumptions underlying the outlook are summarized in the following table. 




As of

 Top-Line and Cost Structure

February 15, 2024

Total revenue

$5.550 - $5.650 billion

Net non-cash rent adjustments (1)

($35 - $40 million)

Adjusted EBITDA

$2.800 - $2.900 billion

G&A

$450 - $460 million




 Internal Growth


Rental rates on renewal leases


Cash basis

4.0% - 6.0%

GAAP basis

6.0% - 8.0%

Year-end portfolio occupancy

+100 - 200 bps

"Same-Capital" cash NOI growth (2)

2.0% - 3.0%




Foreign Exchange Rates


U.S. Dollar / Pound Sterling

$1.25 - $1.30

U.S. Dollar / Euro

$1.05 - $1.10




 External Growth


Dispositions / Joint Venture Capital


Dollar volume

$1,000 - $1,500 million

Cap rate

6.0% - 8.0%

Development


CapEx (Net of Partner Contributions) (3)

$2,000 - $2,500 million

Average stabilized yields

10.0%+

Enhancements and other non-recurring CapEx (4)

$15 - $20 million

Recurring CapEx + capitalized leasing costs (5)

$260 - $275 million




 Balance Sheet


Long-term debt issuance


Dollar amount

$0 - $1,000 million

Pricing

5.0% - 5.5%

Timing

Mid-Year




 Net income per diluted share

$1.80 - $1.95

Real estate depreciation and (gain) / loss on sale

$4.40 - $4.40

 Funds From Operations / share (NAREIT-Defined)

$6.20 - $6.35

Non-core expenses and revenue streams

$0.40 - $0.40

 Core Funds From Operations / share

$6.60 - $6.75

Foreign currency translation adjustments

$0.00 - $0.00

 Constant-Currency Core Funds From Operations / share

$6.60 - $6.75


(1)

Net non-cash rent adjustments represent the sum of straight-line rental revenue and straight-line rental expense, as well as the amortization of above- and below-market leases (i.e., ASC 805 adjustments). 

(2)

The "Same-Capital" pool includes properties owned as of December 31, 2022 with less than 5% of total rentable square feet under development.  It excludes properties that were undergoing, or were expected to undergo, development activities in 2023-2024, properties classified as held for sale, and properties sold or contributed to joint ventures for all periods presented.

(3)

Excludes land acquisitions and includes Digital Realty's share of JV contributions. Figure is net of JV partner contributions.

(4)

Other non-recurring CapEx represents costs incurred to enhance the capacity or marketability of operating properties, such as network fiber initiatives and software development costs.

(5)

Recurring CapEx represents non-incremental improvements required to maintain current revenues, including second-generation tenant improvements and leasing commissions.


Note: The Company does not provide a reconciliation for non-GAAP estimates on a forward-looking basis, where it is unable to provide a meaningful or accurate calculation or estimation of reconciling items and the information is not available without unreasonable effort. Please see Non-GAAP Financial Measures in this document for further discussion.

Non-GAAP Financial Measures

This document contains non-GAAP financial measures, including FFO, Core FFO, Adjusted FFO, Net Operating Income (NOI), "Same-Capital" Cash NOI and Adjusted EBITDA. A reconciliation from U.S. GAAP net income available to common stockholders to FFO, a reconciliation from FFO to Core FFO, a reconciliation from Core FFO to Adjusted FFO, reconciliation from NOI to Cash NOI, and definitions of FFO, Core FFO, Adjusted FFO, NOI and "Same-Capital" Cash NOI are included as an attachment to this document. A reconciliation from U.S. GAAP net income available to common stockholders to Adjusted EBITDA, a definition of Adjusted EBITDA and definitions of net debt-to-Adjusted EBITDA, debt-plus-preferred-to-total enterprise value, cash NOI, and fixed charge coverage ratio are included as an attachment to this document.

The Company does not provide a reconciliation for non-GAAP estimates on a forward-looking basis, where it is unable to provide a meaningful or accurate calculation or estimation of reconciling items and the information is not available without unreasonable effort. This is due to the inherent difficulty of forecasting the timing and/or amount of various items that would impact net income attributable to common stockholders per diluted share, which is the most directly comparable forward-looking GAAP financial measure. This includes, for example, external growth factors, such as dispositions, and balance sheet items such as debt issuances, that have not yet occurred, are out of the Company's control and/or cannot be reasonably predicted. For the same reasons, the Company is unable to address the probable significance of the unavailable information. Forward-looking non-GAAP financial measures provided without the most directly comparable GAAP financial measures may vary materially from the corresponding GAAP financial measures.

Investor Conference Call

Prior to Digital Realty's investor conference call at 5:00 p.m. ET / 4:00 p.m. CT on February 15, 2024, a presentation will be posted to the Investors section of the company's website at https://investor.digitalrealty.com. The presentation is designed to accompany the discussion of the company's fourth quarter 2023 financial results and operating performance. The conference call will feature President & Chief Executive Officer Andy Power and Chief Financial Officer Matt Mercier.

To participate in the live call, investors are invited to dial +1 (888) 317-6003 (for domestic callers) or +1 (412) 317-6061 (for international callers) and reference the conference ID# 0216634 at least five minutes prior to start time. A live webcast of the call will be available via the Investors section of Digital Realty's website at https://investor.digitalrealty.com.

Telephone and webcast replays will be available after the call until March 15, 2024. The telephone replay can be accessed by dialing +1 (877) 344-7529 (for domestic callers) or +1 (412) 317-0088 (for international callers) and providing the conference ID# 4147003. The webcast replay can be accessed on Digital Realty's website.

