Digital Realty Reports Fourth Quarter 2023 Results
AUSTIN, Texas, Feb. 15, 2024 /PRNewswire/ -- Digital Realty (NYSE: DLR), the largest global provider of cloud- and carrier-neutral data center, colocation, and interconnection solutions, announced today financial results for the fourth quarter of 2023. All per share results are presented on a fully diluted basis.
Highlights
-- Reported net income available to common stockholders of $0.08 per share
in 4Q23, compared to ($0.02) in 4Q22
-- Reported FFO per share of $1.53 in 4Q23, compared to $1.45 in 4Q22
-- Reported Core FFO per share of $1.63 in 4Q23, compared to $1.65 in 4Q22
-- Reported Constant-Currency Core FFO per share of $1.62 in 4Q23 and $6.57
per share for the twelve months ended December 31, 2023
-- Reported "Same-Capital" cash NOI growth of 9.9% in 4Q23
-- Reported rental rate increases on renewal leases of 8.2% on a cash basis
in 4Q23
-- Signed total bookings during 4Q23 that are expected to generate $110
million of annualized GAAP rental revenue, including a $39 million
contribution from the 0-1 megawatt category and $13 million contribution
from interconnection
-- Introduced 2024 Core FFO per share outlook of $6.60 - $6.75
Financial Results
Digital Realty reported revenues of $1.4 billion in the fourth quarter of 2023, a 2% decrease from the previous quarter and an 11% increase from the same quarter last year.
The company delivered net income of $20 million in the fourth quarter of 2023, and net income available to common stockholders of $18 million, or $0.08 per diluted share, compared to $2.33 per diluted share in the previous quarter and ($0.02) per diluted share in the same quarter last year.
Digital Realty generated Adjusted EBITDA of $700 million in the fourth quarter of 2023, a 2% increase from the previous quarter and 9% increase over the same quarter last year.
The company reported Funds From Operations (FFO) of $484 million in the fourth quarter of 2023, or $1.53 per share, compared to $1.55 per share in the previous quarter and $1.45 per share in the same quarter last year.
Excluding certain items that do not represent core expenses or revenue streams, Digital Realty delivered Core FFO per share of $1.63 in the fourth quarter of 2023, compared to $1.62 per share in the previous quarter and $1.65 per share in the same quarter last year. Digital Realty delivered Constant-Currency Core FFO per share of $1.62 for the fourth quarter of 2023 and $6.57 per share for the twelve-month period ended December 31, 2023.
"Our fourth quarter results marked the culmination of a transformative year for Digital Realty. We delivered on our strategic priorities and positioned the company for the growing opportunity that lies ahead," said Digital Realty President & Chief Executive Officer Andy Power. "During the fourth quarter, we bolstered and diversified our capital sources through the formation of two new development joint ventures, while continuing to evolve our portfolio to capture the tremendous opportunities created by AI."
Leasing Activity
In the fourth quarter, Digital Realty signed total bookings that are expected to generate $110 million of annualized GAAP rental revenue, including a $39 million contribution from the 0-1 megawatt category and a $13 million contribution from interconnection.
The weighted-average lag between new leases signed during the fourth quarter of 2023 and the contractual commencement date was 16 months.
In addition to new leases signed, Digital Realty also signed renewal leases representing $210 million of annualized rental revenue during the quarter. Rental rates on renewal leases signed during the fourth quarter of 2023 increased 8.2% on a cash basis and 10.6% on a GAAP basis.
New leases signed during the fourth quarter of 2023 are summarized by region and product as follows:
Annualized GAAP
Base Rent Square Feet GAAP Base Rent GAAP Base Rent
Americas (in thousands) (in
thousands) per Square Foot Megawatts per Kilowatt
0-1 MW $13,068 57 $228 4.5 $241
> 1 MW 7,520 66 115 3.9 160
Other (1) 300 5 62
Total $20,887 128 $163 8.4 $204
EMEA (2)
0-1 MW $17,189 87 $198 6.3 $226
> 1 MW 44,669 306 146 25.7 145
Other (1) 49 2 28
Total $61,908 395 $157 32.0 $161
Asia Pacific (2)
0-1 MW $9,225 27 $343 2.8 $273
> 1 MW 4,453 28 158 3.0 124
Other (1) 128 4 30
Total $13,806 59 $233 5.8 $196
All Regions (2)
0-1 MW $39,482 171 $231 13.7 $241
> 1 MW 56,642 400 142 32.6 145
Other (1) 477 11 44
Total $96,601 582 $166 46.3 $173
Interconnection $13,483 N/A N/A N/A N/A
Grand Total $110,084 582 $166 46.3 $173
Note: Totals may not foot due to rounding differences.
(1) Other includes Powered Base Building(R) shell capacity as well as storage and office space within fully improved data center facilities.
(2) Based on quarterly average exchange rates during the three months ended December 31, 2023.
Investment Activity
During the fourth quarter, Digital Realty signed definitive agreements with Brookfield Infrastructure Partners L.P., Cyxtera Technologies and Digital Core REIT to successfully resolve the relationship with Cyxtera. These agreements were completed in conjunction with Brookfield's announced agreement to acquire Cyxtera, pursuant to its Plan of Reorganization under its Chapter 11 proceedings. As part of the agreements, Brookfield would acquire Digital Realty's interest in four data centers for approximately $275 million, Digital Realty would redeploy $55 million to buy out Cyxtera's leases in three Digital Realty data centers in Singapore and Frankfurt, Brookfield would grant Digital Realty a purchase option to acquire a data center outside of London, UK, Brookfield would assume the leases in three data centers previously leased to Cyxtera, and Brookfield would amend the leases in these three data centers in New Jersey and Los Angeles, accelerating the expiration date to September 2024. Subsequent to year end, Digital Realty closed on the transactions and exercised its purchase option to acquire the data center outside of London, UK, which is expected to close at the end of the first quarter.
As previously disclosed, in mid-November, Digital Realty and Realty Income Corporation established a joint venture to support the development of two build-to-suit data centers in Northern Virginia. Realty Income initially invested approximately $200 million to acquire an 80% equity interest in the venture, while Digital Realty maintains a 20% interest. Each partner will fund its pro rata share of the remaining development costs for the two facilities. The build-to-suit facilities are 100% pre-leased and are expected to generate a 6.9% initial cash lease yield upon lease commencement in mid-2024.
Also previously disclosed, in December, Digital Realty and Blackstone Inc. announced a $7 billion joint venture to develop four hyperscale data center campuses across Frankfurt, Paris and Northern Virginia. The campuses are planned to support the construction of 10 data centers with approximately 500 megawatts of potential IT load capacity. Blackstone will initially invest approximately $700 million to acquire an 80% equity interest in the joint venture, while Digital Realty maintains a 20% interest. Digital Realty will manage the development and day-to-day operations of the joint venture, for which it will receive customary fees. Subsequent to year end, the first phase of the joint venture closed on hyperscale data center campuses in Paris and Northern Virginia, while the second phase is scheduled to close later this year, upon obtaining the required regulatory approvals.
