Digital Realty Trust, Inc. · NYSE:DLR
Digital Realty Trust — Non-Deal Roadshow (September 2006)
26 slides from Digital Realty Trust's roadshow presentation, Sep 11, 2006
Slide 1: Investor Meetings September 2006
Exhibit 99.1 Investor Meetings September 2006
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 Europe • Tenants consist of leading global companies diversified across various industries • Own 51 properties comprising 10.3 million rentable sq ft which includes 1.2
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 (37% ) Internet Gateways (42% ) • 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 Primary Drivers – Estimated Annual Growth Rates Other Growth Drivers Increased federal 100% regulatory and legislative 90% requirements for business 80% continuity and records 70% retention 73% 60% Disaster Recovery 60% initiatives prioritized as a
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 70% $600 $540psf 60% $500 64% 50% Revenue PSF (Utilized) $51
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 REIT
DLR is a top performing REIT DLR continues to outperform its Peer Group and the RMS 100% 77.9% 80% 60% 40% 36.8% 29.4% 24.7% 20.9% 20% 12.1% 0% (1) DLR RMS Peer Group Composite FY 2005 Total Return 2006 YTD Total Return Note: YTD 2006 Total Return as of September 7, 2006 assuming dividend reinvestme
Slide 11: DLR Presence in Top Markets
DLR Presence in 23 Top Markets Boston Toronto Boston Boston St. Paul Chicago NY Metro San Francisco Sacramento Philadelphia Northern Silicon Valley Virginia Denver Los Angeles Charlotte Phoenix Dallas Atlanta Austin Houston Miami Dublin London Amsterdam DLR Regional Office # of # of Total Rentable P
Slide 12: DLR is increasingly well diversified by sector
DLR is increasingly well diversified by sector Industry Distribution Professional & Financial Non-Technology Services 15% 13% Other Technology 6% Communications 38% IT Services 28% Note: Calculated based on gross annualized rents using in place leases as of June 30, 2006. 11
Slide 13: 2005 & YTD 2006 Acquisitions
2005 & YTD 2006 Acquisitions DLR acquired approximately $881M in new properties Total Net Rentable Redevelopment Occupancy (1) Property Location Sq. Ft. Sq Ft Sq Ft (Net of Redev) 833 Chestnut East Philadelphia 654,758 535,098 119,660 76% 1125 Energy Park Drive St. Paul 112,827 112,827 - 100% 350 Ea
Slide 14: 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 15: DLR's Value-Add Redevelopment Program
DLR’s Value-Add Redevelopment Program Objective: Achieve attractive returns by providing corporate tenants with custom data center solutions Robust demand from diverse industry sectors: – Financial services – Internet enterprises – Telecom applications providers – Energy companies – Healthcare Limit
Slide 16: DLR's competitive advantage
DLR’s competitive advantage DLR’s unmatched sales and technical team offers tenants design, construction management, engineering and facilities management expertise Inventory totals 1.2 million sf of vacant, redevelopment space, potential for 740,000 sf of data center: – Approximately 735,000 sf in
Slide 17: Leasing Drives Internal Growth
Leasing Drives Internal Growth DLR executed 71 leases in SECOND QUARTER 2006, contributing approximately $11.6M in annualized GAAP rental revenues (1) Type of Total SF Annualized Annualized # of Leases Space Leased GAAP Rent PSF GAAP Rent Data Center 62 115,092 $85.00 $9.7 million Redevelopment 3 44
Slide 18: Leasing Drives Internal Growth
Leasing Drives Internal Growth DLR has executed 113 leases YEAR-TO-DATE 2006, contributing approximately $17.5M in annualized GAAP rental revenues (1) Type of Total SF Annualized Annualized # of Leases Space Leased GAAP Rent PSF GAAP Rent Data Center 95 154,645 $85.00 $13.1 million Redevelopment 5 7
Slide 19: 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 Opportunity DLR Action Result • 40,000 sf suite previously • Invested approx. $10 psf to • Executed new 10,000 sf lease vacant enhance space with international telecom at • Space subs
Slide 20: 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 26.7% 15.2% 14.2% <7.1% in next 3 yrs 10.5% 9.0% 5.7% 4.6% 3.2% 2.7% 1.7% 1.2% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Thereafter • The average lease term is approximately 12 years with 7 year
Slide 21: Digital Realty's financial results
Digital Realty’s financial results Reported FFO(1) of $23.2 million for 2Q06, up 18% from $19.6 million for 2Q05; or $0.38 per diluted share and unit for 2Q06, up 3% from $0.37 per diluted share and unit for 2Q05 2Q06 FFO payout ratio was 71%; 2Q06 AFFO (1) payout ratio was 100% DLR’s stock generate
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 to its Peer Group FFO Multiple (1) Dividend Yield 22.0x 6.0% 20.7x 20.0x 18.7x 18.1x 18.0x 5.0% 17.2x 15.9x 16.0x 15.5x 14.0x 3.9% 4.0% 3.5% 12.0x 3.3% 10.0x 3.0% (2) RMS DLR Peer Group Composite 2006E FFO Multiple 200
Slide 23: Improving overall credit quality of DLR portfolio
Improving overall credit quality of DLR portfolio Approximately $18 million of base rental income, or over 11% of overall income, has experienced an improvement in credit quality. + = + = (1) (2) (1) As a result of a sublease relationship with Microsoft for 200,000 sq ft of space that is leased dire
Slide 24: DLR employs a conservative capital structure
DLR employs a conservative capital structure Wtd Average Cost of Debt: Variable Rate Debt, Preferred Stock, 5.55%; Approximately 80% $201.8 (3) $166.8 fixed rate debt (4) Fixed Rate Debt, (2)(4) $788.1 Expanded credit facility to $500M from $350M, increasing liquidity and financial flexibility Perio
Slide 25: 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 26: Reconciliation of non GAAP items to their closest GAAP
Reconciliation of non GAAP items to their closest GAAP Funds from operations (1) EBITDA and Adjusted EBITDA (including discontinued operations) Q206 Q106 FY2005 Q206 Q106 FY2005 Net income available to common stockholders $1,650 $1,642 $6,087 Net income available to common stockholders $1,650 $1,642
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