About Digital Realty

Digital Realty brings companies and data together by delivering the full spectrum of data center, colocation, and interconnection solutions. PlatformDIGITAL®, the company's global data center platform, provides customers with a secure data meeting place and a proven Pervasive Datacenter Architecture (PDx®) solution methodology for powering innovation and efficiently managing Data Gravity challenges. Digital Realty gives its customers access to the connected data communities that matter to them with a global data center footprint of 300+ facilities in 50+ metros across 25+ countries on six continents. To learn more about Digital Realty, please visit digitalrealty.com or follow us on LinkedIn and X.

Contact Information

Matt Mercier
Chief Financial Officer
Digital Realty
(737) 281-0101

Jordan Sadler / Jim Huseby
Investor Relations
Digital Realty
(737) 281-0101

Consolidated Quarterly Statements of Operations

Financial Supplement

Unaudited and in Thousands, Except Per Share Data

Fourth Quarter 2023


























Three Months Ended

Twelve Months Ended



31-Dec-23

30-Sep-23

30-Jun-23

31-Mar-23

31-Dec-22


31-Dec-23

31-Dec-22

Rental revenues

$885,694

$886,960

$869,298

$870,975

$834,374


$3,512,926

$3,141,488

Tenant reimbursements - Utilities

316,634

335,477

330,416

317,148

247,725


1,299,676

941,891

Tenant reimbursements - Other

46,418

64,876

46,192

40,150

46,045


197,636

199,663

Interconnection & other

106,413

107,305

104,521

101,695

97,286


419,934

379,641

Fee income

14,330

7,819

14,908

7,868

7,508


44,926

24,506

Other

144

—

932

887

168


1,963

4,645

Total Operating Revenues

$1,369,633

$1,402,437

$1,366,267

$1,338,724

$1,233,108


$5,477,061

$4,691,834























Utilities

$366,083

$384,455

$374,934

$346,364

$268,561


$1,471,836

$1,005,070

Rental property operating

237,118

223,089

224,762

224,861

222,430


909,830

820,746

Property taxes

40,161

72,279

46,718

40,424

42,032


199,581

175,631

Insurance

3,794

4,289

4,385

4,355

4,578


16,823

16,114

Depreciation & amortization

420,475

420,613

432,573

421,198

430,130


1,694,859

1,577,933

General & administration

109,235

108,039

105,964

107,766

104,452


431,004

398,669

Severance, equity acceleration and legal expenses

7,565

2,682

3,652

4,155

15,980


18,054

23,498

Transaction and integration expenses

40,226

14,465

17,764

12,267

17,350


84,722

68,766

Provision for impairment

5,363

113,000

—

—

3,000


118,363

3,000

Other expenses

5,580

1,295

655

—

3,615


7,529

12,438

Total Operating Expenses

$1,235,598

$1,344,206

$1,211,407

$1,161,388

$1,112,127


$4,952,600

$4,101,865























Operating Income

$134,035

$58,231

$154,860

$177,335

$120,981


$524,461

$589,969























Equity in earnings / (loss) of unconsolidated joint ventures

(29,955)

(19,793)

5,059

14,897

(28,112)


(29,791)

(13,496)

Gain / (loss) on sale of investments

(103)

810,688

89,946

—

(6)


900,531

176,754

Interest and other income / (expense), net

50,269

24,812

(6,930)

280

(22,894)


68,431

8,918

Interest (expense)

(113,638)

(110,767)

(111,116)

(102,220)

(86,882)


(437,741)

(299,132)

Income tax benefit / (expense)

(20,724)

(17,228)

(16,173)

(21,454)

17,676


(75,579)

(31,551)

Loss from early extinguishment of debt

—

—

—

—

—


—

(51,135)

Net Income

$19,884

$745,941

$115,647

$68,839

$763


$950,311

$380,327























Net income / (loss) attributable to noncontrolling interests

8,419

(12,320)

2,538

(111)

3,326


(1,474)

(2,455)

Net Income Attributable to Digital Realty Trust, Inc.

$28,304

$733,621

$118,185

$68,728

$4,089


$948,838

$377,872























Preferred stock dividends

(10,181)

(10,181)

(10,181)

(10,181)

(10,181)


(40,725)

(40,725)

Net Income / (Loss) Available to Common Stockholders

$18,122

$723,440

$108,003

$58,547

($6,093)


$908,113

$337,147























Weighted-average shares outstanding - basic

305,781

301,827

295,390

291,219

289,365


298,603

286,334

Weighted-average shares outstanding - diluted

314,995

311,341

306,819

303,065

301,712


309,065

297,919

Weighted-average fully diluted shares and units

321,173

317,539

313,021

309,026

307,546


315,113

303,708























Net income / (loss) per share - basic

$0.06

$2.40

$0.37

$0.20

($0.02)


$3.04

$1.18

Net income / (loss) per share - diluted

$0.08

$2.33

$0.37

$0.19

($0.02)


$3.00

$1.13

























 

Funds From Operations and Core Funds From Operations

Unaudited and in Thousands, Except Per Share Data

























Three Months Ended

Twelve Months Ended

Reconciliation of Net Income to Funds From Operations (FFO)

31-Dec-23

30-Sep-23

30-Jun-23

31-Mar-23

31-Dec-22


31-Dec-23

31-Dec-22























Net Income / (Loss)  Available to Common Stockholders

$18,122

$723,440

$108,003

$58,547

($6,093)


$908,112

$337,147

Adjustments:





















Non-controlling interest in operating partnership

410

16,300

2,500

1,500

(586)


20,710

7,914

Real estate related depreciation & amortization (1)

410,167

410,836

424,044

412,192

422,951


1,657,239

1,547,865

Reconciling items related to non-controlling interests

(15,377)

(14,569)

(14,144)

(13,388)

(13,856)


(57,477)

(22,110)

Unconsolidated JV real estate related depreciation & amortization

64,833

43,215

35,386

33,719

33,927


177,153

123,099

(Gain) / loss on real estate transactions

103

(810,688)

(89,946)

