SAN FRANCISCO, Oct. 29, 2019 /PRNewswire/ -- Digital
Realty (NYSE: DLR), a leading global provider of data center,
colocation and interconnection solutions, announced today financial
results for the third quarter of 2019. All per-share results
are presented on a fully-diluted share and unit basis.
Highlights
- Reported net income available to common stockholders of
$0.24 per share in 3Q19, compared to
$0.33 in 3Q18
- Reported FFO per share of $1.59
in 3Q19, compared to $1.57 in
3Q18
- Reported core FFO per share of $1.67 in 3Q19, compared to $1.63 in 3Q18
- Signed total bookings during 3Q19 expected to generate
$69 million of annualized GAAP rental
revenue, including an $8 million
contribution from interconnection
- Revised 2019 core FFO per share outlook from $6.60 - $6.70 to
$6.55 - $6.65, reflecting the expected closing of the
$1.0 billion joint venture with
Mapletree in early November
Financial Results
Digital Realty reported revenues for the third quarter of 2019
of $806 million, a 1% increase from
the previous quarter and a 5% increase from the same quarter last
year.
The company delivered third quarter of 2019 net income of
$68 million, and net income available
to common stockholders of $50
million, or $0.24 per diluted
share, compared to $0.15 per diluted
share in the previous quarter and $0.33 per diluted share in the same quarter last
year.
Digital Realty generated third quarter of 2019 adjusted EBITDA
of $473 million, a 1% increase from
the previous quarter and a 4% increase over the same quarter last
year (reflecting the January 1, 2019
adoption of FASB Accounting Standard Codification Topic 842,
Leases).
The company reported third quarter of 2019 funds from operations
of $349 million, or $1.59 per share, compared to $1.53 per share in the previous quarter and
$1.57 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 2019
core FFO per share of $1.67, a 2%
increase from $1.64 per share in the
previous quarter, and a 2% increase from $1.63 per share in the same quarter last
year.
Leasing Activity
"In the third quarter, we signed total bookings expected to
generate $69 million of annualized
GAAP rental revenue, including an $8
million contribution from interconnection," said Chief
Executive Officer A. William
Stein. "We continued to execute well, with record new
logos and the third-best bookings in the company's history, close
on the heels of our second-highest in the prior quarter. We
also made progress on key strategic priorities, extending our
global footprint, expanding our sustainability initiatives and
optimizing the portfolio while advancing our private capital
program and further strengthening our balance sheet. Looking
ahead, we are confident that our global, multi-product platform
will continue to deliver sustainable growth for all
stakeholders."
The weighted-average lag between leases signed during the third
quarter of 2019 and the contractual commencement date was five
months.
In addition to new leases signed, Digital Realty also signed
renewal leases representing $152
million of annualized GAAP rental revenue during the
quarter. Rental rates on renewal leases signed during the
third quarter of 2019 rolled up 7.2% on a cash basis and up 10.1%
on a GAAP basis.
New leases signed during the third quarter of 2019 are
summarized by region and product type as follows:
|
Annualized
GAAP
|
|
|
|
|
|
|
|
|
|
|
Base
Rent
|
|
|
|
GAAP Base
Rent
|
|
|
|
|
GAAP Base
Rent
|
|
The
Americas
|
(in
thousands)
|
|
Square
Feet
|
|
per Square
Foot
|
|
Megawatts
|
|
per
Kilowatt
|
|
Turn-Key
Flex
|
$40,097
|
|
|
356,759
|
|
|
$112
|
|
|
34.8
|
|
|
|
$96
|
|
|
Powered Base
Building
|
72
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
Colocation
|
5,987
|
|
|
17,260
|
|
|
347
|
|
|
1.8
|
|
|
|
276
|
|
|
Non-Technical
|
154
|
|
|
7,346
|
|
|
21
|
|
|
—
|
|
|
|
—
|
|
|
Total
|
$46,310
|
|
|
381,365
|
|
|
$121
|
|
|
36.6
|
|
|
|
$105
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Europe
(1)
|
|
|
|
|
|
|
|
|
|
|
|
Turn-Key
Flex
|
$5,094
|
|
|
40,811
|
|
|
$125
|
|
|
3.5
|
|
|
|
$123
|
|
|
Colocation
|
1,236
|
|
|
4,460
|
|
|
277
|
|
|
0.3
|
|
|
|
333
|
|
|
Non-Technical
|
120
|
|
|
2,815
|
|
|
42
|
|
|
—
|
|
|
|
—
|
|
|
Total
|
$6,450
|
|
|
48,086
|
|
|
$134
|
|
|
3.8
|
|
|
|
$140
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asia Pacific
(1)
|
|
|
|
|
|
|
|
|
|
|
|
Turn-Key
Flex
|
$7,536
|
|
|
36,225
|
|
|
$208
|
|
|
3.9
|
|
|
|
$161
|
|
|
Colocation
|
210
|
|
|
235
|
|
|
893
|
|
|
—
|
|
|
|
426
|
|
|
Non-Technical
|
101
|
|
|
1,766
|
|
|
57
|
|
|
—
|
|
|
|
—
|
|
|
Total
|
$7,847
|
|
|
38,226
|
|
|
$205
|
|
|
3.9
|
|
|
|
$164
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interconnection
|
$8,009
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Grand
Total
|
$68,616
|
|
|
467,677
|
|
|
$130
|
|
|
44.3
|
|
|
|
$113
|
|
|
|
|
Note:
|
Totals may not foot
due to rounding differences.
|
|
|
|
(1)
|
Based on quarterly
average exchange rates during the three months ended September 30,
2019.
|
Investment Activity
During the third quarter of 2019, Digital Realty closed on the
acquisition of a 22,000 square foot land parcel located in
Seoul, South Korea for
approximately $15 million. The
site is located within the Sangam Digital Media City in northwest
Seoul, a newly developed urban
planning zone focused on technology and media companies, designed
to promote South Korea's digital
economy. Upon completion, the new facility is expected to
support up to 12 megawatts of critical IT capacity.
Construction is expected to commence within the coming months and
to be complete in 2021.
