Digital Realty Reports Third Quarter 2021 Results

Rhea-AI Summary

Digital Realty (DLR) reported a strong third quarter of 2021, with net income of $124 million, or $0.44 per diluted share, compared to a loss of ($0.14) in 3Q20. Total revenue increased by 11% year-over-year to $1.1 billion. Funds from operations (FFO) per share rose to $1.54, a significant increase from $1.19 in the previous year. The company raised its core FFO per share outlook to $6.50-$6.55. Additionally, Digital Realty signed new leases expected to generate $113 million in annual GAAP rental revenue, highlighting robust leasing activity.

Positive

• Net income available to common stockholders of $0.44 per share in 3Q21, up from ($0.14) in 3Q20.
• Total revenue of $1.1 billion, an 11% increase year-over-year.
• FFO per share increased to $1.54, compared to $1.19 in 3Q20.
• Core FFO per share raised to $6.50-$6.55, from $6.45-$6.50 outlook.
• Signed total bookings anticipated to generate $113 million in annualized GAAP rental revenue.

Negative

• FFO per share decreased from $1.78 in the previous quarter to $1.54.
• Rental rates on renewal leases dropped 5.6% on a cash basis.

AUSTIN, Texas, Oct. 26, 2021 /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 2021.  All per-share results are presented on a fully-diluted share and unit basis. 

Highlights

• Reported net income available to common stockholders of $0.44 per share in 3Q21, compared to a net loss available to common stockholders of ($0.14) in 3Q20
• Reported FFO per share of $1.54 in 3Q21, compared to $1.19 in 3Q20
• Reported core FFO per share of $1.65 in 3Q21, compared to $1.54 in 3Q20
• Signed total bookings during 3Q21 expected to generate $113 million of annualized GAAP rental revenue, including a $12 million contribution from interconnection
• Raised core FFO per share outlook from $6.45-$6.50 to $6.50-$6.55

Financial Results

Digital Realty reported revenues for the third quarter of 2021 of $1.1 billion, a 4% increase from the previous quarter and an 11% increase from the same quarter last year. 

The company delivered third quarter of 2021 net income of $137 million, and net income available to common stockholders of $124 million, or $0.44 per diluted share, compared to $0.45 per diluted share in the previous quarter and ($0.14) per diluted share in the same quarter last year. 

Digital Realty generated third quarter of 2021 Adjusted EBITDA of $610 million, a 1% increase from the previous quarter and a 7% increase over the same quarter last year. 

The company reported third quarter of 2021 funds from operations of $447 million, or $1.54 per share, compared to $1.78 per share in the previous quarter and $1.19 per share in the same quarter last year. 

Excluding certain items that do not represent core expenses or revenue streams, Digital Realty delivered third quarter of 2021 core FFO per share of $1.65, a 7% increase from $1.54 per share in the previous quarter, and a 7% increase from $1.54 per share in the same quarter last year. 

Leasing Activity

In the third quarter, Digital Realty signed total bookings expected to generate $113 million of annualized GAAP rental revenue, including a $12 million contribution from interconnection. 

"Digital Realty's global platform, broad product spectrum, and significant scale underpinned our strong third quarter results," said Digital Realty Chief Executive Officer A. William Stein.  "Record new logo growth and continued strong bookings in the quarter reflect the global adoption of PlatformDIGITAL®, while our robust internal processes enabled us to execute consistently for our growing list of customers." 

The weighted-average lag between new leases signed during the third quarter of 2021 and the contractual commencement date was seven months. 

In addition to new leases signed, Digital Realty also signed renewal leases representing $223 million of annualized GAAP rental revenue during the quarter.  Rental rates on renewal leases signed during the third quarter of 2021 rolled down 5.6% on a cash basis and down 3.3% on a GAAP basis. 

New leases signed during the third quarter of 2021 are summarized by region as follows:

		Annualized GAAP
		Base Rent					GAAP Base Rent					GAAP Base Rent
The Americas		(in thousands)			Square Feet		per Square Foot			Megawatts		per Kilowatt
0-1 MW			$11,685		59,887			$195		4.3			$226
> 1 MW			37,923		397,759			95		39.5			80
Other (1)			276		5,991			46		—			—
Total			$49,883		463,637			$108		43.8			$94
EMEA (2)
0-1 MW			$15,225		68,285			$223		6.5			$196
> 1 MW			20,988		128,885			163		15.4			114
Other (1)			21		—			-		—			—
Total			$36,234		197,170			$184		21.9			$138
Asia Pacific (2)
0-1 MW			$5,119		10,739			$477		1.4			$296
> 1 MW			9,850		53,946			183		6.0			137
Other (1)			123		1,484			83		—			—
Total			$15,092		66,168			$228		7.4			$168
All Regions (2)
0-1 MW			$32,028		138,911			$231		12.2			$218
> 1 MW			68,761		580,589			118		60.9			94
Other (1)			420		7,475			56		—			—
Total			$101,209		726,975			$139		73.1			$115
Interconnection			$11,636		N/A			N/A		N/A			N/A
Grand Total			$112,845		726,975			$139		73.1			$115

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, 2021.

