Digital Realty Trust, Inc. · NYSE:DLR
Digital Realty Trust — Q4 2014 Earnings Presentation
24 slides from Digital Realty Trust's earnings presentation, Feb 12, 2015
Slide 1: Restoring Power
Restoring Power 12 February 2015 February 12, 2015
Slide 2: The Way Forward: Top Priorities Progress Report
The Way Forward Top Priorities Progress Report WE SAID… WE DID… • Lease-up existing inventory and improve ROIC • Improved ROIC ~ 60 bps year-over-year • Align our leasing efforts and sales incentive • Rolled out new sales comp plan in January 2014 program to bring inventory back into equilibrium • L
Slide 3: Macro Dashboard: Strong Dollar, Soft Crude
Macro Dashboard Strong Dollar, Soft Crude 3Q14 Call Current Better / 2015E 2016E October 28, 2014 February 5, 2015 Worse Global GDP Growth Forecast (1) 2015E: 3.8% 2015E: 3.5% q 3.5% 3.7% Macroeconomic U.S. GDP Growth Forecast (1) 2015E: 3.1% 2015E: 3.6% p 3.6% 3.3% U.S. Unemployment Rate (2) 6.1% 5
Slide 4: Sustained Leasing Momentum
Sustained Leasing Momentum Steady Inventory Absorption (1) Annualized GAAP Annualized GAAP Type of Space Total s.f. Signed (2) (2) Base Rent / s.f. Base Rent Turn-Key Flex ® 132,861 $167 $22.1 million Powered Base Building® - - - Custom Solutions 104,514 $134 $14.0 million Colocation 21,328 $229 $4.
Slide 5: Healthy Renewal Economics
Healthy Renewal Economics (1) Data Center Pricing on the Upswing TKF ® PBB ® Total Datacenter ■ Signed renewal leases representing $17 35% million of annualized GAAP rental revenue ■ Rental rates on renewals increased by 4% 26% on a cash basis and increased by 22% on a 22% GAAP basis for total data
Slide 6: Robust Full-Year Leasing Volume
Robust Full-Year Leasing Volume Recovering Market Rents 1) GAAP rental revenues include total rent for new leases and expansion. 6
Slide 7: Significant Absorption of Finished Inventory
Significant Absorption of Finished Inventory 45% Reduction Since Investor Day (1) Finished Inventory – Major Markets in megawatts Nov. 12, 2013 Dec. 31, 2014 12 10 8 6 4 2 - Phoenix Silicon Valley Dallas Boston Houston NY Metro N. Virginia Chicago 1) Reflects the reduction of finished inventory thro
Slide 8: U.S. Major Market Data Center Supply
U.S. Major Market Data Center Supply (1) Sub-Lease Availability Is Dwindling 3Q14 in megawatts 60 40 20 - Boston Chicago Dallas Houston N Virginia NY Metro Phoenix Silicon Valley 4Q14 in megawatts 60 40 20 - Boston Chicago Dallas Houston N Virginia NY Metro Phoenix Silicon Valley (2) Current Supply
Slide 9: Top-Tier Track Record
Top-Tier Track Record Top Total Return; Consistent Growth in Cash Flows 10-Year Annualized Total Returns 30% DLR’s 10-year 20% annualized return leads the RMS by 1,400 10% basis points 0% #1 #2 #3 #4 #5 RMZ EXR OHI GEO NHI Digital Realty $6 (1) Dividend / Sh FFO / Sh $4 Generated positive year- over
Slide 10: Top-Three Growth in Dividend and Cash Flow
Top-Three Growth in Dividend and Cash Flow Steady Growth, Low Volatility Dividend / Share CAGR FFO / Share CAGR 46% 20% 20% 17% 20% 16% 15% 14% 15% 15% 13% 15% 13% 9% 10% 10% 5% 5% 0% 0% ELS (1) MPW PSB DLR PSA EXR DLR OHI ELS PSA 9-Year Dividend CAGR for Companies with Annually Increasing Dividends
Slide 11: Premium Track Record at a Discounted Valuation
Premium Track Record At a Discounted Valuation Metric REIT Average Spread Implied Cap Rate 6.7% 5.4% 1.3% Dividend Yield 4.8% 3.4% 1.4% Premium / (Discount) to NAV 5.7% 8.8% (3.1%) 2015E AFFO (1) / Yield 5.9% 4.8% 1.1% Price / 2015E FFO 13.8x 17.5x (3.7x) EV / LQA EBITDA 17.3x 21.2x (3.9x) Source: C
Slide 12: Credit Metrics Compare Favorably to Blue Chip REITs
