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Digital Realty (DLR) Q3 FFO & Revenues Top Estimates, View Up

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Zacks Equity Research
·4 min read
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Digital Realty Trust, Inc. DLR reported third-quarter 2020 core funds from operations (FFO) per share of $1.54, beating the Zacks Consensus Estimate of $1.48. However, the reported figure compares unfavorably with the year-ago quarter’s $1.67.

The company registered operating revenues of $1.024 billion in the third quarter, marking a 27.1% year-over-year rise. The revenue figure also outpaced the Zacks Consensus Estimate of $996.6 million.

Decent leasing activities and strong signed total bookings aided results. Moreover, the company has raised its core FFO per share outlook for full-year 2020.

According to Digital Realty’s CEO A. William Stein, "Our new logo growth and heightened deal velocity reflect the power of our global platform and the resiliency of our business.”

Quarter in Detail

Signed total bookings during the reported quarter are estimated to generate $89 million of annualized GAAP rental revenues. This is expected to include a $14-million contribution from interconnection. Notably, the weighted-average lag between leases signed during the third- quarter and the contractual commencement date was seven months.

Digital Realty signed renewal leases, marking $161 million of annualized GAAP rental revenues in the September-end quarter. Rental rates on renewal leases signed during the quarter rolled down 0.2% on a cash basis but went up 0.4% on a GAAP basis.

Also, the company generated third-quarter adjusted EBITDA of $568 million, up 17% year on year.

Portfolio Activity

During the September-end quarter, Digital Realty closed on the prior-announced acquisition of the freehold to the land under its HanauerLandstraße campus in Frankfurt for €185 million, or roughly $217 million. The company also acquired Altus IT, a carrier-neutral data center provider in Croatia, for about €11 million, or approximately $13 million.

This data-center REIT also closed on the previously-announced sale of a property in Gronigen, the Netherlands for €20 million, or around $23 million, as well as acquired the freehold to a parcel of land within roughly one kilometer of its existing campus in Vienna, Austria for €17 million, or $19 million.

Balance Sheet

Digital Realty exited third-quarter 2020 with cash and cash equivalents of $971.3 million, up from the $505.2 million recorded at second-quarter end.

Further, during the third quarter, the company issued 1.6 million shares of common stock under its at-the-market (“ATM”) equity offering program, generating around $249 million in gross proceeds.

Additionally, as of Sep 30, 2020, the data-center REIT had $12.9 billion of total debt outstanding, of which $12.7 billion was unsecured debt and $0.2 billion was secured debt. Also, as of the same date, its net debt-to-adjusted EBITDA was 5.6X, while fixed charge coverage was 4.4X.

Guidance

Digital Realty raised its guidance for 2020 core FFO per share to $6.10-$6.15 from the prior estimate of $6.00-$6.10. The Zacks Consensus Estimate for the same is currently pegged at $6.09.

It expects total revenues of $3.850-$3.875 billion compared with the $3.775-$3.825 billion guided earlier. Further, adjusted EBITDA for the ongoing year is estimated to be $2.150-$2.175 billion compared with the $2.1-$2.125 billion guided earlier.

Currently, Digital Realty carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Digital Realty Trust, Inc. Price, Consensus and EPS Surprise

Digital Realty Trust, Inc. Price, Consensus and EPS Surprise
Digital Realty Trust, Inc. Price, Consensus and EPS Surprise

Digital Realty Trust, Inc. price-consensus-eps-surprise-chart | Digital Realty Trust, Inc. Quote

We, now, look forward to the earnings results of other REITs like Realty Income Corporation O, Vornado Realty Trust VNO and SBA Communications Corporation SBAC, scheduled for a Nov 2 release.

Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.

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Vornado Realty Trust (VNO) : Free Stock Analysis Report
 
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Realty Income Corporation (O) : Free Stock Analysis Report
 
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