DIGITAL REALTY REPORTS THIRD QUARTER 2022 RESULTS
10/26/2022 - 04:05 PM
AUSTIN, Texas Oct. 26, 2022
Highlights
Reported net income available to common stockholders of $0.75 per share in 3Q22, compared to $0.44 in 3Q21 Reported FFO per share of $1.55 in 3Q22, compared to $1.54 in 3Q21 Reported Core FFO per share of $1.67 in 3Q22, compared to $1.65 in 3Q21 Reported Constant-Currency Core FFO per share of $1.75 in 3Q22 and $5.24 per share for the nine months ended September 30, 2022 Signed total bookings during 3Q22 expected to generate $176 million $13 million Updated 2022 Core FFO per share outlook to $6.70 - $6.75 ; Updated Constant-Currency Core FFO per share outlook of $6.95 - $7.00 Financial Results
Digital Realty reported revenues for the third quarter of 2022 of $1.2 billion 5% increase from the previous quarter and a 5% increase from the same quarter last year.
The company delivered third quarter of 2022 net income of $239 million $227 million $0.75 per diluted share, compared to $0.19 per diluted share in the previous quarter and $0.44 per diluted share in the same quarter last year.
Digital Realty generated third quarter of 2022 Adjusted EBITDA of $620 million 1% increase from the previous quarter and a 2% increase over the same quarter last year.
The company reported third quarter of 2022 funds from operations of $462 million $1.55 per share, compared to $1.55 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 third quarter of 2022 Core FFO per share of $1.67 , compared to $1.72 per share in the previous quarter, and $1.65 per share in the same quarter last year. Digital Realty delivered Constant-Currency Core FFO per share of $1.75 for the third quarter of 2022 and $5.24 per share for the nine-month period ended September 30, 2022 .
Leasing Activity
In the third quarter, Digital Realty signed total bookings expected to generate $176 million $13 million
"Digital Realty again delivered record quarterly bookings in the third quarter, our third record in the past four quarters, reflecting the strong global demand for data center solutions," said Digital Realty Chief Executive Officer Bill Stein . "With a rapidly changing global environment, we are making the necessary adjustments in order to maximize the significant market opportunity that lies ahead."
The weighted-average lag between new leases signed during the third quarter of 2022 and the contractual commencement date was seventeen months.
In addition to new leases signed, Digital Realty also signed renewal leases representing $156 million 0.5% on a cash basis and up 2.3% on a GAAP basis.
New leases signed during the third quarter of 2022 are summarized by region as follows:
Annualized GAAP
Base Rent
GAAP Base Rent
GAAP Base Rent
The Americas
(in thousands)
Square Feet
per Square Foot
Megawatts
per Kilowatt
0-1 MW
$14,693
56,340
$261
5.2
$236
> 1 MW
99,046
834,530
119
73.6
112
Other (1)
15,652
291,993
54
—
—
Total
$129,392
1,182,863
$109
78.8
$120
EMEA (2)
0-1 MW
$12,318
42,762
$288
4.0
$255
> 1 MW
16,826
126,407
133
15.4
91
Other (1)
204
—
—
—
—
Total
$29,348
169,169
$173
19.4
$125
Asia Pacific (2)
0-1 MW
$2,212
10,302
$215
0.7
$256
> 1 MW
2,161
14,968
144
1.8
103
Other (1)
84
948
88
—
—
Total
$4,457
26,217
$170
2.5
$147
All Regions (2)
0-1 MW
$29,223
109,404
$267
9.9
$245
> 1 MW
118,032
975,905
121
90.7
108
Other (1)
15,940
292,941
54
—
—
Total
$163,196
1,378,249
$118
100.7
$122
Interconnection
$12,981
N/A
N/A
N/A
N/A
Grand Total
$176,177
1,378,249
$118
100.7
$122
Note: Totals may not foot due to rounding differences. This table excludes any contribution from Teraco during the quarter.
(1)
Other includes Powered Base Building® shell capacity as well as storage and office space within fully improved data center facilities.
(2)
Based on quarterly average exchange rates during the three months ended September 30, 2022.
Investment Activity
During the third quarter, Digital Realty completed its previously announced acquisition of a majority interest in Teraco, a leading carrier-neutral data center and interconnection services provider in South Africa , for approximately $1.7 billion
Digital Realty acquired three assets for data center development during the third quarter. Digital Realty acquired a 38-acre parcel, which can support approximately 80 megawatts of IT load, in Paris for $10 million Stockholm $39 million Crete, Greece for $2 million
During the third quarter, Digital Realty disposed of a non-core, mixed-use data center property in Dallas for $207 million
During the third quarter, Digital Realty signed a definitive agreement with Digital Core REIT Management Pte. Ltd., Manager of Digital Core REIT (SGX: DCRU), and related parties (collectively, "Core REIT"), to sell a 25% indirect interest in an institutional quality freehold data center property in Frankfurt valued at approximately $547 million 100% share). The transaction is dependent upon the occurrence of certain closing conditions, including a unitholder vote that is expected to take place mid-November, and is expected to generate approximately $137 million Frankfurt data center property up to a total interest of 89.9% as well as a 90% indirect interest in an institutional quality freehold data center property in Dallas valued at $199 million 100% share). If Core REIT exercises its options to purchase all property interests under the Contribution Agreement, the transaction would generate approximately $671 million
Subsequent to the close of the third quarter, Digital Realty acquired a four-acre parcel, which could support 24 megawatts of IT load, immediately adjacent to its campus in Dallas for $24 million
Balance Sheet
Digital Realty had approximately $15.8 billion September 30, 2022 , comprised of $15.3 billion $0.5 billion 36.2% and fixed charge coverage was 5.5x. Pro forma for the physical settlement of $0.5 billion
During the third quarter of 2022, Digital Realty completed the following financing transactions.
