What is Digital Realty Trust's primary business strategy?

Digital Realty Trust's primary business objective is to maximize sustainable long-term growth in earnings, funds from operations, and cash flow per share. They achieve this by focusing on investing in high-quality, strategically located technology-related real estate, particularly properties critical for corporate enterprise datacenters and technology industry tenants.

How has the company's portfolio grown recently?

The company has experienced significant portfolio growth. As of March 31, 2007, DLR owned 61 properties totaling 11.4 million rentable square feet, an increase from 43 properties with 8.1 million rentable square feet as of March 31, 2006. This growth was primarily achieved through the acquisition of 18 new properties in the twelve months leading up to March 31, 2007.

What are the key risks DLR faces?

DLR faces various risks including adverse economic or real estate developments, defaults or non-renewal of leases by tenants, increased interest rates and operating costs, difficulties in managing growth effectively, inability to obtain necessary financing, decreased rental or increased vacancy rates, challenges in acquiring and operating new properties, and maintaining its REIT status. Fluctuations in financial markets and changes in real estate and tax laws are also potential risks.

How is DLR managing its debt and interest rate exposure?

As of March 31, 2007, DLR had approximately $1.3 billion in consolidated debt, with 83.2% being fixed-rate debt (including swapped debt). They utilize interest rate swap agreements to hedge their exposure to variable interest rate movements on a portion of their variable rate debt. The company aims to limit its indebtedness to 60% of its total market capitalization, and as of the reporting date, its ratio was approximately 31%.

DIGITAL REALTY TRUST, INC. 10-Q Quarterly Report Q1 FY2007

Summary

Digital Realty Trust, Inc. (DLR) reported strong growth in its first quarter of 2007, driven by significant property acquisitions and increased leasing activity. The company expanded its portfolio to 61 properties, totaling 11.4 million rentable square feet, up from 43 properties and 8.1 million rentable square feet in the prior year period. This expansion led to a substantial increase in operating revenues, which grew by approximately 56% year-over-year to $89.0 million, primarily due to rental income from newly acquired assets and continued leasing in existing properties. The company's strategy of focusing on technology-related real estate, particularly datacenters, appears to be yielding positive results, with an overall occupancy rate of 94.8% excluding redevelopment space. Despite increased operating expenses and interest expenses associated with portfolio growth and rising interest rates, DLR maintained a healthy debt-to-market capitalization ratio of approximately 31% as of March 31, 2007, indicating prudent financial management.

Key Highlights

1Total operating revenues increased by 55.7% to $88.97 million for the three months ended March 31, 2007, compared to $57.12 million in the same period of 2006, driven by property acquisitions and leasing.
2The company's property portfolio expanded significantly, growing from 43 properties to 61 properties, increasing total rentable square feet to 11.4 million.
3Occupancy rate remained strong at 94.8% for leased space, excluding space held for redevelopment.
4Operating expenses increased by 68.5% to $67.00 million, largely due to the addition of new properties and increased depreciation and amortization.
5Interest expense rose by 58.8% to $16.59 million, reflecting higher average debt balances and rising interest rates.
6The company's debt-to-total market capitalization ratio was approximately 31% as of March 31, 2007, indicating a manageable debt level.
7DLR raised $169.1 million in net proceeds from the issuance of Series C Cumulative Convertible Preferred Stock and used these funds to pay down its unsecured credit facility.

DIGITAL REALTY TRUST, INC. Quarterly Report for Q1 Ended Mar 31, 2007

Summary

Key Highlights

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