Credit Metrics Compare Favorably to Blue Chip REITs Committed to a Conservative Capital Structure Net Debt / LQA Adjusted EBITDA (1) Net Debt + Preferred / LQA Adjusted EBITDA (1) 8.0x 9.0x 6.1x 5.5x 5.5x 6.7x 6.0x 5.2x 5.1x 5.0x 6.2x 5.9x 4.8x 5.7x 6.0x 5.2x 5.1x 5.0x 4.0x 3.0x 2.0x 0.0x 0.0x EQR B
Slide 13: Putting Exposure in Perspective
Putting Exposure in Perspective Benefits of Diversification and Scale on Display Currency Exposure by ABR (1) Hot-Button Exposure by ABR (1) Other Hot-Button % of ABR EUR 4% 8% Net2EZ / Net Data Centers 0.6% GBP 13% Bitcoin Mining 0.0% USD Energy Tenants 1.6% 75% Houston, TX 1.3% Tenant Type by ABR
Slide 14: Enhanced Supplemental Disclosure
Enhanced Supplemental Disclosure Committed to Transparent Investor Communication CIP + Land broken out on balance sheet Net Effective Rent disclosure IT Load by property Cash NOI from unconsolidated JVs NAREIT-defined FFO guidance Cleaner CapEx classification 14
Slide 15: Cleaner CapEx Classifications
Cleaner CapEx Classifications Lower Budget, More Conservative Presentation in 2015 2014 2015 Enhancements & Other Non-Recurring CapEx Discretionary CapEx + spending on non-core assets $25 million N/A Infrequent expenditures for capitalized replacements & upgrades $40 million N/A Network fiber initia
Slide 16: Consistent Execution on Strategic Vision
Consistent Execution on Strategic Vision It Was a Very Good Year…. Leased 28 megawatts of finished inventory Generated 20 megawatts of positive net absorption Improved ROIC by 60 bps (not including impairments) Boosted portfolio occupancy by 60 bps Reported 4% growth in same-capital cash N
Slide 17: Appendix
Appendix 17
Slide 18: Definitions of Non-GAAP Financial Measures
Definitions of Non-GAAP Financial Measures 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 diff
Slide 19: Definitions of Non-GAAP Financial Measures
Definitions of Non-GAAP Financial Measures EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION (EBITDA) AND ADJUSTED EBITDA We believe that earnings before interest expense, income taxes, depreciation and amortization, or EBITDA, and Adjusted EBITDA (a s defined below), are useful supplem
Slide 20: Reconciliation of Non-GAAP Items
Reconciliation of Non-GAAP Items To Their Closest GAAP Equivalent Digital Realty Trust, Inc. and Subsidiaries Reconciliation of Net Income Available to Common Stockholders to Funds From Operations (FFO) Three Months Ended (in thousands, except per share and unit data) December 31, 2014 (unaudited) T
Slide 21: Reconciliation of Non-GAAP Items
Reconciliation of Non-GAAP Items To Their Closest GAAP Equivalent Digital Realty Trust, Inc. and Subsidiaries A reconciliation of the range of 2015 projected net income to projected FFO and core FFO follows: Reconciliation of Operating Income to Net Operating Income (NOI) Low - High (unaudited, in t
Slide 22: Reconciliation of Non-GAAP Items
Reconciliation of Non-GAAP Items To Their Closest GAAP Equivalent Year Ended December 31, 2014 December 31, 2013 December 31, 2012 December 11, 2011 December 31, 2010 FFO available to common stockholders and unitholders $ 691,966 $ 636,426 $ 557,672 $ 449,288 $ 327,473 Add: Series C convertible pref
Slide 23: Reconciliation of Non-GAAP Items
Reconciliation of Non-GAAP Items To Their Closest GAAP Equivalent Funds from operations (1) Q414 Q314 Q214 Q114 FY2014 Q413 Q313 Q213 Q113 FY2013 FY2012 FY2011 FY2010 FY2009 FY2008 FY2007 FY2006 FY2005 Net income (loss) available to common stockholders ($52,289) $109,314 $41,510 $34,186 $132,721 $42
Slide 24: 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 relating to