In mid-August, closed a €750 million term loan due 2025, with €375 million subject to two maturity extension options of one year each. In mid-September, executed a $1 billion 2.485% , which matures coterminously with our 3.70% notes due 2027 in the principal amount of $1 billion In late September, closed an offering of $550 million 5.550% notes due 2028. In conjunction with this offering, the Company executed $550 million $275 million 4.585% and $275 million 1.430% , resulting in an effective overall annual yield to maturity of approximately 3.0% . The cross currency swaps mature coterminously with the 5.550% notes in 2028. Subsequent to quarter end, Digital Realty received over $650 million
2022 Outlook
Digital Realty updated its 2022 Core FFO per share outlook of $6.70 -$6.75 and updated its 2022 constant-currency Core FFO per share outlook of $6.95 - $7.00 . The assumptions underlying the outlook are summarized in the following table.
As of
As of
As of
As of
Top-Line and Cost Structure
February 17, 2022
April 28, 2022
July 28, 2022
October 26, 2022
Total revenue
$4.700 - $4.800 billion
$4.700 - $4.800 billion
$4.650 - $4.750 billion
$4.650 - $4.700 billion
Net non-cash rent adjustments (1)
($35 - $40 million )
($45 - $50 million )
($50 - $55 million )
($55 - $60 million )
Adjusted EBITDA
$2.475 - $2.525 billion
$2.475 - $2.525 billion
$2.450 - $2.500 billion
$2.450 - $2.475 billion
G&A
$410 - $420 million
$410 - $420 million
$405 - $415 million
$395 - $400 million
Internal Growth
Rental rates on renewal leases
Cash basis
Flat
Slightly Positive
Slightly Positive
Slightly Positive
GAAP basis
Slightly positive
Up low-single-digits
Up low-single-digits
Up low-single-digits
Year-end portfolio occupancy
83.0% - 84.0%
83.0% - 84.0%
83.0% - 84.0%
83.5% - 84.0%
"Same-capital" cash NOI growth (2)
(2.5% - 3.5% )
(2.5% - 3.5% )
(3.5% - 4.5% )
(4.5% - 5.5% )
Foreign Exchange Rates
U.S. Dollar / Pound Sterling
$1.30 - $1.38
$1.25 - $1.35
$1.15 - $1.25
$1.10 - $1.15
U.S. Dollar / Euro
$1.10 - $1.15
$1.05 - $1.10
$1.00 - $1.05
$0.95 - $1.00
External Growth
Dispositions
Dollar volume
$0.5 - $1.0 billion
$0.5 - $1.0 billion
$0.5 - $1.0 billion
$0.5 - $1.0 billion
Cap rate
0.0% - 10.0%
0.0% - 10.0%
0.0% - 10.0%
0.0% - 10.0%
Development
CapEx (3)
$2.3 - $2.5 billion
$2.3 - $2.5 billion
$2.2 - $2.4 billion
$2.1 - $2.3 billion
Average stabilized yields
9.0% - 15.0%
9.0% - 15.0%
9.0% - 15.0%
9.0% - 15.0%
Enhancements and other non-recurring CapEx (4)
$5 - $10 million
$5 - $10 million
$5 - $10 million
$5 - $10 million
Recurring CapEx + capitalized leasing costs (5)
$210 - $220 million
$200 - $210 million
$200 - $210 million
$200 - $210 million
Balance Sheet
Long-term debt issuance
Dollar amount
$1.8 - $2.0 billion
$1.8 - $2.0 billion
$1.8 - $2.0 billion
$2.3 - $2.8 billion
Pricing
1.5% - 2.0%
1.5% - 2.0%
2.0% - 2.5%
2.0% - 3.0%
Timing
Early & Late 2022
Early & Late 2022
Early & Late 2022
Early & Late 2022
Net income per diluted share
$1.05 - $1.10
$1.05 - $1.10
$1.00 - $1.05
$1.45 - $1.50
Real estate depreciation and (gain) / loss on sale
$5.35 - $5.35
$5.35 - $5.35
$5.35 - $5.35
$4.85 - $4.85
Funds From Operations / share (NAREIT-Defined)
$6.40 - $6.45
$6.40 - $6.45
$6.35 - $6.40
$6.30 - $6.35
Non-core expenses and revenue streams
$0.40 - $0.45
$0.40 - $0.45
$0.40 - $0.45
$0.40 - $0.40
Core Funds From Operations / share
$6.80 - $6.90
$6.80 - $6.90
$6.75 - $6.85
$6.70 - $6.75
Foreign currency translation adjustments
$0.10 - $0.10
$0.15 - $0.15
$0.20 - $0.20
$0.25 - $0.25
Constant-Currency Core Funds From Operations / share
$6.90 - $7.00
$6.95 - $7.05
$6.95 - $7.05
$6.95 - $7.00
(1)
Net non-cash rent adjustments represent the sum of straight-line rental revenue and straight-line rent expense, as well as the amortization of above- and below-market leases (i.e., ASC 805 adjustments).
(2)
The "same-capital" pool includes properties owned as of December 31, 2020 with less than 5% of total rentable square feet under development. It excludes properties that were undergoing, or were expected to undergo, development activities in 2021-2022, properties classified as held for sale, and properties sold or contributed to joint ventures for all periods presented.
(3)
Includes land acquisitions.
(4)
Other non-recurring CapEx represents costs incurred to enhance the capacity or marketability of operating properties, such as network fiber initiatives and software development costs.
(5)
Recurring CapEx represents non-incremental improvements required to maintain current revenues, including second-generation tenant improvements and leasing commissions.
Non-GAAP Financial Measures
This document 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 5:00 p.m. EDT / 2:00 p.m. PT on October 26 th , 2022, a presentation will be posted to the Investors section of the company's website at https://investor.digitalrealty.com/ . The presentation is designed to accompany the discussion of the company's third quarter 2022 financial results and operating performance. The conference call will feature Chief Executive Officer A. William Stein and President & Chief Financial Officer Andrew P. Power .
To participate in the live call, investors are invited to dial +1 (888) 317-6003 (for domestic callers) or +1 (412) 317-6061 (for international callers) and reference the conference ID# 0366978 at least five minutes prior to start time. A live webcast of the call will be available via the Investors section of Digital Realty's website at https://investor.digitalrealty.com/ .
Telephone and webcast replays will be available after the call until November 25 , 2022. The telephone replay can be accessed by dialing +1 (877) 344-7529 (for domestic callers) or +1 (412) 317-0088 (for international callers) and providing the conference ID# 6591767. The webcast replay can be accessed on Digital Realty's website.
