Digital Realty Trust, Inc. · NYSE:DLR
Digital Realty Trust — Investor Presentation (June 2018)
63 slides from Digital Realty Trust's investor presentation, June 2018
Slide 1: Not an offer to sell or solicitation to buy securities
This document is not an offer to sell or solicitation to buy securities of Digital Realty Trust, Inc. Any offers to sell or solicitations to buy securities of Digital Realty Trust, Inc. shall be made only by means of a prospectus approved for that purpose.
Slide 2: Business Highlights
Business Highlights Positioned to Drive Shareholder Value Digital Realty Overview Introduction Introduction to Data Centers Data center 101 Global Platform Growing world-wide demand from a diversified customer base Connected Campus Strategy Solving for the complete deployment; land and expand Organi
Slide 3: Digital Realty Overview
DIGITAL REALTY OVERVIEW a DIGITAL REALTY GB INVESTOR PRESENTATION | MAY 2018
Slide 4: Digital Realty at a Glance
Digital Realty at a Glance (NYSE: DLR) High-Quality Customer Base, including Investment Management Global Companies Across Approach Focused on DIGITAL REALTY 203 2,500+ CUSTOMERS, $23 Bn & 2 E Investment Grade Ratings © YIETROPOLIDAN AREAS” 32+ MILLION RENTABLE SQUARE FEET @ not hel rawn at an the I
Slide 5: 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 o
Slide 6: Meeting Our Customers' Growing Data Center Needs
Meeting Our Customers’ Growing Data Center Needs GLOBAL, DIVERSE CUSTOMER-CENTRIC CUSTOMER BASE ALIGNMENT Global Solutions i INVESTOR PRESENTATION | MAY 2018 6
Slide 7: Aligning Core Competencies with Customers
Aligning Core Competencies with Customers Global Real Estate Reach, Complementary Product Mix Hworkedense i in erconn oe REAL ESTATE EXPANSIVE COMPLEMENTARY EXPERTISE GLOBAL REACH PRODUCT MIX ¥ i ea a eres os os : , Critical part of customer supply Meet our target customers’ needs Seamless delivery
Slide 8: Supporting Our Customers' Growth
Supporting Our Customers’ Growth Full Soectrum of Data Center Solutions Across a Global Platform a DIGITAL REALTY 203 12 32 32+ DATA CENTERS? COUNTRIES METROPOLITAN AREAS? MILLION RENTABLE SQ. FT. Note: Data as of March 31, 2018 unless otherwise noted. 1) Includes investments in eighteen properties
Slide 9: a ees IHG J
a ees IHG J — 4 2 ui] fi DIGITAL REALTY Pr
Slide 10: What is a Data Center?
Data Center 101 What is a Data Center? af Building Shell | | DIGITAL REALTY $ . MS Electrical Systems Data Center Layout 3 Building Shell @) Building Fit-Out / Site Work Data Centers Data centers are designed to house servers and network Electrical Utility Service (Not Shown in Image) equipment. Dat
Slide 11: What Goes into Building a Data Center?
Data Center 101 What Goes into Building a Data Center? 1 )) BUILDING SHELL 1 2 ELECTRICAL SYSTEMS DIGITAL REALTY Data Center Cost Distribution * Building Shell Building Generator * Raised Floor Shell Batteries 22% Power Distribution Unit (PDU) Electrical Uninterruptible Power Supplies (UPS) Systems
Slide 12: Focused Pursuit
Focused Pursuit COLOCATION CONNECTIVITY + Solution to scale from a medium 300+ kW to very large compute deployments Can execute a solution for medium to large deployment in weeks, contracting for 5-10+ years Customize data center environment to specific deployment needs Due to size of deployments, c
Slide 13: Interconnection: What is a Cross-Connect?
