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Yahoo Finance Plus DIGITAL REALTY REPORTS SECOND QUARTER 2022 RESULTS
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- DLR
- DLR-PJ
- DLR-PK
- DLR-PL
AUSTIN, Texas, July 28, 2022 /PRNewswire/ -- Digital Realty (NYSE: DLR), the largest global provider of cloud- and carrier-neutral data center, colocation and interconnection solutions, announced today financial results for the second quarter of 2022. All per share results are presented on a fully diluted basis.
Highlights
Reported net income available to common stockholders of $0.19 per share in 2Q22, compared to $0.45 in 2Q21
Reported FFO per share of $1.55 in 2Q22, compared to $1.78 in 2Q21
Reported core FFO per share of $1.72 in 2Q22, compared to $1.54 in 2Q21
Signed total bookings during 2Q22 expected to generate $113 million of annualized GAAP rental revenue, including a $12 million contribution from interconnection
Updated 2022 core FFO per share outlook to $6.75 - $6.85; Reiterated 2022 constant-currency core FFO per share outlook of $6.95 - $7.05
Financial Results
Digital Realty reported revenues for the second quarter of 2022 of $1.1 billion, a 1% increase from the previous quarter and a 4% increase from the same quarter last year.
The company delivered second quarter of 2022 net income of $63.9 million, and net income available to common stockholders of $53.2 million, or $0.19 per diluted share, compared to $0.22 per diluted share in the previous quarter and $0.45 per diluted share in the same quarter last year.
Digital Realty generated second quarter of 2022 Adjusted EBITDA of $611 million, a 1% increase from the previous quarter and a 1% increase over the same quarter last year.
The company reported second quarter of 2022 funds from operations of $452 million, or $1.55 per share, compared to $1.60 per share in the previous quarter and $1.78 per share in the same quarter last year.
Excluding certain items that do not represent core expenses or revenue streams, Digital Realty delivered second quarter of 2022 core FFO per share of $1.72, compared to $1.67 per share in the previous quarter, and $1.54 per share in the same quarter last year.
Leasing Activity
In the second quarter, Digital Realty signed total bookings expected to generate $113 million of annualized GAAP rental revenue, including a $12 million contribution from interconnection.
"Demand for data center solutions continued to be strong through the second quarter, with healthy contributions from both hyperscale and enterprise segments," said Digital Realty Chief Executive Officer A. William Stein. "Customers are seeking to secure the capacity they require in advance of availability, as over half of our record development schedule is pre-leased, and tight conditions in many markets around the world are resulting in an improving pricing environment and rising occupancy."
The weighted-average lag between new leases signed during the second quarter of 2022 and the contractual commencement date was thirteen months.
In addition to new leases signed, Digital Realty also signed renewal leases representing $173 million of annualized GAAP rental revenue during the quarter. Rental rates on renewal leases signed during the second quarter of 2022 rolled up 3.4% on a cash basis and up 5.3% on a GAAP basis.
New leases signed during the second quarter of 2022 are summarized by region as follows:
Annualized GAAP | |||||||||||||
Base Rent | GAAP Base Rent | GAAP Base Rent | |||||||||||
The Americas | (in thousands) | Square Feet | per Square Foot | Megawatts | per Kilowatt | ||||||||
0-1 MW | $15,583 | 63,303 | $246 | 6.0 | $217 | ||||||||
> 1 MW | 15,537 | 137,937 | 113 | 14.1 | 92 | ||||||||
Other (1) | 1,566 | 63,467 | 25 | — | — | ||||||||
Total | $32,686 | 264,707 | $123 | 20.1 | $129 | ||||||||
EMEA (2) | |||||||||||||
0-1 MW | $18,301 | 71,568 | $256 | 6.4 | $238 | ||||||||
> 1 MW | 43,760 | 347,280 | 126 | 34.0 | 107 | ||||||||
Other (1) | 171 | 2,409 | 71 | — | — | ||||||||
Total | $62,232 | 421,257 | $148 | 40.4 | $128 | ||||||||
Asia Pacific (2) | |||||||||||||
0-1 MW | $1,544 | 8,591 | $180 | 0.4 | $322 | ||||||||
> 1 MW | 5,399 | 27,157 | 199 | 3.0 | 150 | ||||||||
Other (1) | 25 | 327 | 78 | — | — | ||||||||
Total | $6,968 | 36,075 | $193 | 3.4 | $170 | ||||||||
All Regions (2) | |||||||||||||
0-1 MW | $35,428 | 143,461 | $247 | 12.8 | $231 | ||||||||
> 1 MW | 64,695 | 512,374 | 126 | 51.1 | 105 | ||||||||
Other (1) | 1,763 | 66,203 | 27 | — | — | ||||||||
Total | $101,886 | 722,038 | $141 | 63.9 | $131 | ||||||||
Interconnection | $11,515 | N/A | N/A | N/A | N/A | ||||||||
Grand Total | $113,401 | 722,038 | $141 | 63.9 | $131 | ||||||||
Note: Totals may not foot due to rounding differences. | |
(1) | Other includes Powered Base Building® shell capacity as well as storage and office space within fully improved data center facilities. |
(2) | Based on quarterly average exchange rates during the three months ended June 30, 2022. |
Investment Activity
During the second quarter, Digital Realty acquired an 8-acre parcel in Dublin for $6 million, which can support up to 40 megawatts of IT load. Digital Realty also acquired 2.4 acres in Barcelona for $11 million, which can support up to 15 megawatts of IT load. Lastly, Digital Realty acquired 34 acres in Frankfurt for $60 million, which can support up to 70 megawatts of IT load.