Additionally, Digital Realty completed the sale of an option maintained on a second parcel of land in Sydney, Australia with an area of 21 acres for approximately AU$29 million or $20 million.
Further during the fourth quarter, Digital Realty exercised its option to purchase approximately 19 acres of land (PAR 8 - 11) in Paris, France for approximately EUR70 million or $77 million. The parcel of land, previously leased to Digital Realty, is currently under development to support up to 77 megawatts of IT load. Subsequent to year end, Digital Realty closed on PAR 8 - 11.
In addition, during the fourth quarter, Digital Realty closed on the acquisition of approximately three acres adjacent to its existing campus near Athens, Greece for approximately EUR6 million or $6 million. This land can support the development of an additional data center (ATH5) with up to 15 megawatts of IT load.
Subsequent to year end, GI Partners executed its option to acquire an additional 15% interest in two stabilized hyperscale data center buildings in Chicago, increasing their interest from the 65% interest acquired in the third quarter to 80%. The top-up, completed at the same terms as the initial closing, resulted in approximately $68 million of gross proceeds to Digital Realty.
Balance Sheet
Digital Realty had approximately $17.4 billion of total debt outstanding as of December 31, 2023, comprised of $16.8 billion of unsecured debt and approximately $0.6 billion of secured debt and other. At the end of the fourth quarter of 2023, net debt-to-Adjusted EBITDA was 6.2x, debt-plus-preferred-to-total enterprise value was 29.8% and fixed charge coverage was 3.8x. Pro forma for the completion of the Blackstone development joint ventures announced in December 2023, the completion of asset sales, and the issuance of common stock subsequent to year end, net debt-to-Adjusted EBITDA was 5.8x.
During the quarter, Digital Realty sold 8.7 million shares of its common stock at a weighted average price of $133.21 per share through its ATM program, for net proceeds of approximately $1.1 billion. Subsequent to year end, the company sold 0.6 million shares of its common stock at a weighted average price of $133.43 per share for net proceeds of approximately $84 million.
Subsequent to year end, the company retired $240 million of the $740 million U.S. dollar term loan.
2024 Outlook
Digital Realty introduced its 2024 Core FFO per share and Constant-Currency Core FFO per share outlooks of $6.60 - $6.75. The assumptions underlying the outlook are summarized in the following table.
As of
Top-Line and Cost Structure February 15, 2024
Total revenue
$5.550 - $5.650 billion
Net non-cash rent adjustments (1) ($35 -$40 million)
Adjusted EBITDA
$2.800 - $2.900 billion
G&A
$450 - $460 million
Internal Growth
Rental rates on renewal leases
Cash basis 4.0% - 6.0%
GAAP basis 6.0% - 8.0%
Year-end portfolio occupancy +100 -200 bps
"Same-Capital" cash NOI growth (2) 2.0% - 3.0%
Foreign Exchange Rates
U.S. Dollar / Pound Sterling
$1.25 - $1.30
U.S. Dollar / Euro
$1.05 - $1.10
External Growth
Dispositions / Joint Venture Capital
Dollar volume
$1,000 - $1,500 million
Cap rate 6.0% - 8.0%
Development
CapEx (Net of Partner Contributions) (3)
$2,000 - $2,500 million
Average stabilized yields
10.0%+
Enhancements and other non-recurring CapEx (4)
$15 - $20 million
Recurring CapEx + capitalized leasing costs (5)
$260 - $275 million
Balance Sheet
Long-term debt issuance
Dollar amount
$0 - $1,000 million
Pricing 5.0% - 5.5%
Timing
Mid-Year
Net income per diluted share
$1.80 - $1.95
Real estate depreciation and (gain) / loss on sale
$4.40 - $4.40
Funds From Operations / share (NAREIT-Defined)
$6.20 - $6.35
Non-core expenses and revenue streams
$0.40 - $0.40
Core Funds From Operations / share
$6.60 - $6.75
Foreign currency translation adjustments
$0.00 - $0.00
Constant-Currency Core Funds From Operations / share
$6.60 - $6.75
(1) Net non-cash rent adjustments represent the sum of straight-line rental revenue and straight-line rental expense, as well as the amortization of
above- and below-market leases (i.e., ASC 805 adjustments).
(2) The "Same-Capital" pool includes properties owned as of December 31, 2022 with less than 5% of total rentable square feet under development. It
excludes properties that were undergoing, or were expected to undergo, development activities in 2023-2024, properties classified as held for sale,
and properties sold or contributed to joint ventures for all periods presented.
(3)
Excludes land acquisitions and includes Digital Realty's share of JV contributions. Figure is net of JV partner contributions.
(4) Other non-recurring CapEx represents costs incurred to enhance the capacity or marketability of operating properties, such as network fiber initiatives
and software development costs.
(5) Recurring CapEx represents non-incremental improvements required to maintain current revenues, including second-generation tenant improvements and
leasing commissions.
Note: The Company does not provide a reconciliation for non-GAAP estimates on a forward-looking basis, where it is unable to provide a meaningful or accurate calculation or estimation of reconciling items and the information is not available without unreasonable effort. Please see Non-GAAP Financial Measures in this document for further discussion.
Non-GAAP Financial Measures
This document contains non-GAAP financial measures, including FFO, Core FFO, Adjusted FFO, Net Operating Income (NOI), "Same-Capital" Cash NOI and Adjusted EBITDA. A reconciliation from U.S. GAAP net income available to common stockholders to FFO, a reconciliation from FFO to Core FFO, a reconciliation from Core FFO to Adjusted FFO, reconciliation from NOI to Cash NOI, and definitions of FFO, Core FFO, Adjusted FFO, NOI and "Same-Capital" Cash NOI are included as an attachment to this document. A reconciliation from U.S. GAAP net income available to common stockholders to Adjusted EBITDA, a definition of Adjusted EBITDA and definitions of net debt-to-Adjusted EBITDA, debt-plus-preferred-to-total enterprise value, cash NOI, and fixed charge coverage ratio are included as an attachment to this document.
The Company does not provide a reconciliation for non-GAAP estimates on a forward-looking basis, where it is unable to provide a meaningful or accurate calculation or estimation of reconciling items and the information is not available without unreasonable effort. This is due to the inherent difficulty of forecasting the timing and/or amount of various items that would impact net income attributable to common stockholders per diluted share, which is the most directly comparable forward-looking GAAP financial measure. This includes, for example, external growth factors, such as dispositions, and balance sheet items such as debt issuances, that have not yet occurred, are out of the Company's control and/or cannot be reasonably predicted. For the same reasons, the Company is unable to address the probable significance of the unavailable information. Forward-looking non-GAAP financial measures provided without the most directly comparable GAAP financial measures may vary materially from the corresponding GAAP financial measures.