During the third quarter of 2019, Digital Realty entered into
definitive agreements with affiliates of Mapletree Investments Pte
Ltd and Mapletree Industrial Trust for the sale of ten Powered Base
Buildings® and the establishment of a joint venture on three
existing data centers. The Powered Base Buildings® will be
sold for a total purchase price of approximately $557 million, representing a 6.6% cap rate on
expected 2020 net operating income of $37
million. Separately, an entity jointly owned by
Mapletree Investments and Mapletree Industrial Trust will purchase
an 80% interest, and Digital Realty will retain a 20% interest, in
a joint venture on three fully stabilized hyper-scale facilities
located in Ashburn, Virginia. Mapletree Investments and
Mapletree Industrial Trust will acquire its 80% stake for
approximately $811 million, valuing
these three assets at approximately $1.0
billion. These three facilities are fully leased and
are expected to generate 2020 cash net operating income of
approximately $61 million,
representing a 6.0% cap rate. Digital Realty will continue to
operate and manage these facilities, and the transaction will be
completely seamless from a customer perspective. The
transactions are expected to close in late 2019 or early 2020 and
are subject to customary closing conditions.
Balance Sheet
Digital Realty had approximately $10.9
billion of total debt outstanding as of September 30, 2019, comprised of $10.8 billion of unsecured debt and approximately
$0.1 billion of secured debt.
At the end of the third quarter of 2019, net debt-to-adjusted
EBITDA was 6.1x, debt-plus-preferred-to-total enterprise value was
29.9% and fixed charge coverage was 4.3x. Pro forma for
settlement of the $1.1 billion
forward equity offering and $1.4
billion of proceeds from the Mapletree transaction, net
debt-to-adjusted EBITDA was 5.0x and fixed charge coverage was
4.4x.
Subsequent to the end of the quarter, Digital Realty closed an
offering of 13,800,000 shares of 5.20% Series L Cumulative
Redeemable Preferred Stock (including 1,800,000 shares from the
exercise of the underwriters' over-allotment option) at a price of
$25.00 per share, generating gross
proceeds of approximately $345
million.
Subsequent to quarter-end, Digital Realty also closed a €500
million (approximately $550 million)
Euro-denominated offering of 8.5-year senior unsecured notes due
2028 at 1.125%.
2019 Outlook
Digital Realty revised its 2019 core FFO per share outlook from
$6.60 - $6.70 to $6.55 -
$6.65. The assumptions
underlying this guidance are summarized in the following
table.
|
As
of
|
As
of
|
As
of
|
As
of
|
As
of
|
|
Top-Line and Cost
Structure
|
January 8,
2019
|
February 5,
2019
|
April 25,
2019
|
July 30,
2019
|
October 29,
2019
|
|
Total
revenue
|
$3.2 - $3.3
billion
|
$3.2 - $3.3
billion
|
$3.2 - $3.3
billion
|
$3.2 - $3.3
billion
|
$3.2
billion
|
|
Net
non-cash rent adjustments (1)
|
($5 - $15
million)
|
($5 - $15
million)
|
($5 - $15
million)
|
($5 - $15
million)
|
($25 - $30
million)
|
|
Adjusted
EBITDA margin
|
57.0% -
59.0%
|
57.0% -
59.0%
|
57.0% -
59.0%
|
57.0% -
59.0%
|
58.0% -
59.0%
|
|
G&A
margin
|
6.0% -
7.0%
|
6.0% -
7.0%
|
6.0% -
7.0%
|
6.0% -
7.0%
|
6.0% -
7.0%
|
|
|
|
|
|
|
|
Internal
Growth
|
|
|
|
|
|
|
Rental
rates on renewal leases
|
|
|
|
|
|
|
Cash basis
|
Down
high-single-digits
|
Down
high-single-digits
|
Down
high-single-digits
|
Down
mid-single-digits
|
Slightly
negative
|
|
GAAP basis
|
Slightly
positive
|
Slightly
positive
|
Slightly
positive
|
Slightly
positive
|
Up
mid-single-digits
|
|
Year-end
portfolio occupancy
|
+/- 50 bps
|
+/- 50 bps
|
+/- 50 bps
|
+/- 50 bps
|
- 150 bps
|
|
"Same-capital" cash NOI growth (2)
|
+/- 2.0%
|
+/- 2.0%
|
-2.0% to
-4.0%
|
-2.0% to
-4.0%
|
-2.0% to
-4.0%
|
|
|
|
|
|
|
|
Foreign
Exchange Rates
|
|
|
|
|
|
|
U.S. Dollar / Pound
Sterling
|
$1.20 -
$1.30
|
$1.20 -
$1.30
|
$1.20 -
$1.30
|
$1.20 -
$1.30
|
$1.20 -
$1.30
|
|
U.S. Dollar /
Euro
|
$1.10 -
$1.20
|
$1.10 -
$1.20
|
$1.10 -
$1.20
|
$1.10 -
$1.20
|
$1.10 -
$1.20
|
|
|
|
|
|
|
|
External
Growth
|
|
|
|
|
|
|
Dispositions
|
|
|
|
|
|
|
Dollar
volume
|
N/A
|
N/A
|
N/A
|
N/A
|
$811
million
|
|
Cap
rate
|
N/A
|
N/A
|
N/A
|
N/A
|
6.0%
|
|
Development
|
|
|
|
|
|
|
CapEx
|
$1.2 - $1.4
billion
|
$1.2 - $1.4
billion
|
$1.2 - $1.4
billion
|
$1.2 - $1.4
billion
|
$1.2 - $1.4
billion
|
|
Average
stabilized yields
|
9.0% -
