Digital Realty Trust, Inc. · NYSE:DLR
Digital Realty Trust — Q3 2016 Earnings Presentation
31 slides from Digital Realty Trust's earnings presentation, Oct 27, 2016
Slide 1: Digital Realty 3Q16 Earnings Presentation
DIGITAL REALTY OCTOBER 2016 wn é 4) rs) Wy Lu fag Pe < Y Zz x Z Le Ro) Sj ive) DIGITAL REALTY
Slide 2: Our Focus
Our Focus Our philosophy is to deliver superior returns by capitalizing on our core competencies and tailoring them to meet our customers’ growing and evolving data center needs a “Water SUPERIOR RETURNS Deliver superior risk-adjusted total returns CAPITAL ALLOCATION Prudently allocate capital to op
Slide 3: Expanding the Global Footprint
Expanding the Global Footprint AMSTERDAM Significant Presence Amstel Business Park i in Top Three European Data Center Markets Total MW 67 Total MW 48 rs é s] Total S.F. 31,823 Total S.F. 64,100 Occupancy: 89.3% Occupancy: 75.7% Total MW 4.7 — a Total MW 0.6 Total S.F. 44,449 F r Total S.F. 14,078 O
Slide 4: Diversifying Product Offerings
Diversifying Product Offerings 16 EARNINGS CALL & PRESENTATION | OCTOBER . 27 Lot 7. MarketplacePORTAL™ Microsoft Azure amazon web services Major Cloud Providers '@. A) itczssont Connected Campus Available (Nov2016) Planned Additional Markets oried by Megaport
Slide 5: Data Center Supply in Perspective
Data Center Supply in Perspective The Fundamentals Glass is Still Half-Full Demand Outpacing Supply in ier Data Center Markets National Metro Areas Construction concentrated in metro areas characterized by robust leasing velocity and high visibility of demand 1016 2016 3016 1016 2016 3016 1016 2016
Slide 6: Securing Our Supply Chain
Securing Our Supply Chain Future-Proofing Our Customers’ Expansion Needs
Slide 7: Macroeconomic Forecasts and Market Indicators
2Q16 Call CURRENT Better/ July 28, 2016 October 25, 2016 Worse 2017E 2018E (1) Global GDP Growth Forecast 2017E: 3.2% 2017E: 3.2% tu 3.2% 3.3% U.S. GDP Growth Forecast (1) 2017E: 2.2% 2017E: 2.1% q 2.1% 2.1% (2) U.S. Unemployment Rate 4.9% 5.0% p 4.7% 4.6% Inflation Rate – U.S. Annual CPI Index (2)
Slide 8: Digital Realty
a DIGITAL REALTY
Slide 9: Diverse Customer Base + Product Offerings
Diverse Customer Base + Product Offerings Annualized GAAP Annualized GAAP Historical Lease Signings @ Base Rent Annualized GAAP Base Rent ; 0 $149 million L million 77 million million $ in millions n million $60 $40 $20 | | | | | ‘ | | 1Q 2Q 3Q 4Q 1 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q
Slide 10: Front-End-Loaded Commencement Schedule
Front-End-Loaded Commencement Schedule Backlog Roll-Forward + Commencement Timing $ in millions Hi Current Period Backlog {signings Hi commencements (i Total Backlog $125 $100 ($32) ee | ! 8 | $75 , I l ! S44 $50 I I I I I I $25 $- 2Q16 Backlog Signings Commencements 3Q16 Backlog 2016 2017 2018+ Tot
Slide 11: Cash Rent Change
B Mark-to-Market Mostly Positive Turn-Key Flex® Powered Base Building® Colocation Total Data Center Renewed 66,855 square feet of Turn-Key Flex® data centers at a rental rate decrease of 9% ona cash basis and decrease of 7% on a GAAP basis Renewed 46,296 square feet of Powered Base Building® data ce
Slide 12: Setting the Stage for Embedded Growth Upside Potential
Setting the Stage for Embedded Growth Upside Potential 91% | ~ = 90% 89% — _ 88% 2Q16 Positive Asset Sales Acquisitions Development = Terminations 3Q16 Occupancy Absorption / Held for Sale Placed / Expirations Occupancy in Service i 3Q16 EARNINGS CALL & PI ATION | OCTOBER. 27.2016
Slide 13: Inventory Utilization a More Meaningful Measure
Inventory Utilization a More Meaningful Measure CT Reiurn on Invested Capital * © @Availablity Rate (Pre-Stabilized Inventory / Total IT Load); Availability Return on Rate Invested Capital 10.0% 10.5% ° e 75% —~ 10.0% e e e . fee, e eee. oo ee. 5.0% — 95% oa °e. .° ote , Cee, a oe Sees, oe, ’ .° 25%
Slide 14: MSA Scorecard
MSA Scorecard mpleted / On-Track Slightly Behi Off-Track 2016 $385+ million $148+ million UNDERWRITING TARGET 3016 $967 million ACTUAL 2016 $939 million $39.2 million ACTUAL ueite $917 million $38.4 million ACTUAL 1) Represents T BITDA adjusted for non-cash rent exper mpensation. Excludes synergies.
