Digital Realty Trust, Inc. · NYSE:DLR
Digital Realty Trust — Investor Presentation (June 2021)
63 slides from Digital Realty Trust's investor presentation, June 2021
Slide 1: Global. Connected. Sustainable.
Global. Connected. Sustainable. INVESTOR PRESENTATION JUNE 2021 Digital Realty the trusted foundation | powering your digital ambitions
Slide 2: Business Highlights
Business Highlights 1 Digital Realty Overview Introduction 2 Introduction to Data Centers Data center 101 3 Global Platform Growing world-wide demand from a diversified customer base 4 Connected Campus Strategy Solving for the complete deployment; land and expand 5 Attractive Growth Prospects Organi
Slide 3: Digital Realty Overview
Digital Realty Overview INTRODUCTION DIGITAL REALTY | 3
Slide 4: Global provider dedicated to the full customer spectrum
GLOBAL provider dedicated to the full customer spectrum from ENTERPRISE colocation to HYPERSCALE 4,000+ 290 167,000 GLOBAL CUSTOMERS DATA CENTERS (1) CROSS CONNECTS INTERCONNECTION COLOCATION SCALE HYPERSCALE EQUITY & ENTERPRISE VALUE TOP 10 PUBLICLY TRADED U.S. REIT INVESTMENT GRADE RATINGS (4) $44
Slide 5: Our Strategy
Our Strategy Become the only GLOBAL provider dedicated to the full customer spectrum from SERVICE PROVIDERS to ENTERPRISES WHY WHY WHY GLOBAL? SERVICE ENTERPRISE? PROVIDERS? Rapidly growing globalization Focused on hyperscale and magnetic Focused on Forbes Global 2000 of businesses and consumers cus
Slide 6: Diverse Set of Customers Solving Multiple Digital Transformation Use Cases
Diverse Set of Customers Solving Multiple Digital Transformation Infrastructure Use Cases Across Multi-Metro Deployments RATIONALIZE REWIRE THE IMPLEMENT OPTIMIZE DATA INTERCONNECT THE PORTFOLIO NETWORK HYBRID IT EXCHANGE GLOBAL CONTROLS WORKFLOWS Lower data center Reduce latency Reduce Incr
Slide 7: Three Steps to Accelerate Global Customer Adoption
Three Steps to Accelerate Global Customer Adoption as They Solve Digital Transformation of Their Infrastructure Architecture Platform Roadmap Step by step strategy to deploy A global datacenter platform Platform roadmap organized a decentralized IT architecture experience. Productizing fit for aroun
Slide 8: PlatformDIGITAL Customer Use Case Tailored Solutions
PlatformDIGITAL® Customer Use Case Tailored Solutions 4 1 2 3 ® NETWORK HUB: consolidates and localizes traffic into DATA HUB: localizes data aggregation, staging, analytics, streaming 1 ingress/egress points to optimize network performance and 3 and data management to optimize data exchange and mai
Slide 9: Introduction to Data Centers
Introduction to Data Centers DATA CENTER 101 DIGITAL REALTY | 9
Slide 10: Data Center 101: What is a Data Center?
Data Center 101 What is a Data Center? 1 Building Shell 2 Electrical Systems Data Center Layout 3 HVAC / Mechanical Systems Building Shell 4 Building Fit-Out / Site Work Data Centers HVAC Data centers are designed to Electrical Utility Service (Not Shown in Image) house servers and network Mechanica
Slide 11: Data Center 101: What Goes into Building a Data Center?
Data Center 101 What Goes into Building a Data Center? 1 BUILDING SHELL 2 ELECTRICAL SYSTEMS Approximate Data Center Cost Distribution • Building Shell Building • Generator • Raised Floor • Batteries Shell • Power Distribution Unit (PDU) 25% • Uninterruptible Power Supplies (UPS) Electrical Systems
Slide 12: Interconnection: What is a Cross-Connect?
