SAN FRANCISCO, Feb. 13, 2020 /PRNewswire/ -- Digital
Realty (NYSE: DLR), a leading global provider of data center,
colocation and interconnection solutions, announced today financial
results for the fourth 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
$1.50 per share in 4Q19, compared to
$0.15 in 4Q18
- Reported FFO per share of $1.62
in 4Q19, compared to $1.54 in
4Q18
- Reported core FFO per share of $1.62 in 4Q19, compared to $1.68 in 4Q18
- Signed total bookings during 4Q19 expected to generate
$69 million of annualized GAAP rental
revenue, including a $7 million
contribution from interconnection
Financial Results
Digital Realty reported revenues for the fourth quarter of 2019
of $787 million, a 2% decrease from
the previous quarter and a 1% increase from the same quarter last
year.
The company delivered fourth quarter of 2019 net income of
$349 million, and net income
available to common stockholders of $316
million, or $1.50 per share,
compared to $0.24 per share in the
previous quarter and $0.15 per share
in the same quarter last year.
Digital Realty generated fourth quarter of 2019 adjusted EBITDA
of $462 million, a 2% decrease from
the previous quarter and a 1% decrease from the same quarter last
year (reflecting the January 1, 2019
adoption of FASB Accounting Standard Codification Topic 842,
Leases).
The company reported fourth quarter of 2019 funds from
operations of $354 million, or
$1.62 per share, compared to
$1.59 per share in the previous
quarter and $1.54 per share in the
same quarter last year.
Excluding certain items that do not represent core expenses or
revenue streams, Digital Realty delivered fourth quarter of 2019
core FFO per share of $1.62, a 3%
decrease from $1.67 per share in the
previous quarter, and a 4% decrease from $1.68 per share in the same quarter last
year.
Leasing Activity
"In the fourth quarter, we signed total bookings expected to
generate $69 million of annualized
GAAP rental revenue, including a $7
million contribution from interconnection," said Chief
Executive Officer A. William
Stein. "We made significant progress towards a number
of key strategic priorities. We continued to enhance our
customer offerings with the launch of PlatformDIGITALTM,
a first-of-its-kind global data center platform, and we continued
to extend our global footprint with an agreement to combine with
Interxion. We also executed on our private capital initiative
with the closing of our joint venture with Mapletree, and we
further strengthened the balance sheet with the issuance of
low-cost debt and preferred equity capital. Looking ahead to
2020 and beyond, we are confident that Digital Realty's global,
full-product platform will continue to deliver sustainable growth
for all stakeholders."
The weighted-average lag between leases signed during the fourth
quarter of 2019 and the contractual commencement date was four
months.
In addition to new leases signed, Digital Realty also signed
renewal leases representing $117
million of annualized GAAP rental revenue during the
quarter. Rental rates on renewal leases signed during the
fourth quarter of 2019 rolled down 0.6% on a cash basis and up 4.2%
on a GAAP basis.
New leases signed during the fourth 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
|
|
$34,353
|
|
|
282,393
|
|
|
$122
|
|
|
28.6
|
|
|
|
$100
|
|
Powered Base
Building
|
|
582
|
|
|
27,460
|
|
|
21
|
|
|
—
|
|
|
|
—
|
|
Colocation
|
|
5,957
|
|
|
20,768
|
|
|
287
|
|
|
2.0
|
|
|
|
251
|
|
Non-Technical
|
|
455
|
|
|
14,694
|
|
|
31
|
|
|
—
|
|
|
|
—
|
|
Total
|
|
$41,347
|
|
|
345,315
|
|
|
$120
|
|
|
30.6
|
|
|
|
$110
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Europe
(1)
|
|
|
|
|
|
|
|
|
|
|
|
Turn-Key
Flex
|
|
$4,607
|
|
|
19,687
|
|
|
$234
|
|
|
2.2
|
|
|
|
$174
|
|
Colocation
|
|
2,020
|
|
|
5,021
|
|
|
402
|
|
|
0.6
|
|
|
|
303
|
|
Non-Technical
|
|
61
|
|
|
1,846
|
|
|
33
|
|
|
—
|
|
|
|
—
|
|
Total
|
|
$6,688
|
|
|
26,554
|
|
|
$252
|
|
|
2.8
|
|
|
|
$200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asia Pacific
(1)
|
|
|
|
|
|
|
|
|
|
|
|
Turn-Key
Flex
|
|
$13,679
|
|
|
91,326
|
|
|
$150
|
|
|
7.9
|
|
|
|
$145
|
|
Colocation
|
|
32
|
|
|
92
|
|
|
347
|
|
|
—
|
|
|
|
266
|
|
Non-Technical
|
|
466
|
|
|
8,930
|
|
|
52
|
|
|
—
|
|
|
|
—
|
|
Total
|
|
$14,177
|
|
|
100,348
|
|
|
$141
|
|
|
7.9
|
|
|
|
$145
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interconnection
|
|
$6,942
|
|
|
N/A
|
|
N/A
|
|
N/A
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
Grand
Total
|
|
$69,154
|
|
|
472,217
|
|
|
$132
|
|
|
41.2
|
|
|
|
$123
|
|
|
Note: Totals
may not foot due to rounding differences.
|
|
|
(1)
|
Based on quarterly
average exchange rates during the three months ended December 31,
2019.
|
Investment Activity
In November, Digital Realty closed on a joint venture with
Mapletree Investments and Mapletree Industrial Trust on three
existing Turn-Key Flex® data centers located in Ashburn,
Virginia. The transaction valued the three fully stabilized
hyper-scale facilities at approximately $1.0
billion. The 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 is retaining a
20% ownership interest in the joint venture, and Mapletree has
closed on the acquisition of the remaining 80% stake for
approximately $811 million.
