Le Lézard
Classified in: Science and technology, Business, Covid-19 virus
Subjects: ERN, ERP

DIGITAL REALTY REPORTS SECOND QUARTER 2022 RESULTS


AUSTIN, Texas, July 28, 2022 /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 second quarter of 2022.  All per share results are presented on a fully diluted basis. 

Highlights

Financial Results

Digital Realty reported revenues for the second quarter of 2022 of $1.1 billion, a 1% increase from the previous quarter and a 4% increase from the same quarter last year. 

The company delivered second quarter of 2022 net income of $63.9 million, and net income available to common stockholders of $53.2 million, or $0.19 per diluted share, compared to $0.22 per diluted share in the previous quarter and $0.45 per diluted share in the same quarter last year. 

Digital Realty generated second quarter of 2022 Adjusted EBITDA of $611 million, a 1% increase from the previous quarter and a 1% increase over the same quarter last year. 

The company reported second quarter of 2022 funds from operations of $452 million, or $1.55 per share, compared to $1.60 per share in the previous quarter and $1.78 per share in the same quarter last year. 

Excluding certain items that do not represent core expenses or revenue streams, Digital Realty delivered second quarter of 2022 core FFO per share of $1.72, compared to $1.67 per share in the previous quarter, and $1.54 per share in the same quarter last year. 

Leasing Activity

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

"Demand for data center solutions continued to be strong through the second quarter, with healthy contributions from both hyperscale and enterprise segments," said Digital Realty Chief Executive Officer A. William Stein.  "Customers are seeking to secure the capacity they require in advance of availability, as over half of our record development schedule is pre-leased, and tight conditions in many markets around the world are resulting in an improving pricing environment and rising occupancy." 

The weighted-average lag between new leases signed during the second quarter of 2022 and the contractual commencement date was thirteen months. 

In addition to new leases signed, Digital Realty also signed renewal leases representing $173 million of annualized GAAP rental revenue during the quarter.  Rental rates on renewal leases signed during the second quarter of 2022 rolled up 3.4% on a cash basis and up 5.3% on a GAAP basis. 

New leases signed during the second quarter of 2022 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



$15,583


63,303



$246


6.0



$217

 > 1 MW



15,537


137,937



113


14.1



92

 Other (1)



1,566


63,467



25


?



?

Total



$32,686


264,707



$123


20.1



$129















 EMEA (2)














 0-1 MW



$18,301


71,568



$256


6.4



$238

 > 1 MW



43,760


347,280



126


34.0



107

 Other (1)



171


2,409



71


?



?

Total



$62,232


421,257



$148


40.4



$128















 Asia Pacific (2)














 0-1 MW



$1,544


8,591



$180


0.4



$322

 > 1 MW



5,399


27,157



199


3.0



150

 Other (1)



25


327



78


?



?

Total



$6,968


36,075



$193


3.4



$170















All Regions (2)














 0-1 MW



$35,428


143,461



$247


12.8



$231

 > 1 MW



64,695


512,374



126


51.1



105

 Other (1)



1,763


66,203



27


?



?

Total



$101,886


722,038



$141


63.9



$131















Interconnection



$11,515


N/A



N/A


N/A



N/A















Grand Total



$113,401


722,038



$141


63.9



$131



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 June 30, 2022. 

Investment Activity

During the second quarter, Digital Realty acquired an 8-acre parcel in Dublin for $6 million, which can support up to 40 megawatts of IT load. Digital Realty also acquired 2.4 acres in Barcelona for $11 million, which can support up to 15 megawatts of IT load. Lastly, Digital Realty acquired 34 acres in Frankfurt for $60 million, which can support up to 70 megawatts of IT load.