About Digital Realty
Digital Realty brings companies and data together by delivering the full spectrum of data center, colocation and interconnection solutions. PlatformDIGITAL®, the company's global data center platform, provides customers with a secure data "meeting place" and a proven Pervasive Datacenter Architecture (PDx™) solution methodology for powering innovation and efficiently managing Data Gravity challenges. Digital Realty gives its customers access to the connected communities that matter to them with a global data center footprint of 300+ facilities in 50+ metros across 26 countries on six continents. To learn more about Digital Realty, please visit digitalrealty.com or follow us on LinkedIn and Twitter .
Contact Information
Andrew P. Power
Jordan Sadler / Jim Huseby
Consolidated Quarterly Statements of Operations
Financial Supplement
Unaudited and Dollars in Thousands, Except Per Share Data
Third Quarter 2022
Three Months Ended
Nine Months Ended
30-Sep-22
30-Jun-22
31-Mar-22
31-Dec-21
30-Sep-21
30-Sep-22
30-Sep-21
Rental revenues
$787,839
$767,313
$751,962
$763,117
$773,195
$2,307,114
$2,296,565
Tenant reimbursements - Utilities
251,420
218,198
224,547
195,340
189,060
694,166
543,776
Tenant reimbursements - Other
49,419
52,688
51,511
58,528
57,666
153,618
177,255
Interconnection & other
95,486
93,338
93,530
89,850
90,983
282,354
270,609
Fee income
6,169
5,072
5,757
4,133
3,255
16,998
9,309
Other
1,749
2,713
15
200
18,977
4,477
19,201
Total Operating Revenues
$1,192,082
$1,139,321
$1,127,323
$1,111,167
$1,133,135
$3,458,726
$3,316,715
Utilities
$271,844
$223,426
$241,239
$213,933
$209,585
$736,509
$570,642
Rental property operating
205,886
198,076
194,354
205,250
196,743
598,317
580,682
Property taxes
39,860
47,213
46,526
42,673
55,915
133,598
147,715
Insurance
4,002
3,836
3,698
3,507
4,718
11,536
13,918
Depreciation & amortization
388,704
376,967
382,132
378,883
369,035
1,147,803
1,107,749
General & administration
95,792
101,991
96,435
103,705
97,082
294,217
289,606
Severance, equity acceleration, and legal expenses
1,655
3,786
2,077
1,003
1,377
7,519
6,340
Transaction and integration expenses
25,862
13,586
11,968
12,427
13,804
51,416
34,999
Impairment of investments in real estate
—
—
—
18,291
—
—
—
Other expenses
1,096
70
7,657
(1)
510
8,823
2,551
Total Operating Expenses
$1,034,701
$968,950
$986,087
$979,669
$948,770
$2,989,738
$2,754,203
Operating Income
$157,381
$170,371
$141,236
$131,498
$184,365
$468,988
$562,512
Equity in earnings (loss) of unconsolidated joint ventures
(12,254)
(34,088)
60,958
(7,714)
40,884
14,616
69,996
Gain / (loss) on sale of investments
173,990
—
2,770
1,047,011
(635)
176,760
333,785
Interest and other income (expense), net
15,752
13,008
3,051
(4,349)
(2,947)
31,811
(9)
Interest (expense)
(76,502)
(69,023)
(66,725)
(71,762)
(71,417)
(212,250)
(222,084)
Income tax (expense)
(19,576)
(16,406)
(13,244)
(3,961)
(13,709)
(49,227)
(68,838)
Loss from early extinguishment of debt
—
—
(51,135)
(325)
—
(51,135)
(18,347)
Net Income
$238,791
$63,862
$76,911
$1,090,397
$136,541
$379,564
$657,015
Net (income) attributable to noncontrolling interests
(1,716)
(436)
(3,629)
(22,587)
(2,266)
(5,781)
(15,566)
Net Income Attributable to Digital Realty Trust, Inc.
$237,075
$63,426
$73,282
$1,067,811
$134,275
$373,783
$641,449
Preferred stock dividends, including undeclared dividends
(10,181)
(10,181)
(10,181)
(10,181)
(10,181)
(30,544)
(35,580)
Gain on / (Issuance costs associated with) redeemed preferred stock
—
—
—
—
—
—
18,000
Net Income Available to Common Stockholders
$226,894
$53,245
$63,101
$1,057,630
$124,094
$343,240
$623,869
Weighted-average shares outstanding - basic
286,693,071
284,694,064
284,525,992
283,869,662
283,105,966
285,312,314
281,445,252
Weighted-average shares outstanding - diluted
296,414,726
285,109,903
285,025,099
284,868,184
283,799,538
294,257,222
282,075,611
Weighted-average fully diluted shares and units
302,257,518
290,944,163
290,662,421
290,893,110
290,228,785
300,028,470
289,218,609
Net income per share - basic
$0.79
$0.19
$0.22
$3.73
$0.44
$1.20
$2.22
Net income per share - diluted
$0.75
$0.19
$0.22
$3.71
$0.44
$1.15
$2.21
Funds From Operations and Core Funds From Operations
Financial Supplement
Unaudited and in Thousands, Except Per Share Data
Third Quarter 2022
Three Months Ended
Nine Months Ended
Reconciliation of Net Income to Funds From Operations (FFO)
30-Sep-22
30-Jun-22
31-Mar-22
31-Dec-21
30-Sep-21
30-Sep-22
30-Sep-21
Net Income Available to Common Stockholders
$226,894
$53,245
$63,101
$1,057,630
$124,094
$343,240
$623,869
Adjustments:
Non-controlling interest in operating partnership
5,400
1,500
1,600
23,100
3,000
8,500
16,000
Real estate related depreciation & amortization (1)
381,425
369,327
374,162
372,447