Interconnection What is a Cross-Connect? CONTENT INTERCONNECTION NETWORK CONNECTING PARTNERS AND NETWORKS A cross-connect is a physical layer network connection between two parties. The cross-connect is enabled by the installation of patch cord(s) between ports of the respective parties’ interconnec
Slide 14: Home to the Hybrid Multi-Cloud Solution
Home to the Hybrid Multi-Cloud Solution The majority of companies deploy some form of hybrid cloud solution to run and manage their IT needs HYBRID CLOUD SOLUTION Single organization, V € | Service providers, dedicated environment O} many customers An PRIVATE ONLY? Scale Only Colocation Only iders t
Slide 15: Next Generation Drivers
Next Generation Drivers The Second Wave of Cloud INTERNET OF THINGS (loT) MARKET FORECAST (loT Units Installed in millions) f 20,415 RN CAGR (16-25) AUTONOMOUS VEHICLES MARKET FORECAST 11,197 2016 2017 2018 2020 (shipments in thousands) so 08 ~ 426 92% 500 Bscnce-ay ; | | i 213 2018 2019 2020 2021 2
Slide 16: Global Platform
GLOBAL PLATFORM a DIGITAL REALTY 16
Slide 17: Covering the Waterfront
Covering the Waterfront ASIA PACIFIC NORTH AMERICA EUROPE © Digital Realty Locations Seattle Toronto Minneapolis / St. Paul Chicago ©) () san Francisco Hong Kong © Denver (O)Los Angeles O Phoenix © Dallas © Austin, Houston 1) Miami Asia Pacific Encumbered 1.1% eased 8% © Sydney Melbourne’ ) Unencumb
Slide 18: High-Quality, Diversified Customer Base
High-Quality, Diversified Customer Base TOP 20 CUSTOMERS Customer Rank Locations % of ABR (1) Customer Rank Locations % of ABR“ 1 Een 7 65% n Satat 54 19% Fortune 50 Fortune 500 16 6.1% 12 7 1.9% Software Company SaaS Provider 9 Vv 9 3 facebook « 5.9% 13 DY@ Dxc.technology 10 1.6% a —— Cyxtera’ 19 3
Slide 19: Global Service Infrastructure Platform
Global Service Infrastructure Platform Focused on Real Estate Foundation Funnel Approach Towards Customers laaS SaaS PaaS Customers & Partners Professional Services Managed Hosting Business Continuity REAL ESTATE FOUNDATION Scale Colocation DIGITAL REALTY Interconnection INVESTOR PRESEN ION | MAY 20
Slide 20: AT&T Network and Colocation Services
AT&T AT&T Colocation Services Network-Enabled Network from Digital Realty Colocation Services • Global connectivity • Digital Realty colocation capacity • Complete solution with common resold by AT&T providing wider processes for contracting & support • Network technology leadership geographic cover
Slide 21: Connected Campus Strategy
CONNECTED CAMPUS STRATEGY a DIGITAL REALTY a 7 ‘Se &
Slide 22: Multi-Tiered Cloud Architectures
Multi-Tiered Cloud Architectures Solving for the Complete Deployment; Land and Expand Connected Campus Network Access Nodes Higher Performance ¢ Large-scale computing and storage deployments * Applications: back office, cloud and content infrastructure, data analytics and web hosting Higher * 100+ c
Slide 23: Ashburn Campuses and Land Holdings
@ & & it a NETWORK SOCIAL FINANCIAL CONTENT CLOUD INFORMATION ENTERPRISE of the World’s Web TECHNOLOGY { | Traffic Flows Through Cc) WH fy Loudoun County DATACENTER FUTURE SUB-STATION BUILDING Digital Realty has 345 ..in addition to 180 acres MW of capacity on our \ of land holdings that will two ex
Slide 24: Density at Scale and at Hubs
Density at Scale and at Hubs Expand, Tether, and Densify Data Center Campuses CHICAGO CAMPUS NEW YORK CAMPUS DALLAS CAMPUS LONDON CAMPUS 350 E. CERMAK 111 8TH AVENUE 2323 BRYAN STREET SOVEREIGN HOUSE Connect@Scale suites, Connect@Scale suites, Powered Base Building, Powered Base Building, Connect@Ga
Slide 25: Diversifying Product Offerings