Also during the second quarter, Digital Realty announced a joint venture with Mivne Real Estate (K.D.) (TASE: MVNE) for entry into the Israeli market. The joint venture, which will operate under the brand name Digital Realty Mivne, will serve as a strategic partnership between Digital Realty and Mivne, a market-leading real estate developer, owner and operator that has developed many large-scale projects across Israel and has an extensive land bank. Digital Realty Mivne expects to develop a multi-tenant data center campus in Petah Tikvah, the primary connectivity hub in Israel.  The data center campus will support the development of up to 20 megawatts of IT load.  Delivery of the initial phase is anticipated in 2023, subject to customer demand.

Subsequent to the close of the second quarter, Digital Realty acquired 38 acres in Paris for $11 million and 9 acres in Stockholm for $43 million.

Balance Sheet

Digital Realty had approximately $14.3 billion of total debt outstanding as of June 30, 2022, comprised of $14.1 billion of unsecured debt and approximately $0.2 billion of secured debt.  At the end of the second quarter of 2022, net debt-to-Adjusted EBITDA was 6.2x, debt-plus-preferred-to-total enterprise value was 28.5% and fixed charge coverage was 6.0x.  Pro forma for settlement of the $1 billion forward equity offering, net debt-to-adjusted EBITDA was 5.8x and fixed charge coverage was 6.2x. 

During the second quarter of 2022, Digital Realty completed the following financing transactions:

2022 Outlook

Digital Realty updated its 2022 core FFO per share outlook of $6.75-$6.85 and reiterated its 2022 constant-currency core FFO per share outlook of $6.95 - $7.05.  The assumptions underlying the outlook are summarized in the following table. 










As of


As of


As of

 Top-Line and Cost Structure


February 17, 2022


April 28, 2022


July 28, 2022

Total revenue


$4.700 - $4.800 billion


$4.700 - $4.800 billion


$4.650 - $4.750 billion

Net non-cash rent adjustments (1)


($35 - $40 million)


($45 - $50 million)


($50 - $55 million)

Adjusted EBITDA


$2.475 - $2.525 billion


$2.475 - $2.525 billion


$2.450 - $2.500 billion

G&A


$410 - $420 million


$410 - $420 million


$405 - $415 million








 Internal Growth







Rental rates on renewal leases







Cash basis


Flat


Slightly Positive


Slightly Positive

GAAP basis


Slightly positive


Up low-single-digits


Up low-single-digits

Year-end portfolio occupancy


83.0% - 84.0%


83.0% - 84.0%


83.0% - 84.0%

"Same-capital" cash NOI growth (2)


(2.5% - 3.5%)


(2.5% - 3.5%)


(3.5% - 4.5%)








Foreign Exchange Rates







U.S. Dollar / Pound Sterling


$1.30 - $1.38


$1.25 - $1.35


$1.15 - $1.25

U.S. Dollar / Euro


$1.10 - $1.15


$1.05 - $1.10


$1.00 - $1.05








 External Growth







Dispositions







Dollar volume


$0.5 - $1.0 billion


$0.5 - $1.0 billion


$0.5 - $1.0 billion

Cap rate


0.0% - 10.0%


0.0% - 10.0%


0.0% - 10.0%

Development







CapEx (3)


$2.3 - $2.5 billion


$2.3 - $2.5 billion


$2.2 - $2.4 billion

Average stabilized yields


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

Recurring CapEx + capitalized leasing costs (5)


$210 - $220 million


$200 - $210 million


$200 - $210 million








 Balance Sheet







Long-term debt issuance







Dollar amount


$1.8 - $2.0 billion


$1.8 - $2.0 billion


$1.8 - $2.0 billion

Pricing


1.5% - 2.0%


1.5% - 2.0%


2.0% - 2.5%

Timing


Early & Late 2022


Early & Late 2022


Early & Late 2022








 Net income per diluted share


$1.05 - $1.10


$1.05 - $1.10


$1.00 - $1.05

Real estate depreciation and (gain) / loss on sale


$5.35 - $5.35


$5.35 - $5.35


$5.35 - $5.35

 Funds From Operations / share (NAREIT-Defined)