Investment Activity

During the third quarter, the existing joint venture between Digital Realty and PGIM Real Estate, the real estate investment management and advisory business of Prudential Financial, completed the sale of a portfolio of 10 data centers in North America for $581 million, representing an exit cap rate of approximately 4.5% on the seven stabilized assets in the portfolio.  PGIM Real Estate owned an 80% interest and Digital Realty owned a 20% interest in the joint venture.  The transaction generated net proceeds of approximately $347 million, of which Digital Realty's share was approximately $85 million, including a $19 million promote fee. 

Separately, Digital Realty closed on the sale of a 56-acre land parcel in Mesa, AZ during the third quarter for approximately $17 million. 

Likewise during the third quarter, Digital Realty closed its previously announced joint venture with Brookfield Infrastructure Partners in India.  The joint venture enables the expansion of PlatformDIGITAL®, Digital Realty's global data center platform, which supports the evolving data, control and networking demands of global service providers as well as global and local enterprises.  Its expansion across India is expected to enable customers to rapidly scale digital transformation by deploying critical infrastructure with a leading global data center provider at the heart of a growing connected data community in India. 

Subsequent to quarter-end, Digital Realty reached an agreement to make a strategic investment in AtlasEdge Data Centres, a leading European edge data center provider. 

Also subsequent to quarter-end, Digital Realty and Pembani Remgro Infrastructure Fund created a new joint venture which acquired a controlling interest in Medallion Communications, Nigeria's leading colocation and interconnection provider, for approximately $29 million.  In addition, Kenyan data center operator iColo, Digital Realty's existing joint venture with Pembani Remgro Infrastructure Fund, closed on the acquisition of a land parcel in Maputo, Mozambique during the third quarter for $3 million. 

Balance Sheet

Digital Realty had approximately $14.1 billion of total debt outstanding as of September 30, 2021, comprised of $13.8 billion of unsecured debt and approximately $0.2 billion of secured debt.  At the end of the third quarter of 2021, net debt-to-Adjusted EBITDA was 6.0x, debt plus-preferred-to-total enterprise value was 26.1% and fixed charge coverage was 5.8x.  Pro forma for settlement of the $950 million forward equity offering completed in September, net debt-to-adjusted EBITDA was 5.6x and fixed charge coverage was 6.0x. 

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

• In early July, Digital Realty closed an offering of CHF545 million, or approximately $595 million, of Swiss green bonds with a weighted-average maturity of approximately 6.6 years and a weighted-average coupon of approximately 0.37%.
• In early July, Digital Realty liquidated its remaining stake in Megaport with the sale of 1.95 million shares at a price of A$17.55 per share, generating gross proceeds of A$34 million, or approximately $26 million.
• In late August, Digital Realty issued approximately 0.6 million shares of common stock under the company's at-the-market equity offering program at a weighted average price of $162.20 per share, generating gross proceeds of approximately $95 million.
• In early September, Digital Realty completed an offering of 6,250,000 shares of common stock at a price of $160.50 per share, subject to forward sale agreements. The company expects to receive net proceeds of approximately $950 million (net of fees and estimated expenses) upon full physical settlement of the forward sale agreements, expected to be no later than March 13, 2023.

