Digital Realty Reports Third Quarter 2020 Results
SAN FRANCISCO, Oct. 29, 2020 /PRNewswire/ -- Digital Realty (NYSE: DLR), a leading global provider of cloud- and carrier-neutral data center, colocation and interconnection solutions, announced today financial results for the third quarter of 2020. All per-share results are presented on a fully-diluted share and unit basis.
Highlights
-- Reported net loss available to common stockholders of ($0.14) per share
in 3Q20, compared to net income available to common stockholders of
$0.24 in 3Q19
-- Reported FFO per share of $1.19 in 3Q20, compared to $1.59 in 3Q19
-- Reported core FFO per share of $1.54 in 3Q20, compared to $1.67 in 3Q19
-- Signed total bookings during 3Q20 expected to generate $89 million of
annualized GAAP rental revenue, including a $14 million contribution
from interconnection
-- Raised 2020 core FFO per share outlook from $6.00-$6.10 to $6.10-$6.15
Financial Results
Digital Realty reported revenues for the third quarter of 2020 of $1.0 billion, a 3% increase from the previous quarter and a 27% increase from the same quarter last year.
The company delivered third quarter of 2020 net loss of ($1) million, and a net loss available to common stockholders of ($37) million, or ($0.14) per diluted share, compared to $0.20 per diluted share in the previous quarter and $0.24 per diluted share in the same quarter last year.
Digital Realty generated third quarter of 2020 Adjusted EBITDA of $568 million, a 2% increase from the previous quarter and a 17% increase over the same quarter last year.
The company reported third quarter of 2020 funds from operations of $336 million, or $1.19 per share, compared to $1.49 per share in the previous quarter and $1.59 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 2020 core FFO per share of $1.54, unchanged from $1.54 per share in the previous quarter, and an 8% decrease from $1.67 per share in the same quarter last year.
Leasing Activity
In the third quarter, Digital Realty signed total bookings expected to generate $89 million of annualized GAAP rental revenue, including a $14 million contribution from interconnection.
"We delivered solid third-quarter results, driven by consistent execution and growth across the business," said Digital Realty Chief Executive Officer A. William Stein. "Our new logo growth and heightened deal velocity reflect the power of our global platform and the resiliency of our business. As we close out the year, we remain focused on delivering for our customers, maintaining our momentum, and investing in our global platform to support long-term growth."
The weighted-average lag between leases signed during the third quarter of 2020 and the contractual commencement date was seven months.
In addition to new leases signed, Digital Realty also signed renewal leases representing $161 million of annualized GAAP rental revenue during the quarter. Rental rates on renewal leases signed during the third quarter of 2020 rolled down 0.2% on a cash basis and up 0.4% on a GAAP basis.
New leases signed during the third quarter of 2020 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 $14,491 67,724 $214 6.1 $199
> 1 MW 12,340 99,141 124 9.6 107
Other (1) 62 1,394 45
Total $26,894 168,259 $160 15.7 $143
Europe (2)
0-1 MW $12,116 47,928 $253 4.1 $245
> 1 MW 19,715 117,021 168 12.4 133
Other (1) 281 1,056 266
Total $32,112 166,004 $193 16.5 $161
Asia Pacific (2)
0-1 MW $2,563 13,492 $190 1.0 $220
> 1 MW 13,476 73,238 184 9.0 125
Other (1) 93 2,733
Total $16,133 89,463 $180 10.0 $134
All Regions (2)
0-1 MW $29,171 129,144 $226 11.1 $218
> 1 MW 45,532 289,400 157 31.0 123
Other (1) 436 5,183 84
Total $75,138 423,726 $177 42.1 $148
Interconnection $13,576 N/A N/A N/A N/A
Grand Total $88,714 423,726 $177 42.1 $148
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, 2020.
Investment Activity
During the third quarter of 2020, Digital Realty closed on the previously announced acquisition of the freehold to the land under its Hanauer Landstraße campus in Frankfurt for EUR185 million, or approximately $217 million. The site includes nine Interxion data centers previously subject to leasehold agreements with approximately nine years of remaining lease term, along with Interxion's German headquarters office as well as several buildings currently leased to other customers. Interxion now owns the freehold to all 15 data centers on its Frankfurt campus.
During the third quarter of 2020, Digital Realty acquired Altus IT, the leading carrier-neutral data center provider in Croatia, for approximately EUR11 million, or approximately $13 million. Altus IT's highly-connected data center provides access to more than 100 customers, approximately 50 connectivity providers - including five tier-one carriers - and two main internet exchanges, establishing it as one of the most interconnected communities within Southeastern Europe.