12.0%
|
9.0% -
12.0%
|
9.0% -
12.0%
|
9.0% -
12.0%
|
9.0% -
12.0%
|
|
Enhancements and other non-recurring CapEx (3)
|
$30 - $40
million
|
$30 - $40
million
|
$30 - $40
million
|
$30 - $40
million
|
$5 - $10
million
|
|
Recurring CapEx + capitalized leasing costs (4)
|
$145 - $155
million
|
$145 - $155
million
|
$145 - $155
million
|
$160 - $170
million
|
$160 - $170
million
|
|
|
|
|
|
|
|
Balance
Sheet
|
|
|
|
|
|
|
Long-term debt issuance
|
|
|
|
|
|
|
Dollar
amount
|
$0.5 - $1.0
billion
|
$1.0 - $1.5
billion
|
$1.5 - $2.0
billion
|
$2.3
billion
|
$2.9
billion
|
|
Pricing
|
3.50% -
5.00%
|
2.50% -
5.00%
|
2.75% -
3.75%
|
3.03%
|
2.67%
|
|
Timing
|
Early-to-mid
2019
|
Early-to-mid
2019
|
Early-to-mid
2019
|
Early-to-mid
2019
|
Early-to-mid
2019
|
|
Preferred equity issuance
|
|
|
|
|
|
|
Dollar
amount
|
N/A
|
N/A
|
N/A
|
N/A
|
$555
million
|
|
Pricing
|
N/A
|
N/A
|
N/A
|
N/A
|
5.45%
|
|
Timing
|
N/A
|
N/A
|
N/A
|
N/A
|
Mid-2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per
diluted share
|
$1.40 -
$1.45
|
$1.40 -
$1.45
|
$1.65 -
$1.70
|
$1.50 -
$1.55
|
$2.40 -
$2.45
|
|
Real estate
depreciation and (gain) / loss on sale
|
$5.15 -
$5.15
|
$5.15 -
$5.15
|
$5.00 -
$5.10
|
$5.10 -
$5.10
|
$4.15 -
$4.15
|
|
Funds From
Operations / share (NAREIT-Defined)
|
$6.55 -
$6.60
|
$6.55 -
$6.60
|
$6.65 -
$6.80
|
$6.60 -
$6.65
|
$6.55 -
$6.60
|
|
Non-core expenses and
revenue streams
|
$0.05 -
$0.10
|
$0.05 -
$0.10
|
($0.05 -
$0.10)
|
$0.00 -
$0.05
|
$0.00 -
$0.05
|
|
Core Funds From
Operations / share
|
$6.60 -
$6.70
|
$6.60 -
$6.70
|
$6.60 -
$6.70
|
$6.60 -
$6.70
|
$6.55 -
$6.65
|
|
Foreign currency
translation adjustments
|
$0.05 -
$0.15
|
$0.05 -
$0.15
|
$0.05 -
$0.15
|
$0.05 -
$0.15
|
$0.05 -
$0.15
|
|
Constant-Currency
Core FFO / share
|
$6.65 -
$6.85
|
$6.65 -
$6.85
|
$6.65 -
$6.85
|
$6.65 -
$6.85
|
$6.60 -
$6.80
|
|
|
|
(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., FAS 141
adjustments).
|
|
|
|
(2)
|
The "same-capital"
pool includes properties owned as of December 31, 2017 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 2018-2019, properties classified
as held for sale, and properties sold or contributed to joint
ventures for all periods presented.
|
|
|
|
(3)
|
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.
|
|
|
|
(4)
|
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, 2019, a
presentation will be posted to the Investors section of the
company's website at http://investor.digitalrealty.com. The
presentation is designed to accompany the discussion of the
company's third quarter 2019 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# 3707672 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 http://investor.digitalrealty.com.
Telephone and webcast replays will be available after the call
until November 29, 2019. 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# 10135281. The webcast replay can
be accessed on Digital Realty's website.
About Digital Realty
Digital Realty supports the data center, colocation and
interconnection strategies of more than 2,000 firms across its
secure, network-rich portfolio of data centers located throughout
North America, Europe, Latin
America, Asia and
Australia. Digital Realty's clients include domestic and
international companies of all sizes, ranging from cloud and
information technology services, communications and social
networking to financial services, manufacturing, energy,
healthcare, and consumer products.
Contact Information
Andrew P. Power
Chief Financial Officer
Digital Realty
(415) 738-6500
John J. Stewart
Investor Relations
Digital Realty
(415) 738-6500
|
Consolidated
Quarterly Statements of Operations
|
|
Unaudited and in
Thousands, Except Share and Per Share Data
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
30-Sep-19
|
30-Jun-19
|
31-Mar-19
|
31-Dec-18
|
30-Sep-18
|
|
30-Sep-19
|
30-Sep-18
|
|
Rental
revenues
|
$564,975
|
|
$565,925
|
|
$585,425
|
|
$555,816
|
|
$541,073
|
|
|
$1,716,325
|
|
$1,606,554
|
|
|
Tenant reimbursements
- Utilities
|
114,719
|
|
106,409
|
|
102,569
|
|
102,641
|
|
105,822
|
|
|
323,697
|
|
304,482
|
|
|
Tenant reimbursements
- Other
|
57,466
|
|
62,820
|
|
55,868
|
|
53,090
|
|
57,282
|
|
|
176,154
|
|
164,424
|
|
|
Interconnection &
other
|
65,312
|
|
64,232
|
|
68,168
|
|
63,803
|
|
62,760
|
|
|
197,712
|
|
185,903
|
|
|
Fee income
|
3,994
|
|
925
|
|
1,921
|
|
2,896
|
|
1,469
|
|
|