2021 Outlook

Digital Realty raised its 2021 core FFO per share outlook from $6.45-$6.50 to $6.50-$6.55.  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 11, 2021		April 29, 2021		July 29, 2021		October 26, 2021
Total revenue		$4.250 - $4.350 billion		$4.300 - $4.400 billion		$4.325 - $4.425 billion		$4.400 - $4.425 billion
Net non-cash rent adjustments (1)		($10) - ($15) million		($20) - ($25) million		($20) - ($25) million		($20) - ($25) million
Adjusted EBITDA		$2.300 - $2.350 billion		$2.330 - $2.380 billion		$2.350 - $2.400 billion		$2.400 - $2.425 billion
G&A		$365 - $375 million		$380 - $390 million		$380 - $390 million		$380 - $390 million
Internal Growth
Rental rates on renewal leases
Cash basis		Slightly negative		Slightly negative		Slightly negative		Slightly negative
GAAP basis		Slightly positive		Slightly positive		Slightly positive		Slightly positive
Year-end portfolio occupancy		84.0% - 85.0%		84.0% - 85.0%		84.0% - 85.0%		84.0% - 85.0%
"Same-capital" cash NOI growth (2)		(2.5%) - (3.5%)		(2.5%) - (3.5%)		(2.5%) - (3.5%)		(2.5%) - (3.5%)
Foreign Exchange Rates
U.S. Dollar / Pound Sterling		$1.25 - $1.30		$1.30 - $1.38		$1.30 - $1.38		$1.30 - $1.38
U.S. Dollar / Euro		$1.15 - $1.20		$1.15 - $1.20		$1.15 - $1.20		$1.15 - $1.20
External Growth
Dispositions
Dollar volume		$0.6 - $1.0 billion		$0.7 - $1.0 billion		$0.7 - $1.0 billion		$0.7 - $1.0 billion
Cap rate		0.0% - 12.0%		0.0% - 12.0%		0.0% - 12.0%		0.0% - 12.0%
Development
CapEx (3)		$2.0 - $2.3 billion		$2.0 - $2.3 billion		$2.0 - $2.3 billion		$2.0 - $2.3 billion
Average stabilized yields		9.0% - 15.0%		9.0% - 15.0%		9.0% - 15.0%		9.0% - 15.0%
Enhancements and other non-recurring CapEx (4)		$5 - $10 million		$5 - $10 million		$5 - $10 million		$5 - $10 million
Recurring CapEx + capitalized leasing costs (5)		$220 - $230 million		$220 - $230 million		$210 - $220 million		$190 - $200 million
Balance Sheet
Long-term debt issuance
Dollar amount		$1.0 - $1.5 billion		$1.0 - $1.5 billion		$1.8 - $2.0 billion		$1.8 - $2.0 billion
Pricing		1.00%		1.00%		1.00%		1.00%
Timing		Early-to-mid 2021		Early-to-mid 2021		Early-to-mid 2021		Early-to-mid 2021
Net income per diluted share		$1.40 - $1.45		$2.00 - $2.05		$2.20 - $2.25		$2.45 - $2.50
Real estate depreciation and (gain) / loss on sale		$4.90 - $4.90		$4.25 - $4.25		$4.15 - $4.15		$3.95 - $3.95
Funds From Operations / share (NAREIT-Defined)		$6.30 - $6.35		$6.25 - $6.30		$6.35 - $6.40		$6.40 - $6.45
Non-core expenses and revenue streams		$0.10 - $0.15		$0.25 - $0.25		$0.10 - $0.10		$0.10 - $0.10
Core Funds From Operations / share		$6.40 - $6.50		$6.50 - $6.55		$6.45 - $6.50		$6.50 - $6.55

(1)	Net non-cash rent adjustments represent the sum of straight-line rental revenue and straight-line rent 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, 2019 with less than 5% of total rentable square feet under development.  It also excludes properties that were undergoing, or were expected to undergo, development activities in 2020-2021, properties classified as held for sale, and properties sold or contributed to joint ventures for all periods presented.
(3)	Includes land acquisitions.
(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.

Non-GAAP Financial Measures

This press release contains non-GAAP financial measures, including FFO, core FFO and Adjusted EBITDA.  A reconciliation from U.S. GAAP net income available to common stockholders to FFO, a reconciliation from FFO to core FFO, and definitions of FFO and core FFO 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. 

Investor Conference Call

Prior to Digital Realty's investor conference call at 5:30 p.m. EDT / 2:30 p.m. PDT on October 26, 2021, 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 2021 financial results and operating performance.  The conference call will feature Chief Executive Officer A. William Stein and Chief Financial Officer Andrew P. Power. 

To participate in the live call, investors are invited to dial (888) 317-6003 (for domestic callers) or (412) 317-6061 (for international callers) and reference the conference ID# 0133975 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 23, 2021.  The telephone replay can be accessed by dialing (877) 344-7529 (for domestic callers) or (412) 317-0088 (for international callers) and providing the conference ID# 10160289.  The webcast replay can be accessed on Digital Realty's website. 

About Digital Realty

Digital Realty supports the world's leading enterprises and service providers by delivering the full spectrum of data center, colocation and interconnection solutions.  PlatformDIGITAL®, the company's global data center platform, provides customers a trusted foundation and proven Pervasive Datacenter Architecture (PDx™) solution methodology for scaling digital business and efficiently managing data gravity challenges.  Digital Realty's global data center footprint gives customers access to the connected communities that matter to them with over 280 facilities in 49 metros across 25 countries on six continents.  To learn more about Digital Realty, please visit digitalrealty.com or follow us on LinkedIn and Twitter. 

Contact Information

Andrew P. Power
Chief Financial Officer
Digital Realty
(415) 738-6500

John J. Stewart / Jim Huseby
Investor Relations
Digital Realty
(415) 738-6500

 