Digital Realty will continue to operate and manage these
facilities, and the joint venture transaction will be completely
seamless from a customer perspective.
Subsequent to quarter-end, Digital Realty closed on the sale of
a portfolio of 10 Powered Base Building® properties to
Mapletree Investments and Mapletree Industrial Trust for
approximately $557 million, subject
to customary closing costs and transaction fees. These 10
properties are fully leased and are expected to generate 2020 cash
net operating income of approximately $37
million, representing a 6.6% cap rate. Digital Realty
will provide transitional property management services for the
Powered Base Building® portfolio for one year from the closing date
at a customary market rate.
Balance Sheet
Digital Realty had approximately $10.1
billion of total debt outstanding as of December 31, 2019, comprised of $10.0 billion of unsecured debt and approximately
$0.1 billion of secured debt.
At the end of the fourth quarter of 2019, net debt-to-adjusted
EBITDA was 5.7x, debt-plus-preferred-to-total enterprise value was
30.8% and fixed charge coverage was 4.1x. Pro forma for
settlement of the $1.1 billion
forward equity offering and the $557
million of proceeds from the Mapletree portfolio sale, net
debt-to-adjusted EBITDA was 5.0x and fixed charge coverage was
4.6x.
In early October, 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 in full) at a price of
$25.00 per share, generating gross
proceeds of approximately $345
million. Likewise in early October, Digital Realty
closed a €500 million (approximately $550
million) Euro-denominated offering of 8.5-year senior
unsecured notes due 2028 at 1.125%.
Subsequent to quarter-end, Digital Realty closed an offering of
€1.7 billion of Euro-denominated notes with a weighted-average
maturity of approximately seven years and a weighted-average coupon
of approximately 1.0%. The company intends to use a portion
of the net proceeds from these notes for refinancing the
outstanding debt of InterXion Holding N.V. or its subsidiaries and
the payment of certain transaction fees and expenses incurred in
connection with its combination with InterXion. If the
InterXion combination is not consummated on or prior to
January 27, 2021, Digital Realty will
be required to redeem €1.4 billion of the notes at a redemption
price equal to 101% of the principal amount of such notes, plus
accrued and unpaid interest, if any, up to, but not including, the
redemption date.
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. EST / 2:30 p.m. PST on February 13, 2020, a
presentation will be posted to the Investors section of the
company's website at https://investor.digitalrealty.com. The
presentation is designed to accompany the discussion of the
company's fourth quarter 2019 financial results and operating
performance. The conference call will feature Chief Executive
Officer A. William Stein and Senior
Vice President of Finance, Matt
Mercier.
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# 8863535 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 13, 2020. The
telephone replay can be accessed by dialing (877) 344-7529 (for
domestic callers) or (412) 317-0088 (for international callers) and
providing the conference ID# 10138356. 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 customers across the Americas, EMEA
and APAC, ranging from cloud and information technology services,
communications and social networking to financial services,
manufacturing, energy, healthcare and consumer products. To
learn more about Digital Realty, please visit digitalrealty.com or
follow us on LinkedIn, Twitter, Facebook, Instagram and
YouTube.
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
|
|
Twelve Months
Ended
|
|
31-Dec-19
|
30-Sep-19
|
30-Jun-19
|
31-Mar-19
|
31-Dec-18
|
|
31-Dec-19
|
31-Dec-18
|
Rental
revenues
|
$549,733
|
|
$564,975
|
|
$565,925
|
|
$585,425
|
|
$555,816
|
|
|
$2,266,058
|
|
$2,162,370
|
|
Tenant reimbursements
- Utilities
|
107,518
|
|
114,719
|
|
106,409
|
|
102,569
|
|
102,641
|
|
|
431,215
|
|
407,123
|
|
Tenant reimbursements
- Other
|
59,641
|
|
57,466
|
|
62,820
|
|
55,868
|
|
53,090
|
|
|
235,795
|
|
217,514
|
|
Interconnection &
other
|
65,576
|
|
65,312
|
|
64,232
|
|
68,168
|
|
63,803
|
|
|
263,288
|
|
249,706
|
|
Fee income
|
4,814
|
|
3,994
|
|
925
|
|
1,921
|
|
2,896
|
|
|
11,654
|
|
7,841
|
|
Other
|
181
|
|
—
|
|
486
|
|
564
|
|
21
|
|
|
1,231
|
|
1,924
|
|
Total Operating
Revenues
|
$787,463
|
|
$806,466
|
|
$800,797
|
|
$814,515
|
|
$778,267
|
|
|
$3,209,241
|
|
$3,046,478
|
|
|
|
|
|
|
|
|
|
|
Utilities
|
$125,127
|
|
$132,565
|
|
$123,398
|
|
$124,334
|
|
$122,108
|
|
|
$505,424
|
|
$477,047
|
|
Rental property
operating
|
129,034
|
|
126,866
|
|
128,634
|
|
130,620
|
|
133,024
|
|
|
515,154
|
|
480,018
|
|
Property
taxes
|
42,541
|
|
38,255
|
|
41,482
|
|
37,315
|
|
32,098
|
|
|
159,593
|
|
129,516
|
|
Insurance
|
3,055
|
|
3,103
|
|
3,441
|
|
2,991
|
|
2,412
|
|
|
12,590
|
|
11,402
|
|
Depreciation &
amortization
|
275,008
|
|
286,718
|
|
290,562
|
|
311,486
|
|
299,362
|
|
|
1,163,774
|
|
1,186,896
|
|
General &
administration
|
53,540
|
|
49,862
|
|
52,318
|
|
51,976
|
|
38,801
|
|
|
207,696
|
|
160,364
|
|
Severance, equity
acceleration, and legal expenses
|
1,130
|
|
123
|
|
665
|
|
1,483
|
|
602
|
|
|
3,401
|
|
3,303
|
|
Transaction and
integration expenses
|
17,106
|
|
4,115
|
|
4,210
|
|
2,494
|
|
25,917
|
|
|
27,925
|
|
45,327
|
|
Impairment of
investments in real estate
|
—
|
|
—
|
|
—
|
|
5,351
|
|
—
|
|
|
5,351
|
|
—
|
|
Other
expenses
|
1,989
|
|
92
|
|
7,115
|
|
4,922
|
|
1,096
|
|
|
14,118
|
|
2,818
|
|
Total Operating
Expenses
|
$648,530
|
|
$641,699
|
|
$651,825
|
|
$672,972
|
|
$655,420
|
|
|
$2,615,026
|
|
$2,496,691
|
|
|
|
|
|
|
|
|
|
|
Operating
Income
|
$138,933
|
|
$164,767
|
|
$148,972
|
|
$141,543
|
|
$122,847
|
|
|
$594,215
|
|
$549,787
|
|
|
|
|
|
|
|
|
|
|
Equity in earnings of
unconsolidated joint ventures
|
$11,157
|
|
($19,269)
|
|
$6,962
|
|
$9,217
|
|
$9,245
|
|
|
$8,067
|
|
$32,979
|
|
Gain on sale /
deconsolidation
|
267,651
|
|
—
|
|
—
|
|
67,497
|
|
7
|
|
|
335,148
|
|
80,049
|
|
Interest and other
income
|
10,734
|
|
16,842
|
|
16,980
|
|
21,444
|
|
1,106
|
|
|
66,000
|
|
3,481
|
|
Interest
(expense)
|
(80,880)
|
|
(84,574)
|
|
(86,051)
|
|
(101,552)
|
|
(84,883)
|
|
|
(353,057)
|
|
(321,529)
|
|
Tax benefit
(expense)
|
1,731
|
|
(4,826)
|
|
(4,634)
|
|
(4,266)
|
|
5,843
|
|
|
(11,995)
|
|
(2,084)
|
|
Loss from early
extinguishment of debt
|
—
|
|
(5,366)
|
|
(20,905)
|
|
(12,886)
|
|
(1,568)
|
|
|
(39,157)
|
|
(1,568)
|
|
Net
Income
|
$349,326
|
|
$67,574
|
|
$61,324
|
|
$120,997
|
|
$52,597
|
|
|
$599,221
|
$341,115
|
|
|
|
|
|
|
|
|
|
|
Net (income)
attributable to noncontrolling interests
|
(13,042)
|
|
(1,077)
|
|
(1,156)
|
|
(4,185)
|
|
(1,038)
|
|
|
(19,460)
|
|
(9,869)
|
|
Net Income
Attributable to Digital Realty Trust, Inc.
|
$336,284
|
|
$66,497
|
|
$60,168
|
|
$116,812
|
|
$51,559
|
|
|
$579,761
|
|
$331,246
|
|
|
|
|
|
|
|
|
|
|
Preferred stock
dividends, including undeclared dividends
|
(20,707)
|
|
(16,670)
|
|
(16,670)
|
|
(20,943)
|
|
(20,329)
|
|
|
(74,990)
|
|
(81,316)
|
|
Issuance costs
associated with redeemed preferred stock
|
—
|
|
—
|
|
(11,760)
|
|
—
|
|
—
|
|
|
(11,760)
|
|
—
|
|
|
|
|
|
|
|
|
|
|
Net Income
Available to Common Stockholders
|
$315,577
|
|
$49,827
|
|
$31,738
|
|
$95,869
|
|
$31,230
|
|
|
$493,011
|
|
$249,930
|
|
|
|
|
|
|
|
|
|
|
Weighted-average
shares outstanding - basic
|
208,776,355
|
|
208,421,470
|
|
208,284,407
|
|
207,809,383
|
|
206,345,138
|
|
|
208,325,823
|
|
206,035,408
|
|
Weighted-average
shares outstanding - diluted
|
210,286,278
|
|
209,801,771
|
|
209,435,572
|
|
208,526,249
|
|
207,113,100
|
|
|
209,481,231
|
|
206,673,471
|
|
Weighted-average
fully diluted shares and units
|
218,901,078
|
|
218,755,597
|
|
218,497,318
|
|
217,756,161
|
|
215,417,085
|
|
|
218,440,163
|
|
214,950,934
|
|
|
|
|
|
|
|
|
|
|
Net income per share
- basic
|
$1.51
|
|
$0.24
|
|
$0.15
|
|