$6.40 - $6.45


$6.40 - $6.45


$6.35 - $6.40

Non-core expenses and revenue streams


$0.40 - $0.45


$0.40 - $0.45


$0.40 - $0.45

 Core Funds From Operations / share


$6.80 - $6.90


$6.80 - $6.90


$6.75 - $6.85

Foreign currency translation adjustments


$0.10 - $0.10


$0.15 - $0.15


$0.20 - $0.20

 Constant-Currency Core Funds From Operations / share


$6.90 - $7.00


$6.95 - $7.05


$6.95 - $7.05



(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, 2020 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 2021-2022, 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 document 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 July 28, 2022, 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 second quarter 2022 financial results and operating performance.  The conference call will feature Chief Executive Officer A. William Stein and President & 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# 6453950 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 August 28, 2022.  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# 1684177.  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 (PDxtm) solution methodology for powering innovation and efficiently managing Data Gravity challenges. Digital Realty gives its customers access to the connected communities that matter to them with a global data center footprint of 290+ facilities in 50+ metros across 26 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
President & Chief Financial Officer
Digital Realty
(737) 281-0101

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

 

Consolidated Quarterly Statements of Operations

Unaudited and Dollars in Thousands, Except Per Share Data





Three Months Ended



Six Months Ended




30-Jun-22



31-Mar-22



31-Dec-21



30-Sep-21



30-Jun-21




30-Jun-22



30-Jun-21

Rental revenues



$767,313



$751,962



$763,117



$773,195



$768,826




$1,519,275



$1,523,370

Tenant reimbursements - Utilities



218,198



224,547



195,340



189,060



169,743




442,745



354,716

Tenant reimbursements - Other



52,688



51,511



58,528



57,666



60,261




104,198



119,589

Interconnection & other



93,338



93,530



89,850



90,983



90,565




186,868



179,626

Fee income



5,072



5,757



4,133



3,255



3,628




10,829



6,054

Other



2,713



15



200



18,977



165




2,728



224

Total Operating Revenues



$1,139,321



$1,127,323



$1,111,167



$1,133,135



$1,093,189




$2,266,644



$2,183,580
























Utilities



$223,426



$241,239



$213,933



$209,585



$185,010




$464,665



$361,057

Rental property operating



198,076



194,354



205,250



196,743



198,206




392,430



383,939

Property taxes



47,213



46,526



42,673



55,915



42,795




93,738



91,800

Insurance



3,836



3,698



3,507



4,718



5,703




7,534



9,201

Depreciation & amortization



376,967



382,132



378,883



369,035



368,981




759,099



738,714

General & administration



101,991



96,435



103,705



97,082



94,956




198,426



192,524

Severance, equity acceleration, and legal expenses



3,786



2,077



1,003



1,377



2,536




5,863



4,963

Transaction and integration expenses



13,586



11,968



12,427



13,804



7,075




25,554



21,195

Impairment of investments in real estate



?



?



18,291



?



?




?



?

Other expenses



70



7,657



(1)



510



2,298




7,727



2,041

Total Operating Expenses



$968,950



$986,087



$979,669



$948,770



$907,561




$1,955,037



$1,805,433
























Operating Income



$170,371



$141,236



$131,498



$184,365



$185,627




$311,607



$378,146
























Equity in earnings (loss) of unconsolidated joint ventures



(34,088)



60,958



(7,714)



40,884



52,143




26,870



29,112

Gain / (loss) on sale of investments



?



2,770



1,047,011



(635)



499




2,770



334,420

Interest and other income (expense), net



13,008



3,051



(4,349)



(2,947)



10,124




16,059



2,938

Interest (expense)



(69,023)



(66,725)



(71,762)



(71,417)



(75,014)




(135,748)



(150,667)

Income tax (expense)



(16,406)



(13,244)



(3,961)



(13,709)



(47,582)




(29,650)



(55,129)

Loss from early extinguishment of debt



?