362,728
1,124,914
1,091,065
Depreciation related to non-controlling interests
(8,254)
-
-
-
-
(8,254)
-
Unconsolidated JV real estate related depreciation & amortization
30,831
29,022
29,320
24,146
21,293
89,172
61,654
(Gain) on real estate transactions (2)
(173,990)
(1,144)
(2,770)
(1,047,010)
(63,798)
(177,904)
(398,219)
Impairment of investments in real estate
-
-
-
18,291
-
-
-
Funds From Operations - diluted
$462,306
$451,949
$465,412
$448,602
$447,317
$1,379,667
$1,394,369
Weighted-average shares and units outstanding - basic
292,536
290,528
290,163
289,895
289,542
291,084
288,880
Weighted-average shares and units outstanding - diluted (3)(4)
302,258
290,944
290,662
290,893
290,228
300,028
289,531
Funds From Operations per share - basic
$1.58
$1.56
$1.60
$1.55
$1.54
$4.74
$4.83
Funds From Operations per share - diluted (3)(4)
$1.55
$1.55
$1.60
$1.54
$1.54
$4.61
$4.82
Three Months Ended
Nine Months Ended
Reconciliation of FFO to Core FFO
30-Sep-22
30-Jun-22
31-Mar-22
31-Dec-21
30-Sep-21
30-Sep-22
30-Sep-21
Funds From Operations - diluted
$462,306
$451,949
$465,412
$448,602
$447,317
$1,379,667
$1,394,369
Other non-core revenue adjustments (5)
(1,818)
456
13,916
9,859
(18,066)
12,554
(29,247)
Transaction and integration expenses
25,862
13,586
11,968
12,427
13,804
51,416
34,999
Loss from early extinguishment of debt
-
-
51,135
325
-
51,135
18,347
(Gain on) / Issuance costs associated with redeemed preferred stock
-
-
-
-
-
-
(18,000)
Severance, equity acceleration, and legal expenses (6)
1,655
3,786
2,077
1,003
1,377
7,519
6,340
(Gain) / Loss on FX revaluation
(1,120)
29,539
(67,676)
14,308
33,773
(39,258)
16,196
Other non-core expense adjustments
1,046
70
7,657
(1)
1,004
8,773
(15,938)
Core Funds From Operations - diluted
$487,931
$499,386
$484,490
$486,525
$479,209
$1,471,806
$1,407,067
Weighted-average shares and units outstanding - diluted (3)(4)
292,830
290,944
290,662
290,893
290,228
291,461
289,531
Core Funds From Operations per share - diluted (3)
$1.67
$1.72
$1.67
$1.67
$1.65
$5.05
$4.86
(1) Real Estate Related Depreciation & Amortization
Three Months Ended
Nine Months Ended
30-Sep-22
30-Jun-22
31-Mar-22
31-Dec-21
30-Sep-21
30-Sep-22
30-Sep-21
Depreciation & amortization per income statement
$388,704
$376,967
$382,132
$378,883
$369,035
1,147,803
1,107,749
Non-real estate depreciation
(7,279)
(7,640)
(7,970)
(6,436)
(6,307)
(22,889)
(16,684)
Real Estate Related Depreciation & Amortization
$381,425
$369,327
$374,162
$372,447
$362,728
$1,124,914
1,091,065
(2)
For the fourth quarter 2021, the gain pertains to the contribution of 10 operating data center properties to Digital Core REIT in connection with the listing of Digital Core REIT as a standalone public company traded on the Singapore Exchange in December 2021. For the third quarter 2021, the gain of $64 million represents Digital Realty's share of a gain recognized by an unconsolidated joint venture from the sale of a portfolio of assets owned by the entity and is included in equity in earnings of unconsolidated joint ventures in our consolidated income statement.
(3)
For all periods presented, we have excluded the effect of dilutive series C, 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 J, series K and series L preferred stock, as applicable, which we consider highly improbable, and the effect of the physical settlement of our September 2021 forward sales agreements. See above for calculations of diluted FFO and the share count detail section that follows the reconciliation of Core FFO to AFFO for calculations of weighted average common stock and units outstanding. For definitions and discussion of FFO and Core FFO, see the definitions section.
(4)
Certain of Teraco's minority indirect shareholders have the right to put their shares in an upstream parent company of Teraco to Digital Realty in exchange for cash or the equivalent value of shares of Digital Realty common stock, or a combination thereof. US GAAP requires Digital Realty to assume the put right is settled in shares for purposes of calculating diluted EPS. This same approach was utilized to calculate FFO/share. The potential future dilutive impact associated with this put right will be excluded from Core FFO until settlement occurs – causing diluted share count to be higher for FFO than for Core FFO.
(5)
Includes lease termination fees and certain other adjustments that are not core to our business. For the third quarter 2021, includes a $19 million promote received related to a sale of portfolio of assets within an unconsolidated joint venture. The promote is included in Other revenue in our consolidated income statement.
(6)
Relates to severance and other charges related to the departure of company executives and integration-related severance.