Investor Conference Call
Prior to Digital Realty's investor conference call at 5:00 p.m. ET / 4:00 p.m. CT on February 15, 2024, a presentation will be posted to the Investors section of the company's website at https://investor.digitalrealty.com. The presentation is designed to accompany the discussion of the company's fourth quarter 2023 financial results and operating performance. The conference call will feature President & Chief Executive Officer Andy Power and Chief Financial Officer Matt Mercier.
To participate in the live call, investors are invited to dial +1 (888) 317-6003 (for domestic callers) or +1 (412) 317-6061 (for international callers) and reference the conference ID# 0216634 at least five minutes prior to start time. A live webcast of the call will be available via the Investors section of Digital Realty's website at https://investor.digitalrealty.com.
Telephone and webcast replays will be available after the call until March 15, 2024. The telephone replay can be accessed by dialing +1 (877) 344-7529 (for domestic callers) or +1 (412) 317-0088 (for international callers) and providing the conference ID# 4147003. The webcast replay can be accessed on Digital Realty's website.
About Digital Realty
Digital Realty brings companies and data together by delivering the full spectrum of data center, colocation, and interconnection solutions. PlatformDIGITAL®, the company's global data center platform, provides customers with a secure data meeting place and a proven Pervasive Datacenter Architecture (PDx®) solution methodology for powering innovation and efficiently managing Data Gravity challenges. Digital Realty gives its customers access to the connected data communities that matter to them with a global data center footprint of 300+ facilities in 50+ metros across 25+ countries on six continents. To learn more about Digital Realty, please visit digitalrealty.com or follow us on LinkedIn and X.
Contact Information
Matt Mercier
Chief Financial Officer
Digital Realty
(737) 281-0101
Jordan Sadler / Jim Huseby
Investor Relations
Digital Realty
(737) 281-0101
Consolidated Quarterly Statements of Operations
Financial Supplement
Unaudited and in Thousands, Except Per Share Data
Fourth Quarter 2023
Three Months Ended Twelve Months Ended
31-Dec- 30-Sep- 30-Jun- 31-Mar- 31-Dec- 31-Dec- 31-Dec-
23 23 23 23 22 23 22
Rental revenues $885,694 $886,960 $869,298 $870,975 $834,374 $3,512,926 $3,141,488
Tenant reimbursements - Utilities 316,634 335,477 330,416 317,148 247,725 1,299,676 941,891
Tenant reimbursements - Other 46,418 64,876 46,192 40,150 46,045 197,636 199,663
Interconnection & other 106,413 107,305 104,521 101,695 97,286 419,934 379,641
Fee income 14,330 7,819 14,908 7,868 7,508 44,926 24,506
Other 144 932 887 168 1,963 4,645
Total Operating Revenues $1,369,633 $1,402,437 $1,366,267 $1,338,724 $1,233,108 $5,477,061 $4,691,834
Utilities $366,083 $384,455 $374,934 $346,364 $268,561 $1,471,836 $1,005,070
Rental property operating 237,118 223,089 224,762 224,861 222,430 909,830 820,746
Property taxes 40,161 72,279 46,718 40,424 42,032 199,581 175,631
Insurance 3,794 4,289 4,385 4,355 4,578 16,823 16,114
Depreciation & amortization 420,475 420,613 432,573 421,198 430,130 1,694,859 1,577,933
General & administration 109,235 108,039 105,964 107,766 104,452 431,004 398,669
Severance, equity acceleration and legal expenses 7,565 2,682 3,652 4,155 15,980 18,054 23,498
Transaction and integration expenses 40,226 14,465 17,764 12,267 17,350 84,722 68,766
Provision for impairment 5,363 113,000 3,000 118,363 3,000
Other expenses 5,580 1,295 655 3,615 7,529 12,438
Total Operating Expenses $1,235,598 $1,344,206 $1,211,407 $1,161,388 $1,112,127 $4,952,600 $4,101,865
Operating Income $134,035 $58,231 $154,860 $177,335 $120,981 $524,461 $589,969
Equity in earnings / (loss) of unconsolidated joint ventures (29,955) (19,793) 5,059 14,897 (28,112) (29,791) (13,496)
Gain / (loss) on sale of investments (103) 810,688 89,946 (6) 900,531 176,754
Interest and other income / (expense), net 50,269 24,812 (6,930) 280 (22,894) 68,431 8,918
Interest (expense) (113,638) (110,767) (111,116) (102,220) (86,882) (437,741) (299,132)
Income tax benefit / (expense) (20,724) (17,228) (16,173) (21,454) 17,676 (75,579) (31,551)
Loss from early extinguishment of debt (51,135)
Net Income $19,884 $745,941 $115,647 $68,839 $763 $950,311 $380,327
Net income / (loss) attributable to noncontrolling interests 8,419 (12,320) 2,538 (111) 3,326 (1,474) (2,455)
Net Income Attributable to Digital Realty Trust, Inc. $28,304 $733,621 $118,185 $68,728 $4,089 $948,838 $377,872
Preferred stock dividends (10,181) (10,181) (10,181) (10,181) (10,181) (40,725) (40,725)
Net Income / (Loss) Available to Common Stockholders $18,122 $723,440 $108,003 $58,547 ($6,093) $908,113 $337,147
Weighted-average shares outstanding - basic 305,781 301,827 295,390 291,219 289,365 298,603 286,334
Weighted-average shares outstanding - diluted 314,995 311,341 306,819 303,065 301,712 309,065 297,919
Weighted-average fully diluted shares and units 321,173 317,539 313,021 309,026 307,546 315,113 303,708
Net income / (loss) per share - basic $0.06 $2.40 $0.37 $0.20 ($0.02) $3.04 $1.18
Net income / (loss) per share - diluted $0.08 $2.33 $0.37 $0.19 ($0.02) $3.00 $1.13
Funds From Operations and Core Funds From Operations
Unaudited and in Thousands, Except Per Share Data
Three Months Ended Twelve Months Ended
Reconciliation of Net Income to Funds From Operations (FFO) 31-Dec- 30-Sep- 30-Jun- 31-Mar- 31-Dec- 31-Dec- 31-Dec-
23 23 23 23 22 23 22
Net Income / (Loss) Available to Common Stockholders $18,122 $723,440 $108,003 $58,547 ($6,093) $908,112 $337,147
Adjustments:
Non-controlling interest in operating partnership 410 16,300 2,500 1,500 (586) 20,710 7,914
Real estate related depreciation & amortization (1) 410,167 410,836 424,044 412,192 422,951 1,657,239 1,547,865
Reconciling items related to non-controlling interests (15,377) (14,569) (14,144) (13,388) (13,856) (57,477) (22,110)
Unconsolidated JV real estate related depreciation & amortization 64,833 43,215 35,386 33,719 33,927 177,153 123,099
(Gain) / loss on real estate transactions 103 (810,688) (89,946) (7,825) 572 (908,356) (177,332)
Provision for impairment 5,363 113,000 3,000 118,363 3,000
Funds From Operations $483,621 $481,535 $465,844 $484,745 $439,915 $1,915,745 $1,819,583
Weighted-average shares and units outstanding - basic 311,960 308,024 301,593 297,180 295,199 304,651 292,123
