Digital Realty Trust, Inc. · NYSE:DLR
Digital Realty Trust — Investor Presentation (April 2006)
26 slides from Digital Realty Trust's investor presentation, Apr 4, 2006
Slide 1: April 2006 Investor Presentation
Exhibit 99.2 April 2006 Investor 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 45 properties comprising 9.3 million rentable sq ft which includes 1
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 growth Uniq
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 (36% ) 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 60% $600 57% 50% $532 psf $500 Revenue PSF (Utilized) $518 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 REIT
DLR is a top performing REIT DLR continues to outperform the RMS 100% 77.9% 80% 60% 40% 25.7% 26.3% 20.8% 20% 15.2% 12.1% 0% (1) DLR Peer Group Composite RMS FY 2005 Total Return 2006 YTD Total Return Note: YTD 2006 Total Return as of March 31, 2006 assuming dividend reinvestment as per SNL Financia
Slide 11: Leading presence in US and Europe
Leading presence in US and Europe Boston St. Paul Chicago NY Metro San Francisco Sacramento Philadelphia Northern Silicon Valley Virginia Denver Los Angeles Charlotte Phoenix Dallas Atlanta Austin Miami Dublin London Amsterdam # of # of Total Rentable DLR Regional Office Properties Buildings Square
Slide 12: DLR is increasingly well diversified by sector
DLR is increasingly well diversified by sector Industry Distribution Non-Technology 3% Financial & Professional Services Communications 12% 38% Other Technology 18% IT Services 29% Note: Calculated based on annualized rents using in place leases as of December 31, 2005. 11
Slide 13: 2005 & YTD 2006 Acquisitions
2005 & YTD 2006 Acquisitions DLR acquired approximately $489M in new properties Net Rentable Redevelopment Occupancy Property Location Sq Ft (1) Sq Ft (Net of Redev) 833 Chestnut East Philadelphia 654,758 119,660 91% 1125 Energy Park Drive St. Paul 88,134 - 100% 350 East Cermak Road Chicago 1,133,39
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 Growing demand for data centers Limited supply of existing facilities Existing data centers often do not satisfy electrical and HVAC requirements of current we
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: – Primarily located in Internet Gateway income producing properties • A
Slide 17: Leasing drives internal growth
Leasing drives internal growth DLR executed 137 US leases (new and renewals) in 2005 contributing approximately $15.1M in GAAP rental revenues (2) 2005 DLR Leasing Statistics Annualized Type of Space # of Leases Total SF Leased GAAP Rent Data Center 83 98,000 $78.00 psf Redevelopment 2 82,000 $28.00
Slide 18: 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 19: 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 34.3% 14.9% 12.6% 8.5% in next 3 yrs 8.8% 6.3% 6.8% 3.7% 2.9% 1.9% 1.7 2006 2007 2008 2009 2010 2011 2012 2013 2014 Thereafter • The average lease term is in excess of 12 years with over 7 years remaini
Slide 20: Digital Realty's financial results
Digital Realty’s financial results Reported FFO of $0.36 per diluted share and unit for Q405 and $1.37 per diluted share and unit for fiscal year 2005(1) Significantly reduced our ratio of debt to total market capitalization to 33.3% at year-end 2005 from 42.1% at year-end 2004 Improved our fixed ch
Slide 21: DLR reaffirms 2006 forecast
DLR reaffirms 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 & redevelopment space (gross rent $4
Slide 22: 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) (1) As a result of a sublease relationship with Microsoft for 300,000 sq ft of space that is leased directly
Slide 23: DLR employs a conservative capital structure
DLR employs a conservative capital structure Wtd Average Cost of Debt: 5.8% Approximately 73% fixed rate debt Recently executed $350M credit facility Fixed Rate Debt which reduced borrowing cost and $550.5M increased flexibility 21% $181M outstanding on the credit facility at December 31, 2005 64% 8
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) 24
Slide 26: Reconciliation of non GAAP items to their closest GAAP
Reconciliation of non GAAP items to their closest GAAP Funds from operations Projected 2006 Cash interest expense Q405 FY 2005 High Low Q405 FY 2005 Net income available to common stockholders $1,157 $6,087 $20,706 $17,566 Interest expense per financial statements 10,988 39,122 Amortization of defer
Digital Realty Trust — Investor Presentation (April 2006) on 6ix