Digital Realty Reports Third Quarter 2024 Results

AUSTIN, Texas, Oct. 24, 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 third quarter of 2024. All per share results are presented on a fully diluted basis.

Highlights

Reported net income available to common stockholders of $0.09 per share in 3Q24, compared to $2.31 in 3Q23

Reported FFO per share of $1.55 in 3Q24, compared to $1.55 in 3Q23

Reported Core FFO per share of $1.67 in 3Q24, compared to $1.62 in 3Q23

Reported rental rate increases on renewal leases of 15.2% on a cash basis in 3Q24

Signed total bookings during 3Q24 that are expected to generate $521 million of annualized GAAP rental revenue, including a $50 million contribution from the 0–1 megawatt category and $16 million contribution from interconnection

Reported backlog of $859 million of annualized GAAP base rent at the end of 3Q24

Raised 2024 Core FFO per share outlook to $6.65 - $6.75

Financial Results

Digital Realty reported revenues of $1.4 billion in the third quarter of 2024, a 5% increase from the previous quarter and a 2% increase from the same quarter last year.

The company delivered net income of $40 million in the third quarter of 2024, and net income available to common stockholders of $41 million, or $0.09 per diluted share, compared to $0.20 per diluted share in the previous quarter and $2.31 per diluted share in the same quarter last year. 

Digital Realty generated Adjusted EBITDA of $758 million in the third quarter of 2024, a 4% increase from the previous quarter and a 11% increase over the same quarter last year.

The company reported Funds From Operations (FFO) of $520 million in the third quarter of 2024, or $1.55 per share, compared to $1.57 per share in the previous quarter and $1.55 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 $1.67 in the third quarter of 2024, compared to $1.65 per share in the previous quarter and $1.62 per share in the same quarter last year. Digital Realty delivered Constant-Currency Core FFO per share of $1.66 for the third quarter of 2024 and $4.99 per share for the nine-month period ended September 30, 2024.

"In the third quarter, Digital Realty posted over $520 million of new leasing, more than double the record set in the first quarter. Record leasing across both the greater-than-a-megawatt and 0-1 MW plus interconnection segments drove the backlog up nearly 60% above our prior record," said Digital Realty President & Chief Executive Officer Andy Power. "Our backlog now represents over 20% of annualized in-place data center revenue, enhancing our visibility and positioning Digital Realty for accelerating longer-term growth."

Leasing Activity

In the third quarter, Digital Realty signed total bookings that are expected to generate $521 million of annualized GAAP rental revenue, including a $50 million contribution from the 0–1 megawatt category and a $16 million contribution from interconnection.

The weighted-average lag between new leases signed during the third quarter of 2024 and the contractual commencement date was 15 months. The backlog of signed-but-not-commenced leases at quarter-end increased to $859 million of annualized GAAP base rent at Digital Realty's share.

In addition to new leases signed, Digital Realty also signed renewal leases representing $258 million of annualized cash rental revenue during the quarter. Rental rates on renewal leases signed during the third quarter of 2024 increased 15.2% on a cash basis and 27.5% on a GAAP basis. 

1

New leases signed during the third quarter of 2024 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

$23,394

83

$282

7.5

$262

 > 1 MW

425,641

1,102

386

158.8

223

 Other (1)

4,684

66

71

—

—

Total

$453,719

1,251

$363

166.2

$225

 EMEA (2)

 0-1 MW

$20,406

66

$308

7.5

$228

 > 1 MW

17,339

80

217

9.0

161

 Other (1)

168

5

35

—

—

Total

$37,913

151

$252

16.5

$191

 Asia Pacific (2)

 0-1 MW

$6,563

20

$324

1.7

$315

 > 1 MW

6,764

55

124

4.4

129

 Other (1)

216

2

87

—

—

Total

$13,543

77

$175

6.1

$182

 All Regions (2)

 0-1 MW

$50,363

169

$297

16.6

$252

 > 1 MW

449,744

1,236

364

172.1

218

 Other (1)

5,068

73

69

—

—

Total

$505,174

1,479

$342

188.8

$221

Interconnection

$15,702

N/A

N/A

N/A

N/A

Grand Total

$520,876

1,479

$342

188.8

$221

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 September 30, 2024.

Investment Activity

As previously disclosed, in July, Digital Realty closed on the acquisition of two data centers with a combined IT load of 15 megawatts in the Slough Trading Estate for $200 million, marking the Company's entry into the west London, UK submarket.

During the quarter, Digital Realty acquired the land and shell of one of its existing data centers in Schiphol Rijk, Amsterdam for €43 million, or approximately $48 million. The site comprises approximately 15 megawatts of fully leased capacity and was previously operated pursuant to an operating lease.