Weighted-average shares and units outstanding - diluted (2)(3) 321,173 317,539 313,021 309,026 307,546 315,113 303,708
Funds From Operations per share - basic $1.55 $1.56 $1.54 $1.63 $1.49 $6.29 $6.23
Funds From Operations per share - diluted (2)(3) $1.53 $1.55 $1.52 $1.60 $1.45 $6.20 $6.03
Three Months Ended Twelve Months Ended
Reconciliation of FFO to Core FFO 31-Dec- 30-Sep- 30-Jun- 31-Mar- 31-Dec- 31-Dec- 31-Dec-
23 23 23 23 22 23 22
Funds From Operations $483,621 $481,535 $465,844 $484,745 $439,915 $1,915,745 $1,819,583
Other non-core revenue adjustments (146) (27) 27,454 (887) (3,786) 26,393 8,768
Transaction and integration expenses 40,226 14,465 17,764 12,267 17,350 84,722 68,766
Loss from early extinguishment of debt 51,135
Severance, equity acceleration and legal expenses (4) 7,565 2,682 3,652 4,155 15,980 18,054 23,498
(Gain) / Loss on FX revaluation (24,804) 451 (7,868) (6,778) 14,564 (39,000) (24,694)
Other non-core expense adjustments 1,956 1,295 655 3,615 3,905 12,388
Core Funds From Operations $508,417 $500,402 $507,501 $493,500 $487,638 $2,009,820 $1,959,444
Weighted-average shares and units outstanding - diluted (2)(3) 312,356 308,539 301,806 297,382 295,519 305,138 292,528
Core Funds From Operations per share - diluted (2) $1.63 $1.62 $1.68 $1.66 $1.65 $6.59 $6.70
(1) Real Estate Related Depreciation & Amortization
Three Months Ended Twelve Months Ended
31-Dec- 30-Sep- 30-Jun- 31-Mar- 31-Dec- 31-Dec- 31-Dec-
23 23 23 23 22 23 22
Depreciation & amortization per income statement $420,475 $420,613 $432,573 $421,198 $430,130 $1,694,859 $1,577,933
Non-real estate depreciation (10,308) (9,777) (8,529) (9,006) (7,179) (37,619) (30,068)
Real Estate Related Depreciation & Amortization $410,167 $410,836 $424,044 $412,192 $422,951 $1,657,239 $1,547,865
(2) Certain of Teraco's minority indirect shareholders have the right to put their shares in an upstream parent company of Teraco to Digital Realty in
exchange for cash or the equivalent value of shares of Digital Realty common stock, or a combination thereof. US GAAP requires Digital Realty to assume
the put right is settled in shares for purposes of calculating diluted EPS. This same approach was utilized to calculate FFO/share. The potential
future dilutive impact associated with this put right will be excluded from Core FFO and AFFO until settlement occurs - causing diluted share count to
be higher for FFO than for Core FFO and AFFO. When calculating diluted FFO, Teraco related minority interest is added back to the FFO numerator as the
denominator assumes all shares have been put back to Digital Realty.
Three Months Ended Twelve Months Ended
31-Dec- 30-Sep- 30-Jun- 31-Mar- 31-Dec- 31-Dec- 31-Dec-
23 23 23 23 22 23 22
Teraco noncontrolling share of FFO $7,135 $11,537 $9,645 $11,069 $7,213 $39,386 $11,919
Teraco related minority interest $7,135 $11,537 $9,645 $11,069 $7,213 $39,386 $11,919
(3) For all periods presented, we have excluded the effect of dilutive series J, series K and series L preferred stock, as applicable, that may be converted
into common stock upon the occurrence of specified change in control transactions as described in the articles supplementary governing the series J,
series K and series L preferred stock, as applicable, which we consider highly improbable. See above for calculations of FFO and the share count detail
section that follows the reconciliation of Core FFO to AFFO for calculations of weighted average common stock and units outstanding. For definitions
and discussion of FFO and Core FFO, see the Definitions section.
(4)
Relates to severance and other charges related to the departure of company executives and integration-related severance.
Adjusted Funds From Operations (AFFO)
Unaudited and in Thousands, Except Per Share Data
Three Months Ended Twelve Months Ended
Reconciliation of Core FFO to AFFO 31-Dec- 30-Sep- 30-Jun- 31-Mar- 31-Dec-
23 23 23 23 22 31-Dec-23 31-Dec-22
Core FFO available to common stockholders and unitholders $508,417 $500,402 $507,501 $493,500 $487,638 $2,009,820 $1,959,444
Adjustments:
Non-real estate depreciation 10,308 9,777 8,529 9,006 7,179 37,619 30,068
Amortization of deferred financing costs 5,744 5,776 5,984 4,072 3,753 21,575 13,987
Amortization of debt discount/premium 973 1,360 1,339 1,301 1,276 4,973 4,829
Non-cash stock-based compensation expense 9,226 14,062 13,893 13,056 16,042 50,238 62,242
Straight-line rental revenue (21,992) (14,080) (16,151) (16,194) (29,392) (68,417) (83,604)
Straight-line rental expense (4,999) 1,427 520 (515) (208) (3,567) 4,401
Above- and below-market rent amortization (856) (1,127) (1,195) (1,226) (762) (4,404) (696)
Deferred tax (benefit) / expense 33,448 (8,539) 1,339 (9,795) (4,885) 16,452 (12,491)
Leasing compensation & internal lease commissions 9,848 12,515 11,611 11,067 9,578 45,040 42,117
Recurring capital expenditures (1) (142,808) (90,251) (53,498) (40,465) (109,999) (327,022) (266,466)
AFFO available to common stockholders and unitholders (2) $407,306 $431,322 $479,873 $463,807 $380,220 $1,782,308 $1,753,831
Weighted-average shares and units outstanding - basic 311,960 308,024 301,593 297,180 295,199 304,651 292,123
Weighted-average shares and units outstanding - diluted (3) 312,356 308,539 301,806 297,382 295,519 305,138 292,528
AFFO per share - diluted (3) $1.30 $1.40 $1.59 $1.56 $1.29 $5.84 $6.00
Dividends per share and common unit $1.22 $1.22 $1.22 $1.22 $1.22 $4.88 $4.88
Diluted AFFO Payout Ratio 93.6 % 87.3 % 76.7 % 78.2 % 94.8 % 83.5 % 81.4 %
Three Months Ended Twelve Months Ended
Share Count Detail 31-Dec- 30-Sep- 30-Jun- 31-Mar- 31-Dec- 31-Dec- 31-Dec-
23 23 23 23 22 23 22
Weighted Average Common Stock and Units Outstanding 311,960 308,024 301,593 297,180 295,199 304,651 292,123
Add: Effect of dilutive securities 396 515 213 202 320 487 405
Weighted Avg. Common Stock and Units Outstanding - diluted 312,356 308,539 301,806 297,382 295,519 305,138 292,528
(1) Recurring capital expenditures represent non-incremental building improvements required to maintain current revenues, including second-generation
tenant improvements and external leasing commissions. Recurring capital expenditures do not include acquisition costs contemplated when underwriting
the purchase of a building, costs which are incurred to bring a building up to Digital Realty's operating standards, or internal leasing commissions.
(2) For a definition and discussion of AFFO, see the Definitions section. For a reconciliation of net income available to common stockholders to FFO and
Core FFO, see above.
(3) For all periods presented, we have excluded the effect of dilutive series J, series K and series L preferred stock, as applicable, that may be converted
into common stock upon the occurrence of specified change in control transactions as described in the articles supplementary governing the series J,
series K and series L preferred stock, as applicable, which we consider highly improbable. See above for calculations of FFO and for calculations of
weighted average common stock and units outstanding.
Consolidated Balance Sheets
Unaudited and in Thousands, Except Per Share Data
31-Dec-23 30-Sep-23 30-Jun-23 31-Mar-23 31-Dec-22
Assets
Investments in real estate:
Real estate $27,306,369 $25,887,031 $27,087,769 $27,052,022 $26,136,057
Construction in progress 4,635,215 5,020,464 4,635,939 4,563,578 4,789,134
Land held for future development 118,190 179,959 193,936 194,564 118,452
Investments in Real Estate $32,059,773 $31,087,453 $31,917,644 $31,810,164 $31,043,643
Accumulated depreciation and amortization (7,823,685) (7,489,193) (7,739,462) (7,600,559) (7,268,981)
Net Investments in Properties $24,236,089 $23,598,260 $24,178,182 $24,209,605 $23,774,662
Investment in unconsolidated joint ventures 2,295,889 2,180,313 2,040,452 1,995,576 1,991,426
Net Investments in Real Estate $26,531,977 $25,778,573 $26,218,634 $26,205,180 $25,766,088
Operating lease right-of-use assets,net $1,414,256 $1,274,410 $1,291,233 $1,317,293 $1,351,329
Cash and cash equivalents 1,625,495 1,062,050 124,519 131,406 141,773
Accounts and other receivables, net (1) 1,278,110 1,325,725 1,158,383 1,070,066 969,292
Deferred rent, net 624,427 586,418 613,796 627,700 601,590
Goodwill 9,239,871 8,998,074 9,148,603 9,199,636 9,208,497
Customer relationship value, deferred leasing costs & other intangibles, net 2,500,237 2,506,198 2,825,596 3,015,291 3,092,627
Assets held for sale 478,503 593,892
Other assets 420,382 401,068 414,078 386,495 353,802
Total Assets $44,113,257 $41,932,515 $42,388,735 $41,953,068 $41,484,998
Liabilities and Equity
Global unsecured revolving credit facilities, net $1,812,287 $1,698,780 $2,242,258 $2,514,202 $2,150,451
Unsecured term loans, net 1,560,305 1,524,663 1,548,780 1,542,275 797,449
Unsecured senior notes, net of discount 13,422,342 13,072,102 13,383,819 13,258,079 13,120,033
Secured and other debt, net of discount 630,973 574,231 554,594 560,955 528,870
Operating lease liabilities 1,542,094 1,404,510 1,420,239 1,443,994 1,471,044
Accounts payable and other accrued liabilities 2,168,983 2,147,103 2,214,820 1,923,819 1,868,884
Deferred tax liabilities, net 1,151,096 1,088,724 1,128,961 1,164,276 1,192,752
Accrued dividends and distributions 387,988 363,716
Security deposits and prepaid rents 401,867 385,521 417,693 392,021 369,654
Obligations associated with assets held for sale 39,001 4,990
Total Liabilities $23,116,936 $21,895,634 $22,916,155 $22,799,620 $21,862,853
Redeemable non-controlling interests 1,394,814 1,360,308 1,367,422 1,448,772 1,514,680
Equity
Preferred Stock: $0.01 par value per share, 110,000 shares authorized:
Series J Cumulative Redeemable Preferred Stock (2) $193,540 $193,540 $193,540 $193,540 $193,540
Series K Cumulative Redeemable Preferred Stock (3) 203,264 203,264 203,264 203,264 203,264
Series L Cumulative Redeemable Preferred Stock (4) 334,886 334,886 334,886 334,886 334,886
Common Stock: $0.01 par value per share, 392,000 shares authorized (5) 3,088 3,002 2,967 2,888 2,887
Additional paid-in capital 24,396,797 23,239,088 22,882,200 22,126,379 22,142,868
Dividends in excess of earnings (5,262,648) (4,900,757) (5,253,915) (4,995,982) (4,698,313)
Accumulated other comprehensive (loss), net (751,393) (882,996) (741,484) (652,486) (595,798)
Total Stockholders' Equity $19,117,535 $18,190,026 $17,621,456 $17,212,490 $17,583,334
Noncontrolling Interests
Noncontrolling interest in operating partnership $438,081 $441,366 $436,099 $444,843 $419,317
Noncontrolling interest in consolidated joint ventures 45,892 45,182 47,603 47,342 104,814
Total Noncontrolling Interests $483,972 $486,547 $483,702 $492,185 $524,131
Total Equity $19,601,507 $18,676,573 $18,105,158 $17,704,675 $18,107,465
Total Liabilities and Equity $44,113,257 $41,932,515 $42,388,735 $41,953,068 $41,484,998
(1)
Net of allowance for doubtful accounts of $41,204 and $33,048 as of December 31, 2023 and December 31, 2022, respectively.
(2) Series J Cumulative Redeemable Preferred Stock, 5.250%, $200,000 liquidation preference ($25.00 per share), 8,000 shares issued and outstanding as of
December 31, 2023 and December 31, 2022.
(3) Series K Cumulative Redeemable Preferred Stock, 5.850%, $210,000 liquidation preference ($25.00 per share), 8,400 shares issued and outstanding as of
December 31, 2023 and December 31, 2022.
(4) Series L Cumulative Redeemable Preferred Stock, 5.200%, $345,000 liquidation preference ($25.00 per share), 13,800 shares issued and outstanding as of
December 31, 2023 and December 31, 2022.
(5)
Common Stock: 311,608 and 291,148 shares issued and outstanding as of December 31, 2023 and December 31, 2022, respectively.