(7,825)

572


(908,356)

(177,332)

Provision for impairment

5,363

113,000

—

—

3,000


118,363

3,000

Funds From Operations

$483,621

$481,535

$465,844

$484,745

$439,915


$1,915,745

$1,819,583























Weighted-average shares and units outstanding - basic

311,960

308,024

301,593

297,180

295,199


304,651

292,123

Weighted-average shares and units outstanding - diluted (2)(3)

321,173

317,539

313,021

309,026

307,546


315,113

303,708























Funds From Operations per share - basic

$1.55

$1.56

$1.54

$1.63

$1.49


$6.29

$6.23























Funds From Operations per share - diluted (2)(3)

$1.53

$1.55

$1.52

$1.60

$1.45


$6.20

$6.03

























Three Months Ended

Twelve Months Ended

Reconciliation of FFO to Core FFO

31-Dec-23

30-Sep-23

30-Jun-23

31-Mar-23

31-Dec-22


31-Dec-23

31-Dec-22























Funds From Operations

$483,621

$481,535

$465,844

$484,745

$439,915


$1,915,745

$1,819,583

Other non-core revenue adjustments

(146)

(27)

27,454

(887)

(3,786)


26,393

8,768

Transaction and integration expenses

40,226

14,465

17,764

12,267

17,350


84,722

68,766

Loss from early extinguishment of debt

—

—

—

—

—


—

51,135

Severance, equity acceleration and legal expenses (4)

7,565

2,682

3,652

4,155

15,980


18,054

23,498

(Gain) / Loss on FX revaluation

(24,804)

451

(7,868)

(6,778)

14,564


(39,000)

(24,694)

Other non-core expense adjustments

1,956

1,295

655

—

3,615


3,905

12,388

Core Funds From Operations

$508,417

$500,402

$507,501

$493,500

$487,638


$2,009,820

$1,959,444























Weighted-average shares and units outstanding - diluted (2)(3)

312,356

308,539

301,806

297,382

295,519


305,138

292,528























Core Funds From Operations per share - diluted (2)

$1.63

$1.62

$1.68

$1.66

$1.65


$6.59

$6.70























(1)          Real Estate Related Depreciation & Amortization

Three Months Ended

Twelve Months Ended



31-Dec-23

30-Sep-23

30-Jun-23

31-Mar-23

31-Dec-22


31-Dec-23

31-Dec-22























Depreciation & amortization per income statement

$420,475

$420,613

$432,573

$421,198

$430,130


$1,694,859

$1,577,933

Non-real estate depreciation

(10,308)

(9,777)

(8,529)

(9,006)

(7,179)


(37,619)

(30,068)

Real Estate Related Depreciation & Amortization

$410,167

$410,836

$424,044

$412,192

$422,951


$1,657,239

$1,547,865

























(2)

Certain of Teraco's minority indirect shareholders have the right to put their shares in an upstream parent company of Teraco to Digital Realty in exchange for cash or the equivalent value of shares of Digital Realty common stock, or a combination thereof. US GAAP requires Digital Realty to assume the put right is settled in shares for purposes of calculating diluted EPS. This same approach was utilized to calculate FFO/share. The potential future dilutive impact associated with this put right will be excluded from Core FFO and AFFO until settlement occurs – causing diluted share count to be higher for FFO than for Core FFO and AFFO. When calculating diluted FFO, Teraco related minority interest is added back to the FFO numerator as the denominator assumes all shares have been put back to Digital Realty.

 























Three Months Ended

Twelve Months Ended



31-Dec-23

30-Sep-23

30-Jun-23

31-Mar-23

31-Dec-22


31-Dec-23

31-Dec-22

Teraco noncontrolling share of FFO

$7,135

$11,537

$9,645

$11,069

$7,213


$39,386

$11,919

Teraco related minority interest

$7,135

$11,537

$9,645

$11,069

$7,213


$39,386

$11,919


(3)

For all periods presented, we have excluded the effect of dilutive series J, series K and series L preferred stock, as applicable, that may be converted into common stock upon the occurrence of specified change in control transactions as described in the articles supplementary governing the series J, series K and series L preferred stock, as applicable, which we consider highly improbable. See above for calculations of FFO and the share count detail section that follows the reconciliation of Core FFO to AFFO for calculations of weighted average common stock and units outstanding. For definitions and discussion of FFO and Core FFO, see the Definitions section.

(4)

Relates to severance and other charges related to the departure of company executives and integration-related severance.

 

Adjusted Funds From Operations (AFFO)

Unaudited and in Thousands, Except Per Share Data

























Three Months Ended

Twelve Months Ended

 Reconciliation of Core FFO to AFFO

31-Dec-23

30-Sep-23

30-Jun-23

31-Mar-23

31-Dec-22


31-Dec-23

31-Dec-22























 Core FFO available to common stockholders and unitholders

$508,417

$500,402

$507,501

$493,500

$487,638


$2,009,820

$1,959,444

Adjustments:





















Non-real estate depreciation

10,308

9,777

8,529

9,006

7,179


37,619

30,068

Amortization of deferred financing costs

5,744

5,776

5,984

4,072

3,753


21,575

13,987

Amortization of debt discount/premium

973

1,360

1,339

1,301

1,276


4,973

4,829

Non-cash stock-based compensation expense

9,226

14,062

13,893

13,056

16,042


50,238

62,242

Straight-line rental revenue

(21,992)

(14,080)

(16,151)

(16,194)

(29,392)


(68,417)

(83,604)

Straight-line rental expense

(4,999)

1,427

520

(515)

(208)


(3,567)

4,401

Above- and below-market rent amortization

(856)

(1,127)

(1,195)

(1,226)

(762)


(4,404)

(696)

Deferred tax (benefit) / expense

33,448

(8,539)

1,339

(9,795)

(4,885)


16,452

(12,491)