Digital Realty also closed on the previously announced sale of a property in Gronigen, the Netherlands for EUR20 million, or approximately $23 million. The property is expected to generate 2020 cash net operating income of approximately EUR1.3 million, or approximately $1.6 million, representing a 6.7% cap rate.
During the third quarter of 2020, Digital Realty acquired the freehold to a parcel of land within approximately one kilometer of its existing campus in Vienna, Austria for EUR17 million, or approximately $19 million. The expansion parcel totals 22,000 square meters that will support the development of up to 40 megawatts of additional IT capacity. The parcel will be fully connected to the existing campus, the most highly connected in the Central and Eastern European region with 120 carriers, four Internet Exchanges and direct access to seven global cloud platforms.
Balance Sheet
Digital Realty completed the following financing transactions during the third quarter of 2020.
-- In early August, Digital Realty issued approximately 1.6 million shares
of common stock under the company's at-the-market equity offering
program at a weighted average price of $160.15 per share, generating
gross proceeds of approximately $249 million.
-- Also in early August, Digital Realty redeemed all $300 million of its
outstanding 3.625% notes due 2022 and all $500 million of its
outstanding 3.950% notes due 2022.
-- In early September, Digital Realty redeemed all $250 million of its
6.350% Series I preferred stock.
-- In late September, Digital Realty closed an offering of EUR750 million,
or approximately $880 million, of 1.0% Euro bonds due 2032 as well as
EUR300 million, or approximately $350 million, of floating rate notes
due 2022.
-- Likewise in late September, Digital Realty settled the remaining 9.775
million shares subject to the forward sale agreements originally entered
into during the third quarter of 2018, generating net proceeds of
approximately $1 billion.
-- Subsequent to quarter-end, Digital Realty redeemed all £300 million of
its 4.750% notes due 2023 as well as all $250 million of its 5.875%
Series G preferred stock.
Digital Realty had approximately $12.9 billion of total debt outstanding as of September 30, 2020, comprised of $12.7 billion of unsecured debt and approximately $0.2 billion of secured debt. At the end of the third quarter of 2020, net debt-to-Adjusted EBITDA was 5.6x, debt plus-preferred-to-total enterprise value was 25.0% and fixed charge coverage was 4.4x.
COVID-19
Throughout the COVID-19 global pandemic, Digital Realty's data centers around the world have remained fully operational in accordance with business continuity and pandemic response plans, prioritizing the health and safety of employees, customers and partners while ensuring service levels are maintained. Digital Realty data centers have been deemed essential operations, allowing for critical personnel to remain in place and continue to provide services and support for customers. Construction activity has been somewhat delayed in a few markets due to government restrictions in certain locations and/or limited availability of labor. In some instances, these delays have impacted scheduled delivery dates. We are monitoring the situation closely and remain in frequent communication with customers, contractors and suppliers. We have proactively managed our supply chain, and we believe we have acquired the vast majority of the equipment needed to complete our 2020 development activities. We believe we have ample liquidity to fund our business needs, given the $971 million of cash on the balance sheet and $2.5 billion of availability under our global revolving credit facilities as of September 30, 2020. While we have not experienced any significant business disruptions from the COVID-19 pandemic to date, we cannot predict what impact the COVID-19 pandemic may have on our future financial condition, results of operations or cash flows due to numerous uncertainties.
2020 Outlook
Digital Realty raised its 2020 core FFO per share outlook from $6.00-$6.10 to $6.10-$6.15. The assumptions underlying the outlook are summarized in the following table.