Reconciliation of Earnings Before Interest, Taxes, Depreciation & Amortization and Financial Ratios
Unaudited and Dollars in Thousands
Three Months Ended
Reconciliation of Earnings Before Interest, Taxes, Depreciation & Amortization (EBITDA) (1) 31-Dec- 30-Sep- 30-Jun- 31-Mar- 31-Dec-
23 23 23 23 22
Net Income / (Loss) Available to Common Stockholders $18,122 $723,440 $108,003 $58,547 ($6,093)
Interest 113,638 110,767 111,116 102,220 86,882
Income tax expense (benefit) 20,724 17,228 16,173 21,454 (17,676)
Depreciation & amortization 420,475 420,613 432,573 421,198 430,130
EBITDA $572,958 $1,272,048 $667,866 $603,420 $493,243
Unconsolidated JV real estate related depreciation & amortization 64,833 43,214 35,386 33,719 33,927
Unconsolidated JV interest expense and tax expense 42,140 27,000 32,105 18,556 53,481
Severance, equity acceleration and legal expenses 7,565 2,682 3,652 4,155 15,980
Transaction and integration expenses 40,226 14,465 17,764 12,267 17,350
(Gain) / loss on sale of investments 103 (810,688) (89,946) 6
Provision for impairment 5,363 113,000 3,000
Other non-core adjustments, net (35,439) 1,719 22,132 (14,604) 15,127
Non-controlling interests (8,419) 12,320 (2,538) 111 (3,326)
Preferred stock dividends 10,181 10,181 10,181 10,181 10,181
Adjusted EBITDA $699,509 $685,943 $696,604 $667,804 $638,969
(1) For definitions and discussion of EBITDA and Adjusted EBITDA, see the
Definitions section.
Three Months Ended
Financial Ratios 31-Dec- 30-Sep- 30-Jun- 31-Mar- 31-Dec-
23 23 23 23 22
Total GAAP interest expense $113,638 $110,767 $111,116 $102,220 $86,882
Capitalized interest 33,032 29,130 27,883 26,771 24,581
Change in accrued interest and other non-cash amounts (66,013) 44,183 (60,612) 38,137 (67,909)
Cash Interest Expense (2) $80,657 $184,081 $78,387 $167,128 $43,554
Preferred stock dividends 10,181 10,181 10,181 10,181 10,181
Total Fixed Charges (3) $156,851 $150,079 $149,181 $139,172 $121,645
Coverage
Interest coverage ratio (4) 4.0x 4.3x 4.5x 4.7x 5.3x
Cash interest coverage ratio (5) 6.4x 3.4x 7.4x 3.7x 11.9x
Fixed charge coverage ratio (6) 3.8x 4.1x 4.2x 4.4x 4.9x
Cash fixed charge coverage ratio (7) 5.8x 3.2x 6.6x 3.5x 10.0x
Leverage
Debt to total enterprise value (8)(9) 28.6 % 30.6 % 33.3 % 37.3 % 35.2 %
Debt-plus-preferred-stock-to-total-enterprise-value (9)(10) 29.8 % 32.0 % 34.7 % 38.9 % 36.8 %
Pre-tax income to interest expense (11) 1.2x 7.7x 2.0x 1.7x 1.0x
Net Debt-to-Adjusted EBITDA (12) 6.2x 6.3x 6.8x 7.1x 6.9x
(2) Cash interest expense is interest expense less amortization of debt discount and deferred financing fees and includes interest that we capitalized. We
consider cash interest expense to be a useful measure of interest as it excludes non-cash-based interest expense.
(3)
Fixed charges consist of GAAP interest expense, capitalized interest, and preferred stock dividends.
(4) Adjusted EBITDA divided by GAAP interest expense plus capitalized interest (including our pro rata share of unconsolidated joint venture interest
expense).
(5)
Adjusted EBITDA divided by cash interest expense (including our pro rata share of unconsolidated joint venture interest expense).
(6)
Adjusted EBITDA divided by fixed charges (including our pro rata share of unconsolidated joint venture fixed charges).
(7) Adjusted EBITDA divided by the sum of cash interest expense and preferred stock dividends (including our pro rata share of unconsolidated joint venture
cash fixed charges).
(8)
Total debt divided by market value of common equity plus debt plus preferred stock.
(9)
Total enterprise value defined as market value of common equity plus debt plus preferred stock.
(10)
Same as (8), except numerator includes preferred stock.
(11)
Calculated as net income plus interest expense divided by GAAP interest expense.
(12) Calculated as total debt at balance sheet carrying value, plus capital lease obligations, plus Digital Realty's pro rata share of unconsolidated joint
venture debt, less cash and cash equivalents (including Digital Realty's pro rata share of unconsolidated joint venture cash) divided by the product
of Adjusted EBITDA (including Digital Realty's pro rata share of unconsolidated joint venture EBITDA), multiplied by four.
Definitions
Funds From Operations (FFO):
We calculate funds from operations, or FFO, in accordance with the standards established by the National Association of Real Estate Investment Trusts, or Nareit, in the Nareit Funds From Operations White Paper - 2018 Restatement. FFO represents net income (loss) (computed in accordance with GAAP), excluding (i) gains (or losses) from real estate transactions, (ii) provision for impairment, real estate related depreciation and amortization (excluding amortization of deferred financing costs), (iii) unconsolidated JV real estate related depreciation & amortization, (iv) non-controlling interests in operating partnership, (v) depreciation related to non-controlling interests and (vi) after adjustments for unconsolidated partnerships and joint ventures. Management uses FFO as a supplemental performance measure because, in excluding real estate related depreciation and amortization and gains and losses from property dispositions and after adjustments for unconsolidated partnerships and joint ventures, it provides a performance measure that, when compared year over year, captures trends in occupancy rates, rental rates and operating costs. We also believe that, as a widely recognized measure of the performance of REITs, FFO will be used by investors as a basis to compare our operating performance with that of other REITs. However, because FFO excludes depreciation and amortization and captures neither the changes in the value of our data centers that result from use or market conditions, nor the level of capital expenditures and capitalized leasing commissions necessary to maintain the operating performance of our data centers, all of which have real economic effect and could materially impact our financial condition and results from operations, the utility of FFO as a measure of our performance is limited. Other REITs may not calculate FFO in accordance with the Nareit definition and, accordingly, our FFO may not be comparable to other REITs' FFO. FFO should be considered only as a supplement to net income computed in accordance with GAAP as a measure of our performance.
Core Funds from Operations (Core FFO):
We present core funds from operations, or Core FFO, as a supplemental operating measure because, in excluding certain items that do not reflect core revenue or expense streams, it provides a performance measure that, when compared year over year, captures trends in our core business operating performance. We calculate Core FFO by adding to or subtracting from FFO (i) other non-core revenue adjustments, (ii) transaction and integration expenses, (iii) loss from early extinguishment of debt, (iv) gain on / issuance costs associated with redeemed preferred stock, (v) severance, equity acceleration and legal expenses, (vi) gain/loss on FX revaluation, and (vii) other non-core expense adjustments. Because certain of these adjustments have a real economic impact on our financial condition and results from operations, the utility of Core FFO as a measure of our performance is limited. Other REITs may calculate Core FFO differently than we do and accordingly, our Core FFO may not be comparable to other REITs' Core FFO. Core FFO should be considered only as a supplement to net income computed in accordance with GAAP as a measure of our performance.
