01—Abstract
Summary
Summary of the 10-K/A filed March 4, 2014. Cited figures are marked; the original filing is the authoritative source.
Digital Realty Trust (DLR) filed this Amendment No. 1 on Form 10-K/A for fiscal 2013 to correct information that was inadvertently omitted or misstated in the original March 3, 2014 combined 10-K.
The combined report covers both Digital Realty Trust, Inc. (the REIT) and its operating partnership, Digital Realty Trust, L.P. The amendment does not reflect events after the original filing. The company owned 131 properties (about 24.5 million net rentable square feet) at year-end 2013, with the portfolio 92.6%a leased, spanning North America, Europe, Asia Pacific and Australia.
Financially, 2013 total operating revenues rose 15.9% to $1.48 billionb, and net income attributable to common stockholders was $271.6 million ($2.12 per diluted share), up from $171.7 million. Funds from operations (FFO) per diluted share was $4.74, up from $4.44. Total debt was about $5.0 billion, with roughly 76% fixed-rate or swapped, an effective interest rate of 3.92%, and a debt-to-total-enterprise-value ratio of about 41%.
The company raised capital through a £400 million 4.25% notes offering due 2025 and a $500 millionc share repurchase authorization, though no repurchases were made in 2013. Investors should note concentration and development risk. CenturyLink is the largest tenant at 7.8% of annualized rent, and London represents 12.0% of annualized rent.
Development spending is heavy, with about $1.09 billiond of capital expenditures in 2013 and guidance of $600 million to $800 million for 2014. The company also flags Silicon Valley as at risk of oversupply.
02—Key points
Key Highlights
- Revenue growth: total operating revenues increased 15.9% to $1,482.3 million in 2013, driven by new leasing, acquisitions and the same-store portfolio.
- Earnings: net income available to common stockholders was $271.6 million, or $2.12 per diluted share, versus $171.7 million ($1.48) in 2012.
- FFO growth: diluted FFO per share and unit rose to $4.74 from $4.44 in 2012.
- Portfolio scale: 131 properties totaling 24.5 million net rentable square feet, 92.6% leased, across 33 metropolitan areas.
- Leverage and debt: total consolidated debt of about $5.0 billion, 76% fixed or swapped, effective interest rate of 3.92%, and debt at about 41% of total enterprise value versus a 60% policy limit.
- Concentration risk: CenturyLink is the largest tenant at 7.8% of annualized rent, and London accounts for 12.0% of annualized rent.
- Dividends: the common dividend was $0.78 per quarter in 2013 ($3.12 annual), and the company declared $0.83 per quarter for Q1 2014.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-K/AFY2013filed March 4, 2014Financial Statements
FY2013 against FY2012
| Line item | FY2013FY2012 | Change |
|---|---|---|
| Revenue | $1.48B$1.28B | +15.9% |
| Operating Expenses | $1.10B$912.99M | +20.5% |
| Operating Income | $381.81M$366.08M | +4.3% |
| Interest Expense | $189.40M$157.11M | +20.6% |
| Net Income | $314.49M$210.33M | +49.5% |
| EPS (Basic) | $2.12$1.48 | +43.2% |
| EPS (Diluted) | $2.12$1.48 | +43.2% |
| Shares Outstanding (Basic) | 127.94M115.72M | +10.6% |
| Shares Outstanding (Diluted) | 128.13M116.01M | +10.4% |
05—Questions
Frequently Asked Questions
Why was this 10-K/A filed?
The amendment corrects information that was inadvertently omitted or incorrectly stated in the original March 3, 2014 filing because of an error by the financial printer. It does not reflect events after the original filing.
How did Digital Realty perform financially in 2013?
Total operating revenues grew 15.9% to $1.48 billion and net income available to common stockholders rose to $271.6 million ($2.12 per diluted share) from $171.7 million. Diluted FFO per share increased to $4.74 from $4.44.
What are the main concentration risks for investors?
CenturyLink (including Savvis and Qwest) accounts for 7.8% of annualized rent, and the top 20 tenants account for about 46%. London makes up 12.0% of annualized rent, and the company identifies Silicon Valley as at risk of oversupply.
How much leverage does the company carry and what are the refinancing needs?
Total consolidated debt was about $5.0 billion at year-end 2013, with about 76% fixed or swapped and a 3.92% effective rate. Debt is about 41% of total enterprise value against a 60% policy cap. The 2029 exchangeable debentures are assumed to be redeemed at their first call date in April 2014, and the $1.0 billion term loan and $724.7 million global revolver both mature in 2017.
What is the outlook for development and capital spending?
The company expects to spend roughly $600 million to $800 million on development programs in 2014, after about $1.09 billion of total capital expenditures in 2013. It had about 1.8 million square feet under active development and $202.1 million of open construction commitments at year-end.
06—Continue