& Diversifying Product Offerings Facilitating Secure Connections to Multiple Service Providers @ SERVICE A software-defined network (SDN) that allows a customer to establish direct, private connections to multiple cloud service providers, other participants of the platform, and other data centers on
Slide 26: a DIGITAL REALTY
a DIGITAL REALTY
Slide 27: High Utilization Provides Downside Protection
High Utilization Provides Downside Protection Historical Retention on Rentable Square Feet Trailing Twelve-Month Tenant Retention — — Long-Term Historical Average 100% 90% 80% 70% 60% Note: As of March 31, 2018. 1) Represents trailing 12-month average. 2) Estimates provided by Align Communications -
Slide 28: Evenly-Staggered Lease Expiration Schedule
Evenly-Staggered Lease Expiration Schedule % of Lease Expirations by Annualized Base Rent “ ™Scale = Colocation —_, Annual cash 20% 19.2% fi rental rate increases 2% - 4% 15% 12.3% 12.1% 11.7% 10.6% ; 10% 8.8% leighted avg. 6.8% 6.6% | remaining lease 49% 5.2% term 5% ( 49 Years 19% ox = 2018 2019 2
Slide 29: Cyclical Agnostic Performance Compares Favorably
Cyclical Agnostic Performance Compares Favorably Twelve Consecutive Years of Positive Growth 2006 - 2018E FFO / Share CAGR© 500 Financial Crisis (o>) 400 DLR: 12.3% 300 SPG: 6.9% 200 AVB: 6.4% BXP: 3.0% EQR: 3.0% 100 KIM: (3.5%) (e) 2006 2007) 2008 2009 2010) 2011 2012 2013 2014 2015 2016 2017 2018E
Slide 30: Committed to a Secure and Growing Dividend
Committed to a Secure and Growing Dividend -®-Cash Dividend / Common Share -©-AFFO Payout Ratio S 4.04 $372 ~© $3.52 eo 6) $3.12 _—® 4% $292 @— $2.72 e DIVIDEND oe YIELD $2.0 sua (2005 - 2018) g1i7 $1.26 og $1.00 _ e 9) eo. —e-—® eo —_e—_e B% We 2, —@—e 79% 84% 84% 86% 7, © © 65% = 65% ~=—-69% ° ° 6
Slide 31: Strong Growth, Moderate Volatility
Strong Growth, Moderate Volatility 12-Year FFO / Share Risk-Adjusted Growth 12-Year Dividend / Share Risk-Adjusted Growth 30.0% . 30.0% . im a a a c © s 2 vv yoy ao) 20.0% 2 . 20.0% g DLR ° 5 DLR 5 % of Ss e ° =< 10.0% 06 we 100% © S) Cr) © ° iy f) G5 & °° 8 é ~ eh ° 2 0.0% AS o) z 00% Q1% ° ae 0% 0
Slide 32: REIT Sector PEG Ratios
REIT Sector PEG Ratios (1) (2) 6.0 2018E AFFO Multiple / 2018E AFFO Growth 2018E AFFO Multiple 30x 5.8 REIT Universe Average PEG Ratio 4.0 20x 4.4 2.0 2.3 10x 2.0 1.8 0.0 x Digital Realty Data Centers CBD Office Malls/Outlets Apartments Source: Sub-sector values per Citi Investment Research as of Mo
Slide 33: Prudent Capital Allocation
PRUDENT CAPITAL ALLOCATION
Slide 34: Stringent Acquisition Criteria
Stringent Acquisition Criteria Market Fundamentals, Accessibility, Stability and Risk KEY INVESTMENT CRITERIA FOR EXPANSION STRATEGIC AND FINANCIALLY PRUDENTLY COMPLEMENTARY ACCRETIVE FINANCED (_)DFT DATA CENTERS 365 Main Portfolio Sentrum Portfolio Telx European Acquisition Portfolio | DuPont Fabro
Slide 35: Stringent Acquisition Criteria: Investment Underwriting
Stringent Acquisition Criteria Market Fundamentals, Accessibility, Stability and Risk KEY ELEMENTS OF INVESTMENT UNDERWRITING Market Fundamentals = Core metro areas / major central business districts = Supply & demand dynamics = Customer verticals = Land availability = Construction costs = Utility r
Slide 36: Conservative Financial Strategy
DIGITAL REALTY ) CONSERVATIVE FINANCIAL STRATEGY
Slide 37: Financial Strategy
& Financial Strategy Consistently maintain balance sheet positioned for new investment opportunities Focus on driving higher same-capital cash NO! growth Earn higher risk-adjusted returns on our traditional asset base Continue to prudently build out campuses and expand our global footprint Capitaliz
Slide 38: EPA Top 30 Tech and Telecom Green Power Users
• • • • • • • • • • • 1) Ranking for EPA's Top 30 Tech and Telecom list of largest green power users.
Slide 39: Leverage and Coverage Ratios vs. Peers
Net Debt / LQA Adjusted EBITDA(1) Net Debt + Preferred / LQA Adjusted EBITDA(1) 8x 8x 6.7x 7.0x 6.7x 6.5x 6.4x 6.0x 6.0x 6.0x 5.9x 5.7x 5.7x 6x 5.5x 6x 5.4x 5.3x 5.1x 5.1x 4x 3.4x 4x 3.4x 2x 2x -- -- HCP BXP SPG KIM FRT EQR AVB PLD KIM HCP BXP SPG FRT EQR AVB PLD Interest Coverage(1)(2) Fixed Charge
Slide 40: Recent Results
RECENT RESULTS DIGITAL REALTY Note: The slides in this section were originally posted to the Company's website on April 26, 2018 and have not been updatedto reflect changes occurring eee » o " pooq bone ¥ , 6 °# 0 008 é ; r] Py é a ; ' : ,@ Oey vg rYr 4 cy) o% vooves 40
Slide 41: Serving a Social Purpose
B Serving a Social Purpose Delivering Sustainable Growth for All Stakeholders ENVIRONMENTAL 2017 NAREIT NAREIT P . Leader In The Light Leader in the Light Sensiable Rel Extate Award for Data Committed to enhancing the well- being of our stockholders, customers, employees, vendors, and communities 20
Slide 42: Firm Fundamentals
Firm Fundamentals Robust Demand, Rational Supply NORTH AMERICA 1998 2,250 950 1,014 MEGAWATTS COMMISSIONED® MEGAWATTS COMMISSIONED® 665 MEGAWATTS COMMISSIONED® 90% DIGITAL REALTY 90% REGION OCCUPANCY RATE (1Q18” 85% DIGITAL REALTY 90% REGION OCCUPANCY RATE (1018)? 93% DIGITAL REALTY 93% REGION OCCUP
Slide 43: Delivering Superior Risk-Adjusted Returns
Delivering Superior Risk-Adjusted Returns Investing Opportunistically to Expand Global Platform RETURN VALUE- OPPOR- ADD TUNISTIC CORE 18%+ 12%-18% (oO e 6% — 9%, e : e Risk- Wid Free Rate 100% Pre-leasing AAA Credit Quality 20 yr. Lease Term 100% Funding Wvvy RISK First mover Full product offering
Slide 44: Macroeconomic Assumptions
4Q17 CALL CURRENT Better/ February 14, 2018 April 25, 2018 Worse 2018E 2019E (1) Global GDP Growth Forecast 2018E: 3.9% 2018E: 3.9% tu 3.9% 3.9% MACROECONOMIC U.S. GDP Growth Forecast (1) 2018E: 2.7% 2018E: 2.9% p 2.9% 2.7% U.S. Unemployment Rate (2) 4.1% 4.1% tu 3.9% 3.7% Inflation Rate – U.S. Annu
Slide 45: a DIGITAL REALTY
a DIGITAL REALTY 45
Slide 46: Lumpy but Healthy
Lumpy but Healthy Comprehensive Solutions Support Diverse Customer Base $ in millions $60 $40 | = I | §20 a F 3 | a9 #4 mae ae ae $o TURN-KEY POWERED BASE COLOCATION NON-TECHNICAL INTERCONNECTION TOTAL BOOKINGS FLEX® BUILDING® and expansions, The timing between lease signing and lease commencement (
Slide 47: Healthy Backlog Sets a Solid Foundation
Healthy Backlog Sets a Solid Foundation Front-End-Loaded Commencement Schedule $in millions $in millions Current Period Backlog Signings Il Commencements Total Backlog Current Period Backlog Total Backlog 4Q17 Backlog Signings | Commencements 1018 Backlog 2018 2019 2020+ Total Backlog
Slide 48: Cycling Through Peak Vintage Renewals
Cycling Through Peak Vintage Renewals Positive Mark-to-Market Across All Property Types RENTAL RATE CHANGE As, CASH 14.3% GAAP RENTAL RATE CHANGE 4.0», CASH 32.3% GAAP RENTAL RATE CHANGE 5.5% CASH 5.5% GAAP RENTAL RATE CHANGE 3.9% CASH 9.7% GAAP = Renewed 220,188 square feet of Turn-Key Flex® data c
Slide 49: Currency Exposure
USD CAD GBP EURO JPY HKD SGD AUD 234 bps 141 bps
Slide 50: Consistent Execution, Sustainable Growth
Consistent Execution, Sustainable Growth High Quality of Earnings with Proven Growth Profile 35% 7% 359% 6% Growth Cincl. DFT) Growth (excl. DFT) Growth Cincl. DFT) Growth (excl. DFT) 1018 /1Q17 1Q18 / 1Q17 1018 /1Q17 1018 /1Q17 Sin millions Sin millions $731 $744 $610 ., | gag 9451 $551 $566 9 $352
Slide 51: Four Quarter Two-Step
Four Quarter Two-Step Beat, Dip, Shuffle, Bounce 1Q18A NO! Growth G&AlInvestments Asset Sales 2Q18E 3Q18E Lease 4Q18E Commencements Note: Based on management estimates; actual performance may differ materially. Core FFO and NOI are non-GAAP financial measures. For descriptions and reconciliations to
Slide 52: Matching the Duration of Assets and Liabilities
Matching the Duration of Assets and Liabilities Clear Runway on the Left; No Bar Too Tall on the Right (USD in billions) 5 YEARS 5.4% Weighted Average Weighted Debt Maturity Average Coupon $2.5 $1.3 $10 we ty $i $08 : |] $05 sor $02 $0.0 $0.0 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 20
Slide 53: Consistent Execution on Strategic Vision
Consistent Execution on Strategic Vision Delivering Current Results, Seeding Future Growth Reached high-water mark for bookings and backlog Beat quarterly consensus estimates, raised full-year outlook Raised the dividend by 9%, the 13" consecutive annual increase Gave shareholders the right to propo
Slide 54: Slide 54
Slide 55: Robust Long-Term Demand, Lumpy Near-Term Signings
Robust Long-Term Demand, Lumpy Near-Term Signings Diverse Customer Base + Product Offerings $ in millions $60 $40 — solange $20 $o TURN-KEY POWERED BASE COLOCATION NON-TECHNICAL INTERCONNECTION TOTAL BOOKINGS FLEX® BUILDING® ions, The timing between lease signing and lease commencement (and receipt
Slide 56: REIT Sector PEG Ratios
REIT Sector PEG Ratios 25.0 2018E AFFO/sh Multiple Divided by 2018E AFFO/sh Growth 20.0 15.0 10.0 5.0 0.0 -5.0 -10.0 -15.0 -20.0 -25.0 CBD Office Malls / Outlets Apartments Data Centers Note: Calculated using growth rates from 2017 AFFO to 2018E AFFO. Source: DLR values are calculated using FactSet
Slide 57: Management Statements on Non-GAAP Measures
Appendix Management Statements on Non-GAAP 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
Slide 58: Management Statements on Non-GAAP Measures
Appendix Management Statements on Non-GAAP Measures EBITDA and Adjusted EBITDA: We believe that earnings before interest, loss from early extinguishment of debt, income taxes, depreciation and amortization, and impairment of investments in real estate, or EBITDA, and Adjusted EBITDA (as defined belo
Slide 59: Forward-Looking Statements
Appendix 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 re
Slide 60: Funds from Operations
Funds from operations (1) Q118 Q117 FY 2017 FY 2016 FY2015 FY2014 FY2013 FY2012 FY2011 FY2010 FY2009 FY2008 FY2007 FY2006 FY2005 Net income (loss) available to common stockholders $ 86,298 $ 66,145 $ 173,149 $ 332,088 $ 217,266 $ 132,721 $ 271,583 $ 171,662 $ 130,868 $ 58,339 $ 47,258 $ 26,690 $ 18,
Slide 61: Reconciliation of Core FFO to AFFO
Reconciliation of Core FFO to AFFO 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 Core FFO available to common stockholders and unitholders $1,098,315 $875,798 $746,157 $686,687 $636,425 $557,672 $449,288 $327,473 $252,043 $203,015 $145,460 $104,155 $76,526 Adjustments: Non-real es
Slide 62: Reconciliation of Adjusted EBITDA
Reconciliation of Adjusted EBITDA Total Debt/Total Enterprise Value Q118 Q117 (i ) EBITDA $ 461,446 $ 300,284 Market value of common equity $ 22,615,750 (i i ) Liquidation value of preferred equity 1,266,250 Severance accrual and equity acceleration (including associated legal expenses Total debt at
Slide 63: Net Debt / LQA Adjusted EBITDA
Net Debt/LQA Adjusted EBITDA QE 3/31/2018 QE 3/31/2018 Debt Service Ratio (LQA Adjusted EBITDA/GAAP interest expense plus capitalized interest and less bridge facility fees) Total debt at balance sheet carrying value $ 9,147,712 Total GAAP interest expense 76,985 Add: DLR share of unconsolidated joi
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