Consolidated Quarterly Statements of Operations   Unaudited and Dollars in Thousands, Except Per Share Data
			Three Months Ended															Nine Months Ended
			30-Sep-21			30-Jun-21			31-Mar-21			31-Dec-20			30-Sep-20				30-Sep-21			30-Sep-20
Rental revenues			$773,195			$768,826			$754,544			$754,422			$726,441				$2,296,565			$2,004,256
Tenant reimbursements - Utilities			189,060			169,743			184,973			154,937			155,111				543,776			410,207
Tenant reimbursements - Other			57,666			60,261			59,328			62,084			53,654				177,255			173,227
Interconnection & other			90,983			90,565			89,061			86,424			85,725				270,609			240,988
Fee income			3,255			3,628			2,426			4,722			3,687				9,309			10,492
Other			18,977			165			59			20			50				19,201			1,830
Total Operating Revenues			$1,133,136			$1,093,188			$1,090,391			$1,062,609			$1,024,668				$3,316,715			$2,841,000
Utilities			$209,585			$185,010			$176,046			$169,282			$177,925				$570,642			$467,623
Rental property operating			196,743			198,207			185,733			205,177			180,755				580,682			489,411
Property taxes			55,915			42,795			49,005			42,442			39,732				147,715			126,926
Insurance			4,718			5,703			3,498			3,410			2,926				13,919			9,843
Depreciation & amortization			369,035			368,981			369,733			359,915			365,842				1,107,749			1,006,464
General & administration			97,082			94,956			97,568			101,582			90,431				289,606			243,346
Severance, equity acceleration, and legal expenses			1,377			2,536			2,427			606			920				6,340			5,834
Transaction and integration expenses			13,804			7,075			14,120			19,290			14,953				34,999			87,372
Impairment of investments in real estate			—			—			—			—			6,482				—			6,482
Other expenses			510			2,298			(257)			641			297				2,551			433
Total Operating Expenses			$948,769			$907,561			$897,873			$902,345			$880,263				$2,754,203			$2,443,734
Operating Income			$184,367			$185,627			$192,518			$160,264			$144,405				$562,512			$397,266
Equity in (loss) earnings of unconsolidated joint ventures			40,884			52,143			(23,031)			31,055			(2,056)				69,996			(88,684)
Gain on sale / deconsolidation			(635)			499			333,921			1,684			10,410				333,785			315,211
Interest and other (expense) income, net			(2,947)			10,124			(7,186)			(2,747)			4,348				(9)			22,969
Interest (expense)			(71,417)			(75,014)			(75,653)			(77,848)			(89,499)				(222,084)			(255,173)
Income tax (expense)			(13,709)			(47,582)			(7,547)			(3,322)			(16,053)				(68,838)			(34,725)
Loss from early extinguishment of debt			—			—			(18,347)			(49,576)			(53,007)				(18,347)			(53,639)
Net Income / (Loss)			$136,543			$125,797			$394,675			$59,510			($1,452)				$657,015			$303,225
Net (income) loss attributable to noncontrolling interests			(2,266)			(4,544)			(8,756)			(1,818)			1,316				(15,566)			(4,515)
Net Income / (Loss) Attributable to Digital Realty Trust, Inc.			$134,277			$121,253			$385,919			$57,692			($136)				$641,449			$298,710
Preferred stock dividends, including undeclared dividends			(10,181)			(11,885)			(13,514)			(13,514)			(20,712)				(35,580)			(63,022)
Gain on / (Issuance costs associated with) redeemed preferred stock			—			18,000			—			—			(16,520)				18,000			(16,520)
Net Income / (Loss) Available to Common Stockholders			$124,096			$127,368			$372,405			$44,178			($37,368)				$623,869			$219,168
Weighted-average shares outstanding - basic			283,105,966			281,791,855			281,094,798			280,117,213			270,214,413				281,445,252			253,377,527
Weighted-average shares outstanding - diluted			283,817,950			282,433,857			281,928,182			281,122,368			270,214,413				282,075,611			256,362,579
Weighted-average fully diluted shares and units			290,253,718			289,484,805			289,210,666			288,903,143			281,523,515				289,218,609			264,401,464
Net income / (loss) per share - basic			$0.44			$0.45			$1.32			$0.16			($0.14)				$2.22			$0.86
Net income / (loss) per share - diluted			$0.44			$0.45			$1.32			$0.16			($0.14)				$2.21			$0.85

 

