10-QPeriod: Q2 FY2023

DIGITAL REALTY TRUST, INC. Quarterly Report for Q2 Ended Jun 30, 2023

Filed August 4, 2023For Securities:DLRDLR-PJDLR-PKDLR-PL

Summary

Digital Realty Trust, Inc. (DLR) reported solid revenue growth in the second quarter of 2023, driven by increased rental income and utility reimbursements. Total operating revenues climbed by 19.9% year-over-year for the quarter, reaching $1.37 billion. This growth was supported by strong performance in both stabilized and non-stabilized portfolios, with the latter benefiting from recent development completions and the Teraco acquisition. Despite higher operating expenses, particularly in utilities and property maintenance, the company managed to improve its net income available to common stockholders by 125% to $118.2 million for the quarter. The company continued its strategic capital recycling initiatives, completing the sale of a non-core asset and forming significant joint ventures in Chicago and Northern Virginia that generated substantial proceeds. These activities, combined with proceeds from its ATM equity program, strengthened its liquidity position. DLR also highlighted significant progress in its development pipeline and ongoing investment in enhancing its global data center infrastructure.

Financial Highlights

33 data points
Beta

Revenue

$1.37B

Net Income

$118.18M

8.7% Net Margin

EPS (Diluted)

$0.34

Total Assets

$42.39B

Cash & Equivalents

$134.65M

Free Cash Flow

$464.39M

Financial Statements
Beta
Revenue$1.37B
Operating Expenses$1.21B
Operating Income$154.86M
Interest Expense$111.12M
Net Income$118.18M
EPS (Basic)$0.37
EPS (Diluted)$0.34
Shares Outstanding (Basic)295.39M
Shares Outstanding (Diluted)306.82M

Key Highlights

  • 1Total operating revenues increased by 19.9% to $1.37 billion for the three months ended June 30, 2023, compared to the prior year period.
  • 2Net income available to common stockholders increased significantly by 125.1% to $118.2 million for the three months ended June 30, 2023.
  • 3The company successfully completed the sale of a non-core data center property in Dallas for approximately $151 million, resulting in a net gain of $90 million.
  • 4Digital Realty formed two major joint ventures in July 2023, contributing data center assets in Chicago and Northern Virginia for approximately $743 million and $1.3 billion in gross proceeds, respectively.
  • 5Proceeds of approximately $743.0 million were generated from the issuance of common stock under the ATM program in the first half of 2023.
  • 6Development capital expenditures were $1.17 billion for the six months ended June 30, 2023, reflecting continued investment in expanding the data center portfolio.
  • 7Total debt as of June 30, 2023, stood at $17.86 billion, with 83.2% classified as fixed rate (including swapped debt).

Frequently Asked Questions

Digital Realty reported a 19.9% year-over-year increase in total operating revenues for the three months ended June 30, 2023, reaching $1.37 billion. This growth was driven by both stabilized and non-stabilized portfolios, with notable contributions from utility reimbursements and new leasing activity.

The company actively engaged in capital recycling, selling a non-core asset and forming significant joint ventures in Chicago and Northern Virginia, which generated substantial proceeds. Additionally, proceeds from its ATM equity program provided further liquidity. These actions, combined with operating cash flow and available credit facilities, supported liquidity needs and strategic investments.

Digital Realty continues to invest heavily in its development pipeline, with development capital expenditures totaling $1.17 billion for the first six months of 2023. The company expects to incur further significant capital expenditures for its development programs in the second half of the year, reflecting ongoing expansion and capacity building.

Total outstanding debt stood at $17.86 billion as of June 30, 2023. Interest expense increased compared to the prior year, primarily due to higher average balances and interest rates on credit facilities, as well as new term loan issuances. The company continues to manage its debt profile, with 83.2% of its total debt classified as fixed rate.