Leasing compensation & internal lease commissions

9,848

12,515

11,611

11,067

9,578


45,040

42,117

Recurring capital expenditures (1)

(142,808)

(90,251)

(53,498)

(40,465)

(109,999)


(327,022)

(266,466)























AFFO available to common stockholders and unitholders (2)

$407,306

$431,322

$479,873

$463,807

$380,220


$1,782,308

$1,753,831























Weighted-average shares and units outstanding - basic

311,960

308,024

301,593

297,180

295,199


304,651

292,123

Weighted-average shares and units outstanding - diluted (3)

312,356

308,539

301,806

297,382

295,519


305,138

292,528























AFFO per share - diluted (3)

$1.30

$1.40

$1.59

$1.56

$1.29


$5.84

$6.00























 Dividends per share and common unit

$1.22

$1.22

$1.22

$1.22

$1.22


$4.88

$4.88























Diluted AFFO Payout Ratio

93.6 %

87.3 %

76.7 %

78.2 %

94.8 %


83.5 %

81.4 %

























 























Three Months Ended

Twelve Months Ended

Share Count Detail

31-Dec-23

30-Sep-23

30-Jun-23

31-Mar-23

31-Dec-22


31-Dec-23

31-Dec-22























Weighted Average Common Stock and Units Outstanding

311,960

308,024

301,593

297,180

295,199


304,651

292,123

Add: Effect of dilutive securities

396

515

213

202

320


487

405

Weighted Avg. Common Stock and Units Outstanding - diluted

312,356

308,539

301,806

297,382

295,519


305,138

292,528


(1)

Recurring capital expenditures represent non-incremental building improvements required to maintain current revenues, including second-generation tenant improvements and external leasing commissions. Recurring capital expenditures do not include acquisition costs contemplated when underwriting the purchase of a building, costs which are incurred to bring a building up to Digital Realty's operating standards, or internal leasing commissions.

(2)

For a definition and discussion of AFFO, see the Definitions section. For a reconciliation of net income available to common stockholders to FFO and Core FFO, see above.

(3)

For all periods presented, we have excluded the effect of dilutive series J, series K and series L preferred stock, as applicable, that may be converted into common stock upon the occurrence of specified change in control transactions as described in the articles supplementary governing the series J, series K and series L preferred stock, as applicable, which we consider highly improbable. See above for calculations of FFO and for calculations of weighted average common stock and units outstanding.

 

Consolidated Balance Sheets

Unaudited and in Thousands, Except Per Share Data


















31-Dec-23

30-Sep-23

30-Jun-23

31-Mar-23

31-Dec-22

Assets














Investments in real estate:













Real estate

$27,306,369

$25,887,031

$27,087,769

$27,052,022

$26,136,057

Construction in progress

4,635,215

5,020,464

4,635,939

4,563,578

4,789,134

Land held for future development

118,190

179,959

193,936

194,564

118,452

Investments in Real Estate

$32,059,773

$31,087,453

$31,917,644

$31,810,164

$31,043,643

Accumulated depreciation and amortization

(7,823,685)

(7,489,193)

(7,739,462)

(7,600,559)

(7,268,981)

Net Investments in Properties

$24,236,089

$23,598,260

$24,178,182

$24,209,605

$23,774,662

Investment in unconsolidated joint ventures

2,295,889

2,180,313

2,040,452

1,995,576

1,991,426

Net Investments in Real Estate

$26,531,977

$25,778,573

$26,218,634

$26,205,180

$25,766,088
















Operating lease right-of-use assets,net

$1,414,256

$1,274,410

$1,291,233

$1,317,293

$1,351,329

Cash and cash equivalents

1,625,495

1,062,050

124,519

131,406

141,773

Accounts and other receivables, net (1)

1,278,110

1,325,725

1,158,383

1,070,066

969,292

Deferred rent, net

624,427

586,418

613,796

627,700

601,590

Goodwill

9,239,871

8,998,074

9,148,603

9,199,636

9,208,497

Customer relationship value, deferred leasing costs & other intangibles, net

2,500,237

2,506,198

2,825,596

3,015,291

3,092,627

Assets held for sale

478,503

—

593,892

—

—

Other assets

420,382

401,068

414,078

386,495

353,802

Total Assets

$44,113,257

$41,932,515

$42,388,735

$41,953,068

$41,484,998















Liabilities and Equity













Global unsecured revolving credit facilities, net

$1,812,287

$1,698,780

$2,242,258

$2,514,202

$2,150,451

Unsecured term loans, net

1,560,305

1,524,663

1,548,780

1,542,275

797,449

Unsecured senior notes, net of discount

13,422,342

13,072,102

13,383,819

13,258,079

13,120,033

Secured and other debt, net of discount

630,973

574,231

554,594

560,955

528,870

Operating lease liabilities

1,542,094

1,404,510

1,420,239

1,443,994

1,471,044

Accounts payable and other accrued liabilities

2,168,983

2,147,103

2,214,820

1,923,819

1,868,884

Deferred tax liabilities, net

1,151,096

1,088,724

1,128,961

1,164,276

1,192,752

Accrued dividends and distributions

387,988

—

—

—

363,716

Security deposits and prepaid rents

401,867

385,521

417,693

392,021

369,654

Obligations associated with assets held for sale

39,001

—

4,990

—

—

Total Liabilities

$23,116,936

$21,895,634

$22,916,155

$22,799,620

$21,862,853















Redeemable non-controlling interests

1,394,814

1,360,308

1,367,422

1,448,772

1,514,680















Equity













Preferred Stock:  $0.01 par value per share, 110,000 shares authorized:













Series J Cumulative Redeemable Preferred Stock (2)

$193,540

$193,540

$193,540

$193,540

$193,540

Series K Cumulative Redeemable Preferred Stock (3)