Adjusted Funds From Operations (AFFO)
Financial Supplement
Unaudited and in Thousands, Except Per Share Data
Third Quarter 2022
Three Months Ended
Nine Months Ended
Reconciliation of Core FFO to AFFO
30-Sep-22
30-Jun-22
31-Mar-22
31-Dec-21
30-Sep-21
30-Sep-22
30-Sep-21
Core FFO available to common stockholders and unitholders
$487,931
$499,386
$484,490
$486,525
$479,209
$1,471,806
$1,407,067
Adjustments:
Non-real estate depreciation
7,279
7,640
7,970
6,436
6,307
22,889
16,684
Amortization of deferred financing costs
3,270
3,330
3,634
3,515
3,625
10,234
10,881
Amortization of debt discount/premium
1,146
1,193
1,214
1,107
1,138
3,553
3,438
Non-cash stock-based compensation expense
15,948
15,799
14,453
15,097
15,082
46,201
46,758
Straight-line rental revenue
(18,123)
(17,278)
(18,810)
(16,497)
(11,969)
(54,212)
(46,600)
Straight-line rental expense
2,679
(2,237)
4,168
5,753
7,862
4,609
21,746
Above- and below-market rent amortization
(465)
196
335
910
1,165
65
5,160
Deferred tax expense / (benefit)
(5,233)
(769)
(1,604)
(13,731)
2,112
(7,605)
33,125
Leasing compensation & internal lease commissions
9,866
9,411
13,261
9,564
11,142
32,538
33,262
Recurring capital expenditures (1)
(66,200)
(43,497)
(46,770)
(87,550)
(50,800)
(156,467)
(129,553)
AFFO available to common stockholders and unitholders (2)
$438,097
$473,173
$462,341
$411,130
$464,872
$1,373,611
$1,401,968
Weighted-average shares and units outstanding - basic
292,536
290,528
290,163
289,895
289,542
291,084
288,880
Weighted-average shares and units outstanding - diluted (3)(4)
292,830
290,944
290,662
290,893
290,228
291,461
289,531
AFFO per share - diluted (3)
$1.50
$1.63
$1.59
$1.41
$1.60
$4.71
$4.84
Dividends per share and common unit
$1.22
$1.22
$1.22
$1.16
$1.16
$3.66
$3.48
Diluted AFFO Payout Ratio
81.5 %
75.0 %
76.7 %
82.1 %
72.4 %
77.7 %
71.9 %
Three Months Ended
Nine Months Ended
Share Count Detail
30-Sep-22
30-Jun-22
31-Mar-22
31-Dec-21
30-Sep-21
30-Sep-22
30-Sep-21
Weighted Average Common Stock and Units Outstanding
292,536
290,528
290,163
289,895
289,542
291,084
288,880
Add: Effect of dilutive securities
294
416
499
998
686
377
651
Weighted Avg. Common Stock and Units Outstanding - diluted
292,830
290,944
290,662
290,893
290,228
291,461
289,531
(1)
Recurring capital expenditures represent non-incremental building improvements required to maintain current revenues, including second-generation tenant improvements and external leasing commissions. Recurring capital expenditures do not include acquisition costs contemplated when underwriting the purchase of a building, costs which are incurred to bring a building up to Digital Realty's operating standards, or internal leasing commissions.
(2)
For a definition and discussion of AFFO, see the definitions section. For a reconciliation of net income available to common stockholders to FFO and Core FFO, see above.
(3)
For all periods presented, we have excluded the effect of dilutive series C, 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 J, series K and series L preferred stock, as applicable, which we consider highly improbable, and the effect of the physical settlement of our September 2021 forward sales agreements. See above for calculations of diluted FFO available to common stockholders and unitholders and for calculations of weighted average common stock and units outstanding.
(4)
Certain of Teraco's minority indirect shareholders have the right to put their shares in an upstream parent company of Teraco to Digital Realty in exchange for cash or the equivalent value of shares of Digital Realty common stock, or a combination thereof. US GAAP requires Digital Realty to assume the put right is settled in shares for purposes of calculating diluted EPS. This same approach was utilized to calculate FFO/share. The potential future dilutive impact associated with this put right will be excluded from Core FFO until settlement occurs – causing diluted share count to be higher for FFO than for Core FFO.
Consolidated Balance Sheets
Financial Supplement
Unaudited and in Thousands, Except Share and Per Share Data
Third Quarter 2022
30-Sep-22
30-Jun-22
31-Mar-22
31-Dec-21
30-Sep-21
Assets
Investments in real estate:
Real estate
$24,876,600
$24,065,933
$23,769,712
$23,625,451
$23,384,809
Construction in progress
4,222,142
3,362,114
3,523,484
3,213,387
3,238,388
Land held for future development
34,713
37,460
107,003
133,683
118,091
Investments in real estate
$29,133,455
$27,465,507
$27,400,199
$26,972,522
$26,741,289
Accumulated depreciation and amortization
(6,826,918)
(6,665,118)
(6,467,233)
(6,210,281)
(6,159,294)
Net Investments in Properties
$22,306,537
$20,800,389
$20,932,966
$20,762,241
$20,581,995
Investment in unconsolidated joint ventures
1,912,958
1,942,549
2,044,074
1,807,689
1,292,325
Net Investments in Real Estate
$24,219,495
$22,742,937
$22,977,040
$22,569,930
$21,874,320
Cash and cash equivalents
$176,969
$99,226
$157,964
$142,698
$116,002
Accounts and other receivables (1)
861,117
797,208
774,579
671,721
610,416
Deferred rent
556,198
554,016
545,666
547,385
552,850
Customer relationship value, deferred leasing costs & other intangibles, net
3,035,861
2,521,390
2,640,795
2,735,486
2,871,622
Goodwill
8,728,105
7,545,107
7,802,440
7,937,440
8,062,914
Operating lease right-of-use assets
1,253,393
1,310,970
1,361,942
1,405,441
1,442,661
Other assets
384,079
385,202
420,119
359,459
316,863
Total Assets
$39,215,217
$35,956,057
$36,680,546
$36,369,560
$35,847,648
Liabilities and Equity
Global unsecured revolving credit facilities
$2,255,139
$1,440,040
$943,325
$398,172
$832,322
Unsecured term loans
729,976
—
—
—
—
Unsecured senior notes, net of discount
12,281,410
12,695,568
13,284,650
12,903,370
13,012,790
Secured debt and other, net of premiums
491,984
158,699
160,240
146,668
242,427
Operating lease liabilities
1,363,712
1,418,540
1,472,510
1,512,187
1,543,231
Accounts payable and other accrued liabilities
1,621,406
1,619,222
1,572,359
1,543,623
1,341,866
Deferred tax liabilities, net
1,145,097
611,582
649,112
666,451
725,955
Accrued dividends and distributions
—
—
—
338,729
—
Security deposits and prepaid rent
341,552
341,140
346,911
336,578
341,778
Total Liabilities
$20,230,276
$18,284,791
$18,429,107
$17,845,778
$18,040,369
Redeemable non-controlling interests - operating partnership
1,429,920
41,047
42,734
46,995
40,920
Equity
Preferred Stock: $0.01 par value per share, 110,000,000 shares authorized:
Series J Cumulative Redeemable Preferred Stock (2)
$193,540
$193,540
$193,540
$193,540
$193,540
Series K Cumulative Redeemable Preferred Stock (3)
203,264
203,264
203,264
203,264
203,264
Series L Cumulative Redeemable Preferred Stock (4)
334,886
334,886
334,886
334,886
334,886
Common Stock: $0.01 par value per share, 392,000,000 shares authorized (5)
2,851
2,824
2,824
2,824
2,818
Additional paid-in capital
21,528,384
21,091,364
21,069,391
21,075,863
21,010,202
Dividends in excess of earnings
(4,336,201)
(4,211,685)
(3,916,854)
(3,631,929)
(4,359,033)
Accumulated other comprehensive income (loss), net
(862,804)
(475,561)
(188,844)
(173,880)
(111,560)
Total Stockholders' Equity
$17,063,920
$17,138,632
$17,698,207
$18,004,568
$17,274,117
Noncontrolling Interests
Noncontrolling interest in operating partnership
$421,484
$432,213
$444,029
$425,337
$459,918
Noncontrolling interest in consolidated joint ventures
69,617
59,374
66,470
46,882
32,324
Total Noncontrolling Interests
$491,101
$491,587
$510,499
$472,219
$492,242
Total Equity
$17,555,021
$17,630,219
$18,208,706
$18,476,787
$17,766,359
Total Liabilities and Equity
$39,215,217
$35,956,057
$36,680,546
$36,369,560
$35,847,648
(1)
Net of allowance for doubtful accounts of $36,278 and $28,574 as of September 30, 2022 and December 31, 2021, respectively.
