Digital Realty Trust, Inc. · NYSE:DLR
Digital Realty Trust — Q3 2017 Earnings Presentation
28 slides from Digital Realty Trust's earnings presentation, Oct 25, 2017
Slide 1: Digital Realty Financial Results October 2017
t er an ae Oats " Aine care oa 4 la OCTOBER 2017 DIGITAL REALTY
Slide 2: Our Focus
SUPERIOR RETURNS. Deliver superior risk-adjusted total returns CAPITAL ALLOCATION Prudently allocate capital to opportunistically extend global campus footprint Our Focus Our philosophy is to deliver superior returns by capitalizing on our core competencies and tailoring them to meet our customers’
Slide 3: Entering Tokyo, Expanding in Japan
Entering Tokyo, Expanding in Japan Initial market entry into Tokyo with an institutional quality partner who brings local market expertise and extensive relationships < Digital Realty: 50% MARKETS. * Mitsubishi Corporation: 50% = Osaka and Tokyo 3 SEED ASSETS L Digital Realty: Osaka Saito DC + Initi
Slide 4: Firm Fundamentals
Firm Fundamentals Robust Demand, Rational Supply Demand Outpacing Supply in Top-Tier Data Center Metro Areas lajor U.S. Metro Areas Healthy volumes of underway supply in A by U Metro high leasing ve EET 40 107 2017 307 40 1072073017 ‘Metro DLR” Metro: DLR” Metro: DLR” 95% 96% 89% 91% 94% Healthy Occ
Slide 5: Macro and market assumptions: 2Q17 call vs current
2Q17 CALL CURRENT Better/ July 26, 2017 October 20, 2017 Worse 2017E 2018E Global GDP Growth Forecast (1) 2017E: 3.5% 2017E: 3.6% p 3.6% 3.7% U.S. GDP Growth Forecast (1) 2017E: 2.1% 2017E: 2.2% p 2.2% 2.3% U.S. Unemployment Rate (2) 4.4% 4.2% q 4.4% 4.2% Inflation Rate – U.S. Annual CPI Index (2) 1
Slide 6: ti DIGITAL REALTY
ti DIGITAL REALTY
Slide 7: Comprehensive Solutions Support Diverse Customer Base
Comprehensive Solutions Support Diverse Customer Base Historical Lease Signings Annualized GAAP Base Rent ® Total Annualized GAAP Annuali Product Type Signed ® Base Rent / B $0 1 2Q 3Q 4Q 10 20 3Q 4Q 10 20 3 40 10 20 30 4Q 10 20 30 40 10 20 30 40 10 20 30 40 10 20 30 40 10 2030 ET nsecorecon kgs vss
Slide 8: $59 $31 - $50 $100 $150 $200 $- $50 $100 $150 $200
$59 $31 - $50 $100 $150 $200 $- $50 $100 $150 $200
Slide 9: Gradually Improving Mark-to-Market
Gradually Improving Mark-to-Market PRODUCT TYPE RENEWALS 3Q17 RE-LEASING SPREADS a Turn-Key Flex® att ( 10.6% ) decrease on 3 GAAP basis ) Powered Base + Renewed 176949 square feet of Powered Base Building” data Building® 268% increase on a GAAP basis Colocation increase of 23% on a cash basis and 2
Slide 10: Currency exposure by region
USD CAD GBP EURO JPY HKD SGD AUD
Slide 11: FX Represents ~30 bps Tailwind to Reported Results
FX Represents ~30 bps Tailwind to Reported Results 5% 3017/3016 Revenue Growth 14.6% ™ AsReported m™ Constant-Currency ii Total Including DFT 3017 / 3016 3017 / 3016 3017 / 3016 2017E / 2016 Adj. EBITDA Same-Capital Cash Core FFO/sh Core FFO/sh Growth ® NOI Grow: Growth ® Growth ® 58% and 71% growth
Slide 12: Adjusted EBITDA growth and share count
1Q17A 2Q17A 3Q17A Adjusted EBITDA Growth Long-Term Financings Share Count 4Q17E
Slide 13: Consistently Improving Quality of Earnings
Consistently Improving Quality of Earnings in millions) s @Straight-Line Rental Revenue Straight-Line Rent as % of Revenue $176 $15 $14.5 $13.4 $13.6 $10 3x p5%* S85: $5.5 on $5.2 $5 19% 4a : : $2a fae Ka Fe $0 0. 0.3% 4Q13 1014 2014 3014 4014 1015 2015 3015 4015 101% 20% 3016 4016 1017 2017 3017 0.
