10-KPeriod: FY2018

DIGITAL REALTY TRUST, INC. Annual Report, Year Ended Dec 31, 2018

Filed February 25, 2019For Securities:DLRDLR-PJDLR-PKDLR-PL

Summary

Digital Realty Trust, Inc. (DLR) reported its annual results for the year ended December 31, 2018, showcasing a continued expansion of its global data center footprint and a robust operational performance. The company emphasized its strategic acquisitions, including the significant Ascenty acquisition in Brazil, which bolsters its presence in Latin America, and the integration of DuPont Fabros Technology (DFT), which enhanced its U.S. market reach. DLR's business model focuses on providing comprehensive data center solutions, leveraging its global platform and technology expertise to serve a diverse customer base, including major cloud providers and IT services companies. Financially, DLR demonstrated revenue growth driven by both stabilized and developing properties, alongside strategic capital deployment. The company maintained a disciplined approach to its balance sheet, targeting specific debt-to-EBITDA and coverage ratios. The report also highlights DLR's commitment to sustainability, with various initiatives aimed at environmental efficiency. Investors should note the company's diversified revenue streams, extensive portfolio, and its position as a key player in the growing digital economy.

Financial Statements
Beta
Revenue$3.05B
Operating Expenses$2.50B
Operating Income$549.79M
Interest Expense$321.53M
Net Income$331.25M
EPS (Basic)$1.21
EPS (Diluted)$1.21
Shares Outstanding (Basic)206.04M
Shares Outstanding (Diluted)206.67M

Key Highlights

  • 1Acquisition of Ascenty for approximately $1.8 billion significantly expanded DLR's presence in Latin America, establishing it as a premier data center provider in the region.
  • 2The integration of DuPont Fabros Technology (DFT) for approximately $6.2 billion in an all-stock merger strengthened DLR's U.S. footprint and ability to serve hyper-scale and public cloud solutions.
  • 3DLR's portfolio grew to 214 data centers globally, covering approximately 34.5 million rentable square feet, with 89.0% leased as of December 31, 2018.
  • 4Total operating revenues increased by 23.9% to $3.05 billion for the year ended December 31, 2018, driven by acquisitions and leasing activity.
  • 5The company maintained a diversified customer base, with no single customer accounting for more than 6.8% of aggregate annualized rent, reducing concentration risk.
  • 6DLR continued to invest in development, with approximately 3.4 million square feet under active development and 2.1 million square feet held for future development as of year-end 2018.
  • 7The company maintained a conservative capital structure, targeting a debt-to-adjusted EBITDA ratio at or below 5.5x and strong fixed charge coverage.

Frequently Asked Questions

In 2018, Digital Realty completed the significant acquisition of Ascenty, a leading data center provider in Brazil, for approximately $1.8 billion. This acquisition was instrumental in establishing DLR as a premier data center solutions provider in Latin America. The company also continued to integrate the acquisition of DuPont Fabros Technology (DFT), completed in 2017, which had expanded its footprint in key U.S. metropolitan areas.

As of December 31, 2018, Digital Realty's portfolio comprised 214 data centers across 35 major metropolitan areas on five continents, encompassing approximately 34.5 million rentable square feet. This includes 18 data centers held in unconsolidated joint ventures. The company's recent acquisitions have broadened its global presence, particularly with the Ascenty acquisition significantly strengthening its position in Latin America.

Digital Realty maintained a robust financial position, with total operating revenues reaching $3.05 billion in 2018, reflecting growth from acquisitions and leasing activities. The company is committed to a conservative capital structure, targeting a debt-to-adjusted EBITDA ratio at or below 5.5x and maintaining strong fixed charge coverage. Its balance sheet shows substantial investments in real estate and manageable debt levels relative to its enterprise value.

Digital Realty serves a highly diversified customer base, with over 2,300 customers as of December 31, 2018. The company actively manages its customer concentration risk, as evidenced by its top customer, Facebook, representing only approximately 6.8% of the aggregate annualized rent. This broad customer base across various industry verticals, including cloud providers, network providers, and enterprises, mitigates the impact of any single customer's performance on the company's overall revenue.