DLR-PL — Digital Realty Trust, Inc.

Digital Realty Trust (DLR-PL) Q1 2026 Earnings Call Summary

1. Key Financial Results and Metrics

• Core FFO: Reported at $2.04 per share, reflecting a 15% year-over-year growth.
• Revenue and Adjusted EBITDA: Strong double-digit growth driven by robust leasing activity and a favorable FX environment.
• Leasing Activity: Signed leases totaling $707 million at 100% share, marking the second highest leasing quarter in company history.
• Backlog: Increased to a record $1.8 billion, with $1 billion at Digital Realty's share.
• Development Pipeline: Expanded to $16.5 billion, with 1.2 gigawatts under construction, 61% pre-leased at an average expected yield of 11.4%.
• Leverage: Reduced to a multiyear low of 4.7x debt to adjusted EBITDA.

2. Strategic Updates and Business Highlights

• Record Bookings: Achieved the largest megawatt lease in company history (200-megawatt AI-oriented lease) and set records in the 0-1 megawatt interconnection category.
• Market Expansion: Entered new markets in Sofia, Bulgaria, and Cyberjaya, Malaysia, while acquiring land in Atlanta and Hillsboro for future hyperscale development.
• Customer Demand: Notable increase in AI-driven workloads, with 21% of 0-1 megawatt bookings attributed to AI requirements.
• Interconnection Growth: Continued strong performance in interconnection services, with significant contributions from the Americas and APAC regions.

3. Forward Guidance and Outlook

• Core FFO Guidance: Raised to a range of $8.00 to $8.10 per share, implying 9% growth at the midpoint.
• Cash Renewal Spreads: Expected to be between 6.5% and 8.5%, reflecting strong demand.
• Development CapEx: Anticipated to increase to a range of $3.5 billion to $4 billion for the year.
• Same Capital Cash NOI Growth: Projected growth of 4% to 5% on a constant currency basis.

4. Bad News, Challenges, or Points of Concern

• Operating Expenses: Elevated operating expenses impacted same capital cash NOI growth, which was 2.5% in Q1, below expectations.
• Supply Chain Constraints: Ongoing challenges with utility power delivery, labor availability, and community pushback may extend construction timelines.
• Market Risks: Rising energy costs and geopolitical tensions could affect customer operations, though Digital Realty has limited direct exposure.

5. Notable Q&A Insights

• AI Demand: Management noted that AI workloads are driving demand across various lease sizes, with significant growth in both hyperscale and enterprise segments.
• Commencement Lag: The average commencement lag for new leases increased to 19 months, primarily due to the large 200-megawatt lease signed.
• Land Bank Expansion: The company secured a large contiguous land parcel in Atlanta, with ongoing discussions about power availability.
• Market Rent Growth: Despite rising construction costs, market rent growth is expected to outpace inflation, supported by strong demand and limited supply.

Overall, Digital Realty Trust reported a strong start to 2026, with record leasing activity and a robust development pipeline, while navigating challenges related to operating expenses and supply chain constraints. The company remains optimistic about future growth driven by increasing demand for digital infrastructure, particularly in AI and interconnection services.