203,264

203,264

203,264

203,264

203,264

Series L Cumulative Redeemable Preferred Stock (4)

334,886

334,886

334,886

334,886

334,886

Common Stock: $0.01 par value per share, 392,000 shares authorized (5)

3,088

3,002

2,967

2,888

2,887

Additional paid-in capital

24,396,797

23,239,088

22,882,200

22,126,379

22,142,868

Dividends in excess of earnings

(5,262,648)

(4,900,757)

(5,253,915)

(4,995,982)

(4,698,313)

Accumulated other comprehensive (loss), net

(751,393)

(882,996)

(741,484)

(652,486)

(595,798)

Total Stockholders' Equity

$19,117,535

$18,190,026

$17,621,456

$17,212,490

$17,583,334















Noncontrolling Interests













Noncontrolling interest in operating partnership

$438,081

$441,366

$436,099

$444,843

$419,317

Noncontrolling interest in consolidated joint ventures

45,892

45,182

47,603

47,342

104,814















Total Noncontrolling Interests

$483,972

$486,547

$483,702

$492,185

$524,131















Total Equity

$19,601,507

$18,676,573

$18,105,158

$17,704,675

$18,107,465















Total Liabilities and Equity

$44,113,257

$41,932,515

$42,388,735

$41,953,068

$41,484,998




















(1)

Net of allowance for doubtful accounts of $41,204 and $33,048 as of December 31, 2023 and December 31, 2022, respectively.

(2)

Series J Cumulative Redeemable Preferred Stock, 5.250%, $200,000 liquidation preference ($25.00 per share), 8,000 shares issued and outstanding as of December 31, 2023 and December 31, 2022.

(3)

Series K Cumulative Redeemable Preferred Stock, 5.850%, $210,000 liquidation preference ($25.00 per share), 8,400 shares issued and outstanding as of December 31, 2023 and December 31, 2022.

(4)

Series L Cumulative Redeemable Preferred Stock, 5.200%, $345,000 liquidation preference ($25.00 per share), 13,800 shares issued and outstanding as of December 31, 2023 and December 31, 2022.

(5)

Common Stock: 311,608 and 291,148 shares issued and outstanding as of December 31, 2023 and December 31, 2022, respectively.

 

Reconciliation of Earnings Before Interest, Taxes, Depreciation & Amortization and Financial Ratios

Unaudited and Dollars in Thousands


















Three Months Ended

Reconciliation of Earnings Before Interest, Taxes, Depreciation & Amortization (EBITDA) (1)

31-Dec-23

30-Sep-23

30-Jun-23

31-Mar-23

31-Dec-22
















Net Income / (Loss) Available to Common Stockholders

$18,122

$723,440

$108,003

$58,547

($6,093)

Interest

113,638

110,767

111,116

102,220

86,882

Income tax expense (benefit)

20,724

17,228

16,173

21,454

(17,676)

Depreciation & amortization

420,475

420,613

432,573

421,198

430,130

EBITDA

$572,958

$1,272,048

$667,866

$603,420

$493,243

Unconsolidated JV real estate related depreciation & amortization

64,833

43,214

35,386

33,719

33,927

Unconsolidated JV interest expense and tax expense

42,140

27,000

32,105

18,556

53,481

Severance, equity acceleration and legal expenses

7,565

2,682

3,652

4,155

15,980

Transaction and integration expenses

40,226

14,465

17,764

12,267

17,350

(Gain) / loss on sale of investments

103

(810,688)

(89,946)

—

6

Provision for impairment

5,363

113,000

—

—

3,000

Other non-core adjustments, net

(35,439)

1,719

22,132

(14,604)

15,127

Non-controlling interests

(8,419)

12,320

(2,538)

111

(3,326)

Preferred stock dividends

10,181

10,181

10,181

10,181

10,181

Adjusted EBITDA

$699,509

$685,943

$696,604

$667,804

$638,969




















(1)

For definitions and discussion of EBITDA and Adjusted EBITDA, see the Definitions section.

 
















Three Months Ended

Financial Ratios

31-Dec-23

30-Sep-23

30-Jun-23

31-Mar-23

31-Dec-22
















Total GAAP interest expense

$113,638

$110,767

$111,116

$102,220

$86,882

Capitalized interest

33,032

29,130

27,883

26,771

24,581

Change in accrued interest and other non-cash amounts

(66,013)

44,183

(60,612)

38,137

(67,909)

Cash Interest Expense (2)

$80,657

$184,081

$78,387

$167,128

$43,554
















Preferred stock dividends

10,181

10,181

10,181

10,181

10,181

Total Fixed Charges (3)

$156,851

$150,079

$149,181

$139,172

$121,645
































Coverage














Interest coverage ratio (4)

 4.0x

 4.3x

 4.5x

 4.7x

 5.3x

Cash interest coverage ratio (5)

 6.4x

 3.4x

 7.4x

 3.7x

 11.9x

Fixed charge coverage ratio (6)

 3.8x

 4.1x

 4.2x

 4.4x

 4.9x

Cash fixed charge coverage ratio (7)

 5.8x

 3.2x

 6.6x

 3.5x

 10.0x
















Leverage














Debt to total enterprise value (8)(9)

28.6 %

30.6 %

33.3 %

37.3 %

35.2 %

Debt-plus-preferred-stock-to-total-enterprise-value (9)(10)

29.8 %

32.0 %

34.7 %

38.9 %

36.8 %

Pre-tax income to interest expense (11)

 1.2x

 7.7x

 2.0x

 1.7x

 1.0x

Net Debt-to-Adjusted EBITDA (12)

 6.2x

 6.3x

 6.8x

 7.1x

 6.9x


(2)

Cash interest expense is interest expense less amortization of debt discount and deferred financing fees and includes interest that we capitalized. We consider cash interest expense to be a useful measure of interest as it excludes non-cash-based interest expense.

