SAN FRANCISCO, Oct. 25,
2017 /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 2017. All per-share results are presented on a
fully-diluted share and unit basis.
Highlights
- Reported net loss available to common stockholders of
($0.02) per share in 3Q17, compared
to $1.25 per share in 3Q16
- Reported FFO per share of $1.23
in 3Q17, compared to $1.31 in
3Q16
- Reported core FFO per share of $1.51 in 3Q17, compared to $1.44 in 3Q16
- Signed total bookings during 3Q17 expected to generate
$58 million of annualized GAAP rental
revenue, including an $8 million
contribution from interconnection
- Raised 2017 core FFO per share outlook to $6.00 - $6.10 from $5.95 -
$6.10
Financial Results
Digital Realty reported third quarter of 2017 revenues of
$610 million, an 8% increase from the
previous quarter and a 12% increase from the same quarter last
year.
The company delivered third quarter of 2017 net income of
$12 million, and a net loss available
to common stockholders of ($4)
million, or ($0.02) per
diluted share, compared to net income available to common
stockholders of $0.36 per diluted
share in the previous quarter and $1.25 per diluted share in the same quarter last
year.
Digital Realty generated third quarter of 2017 adjusted EBITDA
of $352 million, a 7% increase from
the previous quarter and a 15% increase over the same quarter last
year.
The company reported third quarter of 2017 funds from operations
("FFO") on a fully diluted basis of $215
million, or $1.23 per share,
compared to $1.44 per share in the
previous quarter and $1.31 per share
in same quarter last year.
Excluding certain items that do not represent core expenses or
revenue streams, Digital Realty delivered third quarter of 2017
core FFO of $1.51 per share, a 2%
decrease from $1.54 per share in the
previous quarter, and a 5% increase from $1.44 per share in the same quarter last
year.
Leasing Activity
"During the third quarter of 2017, we signed total bookings
representing $58 million of
annualized GAAP rental revenue, including an $8 million contribution from interconnection,"
said Chief Executive Officer A. William
Stein. "Our third-quarter activity showcased the
strengths of our diversified business, particularly the strategic
importance of our expanded footprint in Ashburn, the largest and
fastest-growing data center market in the world. In addition,
colocation and interconnection continue to provide stable and
healthy revenue drivers. Heading into the end of the year, we
continue to see healthy demand across all three lines of the
business, and are focused on fully integrating DuPont Fabros while
executing against our goals as a combined organization."
The weighted-average lag between leases signed during the third
quarter of 2017 and the contractual commencement date was four
months.
In addition to new leases signed, Digital Realty also signed
renewal leases representing $66
million of annualized GAAP rental revenue during the
quarter. Rental rates on renewal leases signed during the
third quarter of 2017 rolled down 3.8% on a cash basis and up 1.5%
on a GAAP basis.
New leases signed during the third quarter of 2017 by region and
product type are summarized as follows:
|
|
Annualized
GAAP
|
|
|
|
|
|
|
|
|
|
|
|
Base
Rent
|
|
|
|
GAAP Base
Rent
|
|
|
|
|
GAAP Base
Rent
|
North
America
|
|
(in
thousands)
|
|
Square
Feet
|
|
per Square
Foot
|
|
Megawatts
|
|
per
Kilowatt
|
Turn-Key
Flex
|
|
$42,431
|
|
|
315,300
|
|
|
$135
|
|
|
32
|
|
|
|
$112
|
|
Colocation
|
|
5,077
|
|
|
18,092
|
|
|
281
|
|
|
1
|
|
|
|
355
|
|
Non-Technical
|
|
2,058
|
|
|
102,203
|
|
|
20
|
|
|
—
|
|
|
|
—
|
|
Total
|
|
$49,566
|
|
|
435,595
|
|
|
$114
|
|
|
33
|
|
|
|
$121
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Europe
(1)
|
|
|
|
|
|
|
|
|
|
|
|
Turn-Key
Flex
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
Powered Base
Building
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
Colocation
|
|
$839
|
|
|
1,538
|
|
|
$546
|
|
|
—
|
|
|
|
$409
|
|
Non-Technical
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
Total
|
|
$839
|
|
|
1,538
|
|
|
$546
|
|
|
—
|
|
|
|
$409
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asia Pacific
(1)
|
|
|
|
|
|
|
|
|
|
|
|
Turn-Key
Flex
|
|
$15
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
$412
|
|
Total
|
|
$15
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
$412
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interconnection
|
|
$7,678
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Grand
Total
|
|
$58,098
|
|
|
437,133
|
|
|
$115
|
|
|
33
|
|
|
|
$122
|
|
|
Note: Totals
may not foot due to rounding differences.
|
|
(1)
|
Based on quarterly
average exchange rates during the three months ended
September 30, 2017.
|
Investment Activity
During the third quarter of 2017, Digital Realty completed the
previously announced acquisition of DuPont Fabros in an all-stock
transaction valued at $7.9 billion in
enterprise value.
Digital Realty also acquired land parcels adjacent to the
company's existing holdings in Osaka,
Japan and Garland, TX
during the third quarter of 2017 for a total purchase price of
approximately $10 million. The
two parcels total 20 acres, and are expected to support the
development of up to 51 megawatts of critical power.
Commencement of development will be subject to market demand and
delivery will be phased to facilitate customer expansion
requirements upon completion of the company's existing projects in
Osaka and Richardson, TX.
Likewise during the third quarter of 2017, Digital Realty
recognized impairment losses of approximately $29 million on assets held for sale to reduce the
carrying value of three properties to their estimated fair market
value at September 30, 2017.
Separately, Digital Realty closed on the sale of 8025 North
Interstate 35, a 62,000 square foot Powered Base Building data
center in Austin, TX for
$20 million. The property was
100% leased and was expected to generate cash net operating income
of approximately $1 million in 2017,
representing an exit cap rate of 5%. The sale generated net
proceeds of approximately $20
million, and Digital Realty recognized a gain on the sale of
approximately $10 million in the
third quarter of 2017.
Subsequent to the end of the quarter, Digital Realty closed on
the sale of 44874 Moran Road, a 78,000 square foot data center in
Sterling, VA for $34 million. The property was 100% leased
and was expected to generate cash net operating income of
approximately $3 million in 2017,
representing an exit cap rate of 7%. The property was held in
a consolidated joint venture, in which Digital Realty owned a 75%
stake. The sale generated net proceeds of $34 million, and Digital Realty expects to
recognize a gain on the sale of approximately $15 million during the fourth quarter, or roughly
$12 million, net of non-controlling
interests.
Likewise subsequent to the end of the quarter, Digital Realty
entered into a 50/50 joint venture with Mitsubishi Corporation to
provide data center solutions in Japan. Mitsubishi
Corporation will contribute two existing data center facilities in
the western Tokyo suburb of
Mitaka, while Digital Realty will contribute its recently completed
data center development project in Osaka. The three seed
assets are collectively valued at approximately 40 billion Japanese Yen, or approximately
$350 million.