As of
As of
As of
Top-Line and Cost Structure
May 7, 2020
July 30, 2020 October 29, 2020
Total revenue
$3.725 - $3.825 billion
$3.775 - $3.825 billion
$3.850 - $3.875 billion
Net non-cash rent adjustments (1)
($20 - $30 million)
($20 - $30 million)
($20 - $30 million)
Adjusted EBITDA
$2.075 - $2.125 billion
$2.100 - $2.125 billion
$2.150 - $2.175 billion
G&A
$320 - $330 million
$320 - $330 million
$325 - $335 million
Internal Growth
Rental rates on renewal leases
Cash basis
Down low single-digits
Down low single-digits
Slightly negative
GAAP basis
Unchanged
Unchanged
Slightly positive
Year-end portfolio occupancy (2) 85.0% - 86.0% 85.0% - 86.0% 85.0% - 86.0%
"Same-capital" cash NOI growth (3)
(2.5%) - (3.5%)
(2.5%) - (3.5%)
(1.5%) - (2.5%)
Foreign Exchange Rates
U.S. Dollar / Pound Sterling
$1.20 - $1.25
$1.20 - $1.25
$1.20 - $1.30
U.S. Dollar / Euro
$1.05 - $1.10
$1.05 - $1.15
$1.10 - $1.15
External Growth
Dispositions
Dollar volume
$0.6 - $1.0 billion
$0.6 - $1.0 billion
$0.6 - $1.0 billion
Cap rate 0.0% - 12.0% 0.0% - 12.0% 0.0% - 12.0%
Development
CapEx (4)
$1.9 - $2.2 billion
$1.9 - $2.2 billion
$1.9 - $2.2 billion
Average stabilized yields 9.0% - 15.0% 9.0% - 15.0% 9.0% - 15.0%
Enhancements and other non-recurring CapEx (5)
$5 - $10 million
$5 - $10 million
$5 - $10 million
Recurring CapEx + capitalized leasing costs (6)
$220 - $230 million
$220 - $230 million
$200 - $210 million
Balance Sheet
Long-term debt issuance
Dollar amount
$1.9 billion
$2.5 billion
$3.7 billion
Pricing 1.00% 1.00% - 1.25% 1.00%
Timing
Early 2020
Early-to-mid 2020
Early-to-mid 2020
Net income per diluted share
$1.60 - $1.75
$1.20 - $1.25
$1.25 - $1.30
Real estate depreciation and (gain) / loss on sale
$3.50 - $3.50
$3.90 - $3.90
$3.90 - $3.90
Funds From Operations / share (NAREIT-Defined)
$5.10 - $5.25
$5.10 - $5.15
$5.15 - $5.20
Non-core expenses and revenue streams
$0.80 - $0.85
$0.90 - $0.95
$0.95 - $0.95
Core Funds From Operations / share
$5.90 - $6.10
$6.00 - $6.10
$6.10 - $6.15
Foreign currency translation adjustments
$0.05 - $0.15
$0.05 - $0.15
$0.00 - $0.15
Constant-Currency Core FFO / share
$5.95 - $6.25
$6.05 - $6.25
$6.10 - $6.30
(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) Reflects inclusion of the Interxion
portfolio, which was approximately
75% occupied as of September 30,
2020.
(3) The "same-capital"pool includes
properties owned as of December
31, 2018 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
2019-2020, properties classified
as held for sale, and properties
sold or contributed to joint
ventures for all periods
presented.
(4) Includes land acquisitions.
(5) 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.
(6) 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 29, 2020, 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 2020 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# 1657717 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 29, 2020. 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# 10148191. 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(TM) 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 more than 284 facilities in 48 metros across 23 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-20 30-Jun-20 31-Mar-20 31-Dec-19 30-Sep-19 30-Sep-20 30-Sep-19
Rental revenues $726,441 $698,041 $579,774 $549,733 $564,975 $2,004,256 $1,716,325
Tenant reimbursements - Utilities 155,111 141,576 113,520 107,518 114,719 410,207 323,697
Tenant reimbursements - Other 53,654 62,630 56,943 59,641 57,466 173,227 176,154
Interconnection & other 85,725 85,428 69,835 65,576 65,312 240,988 197,712
Fee income 3,687 4,353 2,452 4,814 3,994 10,492 6,840
Other 50 967 813 181 1,830 1,050
Total Operating Revenues $1,024,668 $992,995 $823,337 $787,463 $806,466 $2,841,000 $2,421,778
Utilities $177,925 $160,173 $129,526 $125,127 $132,565 $467,623 $380,297
Rental property operating 180,755 172,474 136,182 129,034 126,866 489,411 386,120
Property taxes 39,732 45,071 42,123 42,541 38,255 126,926 117,052
Insurance 2,926 3,370 3,547 3,055 3,103 9,843 9,535
