10-QPeriod: Q1 FY2012

DIGITAL REALTY TRUST, INC. Quarterly Report for Q1 Ended Mar 31, 2012

Filed May 7, 2012For Securities:DLRDLR-PJDLR-PKDLR-PL

Summary

Digital Realty Trust, Inc. (DLR) reported solid performance for the quarter ending March 31, 2012, demonstrating growth in operating revenues driven by new property acquisitions and increased leasing activity in its existing portfolio. The company's strategic focus on technology-related real estate, particularly data centers, continues to yield positive results, with a high occupancy rate and a growing portfolio of properties. Despite a challenging global economic environment, DLR has managed its capital effectively, with a conservative debt-to-enterprise value ratio and adequate liquidity from operations and credit facilities. The company is actively pursuing development and redevelopment opportunities to enhance its portfolio's income-generating potential, while also managing risks associated with interest rate fluctuations and foreign currency exchange. Investors should note the company's commitment to maintaining its REIT status through dividend distributions, supported by consistent operational performance.

Financial Highlights

31 data points
Beta

Revenue

$283.15M

Net Income

$48.04M

17.0% Net Margin

EPS (Diluted)

$0.36

Total Assets

$6.42B

Cash & Equivalents

$26.24M

Free Cash Flow

$70.54M

Financial Statements
Beta
Revenue$283.15M
Operating Expenses$197.23M
Operating Income$85.92M
Interest Expense$38.03M
Net Income$48.04M
EPS (Basic)$0.37
EPS (Diluted)$0.36
Shares Outstanding (Basic)107.10M
Shares Outstanding (Diluted)107.58M

Key Highlights

  • 1Total operating revenues increased by 12.9% year-over-year to $283.1 million for the three months ended March 31, 2012.
  • 2The company acquired six new properties in the twelve months preceding March 31, 2012, expanding its portfolio to 102 properties.
  • 3Occupancy rate remained strong at 94.8% (excluding space held for redevelopment) as of March 31, 2012.
  • 4Digital Realty Trust maintained a conservative debt-to-enterprise value ratio of approximately 27% as of March 31, 2012.
  • 5The company successfully increased its global revolving credit facility capacity to $1.5 billion.
  • 6Operating income grew by 15.1% year-over-year to $85.9 million, reflecting revenue growth and efficient cost management.
  • 7The company generated $62.7 million in net proceeds from its At-the-Market equity distribution program during the quarter.

Frequently Asked Questions

Digital Realty Trust demonstrated healthy financial performance, with a notable increase in operating revenues and operating income compared to the prior year. The company maintained a strong balance sheet with a conservative leverage ratio and sufficient liquidity, supported by operating cash flows and credit facilities, positioning it well to navigate the prevailing economic conditions.

The company utilizes a mix of fixed and variable rate debt, actively hedging a portion of its variable rate exposure with swaps and caps to mitigate interest rate risk. Its debt-to-enterprise value ratio remained conservative at 27%, and it has access to significant credit facilities, including a $1.5 billion global revolving credit facility and a new $750 million senior unsecured multi-currency term loan facility, providing ample flexibility for operations, acquisitions, and development.

The company faces risks related to global market and economic conditions, including tighter credit and slower growth, which could impact tenants' ability to pay rent and the company's access to capital. Other risks include decreases in IT spending, tenant bankruptcies or defaults, increased interest rates, competition in the data center space, and the potential impact of climate change legislation on operating costs. The company also noted potential impacts from foreign currency exchange rates on its international operations.

Digital Realty Trust's growth strategy focuses on investing in and redeveloping technology-related real estate, particularly data centers. This includes developing existing space, acquiring new assets, and building out its redevelopment portfolio. Capital expenditures for development and redevelopment programs are significant, with an estimated $565.0 million to $765.0 million expected for the nine months ending December 31, 2012, funded by operations, equity, and debt capital.