Also subsequent to quarter-end, Digital Realty entered into an
agreement to acquire a 250,000 square foot data center on a 19-acre
site in Northlake, Illinois from a
non-traded, publicly registered REIT for a purchase price of
$315 million. The property is
located approximately four miles from the company's Franklin Park campus. Roughly
three-fourths of the building has been developed and is fully
leased, with the remaining 65,000 square feet of shell space
available for build-out of approximately eight megawatts of
critical load from a dedicated on-site sub-station. The
transaction remains subject to certain closing conditions, and
Digital Realty cannot provide any assurances if, or when the
transaction will close.
Balance Sheet
Digital Realty had approximately $8.5
billion of total debt outstanding as of September 30,
2017, substantially all of which was unsecured. At the end of
the third quarter of 2017, net debt-to-adjusted EBITDA was 6.0x,
debt-plus-preferred-to-total enterprise value was 27.8% and fixed
charge coverage was 3.9x.
During the third quarter of 2017, Digital Realty completed the
following financing transactions.
- On July 21, 2017, Digital Realty
issued £250 million of 2.75% Sterling-denominated notes due 2024 and £350
million of 3.30% Sterling-denominated notes due 2029,
generating gross proceeds of approximately $780 million.
- On August 7, 2017, Digital Realty
issued $350 million of 2.75% notes
due 2023 and $1.0 billion of 3.70%
notes due 2027.
- Also on August 7, 2017, Digital
Realty closed an offering of eight million shares of 5.25% Series J
Cumulative Redeemable Preferred Stock at a price of $25.00 per share, generating gross proceeds of
$200 million.
- On September 14, 2017, Digital
Realty closed the acquisition of DuPont Fabros, and exchanged
approximately 43 million shares of DLR Common Stock and six million
Operating Partnership Units for all of the outstanding common
shares and units of DuPont Fabros, representing total consideration
of approximately $6 billion.
- Likewise in conjunction with the closing of the DuPont Fabros
acquisition on September 14, 2017,
Digital Realty exchanged all the outstanding shares of DuPont
Fabros' Series C Preferred Stock for 8.05 million shares of Digital
Realty Series C Preferred Stock, with a total liquidation value of
$201 million.
- Digital Realty also purchased a portion of the DuPont Fabros
5.875% notes due 2021 and redeemed the remainder in mid-September.
The aggregate principal amount totaled $600
million.
- Subsequent to the end of the quarter, Digital Realty redeemed
DuPont Fabros' 5.625% notes due 2023. When Digital Realty assumed
the bonds, the fair market value of $266
million was recorded on the balance sheet. The aggregate
principal amount totaled $250 million
and was redeemed in October
2017.
Non-GAAP Financial Measures
This press release contains non-GAAP financial measures,
including FFO, core FFO, constant-currency 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 constant-currency core FFO, and definitions of FFO, core
FFO and constant-currency 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
25, 2017, 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
2017 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# 9681339 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 22, 2017. 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# 10111773. 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 2,300 firms across its
secure, network-rich portfolio of data centers located throughout
North America, Europe, Asia
and Australia. Digital Realty's clients include domestic and
international companies of all sizes, ranging from financial
services, cloud and information technology services, to
manufacturing, energy, gaming, life sciences and consumer
products.
Additional information about Digital Realty is included in the
Company Overview, available on the Investors page of Digital
Realty's website at www.digitalrealty.com. The Company
Overview is updated periodically, and may contain material
information and updates. To receive e-mail alerts when the
Company Overview is updated, please visit the Investors page of
Digital Realty's website.
Contact Information
Andrew P. Power
Chief Financial Officer
Digital Realty
(415) 738-6500
John J. Stewart / Maria S. Lukens
Investor Relations
Digital Realty
(415) 738-6500
2017 Outlook
Digital Realty raised its 2017 core FFO per share outlook from
$5.95 - $6.10 to $6.00 - $6.10. 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
|
Jan. 3,
2017
|
Feb. 16,
2017
|
Apr. 27,
2017
|
July 27,
2017
|
October 25,
2017
|
2017
total revenue
|
$2.2 - $2.3
billion
|
$2.2 - $2.3
billion
|
$2.2 - $2.3
billion
|
$2.2 - $2.3
billion
|
$2.4 - $2.5
billion
|
2017 net
non-cash rent adjustments (1)
|
($5 - $10
million)
|
($5 - $10
million)
|
($5 - $10
million)
|
($5 - $10
million)
|
($5 - $10
million)
|
2017
Adjusted EBITDA margin
|
57.0% -
59.0%
|
57.0% -
59.0%
|
57.0% -
59.0%
|
57.0% -
59.0%
|
57.0% -
59.0%
|
2017
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
|
Slightly
positive
|
Slightly
positive
|
Slightly
positive
|
Slightly
positive
|
Slightly
positive
|
GAAP basis
|
Up high
single-digits
|
Up high
single-digits
|
Up high
single-digits
|
Up high
single-digits
|
Up high
single-digits
|
Year-end
portfolio occupancy
|
+/- 50 bps
|
+/- 50 bps
|
+/- 50 bps
|
+/- 50 bps
|
+/- 50 bps
|
"Same-capital" cash NOI growth (2)
|
2.0% -
3.0%
|
2.0% -
3.0%
|
2.0% -
3.0%
|
2.0% -
3.0%
|
3.0% -
3.5%
|
|
|
|
|
|
|
Foreign
Exchange Rates
|
|
|
|
|
|
U.S. Dollar / Pound
Sterling
|
$1.20 -
$1.24
|
$1.20 -
$1.24
|
$1.20 -
$1.28
|
$1.22 -
$1.30
|
$1.26 -
$1.30
|
U.S. Dollar /
Euro
|
$1.00 -
$1.05
|
$1.00 -
$1.05
|
$1.00 -
$1.10
|
$1.05 -
$1.15
|
$1.10 -
$1.15
|
|
|
|
|
|
|
|
|
|
|
|
|
External
Growth
|
|
|
|
|
|
Dispositions
|
|
|
|
|
|
Dollar
volume
|
$0 - $200
million
|
$0 - $200
million
|
$0 - $200
million
|
$0 - $200
million
|
$50 - $200
million
|
Cap
rate
|
0.0% -
10.0%
|
0.0% -
10.0%
|
0.0% -
10.0%
|
0.0% -
10.0%
|
0.0% -
10.0%
|
Development
|
|
|
|
|
|
CapEx
|
$0.8 - $1.0
billion
|
$0.8 - $1.0
billion
|
$0.8 - $1.0
billion
|
$0.8 - $1.0
billion
|
$0.9 - $1.0
billion
|
Average
stabilized yields
|
10.0% -
12.0%
|
10.0% -
12.0%
|
10.0% -
12.0%
|
10.0% -
12.0%
|
10.0% -
12.0%
|
Enhancements and other non-recurring CapEx (3)
|
$20 - $25
million
|
$20 - $25
million
|
$20 - $25
million
|
$20 - $25
million
|
$20 - $25
million
|
Recurring CapEx + capitalized leasing costs (4)
|
$125 - $135
million
|
$125 - $135
million
|
$125 - $135
million
|
$125 - $135
million
|
$125 - $135
million
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
Sheet
|
|
|
|
|
|
Long-term debt issuance
|
|
|
|
|
|
Dollar amount
|
$400 - $600
million
|
$400 - $600
million
|
$400 - $600
million
|
$770
million
|
$2.3
billion
|
Pricing
|
3.50% -
4.25%
|
3.50% -
4.25%
|
3.50% -
4.25%
|
3.1%
|
3.1%
|
Timing
|
Mid-to-late
2017
|
Mid-to-late
2017
|
Mid-to-late
2017
|
Mid-2017
|
Mid-2017
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per
diluted share
|
$1.60 -
$1.75
|
$1.60 -
$1.75
|
$1.55 -
$1.65
|
$1.55 -
$1.65
|
$1.10 -
$1.15
|
Real estate
depreciation and (gain)/loss on sale
|
$4.20 -
$4.20
|
$4.20 -
$4.20
|
$4.30 -
$4.30
|
$4.30 -
$4.30
|
$4.60 -
$4.60
|
Funds From
Operations / share (NAREIT-Defined)
|
$5.80 -
$5.95
|
$5.80 -
$5.95
|
$5.85 -
$5.95
|
$5.85 -
$5.95
|
$5.70 -
$5.75
|
Non-core expense and
revenue streams
|
$0.10 -
$0.15
|
$0.10 -
$0.15
|
$0.10 -
$0.15
|
$0.10 -
$0.15
|
$0.30 -
$0.35
|
Core Funds From
Operations / share
|
$5.90 -
$6.10
|
$5.90 -
$6.10
|
$5.95 -
$6.10
|
$5.95 -
$6.10
|
$6.00 -
$6.10
|
Foreign currency
translation adjustments
|
$0.05 -
$0.15
|
$0.05 -
$0.15
|
$0.05 -
$0.15
|
$0.05 -
$0.15
|
$0.05 -
$0.10
|
Constant-Currency
Core FFO / share
|
$5.95 -
$6.25
|
$5.95 -
$6.25
|
$6.00 -
$6.25
|
$6.00 -
$6.25
|
$6.05 -
$6.20
|
|
|
(1)
|
Net non-cash rent
adjustments represents the sum of straight-line rental revenue,
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, 2015 with less
than 5% of the total rentable square feet under development.
It also excludes properties that were undergoing, or were expected
to undergo, development activities in 2016-2017, 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. Capitalized leasing costs include
capitalized leasing compensation as well as capitalized internal
leasing commissions.
|
Safe Harbor Statement
This press release contains forward-looking statements which are
based on current expectations, forecasts and assumptions that
involve risks and uncertainties that could cause actual outcomes
and results to differ materially, including statements related to
the merger with DuPont Fabros Technology, Inc.; supply and demand
for data center and colocation space; the expected timing, benefits
and development of recent land acquisitions; impairment losses; our
joint venture in Japan;
acquisition and disposition activity, including transactions which
are under agreement but subject to closing conditions; 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; expected capital markets
activity; and the company's FFO, core FFO, constant-currency core
FFO and net income outlook and underlying assumptions. These
risks and uncertainties include, among others, the following: the
impact of current global economic, credit and market conditions;
current local economic conditions in the metropolitan areas in
which we operate; decreases in information technology spending,
including as a result of economic slowdowns or recession; 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); our
dependence upon significant tenants; bankruptcy or insolvency of a
major tenant or a significant number of smaller tenants; defaults
on or non-renewal of leases by tenants; our failure to obtain
necessary debt and equity financing; 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; financial
market fluctuations; changes in foreign currency exchange rates;
our inability to manage our growth effectively; difficulty
acquiring or operating properties in foreign jurisdictions; our
failure to successfully integrate and operate acquired or developed
properties or businesses; the suitability of our properties and
data center infrastructure, delays or disruptions in connectivity,
failure of our physical and information security infrastructure or
services or availability of power; risks related to joint venture
investments, including as a result of our lack of control of such
investments; delays or unexpected costs in development of
properties; decreased rental rates, increased operating costs or
increased vacancy rates; increased competition or available supply
of data center space; our inability to successfully develop and
lease new properties and development space; difficulties in
identifying properties to acquire and completing acquisitions; our
inability to acquire off-market properties; the impact of the
United Kingdom's referendum on
withdrawal from the European Union on global financial markets and
our business; our inability to comply with the rules and
regulations applicable to reporting companies; our failure to
maintain our status as a REIT; possible adverse changes to tax
laws; restrictions on our ability to engage in certain business
activities; environmental uncertainties and risks related to
natural disasters; losses in excess of our insurance coverage;
changes in foreign laws and regulations, including those related to
taxation and real estate ownership and operation; and changes in
local, state and federal regulatory requirements, including changes
in real estate and zoning laws and increases in real property tax
rates. For a further list and description of such risks and
uncertainties, see the reports and other filings by the company
with the U.S. Securities and Exchange Commission, including the
company's Annual Report on Form 10-K for the year ended
December 31, 2016, Quarterly Report
on Form 10-Q for the quarters ended March
31, 2017 and June 30, 2017 and
current report on Form 8-K filed July
10, 2017. The company disclaims any intention or
obligation to update or revise any forward-looking statements,
whether as a result of new information, future events or
otherwise.