Slide 14: Third Quarter Capital Markets Activities
Third Quarter Capital Markets Activities RE 3 —h a) July 21, 2017 * £250 million of 275% notes due 2024 Sterling-Denominated Senior Notes * £350 million of 330% notes due 2029 August 7, 2017 enior August 7, 2017 * $200 million Series J Preferred Stock at 5.25% Preferred Stock Offering 10n equity, in
Slide 15: Reflecting a Full-Quarter Contribution
Reflecting a Full-Quarter Contribution Fixed Charge Coverage Ratio” 75x 60x ox | ais 5.0) 5.0x x bh 25x 25x 0.0» 0.0x 301; Forma 3Q17 ) 3017 Pro Forma 30177 Reported Adjustments® As Adjusted Reported Adjustments As Adjusted 3017 DIGITAL REALTY FINANCIAL RESULTS | OC “TOBER 25, 2017
Slide 16: Nominal Near-Term Maturities; No Bar Too Tall
Nominal Near-Term Maturities; No Bar Too Tall DEBT MATURITY SCHEDULE “? CURRENT CAPITAL STRUCTURE ? in billions) $3.0 Pro Rata Share of JV Debt ™ Unsecured Term Loan Unsecured Senior Notes 2017 ©2018-2019 2020-2021 2022 «2023» 2024 +2025 «2026 -«2027-:«2028«—«2029 s/s ro ata share of unconsoidatd in
Slide 17: Delivering Current Results, Seeding Future Growth
Delivering Current Results, Seeding Future Growth Successful Third Quarter 2017 Initiatives EXECUTING M&A GAME PLAN WITH DUPONT FABROS ACQUISITION EXCEEDING EXPECTATIONS RAISING GUIDANCE STRENGTHENING THE BALANCE SHEET
Slide 18: Appendix
Slide 19: Robust Long-Term Demand, Lumpy Near-Term Signings
Robust Long-Term Demand, Lumpy Near-Term Signings Diverse Customer Base + Product Offerings Historical Lease Signings Annualized GAAP Annualized GAAP oH [Product Type Total sf. Signec Base Rent / sf. Base Rer Trailing Four-Quarter Average Turn Ee ; Annualized GAAP Base Rent $ 40 . | Mill g 10 20 30
Slide 20: U.S. Major Metro Area Data Center Supply
U.S. Major Metro Area Data Center Supply Supply Largely Concentrated in Most Active Metro Areas 3Q17 Current Supply ® “New Construction —_ ® Digital Realty Inventory ® Boston Chicago Dallas Houston N Virgina NY Metro Phoenix _ Silicon Valley 2Q17 ‘New Construction "current Supply © Digital Realty In
Slide 21: Appendix
Appendix inthis presentati atemaive uci. Funds from. Operations (FEO) We calculate funds from operations or FFO, in accorda ‘Trusts, or NAREIT. Banc cost. 0 lana ant captures trends We also believe that, as a widely recognized operating perfor However, the utility of FO as 2 Accordingly, Core Funds
Slide 22: Appendix
Appendix income ta jortization, or EBITDA, and Adjusted EBITDA (as defined below), are jul suppleme ures becau view our pac n oF the c fi respect eu aceeraton, and legal non-cash (gain) on leas . core ites oe cr 9 dividends fe ted EOTOR is BT 1d legal expen: . 23h gain on late termination equity in
Slide 23: Forward-Looking Statements
Forward-Looking Statements management Such including ROK vith DuPont Fabros ‘developmen’ matures: our expected tetuns on top investment geographies time a cost ed savings intenions fates, growth me ec P olbal exp sng e expectations jes our expectations and undering assumptions terminology suchas “be
Slide 24: FFO reconciliation
September 30, 2017 September 30, 2016 September 30, 2017 September 30, 2016 Net (loss) income available to common stockholders (4,140)$ 187,330$ 119,842$ 254,406$ Adjustments: Noncontrolling interests in operating partnership (79) 3,024 1,632 4,144 Real estate related depreciation and amortization (
Slide 25: Core FFO and AFFO reconciliation
September 30, 2017 September 30, 2016 September 30, 2017 September 30, 2016 FFO available to common stockholders and unitholders -- basic and diluted 214,626$ 199,496$ 694,429$ 612,285$ Weighted average common stock and units outstanding 173,461 149,778 166,048 149,352 Add: Effect of dilutive securi
Slide 26: EBITDA and Adjusted EBITDA reconciliation
September 30, 2017 September 30, 2016 September 30, 2017 September 30, 2016 Net (loss) income available to common stockholders (4,140)$ 187,330$ 119,842$ 254,406$ Interest 71,621 63,084 184,653 180,254 (Gain) loss from early extinguishment of debt (1,990) 18 (1,990) 982 Taxes 2,494 3,720 7,356 8,081
Slide 27: NOI and Cash NOI reconciliation
September 30, 2017 September 30, 2016 September 30, 2017 September 30, 2016 Rental revenues 247,326$ 243,268$ 741,604$ 734,985$ Tenant reimbursements - Utilities 39,106 42,217 111,752 114,022 Tenant reimbursements - Other 16,646 18,542 49,333 52,714 Interconnection and other 50,835 45,425 149,455 13
Slide 28: Net Debt / Adjusted EBITDA
Net Debt/LQA Adjusted EBITDA QE 09/30/2017 Total debt at balance sheet carrying value 8,484,244$ Add: DLR share of unconsolidated joint venture debt 152,526 Add: Capital lease obligations 170,864 Less: Unrestricted cash (192,578) Net Debt as of September 30, 2017 8,615,056$ Net Debt / LQA Adjusted E