Funds From Operations and Core Funds From Operations Unaudited and in Thousands, Except Per Share Data
		Three Months Ended																Nine Months Ended
Reconciliation of Net Income to Funds From Operations (FFO)			30-Sep-21			30-Jun-21			31-Mar-21			31-Dec-20			30-Sep-20				30-Sep-21			30-Sep-20
Net Income / (Loss) Available to Common Stockholders			$124,096			$127,368			$372,405			$44,178			($37,368)				$623,869			$219,168
Adjustments:
Non-controlling interest in operating partnership			3,000			3,200			9,800			1,300			(1,000)				16,000			8,200
Real estate related depreciation & amortization (1)			362,728			363,640			364,697			354,366			358,619				1,091,065			987,470
Unconsolidated JV real estate related depreciation & amortization			21,293			20,983			19,378			21,471			19,213				61,654			56,259
(Gain) on real estate transactions (2)			(63,799)			(499)			(333,921)			(1,684)			(10,410)				(398,219)			(315,211)
Impairment of investments in real estate			-			-			-			-			6,482				-			6,482
Funds From Operations - diluted			$447,318			$514,692			$432,359			$419,631			$335,536				$1,394,369			$962,368
Weighted-average shares and units outstanding - basic			289,542			288,843			288,377			287,898			278,079				288,880			261,416
Weighted-average shares and units outstanding - diluted (3)			290,254			289,485			289,211			288,903			281,524				289,531			264,401
Funds From Operations per share - basic			$1.54			$1.78			$1.50			$1.46			$1.21				$4.83			$3.68
Funds From Operations per share - diluted (3)			$1.54			$1.78			$1.50			$1.45			$1.19				$4.82			$3.64
		Three Months Ended																Nine Months Ended
Reconciliation of FFO to Core FFO			30-Sep-21			30-Jun-21			31-Mar-21			31-Dec-20			30-Sep-20				30-Sep-21			30-Sep-20
Funds From Operations - diluted			$447,318			$514,692			$432,359			$419,631			$335,536				$1,394,369			$962,368
Termination fees and other non-core revenues (4)			(18,066)			(11,122)			(59)			(25)			(5,713)				(29,247)			(30,046)
Transaction and integration expenses			13,804			7,075			14,120			19,290			14,953				34,999			87,372
Loss from early extinguishment of debt			-			-			18,347			49,576			53,007				18,347			53,639
(Gain on) / Issuance costs associated with redeemed preferred stock			-			(18,000)			-			-			16,520				(18,000)			16,520
Severance, equity acceleration, and legal expenses (5)			1,377			2,536			2,427			606			920				6,340			5,834
(Gain) / Loss on FX revaluation			33,774			(51,649)			34,072			(27,190)			10,312				16,197			109,126
Other non-core expense adjustments			1,004			2,298			(19,240)			3,353			6,697				(15,938)			12,228
Core Funds From Operations - diluted			$479,211			$445,830			$482,026			$465,241			$432,232				$1,407,067			$1,217,041
Weighted-average shares and units outstanding - diluted (3)			290,254			289,485			289,211			288,903			281,524				289,531			264,401
Core Funds From Operations per share - diluted (3)			$1.65			$1.54			$1.67			$1.61			$1.54				$4.86			$4.60
(1) Real Estate Related Depreciation & Amortization		Three Months Ended																Nine Months Ended
			30-Sep-21			30-Jun-21			31-Mar-21			31-Dec-20			30-Sep-20				30-Sep-21			30-Sep-20
Depreciation & amortization per income statement			$369,035			$368,981			$369,733			$359,915			$365,842				1,107,749			1,006,464
Non-real estate depreciation			(6,307)			(5,341)			(5,036)			(5,549)			(7,223)				(16,684)			(18,994)
Real Estate Related Depreciation & Amortization			$362,728			$363,640			$364,697			$354,366			$358,619				$1,091,065			$987,470

(2)	For the third quarter 2021, includes a $64 million gain that represents Digital Realty's share from a sale of a portfolio of assets within an unconsolidated joint venture. The gain is included in equity in earnings of unconsolidated joint ventures in our consolidated income statement.
(3)	For all periods presented, we have excluded the effect of dilutive series C, 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 C, series J, series K and series L preferred stock, as applicable, which we consider highly improbable. See above for calculations of diluted 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)	Includes lease termination fees and certain other adjustments that are not core to our business. For the third quarter 2021, includes a $19 million promote received related to a sale of portfolio of assets within an unconsolidated joint venture. The promote is included in Other revenue in our consolidated income statement.
(5)	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																Nine Months Ended
Reconciliation of Core FFO to AFFO			30-Sep-21			30-Jun-21			31-Mar-21			31-Dec-20			30-Sep-20				30-Sep-21			30-Sep-20
Core FFO available to common stockholders and unitholders			$479,211			$445,830			$482,026			$465,241			$432,232				$1,407,067			$1,217,041
Adjustments:
Non-real estate depreciation			6,307			5,341			5,036			5,549			7,223				16,684			18,994
Amortization of deferred financing costs			3,625			3,718			3,538			3,709			3,655				10,881			11,576
Amortization of debt discount/premium			1,138			1,166			1,134			1,033			987				3,438			2,941
Non-cash stock-based compensation expense			15,082			15,579			16,097			16,315			15,969				46,758			43,182
Straight-line rental revenue			(11,969)			(16,139)			(18,492)			(14,402)			(10,017)				(46,600)			(36,349)
Straight-line rental expense			7,862			7,175			6,709			3,629			3,934				21,746			12,767
Above- and below-market rent amortization			1,165			1,858			2,137			3,239			2,360				5,160			9,448
Deferred tax (expense) benefit			2,112			35,522			(4,509)			(4,226)			6,421				33,125			5,479
Leasing compensation & internal lease commissions			11,142			11,078			11,042			10,506			6,052				33,262			10,584
Recurring capital expenditures (1)			(50,800)			(39,231)			(39,522)			(83,571)			(53,683)				(129,553)			(127,156)
AFFO available to common stockholders and unitholders (2)			$464,875			$471,897			$465,196			$407,022			$415,133				$1,401,968			$1,168,507
Weighted-average shares and units outstanding - basic			289,542			288,843			288,377			287,898			278,079				288,880			261,416
Weighted-average shares and units outstanding - diluted (3)			290,254			289,485			289,211			288,903			281,524				289,531			264,401
AFFO per share - diluted (3)			$1.60			$1.63			$1.61			$1.41			$1.47				$4.84			$4.42
Dividends per share and common unit			$1.16			$1.16			$1.16			$1.12			$1.12				$3.48			$3.36
Diluted AFFO Payout Ratio			72.4%			71.2%			72.1%			79.5%			76.0%				71.9%			76.0%
		Three Months Ended																Nine Months Ended
Share Count Detail			30-Sep-21			30-Jun-21			31-Mar-21			31-Dec-20			30-Sep-20				30-Sep-21			30-Sep-20
Weighted Average Common Stock and Units Outstanding			289,542			288,843			288,377			287,898			278,079				288,880			261,416
Add: Effect of dilutive securities			712			642			834			1,005			3,445				651			2,985
Weighted Avg. Common Stock and Units Outstanding - diluted			290,254			289,485			289,211			288,903			281,524				289,531			264,401