(3)

Fixed charges consist of GAAP interest expense, capitalized interest, and preferred stock dividends.

(4)

Adjusted EBITDA divided by GAAP interest expense plus capitalized interest (including our pro rata share of unconsolidated joint venture interest expense).

(5)

Adjusted EBITDA divided by cash interest expense (including our pro rata share of unconsolidated joint venture interest expense).

(6)

Adjusted EBITDA divided by fixed charges (including our pro rata share of unconsolidated joint venture fixed charges).

(7)

Adjusted EBITDA divided by the sum of cash interest expense and preferred stock dividends (including our pro rata share of unconsolidated joint venture cash fixed charges).

(8)

Total debt divided by market value of common equity plus debt plus preferred stock.

(9)

Total enterprise value defined as market value of common equity plus debt plus preferred stock.

(10)

Same as (8), except numerator includes preferred stock.

(11)

Calculated as net income plus interest expense divided by GAAP interest expense.

(12)

Calculated as total debt at balance sheet carrying value, plus capital lease obligations, plus Digital Realty's pro rata share of unconsolidated joint venture debt, less cash and cash equivalents (including Digital Realty's pro rata share of unconsolidated joint venture cash) divided by the product of Adjusted EBITDA (including Digital Realty's pro rata share of unconsolidated joint venture EBITDA), multiplied by four.

Definitions

Funds From Operations (FFO):
We calculate funds from operations, or FFO, in accordance with the standards established by the National Association of Real Estate Investment Trusts, or Nareit, in the Nareit Funds From Operations White Paper - 2018 Restatement. FFO represents net income (loss) (computed in accordance with GAAP), excluding (i) gains (or losses) from real estate transactions, (ii) provision for impairment, real estate related depreciation and amortization (excluding amortization of deferred financing costs), (iii) unconsolidated JV real estate related depreciation & amortization, (iv) non-controlling interests in operating partnership, (v) depreciation related to non-controlling interests and (vi) after adjustments for unconsolidated partnerships and joint ventures. Management uses FFO as a supplemental performance measure because, in excluding real estate related depreciation and amortization and gains and losses from property dispositions and after adjustments for unconsolidated partnerships and joint ventures, it provides a performance measure that, when compared year over year, captures trends in occupancy rates, rental rates and operating costs. We also believe that, as a widely recognized measure of the performance of REITs, FFO will be used by investors as a basis to compare our operating performance with that of other REITs. However, because FFO excludes depreciation and amortization and captures neither the changes in the value of our data centers that result from use or market conditions, nor the level of capital expenditures and capitalized leasing commissions necessary to maintain the operating performance of our data centers, all of which have real economic effect and could materially impact our financial condition and results from operations, the utility of FFO as a measure of our performance is limited. Other REITs may not calculate FFO in accordance with the Nareit definition and, accordingly, our FFO may not be comparable to other REITs' FFO. FFO should be considered only as a supplement to net income computed in accordance with GAAP as a measure of our performance.

Core Funds from Operations (Core FFO):
We present core funds from operations, or Core FFO, as a supplemental operating measure because, in excluding certain items that do not reflect core revenue or expense streams, it provides a performance measure that, when compared year over year, captures trends in our core business operating performance. We calculate Core FFO by adding to or subtracting from FFO (i) other non-core revenue adjustments, (ii) transaction and integration expenses, (iii) loss from early extinguishment of debt, (iv) gain on / issuance costs associated with redeemed preferred stock, (v) severance, equity acceleration and legal expenses, (vi) gain/loss on FX revaluation, and (vii) other non-core expense adjustments. Because certain of these adjustments have a real economic impact on our financial condition and results from operations, the utility of Core FFO as a measure of our performance is limited. Other REITs may calculate Core FFO differently than we do and accordingly, our Core FFO may not be comparable to other REITs' Core FFO. Core FFO should be considered only as a supplement to net income computed in accordance with GAAP as a measure of our performance.

Adjusted Funds from Operations (AFFO):
We present adjusted funds from operations, or AFFO, as a supplemental operating measure because, when compared year over year, it assesses our ability to fund dividend and distribution requirements from our operating activities. We also believe that, as a widely recognized measure of the operations of REITs, AFFO will be used by investors as a basis to assess our ability to fund dividend payments in comparison to other REITs, including on a per share and unit basis. We calculate AFFO by adding to or subtracting from Core FFO (i) non-real estate depreciation, (ii) amortization of deferred financing costs, (iii) amortization of debt discount/premium, (iv) non-cash stock-based compensation expense, (v) straight-line rental revenue, (vi) straight-line rental expense, (vii) above- and below-market rent amortization, (viii) deferred tax expense / (benefit), (ix) leasing compensation and internal lease commissions, and (x) recurring capital expenditures. Other REITs may calculate AFFO differently than we do and, accordingly, our AFFO may not be comparable to other REITs' AFFO. AFFO should be considered only as a supplement to net income computed in accordance with GAAP as a measure of our performance.