Slide 15: FX Represents ~100-200 bps Drag on Reported Results
FX Represents ~ 100-200 bps Drag on Reported Results GAs Reported Hi Constant-Currency © | Total Including Telx 30% (275%! 25% -— =|! —_ 125.3% iI (24.8%! ! i! === roy 22.0%, | I 20% | I 1 ; 1 ! l 3Q16 / 3Q15 3Q16 / 3Q15 3Q16 / 3Q15 3Q16 / 3Q15 2016E / 2015 Revenue Growth Adj. EBITDA Same-Capital Ca
Slide 16: Steady, Improving and High-Quality Growth
Steady, Improving and High-Quality Growth ng Growth Profile FINANCIAL OUTLOOK © Ow Double-Digit Growth Target accelerating growth in out-years Mid Single-Digit Growth Cash flow contribution from Telx and straight-line rent burn-off drive double- digit AFFO growth in 16 1) Forecasts are based on curr
Slide 17: One-Way Draw-Down
One-Way Draw-Down GS in billions) v Forward Equity Offering $1.1 Bn European Portfolio Acquisition $0.9 Bn Underwriters' Over-Allotment Option $0.2 Bn Mortgage Debt Maturities $0.2 Bn y| Four-Property Portfolio Sale $0.1 Bn Preferred Equity Redemption $0.3 Bn vy Vv Paris Property Sale $0.2 Bn Additi
Slide 18: Benefits of Diversification and Scale on Display
Benefits of Diversification and Scale on Display DEBT MATURITY SCHEDULE CS in billions) CURRENCY / FLOATING RATE EXPOSURE 2 ™Secured Mortgage Debt Unsecured Prudential Shelf Facility Pro Rata Share of JV Debt ™ Unsecured Notes ™Unsecured Term Loan Unsecured Global Facility mUnsecured Green Bonds $2.
Slide 19: Delivering Current Results, Seeding Future Growth
Delivering Current Results, Seeding Future Growth Successful 3Q16 Initiatives EXTENDING GLOBAL FOOTPRINT ENHANCING PRODUCT OFFERINGS DELIVERING DOUBLE-DIGIT AFFO GROWTH STRENGTHENING THE BALANCE SHEET i 3Q16 EARNINGS CALL & PRESENTATION | OCTOBER . 27 . 2016
Slide 20: Appendix
Slide 21: Diverse Customer Base + Product Offerings
Diverse Customer Base + Product Offerings Historical Lease Signings Annualized GAAP nualized GAAP an B Rent B Rent (2: Trailing Four-Quarter Average a ase Rent / eseent . Q urn-Key Flex® nillion Annualized GAAP Base Rent Powered Base Building® E 0.4 million Colocation Sin millions Non-Technical B $6
Slide 22: U.S. Major Metro Area Data Center Supply
U.S. Major Metro Area Data Center Supply “? Supply Largely Concentrated in Most Active Metro Areas in megawatts 3Q16 ™ Current Supply “? “New Construction = Digital Realty Inventory ” 100 80 60 40 | ; val Ld at be (0) Boston Chicago Dallas Houston N Virgina NY Metro Phoenix Silicon Valley in megawat
Slide 23: Non-GAAP Financial Measures: FFO
The information included in this presentation contains 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, and, therefor
Slide 24: EBITDA and Adjusted EBITDA Definitions
EBITDA and Adjusted EBITDA: We believe that earnings before interest, loss from early extinguishment of debt, income taxes and depreciation and amortization, or EBITDA, and Adjusted EBITDA (as defined below), are useful supplemental performance measures because they allow investors to view our perfo
Slide 25: 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 relating to: our economic outlook; oppo
Slide 26: Reconciliation of Telx Core EBITDA
Reconciliation of Telx Core EBITDA (unaudited) (in thousands) Three Months Ended September 30, 2016 Net Loss ($3,111) Income Tax Expense (Benefit) 279 Interest Expense, net 553 Depreciation & Amortization 34,230 EBITDA $31,951 Plus: Non-Cash Rent 8,149 Plus: Non-Cash Compensation 323 Plus: Transacti
Slide 27: Reconciliation of Net Income to Funds From Operations (FFO)
Digital Realty Trust, Inc. and Subsidiaries Reconciliation of Net Income Available to Common Stockholders to Funds From Operations (FFO) (in thousands, except per share and unit data) (unaudited) Three Months Ended Nine Months Ended Year Ended September 30, 2016 September 30, 2015 September 30, 2016
Slide 28: Reconciliation of FFO to Core FFO
Digital Realty Trust, Inc. and Subsidiaries Reconciliation of Funds From Operations (FFO) to Core Funds From Operations (CFFO) (in thousands, except per share and unit data) (unaudited) Three Months Ended Nine Months Ended Year Ended September 30, 2016 September 30, 2015 September 30, 2016 September
Slide 29: Reconciliation of Net Income to EBITDA and Adjusted EBITDA
Digital Realty Trust, Inc. and Subsidiaries Reconciliation of Net Income Available to Common Stockholders to Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) and Adjusted EBITDA (in thousands) (unaudited) Three Months Ended Nine Months Ended September 30, 2016 September 30, 20
Slide 30: Reconciliation of Same Capital Cash Net Operating Income
Digital Realty Trust, Inc. and Subsidiaries Reconciliation of Same Capital Cash Net Operating Income (in thousands) (unaudited) Three Months Ended Nine Months Ended September 30, 2016 September 30, 2015 September 30, 2016 September 30, 2015 Rental revenues $ 203,155 $ 205,215 $ 616,392 $ 614,622 Ten
Slide 31: Reconciliation of Core FFO and AFFO
Digital Realty Trust, Inc. and Subsidiaries Reconciliation of Core Funds From Operations and Adjusted Funds From Operations (AFFO) (in thousands) (unaudited) Nine Months Ended Year Ended September 30, 2016 December 31, 2015 Core FFO available to common stockholders and unitholders $ 643,627 $ 746,15