Subsequent to quarter end, Digital Realty closed on the acquisition of a 6.7-acre parcel in Richardson, Texas, adjacent to Digital Realty's existing campus, for approximately $15 million to support the development of more than 80 megawatts of incremental IT capacity.

2

Balance Sheet

Digital Realty had approximately $17.0 billion of total debt outstanding as of September 30, 2024, comprised of $16.2 billion of unsecured debt and approximately $0.8 billion of secured debt and other. At the end of the third quarter of 2024, net debt-to-Adjusted EBITDA was 5.4x, debt-plus-preferred-to-total enterprise value was 24.5% and fixed charge coverage was 4.1x.

Digital Realty completed the following financing transactions during the third quarter:

In July, the company repaid £250 million ($316 million) in aggregate principal amount of its 2.75% senior notes;

In September, the company issued €850 million aggregate principal amount of 3.875% notes due 2033. Net proceeds were approximately €843 million ($933 million);

In September, the company repaid €375 million ($415 million) on the Euro term loan;

In late September, the company amended, extended, and upsized both its existing global revolving credit facility from $3.75 billion to $4.2 billion and its existing Japanese yen-denominated revolving credit facility from ¥33.3 billion (approximately $232 million) to ¥42.5 billion (approximately $297 million); and

The company also sold 5.2 million shares of common stock under its At-The-Market (ATM) equity issuance program at a weighted average price of $156.19 per share, for net proceeds of approximately $806 million.

Subsequent to quarter end, the company sold an additional 0.4 million shares of common stock under its ATM program at a weighted average price of $160.81 per share, for net proceeds of approximately $62 million. 

3

2024 Outlook

Digital Realty raised its 2024 Core FFO per share and Constant-Currency Core FFO per share outlook to $6.65 - $6.75. The assumptions underlying the outlook are summarized in the following table. 

As of

As of

As of

As of

 Top-Line and Cost Structure

February 15, 2024

May 2, 2024

July 25, 2024

October 24, 2024

Total revenue

$5.550 - $5.650 billion

$5.550 - $5.650 billion

$5.550 - $5.650 billion

$5.550 - $5.600 billion

Net non-cash rent adjustments (1)

($35 - $40 million)

($35 - $40 million)

($35 - $40 million)

($25 - $30 million)

Adjusted EBITDA

$2.800 - $2.900 billion

$2.800 - $2.900 billion

$2.800 - $2.900 billion

$2.925 - $2.975 billion

G&A

$450 - $460 million

$450 - $460 million

$450 - $460 million

$455 - $460 million

 Internal Growth

Rental rates on renewal leases

Cash basis

4.0% - 6.0%

5.0% - 7.0%

5.0% - 7.0%

8.0% - 10.0%

GAAP basis

6.0% - 8.0%

7.0% - 9.0%

7.0% - 9.0%

12.0% - 14.0%

Year-end portfolio occupancy

+100 - 200 bps

+100 - 200 bps

+100 - 200 bps

+150 - 200 bps

"Same-Capital" cash NOI growth (2)

2.0% - 3.0%

2.5% - 3.5%

2.5% - 3.5%

2.75% - 3.25%

Foreign Exchange Rates

U.S. Dollar / Pound Sterling

$1.25 - $1.30

$1.25 - $1.30

$1.25 - $1.30

$1.25 - $1.30

U.S. Dollar / Euro

$1.05 - $1.10

$1.05 - $1.10

$1.05 - $1.10

$1.05 - $1.10

 External Growth

Dispositions / Joint Venture Capital

Dollar volume

$1,000 - $1,500 million

$1,000 - $1,500 million

$1,000 - $1,500 million

$1,000 - $1,500 million

Cap rate

6.0% - 8.0%

6.0% - 8.0%

6.0% - 8.0%

6.0% - 8.0%

Development

CapEx (Net of Partner Contributions) (3)

$2,000 - $2,500 million

$2,000 - $2,500 million

$2,000 - $2,500 million

$2,200 - $2,400 million

Average stabilized yields

10.0%+

10.0%+

10.0%+

10.0%+

Enhancements and other non-recurring CapEx (4)

$15 - $20 million

$15 - $20 million

$15 - $20 million

$25 - $30 million

Recurring CapEx + capitalized leasing costs (5)

$260 - $275 million

$260 - $275 million

$260 - $275 million

$260 - $275 million

 Balance Sheet

Long-term debt issuance

Dollar amount

$0 - $1,000 million

$0 - $1,000 million

$0 - $1,000 million

$933 million

Pricing

5.0% - 5.5%

5.0% - 5.5%

5.0% - 5.5%

3.875 %

Timing

Mid-Year

Mid-Year

Mid-Year

Sep-24

 Net income per diluted share

$1.80 - $1.95

$1.80 - $1.95

$1.40 - $1.55

$1.40 - $1.50

Real estate depreciation and (gain) / loss on sale

$4.40 - $4.40

$4.40 - $4.40

$4.75 - $4.75

$4.75 - $4.75

 Funds From Operations / share (NAREIT-Defined)

