Digital Realty Trust, Inc. · NYSE:DLR
Digital Realty Trust — Non-Deal Roadshow (November 2005)
29 slides from Digital Realty Trust's roadshow presentation, Nov 30, 2005
Slide 1: December 2005 Road Show Presentation
Exhibit 99.1 December 2005 Road Show Presentation
Slide 2: Forward Looking Statements
Forward Looking Statements The information included in this presentation contains forward-looking statements. Such statements are based on management’s beliefs and assumptions made based on information currently available to management. Such forward looking statements include statements and projecti
Slide 3: Digital Realty Trust Overview
Digital Realty Trust Overview DLR is a leading institutional owner focused on mission critical technology properties in the US and Western Europe • Tenants consist of leading global companies diversified across various industries • Own 41 properties comprising 8.0 million rentable sq ft excluding 73
Slide 4: DLR investment highlights
DLR investment highlights • Specialized focus in dynamic and growing industries • High quality portfolio that is difficult to replicate • Experienced industry consolidator with proven ability to acquire assets below replacement cost • Acquisition and leasing pace creates potential for strong FFO gro
Slide 5: DLR properties feature advanced technical systems
DLR properties feature advanced technical systems Power management/conversion Precision air cooling/handling Power backup/redundancy Systems and security controls Between $500 and $1,000 psf typically invested in DLR buildings, creating a barrier to exit for tenants and discouraging speculative new
Slide 6: DLR is unique in its focus on technology properties
DLR is unique in its focus on technology properties Financial Health/Insurance Communications Internet Enterprise IT Services (1) (1) Data Centers (34% ) Internet Gateways (43% ) • Storage/server intensive buildings • Internet and telecom network • Provide a secure 24 x 7 intensive buildings environ
Slide 7: Strong trends drive sustained demand for DLR space
Strong trends drive sustained demand for DLR space Trends E-Commerce • Forrester Research expects US online retail sales to increase to $329B in 2010 from $172B in 2005 (14% growth per year) Digital Communication • IDC predicts that US residential VOIP subscribers will grow to 27M in 2009 from 3M in
Slide 8: Bill rates and utilization rates are escalating
Bill rates and utilization rates are escalating Equinix and Savvis, two leading managed service providers that “resell” space leased directly from DLR, are experiencing strong growth in revenues and utilization Utilization Rate Revenue PSF 60% $600 50% $529 psf $500 Revenue PSF (Utilized) 51% $491 p
Slide 9: Senior management leads a complete REIT team
Senior management leads a complete REIT team DLR is organized and managed to deliver growth Richard Magnuson • Co-founder of Digital Realty Trust Executive Chairman • 23+ years of real estate and technology experience Michael Foust • Co-founder of Digital Realty Trust CEO • 25+ years of real estate
Slide 10: DLR is a top performing 2004 REIT IPO
DLR is a top performing 2004 REIT IPO Since its IPO, DLR has outperformed its peers and the RMS 100% 93.0% 90% 80% 69.9% 70% 60% 56.9% 50% 40% 33.5% 30% 24.3% 20% 16.2% 13.5% 8.1% 10% 0% (1) (2) DLR Tech Real Estate RMS Mixed Office/Industrial composite composite Total Return Since IPO YTD Total Ret
Slide 11: DLR is established in top technology markets
DLR is established in top technology markets Seattle Boston St. Paul Chicago NYC Metro San Francisco Sacramento Philadelphia Silicon Valley DC Metro Denver LA Charlotte Phoenix Dallas Atlanta Miami Amsterdam London Düsseldorf Frankfurt Top Tech Market Paris Geneva DLR Market Source: Top technology m
Slide 12: DLR is increasingly well diversified by sector
DLR is increasingly well diversified by sector Industry Distribution (1) Top 10 Tenants (2) Non-Technology 3% Financial & Professional Services 19% Communications 36% Other Technology 12% IT Services 30% (1) Calculated based on annualized rents using in place leases as of September 30, 2005. (2) Pen
Slide 13: Replacement cost illustrates the value of DLR's portfolio
Replacement cost illustrates the value of DLR’s portfolio Replacement Cost Estimate Cost per Square Foot Cost Components Low High Land $40 $70 Base Building Building Shell 60 150 Electrical Systems $297 $396 Mechanical Systems (HVAC) 92 122 Data Center Fire Protection 21 29 Improvements (1) Other Co
Slide 14: Recent data center sales support $750 psf in value
Recent data center sales support $750 psf in value Indicative Recent Data Center Sales Comps Announced Total Est Data Implied $psf Est Acq. Property Buyer Location Prior Tenant Price ($M) Sq Ft Ctr Sq Ft Data Ctr Cap Rate 1350 Duane Inland Santa Clara, CA Sprint/Equinix $97.5 185,000 80,000 $1,219 7
Slide 15: DLR's acquisitions team continues to deliver