6,840
|
|
4,945
|
|
|
Other
|
—
|
|
486
|
|
564
|
|
21
|
|
518
|
|
|
1,050
|
|
1,903
|
|
|
Total Operating
Revenues
|
$806,466
|
|
$800,797
|
|
$814,515
|
|
$778,267
|
|
$768,924
|
|
|
$2,421,778
|
|
$2,268,211
|
|
|
|
|
|
|
|
|
|
|
|
Utilities
|
$132,565
|
|
$123,398
|
|
$124,334
|
|
$122,108
|
|
$127,239
|
|
|
$380,297
|
|
$354,939
|
|
|
Rental property
operating
|
126,866
|
|
128,634
|
|
130,620
|
|
133,024
|
|
118,732
|
|
|
386,120
|
|
346,994
|
|
|
Property
taxes
|
38,255
|
|
41,482
|
|
37,315
|
|
32,098
|
|
34,871
|
|
|
117,052
|
|
97,418
|
|
|
Insurance
|
3,103
|
|
3,441
|
|
2,991
|
|
2,412
|
|
2,653
|
|
|
9,535
|
|
8,990
|
|
|
Depreciation &
amortization
|
286,718
|
|
290,562
|
|
311,486
|
|
299,362
|
|
293,957
|
|
|
888,766
|
|
887,534
|
|
|
General &
administration
|
49,862
|
|
52,318
|
|
51,976
|
|
38,801
|
|
40,997
|
|
|
154,156
|
|
121,563
|
|
|
Severance, equity
acceleration, and legal expenses
|
123
|
|
665
|
|
1,483
|
|
602
|
|
645
|
|
|
2,271
|
|
2,701
|
|
|
Transaction and
integration expenses
|
4,115
|
|
4,210
|
|
2,494
|
|
25,917
|
|
9,626
|
|
|
10,819
|
|
19,410
|
|
|
Impairment of
investments in real estate
|
—
|
|
—
|
|
5,351
|
|
—
|
|
—
|
|
|
5,351
|
|
—
|
|
|
Other
expenses
|
92
|
|
7,115
|
|
4,922
|
|
1,096
|
|
1,139
|
|
|
12,129
|
|
1,722
|
|
|
Total Operating
Expenses
|
$641,699
|
|
$651,825
|
|
$672,972
|
|
$655,420
|
|
$629,859
|
|
|
$1,966,496
|
|
$1,841,271
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Income
|
$164,767
|
|
$148,972
|
|
$141,543
|
|
$122,847
|
|
$139,065
|
|
|
$455,282
|
|
$426,940
|
|
|
|
|
|
|
|
|
|
|
|
Equity in earnings of
unconsolidated joint ventures
|
($19,269)
|
|
$6,962
|
|
$9,217
|
|
$9,245
|
|
$8,886
|
|
|
($3,090)
|
|
$23,734
|
|
|
Gain on sale /
deconsolidation
|
—
|
|
—
|
|
67,497
|
|
7
|
|
26,577
|
|
|
67,497
|
|
80,042
|
|
|
Interest and other
income
|
16,842
|
|
16,980
|
|
21,444
|
|
1,106
|
|
(981)
|
|
|
55,266
|
|
2,375
|
|
|
Interest
(expense)
|
(84,574)
|
|
(86,051)
|
|
(101,552)
|
|
(84,883)
|
|
(80,851)
|
|
|
(272,177)
|
|
(236,646)
|
|
|
Tax benefit
(expense)
|
(4,826)
|
|
(4,634)
|
|
(4,266)
|
|
5,843
|
|
(2,432)
|
|
|
(13,726)
|
|
(7,927)
|
|
|
Loss from early
extinguishment of debt
|
(5,366)
|
|
(20,905)
|
|
(12,886)
|
|
(1,568)
|
|
—
|
|
|
(39,157)
|
|
—
|
|
|
Net
Income
|
$67,574
|
|
$61,324
|
|
$120,997
|
|
$52,597
|
|
$90,264
|
|
|
$249,895
|
|
$288,518
|
|
|
|
|
|
|
|
|
|
|
|
Net (income) loss
attributable to noncontrolling interests
|
(1,077)
|
|
(1,156)
|
|
(4,185)
|
|
(1,038)
|
|
(2,667)
|
|
|
(6,418)
|
|
(8,831)
|
|
|
Net Income
Attributable to Digital Realty Trust, Inc.
|
$66,497
|
|
$60,168
|
|
$116,812
|
|
$51,559
|
|
$87,597
|
|
|
$243,477
|
|
$279,687
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock
dividends, including undeclared dividends
|
(16,670)
|
|
(16,670)
|
|
(20,943)
|
|
(20,329)
|
|
(20,329)
|
|
|
(54,283)
|
|
(60,987)
|
|
|
Issuance costs
associated with redeemed preferred stock
|
—
|
|
(11,760)
|
|
—
|
|
—
|
|
—
|
|
|
(11,760)
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
Net Income
Available to Common Stockholders
|
$49,827
|
|
$31,738
|
|
$95,869
|
|
$31,230
|
|
$67,268
|
|
|
$177,434
|
|
$218,700
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average
shares outstanding - basic
|
208,421,470
|
|
208,284,407
|
|
207,809,383
|
|
206,345,138
|
|
206,118,472
|
|
|
208,173,995
|
|
205,931,031
|
|
|
Weighted-average
shares outstanding - diluted
|
209,801,771
|
|
209,435,572
|
|
208,526,249
|
|
207,113,100
|
|
206,766,256
|
|
|
209,199,535
|
|
206,555,627
|
|
|
Weighted-average
fully diluted shares and units
|
218,755,597
|
|
218,497,318
|
|
217,756,161
|
|
215,417,085
|
|
214,937,168
|
|
|
218,280,351
|
|
214,824,010
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share
- basic
|
$0.24
|
|
$0.15
|
|
$0.46
|
|
$0.15
|
|
$0.33
|
|
|
$0.85
|
|
$1.06
|
|
|
Net income per share
- diluted
|
$0.24
|
|
$0.15
|
|
$0.46
|
|
$0.15
|
|
$0.33
|
|
|
$0.85
|
|
$1.06
|
|
|
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-19
|
30-Jun-19
|
31-Mar-19
|
31-Dec-18
|
30-Sep-18
|
|
30-Sep-19
|
30-Sep-18
|
|
|
|
|
|
|
|
|
|
|
Net Income
Available to Common Stockholders
|
$49,827
|
|
$31,738
|
|
$95,869
|
|
$31,230
|
|
$67,268
|
|
|
$177,434
|
|
$218,700
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
Non-controlling
interests in operating partnership
|
2,300
|
|
1,400
|
|
4,300
|
|
1,300
|
|
