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: 3Q17 Financial Results
~ . bees a 4 ~ See LT) ~ wan = ARERR aoe — = me . = - . ——— ~ Se —— wee - . - 19 A beni" © ae >. L Ter 3Q17 FINANCIAL RESULTS OCTOBER 2017 DIGITAL REALTY
Slide 2: 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 3: Entering Tokyo, Expanding in Japan
Entering Tokyo, Expanding in Japan oa 4 —] ~ a A | 55 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 2 SEED ASSETS ey Digital Realty: O
Slide 4: Firm Fundamentals
Firm Fundamentals Robust Demand, Rational Supply Major U.S. Metro Areas Healthy volumes of underway supply in USS. Major Metro Areas balanced by high leasing velocity 95% 96% 95% a 90% 89% 89% 89% 93% 93% 93% 1% 4Q16 1017 2017 3Q17 4Q16 1017 2017 3017 4Q16 1017— 2Q17'-—-3Q17 Metro DLR Metro “ DLR® M
Slide 5: Macro and market assumptions update
2Q17 CALL CURRENT Better/ July 26, 2017 October 20, 2017 Worse 2017E 2018E (1) Global GDP Growth Forecast 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: a DIGITAL REALTY
a DIGITAL REALTY
Slide 7: Comprehensive Solutions Support Diverse Customer Base
Comprehensive Solutions Support Diverse Customer Base Historical Lease Signings Total Annualized GAAP Annualized GAAP Product Type Signed Base Rent / s.f.@ jase Rent 1 million Annualized GAAP Base Rent TurnKey Fle 3 million red Base Building® - on s nillion $ in millions Interconnection nillion $60
Slide 8: $200 $200 $31 $150 $150 $100 $100 $59 $50 $50 - $-
$200 $200 $31 $150 $150 $100 $100 $59 $50 $50 - $-
Slide 9: Gradually Improving Mark-to-Market
Gradually Improving Mark-to-Market PRODUCT TYPE RENEWALS 3Q17 RE-LEASING SPREADS = Renewed 234,735 square feet of Turn-Key Flex® data centers Turn-Key Flex® at a rental rate decrease of 10.6% on a cash basis and a 1.1% decrease on a GAAP basis Powered Base = Renewed 176,949 square feet of Powered Ba
Slide 10: Currency exposure
USD CAD GBP EURO JPY HKD SGD AUD
Slide 11: Revenue Growth and FX Tailwind
FX Represents ~30 bps Tailwind to Reported Results 15% cry | 14.3% | im AsReported mM Constant-Currency £2i Total Including DFT fo | . i | 1 | 1 i 1 1 1 10% | 1 1 1 1 1 1 1 1 1 1 1 i — 1 8.4% ‘ 7.1% 5.8% 5% S57 eek 49% 0% 3Q17 / 3Q16 3017 / 3016 3Q17 / 3016 3Q17 / 3016 2O17E / 2016 Revenue Growth Ad
Slide 12: Adjusted EBITDA growth and share count
1Q17A 2Q17A 3Q17A Adjusted EBITDA Long-Term Share 4Q17E Growth Financings Count
Slide 13: Consistently Improving Quality of Earnings
Consistently Improving Quality of Earnings G in millions) 595 Straight-Line Rental Revenue @Straight-Line Rent as % of Revenue $22.7 $20 $15 $10 $5 $o 4Q13, 1014 «2014 «(3014 «44014 «1015 «62015 «693015 «=84Q15 «1016 82016 3016 4016 1017 2Q17 3Q17 FINANCIAL RESULTS | 7.5% 6.0% 4.5% 3.0% 1.5% 0.0%
Slide 14: Third Quarter Capital Markets Activities
Third Quarter Capital Markets Activities July 21, 2017 * £250 million of 275% notes due 2024 Sterling-Denominated Senior Notes * £350 million of 330% notes due 2029 (2) August 7, 2017 $350 million of 275% notes due US. Dollar Senior Notes $1.0 billion of 370% notes due 2027 GB) August 7, 2017 * $200
Slide 15: Reflecting a Full-Quarter Contribution
Reflecting a Full-Quarter Contribution Net Debt to Adjusted EBITDA” Fixed Charge Coverage Ratio” 75x 75x 6.0x Ad 5,0x mex 5.0x 44x , : 25x 25x e a , 0.0x 0.0x 3Q17 Pro Forma 3Q17 , 3Q17 Pro Forma 3Q17 Reported Adjustments® As Adjusted Reported Adjustments“ As Adjusted 1) Calculated as total debt at
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 Variable Rate Debt @ Pro Rata Share of JV Debt Unsecured Term Loan ‘™ Unsecured Senior Notes Fixed Rate Debt 22% sll) Preferred 3% ™ Unsecured Global Facility ™Unsecured Green Bonds @
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 3Q17 DIGITAL REALTY FINANCIAL RESULTS | OCTOBER 25, 2017
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 Trailing Four-Quarter Average million Annualized GAAP Base Rent ) 9° illion S 79 million Gin millions) 1-Technical /, million $60 Interconnection million $40 | $20 | $o 1Q 2Q 3Q 4Q 1
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 Gin megawatts) ™ Current Supply “®” “New Construction —_ Digital Realty Inventory | = {es i oe oo Boston Chicago Dallas Houston N Virgina NY Metro Phoenix Silicon Valley 2Q17 Gin megawatts) 120 ™
Slide 21: Appendix
Appendix The information included in this presentation contains certain non-GAAP financial measures that management believes are helpfulin understanding our business, as further described below. Our definition and calculation of non-GAAP financial measures may differ from those of other REITs, and,
Slide 22: Appendix
Appendix 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 measures because they allow investors to view
Slide 23: 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:
Slide 24: Reconciliation of Net Income to Funds From Operations
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 Nine Months Ended September 30, 2017 September 30, 2016 September 30, 2017 September
Slide 25: FFO and Core FFO Reconciliation
Three Months Ended Nine Months Ended 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 173,461 149,778 166,0
Slide 26: Reconciliation to EBITDA and Adjusted EBITDA
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 Months Ended Nine Months Ended September 30, 2017 September 30, 20
Slide 27: Reconciliation of Same Capital Cash Net Operating Income
Digital Realty Trust, Inc. and Subsidiaries Reconciliation of Same Capital Cash Net Operating Income (in thousands) (unaudited) Three Months Ended Nine Months Ended September 30, 2017 September 30, 2016 September 30, 2017 September 30, 2016 Rental revenues $ 247,326 $ 243,268 $ 741,604 $ 734,985 Ten
Slide 28: Net Debt, Fixed Charge Ratio and Guidance Reconciliation
Net Debt/LQA Adjusted EBITDA QE 09/30/2017 QE 09/30/2017 Fixed Charged Ratio (LQA Adjusted EBITDA/total fixed charges) Total debt at balance sheet carrying value $ 8,484,244 GAAP interest expense plus capitalized interest and less bridge facility fees 73,724 Add: DLR share of unconsolidated joint ve