Consolidated
Quarterly Statements of Operations
Unaudited and in thousands, except share and per share
data
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
30-Sep-17
|
30-Jun-17
|
31-Mar-17
|
31-Dec-16
|
30-Sep-16
|
|
30-Sep-17
|
30-Sep-16
|
Rental
revenues
|
$440,591
|
|
$412,576
|
|
$404,126
|
|
$399,062
|
|
$395,212
|
|
|
$1,257,293
|
|
$1,143,449
|
|
Tenant reimbursements
- Utilities
|
78,134
|
|
68,407
|
|
63,398
|
|
63,956
|
|
68,168
|
|
|
209,939
|
|
189,486
|
|
Tenant reimbursements
- Other
|
29,479
|
|
24,935
|
|
23,890
|
|
23,853
|
|
27,497
|
|
|
78,304
|
|
78,608
|
|
Interconnection &
other
|
59,851
|
|
58,301
|
|
57,225
|
|
55,094
|
|
53,897
|
|
|
175,377
|
|
149,223
|
|
Fee income
|
1,662
|
|
1,429
|
|
1,895
|
|
1,718
|
|
1,517
|
|
|
4,986
|
|
4,567
|
|
Other
|
208
|
|
341
|
|
35
|
|
33,104
|
|
2
|
|
|
584
|
|
93
|
|
Total Operating
Revenues
|
$609,925
|
|
$565,989
|
|
$550,569
|
|
$576,787
|
|
$546,293
|
|
|
$1,726,483
|
|
$1,565,426
|
|
|
|
|
|
|
|
|
|
|
Utilities
|
$95,619
|
|
$82,739
|
|
$77,198
|
|
$76,896
|
|
$85,052
|
|
|
$255,556
|
|
$229,365
|
|
Rental property
operating
|
94,442
|
|
91,977
|
|
92,141
|
|
92,372
|
|
92,140
|
|
|
278,560
|
|
261,544
|
|
Property
taxes
|
32,586
|
|
28,161
|
|
26,919
|
|
27,097
|
|
20,620
|
|
|
87,666
|
|
75,400
|
|
Insurance
|
2,590
|
|
2,576
|
|
2,592
|
|
2,369
|
|
2,470
|
|
|
7,758
|
|
7,123
|
|
Depreciation &
amortization
|
199,914
|
|
178,111
|
|
176,466
|
|
176,581
|
|
178,133
|
|
|
554,491
|
|
522,743
|
|
General &
administrative
|
41,477
|
|
37,144
|
|
33,778
|
|
40,481
|
|
43,555
|
|
|
112,399
|
|
106,044
|
|
Severance, equity
acceleration, and legal expenses
|
2,288
|
|
365
|
|
869
|
|
672
|
|
2,580
|
|
|
3,522
|
|
5,536
|
|
Transaction and
integration expenses
|
42,809
|
|
14,235
|
|
3,323
|
|
8,961
|
|
6,015
|
|
|
60,367
|
|
11,530
|
|
Impairment of
investments in real estate
|
28,992
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
28,992
|
|
—
|
|
Other
expenses
|
3,051
|
|
24
|
|
—
|
|
236
|
|
(22)
|
|
|
3,075
|
|
(23)
|
|
Total Operating
Expenses
|
$543,768
|
|
$435,332
|
|
$413,286
|
|
$425,665
|
|
$430,543
|
|
|
$1,392,386
|
|
$1,219,262
|
|
|
|
|
|
|
|
|
|
|
Operating
Income
|
$66,157
|
|
$130,657
|
|
$137,283
|
|
$151,122
|
|
$115,750
|
|
|
$334,097
|
|
$346,164
|
|
|
|
|
|
|
|
|
|
|
Equity in earnings of
unconsolidated joint ventures
|
$5,880
|
|
$8,388
|
|
$5,324
|
|
$4,742
|
|
$4,152
|
|
|
$19,592
|
|
$12,362
|
|
Gain (loss) on real
estate transactions
|
9,751
|
|
380
|
|
(522)
|
|
(195)
|
|
169,000
|
|
|
9,609
|
|
170,097
|
|
Interest and other
income
|
2,813
|
|
367
|
|
151
|
|
(970)
|
|
355
|
|
|
3,331
|
|
(3,594)
|
|
Interest
(expense)
|
(71,621)
|
|
(57,582)
|
|
(55,450)
|
|
(56,226)
|
|
(63,084)
|
|
|
(184,653)
|
|
(180,254)
|
|
Tax
(expense)
|
(2,494)
|
|
(2,639)
|
|
(2,223)
|
|
(2,304)
|
|
(3,720)
|
|
|
(7,356)
|
|
(8,081)
|
|
Gain (loss) from
early extinguishment of debt
|
1,990
|
|
—
|
|
—
|
|
(29)
|
|
(18)
|
|
|
1,990
|
|
(982)
|
|
Net
Income
|
$12,476
|
|
$79,571
|
|
$84,563
|
|
$96,140
|
|
$222,435
|
|
|
$176,610
|
|
$335,712
|
|
|
|
|
|
|
|
|
|
|
Net (income)
attributable to non-controlling interests
|
(40)
|
|
(920)
|
|
(1,025)
|
|
(1,065)
|
|
(3,247)
|
|
|
(1,985)
|
|
(4,600)
|
|
Net Income
Attributable to Digital Realty Trust, Inc.
|
$12,436
|
|
$78,651
|
|
$83,538
|
|
$95,075
|
|
$219,188
|
|
|
$174,625
|
|
$331,112
|
|
|
|
|
|
|
|
|
|
|
Preferred stock
dividends, including undeclared dividends
|
(16,575)
|
|
(14,505)
|
|
(17,393)
|
|
(17,393)
|
|
(21,530)
|
|
|
(48,473)
|
|
(66,378)
|
|
Issuance costs
associated with redeemed preferred stock
|
—
|
|
(6,309)
|
|
—
|
|
—
|
|
(10,328)
|
|
|
(6,309)
|
|
(10,328)
|
|
|
|
|
|
|
|
|
|
|
Net (Loss) Income
Available to Common Stockholders
|
($4,139)
|
|
$57,837
|
|
$66,145
|
|
$77,682
|
|
$187,330
|
|
|
$119,843
|
|
$254,406
|
|
|
|
|
|
|
|
|
|
|
Weighted-average
shares outstanding - basic
|
170,194,254
|
|
160,832,889
|
|
159,297,027
|
|
158,956,606
|
|
147,397,853
|
|
|
163,481,306
|
|
146,930,939
|
|
Weighted-average
shares outstanding - diluted
|
170,194,254
|
|
161,781,868
|
|
160,421,655
|
|
159,699,411
|
|
149,384,871
|
|
|
164,371,096
|
|
147,655,184
|
|
Weighted-average
fully diluted shares and units
|
174,169,511
|
|
164,026,578
|
|
162,599,529
|
|
162,059,914
|
|
151,764,542
|
|
|
166,937,862
|
|
150,076,482
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income per
share - basic
|
($0.02)
|
|
$0.36
|
|
$0.42
|
|
$0.49
|
|
$1.27
|
|
|
$0.73
|
|
$1.73
|
|
Net (loss) income per
share - diluted
|
($0.02)
|
|
$0.36
|
|
$0.41
|
|
$0.49
|
|
$1.25
|
|
|
$0.73
|
|
$1.72
|
|
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
|
|
Nine Months
Ended
|
30-Sep-17
|
30-Jun-17
|
31-Mar-17
|
31-Dec-16
|
30-Sep-16
|
|
30-Sep-17
|
30-Sep-16
|
|
|
|
|
|
|
|
|
|
Net (Loss) Income
Available to Common Stockholders
|
($4,139)
|
|
$57,837
|
|
$66,145
|
|
$77,682
|
|
$187,330
|
|
|
$119,843
|