Interconnection What is a Cross-Connect? INTERCONNECTION CONTENT 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 13: Home to the Hybrid Multi-Cloud Solution
Home to the Hybrid Multi-Cloud Solution Customers’ Desired IT End State The majority of companies deploy some form of hybrid cloud solution to run and manage their IT needs PRIVATE PUBLIC CLOUD SOLUTIONS CLOUD SOLUTIONS Single organization, Service providers, dedicated environment many customers 3%
Slide 14: Global Platform
Global Platform GROWING WORLD-WIDE DEMAND FROM A DIVERSIFIED CUSTOMER BASE DIGITAL REALTY | 14
Slide 15: Covering the Waterfront: 290 Data Centers Across 47 Metro Areas
Covering the Waterfront 290 Data Centers Across 47 Metro Areas Stockholm Seattle Portland Minneapolis / Toronto Copenhagen St. Paul Boston San Francisco New York Metro Amsterdam Silicon Valley Brussels Düsseldorf Chicago Dublin Seoul Northern London Virginia Frankfurt Tokyo Zurich Vienna Los Angeles
Slide 16: High-Quality, Diversified Customer Base
High-Quality, Diversified Customer Base Numerous Customers with Multiple Locations Across the Portfolio TOP 20 CUSTOMERS CUSTOMER TYPE (% by ARR) (1) Customer Rank Locations % of ARR (1) Customer Rank Locations % of ARR (1) Content Fortune 50 Financial 1 55 9.7% 11 20 2.0% 15% 11% Software Company F
Slide 17: Global Service Infrastructure Platform
Global Service Infrastructure Platform Deliver Basic Services, Enable Partners Digital Realty is Focused on Providing the Real Estate Foundation to Enable Customers & Partners to Service Thousands of Their Customers Focused on Real Estate Foundation Funnel Approach Towards Customers CLOUD SERVICES T
Slide 18: Connected Campus Strategy
Connected Campus Strategy SOLVING FOR THE COMPLETE DEPLOYMENT; LAND AND EXPAND DIGITAL REALTY | 18
Slide 19: Multi-Tiered Cloud Architectures
Multi-Tiered Cloud Architectures Solving for the Complete Deployment; Land and Expand Connected Campus Network Access Nodes Higher COLO • High network requirements to efficiently distribute and aggregate Performance traffic • Applications: network connectivity, network peering and WAN optimization •
Slide 20: The Connected Campus: Digital Ashburn
The Connected Campus Digital Ashburn 70% 70% of the world’s web traffic flows through Loudoun County (1) 460+ MW Digital Realty has over 400 MW of capacity on our existing Northern Virginia campuses… 600+ acres 370 …in addition to 672 W holdings acres of land that will support the build-out of anoth
Slide 21: 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, Connect@Scale suites, Connect@Scale suites, Powered Base
Slide 22: Digital Realty is the Edge
Digital Realty is the Edge Network Density that Promotes Innovation and Collaboration 25 CITIES 167k 2,500 42 ASSETS Globally Where Our CROSS-CONNECTS NETWORK INSTANCES With Over 1,000 Internet Gateways Cross-Connects GLOBALLY GLOBALLY Are Located Each ATLANTA CHICAGO NEW YORK SEATTLE AMSTERDAM FRAN
Slide 23: Diversifying Product Offerings
Diversifying Product Offerings Facilitating Secure Connections to Multiple Service Providers METRO AREAS ACROSS NORTH AMERICA, EMEA & APAC 25 + 5 CURRENT ROADMAP A software-defined network (SDN) that allows a 60+ customer to establish direct, private connections to multiple cloud service providers,
Slide 24: Attractive Growth Prospects
Attractive Growth Prospects ORGANIC GROWTH COMBINED WITH LEASE-UP OPPORTUNITY DIGITAL REALTY | 24
Slide 25: High Utilization Provides Downside Protection
High Utilization Provides Downside Protection Significant Customer Investment Drives Stable Retention Historical Retention on Rentable Square Feet (1)(2) Trailing Twelve-Month Tenant Retention Long-Term Historical Average $15 – $30 100% million approximate cost of a new 1.125 MW data center deployme
Slide 26: Data Center Migration Projected Costs
Data Center Migration Projected Costs Assumptions: 1.5 – 2 yrs • 1 MW / 10,000 s.f. data center with 2,000 devices • Hyperconverged: 100% new hardware, factory built cabinets with compute, storage & networking 1 - 1.5 yrs • Hybrid: Build new network, replace 33%-50% of the existing hardware, mig
Slide 27: Evenly-Staggered Lease Expiration Schedule
Evenly-Staggered Lease Expiration Schedule Consistent, Modest Roll-Over Exposure in Any One Year % of Lease Expirations by Annualized Base Rent (1) Scale Colocation 2% - 4% Annual cash rental rate increases (2) 21.3% 19.8% 12.1% 9.6% 10.8% 8.9% 4.8 years 5.6% Weighted avg. 3.9% 2.2% 2.8% 2.9% remain
Slide 28: Committed to a Secure and Growing Dividend
Committed to a Secure and Growing Dividend Fourteen Consecutive Years of Dividend Increases (1) Cash Dividend / Common Share AFFO Payout Ratio $4.64 $4.48 $4.32 3.1% $4.04 $3.72 $3.52 $3.32 $3.40 $3.12 DIVIDEND YIELD (3) $2.92 $2.72 $2.02 $1.00 $1.08 $1.17 $1.26 $1.47 10% DIVIDEND CAGR 93% 95% (2005
Slide 29: Exceptional Risk-Adjusted Growth Track Record
Exceptional Risk-Adjusted Growth Track Record Strong Growth, Moderate Volatility Consistently Delivered Healthy Growth in FFO and Dividends per Share 15-Year FFO / Share Risk-Adjusted Growth (1) 15-Year Dividend / Share Risk-Adjusted Growth (2) Median REIT Median REIT Above-average Above-average (14
Slide 30: Graham's Golden Rules
Graham’s Golden Rules Defensive Requirements for the Intelligent Investor (1) 1 Adequate Size of the Enterprise $55 Bn ENTERPRISE VALUE (2) 2 Sufficiently Strong Financial Condition BBB / Baa2 / BBB INVESTMENT GRADE BALANCE SHEET GFC CONSISTENT GROWTH 3 Earnings Stability IN CORE FFO / SH (3) 10% 4
Slide 31: Prudent Capital Allocation
Prudent Capital Allocation DISCIPLINED INVESTMENT CRITERIA GUIDED BY RETURN ON INVESTED CAPITAL DIGITAL REALTY | 31
Slide 32: Stringent Acquisition Criteria
Stringent Acquisition Criteria Never Putting Balance Sheet at Risk Through Strategic M&A 2012 2015 2016 2017 2018 2019 Sentrum European DuPont Fabros Portfolio Telx Acquisition Portfolio Technology Ascenty Interxion Three assets in London 20 assets in 13 metro Eight assets in Europe 12 assets and si
Slide 33: Stringent Acquisition Criteria: Market Fundamentals, Accessibility, Stability
Stringent Acquisition Criteria Market Fundamentals, Accessibility, Stability and Risk KEY ELEMENTS OF INVESTMENT UNDERWRITING Market Fundamentals Accessibility / Business-Friendly / Internet Proximity Stable Locations Core metro areas / major Access to fiber Accommodative local utility central
Slide 34: Conservative Financial Strategy
Conservative Financial Strategy COMMITTED TO MAINTAINING A FLEXIBLE BALANCE SHEET DIGITAL REALTY | 34
Slide 35: Prudent Financial Management Positioning for Growth
Prudent Financial Management Positioning for Growth INVESTMENT GRADE BALANCE SHEET Consistently maintain balance sheet positioned for new investment opportunities ORGANIC GROWTH Focus on driving higher same-capital cash NOI growth RISK-ADJUSTED RETURNS Earn higher risk-adjusted returns on our tradit
Slide 36: Industry-Leading Sustainability
Industry-Leading Sustainability Track Record and Commitment to Best Practices Management and Award-Winning Track Record of Industry-Leading Thought Leadership Organizational Data Center Designs Sustainable Project Clean Energy and Innovation in Commitment to and Third-Party Investment Solutions Ener
Slide 37: 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) 10x 10x 7.6x 7.7x 7.4x 8x 6.9x 6.8x 8x 7.1x 5.9x 5.6x 5.6x 6.0x 6.0x 5.6x 6x 5.4x 4.9x 6x 5.4x 5.0x 4.2x 4.2x 4x 4x 2x 2x
Slide 38: Recent Results
Recent Results Note: The slides in this section were originally posted to the Company's website on April 29, 2021 and have not been updated to reflect changes occurring after that date. DIGITAL REALTY | 38
Slide 39: Navigating the Future
Navigating the Future Sustainable Growth for Customers, Shareholders and Employees GLOBAL CONNECTED SUSTAINABLE Selling GLOBALLY… Supporting LOCALLY AMERICAS EMEA APAC A Digital Realty and Brookfield Infrastructure JV DIGITAL REALTY | 39
Slide 40: Serving a Social Purpose
Serving a Social Purpose Delivering Sustainable Growth for All Stakeholders ENVIRONMENTAL SOCIAL GOVERNANCE Named 2021 EPA Demonstrated senior leadership and ENERGY STAR® employee commitment to Diversity, Formalized ESG oversight Partner of the Year for second Equity & Inclusion; signed CEO Action P
Slide 41: Expanding Global Platform Supporting Customer Growth
Brussels Frankfurt Madrid Expanding Global Platform Supporting Customer Growth Marseille Paris Singapore Global Platform 167,000 4,000+ 47 Cross-Connects Customers Metro Areas Note: As of March 31, 2021. DIGITAL REALTY | 41
Slide 42: Data Gravity Driving Data Center Demand
Data Gravity Driving Data Center Demand PlatformDIGITAL® Poised to Capitalize Data Sets Public Private Shared Enabling Connected Data Communities™ #BeyondCrossConnects Digital Products Investments Driving Data Hub Deployments Needs Global MTDC Leader 83% 75% 83% of CEOs surveyed expect to increase i
Slide 43: Financial Results
Financial Results DIGITAL REALTY | 43
Slide 44: Digital Transformation Driving Steady Demand
Digital Transformation Driving Steady Demand Global Full-Product Spectrum Provides Broadest Solutions HISTORICAL BOOKINGS ANNUALIZED GAAP BASE RENT $ in millions #1 $150 #2 #3 $100 $50 $0 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 1Q21 BOOKINGS 0-1 MW > 1 MW OTHER (1) INTERCONNECTION TOT
Slide 45: Connected Data Communities Attracting New Logos
Digital Ad Industrial Connected Data Communities Exchange Manufacturer Attracting New Logos 100 new logos Automotive IT Services Tech Designer Provider 39% of total bookings from 0-1 MW + interconnection Video Game eCommerce Developer Servicer 59% of total bookings outside the Americas Note: For qua
Slide 46: Top-Line Step Function: Healthy Backlog
Top-Line Step Function Healthy Backlog Sets a Solid Foundation BACKLOG ROLL-FORWARD (1) COMMENCEMENT TIMING (2) $ in millions $ in millions Digital Realty Backlog Unconsolidated Joint Venture Backlog Digital Realty Backlog Unconsolidated Joint Venture Backlog $13M $4M $62M $91M $1M $6M $6M $24M $24M
Slide 47: Cycling Through Peak Vintage Renewals
Cycling Through Peak Vintage Renewals Narrowing the Gap on Cash Re-Leasing Spreads 1Q21 RE-LEASING SPREADS 0-1 MW > 1 MW OTHER (1) TOTAL RENTAL RATE CHANGE RENTAL RATE CHANGE RENTAL RATE CHANGE RENTAL RATE CHANGE 1.6% -11.3% 6.3% -2.1% CASH CASH CASH CASH 2.5% 2.5% 21.0% 3.2% GAAP GAAP GAAP GAAP Sig
Slide 48: Effective Economic Risk Mitigation Strategies
Effective Economic Risk Mitigation Strategies Benefits of Scale and Diversification on Display EXPOSURE BY REVENUE (1) CORE FFO/SHARE EXPOSURE (2) USD CAD GBP EURO JPY HKD SGD AUD BRL SEK DKK CHF KES < 1% < 1% 2.0% 8% < 1% < 1% 0.4% 0.2% 20% 2% 61% 2021 $6.53 / Sh BENCHMARK GBP < 1% RATES +/- 10% <
Slide 49: Four Quarter Two-Step
Four Quarter Two-Step Beat, Dip, Shuffle, Bounce 2021E CORE FFO PER SHARE 1Q21 NOI Growth Asset Sales Normalized 2Q21 3Q21 4Q21 OpEx Note: Based on management estimates; actual performance may differ materially. Core FFO and NOI are non-GAAP financial measures. For descriptions and reconciliations t
Slide 50: 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 DEBT MATURITY SCHEDULE AS OF MARCH 31, 2021 (1)(2) DEBT PROFILE (U.S. $ in billions) 98% Unsecured 6.7 2.3 % Unsecured Secured YEARS Weighted Avg. Weighted Avg. Maturity (1)(2) Coupon (1) 94% Fixed
Slide 51: Consistent Execution on Strategic Vision
Consistent Execution on Strategic Vision Delivering Current Results, Seeding Future Growth SUCCESSFUL 1Q21 INITIATIVES 1. Delivering Sustainable Growth Named EPA ENERGY STAR® Partner of the Year for second consecutive year 2. Enhancing Portfolio Quality Sold non-core assets, extended connectivity so
Slide 52: Appendix
Appendix fi DIGITAL REALTY | 52
Slide 53: Digital Transformation Driving Steady Demand
Digital Transformation Driving Steady Demand Global Full-Product Spectrum Provides Broadest Solutions HISTORICAL BOOKINGS TRAILING FOUR-QUARTER AVERAGE ANNUALIZED GAAP BASE RENT $ in millions $150 $100 $50 $0 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 1Q21 TRAILING FOUR-QUARTER AVERAGE B
Slide 54: Firm Fundamentals: Robust Demand, Rational Supply
Firm Fundamentals Robust Demand, Rational Supply NORTH AMERICA EMEA APAC 3,471 1,579 2,964 1,354 1,193 1,014 1Q21 1Q20 1Q21 1Q20 1Q20 1Q21 MEGAWATTS COMMISSIONED (1)(2) MEGAWATTS COMMISSIONED (1)(2) MEGAWATTS COMMISSIONED (1)(2) 90% 86% 90% 77% 93% 89% DIGITAL DIGITAL REGION DIGITAL REGION REGION RE
Slide 55: 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 56: 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, and depreciation and amortization, or EBITDA, and Adjusted EBITDA (as defined below), are useful supplemental performance me
Slide 57: Forward-Looking Statements
Appendix Forward-Looking Statements This information in this presentation contains forward-looking statements within the meaning of the federal securities laws, which are based on current expectations, forecasts and assumptions that involve risks and uncertainties that could cause actual outcomes an
Slide 58: Reconciliation of Non-GAAP Items To Their Closest GAAP Equivalent
Reconciliation of Non-GAAP Items To Their Closest GAAP Equivalent Reconciliation of non-GAAP items to their closest GAAP equivalents. Funds from operations (1) Q121 FY 2020 FY 2019 FY 2018 FY 2017 FY 2016 FY2015 FY2014 FY2013 FY2012 FY2011 FY2010 FY2009 FY2008 FY2007 FY2006 FY2005 Net income (loss)
Slide 59: Reconciliation of Non-GAAP Items To Their Closest GAAP Equivalent
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) (in thousands, except per share and unit data) (unaudited) Three Months Ended March 31, 2021 Dece
Slide 60: Reconciliation of Non-GAAP Items To Their Closest GAAP Equivalent
Reconciliation of Non-GAAP Items To Their Closest GAAP Equivalent Digital Realty Trust, Inc. and Subsidiaries Reconciliation of Funds From Operations (FFO) to Core Funds From Operations (CFFO) (in thousands, except per share and unit data) (unaudited) Three Months Ended March 31, 2021 December 31, 2
Slide 61: Reconciliation of Non-GAAP Items To Their Closest GAAP Equivalent
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 Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) and Adjusted EBITDA (in thousands) (unaudited) Three
Slide 62: Reconciliation of Non-GAAP Items To Their Closest GAAP Equivalent
Reconciliation of Non-GAAP Items To Their Closest GAAP Equivalent Digital Realty Trust, Inc. and Subsidiaries Reconciliation of Same Capital Cash Net Operating Income (in thousands) (unaudited) Three Months Ended March 31, 2021 December 31, 2020 Rental revenues $ 415,860 $ 416,570 Tenant reimburseme
Slide 63: Reconciliation of Non-GAAP Items To Their Closest GAAP Equivalent
Reconciliation of Non-GAAP Items To Their Closest GAAP Equivalent Total Debt/Total Enterprise Value QE 3/31/21 Market value of common equity(i) $ 40,718,757 Debt Service Ratio (LQA Adjusted EBITDA/GAAP interest expense plus capitalized interest and less bridge facility fees) Liquidation value of pre
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