Depreciation & amortization 365,842 349,165 291,457 275,008 286,718 1,006,464 888,766
General & administration 90,431 90,649 62,266 53,540 49,862 243,346 154,156
Severance, equity acceleration, and legal expenses 920 3,642 1,272 1,130 123 5,834 2,271
Transaction and integration expenses 14,953 15,618 56,801 17,106 4,115 87,372 10,819
Impairment of investments in real estate 6,482 6,482 5,351
Other expenses 297 22 114 1,989 92 433 12,129
Total Operating Expenses $880,263 $840,184 $723,288 $648,530 $641,699 $2,443,734 $1,966,496
Operating Income $144,405 $152,811 $100,049 $138,933 $164,767 $397,266 $455,282
Equity in (loss) earnings of unconsolidated joint ventures (2,056) (7,632) (78,996) 11,157 (19,269) (88,684) (3,090)
Gain on sale / deconsolidation 10,410 304,801 267,651 315,211 67,497
Interest and other income (expense), net 4,348 22,163 (3,542) 10,734 16,842 22,969 55,266
Interest (expense) (89,499) (79,874) (85,800) (80,880) (84,574) (255,173) (272,177)
Income tax benefit (expense) (16,053) (11,490) (7,182) 1,731 (4,826) (34,725) (13,726)
Loss from early extinguishment of debt (53,007) (632) (5,366) (53,639) (39,157)
Net (Loss) / Income ($1,452) $75,978 $228,698 $349,326 $67,574 $303,225 $249,895
Net (income) loss attributable to noncontrolling interests 1,316 (1,147) (4,684) (13,042) (1,077) (4,515) (6,418)
Net Income Attributable to Digital Realty Trust, Inc. ($136) $74,831 $224,014 $336,284 $66,497 $298,710 $243,477
Preferred stock dividends, including undeclared dividends (20,712) (21,155) (21,155) (20,707) (16,670) (63,022) (54,283)
Issuance costs associated with redeemed preferred stock (16,520) (16,520) (11,760)
Net (Loss) / Income Available to Common Stockholders ($37,368) $53,676 $202,859 $315,577 $49,827 $219,168 $177,434
Weighted-average shares outstanding - basic 270,214,413 267,569,823 222,163,324 208,776,355 208,421,470 253,377,527 208,173,995
Weighted-average shares outstanding - diluted 270,214,413 270,744,408 224,474,295 210,286,278 209,801,771 256,362,579 209,199,535
Weighted-average fully diluted shares and units 281,523,515 278,719,109 232,753,630 218,901,078 218,755,597 264,401,464 218,280,351
Net (loss) / income per share - basic ($0.14) $0.20 $0.91 $1.51 $0.24 $0.86 $0.85
Net (loss) / income per share - diluted ($0.14) $0.20 $0.90 $1.50 $0.24 $0.85 $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-20 30-Jun-20 31-Mar-20 31-Dec-19 30-Sep-19 30-Sep-20 30-Sep-19
---
Net (Loss) / Income Available to Common Stockholders ($37,368) $53,676 $202,859 $315,577 $49,827 $219,167 $177,434
Adjustments:
Non-controlling interest operating partnership (1,000) 1,400 7,800 13,100 2,300 8,200 8,000
Real estate related depreciation & amortization (1) 358,619 342,334 286,517 271,371 283,090 987,470 877,869
Unconsolidated JV real estate related depreciation & amortization 19,213 17,123 19,923 21,631 13,612 56,259 31,086
(Gain) on real estate transactions (10,410) (304,801) (267,651) (315,211)
Impairment of investments in real estate 6,482 6,482 5,351
Funds From Operations $335,536 $414,533 $212,298 $354,028 $348,829 $962,367 $1,099,740
Funds From Operations - diluted $335,536 $414,533 $212,298 $354,028 $348,829 $962,367 $1,099,740
Weighted-average shares and units outstanding - basic 278,079 275,545 230,443 217,391 217,375 261,416 217,255
Weighted-average shares and units outstanding - diluted (2) 281,524 278,719 232,754 218,901 218,756 264,401 218,280
Funds From Operations per share - basic $1.21 $1.50 $0.92 $1.63 $1.60 $3.68 $5.06
Funds From Operations per share - diluted (2) $1.19 $1.49 $0.91 $1.62 $1.59 $3.64 $5.04
Three Months Ended Nine Months Ended
--- ---
Reconciliation of FFO to Core FFO 30-Sep-20 30-Jun-20 31-Mar-20 31-Dec-19 30-Sep-19 30-Sep-20 30-Sep-19
---
Funds From Operations - diluted $335,536 $414,533 $212,298 $354,028 $348,829 $962,367 $1,099,740
Termination fees and other non-core revenues (3) (5,713) (21,908) (2,425) (5,634) (16,792) (30,046) (48,063)
Transaction and integration expenses 14,953 15,618 56,801 17,106 4,115 87,372 10,819
Loss from early extinguishment of debt 53,007 632 5,366 53,639 39,157