(51,135)



(325)



?



?




(51,135)



(18,347)

Net Income



$63,862



$76,911



$1,090,397



$136,541



$125,799




$140,773



$520,474
























Net (income) attributable to noncontrolling interests



(436)



(3,629)



(22,587)



(2,266)



(4,544)




(4,065)



(13,298)

Net Income Attributable to Digital Realty Trust, Inc.



$63,426



$73,282



$1,067,811



$134,275



$121,255




$136,708



$507,177
























Preferred stock dividends, including undeclared dividends



(10,181)



(10,181)



(10,181)



(10,181)



(11,885)




(20,363)



(25,399)

Gain on / (Issuance costs associated with) redeemed preferred stock



?



?



?



?



18,000




?



18,000

Net Income Available to Common Stockholders



$53,245



$63,101



$1,057,630



$124,094



$127,371




$116,346



$499,777
























Weighted-average shares outstanding - basic



284,694,064



284,525,992



283,869,662



283,105,966



281,791,855




284,610,492



281,445,252

Weighted-average shares outstanding - diluted



285,109,903



285,025,099



284,868,184



283,799,538



282,433,857




284,979,709



282,075,611

Weighted-average fully diluted shares and units



290,944,163



290,662,421



290,893,110



290,228,785



289,484,805




290,716,197



289,218,609
























Net income per share - basic



$0.19



$0.22



$3.73



$0.44



$0.45




$0.41



$1.78

Net income per share - diluted



$0.19



$0.22



$3.71



$0.44



$0.45




$0.41



$1.77

 

Funds From Operations and Core Funds From Operations

Unaudited and in Thousands, Except Per Share Data


























Three Months Ended



Six Months Ended

Reconciliation of Net Income to Funds From Operations (FFO)



30-Jun-22



31-Mar-22



31-Dec-21



30-Sep-21



30-Jun-21




30-Jun-22



30-Jun-21
























Net Income Available to Common Stockholders



$53,245



$63,101



$1,057,630



$124,094



$127,371




$116,346



$499,777

Adjustments:























Non-controlling interest in operating partnership



1,500



1,600



23,100



3,000



3,200




3,100



13,000

Real estate related depreciation & amortization (1)



369,327



374,162



372,447



362,728



363,640




743,489



728,336

Unconsolidated JV real estate related depreciation & amortization



29,022



29,320



24,146



21,293



20,983




58,341



40,361

(Gain) on real estate transactions (2)



(1,144)



(2,770)



(1,047,010)



(63,798)



(499)




(3,914)



(334,420)

Impairment of investments in real estate



-



-



18,291



-



-




-



-

Funds From Operations - diluted



$451,949



$465,412



$448,602



$447,317



$514,695




$917,362



$947,055
























Weighted-average shares and units outstanding - basic



290,528



290,163



289,895



289,542



288,843




290,346



288,588

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



290,944



290,662



290,893



290,228



289,485




290,716



289,219
























Funds From Operations per share - basic



$1.56



$1.60



$1.55



$1.54



$1.78




$3.16



$3.28
























Funds From Operations per share - diluted (3)



$1.55



$1.60



$1.54



$1.54



$1.78




$3.16



$3.27


























Three Months Ended



Six Months Ended

Reconciliation of FFO to Core FFO



30-Jun-22



31-Mar-22



31-Dec-21



30-Sep-21



30-Jun-21




30-Jun-22



30-Jun-21
























Funds From Operations - diluted



$451,949



$465,412



$448,602



$447,317



$514,695




$917,362



$947,055

Other non-core revenue adjustments (4)



456



13,916



9,859



(18,066)



(11,122)




14,372



(11,181)

Transaction and integration expenses



13,586



11,968



12,427



13,804



7,075




25,554



21,195

Loss from early extinguishment of debt



-



51,135



325



-



-




51,135



18,347

(Gain on) / Issuance costs associated with redeemed preferred stock



-



-



-



-



(18,000)