DLR’s acquisitions team continues to deliver … DLR has acquired approximately $438M in new properties contributing approximately $42M in projected NOI Purchase Net Rentable In-place yr 1 Purchase Occupancy Property Location Price ($M) Sq Ft NOI Cap Price PSF (Net of Redev) 833 Chestnut Philadelphia
Slide 16: ... with sales/leasing driving additional growth
… with sales/leasing driving additional growth DLR has executed 100 US leases (new and renewals) contributing over $11.8M in incremental annual GAAP rental revenues Indicative DLR leasing in 2005 • 60 leases for technical space representing approx. 116,000 sq ft • Rent per square foot: approx. $65.9
Slide 17: Case studies: DLR's value-add leasing
Case studies: DLR’s value-add leasing Recent leasing illustrates effectiveness of DLR’s leasing and engineering team Prior Lease DLR Action New Lease(s) - 40,000 sq. ft. suite - DLR invested - Executed new 10,000 sq. ft. lease with previously vacant approx. $10 psf to international telecom at approx
Slide 18: DLR's model features long-term, stable leases
DLR’s model features long-term, stable leases Lease Expiration as a % of Net Rentable Square Feet 32.50% 14.10% 12.10% 7.8% in next 3 yrs 7.80% 6.10% 6.60% 3.50% 2.50% 1.80% 1.60% 2006 2007 2008 2009 2010 2011 2012 2013 2014 Thereafter • The average lease term is in excess of 12 years with over 7 ye
Slide 19: DLR is re-affirming its 2005 forecast
DLR is re-affirming its 2005 forecast (1) 2005 projected FFO Per Share Guidance : $1.35 - $1.40 Lease-Up (2) 200,000 sq ft of basic commercial space (gross rent 3 – 4% $20 / sq ft) Internal Growth o 130,000 sq ft leased FFO Per Share Growth YTD at $19.60 / sq ft 45,000 - 50,000 sq ft of highly impro
Slide 20: DLR recently released its preliminary 2006 forecast
DLR recently released its preliminary 2006 forecast (1) 2006 projected FFO Per Share Guidance : $1.65 - $1.75 Lease-Up 125,000 – 150,000 sq ft of basic commercial space (gross rent 10 – 14% $19 / sq ft) Internal Growth FFO Per Share Growth 200,000 - 300,000 sq ft of highly improved tech space (gross
Slide 21: DLR employs a conservative capital structure
DLR employs a conservative capital structure • Wtd Average Cost of Debt: 6.0% • Approximately 75% fixed rate debt • Recently executed $350M credit facility Fixed Rate Debt which reduced borrowing cost and $517.9M increased flexibility 27% • $103.8M outstanding on the credit facility at September 30,
Slide 22: DLR trades at a discount to public peers
DLR trades at a discount to public peers DLR’s FFO multiples remain at a discount FFO Multiple (1) Dividend Yield 21.0x 6.0% 20.3x 20.0x 5.6% 5.5% 19.0x 18.0x 17.1x 4.9% 5.0% 17.0x 16.0x 16.0x 4.5% 15.7x 15.4x 4.5% 14.8x 15.0x 13.9x 4.0% 14.0x 4.0% 12.8x 13.0x 12.0x 3.5% 11.0x 10.0x 3.0% (2) (3) RMS
Slide 23: DLR is valued at a discount to prevailing RE metrics
DLR is valued at a discount to prevailing RE metrics An analysis by Cushman & Wakefield of 60+ recent sales of properties similar to DLR’s portfolio indicates a current market cap rate range of 7.50% to 8.25% 5.00% Tech RE Composite (5.3%) DLR Implied Valuation All figures in thousands except sq ft,
Slide 24: Definition of Non-GAAP Financial Measures
Definition of Non-GAAP Financial Measures This presentation includes certain non-GAAP financial measures that management believes are helpful in understanding our business, as further described below. Our definition and calculation of non-GAAP financial measures may differ from those of other REITs,
Slide 25: Definition of Non-GAAP Financial Measures (continued)
Definition of Non-GAAP Financial Measures (continued) EBITDA and Adjusted EBITDA We believe that earnings before interest, income taxes, depreciation and amortization, or EBITDA and Adjusted EBITDA (as defined below), are useful supplemental performance measures because they allow investors to view
Slide 26: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Reconciliation of the range of 2005 projected net income to projected FFO Low End High end (in millions) Net Income $11.3 -- $12.7 Add: Minority interest in operating partnership $13.5 -- $15.2 Net income before minority interest in operating partnership
Slide 27: Reconciliation of Non-GAAP Financial Measures (continued)
Reconciliation of Non-GAAP Financial Measures (continued) Reconciliation of the range of 2006 projected net income to projected FFO Low End High end (in millions) Net Income $23.2 -- $24.9 Add: Minority interest in operating partnership $18.1 -- $19.5 Net income before minority interest in operating
Slide 28: Reconciliation of Non-GAAP Financial Measures (continued)
Reconciliation of Non-GAAP Financial Measures (continued) Reconciliation of Earnings Before Interest Taxes and Depreciation and Amortization Three Months Ended 9/30/2005 6/30/2005 3/31/2005 Reconciliation of net income available to common stockholders to earnings before interest, taxes and depreciat
Slide 29: Digital Realty Trust
DIGITAL REALTY TRUST connecting the worlds of technology and real estate
Digital Realty Trust — Non-Deal Roadshow (November 2005) on 6ix