Digital Realty Trust, Inc. · NYSE:DLR
Digital Realty Trust — Q3 2014 Earnings Presentation
25 slides from Digital Realty Trust's earnings presentation, Oct 28, 2014
Slide 1: Going the Distance
Going the Distance 28 October 2014 October 28, 2014
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 ~ 30 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: Relatively Benign Outlook
Macro Dashboard Relatively Benign Outlook 2Q14 Call Current Change 2015E 2016E July 29,2014 October 27, 2014 Global GDP Growth Forecast (1) 2014E: 3.4% 2014E: 3.3% q 3.8% n/a Macroeconomic U.S. GDP Growth Forecast (2) 2014E: 1.7% 2014E: 2.2% p 3.1% n/a U.S. Unemployment Rate (2) 6.2% 6.1% q 5.6% 5.4
Slide 4: Value-Creating Joint Venture Contribution
Value-Creating Joint Venture Contribution Establishes Attractive Valuation for Turn-Key Properties Partner • Griffin Capital Essential Asset REIT, Inc. (“GCEAR”) Market • Ashburn, VA Property Type • Turn-Key Flex data center JV Contribution Date • September 9, 2014 Ownership • Digital Realty 20% / G
Slide 5: Sustained Leasing Momentum
Sustained Leasing Momentum Consistent Execution in Absorbing Inventory (1) Annualized GAAP Annualized GAAP Type of Space Total s.f. Signed (2) (2) Base Rent / s.f. Base Rent Turn-Key Flex ® 148,612 $140 $20.8 million Powered Base Building® 22,000 $46 $1.0 million Custom Solutions 15,195 $238 $3.6 mi
Slide 6: Lease Momentum Driven by Cloud Providers
Lease Momentum Driven by Cloud Providers Cloud Demand is the Fastest Growing Segment Annualized GAAP Base Rent (1) $ in millions All Other Social, Mobile, Analytics, Cloud & Content $60 $40 $20 $0 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 1) GAAP rental revenues include total rent for new leases and expans
Slide 7: Healthy Renewal Economics
Healthy Renewal Economics (1) Peak-Rate Expirations Weigh on Otherwise Solid Results TKF ® PBB® Total Datacenter 75% ■ Signed renewal leases representing $42 66% million of annualized GAAP rental revenue 60% ■ Rental rates on renewals increased by 10% on a GAAP basis and decreased by 45% 6% on a cas
Slide 8: Steady Velocity & Pricing
Steady Velocity & Pricing Early Innings of Rate Trend Improvement 1) GAAP rental revenues include total rent for new leases and expansion. The timing between lease signing and lease commencement (and receipt of rents) may be significant. 2) As of September 30, 2014. 8
Slide 9: Lag Has Stabilized in the Six-Month Range
Lag Has Stabilized in the ~ Six-Month Range (1) (2) Sign-to-Commencement Gap is Healthy (1) $ in millions Expected Commencement Quarter 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 2016+ Pre 1Q13 $67.4 $19.3 $13.7 $8.3 $2.6 $3.8 $1.2 $1.6 $.0 $.0 $.0 $6.0 $2.3 $8.6 Signing Quarter 1Q1
Slide 10: Significant Absorption of Finished Inventory
Significant Absorption of Finished Inventory(1) Steady Progress Since Investor Day Investor Day As of in megawatts Nov. 12, 2013 Sept. 30, 2014 12 9 6 3 - Phoenix Silicon Valley Dallas Boston Houston NY Metro N. Virginia Chicago 1) Finished inventory represents space ready for immediate leasing and
Slide 11: Data Center Retention is Solid
Data Center Retention is Solid Tenants are Sticky Given Their Capital Investment Retention on Rentable Square Feet (1) Data Center Non-Data Center 100% Historical Average = 84% 80% 60% Historical Average = 52% 40% 1Q10 3Q10 1Q11 3Q11 1Q12 3Q12 1Q13 3Q13 1Q14 3Q14 1) Represents trailing 12-month aver
Slide 12: 2Q14 U.S. Major Market Data Center Supply