(2)
Series J Cumulative Redeemable Preferred Stock, 5.250% , $200,000 and $200,000 liquidation preference, respectively ($25.00 per share), 8,000,000 and 8,000,000 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively.
(3)
Series K Cumulative Redeemable Preferred Stock, 5.850% , $210,000 and $210,000 liquidation preference, respectively ($25.00 per share), 8,400,000 and 8,400,000 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively.
(4)
Series L Cumulative Redeemable Preferred Stock, 5.200% , $345,000 and $345,000 liquidation preference, respectively ($25.00 per share), 13,800,000 and 13,800,000 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively.
(5)
Common Stock: 287,509,059 and 284,415,013 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively.
Reconciliation of Earnings Before Interest, Taxes, Depreciation &
Amortization and Financial Ratios
Financial Supplement
Unaudited and Dollars in Thousands
Third Quarter 2022
Three Months Ended
Reconciliation of Earnings Before Interest, Taxes, Depreciation & Amortization
(EBITDA) (1)
30-Sep-22
30-Jun-22
31-Mar-22
31-Dec-21
30-Sep-21
Net Income Available to Common Stockholders
$226,894
$53,245
$63,101
$1,057,630
$124,094
Interest
76,502
69,023
66,725
71,762
71,417
Loss from early extinguishment of debt
—
—
51,135
325
—
Income tax expense (benefit)
19,576
16,406
13,244
3,961
13,709
Depreciation & amortization
388,704
376,967
382,132
378,883
369,035
EBITDA
$711,676
$515,642
$576,337
$1,512,561
$578,255
Unconsolidated JV real estate related depreciation & amortization
30,831
29,023
29,319
24,146
21,293
Unconsolidated JV interest expense and tax expense
11,948
6,708
21,111
15,222
11,008
Severance, equity acceleration, and legal expenses
1,655
3,786
2,077
1,003
1,377
Transaction and integration expenses
25,862
13,586
11,968
12,427
13,804
(Gain) / loss on sale of investments
(173,990)
—
(2,770)
(1,047,011)
635
Impairment of investments in real estate
—
—
—
18,291
—
Other non-core adjustments, net
(94)
31,633
(48,858)
14,307
(28,745)
Non-controlling interests
1,716
436
3,629
22,587
2,266
Preferred stock dividends, including undeclared dividends
10,181
10,181
10,181
10,181
10,181
(Gain on) / Issuance costs associated with redeemed preferred stock
—
—
—
—
—
Adjusted EBITDA
$619,786
$610,994
$602,994
$583,713
$610,074
(1)
For definitions and discussion of EBITDA and Adjusted EBITDA, see the definitions section.
Three Months Ended
Financial Ratios
30-Sep-22
30-Jun-22
31-Mar-22
31-Dec-21
30-Sep-21
Total GAAP interest expense
$76,502
$69,023
$66,725
$71,762
$71,417
Capitalized interest
17,304
14,131
14,751
15,328
15,142
Change in accrued interest and other non-cash amounts
31,860
(43,952)
52,324
(37,974)
17,820
Cash Interest Expense (2)
$125,666
$39,202
$133,800
$49,116
$104,379
Preferred dividends
10,181
10,181
10,181
10,181
10,181
Total Fixed Charges (3)
$103,987
$93,335
$91,657
$97,271
$96,740
Coverage
Interest coverage ratio (4)
6.1x
6.6x
6.1x
6.0x
6.5x
Cash interest coverage ratio (5)
4.6x
12.6x
4.0x
9.8x
5.4x
Fixed charge coverage ratio (6)
5.5x
6.0x
5.5x
5.4x
5.8x
Cash fixed charge coverage ratio (7)
4.3x
10.4x
3.7x
8.3x
5.0x
Leverage
Debt to total enterprise value (8) (9)
34.5 %
27.1 %
25.5 %
20.5 %
24.8 %
Debt plus preferred stock to total enterprise value (10)
36.2 %
28.5 %
26.8 %
21.7 %
26.1 %
Pre-tax income to interest expense (11)
4.1x
1.9x
2.2x
16.2x
2.9x
Net Debt to Adjusted EBITDA (12)
6.7x
6.2x
6.3x
6.1x
6.0x
(2)
Cash interest expense is interest expense less amortization of debt discount and deferred financing fees and includes interest that we capitalized. We consider cash interest expense to be a useful measure of interest as it excludes non-cash based interest expense.
(3)
Fixed charges consist of GAAP interest expense, capitalized interest, and preferred dividends.
(4)
Adjusted EBITDA divided by GAAP interest expense plus capitalized interest (including our pro rata share of unconsolidated joint venture interest expense).
(5)
Adjusted EBITDA divided by cash interest expense (including our pro rata share of unconsolidated joint venture interest expense).
(6)
Adjusted EBITDA divided by fixed charges (including our pro rata share of unconsolidated joint venture fixed charges).
(7)
Adjusted EBITDA divided by the sum of cash interest expense, and preferred dividends (including our pro rata share of unconsolidated joint venture cash fixed charges).
(8)
Mortgage debt and other loans divided by market value of common equity plus debt plus preferred stock.