2,700
|
|
|
8,000
|
|
8,880
|
|
|
Real estate related
depreciation & amortization (1)
|
283,090
|
|
286,915
|
|
307,864
|
|
295,724
|
|
290,757
|
|
|
877,869
|
|
878,193
|
|
|
Unconsolidated JV
real estate related depreciation & amortization
|
13,612
|
|
13,623
|
|
3,851
|
|
3,615
|
|
3,775
|
|
|
31,086
|
|
10,973
|
|
|
(Gain) on real estate
transactions
|
—
|
|
—
|
|
—
|
|
(7)
|
|
(26,577)
|
|
|
—
|
|
(80,042)
|
|
|
Impairment of
investments in real estate
|
—
|
|
—
|
|
5,351
|
|
—
|
|
—
|
|
|
5,351
|
|
—
|
|
|
Funds From
Operations
|
$348,829
|
|
$333,676
|
|
$417,235
|
|
$331,862
|
|
$337,923
|
|
|
$1,099,740
|
|
$1,036,704
|
|
|
|
|
|
|
|
|
|
|
|
Funds From
Operations - diluted
|
$348,829
|
|
$333,676
|
|
$417,235
|
|
$331,862
|
|
$337,923
|
|
|
$1,099,740
|
|
$1,036,704
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average
shares and units outstanding - basic
|
217,375
|
|
217,346
|
|
217,039
|
|
214,649
|
|
214,289
|
|
|
217,255
|
|
214,199
|
|
|
Weighted-average
shares and units outstanding - diluted (2)
|
218,756
|
|
218,497
|
|
217,756
|
|
215,417
|
|
214,937
|
|
|
218,280
|
|
214,824
|
|
|
|
|
|
|
|
|
|
|
|
Funds From
Operations per share - basic
|
$1.60
|
|
$1.54
|
|
$1.92
|
|
$1.55
|
|
$1.58
|
|
|
$5.06
|
|
$4.84
|
|
|
|
|
|
|
|
|
|
|
|
Funds From
Operations per share - diluted (2)
|
$1.59
|
|
$1.53
|
|
$1.92
|
|
$1.54
|
|
$1.57
|
|
|
$5.04
|
|
$4.83
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
Reconciliation of
FFO to Core FFO
|
30-Sep-19
|
30-Jun-19
|
31-Mar-19
|
31-Dec-18
|
30-Sep-18
|
|
30-Sep-19
|
30-Sep-18
|
|
|
|
|
|
|
|
|
|
|
Funds From
Operations - diluted
|
$348,829
|
|
$333,676
|
|
$417,235
|
|
$331,862
|
|
$337,923
|
|
|
$1,099,740
|
|
$1,036,704
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
Termination fees and
other non-core revenues (3)
|
(16,792)
|
|
(16,826)
|
|
(14,445)
|
|
(21)
|
|
(518)
|
|
|
(48,063)
|
|
(5,039)
|
|
|
Transaction and
integration expenses
|
4,115
|
|
4,210
|
|
2,494
|
|
25,917
|
|
9,626
|
|
|
10,819
|
|
19,410
|
|
|
Loss from early
extinguishment of debt
|
5,366
|
|
20,905
|
|
12,886
|
|
1,568
|
|
—
|
|
|
39,157
|
|
—
|
|
|
Issuance costs
associated with redeemed preferred stock
|
—
|
|
11,760
|
|
—
|
|
—
|
|
—
|
|
|
11,760
|
|
—
|
|
|
Severance, equity
acceleration, and legal expenses (4)
|
123
|
|
665
|
|
1,483
|
|
602
|
|
645
|
|
|
2,271
|
|
2,701
|
|
|
(Gain) / Loss on FX
revaluation
|
23,136
|
|
(4,251)
|
|
9,604
|
|
—
|
|
—
|
|
|
28,489
|
|
—
|
|
|
(Gain) on
contribution to unconsolidated joint venture, net of related
tax
|
—
|
|
—
|
|
(58,497)
|
|
—
|
|
—
|
|
|
(58,497)
|
|
—
|
|
|
Other non-core
expense adjustments
|
92
|
|
7,115
|
|
4,922
|
|
1,471
|
|
2,269
|
|
|
12,129
|
|
2,852
|
|
|
Core Funds From
Operations - diluted
|
$364,869
|
|
$357,254
|
|
$375,682
|
|
$361,399
|
|
$349,945
|
|
|
$1,097,805
|
|
$1,056,628
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average
shares and units outstanding - diluted (2)
|
218,756
|
|
218,497
|
|
217,756
|
|
215,417
|
|
214,937
|
|
|
218,280
|
|
214,824
|
|
|
|
|
|
|
|
|
|
|
|
Core Funds From
Operations per share - diluted (2)
|
$1.67
|
|
$1.64
|
|
$1.73
|
|
$1.68
|
|
$1.63
|
|
|
$5.03
|
|
$4.92
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Real
Estate Related Depreciation & Amortization:
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
30-Sep-19
|
30-Jun-19
|
31-Mar-19
|
31-Dec-18
|
30-Sep-18
|
|
30-Sep-19
|
30-Sep-18
|
|
|
|
|
|
|
|
|
|
|
Depreciation &
amortization per income statement
|
$286,718
|
|
$290,562
|
|
$311,486
|
|
$299,362
|
|
$293,957
|
|
|
$888,766
|
|
$887,534
|
|
|
Non-real estate
depreciation
|
(3,628)
|
|
(3,647)
|
|
(3,622)
|
|
(3,638)
|
|
(3,200)
|
|
|
(10,897)
|
|
(9,341)
|
|
|
|
|
|
|
|
|
|
|
|
Real Estate
Related Depreciation & Amortization
|
$283,090
|
|
$286,915
|
|
$307,864
|
|
$295,724
|
|
$290,757
|
|
|
$877,869
|
|
$878,193
|
|
|
|
|
(2)
|
For all periods
presented, we have excluded the effect of dilutive series C, series
G, series H, series I, series J, and series K 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, and series K preferred stock, as
applicable, which we consider highly improbable. See above
for calculations of diluted FFO available to common stockholders
and unitholders and the share count detail section of the
reconciliation of core FFO to AFFO for calculations of weighted
average common stock and units outstanding.