$0.46
|
|
$0.15
|
|
|
$2.37
|
|
$1.21
|
|
Net income per share
- diluted
|
$1.50
|
|
$0.24
|
|
$0.15
|
|
$0.46
|
|
$0.15
|
|
|
$2.35
|
|
$1.21
|
|
Funds From Operations
and Core Funds From Operations
|
|
Unaudited and in
Thousands, Except Per Share Data
|
|
Reconciliation of
Net Income to Funds From Operations (FFO)
|
Three Months
Ended
|
|
Twelve Months
Ended
|
31-Dec-19
|
30-Sep-19
|
30-Jun-19
|
31-Mar-19
|
31-Dec-18
|
|
31-Dec-19
|
31-Dec-18
|
|
|
|
|
|
|
|
|
|
Net Income
Available to Common Stockholders
|
$315,577
|
|
$49,827
|
|
$31,738
|
|
$95,869
|
|
$31,230
|
|
|
$493,011
|
|
$249,930
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
Non-controlling
interests in operating partnership
|
13,100
|
|
2,300
|
|
1,400
|
|
4,300
|
|
1,300
|
|
|
21,100
|
|
10,180
|
|
Real estate related
depreciation & amortization (1)
|
271,371
|
|
283,090
|
|
286,915
|
|
307,864
|
|
295,724
|
|
|
1,149,240
|
|
1,173,917
|
|
Unconsolidated JV
real estate related depreciation & amortization
|
21,631
|
|
13,612
|
|
13,623
|
|
3,851
|
|
3,615
|
|
|
52,716
|
|
14,587
|
|
(Gain) on real estate
transactions
|
(267,651)
|
|
—
|
|
—
|
|
—
|
|
(7)
|
|
|
(267,651)
|
|
(80,049)
|
|
Impairment of
investments in real estate
|
—
|
|
—
|
|
—
|
|
5,351
|
|
—
|
|
|
5,351
|
|
—
|
|
Funds From
Operations
|
$354,028
|
|
$348,829
|
|
$333,676
|
|
$417,235
|
|
$331,862
|
|
|
$1,453,767
|
|
$1,368,565
|
|
|
|
|
|
|
|
|
|
|
Funds From
Operations - diluted
|
$354,028
|
|
$348,829
|
|
$333,676
|
|
$417,235
|
|
$331,862
|
|
|
$1,453,767
|
|
$1,368,565
|
|
|
|
|
|
|
|
|
|
|
Weighted-average
shares and units outstanding - basic
|
217,391
|
|
217,375
|
|
217,346
|
|
217,039
|
|
214,649
|
|
|
217,285
|
|
214,313
|
|
Weighted-average
shares and units outstanding - diluted (2)
|
218,901
|
|
218,756
|
|
218,497
|
|
217,756
|
|
215,417
|
|
|
218,440
|
|
214,951
|
|
|
|
|
|
|
|
|
|
|
Funds From
Operations per share - basic
|
$1.63
|
|
$1.60
|
|
$1.54
|
|
$1.92
|
|
$1.55
|
|
|
$6.69
|
|
$6.39
|
|
|
|
|
|
|
|
|
|
|
Funds From
Operations per share - diluted (2)
|
$1.62
|
|
$1.59
|
|
$1.53
|
|
$1.92
|
$1.54
|
|
|
$6.66
|
|
$6.37
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Twelve Months
Ended
|
Reconciliation of
FFO to Core FFO
|
31-Dec-19
|
30-Sep-19
|
30-Jun-19
|
31-Mar-19
|
31-Dec-18
|
|
31-Dec-19
|
31-Dec-18
|
|
|
|
|
|
|
|
|
|
Funds From
Operations - diluted
|
$354,028
|
|
$348,829
|
|
$333,676
|
|
$417,235
|
|
$331,862
|
|
|
$1,453,767
|
|
$1,368,565
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
Termination fees and
other non-core revenues (3)
|
(5,634)
|
|
(16,792)
|
|
(16,826)
|
|
(14,445)
|
|
(21)
|
|
|
(53,697)
|
|
(5,060)
|
|
Transaction and
integration expenses
|
17,106
|
|
4,115
|
|
4,210
|
|
2,494
|
|
25,917
|
|
|
27,925
|
|
45,327
|
|
Loss from early
extinguishment of debt
|
—
|
|
5,366
|
|
20,905
|
|
12,886
|
|
1,568
|
|
|
39,157
|
|
1,568
|
|
Issuance costs
associated with redeemed preferred stock
|
—
|
|
—
|
|
11,760
|
|
—
|
|
—
|
|
|
11,760
|
|
—
|
|
Severance, equity
acceleration, and legal expenses (4)
|
1,130
|
|
123
|
|
665
|
|
1,483
|
|
602
|
|
|
3,401
|
|
3,303
|
|
(Gain) / Loss on FX
revaluation
|
(10,422)
|
|
23,136
|
|
(4,251)
|
|
9,604
|
|
—
|
|
|
18,067
|
|
—
|
|
(Gain) on
contribution to unconsolidated joint venture, net of related
tax
|
—
|
|
—
|
|
—
|
|
(58,497)
|
|
—
|
|
|
(58,497)
|
|
—
|
|
Other non-core
expense adjustments
|
(1,511)
|
|
92
|
|
7,115
|
|
4,922
|
|
1,471
|
|
|
10,618
|
|
4,323
|
|
Core Funds From
Operations - diluted
|
$354,697
|
|
$364,869
|
|
$357,254
|
|
$375,682
|
|
$361,399
|
|
|
$1,452,501
|
|
$1,418,026
|
|
|
|
|
|
|
|
|
|
|
Weighted-average
shares and units outstanding - diluted (2)
|
218,901
|
|
218,756
|
|
218,497
|
|
217,756
|
|
215,417
|
|
|
218,440
|
|
214,951
|
|
|
|
|
|
|
|
|
|
|
Core Funds From
Operations per share - diluted (2)
|
$1.62
|
|
$1.67
|
|
$1.64
|
|
$1.73
|
|
$1.68
|
|
|
$6.65
|
|
$6.60
|
|
|
|
|
|
|
|
|
|
|
(1) Real
Estate Related Depreciation & Amortization:
|
Three Months
Ended
|
|
Twelve Months
Ended
|
