10-QPeriod: Q1 FY2015

DIGITAL REALTY TRUST, INC. Quarterly Report for Q1 Ended Mar 31, 2015

Filed May 8, 2015For Securities:DLRDLR-PJDLR-PKDLR-PL

Summary

Digital Realty Trust, Inc. (DLR) reported its first quarter 2015 financial results, showcasing continued portfolio growth and operational performance. The company owns and operates a significant portfolio of technology-related real estate, primarily data centers, with 130 properties totaling approximately 24.7 million rentable square feet as of March 31, 2015. DLR's strategy focuses on maximizing sustainable long-term growth in earnings and funds from operations per share, along with cash flow and returns to stockholders. Operationally, the company maintained a high occupancy rate of 92.1% across its portfolio, excluding space under development. DLR also reported successful property sales, including three properties generating approximately $161 million in proceeds and significant gains, as part of its capital recycling strategy. While the company faces some risks from global economic conditions, foreign currency fluctuations, and competition, its robust leasing activity, a strong debt-to-enterprise value ratio of approximately 32%, and ample liquidity under its credit facilities position it for continued operations and growth.

Financial Highlights

32 data points
Beta

Revenue

$406.61M

Net Income

$120.18M

29.6% Net Margin

EPS (Diluted)

$0.75

Total Assets

$9.41B

Cash & Equivalents

$37.33M

Free Cash Flow

$138.92M

Financial Statements
Beta
Revenue$406.61M
Operating Expenses$257.29M
Operating Income$149.32M
Interest Expense$45.47M
Net Income$120.18M
EPS (Basic)$0.75
EPS (Diluted)$0.75
Shares Outstanding (Basic)135.70M
Shares Outstanding (Diluted)136.13M

Key Highlights

  • 1As of March 31, 2015, Digital Realty Trust owned 130 properties, encompassing approximately 24.7 million rentable square feet, with 1.2 million square feet under active development.
  • 2The company maintained a portfolio occupancy rate of 92.1%, excluding space under development and held for future development.
  • 3DLR successfully executed its capital recycling strategy, selling three properties during the first quarter and April 2015, generating approximately $205 million in net proceeds and significant gains.
  • 4Total operating revenues for the first quarter of 2015 increased by $16.0 million to $406.6 million compared to the same period in 2014.
  • 5Operating expenses decreased by approximately $43.3 million primarily due to a significant decrease in general and administrative expenses, notably severance costs in the prior year, and a reduction in the fair value of contingent consideration.
  • 6The company's debt-to-total enterprise value ratio stood at approximately 32% as of March 31, 2015, indicating a healthy leverage position.
  • 7Availability under the global revolving credit facility was approximately $1.1 billion as of March 31, 2015, providing substantial liquidity.

Frequently Asked Questions

Digital Realty Trust's primary business objectives are to maximize sustainable long-term growth in earnings and funds from operations per share and unit, enhance cash flow and returns to stockholders and unitholders through distributions, and improve return on invested capital. They achieve this by focusing on investing in and developing technology-related real estate, particularly data centers.

As of March 31, 2015, Digital Realty Trust had approximately $4.8 billion in outstanding consolidated long-term debt, with a debt-to-total enterprise value ratio of about 32%. The company has substantial liquidity, with approximately $1.1 billion available under its global revolving credit facility, which is expected to be sufficient for its short-term liquidity requirements, including operating expenses, development costs, and distributions.

Key risks include global economic conditions, decreased IT spending, tenant bankruptcy or defaults, inability to secure necessary financing, interest rate fluctuations, foreign currency exchange rate movements, challenges in managing growth, competition, difficulty acquiring or operating properties in foreign jurisdictions, infrastructure failures, and the potential inability to maintain its REIT status.

For the three months ended March 31, 2015, Digital Realty Trust reported total operating revenues of $406.6 million, an increase of $16.0 million compared to the same period in 2014. Total operating expenses decreased significantly by $43.3 million, primarily due to lower general and administrative expenses and a favorable change in the fair value of contingent consideration.