$6.20 - $6.35

$6.20 - $6.35

$6.15 - $6.30

$6.15 - $6.25

Non-core expenses and revenue streams

$0.40 - $0.40

$0.40 - $0.40

$0.45 - $0.45

$0.50 - $0.50

 Core Funds From Operations / share

$6.60 - $6.75

$6.60 - $6.75

$6.60 - $6.75

$6.65 - $6.75

Foreign currency translation adjustments

$0.00 - $0.00

$0.00 - $0.00

$0.00 - $0.00

$0.00 - $0.00

 Constant-Currency Core Funds From Operations / share

$6.60 - $6.75

$6.60 - $6.75

$6.60 - $6.75

$6.65 - $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.

4

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 October 24, 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 third quarter 2024 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# 0345410 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 November 24, 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# 4823548. 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 MercierChief Financial OfficerDigital Realty(415) 874-2803

Jordan Sadler / Jim Huseby Investor Relations  Digital Realty (415) 275-5344

 

5

 

Consolidated Quarterly Statements of Operations

Third Quarter 2024

Unaudited and in Thousands, Except Per Share Data

Three Months Ended

Nine Months Ended

30-Sep-24

30-Jun-24

31-Mar-24

31-Dec-23

30-Sep-23

30-Sep-24

30-Sep-23

Rental revenues

$956,351

$912,994

$894,409

$885,694

$886,960

$2,763,753

$2,627,233

Tenant reimbursements - Utilities

305,097

274,505

276,357

316,634

335,477

855,959

983,041

Tenant reimbursements - Other

39,624

41,964

38,434

46,418

64,876

120,021

151,218

Interconnection & other

112,655

109,505

108,071

106,413

107,305

330,231

313,521

Fee income

12,907

15,656

13,010

14,330

7,819

41,572

30,596

Other

4,581

2,125

862

144

—

7,568

1,819

Total Operating Revenues

$1,431,214

$1,356,749

$1,331,143

$1,369,633

$1,402,437

$4,119,106

$4,107,428

Utilities

$356,063

$315,248

$324,571

$366,083

$384,455

$995,882

$1,105,753

Rental property operating

249,796

237,653

224,369

237,118

223,089

711,817

672,717

Property taxes

45,633

49,620

41,156

40,161

72,279

136,408

159,420

Insurance

4,869

4,755

2,694

3,794

4,289

12,318

13,029

Depreciation & amortization

459,997

425,343

431,102

420,475

420,613

1,316,442

1,274,379

General & administration

115,120

119,511

114,419

109,235

108,039

349,051

321,769

Severance, equity acceleration and legal expenses

2,481

884

791

7,565

2,682

4,156

10,489

Transaction and integration expenses

24,194

26,072

31,839

40,226

14,465

82,105

44,496

Provision for impairment

—

168,303

—

5,363

113,000

168,303

113,000

Other expenses

4,774

(529)

10,836

5,580

1,295

15,080

1,949

Total Operating Expenses

$1,262,928

$1,346,860

$1,181,776

$1,235,598

$1,344,206

$3,791,564

$3,717,001

Operating Income

$168,286

$9,889

$149,367

$134,035

$58,231

$327,542

$390,426

Equity in earnings / (loss) of unconsolidated joint ventures

(26,486)

(41,443)

(16,008)

(29,955)

(19,793)

(83,936)

164

Gain / (loss) on sale of investments

(556)

173,709

277,787

(103)

810,688

450,940

900,634

Interest and other income / (expense), net

37,756

62,261

9,709

50,269

24,812

109,726

18,162

Interest (expense)

(123,803)

(114,756)

(109,535)

(113,638)

(110,767)

(348,095)

(324,103)

Income tax benefit / (expense)

(12,427)

(14,992)

(22,413)

(20,724)

(17,228)

(49,832)

(54,855)

Loss on debt extinguishment and modifications

(2,636)

—

(1,070)

—

—

(3,706)

—

Net Income

$40,134

$74,668

$287,837

$19,884

$745,941

$402,639

$930,427

Net (income) / loss attributable to noncontrolling interests

11,059

5,552

(6,329)

8,419

(12,320)

10,282

(9,893)

Net Income Attributable to Digital Realty Trust, Inc.

$51,193

$80,220

$281,508

$28,304

$733,621

$412,921

$920,534

Preferred stock dividends

(10,181)

(10,181)

(10,181)

(10,181)

(10,181)

(30,544)

(30,544)

Net Income / (Loss) Available to Common Stockholders

$41,012

$70,039

$271,327

$18,122

$723,440

$382,377

$889,990