Issuance costs associated with redeemed preferred stock 16,520 16,520 11,760
Severance, equity acceleration, and legal expenses (4) 920 3,642 1,272 1,130 123 5,834 2,271
(Gain) / Loss on FX revaluation 10,312 17,526 81,288 (10,422) 23,136 109,126 28,489
(Gain) on contribution to unconsolidated JV, net of related tax (58,497)
Other non-core expense adjustments 6,697 22 5,509 (1,511) 92 12,228 12,129
Core Funds From Operations - diluted $432,232 $429,433 $355,375 $354,697 $364,869 $1,217,040 $1,097,805
Weighted-average shares and units outstanding - diluted (2) 281,524 278,719 232,754 218,901 218,756 264,401 218,280
Core Funds From Operations per share - diluted (2) $1.54 $1.54 $1.53 $1.62 $1.67 $4.60 $5.03
(1) Real Estate Related Depreciation & Amortization
Three Months Ended Nine Months Ended
--- ---
30-Sep-20 30-Jun-20 31-Mar-20 31-Dec-19 30-Sep-19 30-Sep-20 30-Sep-19
Depreciation & amortization per income statement $365,842 $349,165 $291,457 $275,008 $286,718 1,006,464 888,766
Non-real estate depreciation (7,223) (6,831) (4,940) (3,637) (3,628) (18,994) (10,897)
Real Estate Related Depreciation & Amortization $358,619 $342,334 $286,517 $271,371 $283,090 $987,470 $877,869
(2) For all periods presented, we have
excluded the effect of dilutive
series C, series G, series H,
series I, 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 G,
series H, series I, 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 definition section.
(3) Includes lease termination fees and
certain other adjustments that are
not core to our business.
(4) Relates to severance and other
charges related to the departure of
company executives and integration-
related severance.
Adjusted Funds From Operations (AFFO)
Unaudited and in Thousands, Except Per Share Data
Three Months Ended Nine Months Ended
--- ---
Reconciliation of Core FFO to AFFO 30-Sep-20 30-Jun-20 31-Mar-20 31-Dec-19 30-Sep-19 30-Sep-20 30-Sep-19
---
Core FFO available to common stockholders and unitholders $432,232 $429,433 $355,375 $354,697 $364,869 $1,217,040 $1,097,805
Adjustments:
Non-real estate depreciation 7,223 6,831 4,940 3,637 3,628 18,994 10,897
Amortization of deferred financing costs 3,655 3,661 4,260 3,064 2,900 11,576 10,298
Amortization of debt discount/premium 987 1,011 943 612 466 2,941 1,741
Non-cash stock-based compensation expense 15,969 15,060 12,153 8,937 8,906 43,182 25,966
Straight-line rental revenue (10,017) (10,928) (15,404) (13,994) (12,764) (36,349) (41,776)
Straight-line rental expense 3,934 7,373 1,460 (342) (209) 12,767 1,342
Above- and below-market rent amortization 2,360 3,794 3,294 4,109 2,824 9,448 12,988
Deferred tax expense 6,421 (150) (792) (998) (1,418) 5,479 (17,794)
Leasing compensation & internal lease commissions (1) 6,052 1,739 2,793 3,646 3,254 10,584 10,860
Recurring capital expenditures (2) (53,683) (38,796) (34,677) (54,731) (48,408) (127,156) (125,982)
AFFO available to common stockholders and unitholders (3) $415,133 $419,028 $334,345 $308,637 $324,048 $1,168,506 $986,345
Weighted-average shares and units outstanding - basic 278,079 275,545 230,443 217,391 217,375 261,416 217,255
Weighted-average shares and units outstanding - diluted (4) 281,524 278,719 232,754 218,901 218,756 264,401 218,280
AFFO per share - diluted (4) $1.47 $1.50 $1.44 $1.41 $1.48 $4.42 $4.52
Dividends per share and common unit $1.12 $1.12 $1.12 $1.08 $1.08 $3.36 $3.24
Diluted AFFO Payout Ratio 76.0% 74.5% 78.0% 76.6% 72.9% 76.0% 71.7%
Three Months Ended Nine Months Ended
--- ---
Share Count Detail 30-Sep-20 30-Jun-20 31-Mar-20 31-Dec-19 30-Sep-19 30-Sep-20 30-Sep-19
---
Weighted Average Common Stock and Units Outstanding 278,079 275,545 230,443 217,391 217,375 261,416 217,255
Add: Effect of dilutive securities 3,445 3,174 2,311 1,510 1,381 2,985 1,025
Weighted Avg. Common Stock and Units Outstanding - diluted 281,524 278,719 232,754 218,901 218,756 264,401 218,280
(1) The company adopted ASC 842 in the
first quarter of 2019.
(2) 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.
(3) 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.
