Digital Realty Trust, Inc. · NYSE:DLR
Digital Realty Trust — Investor Presentation (May 2020)
67 slides from Digital Realty Trust's investor presentation, May 2020
Slide 1: Investor Presentation May 2020
Global. Connected. Sustainable. INVESTOR PRESENTATION MAY 2020 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 from enterprise colocation to hyperscale
GLOBAL provider dedicated to the full customer spectrum from ENTERPRISE colocation to HYPERSCALE GLOBAL CUSTOMER BASE 275 DATA CENTERS (1) ~145k TOTAL CROSS CONNECTS 2,000+ 2,000+ Digital Realty Interxion ~80k ~55k ~10k CUSTOMERS CUSTOMERS Digital Realty Interxion Westin Exchange INTERCONNECTION COL
Slide 5: Navigating the Future
Navigating the Future Sustainable Growth for Customers, Shareholders and Employees GLOBAL CONNECTED SUSTAINABLE DIGITAL REALTY | 5
Slide 6: Prioritizing Health and Safety amid Global Pandemic
Prioritizing Health and Safety amid Global Pandemic Maintaining Resiliency Employees and Vendors • Minimized on-site data center staffing and increased safety protocols, i.e. sanitation efforts, training • Coordination with suppliers to confirm their response plans and service continuity capacity •
Slide 7: Serving a Social Purpose
Serving a Social Purpose Delivering Sustainable Growth for All Stakeholders ENVIRONMENTAL SOCIAL GOVERNANCE Enhanced Board 2020 Named 2020 EPA $1,000,000 philanthropic effort diversity with the ENERGY STAR® put forth to help combat the Partner of the Year addition of three new COVID-19 pandemic Dire
Slide 8: Our Strategy
OUR STRATEGY Become the only GLOBAL provider dedicated to the full customer spectrum from ENTERPRISE to HYPERSCALE WHY WHY WHY GLOBAL? ENTERPRISE? HYPERSCALE? Rapidly growing globalization of Largest addressable market Fastest growing addressable market businesses and consumers (1) Robust va
Slide 9: Expanding Global Platform
Expanding Global Platform Supporting Customer Growth Manchester| 38k NRSF Stockholm| Dublin| 12MW 22MW Copenhagen| London| 9MW 108MW Brussels| Amsterdam| 9MW Paris| 99MW 35MW Dusseldorf| Marseille| 4MW 15MW Frankfurt| 86MW Vienna| Madrid| Geneva| Zurich| 26MW 12MW 59k NRSF 5MW Strategic Combination
Slide 10: Combining Two Leading Platforms in EMEA
Combining Two Leading Platforms in EMEA Further Solidifying Global Connection with Customers Customers Communities of Interest Growth Collaborated on customer proposals Assessing fiber connectivity between Leveraging investment grade balance for Paris, Amsterdam, Brussels, and a data centers in over
Slide 11: Digital Transformation Driving Data Center Demand
Digital Transformation Driving Data Center Demand PlatformDIGITAL Poised to Capitalize Digital Transformation Driving Data Center Demand Global Data Center Leader (3) 1.9x Leaders 66 Equinix 27 x 8 Digital Realty CAPABILITIES 34 Interxion Cyxtera NTT CoreSite Major Rackspace CyrusOne Players All Cou
Slide 12: Diverse Set of Customers Solving Multiple Use Cases
Diverse Set of Customers Solving Multiple Digital Transformation Infrastructure Use Cases Across Multi-location Deployments* RATIONALIZE REWIRE THE IMPLEMENT OPTIMIZE DATA INTERCONNECT THE PORTFOLIO NETWORK HYBRID IT EXCHANGE GLOBAL CONTROLS WORKFLOWS Lower data center Reduce latency Reduce
Slide 13: 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 14: PlatformDIGITAL Customer Use Case Tailored Solutions
PlatformDIGITAL™ Customer Use Case Tailored Solutions 4 1 2 3 DATA HUB: localizes data aggregation, staging, analytics, streaming and 1 NETWORK HUB: consolidates and localizes traffic into ingress/egress points to optimize network performance and cost 3 data management to optimize data exchange and
Slide 15: Robust Recognition by Customers & Industry Analysts
PlatformDIGITAL™ Robust Recognition by Customers & Industry Analysts Global Data Center Leader Market Report (1) “PlatformDIGITAL puts DLR in a position as a much more strategic partner to enterprises” Eric Hanselman Chief Analyst Research Report “Deploying Data Hubs will be an essential strategy to
Slide 16: Introduction to Data Centers
Introduction to Data Centers DATA CENTER 101 DIGITAL REALTY | 16
Slide 17: 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 18: What Goes into Building a Data Center?