|
|
|
|
(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-19
|
30-Jun-19
|
31-Mar-19
|
31-Dec-18
|
30-Sep-18
|
|
30-Sep-19
|
30-Sep-18
|
|
|
|
|
|
|
|
|
|
|
Core FFO available
to common stockholders and unitholders
|
$364,869
|
|
$357,254
|
|
$375,682
|
|
$361,399
|
|
$349,945
|
|
|
$1,097,805
|
|
$1,056,628
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
Non-real estate
depreciation
|
3,628
|
|
3,647
|
|
3,622
|
|
3,638
|
|
3,200
|
|
|
10,897
|
|
9,341
|
|
|
Amortization of
deferred financing costs
|
2,900
|
|
2,905
|
|
4,493
|
|
3,128
|
|
3,066
|
|
|
10,298
|
|
9,079
|
|
|
Amortization of debt
discount/premium
|
466
|
|
515
|
|
760
|
|
971
|
|
902
|
|
|
1,741
|
|
2,659
|
|
|
Non-cash stock-based
compensation expense
|
8,906
|
|
9,468
|
|
7,592
|
|
5,609
|
|
5,823
|
|
|
25,966
|
|
19,741
|
|
|
Straight-line rental
revenue
|
(12,764)
|
|
(13,033)
|
|
(15,979)
|
|
(11,157)
|
|
(10,511)
|
|
|
(41,776)
|
|
(29,266)
|
|
|
Straight-line rental
expense
|
(209)
|
|
318
|
|
1,235
|
|
2,052
|
|
2,482
|
|
|
1,342
|
|
7,698
|
|
|
Above- and
below-market rent amortization
|
2,824
|
|
3,954
|
|
6,210
|
|
6,521
|
|
6,552
|
|
|
12,988
|
|
20,012
|
|
|
Deferred tax
expense
|
(1,418)
|
|
(979)
|
|
(15,397)
|
|
(8,835)
|
|
(1,783)
|
|
|
(17,794)
|
|
(3,135)
|
|
|
Leasing compensation
& internal lease commissions (1)
|
3,254
|
|
4,025
|
|
3,581
|
|
(5,160)
|
|
(5,153)
|
|
|
10,860
|
|
(15,847)
|
|
|
Recurring capital
expenditures (2)
|
(48,408)
|
|
(39,515)
|
|
(38,059)
|
|
(47,951)
|
|
(22,500)
|
|
|
(125,982)
|
|
(84,275)
|
|
|
|
|
|
|
|
|
|
|
|
AFFO available to
common stockholders and unitholders (3)
|
$324,048
|
|
$328,559
|
|
$333,740
|
|
$310,215
|
|
$332,023
|
|
|
$986,345
|
|
$992,635
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average
shares and units outstanding - basic
|
217,375
|
|
217,346
|
|
217,039
|
|
214,649
|
|
214,289
|
|
|
217,255
|
|
214,199
|
|
|
Weighted-average
shares and units outstanding - diluted (4)
|
218,756
|
|
218,497
|
|
217,756
|
|
215,417
|
|
214,937
|
|
|
218,280
|
|
214,824
|
|
|
|
|
|
|
|
|
|
|
|
AFFO per share -
diluted (4)
|
$1.48
|
|
$1.50
|
|
$1.53
|
|
$1.44
|
|
$1.54
|
|
|
$4.52
|
|
$4.62
|
|
|
|
|
|
|
|
|
|
|
|
Dividends per share
and common unit
|
$1.08
|
|
$1.08
|
|
$1.08
|
|
$1.01
|
|
$1.01
|
|
|
$3.24
|
|
$3.03
|
|
|
|
|
|
|
|
|
|
|
|
Diluted AFFO
Payout Ratio
|
72.9
|
%
|
71.8
|
%
|
70.5
|
%
|
70.1
|
%
|
65.4
|
%
|
|
71.7
|
%
|
65.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
Share Count
Detail
|
30-Sep-19
|
30-Jun-19
|
31-Mar-19
|
31-Dec-18
|
30-Sep-18
|
|
30-Sep-19
|
30-Sep-18
|
|
|
|
|
|
|
|
|
|
|
Weighted Average
Common Stock and Units Outstanding
|
217,375
|
|
217,346
|
|
217,039
|
|
214,649
|
|
214,289
|
|
|
217,255
|
|
214,199
|
|
|
Add: Effect of
dilutive securities
|
1,381
|
|
1,151
|
|
717
|
|
768
|
|
648
|
|
|
1,025
|
|
625
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Avg.
Common Stock and Units Outstanding - diluted
|
218,756
|
|
218,497
|
|
217,756
|
|
215,417
|
|
214,937
|
|
|
218,280
|
|
214,824
|
|
|
|
|
(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, and series K 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, and series K 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-19
|
30-Jun-19
|
31-Mar-19
|
31-Dec-18
|
30-Sep-18
|
|
Assets
|
|
|
|
|
|
|
Investments in real
estate:
|
|
|
|
|
|
|
Real
estate
|
$16,407,080
|
|
$17,324,416
|
|
$16,988,322
|
|
$17,055,017
|
|
$16,062,402
|
|
|
Construction in
progress
|
1,647,130
|
|
1,685,056
|
|
1,584,327
|
|
1,621,927
|
|
1,464,010
|
|
|
Land held for future
development
|
150,265
|
|
152,368
|
|
163,081
|
|
162,941
|
|
284,962
|
|
|
Investments in
real estate
|
$18,204,475
|
|
$19,161,840
|
|
$18,735,730
|
|
$18,839,885
|
|
$17,811,374
|
|
|
Accumulated
depreciation and amortization
|
(4,298,629)
|
|
(4,312,357)
|
|
(4,124,002)
|
|
(3,935,267)
|
|
(3,755,596)
|
|
|
Net Investments in
Properties
|
$13,905,846
|
|
$14,849,483
|
|
$14,611,728
|
|
$14,904,618
|
|
$14,055,778
|
|
|
Investment in
unconsolidated joint ventures
|
1,035,861
|
|
979,350
|
|
930,326
|
|
175,108
|
|
169,919
|
|
|
Net Investments in
Real Estate
|
$14,941,707
|
|
$15,828,833
|
|
$15,542,054
|
|
$15,079,726
|
|
$14,225,697
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
$7,190
|
|
$33,536
|
|
$123,879
|
|
$126,700
|
|
$46,242
|
|
|
Accounts and other
receivables (1)
|
304,712
|
|
320,938
|
|
328,009
|
|
299,621
|
|
308,709
|
|
|
Deferred
rent
|
471,516
|
|
491,486
|
|
479,640
|
|
463,248
|
|
454,412
|
|
|
Acquired in-place
lease value, deferred leasing costs and other real estate
intangibles, net
|
2,245,017
|
|
2,499,564
|
|
2,580,624
|
|
3,144,395
|
|
2,734,158
|
|
|
Acquired above-market
leases, net
|
84,315
|
|
94,474
|
|
106,044
|
|
119,759
|
|
135,127
|
|
|
Goodwill
|
3,338,168
|
|
3,353,538
|
|
3,358,463
|
|
4,348,007
|
|
3,373,342
|
|
|
Assets associated
with real estate held for sale
|
967,527
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
Operating lease
right-of-use assets (2)
|
634,085
|
|
648,952
|
|
660,586
|
|
—
|
|
—
|
|
|
Other
assets
|