(4) For all periods presented, we have
excluded the effect of dilutive
series C, series G, series H,
series I, 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 G, series H,
series I, 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-20 30-Jun-20 31-Mar-20 31-Dec-19 30-Sep-19
Assets
Investments in real estate:
Real estate $22,125,486 $20,843,273 $20,477,290 $16,886,592 $16,407,080
Construction in progress 2,328,654 2,514,324 2,204,869 1,732,555 1,647,130
Land held for future development 198,536 175,209 137,447 147,597 150,265
Investments in real estate $24,652,676 $23,532,806 $22,819,606 $18,766,744 $18,204,475
Accumulated depreciation and amortization (5,250,140) (4,945,534) (4,694,713) (4,536,169) (4,298,629)
Net Investments in Properties $19,402,536 $18,587,272 $18,124,893 $14,230,575 $13,905,846
Investment in unconsolidated joint ventures 1,059,978 1,033,235 1,064,009 1,287,109 1,035,861
Net Investments in Real Estate $20,462,514 $19,620,507 $19,188,902 $15,517,684 $14,941,707
Cash and cash equivalents $971,305 $505,174 $246,480 $89,817 $7,190
Accounts and other receivables (1) 585,506 542,750 527,699 305,501 304,712
Deferred rent 510,627 496,684 484,179 478,744 471,516
Customer relationship value, deferred leasing costs & other intangibles, net 3,106,414 3,128,140 3,500,588 2,195,324 2,245,017
Acquired above-market leases, net 50,080 57,535 66,033 74,815 84,315
Goodwill 8,012,256 7,791,522 7,466,046 3,363,070 3,338,168
Assets associated with real estate held for sale 10,981 229,934 967,527
Operating lease right-of-use assets (2) 1,363,285 1,375,427 1,364,621 628,681 634,085
Other assets 373,346 333,916 268,752 184,561 178,528
Total Assets $35,435,333 $33,862,636 $33,113,300 $23,068,131 $23,172,765
Liabilities and Equity
Global unsecured revolving credit facilities $124,082 $64,492 $603,101 $234,105 $1,833,512
Unsecured term loans 512,642 799,550 771,425 810,219 796,232
Unsecured senior notes, net of discount 11,999,170 11,268,753 10,637,006 8,973,190 8,189,138
Secured debt, net of premiums 238,866 238,826 239,800 104,934 105,153
Operating lease liabilities (2) 1,444,060 1,451,152 1,431,292 693,539 699,381
Accounts payable and other accrued liabilities 2,187,025 1,828,288 1,732,318 1,007,761 938,740
Accrued dividends and distributions 571 234,620
Acquired below-market leases 135,263 139,851 145,208 148,774 153,422
Security deposits and prepaid rent 353,902 348,253 336,583 208,724 203,708
Liabilities associated with assets held for sale 238 2,700 23,534
Total Liabilities $16,995,581 $16,139,403 $15,896,733 $12,418,566 $12,942,820
Redeemable non-controlling interests - operating partnership 41,265 40,584 40,027 41,465 19,090
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 $219,250 $219,250
Series G Cumulative Redeemable Preferred Stock (4) 241,468 241,468 241,468 241,468
Series I Cumulative Redeemable Preferred Stock (5) 242,012 242,012 242,012 242,012
Series J Cumulative Redeemable Preferred Stock (6) 193,540 193,540 193,540 193,540 193,540
Series K Cumulative Redeemable Preferred Stock (7) 203,264 203,264 203,264 203,264 203,264
Series L Cumulative Redeemable Preferred Stock (8) 334,886 334,886 334,886 334,886
Common Stock: $0.01 par value per share, 392,000,000 shares authorized (9) 2,784 2,670 2,622 2,073 2,069
Additional paid-in capital 20,566,645 19,292,311 18,606,766 11,577,320 11,540,980
Dividends in excess of earnings (3,726,901) (3,386,525) (3,139,350) (3,046,579) (3,136,668)
Accumulated other comprehensive (loss), net (123,623) (358,349) (444,222) (87,922) (68,625)
Total Stockholders' Equity $17,669,845 $16,984,527 $16,460,236 $9,879,312 $9,437,290
Noncontrolling Interests
Noncontrolling interest in operating partnership $620,676 $633,831 $656,266 $708,163 $732,314
Noncontrolling interest in consolidated joint ventures 107,966 64,291 60,038 20,625 41,251
Total Noncontrolling Interests $728,642 $698,122 $716,304 $728,788 $773,565
Total Equity $18,398,487 $17,682,649 $17,176,540 $10,608,100 $10,210,855
Total Liabilities and Equity $35,435,333 $33,862,636 $33,113,300 $23,068,131 $23,172,765
Net of allowance for doubtful
accounts of $19,146 and $13,753
as of September 30, 2020 and
December 31, 2019,
(1) respectively.