(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 C,  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 C, series J, series K and series L preferred stock, as applicable, which we consider highly improbable.  See above for calculations of diluted FFO available to common stockholders and unitholders and for calculations of weighted average common stock and units outstanding.

 

Consolidated Balance Sheets Unaudited and in Thousands, Except Share and Per Share Data
							30-Sep-21			30-Jun-21			31-Mar-21			31-Dec-20			30-Sep-20
Assets
Investments in real estate:
Real estate								$23,384,809			$23,287,853			$22,762,279			$23,142,988			$22,125,486
Construction in progress								3,238,388			3,270,570			2,904,642			2,768,326			2,328,654
Land held for future development								118,091			143,575			192,896			226,862			198,536
Investments in real estate								$26,741,289			$26,701,998			$25,859,817			$26,138,175			$24,652,676
Accumulated depreciation and amortization								(6,159,294)			(5,919,650)			(5,649,019)			(5,555,221)			(5,250,140)
Net Investments in Properties								$20,581,995			$20,782,348			$20,210,798			$20,582,954			$19,402,536
Investment in unconsolidated joint ventures								1,292,325			1,119,026			970,703			1,148,158			1,059,978
Net Investments in Real Estate								$21,874,320			$21,901,374			$21,181,501			$21,731,112			$20,462,514
Cash and cash equivalents								$116,002			$120,482			$221,140			$108,501			$971,305
Accounts and other receivables (1)								610,416			630,086			657,096			603,111			585,506
Deferred rent								552,850			539,379			524,200			528,180			510,627
Customer relationship value, deferred leasing costs & other intangibles, net								2,871,622			2,956,027			3,057,245			3,122,904			3,106,414
Goodwill								8,062,914			8,185,931			8,125,706			8,330,996			8,012,256
Operating lease right-of-use assets (2)								1,442,661			1,452,633			1,495,869			1,386,959			1,363,285
Other assets								316,863			365,308			279,734			264,528			423,426
Total Assets								$35,847,648			$36,151,220			$35,542,491			$36,076,291			$35,435,333
Liabilities and Equity
Global unsecured revolving credit facilities								$832,322			$1,026,368			$451,007			$531,905			$124,082
Unsecured term loans								—			—			—			536,580			512,642
Unsecured senior notes, net of discount								13,012,790			12,659,043			12,566,198			11,997,010			11,999,170
Secured debt and other, net of premiums								242,427			242,410			239,634			239,222			238,866
Operating lease liabilities (2)								1,543,231			1,545,689			1,581,759			1,468,712			1,444,060
Accounts payable and other accrued liabilities								1,341,866			1,367,240			1,305,921			1,420,162			1,610,814
Deferred tax liabilities, net								725,955			742,127			650,543			698,308			711,474
Accrued dividends and distributions								—			—			—			324,386			571
Security deposits and prepaid rent								341,778			362,606			362,008			371,659			353,902
Total Liabilities								$18,040,369			$17,945,483			$17,157,070			$17,587,944			$16,995,581
Redeemable non-controlling interests - operating partnership								40,924			41,490			40,097			42,011			41,265
Equity
Preferred Stock:  $0.01 par value per share, 110,000,000 shares authorized:
Series C Cumulative Redeemable Perpetual Preferred Stock (3)								—			—			$219,250			$219,250			$219,250
Series J Cumulative Redeemable Preferred Stock (4)								$193,540			$193,540			193,540			193,540			193,540
Series K Cumulative Redeemable Preferred Stock (5)								203,264			203,264			203,264			203,264			203,264
Series L Cumulative Redeemable Preferred Stock (6)								334,886			334,886			334,886			334,886			334,886
Common Stock: $0.01 par value per share, 392,000,000 shares authorized (7)								2,818			2,806			2,795			2,788			2,784
Additional paid-in capital								21,010,202			20,844,834			20,700,282			20,626,897			20,566,645
Dividends in excess of earnings								(4,358,933)			(4,153,407)			(3,952,497)			(3,997,938)			(3,726,901)
Accumulated other comprehensive income (loss), net								(111,560)			31,733			(77,783)			135,010			(123,623)
Total Stockholders' Equity								$17,274,217			$17,457,656			$17,623,737			$17,717,697			$17,669,845
Noncontrolling Interests
Noncontrolling interest in operating partnership								$459,814			$513,897			$571,292			$608,980			$620,676
Noncontrolling interest in consolidated joint ventures								32,324			192,694			150,295			119,659			107,966
Total Noncontrolling Interests								$492,138			$706,591			$721,587			$728,639			$728,642
Total Equity								$17,766,355			$18,164,247			$18,345,324			$18,446,336			$18,398,487
Total Liabilities and Equity								$35,847,648			$36,151,220			$35,542,491			$36,076,291			$35,435,333