Adjusted Funds from Operations (AFFO):
We present adjusted funds from operations, or AFFO, as a supplemental operating measure because, when compared year over year, it assesses our ability to fund dividend and distribution requirements from our operating activities. We also believe that, as a widely recognized measure of the operations of REITs, AFFO will be used by investors as a basis to assess our ability to fund dividend payments in comparison to other REITs, including on a per share and unit basis. We calculate AFFO by adding to or subtracting from Core FFO (i) non-real estate depreciation, (ii) amortization of deferred financing costs, (iii) amortization of debt discount/premium, (iv) non-cash stock-based compensation expense, (v) straight-line rental revenue, (vi) straight-line rental expense, (vii) above- and below-market rent amortization, (viii) deferred tax expense / (benefit), (ix) leasing compensation and internal lease commissions, and (x) recurring capital expenditures. Other REITs may calculate AFFO differently than we do and, accordingly, our AFFO may not be comparable to other REITs' AFFO. AFFO should be considered only as a supplement to net income computed in accordance with GAAP as a measure of our performance.
EBITDA and Adjusted EBITDA:
We believe that earnings before interest, loss from early extinguishment of debt, income taxes, and depreciation and amortization, or EBITDA, and Adjusted EBITDA (as defined below), are useful supplemental performance measures because they allow investors to view our performance without the impact of non-cash depreciation and amortization or the cost of debt and, with respect to Adjusted EBITDA, (i) unconsolidated joint venture real estate related depreciation & amortization, (ii) unconsolidated joint venture interest expense and tax, (iii) severance, equity acceleration and legal expenses, (iv) transaction and integration expenses, (v) gain (loss) on sale / deconsolidation, (vi) provision for impairment, (vii) other non-core adjustments, net, (viii) non-controlling interests, (ix) preferred stock dividends, and (x) issuance costs associated with redeemed preferred stock. Adjusted EBITDA is EBITDA excluding (i) unconsolidated joint venture real estate related depreciation & amortization, (ii) unconsolidated joint venture interest expense and tax, (iii) severance, equity acceleration and legal expenses, (iv) transaction and integration expenses, (v) gain (loss) on sale / deconsolidation, (vi) provision for impairment, (vii) other non-core adjustments, net, (vii) non-controlling interests, (ix) preferred stock dividends, and (x) gain on / issuance costs associated with redeemed preferred stock. In addition, we believe EBITDA and Adjusted EBITDA are frequently used by securities analysts, investors, and other interested parties in the evaluation of REITs. Because EBITDA and Adjusted EBITDA are calculated before recurring cash charges including interest expense and income taxes, exclude capitalized costs, such as leasing commissions, and are not adjusted for capital expenditures or other recurring cash requirements of our business, their utility as a measure of our performance is limited. Other REITs may calculate EBITDA and Adjusted EBITDA differently than we do and, accordingly, our EBITDA and Adjusted EBITDA may not be comparable to other REITs' EBITDA and Adjusted EBITDA. Accordingly, EBITDA and Adjusted EBITDA should be considered only as supplements to net income computed in accordance with GAAP as a measure of our financial performance.
Net Operating Income (NOI) and Cash NOI:
Net operating income, or NOI, represents rental revenue, tenant reimbursement revenue and interconnection revenue less utilities expense, rental property operating expenses, property taxes and insurance expenses (as reflected in the statement of operations). NOI is commonly used by stockholders, company management and industry analysts as a measurement of operating performance of the company's rental portfolio. Cash NOI is NOI less straight-line rents and above- and below-market rent amortization. Cash NOI is commonly used by stockholders, company management and industry analysts as a measure of property operating performance on a cash basis. Same-Capital Cash NOI represents buildings owned as of December 31, 2021 of the prior year with less than 5% of total rentable square feet under development and excludes buildings that were undergoing, or were expected to undergo, development activities in 2022-2023, buildings classified as held for sale, and buildings sold or contributed to joint ventures for all periods presented (prior period numbers adjusted to reflect current same-capital pool). However, because NOI and cash NOI exclude depreciation and amortization and capture neither the changes in the value of our data centers that result from use or market conditions, nor the level of capital expenditures and capitalized leasing commissions necessary to maintain the operating performance of our data centers, all of which have real economic effect and could materially impact our results from operations, the utility of NOI and cash NOI as measures of our performance is limited. Other REITs may calculate NOI and cash NOI differently than we do and, accordingly, our NOI and cash NOI may not be comparable to other REITs' NOI and cash NOI. NOI and cash NOI should be considered only as supplements to net income computed in accordance with GAAP as measures of our performance.
Additional Definitions
Net debt-to-Adjusted EBITDA ratio is calculated as total debt at balance sheet carrying value, plus capital lease obligations, plus Digital Realty's pro rata share of unconsolidated joint venture debt, less cash and cash equivalents (including Digital Realty's pro rata share of unconsolidated joint venture cash) divided by the product of Adjusted EBITDA (including Digital Realty's pro rata share of unconsolidated joint venture EBITDA), multiplied by four.
Debt-plus-preferred-to-total enterprise value is total debt plus preferred stock divided by total debt plus the liquidation value of preferred stock and the market value of outstanding Digital Realty Trust, Inc. common stock and Digital Realty Trust, L.P. units, assuming the redemption of Digital Realty Trust, L.P. units for shares of Digital Realty Trust, Inc. common stock.
Fixed charge coverage ratio is Adjusted EBITDA divided by the sum of GAAP interest expense, capitalized interest and preferred stock dividends. For the quarter ended December 31, 2023, GAAP interest expense was $114 million, capitalized interest was $33 million and preferred stock dividends was $10 million.