178,528
|
|
158,770
|
|
162,768
|
|
185,239
|
|
184,423
|
|
|
Total
Assets
|
$23,172,765
|
|
$23,430,091
|
|
$23,342,067
|
|
$23,766,695
|
|
$21,462,110
|
|
|
|
|
|
|
|
|
Liabilities and
Equity
|
|
|
|
|
|
|
Global unsecured
revolving credit facilities
|
$1,833,512
|
|
$1,417,675
|
|
$842,975
|
|
$1,647,735
|
|
$590,289
|
|
|
Unsecured term
loans
|
796,232
|
|
807,922
|
|
807,726
|
|
1,178,904
|
|
1,352,969
|
|
|
Unsecured senior
notes, net of discount
|
8,189,138
|
|
8,511,656
|
|
8,523,462
|
|
7,589,126
|
|
7,130,541
|
|
|
Secured debt, net of
premiums
|
105,153
|
|
105,325
|
|
105,493
|
|
685,714
|
|
106,072
|
|
|
Operating lease
liabilities (2)
|
699,381
|
|
714,256
|
|
725,470
|
|
—
|
|
—
|
|
|
Accounts payable and
other accrued liabilities
|
938,740
|
|
984,812
|
|
922,571
|
|
1,164,509
|
|
1,059,355
|
|
|
Accrued dividends and
distributions
|
—
|
|
—
|
|
—
|
|
217,241
|
|
—
|
|
|
Acquired below-market
leases
|
153,422
|
|
183,832
|
|
192,667
|
|
200,113
|
|
208,202
|
|
|
Security deposits and
prepaid rent
|
203,708
|
|
213,549
|
|
221,526
|
|
209,311
|
|
233,667
|
|
|
Liabilities
associated with assets held for sale
|
23,534
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
Total
Liabilities
|
$12,942,820
|
|
$12,939,027
|
|
$12,341,890
|
|
$12,892,653
|
|
$10,681,095
|
|
|
|
|
|
|
|
|
Redeemable
non-controlling interests - operating partnership
|
19,090
|
|
17,344
|
|
17,678
|
|
15,832
|
|
17,553
|
|
|
|
|
|
|
|
|
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
|
|
241,468
|
|
|
Series H Cumulative
Redeemable Preferred Stock (5)
|
—
|
|
—
|
|
353,290
|
|
353,290
|
|
353,290
|
|
|
Series I Cumulative
Redeemable Preferred Stock (6)
|
242,012
|
|
242,012
|
|
242,012
|
|
242,012
|
|
242,012
|
|
|
Series J Cumulative
Redeemable Preferred Stock (7)
|
193,540
|
|
193,540
|
|
193,540
|
|
193,540
|
|
193,540
|
|
|
Series K Cumulative
Redeemable Preferred Stock (8)
|
203,264
|
|
203,264
|
|
203,423
|
|
—
|
|
—
|
|
|
Common Stock: $0.01
par value per share, 315,000,000 shares authorized (9)
|
2,069
|
|
2,067
|
|
2,066
|
|
2,051
|
|
2,049
|
|
|
Additional paid-in
capital
|
11,540,980
|
|
11,511,519
|
|
11,492,766
|
|
11,355,751
|
|
11,333,035
|
|
|
Dividends in excess
of earnings
|
(3,136,668)
|
|
(2,961,307)
|
|
(2,767,708)
|
|
(2,633,071)
|
|
(2,455,189)
|
|
|
Accumulated other
comprehensive (loss), net
|
(68,625)
|
|
(89,588)
|
|
(91,699)
|
|
(115,647)
|
|
(103,201)
|
|
|
Total
Stockholders' Equity
|
$9,437,290
|
|
$9,562,225
|
|
$10,088,408
|
|
$9,858,644
|
|
$10,026,254
|
|
|
|
|
|
|
|
|
Noncontrolling
Interests
|
|
|
|
|
|
|
Noncontrolling
interest in operating partnership
|
$732,314
|
|
$756,050
|
|
$772,931
|
|
$906,510
|
|
$671,269
|
|
|
Noncontrolling
interest in consolidated joint ventures
|
41,251
|
|
155,445
|
|
121,160
|
|
93,056
|
|
65,939
|
|
|
|
|
|
|
|
|
Total
Noncontrolling Interests
|
$773,565
|
|
$911,495
|
|
$894,091
|
|
$999,566
|
|
$737,208
|
|
|
|
|
|
|
|
|
Total
Equity
|
$10,210,855
|
|
$10,473,720
|
|
$10,982,499
|
|
$10,858,210
|
|
$10,763,462
|
|
|
|
|
|
|
|
|
Total Liabilities
and Equity
|
$23,172,765
|
|
$23,430,091
|
|
$23,342,067
|
|
$23,766,695
|
|
$21,462,110
|
|
|
|
|
(1)
|
Net of allowance for
doubtful accounts of $13,239 and $11,554, as of September 30, 2019
and December 31, 2018, respectively.
|
|
(2)
|
Adoption of the new
lease accounting standard required that we adjust the consolidated
balance sheet to include the recognition of additional right-of-use
assets and lease liabilities for operating leases. See our
quarterly report on Form 10-Q filed on May 10, 2019 for additional
information.
|
|
(3)
|
Series C Cumulative
Redeemable Perpetual Preferred Stock, 6.625%, $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,
2019 and December 31, 2018, respectively.
|
|
(4)
|
Series G Cumulative
Redeemable Preferred Stock, 5.875%, $250,000 and $250,000
liquidation preference, respectively ($25.00 per share), 10,000,000
and 10,000,000 shares issued and outstanding as of September 30,
2019 and December 31, 2018, respectively.
|
|
(5)
|
Series H Cumulative
Redeemable Preferred Stock, 7.375%, $0 and $365,000 liquidation
preference, respectively ($25.00 per share), 0 and 14,600,000
shares issued and outstanding as of September 30, 2019 and
December 31, 2018, respectively. Redeemed on April 1,
2019.
|
|
(6)
|
Series I Cumulative
Redeemable Preferred Stock, 6.350%, $250,000 and $250,000
liquidation preference, respectively ($25.00 per share), 10,000,000
and 10,000,000 shares issued and outstanding as of September 30,
2019 and December 31, 2018, respectively.
|
|
(7)
|
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,
2019 and December 31, 2018, respectively.
|
|
(8)
|
Series K Cumulative
Redeemable Preferred Stock, 5.850%, $210,000 and $0 liquidation
preference, respectively ($25.00 per share), 8,400,000 and 0 shares
issued and outstanding as of September 30, 2019 and
December 31, 2018, respectively.
|
|
(9)
|
Common Stock:
208,583,244 and 206,425,656 shares issued and outstanding as of
September 30, 2019 and December 31, 2018,
respectively.