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
(2) for additional information.
Series C Cumulative Redeemable
Perpetual Preferred Stock,
6.625%, $201,250 and $201,250
liquidation preference,
respectively ($25.00 per
share), 8,050,000 and 8,050,000
shares issued and outstanding
as of September 30, 2020 and
December 31, 2019,
(3) respectively.
Series
G Cumulative Redeemable
Preferred Stock, 5.875%, $0
(redeemed October 15, 2020,
reclassed to accounts payable
as of September 30, 2020 for
accounting purposes) and
$250,000 liquidation
preference, respectively
($25.00 per share), 0 and
10,000,000 shares issued and
outstanding as of September 30,
2020 and December 31, 2019,
(4) respectively.
Series
I Cumulative Redeemable
Preferred Stock, 6.350%, $0 and
$250,000 liquidation
preference, respectively
($25.00 per share), 0 and
10,000,000 shares issued and
outstanding as of September 30,
2020 and December 31, 2019,
(5) respectively.
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, 2020 and
December 31, 2019,
(6) respectively.
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, 2020 and
December 31, 2019,
(7) respectively.
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,
2020 and December 31, 2019,
(8) respectively.
Common Stock: 279,920,621 and
208,900,758 shares issued and
outstanding as of September 30,
2020 and December 31, 2019,
(9) 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 30-Sep-20 30-Jun-20 31-Mar-20 31-Dec-19 30-Sep-19
(EBITDA) (1)
Net (Loss) / Income Available to Common Stockholders ($37,368) $53,676 $202,859 $315,577 $49,827
Interest 89,499 79,874 85,800 80,880 84,574
Loss from early extinguishment of debt 53,007 632 5,366
Income tax (benefit) expense 16,053 11,490 7,182 (1,731) 4,826
Depreciation & amortization 365,842 349,165 291,457 275,008 286,718
EBITDA $487,033 $494,205 $587,930 $669,734 $431,311
Unconsolidated JV real estate related depreciation & amortization 19,213 17,123 19,923 21,631 13,612
Unconsolidated JV interest expense and tax expense 9,002 9,203 9,944 13,553 10,816
Severance, equity acceleration, and legal expenses 920 3,642 1,272 1,130 123
Transaction and integration expenses 14,953 15,618 56,801 17,106 4,115
(Gain) on sale / deconsolidation (10,410) (304,801) (267,651)
Impairment of investments in real estate 6,482
Other non-core adjustments, net 4,945 (3,404) 85,185 (13,886) 6,436
Non-controlling interests (1,316) 1,147 4,684 13,042 1,077
Preferred stock dividends, including undeclared dividends 20,712 21,155 21,155 20,707 16,670
Issuance costs associated with redeemed preferred stock 16,520
Adjusted EBITDA $568,054 $558,690 $482,093 $475,366 $484,160
(1)
For definitions and discussion of EBITDA and Adjusted EBITDA, see the definitions section.
Three Months Ended
---
Financial Ratios 30-Sep-20 30-Jun-20 31-Mar-20 31-Dec-19 30-Sep-19
Total GAAP interest expense $89,499 $79,874 $85,800 $80,880 $84,574
Capitalized interest 12,379 13,133 10,480 9,877 9,936
Change in accrued interest and other non-cash amounts 19,718 (38,478) 24,321 (30,564) 8,490
Cash Interest Expense (2) $121,596 $54,529 $120,601 $60,193 $103,000
Scheduled debt principal payments 57 125 210 163
Preferred dividends 20,712 21,155 21,155 20,707 16,670
Total Fixed Charges (3) $122,590 $114,219 $117,560 $111,674 $111,343
Coverage
Interest coverage ratio (4)
5.2x
5.6x
4.6x
4.7x
4.7x
---
Cash interest coverage ratio (5)
4.4x
9.1x
3.7x
6.7x
4.3x
---
Fixed charge coverage ratio (6)
4.4x
4.6x
3.8x
3.9x
4.0x
---
Cash fixed charge coverage ratio (7)
3.8x
6.8x
3.2x
5.2x
3.8x
---
Leverage
Debt to total enterprise value (8) (9) 22.8% 23.3% 23.8% 26.9% 27.1%
---
Debt plus preferred stock to total enterprise value (10) 25.0% 26.0% 26.6% 30.8% 29.9%
---
Pre-tax income to interest expense (11)
1.0x
2.0x
3.7x
5.3x
1.8x
---
Net Debt to Adjusted EBITDA (12)
5.6x
5.7x
6.6x
5.7x
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, scheduled debt principal
payments 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, scheduled
debt principal payments and
preferred dividends (including our
pro rata share of unconsolidated
joint venture fixed charges).