|
31-Dec-19
|
30-Sep-19
|
30-Jun-19
|
31-Mar-19
|
31-Dec-18
|
|
31-Dec-19
|
31-Dec-18
|
|
|
|
|
|
|
|
|
|
Depreciation &
amortization per income statement
|
$275,008
|
|
$286,718
|
|
$290,562
|
|
$311,486
|
|
$299,362
|
|
|
$1,163,774
|
|
$1,186,896
|
|
Non-real estate
depreciation
|
(3,637)
|
|
(3,628)
|
|
(3,647)
|
|
(3,622)
|
|
(3,638)
|
|
|
(14,534)
|
|
(12,979)
|
|
|
|
|
|
|
|
|
|
|
Real Estate
Related Depreciation & Amortization
|
$271,371
|
|
$283,090
|
|
$286,915
|
|
$307,864
|
|
$295,724
|
|
|
$1,149,240
|
|
$1,173,917
|
|
|
|
(2)
|
For all periods
presented, we have excluded the effect of dilutive series C, series
G, series H, series I, series J, series K, and series L preferred
stock, as applicable, that may be converted into common stock upon
the occurrence of specified change in control transactions as
described in the articles supplementary governing the series C,
series G, series H, series I, series J, series K, and series L
preferred stock, as applicable, which we consider highly
improbable. See above for calculations of diluted FFO and the
share count detail section 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
|
|
Twelve Months
Ended
|
Reconciliation of
Core FFO to AFFO
|
31-Dec-19
|
30-Sep-19
|
30-Jun-19
|
31-Mar-19
|
31-Dec-18
|
|
31-Dec-19
|
31-Dec-18
|
|
|
|
|
|
|
|
|
|
Core FFO available
to common stockholders and unitholders
|
$354,697
|
|
$364,869
|
|
$357,254
|
|
$375,682
|
|
$361,399
|
|
|
$1,452,501
|
|
$1,418,026
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
Non-real estate
depreciation
|
3,637
|
|
3,628
|
|
3,647
|
|
3,622
|
|
3,638
|
|
|
14,534
|
|
12,979
|
|
Amortization of
deferred financing costs
|
3,064
|
|
2,900
|
|
2,905
|
|
4,493
|
|
3,128
|
|
|
13,362
|
|
12,207
|
|
Amortization of debt
discount/premium
|
612
|
|
466
|
|
515
|
|
760
|
|
971
|
|
|
2,353
|
|
3,630
|
|
Non-cash stock-based
compensation expense
|
8,937
|
|
8,906
|
|
9,468
|
|
7,592
|
|
5,609
|
|
|
34,903
|
|
25,349
|
|
Straight-line rental
revenue
|
(13,994)
|
|
(12,764)
|
|
(13,033)
|
|
(15,979)
|
|
(11,157)
|
|
|
(55,770)
|
|
(40,422)
|
|
Straight-line rental
expense
|
(342)
|
|
(209)
|
|
318
|
|
1,235
|
|
2,052
|
|
|
1,002
|
|
9,750
|
|
Above- and
below-market rent amortization
|
4,109
|
|
2,824
|
|
3,954
|
|
6,210
|
|
6,521
|
|
|
17,097
|
|
26,533
|
|
Deferred tax
expense
|
(998)
|
|
(1,418)
|
|
(979)
|
|
(15,397)
|
|
(8,835)
|
|
|
(18,792)
|
|
(11,970)
|
|
Leasing compensation
& internal leasing commissions (1)
|
3,646
|
|
3,254
|
|
4,025
|
|
3,581
|
|
(5,160)
|
|
|
14,506
|
|
(21,007)
|
|
Recurring capital
expenditures (2)
|
(54,731)
|
|
(48,408)
|
|
(39,515)
|
|
(38,059)
|
|
(47,951)
|
|
|
(180,713)
|
|
(132,226)
|
|
|
|
|
|
|
|
|
|
|
AFFO available to
common stockholders and unitholders (3)
|
$308,637
|
|
$324,048
|
|
$328,559
|
|
$333,740
|
|
$310,215
|
|
|
$1,294,983
|
|
$1,302,849
|
|
|
|
|
|
|
|
|
|
|
Weighted-average
shares and units outstanding - basic
|
217,391
|
|
217,375
|
|
217,346
|
|
217,039
|
|
214,649
|
|
|
217,285
|
|
214,313
|
|
Weighted-average
shares and units outstanding - diluted (4)
|
218,901
|
|
218,756
|
|
218,497
|
|
217,756
|
|
215,417
|
|
|
218,440
|
|
214,951
|
|
|
|
|
|
|
|
|
|
|
AFFO per share -
diluted (4)
|
$1.41
|
|
$1.48
|
|
$1.50
|
|
$1.53
|
|
$1.44
|
|
|
$5.93
|
|
$6.06
|
|
|
|
|
|
|
|
|
|
|
Dividends per share
and common unit
|
$1.08
|
|
$1.08
|
|
$1.08
|
|
$1.08
|
|
$1.01
|
|
|
$4.32
|
|
$4.04
|
|
|
|
|
|
|
|
|
|
|
Diluted AFFO
Payout Ratio
|
76.6
|
%
|
72.9
|
%
|
71.8
|
%
|
70.5
|
%
|
70.1
|
%
|
|
72.9
|
%
|
66.7
|
%
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Twelve Months
Ended
|
Share Count
Detail
|
31-Dec-19
|
30-Sep-19
|
30-Jun-19
|
31-Mar-19
|
31-Dec-18
|
|
31-Dec-19
|
31-Dec-18
|
|
|
|
|
|
|
|
|
|
Weighted Average
Common Stock and Units Outstanding
|
217,391
|
|
217,375
|
|
217,346
|
|
217,039
|
|
214,649
|
|
|
217,285
|
|
214,313
|
|
Add: Effect of
dilutive securities
|
1,510
|
|
1,381
|
|
1,151
|
|
717
|
|
768
|
|
|
1,155
|
|
638
|
|
|
|
|
|
|
|
|
|
|
Weighted Avg.