|
|
Reconciliation of
Earnings Before Interest, Taxes, Depreciation & Amortization
and Financial Ratios
|
|
Unaudited and in
Thousands
|
|
|
Three Months
Ended
|
|
Reconciliation of
Earnings Before Interest, Taxes, Depreciation &
Amortization (EBITDA) (1)
|
30-Sep-19
|
30-Jun-19
|
31-Mar-19
|
31-Dec-18
|
30-Sep-18
|
|
|
|
|
|
|
|
Net Income
Available to Common Stockholders
|
$49,827
|
|
$31,738
|
|
$95,869
|
|
$31,230
|
|
$67,268
|
|
|
Interest
|
84,574
|
|
86,051
|
|
101,552
|
|
84,883
|
|
80,851
|
|
|
Loss from early
extinguishment of debt
|
5,366
|
|
20,905
|
|
12,886
|
|
1,568
|
|
—
|
|
|
Tax (benefit)
expense
|
4,826
|
|
4,634
|
|
4,266
|
|
(5,843)
|
|
2,432
|
|
|
Depreciation &
amortization
|
286,718
|
|
290,562
|
|
311,486
|
|
299,362
|
|
293,957
|
|
|
EBITDA
|
$431,311
|
|
$433,890
|
|
$526,059
|
|
$411,200
|
|
$444,508
|
|
|
Unconsolidated JV
real estate related depreciation & amortization
|
13,612
|
|
13,623
|
|
3,851
|
|
3,615
|
|
3,775
|
|
|
Severance, equity
acceleration, and legal expenses
|
123
|
|
665
|
|
1,483
|
|
602
|
|
645
|
|
|
Transaction and
integration expenses
|
4,115
|
|
4,210
|
|
2,494
|
|
25,917
|
|
9,626
|
|
|
(Gain) on sale /
deconsolidation
|
—
|
|
—
|
|
(67,497)
|
|
(7)
|
|
(26,577)
|
|
|
Impairment of
investments in real estate
|
—
|
|
—
|
|
5,351
|
|
—
|
|
—
|
|
|
Other non-core
adjustments, net
|
6,436
|
|
(13,476)
|
|
(13,806)
|
|
1,471
|
|
2,269
|
|
|
Non-controlling
interests
|
1,077
|
|
1,156
|
|
4,185
|
|
1,038
|
|
2,667
|
|
|
Preferred stock
dividends, including undeclared dividends
|
16,670
|
|
16,670
|
|
20,943
|
|
20,329
|
|
20,329
|
|
|
Issuance costs
associated with redeemed preferred stock
|
—
|
|
11,760
|
|
—
|
|
—
|
|
—
|
|
|
Adjusted
EBITDA
|
$473,344
|
|
$468,498
|
|
$483,063
|
|
$464,165
|
|
$457,242
|
|
|
|
|
(1)
|
For definitions and
discussion of EBITDA and Adjusted EBITDA, see the definitions
section.
|
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, severance, equity acceleration, and legal expenses,
transaction and integration expenses, (gain) loss on real estate
transactions, equity in earnings adjustment for non-core items,
other non-core adjustments, net, noncontrolling 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, 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, 2019, GAAP interest
expense was $85 million, capitalized interest was $10 million and scheduled debt principal payments
and preferred dividends was $17
million.
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
Reconciliation of
Net Operating Income (NOI) (in thousands)
|
30-Sep-19
|
30-Jun-19
|
30-Sep-18
|
|
30-Sep-19
|
30-Sep-18
|
|
|
|
|
|
|
|
|
Operating
income
|
$164,767
|
|
$148,972
|
|
$139,065
|
|
|
$455,282
|
|
$426,940
|
|
|
|
|
|
|
|
|
|
Fee income
|
(3,994)
|
|
(925)
|
|
(1,469)
|
|
|
(6,840)
|
|
(4,945)
|
|
|
Other
income
|
—
|
|
(486)
|
|
(518)
|
|
|
(1,050)
|
|
(1,903)
|
|
|
Depreciation and
amortization
|
286,718
|
|
290,562
|
|
293,957
|
|
|
888,766
|
|
887,534
|
|
|
General and
administrative
|
49,862
|
|
52,318
|
|
40,997
|
|
|
154,156
|
|
121,563
|
|
|
Severance, equity
acceleration, and legal expenses
|
123
|
|
665
|
|
645
|
|
|
2,271
|
|
2,701
|
|
|
Transaction
expenses
|
4,115
|
|
4,210
|
|
9,626
|
|
|
10,819
|
|
19,410
|
|
|
Impairment in
investments in real estate
|
—
|
|
—
|
|
—
|
|
|
5,351
|
|
—
|
|
|
Other
expenses
|
92
|
|
7,115
|
|
1,139
|
|
|
12,129
|
|
1,722
|
|
|
|
|
|
|
|
|
|
Net Operating
Income
|
$501,683
|
|
$502,431
|
|
$483,442
|
|
|
$1,520,884
|
|
$1,453,022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Net Operating
Income (Cash NOI)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Operating
Income
|
$501,683
|
|
$502,431
|
|
$483,442
|
|
|
$1,520,884
|
|
$1,453,022
|
|
|
|
|
|
|
|
|
|
Straight-line rental
revenue
|
(12,764)
|
|
(13,033)
|
|
(10,511)
|
|
|
(41,776)
|
|
(29,266)
|
|
|
Straight-line rental
expense
|
(192)
|
|
396
|
|
2,479
|
|
|
1,381
|
|
7,770
|
|
|
Above- and
below-market rent amortization
|
2,824
|
|
3,954
|
|
6,552
|
|
|
12,988
|
|
20,012
|
|
|
|
|
|
|
|
|
|
Cash Net Operating
Income
|
$491,551
|
|
$493,748
|
|
$481,962
|
|
|
$1,493,477
|
|
$1,451,538
|
|
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: expected physical settlement of the forward
sale agreements and use of proceeds from any such settlement, our
expected investment and expansion activity, 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, 2019 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, 2019 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;
- the competitive environment in which we operate;
- 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;
- 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;
- 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;
- environmental liabilities and risks related to natural
disasters;
- 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; and
- 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;
- our ability to attract and retain qualified personnel and to
attract and retain customers; 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. We discussed a number of additional material
risks in our annual report on Form 10-K for the year ended
December 31, 2018 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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SOURCE Digital Realty