EBITDA and Adjusted EBITDA:
We believe that earnings before interest, loss from early extinguishment of debt, income taxes, and depreciation and amortization, or EBITDA, and Adjusted EBITDA (as defined below), are useful supplemental performance measures because they allow investors to view our performance without the impact of non-cash depreciation and amortization or the cost of debt and, with respect to Adjusted EBITDA, (i) unconsolidated joint venture real estate related depreciation & amortization, (ii) unconsolidated joint venture interest expense and tax, (iii) severance, equity acceleration and legal expenses, (iv) transaction and integration expenses, (v) gain (loss) on sale / deconsolidation, (vi) provision for impairment, (vii) other non-core adjustments, net, (viii) non-controlling interests, (ix) preferred stock dividends, and (x) issuance costs associated with redeemed preferred stock. Adjusted EBITDA is EBITDA excluding (i) unconsolidated joint venture real estate related depreciation & amortization, (ii) unconsolidated joint venture interest expense and tax, (iii) severance, equity acceleration and legal expenses, (iv) transaction and integration expenses, (v) gain (loss) on sale / deconsolidation, (vi) provision for impairment, (vii) other non-core adjustments, net, (vii) non-controlling interests, (ix) preferred stock dividends, and (x) gain on / issuance costs associated with redeemed preferred stock. In addition, we believe EBITDA and Adjusted EBITDA are frequently used by securities analysts, investors, and other interested parties in the evaluation of REITs. Because EBITDA and Adjusted EBITDA are calculated before recurring cash charges including interest expense and income taxes, exclude capitalized costs, such as leasing commissions, and are not adjusted for capital expenditures or other recurring cash requirements of our business, their utility as a measure of our performance is limited. Other REITs may calculate EBITDA and Adjusted EBITDA differently than we do and, accordingly, our EBITDA and Adjusted EBITDA may not be comparable to other REITs' EBITDA and Adjusted EBITDA. Accordingly, EBITDA and Adjusted EBITDA should be considered only as supplements to net income computed in accordance with GAAP as a measure of our financial performance.

Net Operating Income (NOI) and Cash NOI:
Net operating income, or NOI, represents rental revenue, tenant reimbursement revenue and interconnection revenue less utilities expense, rental property operating expenses, property taxes and insurance expenses (as reflected in the statement of operations). NOI is commonly used by stockholders, company management and industry analysts as a measurement of operating performance of the company's rental portfolio. Cash NOI is NOI less straight-line rents and above- and below-market rent amortization. Cash NOI is commonly used by stockholders, company management and industry analysts as a measure of property operating performance on a cash basis. Same-Capital Cash NOI represents buildings owned as of December 31, 2021 of the prior year with less than 5% of total rentable square feet under development and excludes buildings that were undergoing, or were expected to undergo, development activities in 2022-2023, buildings classified as held for sale, and buildings sold or contributed to joint ventures for all periods presented (prior period numbers adjusted to reflect current same-capital pool). However, because NOI and cash NOI exclude depreciation and amortization and capture neither the changes in the value of our data centers that result from use or market conditions, nor the level of capital expenditures and capitalized leasing commissions necessary to maintain the operating performance of our data centers, all of which have real economic effect and could materially impact our results from operations, the utility of NOI and cash NOI as measures of our performance is limited. Other REITs may calculate NOI and cash NOI differently than we do and, accordingly, our NOI and cash NOI may not be comparable to other REITs' NOI and cash NOI. NOI and cash NOI should be considered only as supplements to net income computed in accordance with GAAP as measures of our performance.

Additional Definitions

Net debt-to-Adjusted EBITDA ratio is calculated as total debt at balance sheet carrying value, plus capital lease obligations, plus Digital Realty's pro rata share of unconsolidated joint venture debt, less cash and cash equivalents (including Digital Realty's pro rata share of unconsolidated joint venture cash) divided by the product of Adjusted EBITDA (including Digital Realty's pro rata share of unconsolidated joint venture EBITDA), multiplied by four.

Debt-plus-preferred-to-total enterprise value is total debt plus preferred stock divided by total debt plus the liquidation value of preferred stock and the market value of outstanding Digital Realty Trust, Inc. common stock and Digital Realty Trust, L.P. units, assuming the redemption of Digital Realty Trust, L.P. units for shares of Digital Realty Trust, Inc. common stock.

Fixed charge coverage ratio is Adjusted EBITDA divided by the sum of GAAP interest expense, capitalized interest and preferred stock dividends. For the quarter ended December 31, 2023, GAAP interest expense was $114 million, capitalized interest was $33 million and preferred stock dividends was $10 million.















Reconciliation of Net Operating Income (NOI)

Three Months Ended

Twelve Months Ended

(in thousands)

31-Dec-23

30-Sep-23

31-Dec-22

31-Dec-23

31-Dec-22

















Operating income

$134,035

$58,231

$120,981


$524,461

$589,969

















 Fee income

(14,330)

(7,819)

(7,508)


(44,926)

(24,506)

 Other income

(144)

—

(168)


(1,963)

(4,645)

 Depreciation and amortization

420,475

420,613

430,130


1,694,859

1,577,933

 General and administrative

109,235

108,039

104,452


431,004

398,669

 Severance, equity acceleration and legal expenses

7,565

2,682

15,980


18,054

23,498

 Transaction expenses

40,226

14,465

17,350


84,722

68,766

 Provision for impairment

5,363

113,000

3,000


118,363

3,000

 Other expenses

5,580

1,295

3,615


7,529

12,438

















Net Operating Income

$708,003

$710,505

$687,831


$2,832,102

$2,645,122


































 Cash Net Operating Income (Cash NOI)
































Net Operating Income

$708,003

$710,505

$687,831


$2,832,102

$2,645,122

















 Straight-line rental revenue

(22,085)

(14,185)

(32,226)


(40,480)

(69,998)

 Straight-line rental expense

(4,745)

1,632

(680)


(2,901)

2,857

 Above- and below-market rent amortization

(856)

(1,127)

(762)


(4,404)

(696)

















Cash Net Operating Income

$680,317

$696,826

$654,164


$2,784,317

$2,577,283



















































Constant Currency CFFO Reconciliation

Three Months Ended

Twelve Months Ended

(in thousands, except per share data)

31-Dec-23

30-Sep-23

31-Dec-22

31-Dec-23

31-Dec-22

















Core FFO (1)

$508,417




$487,638


$2,009,820

$1,959,444

 Core FFO impact of holding '22 Exchange Rates Constant (2)

(3,781)




—


(3,964)

—

















Constant Currency Core FFO

$504,636




$487,638


$2,005,856

$1,959,444

 Weighted-average shares and units outstanding - diluted

312,356




295,519


305,138

292,528

Constant Currency CFFO Per Share

$1.62




$1.65


$6.57

$6.70


1)

As reconciled to net income above.