2Q14 U.S. Major Market Data Center Supply (1) New Starts in Dallas & Houston; NoVa Still a Focus (2) in megawatts 80 60 40 20 - Boston Chicago Dallas Houston N Virginia NY Metro Phoenix Silicon Valley 1) Based on Digital Realty internal estimates. 2) Represents DLR’s available finished data center s
Slide 13: 3Q14 U.S. Major Market Data Center Supply
3Q14 U.S. Major Market Data Center Supply (1) Positive Momentum in NoVA & Silicon Valley Current Supply New Construction Sublease Availablility DLR Inventory(2) in megawatts 80 60 40 20 - Boston Chicago Dallas Houston N Virginia NY Metro Phoenix Silicon Valley 1) Based on Digital Realty internal est
Slide 14: Credit Metrics Compare Favorably to REIT Peers
Credit Metrics Compare Favorably to REIT Peers Committed to a Conservative Capital Structure Net Debt / LQA Adjusted EBITDA (1) Net Debt + Preferred / LQA Adjusted EBITDA (1) 8.0x 8.0x 6.7x 6.6x 7.1x 6.9x 6.6x 5.9x 6.2x 6.0x 5.5x 5.5x 5.3x 6.0x 5.5x 5.5x 5.3x 5.0x 4.0x 4.0x 2.0x 2.0x 0.0x (2) (2) (2
Slide 15: Credit Spreads Have Tightened Nicely
Credit Spreads Have Tightened Nicely Digital Realty Notes due 2022 vs. REIT BBB 10 Year Basis points 100 80 60 40 20 - Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 15
Slide 16: Solid Performance Track Record
Solid Performance Track Record Steady Growth in Dividend and Earnings Cash Dividend / Share $4 $3.12 $3.32 $2.72 $2.92 $3 $2.02 $2 $1.47 $1.08 $1.17 $1.26 $1.00 $1 $0 (1) 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014E • Increased the 2014 common dividend to $3.32 per share or 6.4% over 2013 • 14
Slide 17: Consistent Execution on Strategic Vision
Consistent Execution on Strategic Vision Third Quarter in Review Signed $31 million of new leasing ̵ Including a $5.3 million mid-market contribution Leased 5.7 megawatts of finished inventory ̵ One megawatt of positive net absorption Occupancy ticked up another 20 bps sequentially Same-capi
Slide 18: Appendix
Appendix 18
Slide 19: 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 20: 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 21: Reconciliation of Non-GAAP Items
Reconciliation of Non-GAAP Items To Their Closest GAAP Equivalent Three Months Ended Digital Realty Trust, Inc. and Subsidiaries September 30, 2014 Reconciliation of Net Income Available to Common Stockholders to Funds From Operations (FFO) (in thousands, except per share and unit data) FFO availabl
Slide 22: Reconciliation of Non-GAAP Items
Reconciliation of Non-GAAP Items To Their Closest GAAP Equivalent A reconciliation of the range of 2014 projected net income to projected FFO and core FFO follows: Digital Realty Trust, Inc. and Subsidiaries Low - High Reconciliation of Operating Income to Net Operating Income (NOI) Net income avail
Slide 23: Reconciliation of Non-GAAP Items
Reconciliation of Non-GAAP Items To Their Closest GAAP Equivalent Year Ended December 31, 2013 December 31, 2012 December 11, 2011 December 31, 2010 December 31, 2009 FFO available to common stockholders and unitholders $ 636,426 $ 557,672 $ 449,288 $ 327,473 $ 252,043 Add: Series C convertible pref
Slide 24: Reconciliation of Non-GAAP Items
Reconciliation of Non-GAAP Items To Their Closest GAAP Equivalent Funds from operations (1) Q214 Q114 FY2014 Q413 Q313 Q213 Q113 FY2013 FY2012 FY2011 FY2010 FY2009 FY2008 FY2007 FY2006 FY2005 Net income (loss) available to common stockholders $41,510 $34,186 $75,696 $42,977 $ 138,872 $ 47,077 $ 42,6
Slide 25: 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