10-QPeriod: Q3 FY2011

DIGITAL REALTY TRUST, INC. Quarterly Report for Q3 Ended Sep 30, 2011

Filed November 7, 2011For Securities:DLRDLR-PJDLR-PKDLR-PL

Summary

Digital Realty Trust, Inc. (DLR) reported solid revenue growth for the nine months ended September 30, 2011, with total operating revenues increasing by approximately 26.7% to $792.1 million compared to the prior year. This growth was driven by a combination of increased rental income and tenant reimbursements from both existing 'same store' properties and newly acquired assets, alongside significant contributions from construction management services. The company's strategy of investing in and developing technology-related real estate, particularly data centers, continues to be a key driver of its expansion. The company maintained a strong occupancy rate of 93.7% (excluding redevelopment space) and demonstrated effective leasing activity, with rental rates on new and renewed leases showing positive trends. DLR also highlighted its commitment to strengthening its capital structure and liquidity, evidenced by active equity and debt management, including the issuance of new notes and the establishment of a new global revolving credit facility. Despite facing macroeconomic headwinds and potential interest rate fluctuations, DLR's financial position appears robust, supported by its strategic focus on the growing demand for data center space.

Financial Highlights

31 data points
Beta

Revenue

$273.48M

Net Income

$36.34M

13.3% Net Margin

EPS (Diluted)

$0.31

Total Assets

$5.83B

Cash & Equivalents

$38.73M

Free Cash Flow

$90.38M

Financial Statements
Beta
Revenue$273.48M
Operating Expenses$201.85M
Operating Income$71.63M
Interest Expense$37.08M
Net Income$36.34M
EPS (Basic)$0.32
EPS (Diluted)$0.31
Shares Outstanding (Basic)100.59M
Shares Outstanding (Diluted)101.91M

Key Highlights

  • 1Total operating revenues increased by 26.7% to $792.1 million for the nine months ended September 30, 2011, compared to $626.7 million in the prior year.
  • 2Occupancy rate remained strong at 93.7% for the portfolio (excluding redevelopment space) as of September 30, 2011.
  • 3The company actively managed its capital structure, issuing new debt and equity, and establishing a $1.5 billion global revolving credit facility, replacing previous credit lines.
  • 4Rental revenue from 'same store' properties increased by 8.9% for the nine months ended September 30, 2011, indicating steady performance of its existing portfolio.
  • 5New property acquisitions and development contributed significantly to revenue growth, with total revenues from 'new properties' increasing by 147.5% for the nine months ended September 30, 2011.
  • 6DLR's debt-to-total enterprise value ratio was approximately 30% as of September 30, 2011, indicating a manageable leverage level.
  • 7Funds From Operations (FFO) available to common stockholders and unitholders increased by 47.3% to $330.7 million for the nine months ended September 30, 2011.

Frequently Asked Questions

Digital Realty Trust's primary strategy is to maximize long-term growth in earnings and funds from operations per share and cash flow by focusing on investing in, developing, and redeveloping technology-related real estate, with a particular emphasis on data centers. They target high-quality, strategically located properties critical to corporate enterprise data center and technology industry tenants.

The company is actively managing its capital structure. As of September 30, 2011, its debt-to-total enterprise value ratio was approximately 30%. They also established a new $1.5 billion global revolving credit facility in November 2011, replacing prior facilities, to ensure access to capital for acquisitions, development, and general corporate purposes. Furthermore, they have utilized at-the-market equity distribution programs and debt issuances to manage liquidity and fund growth.

The primary revenue drivers are rental income from its portfolio of technology-related real estate, particularly data centers. Additionally, tenant reimbursements for operating expenses and property taxes contribute to revenue. The company also generates revenue from construction management fees related to its development and redevelopment projects.

Key risks include global market and economic conditions, tighter credit conditions, decreased IT spending, tenant bankruptcy or insolvency, increased interest rates and operating costs, foreign currency exchange rate fluctuations, and competition in the data center space. The company also notes risks associated with the concentration of its portfolio in specific geographic markets.