(9)
Total enterprise value defined as market value of common equity plus debt plus preferred stock.
(10)
Same as (8), except numerator includes preferred stock.
(11)
Calculated as net income plus interest expense divided by GAAP interest expense.
(12)
Calculated as total debt at balance sheet carrying value, plus capital lease obligations, plus Digital Realty's pro rata share of unconsolidated of joint venture debt, less cash and cash equivalents (including Digital Realty's pro rata share of unconsolidated joint venture cash) divided by the product of Adjusted EBITDA (including Digital Realty's pro rata share of unconsolidated joint venture EBITDA), multiplied by four.
Definitions
Funds From Operations (FFO) :
We calculate funds from operations, or FFO, in accordance with the standards established by the National Association of Real Estate Investment Trusts, or Nareit, in the Nareit Funds From Operations White Paper - 2018 Restatement. FFO represents net income (loss) (computed in accordance with GAAP), excluding 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) other non-core revenue adjustments, (ii) transaction and integration expenses, (iii) loss from early extinguishment of debt, (iv) gain on / issuance costs associated with redeemed preferred stock, (v) severance, equity acceleration, and legal expenses, (vi) gain/loss on FX revaluation, and (vii) other non-core expense adjustments. Because certain of these adjustments have a real economic impact on our financial condition and results from operations, the utility of Core FFO as a measure of our performance is limited. Other REITs may calculate Core FFO differently than we do and accordingly, our Core FFO may not be comparable to other REITs' Core FFO. Core FFO should be considered only as a supplement to net income computed in accordance with GAAP as a measure of our performance.
Adjusted Funds from Operations (AFFO) :
We present adjusted funds from operations, or AFFO, as a supplemental operating measure because, when compared year over year, it assesses our ability to fund dividend and distribution requirements from our operating activities. We also believe that, as a widely recognized measure of the operations of REITs, AFFO will be used by investors as a basis to assess our ability to fund dividend payments in comparison to other REITs, including on a per share and unit basis. We calculate AFFO by adding to or subtracting from Core FFO (i) non-real estate depreciation, (ii) amortization of deferred financing costs, (iii) amortization of debt discount/premium, (iv) non-cash stock-based compensation expense, (v) straight-line rental revenue, (vi) straight-line rental expense, (vii) above- and below-market rent amortization, (viii) deferred tax expense / (benefit), (ix) leasing compensation and internal lease commissions, and (x) recurring capital expenditures. Other REITs may calculate AFFO differently than we do and, accordingly, our AFFO may not be comparable to other REITs' AFFO. AFFO should be considered only as a supplement to net income computed in accordance with GAAP as a measure of our performance.
EBITDA and Adjusted EBITDA :
We believe that earnings before interest, loss from early extinguishment of debt, income taxes, and depreciation and amortization, or EBITDA, and Adjusted EBITDA (as defined below), are useful supplemental performance measures because they allow investors to view our performance without the impact of non-cash depreciation and amortization or the cost of debt and, with respect to Adjusted EBITDA, unconsolidated joint venture real estate related depreciation & amortization, unconsolidated joint venture interest expense and tax, severance, equity acceleration, and legal expenses, transaction and integration expenses, gain on sale / deconsolidation, impairment of investments in real estate, other non-core adjustments, net, non-controlling interests, preferred stock dividends, including undeclared dividends, and issuance costs associated with redeemed preferred stock. Adjusted EBITDA is EBITDA excluding unconsolidated joint venture real estate related depreciation & amortization, unconsolidated joint venture interest expense and tax, severance, equity acceleration, and legal expenses, transaction and integration expenses, gain on sale / deconsolidation, impairment of investments in real estate, other non-core adjustments, net, non-controlling interests, preferred stock dividends, including undeclared dividends, and gain on / issuance costs associated with redeemed preferred stock. In addition, we believe EBITDA and Adjusted EBITDA are frequently used by securities analysts, investors and other interested parties in the evaluation of REITs. Because EBITDA and Adjusted EBITDA are calculated before recurring cash charges including interest expense and income taxes, exclude capitalized costs, such as leasing commissions, and are not adjusted for capital expenditures or other recurring cash requirements of our business, their utility as a measure of our performance is limited. Other REITs may calculate EBITDA and Adjusted EBITDA differently than we do and, accordingly, our EBITDA and Adjusted EBITDA may not be comparable to other REITs' EBITDA and Adjusted EBITDA. Accordingly, EBITDA and Adjusted EBITDA should be considered only as supplements to net income computed in accordance with GAAP as a measure of our financial performance.
Net Operating Income (NOI) and Cash NOI :
Net operating income, or NOI, represents rental revenue, tenant reimbursement revenue and interconnection revenue less utilities expense, rental property operating expenses, property taxes and insurance expenses (as reflected in the statement of operations). NOI is commonly used by stockholders, company management and industry analysts as a measurement of operating performance of the company's rental portfolio. Cash NOI is NOI less straight-line rents and above- and below-market rent amortization. Cash NOI is commonly used by stockholders, company management and industry analysts as a measure of property operating performance on a cash basis. 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 unconsolidated JV debt, less unrestricted cash and cash equivalents (including our share of unconsolidated JV cash) divided by the product of Adjusted EBITDA (inclusive of our share of unconsolidated 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, 2022 , GAAP interest expense was $77 million , capitalized interest was $17 million $10 million
Reconciliation of Net Operating Income (NOI)
Three Months Ended
Nine Months Ended
(in thousands)
30-Sep-22
30-Jun-22
30-Sep-21
30-Sep-22
30-Sep-21
Operating income
$157,381
$170,371
$184,365
$468,988
$562,512
Fee income
(6,169)
(5,072)
(3,255)
(16,998)
(9,309)
Other income
(1,749)
(2,713)
(18,977)
(4,477)
(19,201)
Depreciation and amortization
388,704
376,967
369,035
1,147,803
1,107,749
General and administrative
95,792
101,991
97,082
294,217
289,606
Severance, equity acceleration, and legal expenses
1,655
3,786
1,377
7,519
6,340
Transaction expenses
25,862
13,586
13,804
51,416
34,999
Other expenses
1,096
70
510
8,823
2,551
Net Operating Income
$662,572
$658,986
$643,942
$1,957,291
$1,975,247
Cash Net Operating Income (Cash NOI)
Net Operating Income
$662,572
$658,986
$643,942
$1,957,291
$1,975,247
Straight-line rental revenue
(17,505)
(14,134)
(12,029)
(38,168)
(47,762)
Straight-line rental expense
2,499
(2,609)
7,779
3,536
21,598
Above- and below-market rent amortization
(465)
196
1,165
65
5,159
Cash Net Operating Income
$647,101
$642,439
$640,857
$1,922,725
$1,954,241
Constant Currency CFFO Reconciliation
Three Months Ended
Nine Months Ended
(in thousands)
30-Sep-22
30-Jun-22
30-Sep-21
30-Sep-22
30-Sep-21
Core FFO (1)
$487,931
$479,209
$1,471,806
$1,407,067
Core FFO impact of holding '21 Exchange Rates Constant (2)
25,975
—
55,899
—
Constant Currency Core FFO
$513,906
$479,209
$1,527,705
$1,407,067
Weighted-average shares and units outstanding - diluted
292,830
290,228
291,461
289,531
Constant Currency CFFO Per Share
$1.75
$1.65
$5.24
$4.86
1)
As reconciled to net income on page 14.