-



(18,000)

Severance, equity acceleration, and legal expenses (5)



3,786



2,077



1,003



1,377



2,536




5,863



4,963

(Gain) / Loss on FX revaluation



29,539



(67,676)



14,308



33,773



(51,649)




(38,137)



(17,577)

Other non-core expense adjustments



70



7,657



(1)



1,004



2,298




7,727



(16,942)

Core Funds From Operations - diluted



$499,386



$484,490



$486,525



$479,209



$445,833




$983,875



$927,859
























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



290,944



290,662



290,893



290,228



289,485




290,716



289,219
























Core Funds From Operations per share - diluted (3)



$1.72



$1.67



$1.67



$1.65



$1.54




$3.38



$3.21
























(1) Real Estate Related Depreciation & Amortization


Three Months Ended



Six Months Ended




30-Jun-22



31-Mar-22



31-Dec-21



30-Sep-21



30-Jun-21




30-Jun-22



30-Jun-21
























Depreciation & amortization per income statement



$376,967



$382,132



$378,883



$369,035



$368,981




759,099



738,714

Non-real estate depreciation



(7,640)



(7,970)



(6,436)



(6,307)



(5,341)




(15,610)



(10,377)

Real Estate Related Depreciation & Amortization



$369,327



$374,162



$372,447



$362,728



$363,640




$743,489



$728,336



(2)

For the fourth quarter 2021, the gain pertains to the contribution of 10 operating data center properties to Digital Core REIT in connection with the listing of Digital Core REIT as a standalone public company traded on the Singapore Exchange in December 2021.  For the third quarter 2021, the gain of $64 million represents Digital Realty's share of a gain recognized by an unconsolidated joint venture from the sale of a portfolio of assets owned by the entity and 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, and the effect of the physical settlement of our September 2021 forward sales agreements. 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



Six Months Ended

 Reconciliation of Core FFO to AFFO



30-Jun-22



31-Mar-22



31-Dec-21



30-Sep-21



30-Jun-21




30-Jun-22



30-Jun-21
























 Core FFO available to common stockholders and unitholders



$499,386



$484,490



$486,525



$479,209



$445,833




$983,875



$927,859

Adjustments:























Non-real estate depreciation



7,640



7,970



6,436



6,307



5,341




15,610



10,377

Amortization of deferred financing costs



3,330



3,634



3,515



3,625



3,718




6,964



7,256

Amortization of debt discount/premium



1,193



1,214



1,107



1,138



1,166




2,407



2,300

Non-cash stock-based compensation expense



15,799



14,453



15,097



15,082



15,578




30,253



31,675

Straight-line rental revenue



(17,278)



(18,810)



(16,497)



(11,969)



(16,139)




(36,089)



(34,631)

Straight-line rental expense



(2,237)



4,168



5,753



7,862



7,175




1,931



13,884

Above- and below-market rent amortization



196



335



910



1,165



1,857




531



3,994

Deferred tax expense / (benefit)



(769)



(1,604)



(13,731)



2,112



35,522




(2,372)



31,013

Leasing compensation & internal lease commissions



9,411



13,261



9,564



11,142



11,078




22,672



22,120

Recurring capital expenditures (1)



(43,497)



(46,770)



(87,550)



(50,800)



(39,231)




(90,267)



(78,753)
























AFFO available to common stockholders and unitholders (2)



$473,173



$462,341



$411,130



$464,872



$471,899




$935,514



$937,095
























Weighted-average shares and units outstanding - basic



290,528



290,163



289,895



289,542



288,843




290,346



288,588

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



290,944



290,662



290,893



290,228



289,485




290,716



289,219
























AFFO per share - diluted (3)