Common Stock and Units Outstanding - diluted
|
218,901
|
|
218,756
|
|
218,497
|
|
217,756
|
|
215,417
|
|
|
218,440
|
|
214,951
|
|
|
|
(1)
|
The company adopted
ASC 842 in the first quarter of 2019.
|
|
|
(2)
|
Recurring capital
expenditures represent non-incremental building improvements
required to maintain current revenues, including second-generation
tenant improvements and external leasing commissions.
Recurring capital expenditures do not include acquisition costs
contemplated when underwriting the purchase of a building, costs
which are incurred to bring a building up to Digital Realty's
operating standards, or internal leasing commissions.
|
|
|
(3)
|
For a definition and
discussion of AFFO, see the definitions section. For a
reconciliation of net income available to common stockholders to
FFO and core FFO, see above.
|
|
|
(4)
|
For all periods
presented, we have excluded the effect of dilutive series C, series
G, series H, series I, series J, series K, and series L preferred
stock, as applicable, that may be converted into common stock upon
the occurrence of specified change in control transactions as
described in the articles supplementary governing the series C,
series G, series H, series I, series J, series K, and series L
preferred stock, as applicable, which we consider highly
improbable. See above for calculations of diluted FFO available to
common stockholders and unitholders and for calculations of
weighted average common stock and units outstanding.
|
Consolidated Balance
Sheets
|
Unaudited and in
Thousands, Except Share and Per Share Data
|
|
|
30-Dec-19
|
30-Sep-19
|
30-Jun-19
|
31-Mar-19
|
31-Dec-18
|
Assets
|
|
|
|
|
|
Investments in real
estate:
|
|
|
|
|
|
Real
estate
|
$16,886,592
|
|
$16,407,080
|
|
$17,324,416
|
|
$16,988,322
|
|
$17,055,017
|
|
Construction in
progress
|
1,732,555
|
|
1,647,130
|
|
1,685,056
|
|
1,584,327
|
|
1,621,927
|
|
Land held for future
development
|
147,597
|
|
150,265
|
|
152,368
|
|
163,081
|
|
162,941
|
|
Investments in
real estate
|
$18,766,744
|
|
$18,204,475
|
|
$19,161,840
|
|
$18,735,730
|
|
$18,839,885
|
|
Accumulated
depreciation and amortization
|
(4,536,169)
|
|
(4,298,629)
|
|
(4,312,357)
|
|
(4,124,002)
|
|
(3,935,267)
|
|
Net Investments in
Properties
|
$14,230,575
|
|
$13,905,846
|
|
$14,849,483
|
|
$14,611,728
|
|
$14,904,618
|
|
Investment in
unconsolidated joint ventures
|
1,287,109
|
|
1,035,861
|
|
979,350
|
|
930,326
|
|
175,108
|
|
Net Investments in
Real Estate
|
$15,517,684
|
|
$14,941,707
|
|
$15,828,833
|
|
$15,542,054
|
|
$15,079,726
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
$89,817
|
|
$7,190
|
|
$33,536
|
|
$123,879
|
|
$126,700
|
|
Accounts and other
receivables (1)
|
305,501
|
|
304,712
|
|
320,938
|
|
328,009
|
|
299,621
|
|
Deferred
rent
|
478,744
|
|
471,516
|
|
491,486
|
|
479,640
|
|
463,248
|
|
Acquired in-place
lease value, deferred leasing costs and other real estate
intangibles, net
|
2,195,324
|
|
2,245,017
|
|
2,499,564
|
|
2,580,624
|
|
3,144,395
|
|
Acquired above-market
leases, net
|
74,815
|
|
84,315
|
|
94,474
|
|
106,044
|
|
119,759
|
|
Goodwill
|
3,363,070
|
|
3,338,168
|
|
3,353,538
|
|
3,358,463
|
|
4,348,007
|
|
Assets associated
with real estate held for sale
|
229,934
|
|
967,527
|
|
—
|
|
—
|
|
—
|
|
Operating lease
right-of-use assets (2)
|
628,681
|
|
634,085
|
|
648,952
|
|
660,586
|
|
—
|
|
Other
assets
|
184,561
|
|
178,528
|
|
158,770
|
|
162,768
|
|
185,239
|
|
Total
Assets
|
$23,068,131
|
|
$23,172,765
|
|
$23,430,091
|
|
$23,342,067
|
|
$23,766,695
|
|
|
|
|
|
|
|
Liabilities and
Equity
|
|
|
|
|
|
Global unsecured
revolving credit facilities
|
$234,105
|
|
$1,833,512
|
|
$1,417,675
|
|
$842,975
|
|
$1,647,735
|
|
Unsecured term
loans
|
810,219
|
|
796,232
|
|
807,922
|
|
807,726
|
|
1,178,904
|
|
Unsecured senior
notes, net of discount
|
8,973,190
|
|
8,189,138
|
|
8,511,656
|
|
8,523,462
|
|
7,589,126
|
|
Secured debt, net of
premiums
|
104,934
|
|
105,153
|
|
105,325
|
|
105,493
|
|
685,714
|
|
Operating lease
liabilities (2)
|
693,539
|
|
699,381
|
|
714,256
|
|
725,470
|
|
—
|
|
Accounts payable and
other accrued liabilities
|
1,007,761
|
|
938,740
|
|
984,812
|
|
922,571
|
|
1,164,509
|
|
Accrued dividends and
distributions
|
234,620
|
|
—
|
|
—
|
|
—
|
|
217,241
|
|
Acquired below-market
leases
|
148,774
|
|
153,422
|
|
183,832
|
|
192,667
|
|
200,113
|
|
Security deposits and
prepaid rent
|
208,724
|
|
203,708
|
|
213,549
|
|
221,526
|
|
209,311
|
|
Liabilities
associated with assets held for sale
|
2,700
|
|
23,534
|
|
—
|
|
—
|
|
—
|
|
Total
Liabilities
|
$12,418,566
|
|
$12,942,820
|
|
$12,939,027
|
|
$12,341,890
|
|
$12,892,653
|
|
|
|
|
|
|
|
Redeemable
non-controlling interests - operating partnership
|
41,465
|
|
19,090
|
|
17,344
|
|
17,678
|
|
15,832
|
|
|
|
|
|
|
|
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
|
|
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
|
|
203,264
|
|
203,423
|
|
—
|
|
Series L Cumulative
Redeemable Preferred Stock (9)
|
334,886
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Common Stock: $0.01
par value per share, 315,000,000 shares authorized (10)
|
2,073
|
|
2,069
|
|
2,067
|
|
2,066
|
|
2,051
|
|
Additional paid-in
capital
|
11,577,320
|
|
11,540,980
|
|
11,511,519
|
|
11,492,766
|
|
11,355,751
|
|
Dividends in excess
of earnings
|
(3,046,579)
|
|
(3,136,668)
|
|
(2,961,307)
|
|
(2,767,708)
|
|
(2,633,071)
|
|
Accumulated other
comprehensive (loss), net
|
(87,922)
|
|
(68,625)
|
|
(89,588)
|
|
(91,699)
|
|
(115,647)
|
|
Total
Stockholders' Equity
|
$9,879,312
|
|
$9,437,290
|
|
$9,562,225
|
|
$10,088,408
|
|
$9,858,644
|
|
|
|
|
|
|
|
Noncontrolling
Interests
|
|
|
|
|
|
Noncontrolling
interest in operating partnership
|
$708,163
|
|
$732,314
|
|
$756,050
|
|
$772,931
|
|
$906,510
|
|
Noncontrolling
interest in consolidated joint ventures
|
20,625
|
|
41,251
|
|
155,445
|
|
121,160
|
|
93,056
|
|
|
|
|
|
|
|
Total
Noncontrolling Interests
|
$728,788
|
|
$773,565
|
|
$911,495
|
|
$894,091
|
|
$999,566
|
|
|
|
|
|
|
|
Total
Equity
|
$10,608,100
|
|
$10,210,855
|
|
$10,473,720
|
|
$10,982,499
|
|
$10,858,210
|
|
|
|
|
|
|
|
Total Liabilities
and Equity
|
$23,068,131
|
|
$23,172,765
|
|
$23,430,091
|
|
$23,342,067
|
|
$23,766,695
|
|
|
|
(1)
|
Net of allowance for
doubtful accounts of $13,753 and $11,554, as of December 31, 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 December 31, 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 December 31,
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 December 31, 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 December 31,
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 December 31, 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 December 31, 2019 and
December 31, 2018, respectively.
|
|
|
(9)
|
Series L Cumulative
Redeemable Preferred Stock, 5.200%, $345,000 and $0 liquidation
preference, respectively ($25.00 per share), 13,800,000 and 0
shares issued and outstanding as of December 31, 2019 and
December 31, 2018, respectively.
|
|
|
(10)
|
Common Stock:
208,900,758 and 206,425,656 shares issued and outstanding as of
December 31, 2019 and December 31, 2018,
respectively.
|
Reconciliation of
Earnings Before Interest, Taxes,
|
Depreciation &
Amortization and Financial Ratios Unaudited and in
Thousands
|
|
Reconciliation of
Earnings Before Interest, Taxes,
Depreciation & Amortization (EBITDA) (1)
|
Three Months
Ended
|
31-Dec-19
|
30-Sep-19
|
30-Jun-19
|
31-Mar-19
|
31-Dec-18
|
|
|
|
|
|
|
|
Net Income
Available to Common Stockholders
|
$315,577
|
$49,827
|
|
$31,738
|
|
$95,869
|
|
$31,230
|
Interest
|
80,880
|
|
84,574
|
|
86,051
|
|
101,552
|
|
84,883
|
|
Loss from early
extinguishment of debt
|
—
|
|
5,366
|
|
20,905
|
|
12,886
|
|
1,568
|
|
Tax (benefit)
expense
|
(1,731)
|
|
4,826
|
|
4,634
|
|
4,266
|
|
(5,843)
|
|
Depreciation &
amortization
|
275,008
|
|
286,718
|
|
290,562
|
|
311,486
|
|
299,362
|
|
EBITDA
|
$669,734
|
|
$431,311
|
|
$433,890
|
|
$526,059
|
|
$411,200
|
|
Unconsolidated JV
real estate related depreciation & amortization
|
21,631
|
|
13,612
|
|
13,623
|
|
3,851
|
|
3,615
|
|
Severance, equity
acceleration, and legal expenses
|
1,130
|
|
123
|
|
665
|
|
1,483
|
|
602
|
|
Transaction and
integration expenses
|
17,106
|
|
4,115
|
|
4,210
|
|
2,494
|
|
25,917
|
|
(Gain) on sale /
deconsolidation
|
(267,651)
|
|
—
|
|
—
|
|
(67,497)
|
|
(7)
|
|
Impairment of
investments in real estate
|
—
|
|
—
|
|
—
|
|
5,351
|
|
—
|
|
Other non-core
adjustments, net
|
(13,886)
|
|
6,436
|
|
(13,476)
|
|
(13,806)
|
|
1,471
|
|
Non-controlling
interests
|
13,042
|
|
1,077
|
|
1,156
|
|
4,185
|
|
1,038
|
|
Preferred stock
dividends, including undeclared dividends
|
20,707
|
|
16,670
|
|
16,670
|
|
20,943
|
|
20,329
|
|
Issuance costs
associated with redeemed preferred stock
|
—
|
|
—
|
|
11,760
|
|
—
|
|
—
|
|
Adjusted
EBITDA
|
$461,813
|
|
$473,344
|
|
$468,498
|
|
$483,063
|
|
$464,165
|
|
(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
December 31, 2019, GAAP interest
expense was $81 million, capitalized interest was $10 million and scheduled debt principal payments
and preferred dividends was $21
million.
|
Three Months
Ended
|
|
Twelve Months
Ended
|
Reconciliation of
Net Operating Income (NOI) (in thousands)
|
31-Dec-19
|
30-Sep-19
|
31-Dec-18
|
|
31-Dec-19
|
31-Dec-18
|
|
|
|
|
|
|
|
Operating
income
|
$138,933
|
|
$164,767
|
|
$122,847
|
|
|
$594,215
|
|
$549,787
|
|
|
|
|
|
|
|
|
Fee income
|
(4,814)
|
|
(3,994)
|
|
(2,896)
|
|
|
(11,654)
|
|
(7,841)
|
|
Other
income
|
(181)
|
|
—
|
|
(21)
|
|
|
(1,231)
|
|
(1,924)
|
|
Depreciation and
amortization
|
275,008
|
|
286,718
|
|
299,362
|
|
|
1,163,774
|
|
1,186,896
|
|
General and
administrative
|
53,540
|
|
49,862
|
|
38,801
|
|
|
207,696
|
|
160,364
|
|
Severance, equity
acceleration, and legal expenses
|
1,130
|
|
123
|
|
602
|
|
|
3,401
|
|
3,303
|
|
Transaction
expenses
|
17,106
|
|
4,115
|
|
25,917
|
|
|
27,925
|
|
45,327
|
|
Impairment in
investments in real estate
|
—
|
|
—
|
|
—
|
|
|
5,351
|
|
—
|
|
Other
expenses
|
1,989
|
|
92
|
|
1,096
|
|
|
14,118
|
|
2,818
|
|
|
|
|
|
|
|
|
Net Operating
Income
|
$482,711
|
|
$501,683
|
|
$485,708
|
|
|
$2,003,595
|
|
$1,938,730
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Net Operating
Income (Cash NOI)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Operating
Income
|
$482,711
|
|
$501,683
|
|
$485,708
|
|
|
$2,003,595
|
|
$1,938,730
|
|
|
|
|
|
|
|
|
Straight-line rental
revenue
|
(8,495)
|
|
(12,764)
|
|
(11,157)
|
|
|
(50,273)
|
|
(40,422)
|
|
Straight-line rental
expense
|
(306)
|
|
(193)
|
|
2,108
|
|
|
1,075
|
|
9,878
|
|
Above- and
below-market rent amortization
|
4,109
|
|
2,824
|
|
6,521
|
|
|
17,097
|
|
26,533
|
|
|
|
|
|
|
|
|
Cash Net Operating
Income
|
$478,019
|
|
$491,550
|
|
$483,180
|
|
|
$1,971,494
|
|
$1,934,719
|
|
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, the
expected benefits and timing of PlatformDIGITALTM, the
Mapletree transactions, the InterXion combination, our capital
markets activity and the use of proceeds from any such activity,
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, and
underlying assumptions, information related to trends, our strategy
and plans, leasing expectations, weighted average lease terms, the
exercise of lease extensions, lease expirations, debt maturities,
annualized rent at expiration of leases, the effect new leases and
increases in rental rates will have on our rental revenue, our
credit ratings, construction and development activity and plans,
projected construction costs, estimated yields on investment,
expected occupancy, expected square footage and IT load capacity
upon completion of development projects, 2020 backlog NOI, NAV
components, and other forward-looking financial data. Such
statements are based on management's beliefs and assumptions made
based on information currently available to management. Such
statements are subject to risks, uncertainties and assumptions and
are not guarantees of future performance and may be affected by
known and unknown risks, trends, uncertainties and factors that are
beyond our control. Should one or more of these risks or
uncertainties materialize, or should underlying assumptions prove
incorrect, actual results may vary materially from those
anticipated, estimated or projected. Some of the risks and
uncertainties that may cause our actual results, performance or
achievements to differ materially from those expressed or implied
by forward-looking statements include, among others, the
following:
- reduced demand for data centers or decreases in information
technology spending;
- 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 inability to achieve expected revenue synergies or cost
savings as a result of our combination with InterXion;
- each of our and InterXion's ability to consummate the
transactions contemplated by the purchase agreement, the timing of
the closing of those transactions and unexpected costs or
unexpected liabilities that may arise from the transactions,
whether or not consummated;
- 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, quarterly report
on Form 10-Q for the quarter ended September
30, 2019 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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content:http://www.prnewswire.com/news-releases/digital-realty-reports-fourth-quarter-2019-results-301004944.html
SOURCE Digital Realty