2)

Adjustment calculated by holding currency translation rates for 2023 constant with average currency translation rates that were applicable to the same periods in 2022.

This document contains forward-looking statements within the meaning of the federal securities laws, which are based on current expectations, forecasts and assumptions that involve risks and uncertainties that could cause actual outcomes and results to differ materially. Such forward-looking statements include statements relating to: our economic outlook, our expected investment and expansion activity, anticipated continued demand for our products and service, our liquidity, our joint ventures, supply and demand for data center and colocation space, our acquisition and disposition activity, pricing and net effective leasing economics, market dynamics and data center fundamentals, our strategic priorities, our product offerings, available inventory, rent from leases that have been signed but have not yet commenced and other contracted rent to be received in future periods, rental rates on future leases, lag between signing and commencement, cap rates and yields, investment activity, the company's FFO, Core FFO, constant currency Core FFO, adjusted FFO, and net income, 2024 outlook and underlying assumptions, information related to trends, our strategy and plans, leasing expectations, weighted average lease terms, the exercise of lease extensions, lease expirations, debt maturities, annualized rent at expiration of leases, the effect new leases and increases in rental rates will have on our rental revenue, our credit ratings, construction and development activity and plans, projected construction costs, estimated yields on investment, expected occupancy, expected square footage and IT load capacity upon completion of development projects, backlog NOI, NAV components, and other forward-looking financial data. Such statements are based on management's beliefs and assumptions made based on information currently available to management. Such statements are subject to risks, uncertainties and assumptions and are not guarantees of future performance and may be affected by known and unknown risks, trends, uncertainties, and factors that are beyond our control. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated, or projected. Some of the risks and uncertainties that may cause our actual results, performance, or achievements to differ materially from those expressed or implied by forward-looking statements include, among others, the following:

  • reduced demand for data centers or decreases in information technology spending;
  • decreased rental rates, increased operating costs, or increased vacancy rates;
  • increased competition or available supply of data center space;
  • the suitability of our data centers and data center infrastructure, delays or disruptions in connectivity or availability of power, or failures or breaches of our physical and information security infrastructure or services;
  • our dependence upon significant customers, bankruptcy or insolvency of a major customer or a significant number of smaller customers, or defaults on or non-renewal of leases by customers;
  • our ability to attract and retain customers;
  • breaches of our obligations or restrictions under our contracts with our customers;
  • our inability to successfully develop and lease new properties and development space, and delays or unexpected costs in development of properties;
  • the impact of current global and local economic, credit and market conditions;
  • our inability to retain data center space that we lease or sublease from third parties;
  • global supply chain or procurement disruptions, or increased supply chain costs;
  • information security and data privacy breaches;
  • difficulty managing an international business and acquiring or operating properties in foreign jurisdictions and unfamiliar metropolitan areas;
  • our failure to realize the intended benefits from, or disruptions to our plans and operations or unknown or contingent liabilities related to, our recent acquisitions;
  • our failure to successfully integrate and operate acquired or developed properties or businesses;
  • difficulties in identifying properties to acquire and completing acquisitions;
  • risks related to joint venture investments, including as a result of our lack of control of such investments;
  • risks associated with using debt to fund our business activities, including re-financing and interest rate risks, our failure to repay debt when due, adverse changes in our credit ratings or our breach of covenants or other terms contained in our loan facilities and agreements;
  • our failure to obtain necessary debt and equity financing, and our dependence on external sources of capital;
  • financial market fluctuations and changes in foreign currency exchange rates;
  • adverse economic or real estate developments in our industry or the industry sectors that we sell to, including risks relating to decreasing real estate valuations and impairment charges and goodwill and other intangible asset impairment charges;
  • our inability to manage our growth effectively;
  • losses in excess of our insurance coverage;
  • our inability to attract and retain talent;
  • impact on our operations and on the operations of our customers, suppliers, and business partners during a pandemic, such as COVID-19;
  • the expected operating performance of anticipated near-term acquisitions and descriptions relating to these expectations;
  • environmental liabilities, risks related to natural disasters and our inability to achieve our sustainability goals;
  • our inability to comply with rules and regulations applicable to our company;
  • Digital Realty Trust, Inc.'s failure to maintain its status as a REIT for federal income tax purposes;
  • Digital Realty Trust, L.P.'s failure to qualify as a partnership for federal income tax purposes;
  • restrictions on our ability to engage in certain business activities;
  • changes in local, state, federal and international laws, and regulations, including related to taxation, real estate, and zoning laws, and increases in real property tax rates; and
  • the impact of any financial, accounting, legal or regulatory issues or litigation that may affect us.

The risks included here are not exhaustive, and additional factors could adversely affect our business and financial performance. Several additional material risks are discussed in our annual report on Form 10‑K for the year ended December 31, 2022, and other filings with the U.S. Securities and Exchange Commission. Those risks continue to be relevant to our performance and financial condition. Moreover, we operate in a competitive and rapidly changing environment. New risk factors emerge from time to time and it is not possible for management to predict all such risk factors, nor can it assess the impact of all such risk factors on the business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.  We expressly disclaim any responsibility to update forward-looking statements, whether as a result of new information, future events or otherwise. Digital Realty, Digital Realty Trust, the Digital Realty logo, Interxion, Turn-Key Flex, Powered Base Building, ServiceFabric, AnyScale Colo, Pervasive Data Center Architecture, PlatformDIGITAL, PDx, Data Gravity Index and Data Gravity Index DGx are registered trademarks and service marks of Digital Realty Trust, Inc. in the United States and/or other countries. All other names, trademarks and service marks are the property of their respective owners.

 

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