Reconciliation of Net Operating Income (NOI) Three Months Ended Twelve Months Ended
(in thousands) 31-Dec- 30-Sep-
23 23 31-Dec-22 31-Dec-23 31-Dec-22
Operating income $134,035 $58,231 $120,981 $524,461 $589,969
Fee income (14,330) (7,819) (7,508) (44,926) (24,506)
Other income (144) (168) (1,963) (4,645)
Depreciation and amortization 420,475 420,613 430,130 1,694,859 1,577,933
General and administrative 109,235 108,039 104,452 431,004 398,669
Severance, equity acceleration and legal expenses 7,565 2,682 15,980 18,054 23,498
Transaction expenses 40,226 14,465 17,350 84,722 68,766
Provision for impairment 5,363 113,000 3,000 118,363 3,000
Other expenses 5,580 1,295 3,615 7,529 12,438
Net Operating Income $708,003 $710,505 $687,831 $2,832,102 $2,645,122
Cash Net Operating Income (Cash NOI)
Net Operating Income $708,003 $710,505 $687,831 $2,832,102 $2,645,122
Straight-line rental revenue (22,085) (14,185) (32,226) (40,480) (69,998)
Straight-line rental expense (4,745) 1,632 (680) (2,901) 2,857
Above- and below-market rent amortization (856) (1,127) (762) (4,404) (696)
Cash Net Operating Income $680,317 $696,826 $654,164 $2,784,317 $2,577,283
Constant Currency CFFO Reconciliation Three Months Ended Twelve Months Ended
(in thousands, except per share data) 31-Dec- 30-Sep-
23 23 31-Dec-22 31-Dec-23 31-Dec-22
Core FFO
(1) $508,417 $487,638 $2,009,820 $1,959,444
Core FFO impact of holding '22 Exchange Rates Constant (2) (3,781) (3,964)
Constant Currency Core FFO $504,636 $487,638 $2,005,856 $1,959,444
Weighted-average shares and units outstanding - diluted 312,356 295,519 305,138 292,528
Constant Currency CFFO Per Share $1.62 $1.65 $6.57 $6.70
1)
As reconciled to net income above.
2) Adjustment calculated by holding currency translation rates for 2023 constant with average currency translation rates that were
applicable to the same periods in 2022.
This document contains forward-looking statements within the meaning of the federal securities laws, which are based on current expectations, forecasts and assumptions that involve risks and uncertainties that could cause actual outcomes and results to differ materially. Such forward-looking statements include statements relating to: our economic outlook, our expected investment and expansion activity, anticipated continued demand for our products and service, our liquidity, our joint ventures, supply and demand for data center and colocation space, our acquisition and disposition activity, pricing and net effective leasing economics, market dynamics and data center fundamentals, our strategic priorities, our product offerings, available inventory, rent from leases that have been signed but have not yet commenced and other contracted rent to be received in future periods, rental rates on future leases, lag between signing and commencement, cap rates and yields, investment activity, the company's FFO, Core FFO, constant currency Core FFO, adjusted FFO, and net income, 2024 outlook and underlying assumptions, information related to trends, our strategy and plans, leasing expectations, weighted average lease terms, the exercise of lease extensions, lease expirations, debt maturities, annualized rent at expiration of leases, the effect new leases and increases in rental rates will have on our rental revenue, our credit ratings, construction and development activity and plans, projected construction costs, estimated yields on investment, expected occupancy, expected square footage and IT load capacity upon completion of development projects, backlog NOI, NAV components, and other forward-looking financial data. Such statements are based on management's beliefs and assumptions made based on information currently available to management. Such statements are subject to risks, uncertainties and assumptions and are not guarantees of future performance and may be affected by known and unknown risks, trends, uncertainties, and factors that are beyond our control. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated, or projected. Some of the risks and uncertainties that may cause our actual results, performance, or achievements to differ materially from those expressed or implied by forward-looking statements include, among others, the following:
-- reduced demand for data centers or decreases in information technology
spending;
-- decreased rental rates, increased operating costs, or increased vacancy
rates;
-- increased competition or available supply of data center space;
-- the suitability of our data centers and data center infrastructure,
delays or disruptions in connectivity or availability of power, or
failures or breaches of our physical and information security
infrastructure or services;
-- our dependence upon significant customers, bankruptcy or insolvency of a
major customer or a significant number of smaller customers, or defaults
on or non-renewal of leases by customers;
-- our ability to attract and retain customers;
-- breaches of our obligations or restrictions under our contracts with our
customers;
-- our inability to successfully develop and lease new properties and
development space, and delays or unexpected costs in development of
properties;
-- the impact of current global and local economic, credit and market
conditions;
-- our inability to retain data center space that we lease or sublease from
third parties;
-- global supply chain or procurement disruptions, or increased supply
chain costs;
-- information security and data privacy breaches;
-- difficulty managing an international business and acquiring or operating
properties in foreign jurisdictions and unfamiliar metropolitan areas;
-- our failure to realize the intended benefits from, or disruptions to our
plans and operations or unknown or contingent liabilities related to,
our recent acquisitions;
-- our failure to successfully integrate and operate acquired or developed
properties or businesses;
-- difficulties in identifying properties to acquire and completing
acquisitions;
-- risks related to joint venture investments, including as a result of our
lack of control of such investments;
-- risks associated with using debt to fund our business activities,
including re-financing and interest rate risks, our failure to repay
debt when due, adverse changes in our credit ratings or our breach of
covenants or other terms contained in our loan facilities and
agreements;
-- our failure to obtain necessary debt and equity financing, and our
dependence on external sources of capital;
-- financial market fluctuations and changes in foreign currency exchange
rates;
-- adverse economic or real estate developments in our industry or the
industry sectors that we sell to, including risks relating to decreasing
real estate valuations and impairment charges and goodwill and other
intangible asset impairment charges;
-- our inability to manage our growth effectively;
-- losses in excess of our insurance coverage;
-- our inability to attract and retain talent;
-- impact on our operations and on the operations of our customers,
suppliers, and business partners during a pandemic, such as COVID-19;
-- the expected operating performance of anticipated near-term acquisitions
and descriptions relating to these expectations;
-- environmental liabilities, risks related to natural disasters and our
inability to achieve our sustainability goals;
-- our inability to comply with rules and regulations applicable to our
company;
-- Digital Realty Trust, Inc.'s failure to maintain its status as a REIT
for federal income tax purposes;
-- Digital Realty Trust, L.P.'s failure to qualify as a partnership for
federal income tax purposes;
-- restrictions on our ability to engage in certain business activities;
-- changes in local, state, federal and international laws, and
regulations, including related to taxation, real estate, and zoning
laws, and increases in real property tax rates; and
-- the impact of any financial, accounting, legal or regulatory issues or
litigation that may affect us.
The risks included here are not exhaustive, and additional factors could adversely affect our business and financial performance. Several additional material risks are discussed in our annual report on Form 10?K for the year ended December 31, 2022, and other filings with the U.S. Securities and Exchange Commission. Those risks continue to be relevant to our performance and financial condition. Moreover, we operate in a competitive and rapidly changing environment. New risk factors emerge from time to time and it is not possible for management to predict all such risk factors, nor can it assess the impact of all such risk factors on the business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. We expressly disclaim any responsibility to update forward-looking statements, whether as a result of new information, future events or otherwise. Digital Realty, Digital Realty Trust, the Digital Realty logo, Interxion, Turn-Key Flex, Powered Base Building, ServiceFabric, AnyScale Colo, Pervasive Data Center Architecture, PlatformDIGITAL, PDx, Data Gravity Index and Data Gravity Index DGx are registered trademarks and service marks of Digital Realty Trust, Inc. in the United States and/or other countries. All other names, trademarks and service marks are the property of their respective owners.
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