2)
Adjustment calculated by holding currency translation rates for 2022 constant with average currency translation rates that were applicable to the same periods in 2021.
This document contains forward-looking statements within the meaning of the federal securities laws, which are based on current expectations, forecasts and assumptions that involve risks and uncertainties that could cause actual outcomes and results to differ materially. Such forward-looking statements include statements relating to: our economic outlook, our expected investment and expansion activity, our expected physical settlement of the forward sale agreements and use of proceeds from any such settlement, our liquidity, our joint ventures, supply and demand for data center and colocation space, our acquisition and disposition activity, pricing and net effective leasing economics, market dynamics and data center fundamentals, our strategic priorities, our product offerings, available inventory rent from leases that have been signed but have not yet commenced and other contracted rent to be received in future periods, rental rates on future leases, lag between signing and commencement, cap rates and yields, investment activity, the company's FFO, Core FFO and net income, 2022 outlook and underlying assumptions, information related to trends, our strategy and plans, leasing expectations, weighted average lease terms, the exercise of lease extensions, lease expirations, debt maturities, annualized rent at expiration of leases, the effect new leases and increases in rental rates will have on our rental revenue, our credit ratings, construction and development activity and plans, projected construction costs, estimated yields on investment, expected occupancy, expected square footage and IT load capacity upon completion of development projects, 2022 backlog NOI, NAV components, and other forward-looking financial data. Such statements are based on management's beliefs and assumptions made based on information currently available to management. Such statements are subject to risks, uncertainties and assumptions and are not guarantees of future performance and may be affected by known and unknown risks, trends, uncertainties and factors that are beyond our control. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated or projected. Some of the risks and uncertainties that may cause our actual results, performance or achievements to differ materially from those expressed or implied by forward-looking statements include, among others, the following:
reduced demand for data centers or decreases in information technology spending; increased competition or available supply of data center space; decreased rental rates, increased operating costs or increased vacancy rates; the suitability of our data centers and data center infrastructure, delays or disruptions in connectivity or availability of power, or failures or breaches of our physical and information security infrastructure or services; our dependence upon significant customers, bankruptcy or insolvency of a major customer or a significant number of smaller customers, or defaults on or non-renewal of leases by customers; our ability to attract and retain customers; breaches of our obligations or restrictions under our contracts with our customers; our inability to successfully develop and lease new properties and development space, and delays or unexpected costs in development of properties; the impact of current global and local economic, credit and market conditions; our inability to retain data center space that we lease or sublease from third parties; global supply chain or procurement disruptions, or increased supply chain costs; information security and data privacy breaches; difficulty managing an international business and acquiring or operating properties in foreign jurisdictions and unfamiliar metropolitan areas; our failure to realize the intended benefits from, or disruptions to our plans and operations or unknown or contingent liabilities related to, our recent acquisitions; our failure to successfully integrate and operate acquired or developed properties or businesses; difficulties in identifying properties to acquire and completing acquisitions; risks related to joint venture investments, including as a result of our lack of control of such investments; risks associated with using debt to fund our business activities, including re-financing and interest rate risks, our failure to repay debt when due, adverse changes in our credit ratings or our breach of covenants or other terms contained in our loan facilities and agreements; our failure to obtain necessary debt and equity financing, and our dependence on external sources of capital; financial market fluctuations and changes in foreign currency exchange rates; adverse economic or real estate developments in our industry or the industry sectors that we sell to, including risks relating to decreasing real estate valuations and impairment charges and goodwill and other intangible asset impairment charges; our inability to manage our growth effectively; losses in excess of our insurance coverage; our inability to attract and retain talent; impact on our operations and on the operations of our customers, suppliers and business partners during a pandemic, such as COVID-19; environmental liabilities, risks related to natural disasters and our inability to achieve our sustainability goals; our inability to comply with rules and regulations applicable to our company; Digital Realty Trust, Inc.'s failure to maintain its status as a REIT for federal income tax purposes; Digital Realty Trust, L.P.'s failure to qualify as a partnership for federal income tax purposes; restrictions on our ability to engage in certain business activities; changes in local, state, federal and international laws and regulations, including related to taxation, real estate and zoning laws, and increases in real property tax rates; and the impact of any financial, accounting, legal or regulatory issues or litigation that may affect us. The risks included here are not exhaustive, and additional factors could adversely affect our business and financial performance. Several additional material risks are discussed in our annual report on Form 10‑K for the year ended December 31, 2021 and other filings with the U.S. Securities and Exchange Commission. Those risks continue to be relevant to our performance and financial condition. Moreover, we operate in a 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, Interxion, Turn-Key Flex, Powered Base Building, and PlatformDIGITAL, Data Gravity Index and Data Gravity Index DGx are registered trademarks and service marks of Digital Realty Trust, Inc. in the United States and/or other countries. All other names, trademarks and service marks are the property of their respective owners.
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SOURCE Digital Realty