Data Center 101 What Goes into Building a Data Center? 1 BUILDING SHELL 2 ELECTRICAL SYSTEMS Data Center Cost Distribution • Building Shell Building • Generator • Raised Floor Shell • Batteries 25% • Power Distribution Unit (PDU) Electrical • Uninterruptible Power Supplies Systems (UPS) 40% HVAC / M
Slide 19: Comprehensive Customer-Focused Product Suite
Focused Pursuit Comprehensive Customer-Focused Product Suite Flexible solutions meeting customers’ needs in space, colo and interconnection through one provider SCALE COLOCATION CONNECTIVITY Solution to scale from a medium Enabling small (one cabinet) to Connecting customers & partners 300+ kW to ve
Slide 20: 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 21: 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 22: Next Generation Drivers: The Second Wave of Cloud
Next Generation Drivers The Second Wave of Cloud ARTIFICIAL INTELLIGENCE MARKET FORECAST (1) INTERNET OF THINGS (IoT) MARKET FORECAST (2) $90 (IoT Units Installed in millions) ($ in billions) $71 45% $53 34% 20,415 CAGR (‘16 - ‘25) $38 CAGR (‘16 - ‘20) $26 11,197 8,381 $17 $11 6,382 $5 $7 $3 2016 20
Slide 23: Global Platform
Global Platform GROWING WORLD-WIDE DEMAND FROM A DIVERSIFIED CUSTOMER BASE DIGITAL REALTY | 23
Slide 24: Covering the Waterfront
Covering the Waterfront Over 270 Data Centers across more than 40 Metro Areas Seattle Minneapolis / St. Paul Portland Toronto Boston New York Metro San Francisco Silicon Valley Chicago Northern Stockholm Seoul Los Angeles Virginia Tokyo Phoenix Charlotte Copenhagen Osaka Dallas Atlanta Manchester Au
Slide 25: High-Quality, Diversified Customer Base
Excludes Interxion High-Quality, Diversified Customer Base Numerous Customers with Multiple Locations Across the Portfolio TOP 20 CUSTOMERS CUSTOMER TYPE (% by ABR) (1) Customer Rank Locations % of ABR (1) Customer Rank Locations % of ABR (1) Fortune 50 Content Financial 1 20 7.9% 11 26 1.6% 12% Sof
Slide 26: 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 27: Connected Campus Strategy
Connected Campus Strategy SOLVING FOR THE COMPLETE DEPLOYMENT; LAND AND EXPAND DIGITAL REALTY | 27
Slide 28: 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 29: The Connected Campus: Digital Ashburn
The Connected Campus Digital Ashburn 70% 70% of the world’s web traffic flows through Loudoun County (1) 400+ MW Digital Realty has over 400 MW of capacity on our existing Northern Virginia campuses… 672 acres 370 …in addition to 672 W holdings acres of land that will support the build-out of anothe
Slide 30: 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 31: Digital Realty is the Edge
Digital Realty is the Edge Network Density That Promotes Innovation and Collaboration 12CITIES 145k 1,600+ 16 ASSETS Globally Where Our CROSS-CONNECTS NETWORK INSTANCES With Over 1,000 Internet Gateways Cross-Connects GLOBALLY GLOBALLY Are Located Each 111 8th AVENUE 60 HUDSON 56 MARIETTA 350 E. CER
Slide 32: Diversifying Product Offerings
Diversifying Product Offerings Facilitating Secure Connections to Multiple Service Providers METRO AREAS ACROSS NORTH AMERICA, EMEA & APAC 16 + 5 CURRENT ROADMAP A software-defined network (SDN) that allows a 60+ customer to establish direct, private connections to multiple cloud service providers,
Slide 33: Attractive Growth Prospects
Attractive Growth Prospects ORGANIC GROWTH COMBINED WITH LEASE-UP OPPORTUNITY DIGITAL REALTY | 33
Slide 34: High Utilization Provides Downside Protection
High Utilization Provides Downside Protection Significant Customer Investment Drives Stable Retention Historical Retention on Rentable Square Feet (1)(2) $15 – $30 100.0% million approximate cost of a new 1.125 MW data center deployment (3) 90.0% 80.0% $15 – $20 70.0% million approximate cost to mig
Slide 35: Data Center Migration Projected Costs
Data Center Migration Projected Costs Assumptions: 1.5 – 2 yrs • 1 MW / 10K Ft2 data center with 2,000 devices • Hyperconverged: 100% new hardware, factory built cabinets with compute, storage and networking 1 - 1.5 yrs • Hybrid: Build new network, replace 33%-50% of the existing hardware, migra
Slide 36: 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) 20.0% 18.2% Scale Colocation 2% - 4% Annual cash rental rate increases (2) 14.9% 15.0% 11.2% 10.5% 10.0% 10.0% 10.0% 9.6% 5.8% 5.1 years 5.0% Weighted a
Slide 37: 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 $4.48 $4.32 3.2% $4.04 $3.72 $3.52 $3.32 $3.40 $3.12 DIVIDEND YIELD (3) $2.92 $2.72 $2.02 11.0% $1.47 $1.17 $1.26 $1.00 $1.08 CAGR (2005 – 2020) 93% 95% 79%
Slide 38: 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 14-Year FFO / Share Risk-Adjusted Growth (1) 14-Year Dividend / Share Risk-Adjusted Growth (2) 30.0% 30.0% Median REIT Median REIT 20.0% 20.0% Above-a
Slide 39: Graham's Golden Rules
Graham’s Golden Rules Defensive Requirements for the Intelligent Investor (1) 1 Adequate Size of the Enterprise $52 Bn ENTERPRISE VALUE (2) 2 Sufficiently Strong Financial Condition BBB / Baa2 / BBB INVESTMENT GRADE BALANCE SHEET GFC CONSISTENT GROWTH 3 Earnings Stability 05 06 07 08 09 10 11 12 13
Slide 40: Prudent Capital Allocation
Prudent Capital Allocation DISCIPLINED INVESTMENT CRITERIA GUIDED BY RETURN ON INVESTED CAPITAL DIGITAL REALTY | 40
Slide 41: Stringent Acquisition Criteria: Strategic M&A
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 42: Stringent Acquisition Criteria: Market Fundamentals
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 43: Conservative Financial Strategy
Conservative Financial Strategy COMMITTED TO MAINTAINING A FLEXIBLE BALANCE SHEET DIGITAL REALTY | 43
Slide 44: Prudent Financial Management
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 45: Industry Leading Sustainability
Industry Leading Sustainability Track Record and Commitment to Leading 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 E
Slide 46: 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) 8x 8x 7.2x 6.7x 6.6x 6.4x 5.7x 6.0x 5.9x(4) 6x (4) 5.1x 5.0x 4.9x 4.8x 6x 5.0x 4.9x 4.8x 4.6x 4.6x 4.2x 4.2x 4x 4x 2x 2x -
Slide 47: Financial Results
Financial Results Note: The slides in this section were originally posted to the Company's website on May 7, 2020 and have not been updated to reflect changes occurring after that date. DIGITAL REALTY | 47
Slide 48: Combination Creates Powerful Global Platform
Combination Creates Powerful Global Platform Includes Interxion Expanded Customer Base and Reach Poised for Growth Global Presence Customers and Communities Growth 275 4,000+ $2Bn Data Centers Customers of Development 44 145,000+ 188MW Metros Cross-Connects of Construction 86% 29% 34% Total Occupanc
Slide 49: Digital Transformation Driving Steady Demand
Digital Transformation Driving Steady Demand Excludes Interxion Global Full-Product Spectrum Provides Broadest Solutions HISTORICAL BOOKINGS ANNUALIZED GAAP BASE RENT(1)(2) $ in millions Space & Power Interconnection $100 $75 $50 $25 $0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 1Q20 BOO
Slide 50: Attracting New Logos
Video Communities of Interest Streaming Attracting New Logos 74 New Logos in 1Q20 (1) Excludes Interxion Social Media Application $8.6mm Interconnection Bookings Excludes Interxion AI-Powered Tech for Investment Management $16mm Bookings in APAC Excludes Interxion 1) Includes 54 new logos added by D
Slide 51: Top-Line Step Function: Healthy Backlog
Top-Line Step Function Excludes Interxion 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 $10 $16 $56 $43 $2 $8
Slide 52: Cycling Through Peak Vintage Renewals
Cycling Through Peak Vintage Renewals Excludes Interxion Colocation Contribution Boosts Overall Results 1Q20 RE-LEASING SPREADS TURN-KEY FLEX® POWERED BASE BUILDING® COLOCATION TOTAL RENTAL RATE CHANGE RENTAL RATE CHANGE RENTAL RATE CHANGE RENTAL RATE CHANGE -9.3% -17.2% 2.0% -1.5% CASH CASH CASH CA
Slide 53: Effective Economic Risk Mitigation Strategies
Effective Economic Risk Mitigation Strategies Excludes Interxion Benefits of Scale and Diversification on Display EXPOSURE BY REVENUE (1) CUSTOMER CONCENTRATION BY REVENUE (2) USD CAD GBP EURO JPY HKD SGD AUD LATAM Content Potential 17% At-Risk 0.9% 9% Financial Enterprise 5% 12% 4% Cloud 2% 78% 26%
Slide 54: Four Quarter Two-Step
Four Quarter Two-Step Includes Interxion Beat, Dip, Shuffle, Bounce 2020E CORE FFO PER SHARE $1.53 1Q20 NOI Growth Strategic Capital COVID-19 Interxion 2Q20 3Q20 4Q20 Management Investments Note: Based on management estimates; actual performance may differ materially. Core FFO and NOI are non-GAAP f
Slide 55: Prudently Financed Transaction Enhances Credit Profile
Prudently Financed Transaction Enhances Credit Profile Includes Interxion Reflecting a Full-Quarter Contribution Net Debt to Adjusted EBITDA (1) Fixed Charge Coverage Ratio (2) 6.6x 1.5x 4.8x 5.1x 1.0x 3.8x 8% 0% Floating Rate Floating Rate Debt Debt(3) 1Q20 Pro Forma 1Q20 1Q20 Pro Forma 1Q20 Report
Slide 56: Matching the Duration of Assets and Liabilities
Matching the Duration of Assets and Liabilities Includes Interxion Clear Runway on the Left, No Bar Too Tall on the Right DEBT MATURITY SCHEDULE AS OF MARCH 31, 2020 (1)(2) DEBT PROFILE (U.S. $ in billions) 98% Unsecured 6.2 3.0 % Unsecured Secured YEARS Weighted Avg. Weighted Avg. Maturity(1)(2) Co
Slide 57: Consistent Execution on Strategic Vision
Consistent Execution on Strategic Vision Delivering Current Results, Seeding Future Growth SUCCESSFUL 1Q20 INITIATIVES 1. Enhancing Platform Value 145,000+ Closed Interxion combination, Westin acquisition and Mapletree disposition Cross-Connects 2. Delivering Sustainable Growth for Stakeholders Rece
Slide 58: Appendix
Appendix fi DIGITAL REALTY | 58
Slide 59: Robust Long-Term Demand, Lumpy Near-Term Signings
Robust Long-Term Demand, Lumpy Near-Term Signings Excludes Interxion Diverse Customer Base + Product Offerings HISTORICAL BOOKINGS TRAILING FOUR-QUARTER AVERAGE ANNUALIZED GAAP BASE RENT(1)(2) $ in millions Space & Power Interconnection $80 $60 $40 $20 $0 2010 2011 2012 2013 2014 2015 2016 2017 2018
Slide 60: Firm Fundamentals: Robust Demand, Rational Supply
Firm Fundamentals Excludes Interxion Robust Demand, Rational Supply NORTH AMERICA EMEA APAC 2,964 2,557 1,354 1,250 896 1,014 1Q19 1Q20 1Q19 1Q20 1Q19 1Q20 MEGAWATTS COMMISSIONED(1)(2) MEGAWATTS COMMISSIONED(1)(2) MEGAWATTS COMMISSIONED(1)(2) 91% 88% 89% 80% 84% 84% DIGITAL DIGITAL REGION DIGITAL RE
Slide 61: Durable Business Model
Durable Business Model Levered to Long-Term Secular Demand Drivers 4Q19 CALL CURRENT Better/ February 10, 2020 May 1, 2020 Worse 2020E 2021E Global GDP Growth Forecast (1) 2020E: 3.3% 2020E: -3.0% -3.3% 5.8% U.S. GDP Growth Forecast (1) MACROECONOMIC 2020E: 2.0% 2020E: -5.9% -5.9% 4.7% U.S. Unem
Slide 62: 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 63: 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 64: 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 65: Reconciliation of Non-GAAP Items To Their Closest GAAP Equivalent
Reconciliation of Non-GAAP Items To Their Closest GAAP Equivalent Reconciliation of Core FFO to AFFO 31-Mar-20 Core FFO available to common stockholders and unitholders $355,375 Adjustments: Non-real estate depreciation 4,940 Amortization of deferred financing costs 4,260 Amortization of debt discou
Slide 66: Reconciliation of Non-GAAP Items To Their Closest GAAP Equivalent
Reconciliation of Non-GAAP Items To Their Closest GAAP Equivalent DIGITAL REALTY | 66
Slide 67: Reconciliation of Non-GAAP Items To Their Closest GAAP Equivalent
Reconciliation of Non-GAAP Items To Their Closest GAAP Equivalent Note: For quarter ended March 31, 2020 DIGITAL REALTY | 67
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