Digital Realty Trust, Inc. · NYSE:DLR
Digital Realty Trust — Q4 2015 Earnings Presentation
30 slides from Digital Realty Trust's earnings presentation, Feb 25, 2016
Slide 1: Digital Realty | Telx February 25, 2016
i DIGITAL REALTY | telx February 25, 2016 yr > A lw: za
Slide 2: Our Focus: The Next Horizon Three-Year Guideposts
1 SUPERIOR RETURNS Deliver superior risk-adjusted total shareholder returns 2 CAPITAL ALLOCATION Prudently allocate capital to opportunistically extend global campus footprint 3 PRODUCT OFFERINGS Drive higher returns on the asset base by diversifying product offerings 4 OPERATING EFFICIENCIES Achiev
Slide 3: Focused on Foundational Services
FUNNEL APPROACH TOWARDS CUSTOMERS ADVANCED SERVICES Cloud Hosting Cloud Apps MANAGED SERVICES Network Security Business Continuity FOUNDATIONAL SERVICES Scale / Colocation Connectivity Global Service Infrastructure Platform Deliver Basic Services, Enable Partners 3 Digital Realty is focused on found
Slide 4: Achieving Favorable Execution on Capital Recycling
Achieving Favorable Execution on Capital Recycling Redeploying Accretively, Enhancing Portfolio Quality 4 Property Kato & Page / Fremont, CA Sales Price $37.5 million Sales Price / s.f. $188 / s.f. Gain (Loss) on Sale $1.2 million Cap Rate 7.2% Closing Date January 2016 Property 650 Randolph / Somer
Slide 5: Fundamentals Firming Across the Board
- 20 40 60 Boston Chicago Dallas Houston N Virginia NY Metro Phoenix Silicon Valley Current Supply New Construction Sub-Lease Availablility Digital Realty Inventory U.S. Major Market Data Center Supply (1) Fundamentals Firming Across the Board 1) Based on Digital Realty internal estimates. 2) Repres
Slide 6: Macro and market assumptions update
3Q15 CALL October 29, 2015 CURRENT February 19, 2016 2016E 2017E Global GDP Growth Forecast (1) 2016E: 3.6% 2016E: 3.4% 3.4% 3.6% U.S. GDP Growth Forecast (1) 2016E: 2.8% 2016E: 2.6% 2.6% 2.6% U.S. Unemployment Rate (2) 5.2% 5.0% 4.8% 4.7% Inflation Rate – U.S. Annual CPI Index (2) 0.2% 0.7% 1.5% 2.
Slide 7: Graham's Golden Rules
Graham’s Golden Rules Defensive Requirements for the Intelligent Investor (1) Adequate Size of the Enterprise $19 Bn ENTERPRISE VALUE (2) Sufficiently Strong Financial Condition BBB / Baa2 / BBB INVESTMENT GRADE BALANCE SHEET Earnings Stability GROWTH IN CORE FFO / SH EACH AND EVERY YEAR Dividend Re
Slide 8: Financial Results
Financial Results
Slide 9: On Track to Meet Key 2016 Financial Targets
M&A Scorecard On Track to Meet Key 2016 Financial Targets 9 OPERATING REVENUE 2016 TARGET CORE EBITDA (1) 4Q15 ACTUAL 1Q15 ACTUAL 1) Represents EBITDA adjusted for deferred rent expense and excludes synergies. EXPENSE SYNERGIES Completed / On-Track Slightly Behind Off-Track $83.5 million $89.5 milli
Slide 10: Sustained Leasing Momentum
$0 $20 $40 $60 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q Historical Lease Signings Annualized GAAP Base Rent (2) Sustained Leasing Momentum Hunting and Farming Note: Leasing detail by product type represents leases signed in the fourt
Slide 11: Healthy Backlog Sets a Solid Foundation
Healthy Backlog Sets a Solid Foundation Front-End Loaded in 1H16 Note: Amounts shown represent GAAP annualized base rent from signed but not yet commenced leases and are based on current estimates of future lease commencement timing. Actual results may vary from current estimates. The lag between le
Slide 12: Cycling Through Peak Vintage Renewals
Note: Represents Turn-Key Flex® and Powered Base Building® leases signed during the quarter ended 12/31/15. Rental rate changes on renewals are calculated as the cash rent from new leases divided by the cash rent from expiring leases, minus one. Cycling Through Peak Vintage Renewals Approaching Mark
Slide 13: 4Q15 Core FFO / Share Out-Performance
$1.30 $1.38 $0.03 $0.02 $0.01 $0.01 $0.01 $1.20 $1.25 $1.30 $1.35 $1.40 4Q15 Core FFO Guidance G&A Telx Outperformance Synergies Lower Interest One-Time OpEx Savings 4Q15 Core FFO Actual 4Q15 Core FFO / Share Reconciliation 4Q15 Core FFO / Share Out-Performance Lower G&A + Telx Results Drive Upside
Slide 14: Constant-Currency Growth
6.3% 7.9% 3.4% 9.6% 6.0% 8.3% 10.1% 4.9% 11.9% 9.2% – 5% 10% 15% 4Q15 / 4Q14 Revenue Growth 4Q15 / 4Q14 Adj. EBITDA Growth 4Q15 / 4Q14 Same-Capital Cash NOI Growth 4Q15 / 4Q14 Core FFO / sh Growth 2015 / 2014 Core FFO / Sh Growth As Reported Constant Currency Constant-Currency Growth FX Represents ~
Slide 15: Putting Exposure in Perspective
Putting Exposure in Perspective Benefits of Diversification and Scale on Display 15 HOT BUTTON EXPOSURE BY ABR FFO CURRENCY EXPOSURE 1.6% ENERGY TENANTS 1.4% UNICORNS 1.3% HOUSTON (2) 2016 CORE FFO EXPOSURE (% OF GUIDANCE) (1) 10% BRITISH POUND 4% EURO 5% OTHER 96% NON-EXPOSED 1.3% GBP +/- 10% 0.4%
Slide 16: Closing the GAAP on Straight-Line Rent
Closing the GAAP on Straight-Line Rent Consistently Improving Quality of Earnings $21.2 $19.9 $19.7 $22.7 $21.3 $19.9 $17.6 $18.6 $13.4 $14.5 $13.6 $9.5 5.9% 5.5% 5.2% 6.0% 5.5% 5.0% 4.3% 4.5% 3.3% 3.5% 3.1% 1.9% 2% 3% 5% 6% $0 $10 $20 $30 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15
Slide 17: Back-End Loaded Debt Maturity Schedule
$0.1 $0.2 $0.1 $0.0 $1.0 $2.1 $0.8 $0.7 $1.0 $0.0 $1.0 $2.0 $3.0 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Secured Mortgage Debt Unsecured Prudential Shelf Facility Pro Rata Share of JV Debt Unsecured Notes Unsecured Term Loan Unsecured Global Facility $0.0 (1) Extended Global Unsecured Revo
Slide 18: Consistent Execution on Strategic Vision
Closed Telx Acquisition Truly transformational transaction – strategic, accretive in year one, and prudently financed Results Surpass Expectations Reported 4Q15 Core FFO / share of $1.38, above the high end of the forecast range Set the Stage for Double-Digit AFFO / Share Growth Quality of earni
Slide 19: Appendix
Appendix
Slide 20: Definitions of Non-GAAP Financial Measures
Definitions of Non-GAAP Financial Measures The information included in this presentation contains certain non-GAAP financial measures that management believes are helpful in understanding our business, as further described below. Our definition and calculation of non-GAAP financial measures may diff
Slide 21: Definitions of Non-GAAP Financial Measures (cont.)
Definitions of Non-GAAP Financial Measures (cont.) The information included in this presentation contains certain non-GAAP financial measures that management believes are helpful in understanding our business, as further described below. Our definition and calculation of non-GAAP financial measures
Slide 22: Consolidated Income Statement
December 31, 2015 December 31, 2014 December 31, 2015 December 31, 2014 Operating Revenues: Rental 366,814$ 319,816$ 1,354,986$ 1,256,086$ Tenant reimbursements 90,990 88,717 359,875 350,234 Interconnection 40,759 - 40,759 - Fee income 1,880 1,871 6,638 7,268 Other - 1,812 1,078 2,850 Total operatin
Slide 23: Reconciliation of Non-GAAP Items To Their Closest GAAP Equivalent
Reconciliation of Non-GAAP Items To Their Closest GAAP Equivalent 23 December 31, 2015 December 31, 2014 ASSETS (unaudited) Investments in real estate Properties: Land 689,573$ 671,602$ Acquired ground leases 12,639 12,196 Buildings and improvements 9,676,427 8,823,814 Tenant improvements 536,734 47
Slide 24: Reconciliation of Non-GAAP Items To Their Closest GAAP Equivalent
Reconciliation of Non-GAAP Items To Their Closest GAAP Equivalent 24 LIABILITIES AND EQUITY Global revolving credit facility 967,884$ 525,951$ Unsecured term loan 924,568 976,600 Unsecured senior notes, net of discount 3,738,606 2,791,758 Mortgage loans, net of premiums 303,183 378,818 Accounts paya
Slide 25: Reconciliation of Non-GAAP Items To Their Closest GAAP Equivalent
Reconciliation of Non-GAAP Items To Their Closest GAAP Equivalent 25 December 31, 2015 December 31, 2014 December 31, 2015 December 31, 2014 Net income (loss) available to common stockholders (40,039)$ (52,289)$ 217,266$ 132,721$ Adjustments: Noncontrolling interests in operating partnership (708) (
Slide 26: Reconciliation of Non-GAAP Items To Their Closest GAAP Equivalent
Reconciliation of Non-GAAP Items To Their Closest GAAP Equivalent 26 December 31, 2015 December 31, 2014 December 31, 2015 December 31, 2014 Net income (loss) available to common stockholders (40,039)$ (52,289)$ 217,266$ 132,721$ Interest 61,717 46,396 201,435 191,085 Loss from early extinguishment
Slide 27: Reconciliation of Non-GAAP Items To Their Closest GAAP Equivalent
Reconciliation of Non-GAAP Items To Their Closest GAAP Equivalent 27 December 31, 2015 December 31, 2014 December 31, 2015 December 31, 2014 FFO available to common stockholders and unitholders -- diluted 117,538$ 194,880$ 687,896$ 696,691$ Termination fees and other non-core revenues (3) - (2,584)
Slide 28: Reconciliation of Non-GAAP Items To Their Closest GAAP Equivalent
Reconciliation of Non-GAAP Items To Their Closest GAAP Equivalent 28 Core EBITDA is a non-GAAP financial metric that Telx uses as a supplemental measure of its operating performance that adjusts net loss to eliminate the impact of certain items that it does not consider indicative of its core operat
Slide 29: Reconciliation of Non-GAAP Items To Their Closest GAAP Equivalent
Reconciliation of Non-GAAP Items To Their Closest GAAP Equivalent 29 Digital Realty Trust, Inc. and Subsidiaries Reconciliation of Same-Capital Cash Net Operating Income (in thousands) (unaudited) December 31, 2015 December 31, 2014 December 31, 2015 December 31, 2014 Rental revenues 198,704$ 197,95
Slide 30: 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: