01—Abstract
Summary
Summary of the 10-K filed March 1, 2018. Cited figures are marked; the original filing is the authoritative source.
Digital Realty Trust, Inc. (DLR) concluded its 2017 fiscal year with significant strategic growth, notably the acquisition of DuPont Fabros Technology, Inc. (DFT) for $6.2 billiona in September 2017.
This acquisition expanded DLR's footprint in key U.S. metropolitan areas and bolstered its capacity to serve hyper-scale and public cloud demands. The company's portfolio at the end of 2017 comprised 205 data centers across 33 major metropolitan areas globally, spanning approximately 32.1 million square feet, with 90.2%b occupancy for its stabilized properties. DLR's business model focuses on providing data center solutions, including colocation and interconnection services, catering to a diverse range of industry verticals.
The company emphasizes its global platform, presence in key metropolitan areas, secure and network-rich facilities, and a comprehensive product offering as competitive strengths. Despite increased operating expenses and interest expenses driven by recent acquisitions and development activities, DLR maintained a strong focus on prudent capital allocation and balance sheet flexibility, targeting a debt-to-adjusted EBITDA ratio of at or below 5.5xc.
02—Key points
Key Highlights
- Completed the $6.2 billion acquisition of DuPont Fabros Technology, Inc. (DFT) in September 2017, significantly expanding its U.S. data center portfolio and hyper-scale capabilities.
- Operated a global portfolio of 205 data centers across 33 metropolitan areas, totaling approximately 32.1 million square feet.
- Maintained a strong global platform with a focus on key metropolitan areas, network density, and comprehensive data center solutions.
- Diversified customer base with over 2,300 tenants, where the largest customer accounted for only 6.5% of annualized rent, mitigating single-customer risk.
- Invested heavily in development and acquisitions, with approximately 2.7 million square feet under active development and 1.7 million square feet held for future development as of year-end 2017.
- Maintained a conservative capital structure with a target debt-to-adjusted EBITDA ratio at or below 5.5x and sufficient liquidity through its global revolving credit facility.
- Demonstrated strong sustainability initiatives, recognized by industry awards and participation in U.S. Department of Energy programs.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2017filed March 1, 2018Financial Statements
FY2017 against FY2016
| Line item | FY2017FY2016 | Change |
|---|---|---|
| Revenue | $2.46B$2.14B | +14.7% |
| Operating Expenses | $2.01B$1.64B | +22.0% |
| Operating Income | $451.30M$497.29M | −9.2% |
| Interest Expense | $258.64M$236.48M | +9.4% |
| Net Income | $248.26M$426.19M | −41.7% |
| EPS (Basic) | $0.99$2.21 | −55.2% |
| EPS (Diluted) | $0.99$2.20 | −55.0% |
| Shares Outstanding (Basic) | 174.06M149.95M | +16.1% |
| Shares Outstanding (Diluted) | 174.90M150.68M | +16.1% |
05—Questions
Frequently Asked Questions
What was Digital Realty's (DLR) most significant strategic move in 2017?
The most significant strategic move for Digital Realty in 2017 was the acquisition of DuPont Fabros Technology, Inc. (DFT) for $6.2 billion in September 2017. This all-stock transaction significantly expanded DLR's data center footprint in key U.S. markets and enhanced its capabilities to serve the growing demand for hyper-scale and public cloud solutions.
How diversified is DLR's tenant base?
Digital Realty Trust maintains a highly diversified tenant base, with over 2,300 customers as of December 31, 2017. The company's largest customer, IBM, accounted for approximately 6.5% of the aggregate annualized rent, and no other single customer represented more than approximately 6.2%, indicating a low concentration of revenue from any single tenant.
What is DLR's approach to capital management and debt?
Digital Realty Trust is committed to maintaining a conservative capital structure. The company targets a debt-to-adjusted EBITDA ratio at or below 5.5x, aims for a fixed charge coverage of greater than three times, and keeps floating rate debt below 20% of total outstanding debt. They also focus on a well-laddered debt maturity schedule and maximizing available sources of capital while minimizing costs.
What is the current status of DLR's development pipeline?
As of December 31, 2017, Digital Realty had approximately 2.7 million square feet of space under active development and an additional 1.7 million square feet of space held for future development. This development pipeline is spread across seven U.S. metropolitan areas, four in Europe, two in Australia, one in Canada, and one in Asia, indicating a continued investment in expanding its data center capacity.
06—Continue