(1)	Net of allowance for doubtful accounts of $24,038 and $18,825 as of September 30, 2021 and December 31, 2020, respectively.
(2)	Adoption of the new lease accounting standard required that we adjust the consolidated balance sheet to include the recognition of additional right-of-use assets and lease liabilities for operating leases. See our quarterly report on Form 10–Q filed on May 10, 2019 for additional information.
(3)	Series C Cumulative Redeemable Perpetual Preferred Stock, 6.625%, $0 and $201,250 liquidation preference, respectively ($25.00 per share), 0 and 8,050,000 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively.
(4)	Series J Cumulative Redeemable Preferred Stock, 5.250%, $200,000 and $200,000 liquidation preference, respectively ($25.00 per share), 8,000,000 and 8,000,000 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively.
(5)	Series K Cumulative Redeemable Preferred Stock, 5.850%, $210,000 and $210,000 liquidation preference, respectively ($25.00 per share), 8,400,000 and 8,400,000  shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively.
(6)	Series L Cumulative Redeemable Preferred Stock, 5.200%, $345,000 and $345,000 liquidation preference, respectively ($25.00 per share), 13,800,000 and 13,800,000  shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively.
(7)	Common Stock: 283,846,802 and 208,900,758 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectivel

 

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)			30-Sep-21			30-Jun-21			31-Mar-21			31-Dec-20			30-Sep-20
Net Income / (Loss) Available to Common Stockholders			$124,096			$127,368			$372,405			$44,178			($37,368)
Interest			71,417			75,014			75,653			77,848			89,499
Loss from early extinguishment of debt			—			—			18,347			49,576			53,007
Income tax expense (benefit)			13,709			47,582			7,547			3,322			16,053
Depreciation & amortization			369,035			368,981			369,733			359,915			365,842
EBITDA			$578,257			$618,945			$843,685			$534,839			$487,033
Unconsolidated JV real estate related depreciation & amortization			21,293			20,983			19,378			21,471			19,213
Unconsolidated JV interest expense and tax expense			11,008			15,523			8,786			12,143			9,002
Severance, equity acceleration, and legal expenses			1,377			2,536			2,427			606			920
Transaction and integration expenses			13,804			7,075			14,120			19,290			14,953
(Gain) on sale / deconsolidation			635			(499)			(333,921)			(1,684)			(10,410)
Impairment of investments in real estate			—			—			—			—			6,482
Other non-core adjustments, net			(28,745)			(60,308)			38,574			(23,842)			4,945
Non-controlling interests			2,266			4,544			8,756			1,818			(1,316)
Preferred stock dividends, including undeclared dividends			10,181			11,885			13,514			13,514			20,712
(Gain on) / Issuance costs associated with redeemed preferred stock			—			(18,000)			—			—			16,520
Adjusted EBITDA			$610,076			$602,684			$615,319			$578,156			$568,054
(1) For definitions and discussion of EBITDA and Adjusted EBITDA, see the definitions section.
		Three Months Ended
Financial Ratios			30-Sep-21			30-Jun-21			31-Mar-21			31-Dec-20			30-Sep-20
Total GAAP interest expense			$71,417			$75,014			$75,653			$77,848			$89,499
Capitalized interest			15,142			11,558			11,434			11,836			12,379
Change in accrued interest and other non-cash amounts			17,820			(43,604)			44,620			(37,182)			19,718
Cash Interest Expense (2)			$104,379			$42,968			$131,707			$52,502			$121,596
Preferred dividends			10,181			11,885			13,514			13,514			20,712
Total Fixed Charges (3)			$96,740			$98,457			$100,601			$103,198			$122,590
Coverage
Interest coverage ratio (4)			6.5x			6.1x			6.6x			5.8x			5.2x
Cash interest coverage ratio (5)			5.4x			10.9x			4.5x			9.3x			4.4x
Fixed charge coverage ratio (6)			5.8x			5.4x			5.8x			5.1x			4.4x
Cash fixed charge coverage ratio (7)			5.0x			9.0x			4.1x			7.7x			3.8x
Leverage
Debt to total enterprise value (8) (9)			24.8%			23.9%			24.1%			24.4%			22.8%
Debt plus preferred stock to total enterprise value (10)			26.1%			25.2%			25.9%			26.2%			25.0%
Pre-tax income to interest expense (11)			2.9x			2.7x			6.2x			1.8x			1.0x
Net Debt to Adjusted EBITDA (12)			6.0x			6.0x			5.6x			6.0x			5.5x

(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 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 dividends (including our pro rata share of unconsolidated joint venture cash fixed charges).
(8)	Mortgage debt and other loans 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)	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 of 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.

 

Management Statements on Non-GAAP Measures
Unaudited

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 gains (or losses) from real estate transactions, impairment of investment in real estate, real estate related depreciation and amortization (excluding amortization of deferred financing costs), unconsolidated JV real estate related depreciation & amortization, non-controlling interests in operating partnership and 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) termination fees and other non-core revenues, (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, unconsolidated joint venture real estate related depreciation & amortization, unconsolidated joint venture interest expense and tax, severance, equity acceleration, and legal expenses, transaction and integration expenses, gain on sale / deconsolidation, impairment of investments in real estate, other non-core adjustments, net, non-controlling interests, preferred stock dividends, including undeclared dividends, and issuance costs associated with redeemed preferred stock. Adjusted EBITDA is EBITDA excluding unconsolidated joint venture real estate related depreciation & amortization, unconsolidated joint venture interest expense and tax, severance, equity acceleration, and legal expenses, transaction and integration expenses, gain on sale / deconsolidation, impairment of investments in real estate, other non-core adjustments, net, non-controlling interests, preferred stock dividends, including undeclared dividends, and 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. 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 using total debt at balance sheet carrying value, plus capital lease obligations, plus our share of unconsolidated JV debt, less unrestricted cash and cash equivalents (including our share of unconsolidated JV cash) divided by the product of Adjusted EBITDA (inclusive of our share of unconsolidated JV EBITDA) multiplied by four.

Debt-plus-preferred-to-total enterprise value is mortgage debt and other loans plus preferred stock divided by mortgage debt and other loans 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, scheduled debt principal payments and preferred dividends. For the quarter ended September 30, 2021, GAAP interest expense was $71 million, capitalized interest was $15 million and scheduled debt principal payments and preferred dividends was $10 million.

Reconciliation of Net Operating Income (NOI)		Three Months Ended										Nine Months Ended
(in thousands)		30-Sep-21			30-Jun-21			30-Sep-20				30-Sep-21			30-Sep-20
Operating income			$184,367			$185,627			$144,405				$562,512			$397,266
Fee income			(3,255)			(3,628)			(3,687)				(9,309)			(10,492)
Other income			(18,977)			(165)			(50)				(19,201)			(1,830)
Depreciation and amortization			369,035			368,981			365,842				1,107,749			1,006,464
General and administrative			97,082			94,956			90,431				289,606			243,346
Severance, equity acceleration, and legal expenses			1,377			2,536			920				6,340			5,834
Transaction expenses			13,804			7,075			14,953				34,999			87,372
Other expenses			510			2,298			297				2,551			433
Net Operating Income			$643,943			$657,680			$619,593				$1,975,247			$1,734,875
Cash Net Operating Income (Cash NOI)
Net Operating Income			$643,943			$657,680			$619,593				$1,975,247			$1,734,875
Straight-line rental revenue			(12,029)			(17,127)			(9,215)				(47,763)			(33,321)
Straight-line rental expense			7,779			7,069			3,674				21,598			12,465
Above- and below-market rent amortization			1,165			1,858			2,360				5,158			9,447
Cash Net Operating Income			$640,858			$649,480			$616,412				$1,954,240			$1,723,466

 

Forward-Looking Statements

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, our expected physical settlement of the forward sale agreements and use of proceeds from any such settlement, the COVID-19 pandemic, 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 and net income, 2021 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, 2021 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;
• increased competition or available supply of data center space;
• decreased rental rates, increased operating costs or increased vacancy rates;
• 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 of the COVID-19 pandemic on our operations and on the operations of our customers, suppliers and business partners
• 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, 2020 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 very 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, and PlatformDIGITAL, 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.

View original content:https://www.prnewswire.com/news-releases/digital-realty-reports-third-quarter-2021-results-301409128.html

SOURCE Digital Realty

FAQ

What were Digital Realty's 3Q21 financial results?

Digital Realty reported a net income of $124 million or $0.44 per diluted share in 3Q21.

How much revenue did Digital Realty generate in the third quarter of 2021?

Digital Realty generated $1.1 billion in revenue during 3Q21.

What is the updated core FFO outlook for Digital Realty?

Digital Realty raised its core FFO per share outlook to $6.50-$6.55 for 2021.

How much annualized GAAP rental revenue is expected from new leases signed in 3Q21?

The new leases signed in 3Q21 are expected to generate $113 million in annualized GAAP rental revenue.

What was the change in rental rates on renewal leases for Digital Realty?

Rental rates on renewal leases rolled down 5.6% on a cash basis in 3Q21.