(8) Mortgage debt and other loans
divided by market value of 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
share of joint venture debt, less
cash and cash equivalents divided
by the product of Adjusted EBITDA
(inclusive of our share of joint
venture EBITDA), multiplied by
four
.
Definitions
Funds From Operations (FFO):
We calculate funds from operations, or FFO, in accordance with the standards established by the National Association of Real Estate Investment Trusts, or Nareit, in the Nareit Funds From Operations White Paper - 2018 Restatement. FFO represents net income (loss) (computed in accordance with GAAP), excluding 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) issuance costs associated with redeemed preferred stock, (v) severance, equity acceleration, and legal expenses, (vi) gain/loss on FX revaluation, (vii) gain on contribution to unconsolidated joint venture, net of related tax, and (viii) 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, (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, 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 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 JV debt, less unrestricted cash and cash equivalents divided by the product of Adjusted EBITDA (inclusive of our share of 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, 2020, GAAP interest expense was $89 million, capitalized interest was $12 million and scheduled debt principal payments and preferred dividends was $21 million.
Reconciliation of Net Operating Income (NOI) Three Months Ended Nine Months Ended
(in thousands) 30-Sep-20 30-Jun-20 30-Sep-19 30-Sep-20 30-Sep-19
---
Operating income $144,405 $152,811 $164,767 $397,266 $455,282
Fee income (3,687) (4,353) (3,994) (10,492) (6,840)
Other income (50) (967) (1,830) (1,050)
Depreciation and amortization 365,842 349,165 286,718 1,006,464 888,766
General and administrative 90,431 90,649 49,862 243,346 154,156
Severance, equity acceleration, and legal expenses 920 3,642 123 5,834 2,271
Transaction expenses 14,953 15,618 4,115 87,372 10,819
Impairment in investments in real estate 6,482 6,482 5,351
Other expenses 297 22 92 433 12,129
Net Operating Income $619,593 $606,587 $501,683 $1,734,875 $1,520,884
Cash Net Operating Income (Cash NOI)
Net Operating Income $619,593 $606,587 $501,683 $1,734,875 $1,520,884
Straight-line rental revenue (9,215) (10,713) (12,673) (33,321) (42,208)
Straight-line rental expense 3,674 7,296 (192) 12,465 1,381
Above- and below-market rent amortization 2,360 3,794 2,824 9,447 12,988
Cash Net Operating Income $616,412 $606,964 $491,642 $1,723,466 $1,493,045
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 expected investment and expansion activity, COVID-19, 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, 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, 2020 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, 2020 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;
-- information security and data privacy breaches;
-- difficulty managing an international business and acquiring or operating
properties in foreign jurisdictions and unfamiliar metropolitan areas;
-- our failure to realize the intended benefits from, or disruptions to our
plans and operations or unknown or contingent liabilities related to,
our recent acquisitions;
-- our failure to successfully integrate and operate acquired or developed
properties or businesses;
-- difficulties in identifying properties to acquire and completing
acquisitions;
-- risks related to joint venture investments, including as a result of our
lack of control of such investments;
-- risks associated with using debt to fund our business activities,
including re-financing and interest rate risks, our failure to repay
debt when due, adverse changes in our credit ratings or our breach of
covenants or other terms contained in our loan facilities and
agreements;
-- our failure to obtain necessary debt and equity financing, and our
dependence on external sources of capital;
-- financial market fluctuations and changes in foreign currency exchange
rates;
-- adverse economic or real estate developments in our industry or the
industry sectors that we sell to, including risks relating to decreasing
real estate valuations and impairment charges and goodwill and other
intangible asset impairment charges;
-- our inability to manage our growth effectively;
-- losses in excess of our insurance coverage;
-- our inability to attract and retain talent;
-- impact on our operations and on the operations of our customers,
suppliers and business partners during a pandemic, such as COVID-19;
-- 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, 2019, our quarterly reports on Form 10-Q for the quarters ended June 30, 2020 and other filings with the 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, Turn-Key Flex and Powered Base Building are registered trademarks and service marks of Digital Realty Trust, Inc. in the United States and/or other countries.
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