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Digital Realty (DLR) Q4 FFO Lags Estimates, Revenues Top

Digital Realty Trust DLR delivered fourth-quarter 2021 core FFO per share of $1.67, up from $1.61 reported in the year-ago period. However, the figure missed the Zacks Consensus Estimate of $1.68.

The company registered revenues of $1.11 billion in the fourth quarter, marking a 4.6% year-over-year increase. Revenues also outpaced the Zacks Consensus Estimate of $1.10 billion.

Adjusted EBITDA of $584 million in the quarter marked a 1% increase year over year.

Decent leasing activities and strong signed total bookings aided Digital Realty.

According to DLR’s CEO A. William Stein, "Digital Realty delivered record bookings in the fourth quarter and for the full year, with over $500 million of new business globally in 2021, demonstrating the strength of our global value proposition."

For 2021, the company reported core FFO per share of $6.53, up from the prior year’s $6.22. Total operating revenues of $4.4 billion increased 13.4% year over year.

Quarter in Detail

In the reported quarter, signed total bookings were estimated to generate $156 million of annualized GAAP rental revenues, including the $11-million contribution from interconnection. The weighted-average lag between the new leases signed during the fourth quarter and the contractual commencement date was 14 months.

Digital Realty signed renewal leases, marking $151 million of annualized GAAP rental revenues during the December-end quarter. Rental rates on renewal leases signed during the quarter rolled down 3.9% on a cash basis and 2.6% on a GAAP basis.

Portfolio Activity

During the October-December period, Digital Realty made a strategic investment in AtlasEdge Data Centres, a European edge data center provider. DLR also acquired 16 acres of land in Northern Virginia for roughly $23 million and sold a mixed-use retail and data center property in San Jose, CA for around $60 million.

Balance Sheet

Digital Realty exited 2021 with cash and cash equivalents of $142.7 million, up from $116 million recorded at the end of the third quarter of 2021. As of Dec 31, 2021, this data center REIT had $13.4 billion of total debt outstanding, of which $13.3 billion was unsecured debt and $0.1 billion was secured debt. As of the same date, its net debt-to-adjusted EBITDA was 6.1X, while fixed charge coverage was 5.4X.

Guidance

Digital Realty issued its 2022 outlook, projecting core FFO per share in the range of $6.80-$6.90. The Zacks Consensus Estimate for the same is currently pinned at $6.90.

DLR projects full-year total revenues in the band of $4.7-$4.8 billion and adjusted EBITDA in the range of $2.475-$2.525 billion.

This data center REIT projects rental rates on renewal leases to remain flat on a cash basis and slightly positive on a GAAP basis. Year-end portfolio occupancy is 83%-84%, while same-capital cash NOI is expected to decline 2.5-3.5%.

Currently, the company 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

Performance of Notable REITs

Simon Property Group, Inc.’s SPG fourth-quarter 2021 FFO per share of $3.09 exceeded the Zacks Consensus Estimate of $2.88. Simon Property’s performance was backed by occupancy and NOI growth. However, SPG generated revenues of $1.33 billion during the quarter, lagging the Zacks Consensus Estimate of $1.35 billion.

Prologis, Inc. PLD reported fourth-quarter 2021 core FFO per share of $1.12, beating the Zacks Consensus Estimate of $1.10. Prologis also compared favorably with the year-ago quarter’s figure of 95 cents. PLD’s results reflected low vacancies and solid increases in rental revenues. Further, this industrial REIT issued its 2022 outlook.

Boston Properties Inc.’s BXP fourth-quarter 2021 FFO per share of $1.55 beat the Zacks Consensus Estimate of $1.52. The figure also compared favorably with the year-ago quarter’s tally of $1.37. The quarterly figure also exceeded the midpoint of Boston Properties’ fourth-quarter guidance by 5 cents, reflecting an improved portfolio performance. BXP also experienced strong leasing activity in the fourth quarter.

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


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