$1.63



$1.59



$1.41



$1.60



$1.63




$3.22



$3.24
























 Dividends per share and common unit



$1.22



$1.22



$1.16



$1.16



$1.16




$2.44



$2.32
























Diluted AFFO Payout Ratio



75.0 %



76.7 %



82.1 %



72.4 %



71.2 %




75.8 %



71.6 %


























Three Months Ended



Six Months Ended

Share Count Detail



30-Jun-22



31-Mar-22



31-Dec-21



30-Sep-21



30-Jun-21




30-Jun-22



30-Jun-21
























Weighted Average Common Stock and Units Outstanding



290,528



290,163



289,895



289,542



288,843




290,346



288,588

Add: Effect of dilutive securities



416



499



998



686



642




370



631

Weighted Avg. Common Stock and Units Outstanding - diluted



290,944



290,662



290,893



290,228



289,485




290,716



289,219

 



(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, and the effect of the physical settlement of our September 2021 forward sales agreements.  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-Jun-22


31-Mar-22


31-Dec-21


30-Sep-21


30-Jun-21

Assets





















Investments in real estate:
















Real estate



$24,065,933



$23,769,712



$23,625,451



$23,384,809



$23,287,853

Construction in progress



3,362,114



3,523,484



3,213,387



3,238,388



3,270,570

Land held for future development



37,460



107,003



133,683



118,091



143,575

Investments in real estate



$27,465,507



$27,400,199



$26,972,522



$26,741,289



$26,701,998

Accumulated depreciation and amortization



(6,665,118)



(6,467,233)



(6,210,281)



(6,159,294)



(5,919,650)

Net Investments in Properties



$20,800,389



$20,932,966



$20,762,241



$20,581,995



$20,782,348

Investment in unconsolidated joint ventures



1,942,549



2,044,074



1,807,689



1,292,325



1,119,026

Net Investments in Real Estate



$22,742,937



$22,977,040



$22,569,930



$21,874,320



$21,901,374

















Cash and cash equivalents



$99,226



$157,964



$142,698



$116,002



$120,482

Accounts and other receivables (1)



797,208



774,579



671,721



610,416



630,086

Deferred rent



554,016



545,666



547,385



552,850



539,379

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



2,521,390



2,640,795



2,735,486



2,871,622



2,956,027

Goodwill



7,545,107



7,802,440



7,937,440



8,062,914



8,185,931

Operating lease right-of-use assets



1,310,970



1,361,942



1,405,441



1,442,661



1,452,633

Other assets



385,202



420,119



359,459



316,863



365,308

Total Assets



$35,956,057



$36,680,546



$36,369,560



$35,847,648



$36,151,220

















Liabilities and Equity
















Global unsecured revolving credit facilities



$1,440,040



$943,325



$398,172



$832,322



$1,026,368

Unsecured senior notes, net of discount



12,695,568



13,284,650



12,903,370



13,012,790



12,659,043

Secured debt and other, net of premiums



158,699



160,240



146,668



242,427



242,410

Operating lease liabilities



1,418,540



1,472,510



1,512,187



1,543,231



1,545,689

Accounts payable and other accrued liabilities



1,619,222



1,572,359



1,543,623



1,341,866



1,367,240

Deferred tax liabilities, net



611,582



649,112



666,451



725,955



742,127

Accrued dividends and distributions



?



?



338,729



?



?

Security deposits and prepaid rent



341,140



346,911



336,578



341,778



362,606

Total Liabilities



$18,284,791



$18,429,107



$17,845,778



$18,040,369



$17,945,483

















Redeemable non-controlling interests - operating partnership



41,047



42,734



46,995



40,920



41,490

















Equity
















Preferred Stock:  $0.01 par value per share, 110,000,000 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, 392,000,000 shares authorized (5)



2,824



2,824



2,824



2,818



2,806

Additional paid-in capital



21,091,364



21,069,391



21,075,863



21,010,202



20,844,834

Dividends in excess of earnings



(4,211,685)



(3,916,854)



(3,631,929)



(4,359,033)



(4,153,407)

Accumulated other comprehensive income (loss), net



(475,561)



(188,844)



(173,880)



(111,560)



31,733

Total Stockholders' Equity



$17,138,632



$17,698,207



$18,004,568



$17,274,117



$17,457,656

















Noncontrolling Interests
















Noncontrolling interest in operating partnership



$432,213



$444,029



$425,337



$459,918



$513,897

Noncontrolling interest in consolidated joint ventures



59,374



66,470



46,882



32,324



192,694

















Total Noncontrolling Interests



$491,587



$510,499



$472,219



$492,242



$706,591

















Total Equity



$17,630,219



$18,208,706



$18,476,787



$17,766,359



$18,164,247

















Total Liabilities and Equity



$35,956,057



$36,680,546



$36,369,560



$35,847,648



$36,151,220



(1)

Net of allowance for doubtful accounts of $37,799 and $28,574 as of June 30, 2022 and December 31, 2021, respectively.

(2)

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 June 30, 2022 and December 31, 2021, respectively.

(3)

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 June 30, 2022 and December 31, 2021, respectively.

(4)

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 June 30, 2022 and December 31, 2021, respectively.

(5)

Common Stock: 284,733,922 and 284,415,013 shares issued and outstanding as of June 30, 2022 and December 31, 2021, 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)



30-Jun-22



31-Mar-22



31-Dec-21



30-Sep-21



30-Jun-21

















Net Income Available to Common Stockholders



$53,245



$63,101



$1,057,630



$124,094



$127,371

Interest



69,023



66,725



71,762



71,417



75,014

Loss from early extinguishment of debt



?



51,135



325



?



?

Income tax expense (benefit)



16,406



13,244



3,961



13,709



47,582

Depreciation & amortization



376,967



382,132



378,883



369,035



368,981

EBITDA



$515,642



$576,337



$1,512,561



$578,255



$618,947

Unconsolidated JV real estate related depreciation & amortization



29,023



29,319



24,146



21,293



20,983

Unconsolidated JV interest expense and tax expense



6,708



21,111



15,222



11,008



15,523

Severance, equity acceleration, and legal expenses



3,786



2,077



1,003



1,377



2,536

Transaction and integration expenses



13,586



11,968



12,427



13,804



7,075

(Gain) / loss on sale of investments



?



(2,770)



(1,047,011)



635



(499)

Impairment of investments in real estate



?



?



18,291



?



?

Other non-core adjustments, net



31,633



(48,858)



14,307



(28,745)



(60,308)

Non-controlling interests



436



3,629



22,587



2,266



4,544

Preferred stock dividends, including undeclared dividends



10,181



10,181



10,181



10,181



11,885

(Gain on) / Issuance costs associated with redeemed preferred stock



?



?



?



?



(18,000)

Adjusted EBITDA



$610,994



$602,994



$583,713



$610,074



$602,686


(1) For definitions and discussion of EBITDA and Adjusted EBITDA, see the definitions section.




















Three Months Ended

Financial Ratios



30-Jun-22



31-Mar-22



31-Dec-21



30-Sep-21



30-Jun-21

















Total GAAP interest expense



$69,023



$66,725



$71,762



$71,417



$75,014

Capitalized interest



14,131



14,751



15,328



15,142



11,558

Change in accrued interest and other non-cash amounts



(43,952)



52,324



(37,974)



17,820



(43,604)

Cash Interest Expense (2)



$39,202



$133,800



$49,116



$104,379



$42,968

















Preferred dividends



10,181



10,181



10,181



10,181



11,885

Total Fixed Charges (3)



$93,335



$91,657



$97,271



$96,740



$98,457

































Coverage
















Interest coverage ratio (4)



 6.6x



 6.1x



 6.0x



 6.5x



 6.1x

Cash interest coverage ratio (5)



 12.6x



 4.0x



 9.8x



 5.4x



 10.9x

Fixed charge coverage ratio (6)