Also during the second quarter, Digital Realty announced a joint venture with Mivne Real Estate (K.D.) (TASE: MVNE) for entry into the Israeli market. The joint venture, which will operate under the brand name Digital Realty Mivne, will serve as a strategic partnership between Digital Realty and Mivne, a market-leading real estate developer, owner and operator that has developed many large-scale projects across Israel and has an extensive land bank. Digital Realty Mivne expects to develop a multi-tenant data center campus in Petah Tikvah, the primary connectivity hub in Israel. The data center campus will support the development of up to 20 megawatts of IT load. Delivery of the initial phase is anticipated in 2023, subject to customer demand.
Subsequent to the close of the second quarter, Digital Realty acquired 38 acres in Paris for $11 million and 9 acres in Stockholm for $43 million.
Balance Sheet
Digital Realty had approximately $14.3 billion of total debt outstanding as of June 30, 2022, comprised of $14.1 billion of unsecured debt and approximately $0.2 billion of secured debt. At the end of the second quarter of 2022, net debt-to-Adjusted EBITDA was 6.2x, debt-plus-preferred-to-total enterprise value was 28.5% and fixed charge coverage was 6.0x. Pro forma for settlement of the $1 billion forward equity offering, net debt-to-adjusted EBITDA was 5.8x and fixed charge coverage was 6.2x.
During the second quarter of 2022, Digital Realty completed the following financing transactions:
Amended its Global Senior Credit Agreement to increase the size from $3.0 billion to $3.75 billion.
Entered into an at-the-market (ATM) equity offering agreement of up to $1.5 billion. The prior program, which had $577.6 million remaining, was terminated.
2022 Outlook
Digital Realty updated its 2022 core FFO per share outlook of $6.75-$6.85 and reiterated its 2022 constant-currency core FFO per share outlook of $6.95 - $7.05. The assumptions underlying the outlook are summarized in the following table.
As of | As of | As of | ||||
Top-Line and Cost Structure | February 17, 2022 | April 28, 2022 | July 28, 2022 | |||
Total revenue | $4.700 - $4.800 billion | $4.700 - $4.800 billion | $4.650 - $4.750 billion | |||
Net non-cash rent adjustments (1) | ($35 - $40 million) | ($45 - $50 million) | ($50 - $55 million) | |||
Adjusted EBITDA | $2.475 - $2.525 billion | $2.475 - $2.525 billion | $2.450 - $2.500 billion | |||
G&A | $410 - $420 million | $410 - $420 million | $405 - $415 million | |||
Internal Growth | ||||||
Rental rates on renewal leases | ||||||
Cash basis | Flat | Slightly Positive | Slightly Positive | |||
GAAP basis | Slightly positive | Up low-single-digits | Up low-single-digits | |||
Year-end portfolio occupancy | 83.0% - 84.0% | 83.0% - 84.0% | 83.0% - 84.0% | |||
"Same-capital" cash NOI growth (2) | (2.5% - 3.5%) | (2.5% - 3.5%) | (3.5% - 4.5%) | |||
Foreign Exchange Rates | ||||||
U.S. Dollar / Pound Sterling | $1.30 - $1.38 | $1.25 - $1.35 | $1.15 - $1.25 | |||
U.S. Dollar / Euro | $1.10 - $1.15 | $1.05 - $1.10 | $1.00 - $1.05 | |||
External Growth | ||||||
Dispositions | ||||||
Dollar volume | $0.5 - $1.0 billion | $0.5 - $1.0 billion | $0.5 - $1.0 billion | |||
Cap rate | 0.0% - 10.0% | 0.0% - 10.0% | 0.0% - 10.0% | |||
Development | ||||||
CapEx (3) | $2.3 - $2.5 billion | $2.3 - $2.5 billion | $2.2 - $2.4 billion | |||
Average stabilized yields |