|
$254,406
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
Non-controlling
interests in operating partnership
|
(79)
|
|
807
|
|
904
|
|
1,154
|
|
3,024
|
|
|
1,632
|
|
4,144
|
|
Real estate related
depreciation & amortization (1)
|
196,871
|
|
175,010
|
|
173,447
|
|
173,523
|
|
175,332
|
|
|
545,328
|
|
509,287
|
|
Impairment charge
related to Telx trade name
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
6,122
|
|
Unconsolidated JV
real estate related depreciation & amortization
|
2,732
|
|
2,754
|
|
2,757
|
|
2,823
|
|
2,810
|
|
|
8,243
|
|
8,424
|
|
(Gain) loss on real
estate transactions
|
(9,751)
|
|
(380)
|
|
522
|
|
195
|
|
(169,000)
|
|
|
(9,609)
|
|
(170,097)
|
|
Impairment of
investments in real estate
|
28,992
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
28,992
|
|
—
|
|
Funds From
Operations
|
$214,626
|
|
$236,028
|
|
$243,775
|
|
$255,377
|
|
$199,496
|
|
|
$694,429
|
|
$612,286
|
|
|
|
|
|
|
|
|
|
|
Funds From
Operations - diluted
|
$214,626
|
|
$236,028
|
|
$243,775
|
|
$255,377
|
|
$199,496
|
|
|
$694,429
|
|
$612,286
|
|
|
|
|
|
|
|
|
|
|
Weighted-average
shares and units outstanding - basic
|
173,461
|
|
163,078
|
|
161,475
|
|
161,317
|
|
149,778
|
|
|
166,048
|
|
149,352
|
|
Weighted-average
shares and units outstanding - diluted (2)
|
174,170
|
|
164,027
|
|
162,600
|
|
162,060
|
|
151,765
|
|
|
166,938
|
|
150,076
|
|
|
|
|
|
|
|
|
|
|
Funds From
Operations per share - basic
|
$1.24
|
|
$1.45
|
|
$1.51
|
|
$1.58
|
|
$1.33
|
|
|
$4.18
|
|
$4.10
|
|
|
|
|
|
|
|
|
|
|
Funds From
Operations per share - diluted (2)
|
$1.23
|
|
$1.44
|
|
$1.50
|
|
$1.58
|
|
$1.31
|
|
|
$4.16
|
|
$4.08
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
Reconciliation of
FFO to Core FFO
|
30-Sep-17
|
30-Jun-17
|
31-Mar-17
|
31-Dec-16
|
30-Sep-16
|
|
30-Sep-17
|
30-Sep-16
|
|
|
|
|
|
|
|
|
|
Funds From
Operations - diluted
|
$214,626
|
|
$236,028
|
|
$243,775
|
|
$255,377
|
|
$199,496
|
|
|
$694,429
|
|
$612,286
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
Termination fees and
other non-core revenues (3)
|
(208)
|
|
(341)
|
|
(35)
|
|
(33,104)
|
|
(2)
|
|
|
(584)
|
|
(93)
|
|
Transaction and
integration expenses
|
42,809
|
|
14,235
|
|
3,323
|
|
8,961
|
|
6,015
|
|
|
60,367
|
|
11,530
|
|
Gain (loss) from
early extinguishment of debt
|
(1,990)
|
|
—
|
|
—
|
|
29
|
|
18
|
|
|
(1,990)
|
|
982
|
|
Issuance costs
associated with redeemed preferred stock
|
—
|
|
6,309
|
|
—
|
|
—
|
|
10,328
|
|
|
6,309
|
|
10,328
|
|
Equity in earnings
adjustment for non-core items
|
—
|
|
(3,285)
|
|
—
|
|
—
|
|
—
|
|
|
(3,285)
|
|
—
|
|
Severance, equity
acceleration, and legal expenses (4)
|
2,288
|
|
365
|
|
869
|
|
672
|
|
2,580
|
|
|
3,522
|
|
5,536
|
|
Bridge facility fees
(5)
|
3,182
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
3,182
|
|
—
|
|
Loss on currency
forwards
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
3,082
|
|
Other non-core
expense adjustments
|
3,051
|
|
24
|
|
—
|
|
236
|
|
(22)
|
|
|
3,075
|
|
(23)
|
|
Core Funds From
Operations - diluted
|
$263,758
|
|
$253,335
|
|
$247,932
|
|
$232,171
|
|
$218,413
|
|
|
$765,025
|
|
$643,628
|
|
|
|
|
|
|
|
|
|
|
Weighted-average
shares and units outstanding - diluted (2)
|
174,170
|
|
164,027
|
|
162,600
|
|
162,060
|
|
151,765
|
|
|
166,938
|
|
150,076
|
|
|
|
|
|
|
|
|
|
|
Core Funds From
Operations per share - diluted (2)
|
$1.51
|
|
$1.54
|
|
$1.52
|
|
$1.43
|
|
$1.44
|
|
|
$4.58
|
|
$4.29
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Real
Estate Related Depreciation & Amortization:
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
30-Sep-17
|
30-Jun-17
|
31-Mar-17
|
31-Dec-16
|
30-Sep-16
|
|
30-Sep-17
|
30-Sep-16
|
|
|
|
|
|
|
|
|
|
Depreciation &
amortization per income statement
|
$199,914
|
|
$178,111
|
|
$176,466
|
|
$176,581
|
|
$178,133
|
|
|
$554,491
|
|
$522,743
|
|
Non-real estate
depreciation
|
(3,043)
|
|
(3,101)
|
|
(3,019)
|
|
(3,058)
|
|
(2,801)
|
|
|
(9,163)
|
|
(7,334)
|
|
Impairment charge
related to Telx trade name
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
(6,122)
|
|
|
|
|
|
|
|
|
|
|
Real Estate
Related Depreciation & Amortization
|
$196,871
|
|
$175,010
|
|
$173,447
|
|
$173,523
|
|
$175,332
|
|
|
$545,328
|
|
$509,287
|
|
|
|
(2)
|
For all periods
presented, we have excluded the effect of dilutive series C, series
E, series F, series G, series H, series I and series J preferred
stock, as applicable, that may be converted upon the occurrence of
specified change in control transactions as described in the
articles supplementary governing the series C, the series E, series
F, series G, series H, series I, and series J preferred stock, as
applicable, which we consider highly improbable. See above
for calculations of diluted FFO available to common stockholders
and unitholders and below 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.
|
(5)
|
Bridge facility fees
included in interest expense.
|
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-17
|
30-Jun-17
|
31-Mar-17
|
31-Dec-16
|
30-Sep-16
|
|
30-Sep-17
|
30-Sep-16
|
|
|
|
|
|
|
|
|
|
Core FFO available
to common stockholders and unitholders
|
$263,758
|
|
$253,335
|
|
$247,932
|
|
$232,171
|
|
$218,413
|
|
|
$765,025
|
|
$643,628
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
Non-real estate
depreciation
|
3,043
|
|
3,101
|
|
3,019
|
|
3,058
|
|
2,801
|
|
|
9,163
|
|
7,334
|
|
Amortization of
deferred financing costs
|
2,611
|
|
2,518
|
|
2,443
|
|
2,455
|
|
2,550
|
|
|
7,572
|
|
7,454
|
|
Amortization of debt
discount/premium
|
816
|
|
713
|
|
697
|
|
693
|
|
693
|
|
|
2,226
|
|
2,029
|
|
Non-cash stock-based
compensation expense
|
4,636
|
|
5,637
|
|
3,704
|
|
3,774
|
|
4,041
|
|
|
13,977
|
|
12,091
|
|
Straight-line rental
revenue
|
(1,692)
|
|
(2,110)
|
|
(4,058)
|
|
(5,210)
|
|
(6,032)
|
|
|
(7,860)
|
|
(19,043)
|
|
Straight-line rental
expense
|
4,212
|
|
4,343
|
|
4,187
|
|
5,096
|
|
6,402
|
|
|
12,742
|
|
17,990
|
|
Above- and
below-market rent amortization
|
(873)
|
|
(1,946)
|
|
(1,973)
|
|
(2,048)
|
|
(2,002)
|
|
|
(4,792)
|
|
(6,265)
|
|
Deferred non-cash tax
expense
|
284
|
|
(1,443)
|
|
(653)
|
|
(1,279)
|
|
(189)
|
|
|
(1,812)
|
|
1,117
|
|
Capitalized leasing
compensation (1)
|
(2,945)
|
|
(2,740)
|
|
(2,634)
|
|
(3,644)
|
|
(2,795)
|
|
|
(8,319)
|
|
(7,945)
|
|
Recurring capital
expenditures (2)
|
(34,664)
|
|
(26,740)
|
|
(29,588)
|
|
(21,246)
|
|
(15,252)
|
|
|
(90,992)
|
|
(54,230)
|
|
Capitalized internal
leasing commissions
|
(1,225)
|
|
(1,355)
|
|
(1,493)
|
|
(1,835)
|
|
(1,786)
|
|
|
(4,073)
|
|
(5,487)
|
|
|
|
|
|
|
|
|
|
|
AFFO available to
common stockholders and unitholders (3)
|
$237,961
|
|
$233,313
|
|
$221,583
|
|
$211,984
|
|
$206,844
|
|
|
$692,857
|
|
$598,673
|
|
|
|
|
|
|
|
|
|
|
Weighted-average
shares and units outstanding - basic
|
173,461
|
|
163,078
|
|
161,475
|
|
161,317
|
|
149,778
|
|
|
166,048
|
|
149,352
|
|
Weighted-average
shares and units outstanding - diluted (4)
|
174,170
|
|
164,027
|
|
162,600
|
|
162,060
|
|
151,765
|
|
|
166,938
|
|
150,076
|
|
|
|
|
|
|
|
|
|
|
AFFO per share -
diluted (4)
|
$1.37
|
|
$1.42
|
|
$1.36
|
|
$1.31
|
|
$1.36
|
|
|
$4.15
|
|
$3.99
|
|
|
|
|
|
|
|
|
|
|
Dividends per share
and common unit
|
$0.93
|
|
$0.93
|
|
$0.93
|
|
$0.88
|
|
$0.88
|
|
|
$2.79
|
|
$2.64
|
|
|
|
|
|
|
|
|
|
|
Diluted AFFO
Payout Ratio
|
68.1
|
%
|
65.4
|
%
|
68.2
|
%
|
67.3
|
%
|
64.6
|
%
|
|
67.2
|
%
|
66.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
Share Count
Detail
|
30-Sep-17
|
30-Jun-17
|
31-Mar-17
|
31-Dec-16
|
30-Sep-16
|
|
30-Sep-17
|
30-Sep-16
|
|
|
|
|
|
|
|
|
|
Weighted Average
Common Stock and Units Outstanding
|
173,461
|
|
163,078
|
|
161,475
|
|
161,317
|
|
149,778
|
|
|
166,048
|
|
149,352
|
|
Add: Effect of
dilutive securities
|
709
|
|
949
|
|
1,125
|
|
743
|
|
1,987
|
|
|
890
|
|
724
|
|
|
|
|
|
|
|
|
|
|
Weighted Avg.
Common Stock and Units Outstanding - diluted
|
174,170
|
|
164,027
|
|
162,600
|
|
162,060
|
|
151,765
|
|
|
166,938
|
|
150,076
|
|
|
|
(1)
|
Includes only second
generation leasing costs.
|
(2)
|
For a definition of
recurring capital expenditures, see our supplemental operating and
financial data package.
|
(3)
|
For a definition and
discussion of AFFO, see below. 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
E, series F, series G, series H, series I and series J preferred
stock, as applicable, that may be converted upon the occurrence of
specified change in control transactions as described in the
articles supplementary governing the series C, series E, series F,
series G, series H, series I, and series J preferred stock, as
applicable, which we consider highly improbable. See above for
calculations of diluted FFO available to common stockholders and
unitholders and above 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-17
|
30-Jun-17
|
31-Mar-17
|
31-Dec-16
|
30-Sep-16
|
Assets
|
|
|
|
|
|
Investments in real
estate:
|
|
|
|
|
|
Real
estate
|
$14,693,479
|
|
$11,132,356
|
|
$10,858,628
|
|
$10,630,514
|
|
$10,607,440
|
|
Construction in
progress
|
1,405,740
|
|
787,315
|
|
780,966
|
|
732,430
|
|
681,189
|
|
Land held for future
development
|
330,101
|
|
262,139
|
|
229,411
|
|
195,525
|
|
223,236
|
|
Investments in
Real Estate
|
$16,429,320
|
|
$12,181,810
|
|
$11,869,005
|
|
$11,558,469
|
|
$11,511,865
|
|
Accumulated
depreciation & amortization
|
(3,075,294)
|
|
(2,929,095)
|
|
(2,792,910)
|
|
(2,668,509)
|
|
(2,565,368)
|
|
Net Investments in
Properties
|
$13,354,026
|
|
$9,252,715
|
|
$9,076,095
|
|
$8,889,960
|
|
$8,946,497
|
|
Investment in
unconsolidated joint ventures
|
106,374
|
|
103,881
|
|
112,856
|
|
106,402
|
|
105,819
|
|
Net Investments in
Real Estate
|
$13,460,400
|
|
$9,356,596
|
|
$9,188,951
|
|
$8,996,362
|
|
$9,052,316
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
$192,578
|
|
$22,383
|
|
$14,950
|
|
$10,528
|
|
$36,445
|
|
Accounts and other
receivables (1)
|
258,490
|
|
229,450
|
|
195,406
|
|
203,938
|
|
208,097
|
|
Deferred
rent
|
420,348
|
|
423,188
|
|
418,858
|
|
412,269
|
|
412,977
|
|
Acquired in-place
lease value, deferred leasing costs and other real estate
intangibles, net
|
3,052,277
|
|
1,494,083
|
|
1,501,843
|
|
1,522,378
|
|
1,526,563
|
|
Acquired above-market
leases, net
|
178,190
|
|
19,716
|
|
20,826
|
|
22,181
|
|
24,554
|
|
Goodwill
|
3,384,394
|
|
778,862
|
|
757,444
|
|
752,970
|
|
780,099
|
|
Restricted
cash
|
17,753
|
|
18,931
|
|
10,447
|
|
11,508
|
|
11,685
|
|
Assets associated
with real estate held for sale
|
132,818
|
|
87,882
|
|
56,154
|
|
56,097
|
|
55,915
|
|
Other
assets
|
135,250
|
|
148,480
|
|
164,669
|
|
204,354
|
|
190,384
|
|
|
|
|
|
|
|
Total
Assets
|
$21,232,498
|
|
$12,579,571
|
|
$12,329,548
|
|
$12,192,585
|
|
$12,299,035
|
|
|
|
|
|
|
|
Liabilities and
Equity
|
|
|
|
|
|
Global unsecured
revolving credit facility
|
$138,477
|
|
$563,063
|
|
$564,467
|
|
$199,209
|
|
$153,189
|
|
Unsecured term
loan
|
1,432,659
|
|
1,520,482
|
|
1,505,667
|
|
1,482,361
|
|
1,521,613
|
|
Unsecured senior
notes, net of discount
|
6,806,333
|
|
4,351,148
|
|
4,128,110
|
|
4,153,797
|
|
4,238,435
|
|
Mortgage loans, net
of premiums
|
106,775
|
|
2,927
|
|
3,085
|
|
3,240
|
|
111,750
|
|
Accounts payable and
other accrued liabilities
|
1,024,394
|
|
850,602
|
|
804,371
|
|
824,878
|
|
823,905
|
|
Accrued dividends and
distributions
|
—
|
|
—
|
|
—
|
|
144,194
|
|
—
|
|
Acquired below-market
leases
|
257,732
|
|
76,099
|
|
78,641
|
|
81,899
|
|
86,888
|
|
Security deposits and
prepaid rent
|
223,536
|
|
181,007
|
|
171,692
|
|
168,111
|
|
163,787
|
|
Liabilities
associated with assets held for sale
|
4,660
|
|
2,949
|
|
3,070
|
|
2,599
|
|
2,820
|
|
Total
Liabilities
|
$9,994,566
|
|
$7,548,277
|
|
$7,259,103
|
|
$7,060,288
|
|
$7,102,387
|
|
Redeemable
noncontrolling interests – operating partnership
|
64,509
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
Preferred
Stock: $0.01 par value per share, 110,000,000 shares
authorized:
|
|
|
|
|
|
Series C Cumulative
Redeemable Perpetual Preferred Stock (2)
|
$219,250
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Series F Cumulative
Redeemable Preferred Stock (3)
|
—
|
|
—
|
|
$176,191
|
|
$176,191
|
|
$176,191
|
|
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
|
|
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)
|
193,667
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Common Stock: $0.01
par value per share, 315,000,000 shares authorized (8)
|
2,043
|
|
1,611
|
|
1,584
|
|
1,582
|
|
1,581
|
|
Additional paid-in
capital
|
11,250,322
|
|
5,991,753
|
|
5,769,091
|
|
5,764,497
|
|
5,759,338
|
|
Dividends in excess
of earnings
|
(1,917,791)
|
|
(1,722,610)
|
|
(1,629,633)
|
|
(1,547,420)
|
|
(1,483,223)
|
|
Accumulated other
comprehensive (loss) income, net
|
(116,732)
|
|
(110,709)
|
|
(122,540)
|
|
(135,605)
|
|
(131,936)
|
|
Total
Stockholders' Equity
|
$10,467,529
|
|
$4,996,815
|
|
$5,031,463
|
|
$5,096,015
|
|
$5,158,721
|
|
|
|
|
|
|
|
Non-controlling
Interests
|
|
|
|
|
|
Non-controlling
interest in operating partnership
|
$699,308
|
|
$27,909
|
|
$32,409
|
|
$29,684
|
|
$31,088
|
|
Non-controlling
interest in consolidated joint ventures
|
6,586
|
|
6,570
|
|
6,573
|
|
6,598
|
|
6,839
|
|
|
|
|
|
|
|
Total
Non-controlling Interests
|
$705,894
|
|
$34,479
|
|
$38,982
|
|
$36,282
|
|
$37,927
|
|
|
|
|
|
|
|
Total
Equity
|
$11,173,423
|
|
$5,031,294
|
|
$5,070,445
|
|
$5,132,297
|
|
$5,196,648
|
|
|
|
|
|
|
|
Total Liabilities
and Equity
|
$21,232,498
|
|
$12,579,571
|
|
$12,329,548
|
|
$12,192,585
|
|
$12,299,035
|
|
|
|
(1)
|
Net of allowance for
doubtful accounts of $6,187 and $7,446 as of September 30,
2017 and December 31, 2016, respectively.
|
(2)
|
Series C Cumulative
Redeemable Perpetual Preferred Stock, 6.625%, $201,250 and $0
liquidation preference, respectively ($25.00 per share), 8,050,000
and 0 shares issued and outstanding as of September 30, 2017 and
December 31, 2016, respectively.
|
(3)
|
Series F Cumulative
Redeemable Preferred Stock, 6.625%, $0 and $182,500 liquidation
preference, respectively ($25.00 per share), 0 and 7,300,000 shares
issued and outstanding as of September 30, 2017 and
December 31, 2016, respectively. All outstanding shares
of Series F Cumulative Redeemable Preferred Stock were redeemed on
April 5, 2017.
|
(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, 2017 and December 31, 2016,
respectively.
|
(5)
|
Series H Cumulative
Redeemable Preferred Stock, 7.375%, $365,000 and $365,000
liquidation preference, respectively ($25.00 per share), 14,600,000
and 14,600,000 shares issued and outstanding as of
September 30, 2017 and December 31, 2016,
respectively.
|
(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, 2017 and December 31, 2016,
respectively.
|
(7)
|
Series J Cumulative
Redeemable Preferred Stock, 5.250%, $200,000 and $0 liquidation
preference, respectively ($25.00 per share), 8,000,000 and 0 shares
issued and outstanding as of September 30, 2017 and
December 31, 2016, respectively.
|
(8)
|
Common Stock:
205,433,495 and 146,384,247 shares issued and outstanding as of
September 30, 2017 and December 31, 2016,
respectively.
|
Reconciliation of
Earnings Before Interest, Taxes,
Depreciation &
Amortization (EBITDA) (1)
|
Three Months
Ended
|
30-Sep-17
|
30-Jun-17
|
31-Mar-17
|
31-Dec-16
|
30-Sep-16
|
|
|
|
|
|
|
Net (Loss) Income
Available to Common Stockholders
|
($4,139)
|
|
$57,837
|
|
$66,145
|
|
$77,682
|
|
$187,330
|
|
Interest
|
71,621
|
|
57,582
|
|
55,450
|
|
56,226
|
|
63,084
|
|
(Gain) loss from
early extinguishment of debt
|
(1,990)
|
|
—
|
|
—
|
|
29
|
|
18
|
|
Tax
expense
|
2,494
|
|
2,639
|
|
2,223
|
|
2,304
|
|
3,720
|
|
Depreciation &
amortization
|
199,914
|
|
178,111
|
|
176,466
|
|
176,581
|
|
178,133
|
|
Impairment of
investments in real estate
|
28,992
|
|
—
|
|
—
|
|
—
|
|
—
|
|
EBITDA
|
$296,892
|
|
$296,169
|
|
$300,284
|
|
$312,822
|
|
$432,285
|
|
Severance-related
expense, equity acceleration, and legal expenses
|
2,288
|
|
365
|
|
869
|
|
672
|
|
2,580
|
|
Transaction and
integration expenses
|
42,809
|
|
14,235
|
|
3,323
|
|
8,961
|
|
6,015
|
|
(Gain) loss on real
estate transactions
|
(9,751)
|
|
(380)
|
|
522
|
|
195
|
|
(169,000)
|
|
Non-cash (gain) on
lease termination (2)
|
—
|
|
—
|
|
—
|
|
(29,205)
|
|
—
|
|
Equity in earnings
adjustment for non-core items
|
—
|
|
(3,285)
|
|
—
|
|
—
|
|
—
|
|
Other non-core
expense adjustments
|
3,051
|
|
24
|
|
—
|
|
236
|
|
(22)
|
|
Non-controlling
interests
|
40
|
|
920
|
|
1,025
|
|
1,065
|
|
3,247
|
|
Preferred stock
dividends, including undeclared dividends
|
16,575
|
|
14,505
|
|
17,393
|
|
17,393
|
|
21,530
|
|
Issuance costs
associated with redeemed preferred stock
|
—
|
|
6,309
|
|
—
|
|
—
|
|
10,328
|
|
Adjusted
EBITDA
|
$351,904
|
|
$328,862
|
|
$323,416
|
|
$312,139
|
|
$306,963
|
|
|
|
(1)
|
For definition and
discussion of EBITDA and Adjusted EBITDA, see below.
|
(2)
|
Q4 2016 amount
included in Other revenue on the income statement.
|
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. FFO represents net income
(loss) (computed in accordance with GAAP), excluding gains (or
losses) from real estate transactions, impairment charges, real
estate related depreciation and amortization (excluding
amortization of deferred financing costs), 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 properties 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 properties, 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 such other REITs'
FFO. Accordingly, 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:
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) gain (loss) from early extinguishment of debt, (iv)
issuance costs associated with redeemed preferred stock, (v) equity
in earnings adjustment for non-core items (vi) severance, equity
acceleration, and legal expenses, (vii) bridge facility fees,
(viii) loss on currency forwards and (ix) 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 not calculate core FFO in a consistent
manner. 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.
Constant-Currency Core Funds from Operations:
We calculate constant-currency core funds from operations by
adjusting the core funds from operations for foreign currency
translations.
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 rent revenue, (vi) straight-line rent expense,
(vii) above- and below-market rent amortization, (viii) deferred
non-cash tax expense, (ix) capitalized leasing compensation, (x)
recurring capital expenditures and (xi) capitalized internal
leasing commissions. Other REITs may not calculate AFFO in a
consistent manner. 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-related expense, equity acceleration,
and legal expenses, transaction and integration expenses, (gain)
loss on real estate transactions, non-cash (gain) on lease
termination, equity in earnings adjustment for non-core items,
other non-core expense adjustments, noncontrolling interests,
preferred stock dividends, including undeclared dividends, and
issuance costs associated with redeemed preferred stock. Adjusted
EBITDA is EBITDA excluding severance-related expense, equity
acceleration, and legal expenses, transaction and integration
expenses, (gain) loss on real estate transactions, non-cash (gain)
on lease termination, equity in earnings adjustment for non-core
items, other non-core expense adjustments, 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; accordingly, our EBITDA and Adjusted EBITDA
may not be comparable to such 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
properties 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 properties,
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 not
calculate NOI and cash NOI in the same manner we do and,
accordingly, our NOI and cash NOI may not be comparable to such
other REITs' NOI and cash NOI. Accordingly, 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, 2017, GAAP interest expense was $72
million, capitalized interest was $5
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-17
|
30-Jun-17
|
30-Sep-16
|
30-Sep-17
|
30-Sep-16
|
|
|
|
|
|
|
Operating
income
|
$66,157
|
|
$130,657
|
|
$115,750
|
|
$334,097
|
|
$346,164
|
|
|
|
|
|
|
|
Fee income
|
(1,662)
|
|
(1,429)
|
|
(1,517)
|
|
(4,986)
|
|
(4,567)
|
|
Other
income
|
(208)
|
|
(341)
|
|
(2)
|
|
(584)
|
|
(93)
|
|
Depreciation and
amortization
|
199,914
|
|
178,111
|
|
178,133
|
|
554,491
|
|
522,743
|
|
General and
administrative
|
41,477
|
|
37,144
|
|
43,555
|
|
112,399
|
|
106,044
|
|
Severance related
expense, equity acceleration, and legal expenses
|
2,288
|
|
365
|
|
2,580
|
|
3,522
|
|
5,536
|
|
Transaction
expenses
|
42,809
|
|
14,235
|
|
6,015
|
|
60,367
|
|
11,530
|
|
Impairment in
investments in real estate
|
28,992
|
|
—
|
|
—
|
|
28,992
|
|
—
|
|
Other
expenses
|
3,051
|
|
24
|
|
(22)
|
|
3,075
|
|
(23)
|
|
|
|
|
|
|
|
Net Operating
Income
|
$382,818
|
|
$358,766
|
|
$344,492
|
|
$1,091,373
|
|
$987,334
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Net Operating
Income (Cash NOI)
|
|
|
|
|
|
|
|
|
|
|
|
Net Operating
Income
|
$382,818
|
|
$358,766
|
|
$344,492
|
|
$1,091,373
|
|
$987,334
|
|
Straight-line rent,
net
|
2,436
|
|
2,206
|
|
205
|
|
4,842
|
|
(1,677)
|
|
Above- and
below-market rent amortization
|
(873)
|
|
(1,946)
|
|
(2,002)
|
|
(4,920)
|
|
(6,265)
|
|
|
|
|
|
|
|
Cash Net Operating
Income
|
$384,381
|
|
$359,026
|
|
$342,695
|
|
$1,091,295
|
|
$979,392
|
|
View original
content:http://www.prnewswire.com/news-releases/digital-realty-reports-third-quarter-2017-results-300543396.html
SOURCE Digital Realty