 6.0x



 5.5x



 5.4x



 5.8x



 5.4x

Cash fixed charge coverage ratio (7)



 10.4x



 3.7x



 8.3x



 5.0x



 9.0x

















Leverage
















Debt to total enterprise value (8) (9)



27.1 %



25.5 %



20.5 %



24.8 %



23.9 %

Debt plus preferred stock to total enterprise value (10)



28.5 %



26.8 %



21.7 %



26.1 %



25.2 %

Pre-tax income to interest expense (11)



 1.9x



 2.2x



 16.2x



 2.9x



 2.7x

Net Debt to Adjusted EBITDA (12)



 6.2x



 6.3x



 6.1x



 6.0x



 6.0x

 



(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)

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 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) 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, 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 June 30, 2022, GAAP interest expense was $69 million, capitalized interest was $14 million and scheduled debt principal payments and preferred dividends was $10 million.


















Reconciliation of Net Operating Income (NOI)


Three Months Ended



Six Months Ended

(in thousands)


30-Jun-22


31-Mar-21


30-Jun-21



30-Jun-22


30-Jun-21


















Operating income



$170,371



$141,236



$185,627




$311,607



$378,146


















 Fee income



(5,072)



(5,757)



(3,628)




(10,829)



(6,054)

 Other income



(2,713)



(15)



(165)




(2,728)



(224)

 Depreciation and amortization



376,967



382,132



368,981




759,099



738,714

 General and administrative



101,991



96,435



94,956




198,426



192,524

 Severance, equity acceleration, and legal expenses



3,786



2,077



2,536




5,863



4,963

 Transaction expenses



13,586



11,968



7,075




25,554



21,195

 Other expenses



70



7,657



2,298




7,727



2,041


















Net Operating Income



$658,986



$635,734



$657,680




$1,294,720



$1,331,304



































 Cash Net Operating Income (Cash NOI)


































Net Operating Income



$658,986



$635,734



$657,680




$1,294,720



$1,331,304


















 Straight-line rental revenue



(14,105)



(6,530)



(17,127)




(20,635)



(35,734)

 Straight-line rental expense



(2,609)



3,646



7,069




1,037



13,819

 Above- and below-market rent amortization



196



335



1,857




531



3,994


















Cash Net Operating Income



$642,468



$633,185



$649,480




$1,275,653



$1,313,383

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,  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, 2022 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, 2022 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:

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, 2021 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.

SOURCE Digital Realty


These press releases may also interest you

at 11:43
Today, Questis, a workforce financial empowerment company, announces a targeted campaign to provide financial coaching to those affected by mass layoffs in the tech sector....

at 11:43
The famous Ukrainian Counter-Strike pro player Danylo 'Zeus' Teslenko joins the SIDUS GATES GameFi publisher inside the crypto metaverse. He signed a 10-year contract for the release of exclusive NFT collections. To celebrate this extraordinary...

at 11:35
CIBL, Inc. ("CIBL" or the "Company"; OTC Pink ®: CIBY) announces that at September 30, 2022, CIBL held $23.7 million in liquid assets or $1,817 per share, based on the 13,042 shares outstanding at that date, and 10,000 shares of Solix Inc., a private...

at 11:34
Bradley Arant Boult Cummings LLP is pleased to announce that Jera L. Bradshaw has joined the firm's Dallas office as counsel in the Banking & Financial Services Practice Group. Ms. Bradshaw brings more than 13 years of experience advising banks and...

at 11:31
As part of Hallmark Channel's "Countdown to Christmas," the Channel and Warm Up America! have teamed up for the "Stitched with Love" initiative to create beautiful cozy blankets to donate to women's domestic violence shelters. The Channel has also...

at 11:30
Merkle Science, a predictive web3 risk and intelligence platform, today announced a partnership with Polarys, providers of membership-based NFTs to businesses and individuals seeking to engage with web3 and blockchain for the first time. The...



News published on 28 july 2022 at 16:32 and distributed by: