• Total Leasing Completed in 2024: $1 billion.
• New Debt and Equity Capital Raised in Q4: Over $2 billion.
• Net Proceeds from Asset Sales and JV Contributions: Over $500 million.
• Liquidity at Year-End: Over $6 billion.
• Leverage at Year-End: 4.8 times.
• Core FFO Per Share Growth in Q4: 6%.
• New Leases Signed in Q4: $100 million.
• 0-1 Megawatt Plus Interconnection Bookings in Q4: $76 million (16% sequential uplift).
• Lease Renewal Activity in 2024: Approached $1 billion with cash rents rolling up 9% on average.
• New Logos Added in 2024: Nearly 600.
• Capacity Expansion in 2024: Over 200 megawatts.
• Development Pipeline: Over $7 billion of projects underway, 70% pre-leased.
• Backlog of Booked but Not Yet Billed Leases at Year-End: Roughly $800 million.
• Core FFO in Q4: $1.73 per share (up 6.1% year-over-year).
• Data Center Revenue Growth in Q4: 8% year-over-year.
• Adjusted EBITDA Growth in Q4: 7.4% year-over-year.
• Same Capital Cash NOI Growth in Q4: 1.4% year-over-year.
• Development CapEx in 2024: Approximately $3 billion on a gross basis.
• Net Debt-to-Adjusted-EBITDA Ratio at Year-End: 4.8 times.
• Core FFO Guidance for 2025: $7.05 to $7.15 per share.
• Expected Total Revenue and Adjusted EBITDA Growth in 2025: More than 10% on a normalized and constant currency basis.
• Expected Same Capital Cash NOI Growth in 2025: 3.5% to 4.5% on a constant currency basis.

• Warning! GuruFocus has detected 9 Warning Signs with DLR.

Release Date: February 13, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Digital Realty Trust Inc (NYSE:DLR) achieved a record $1 billion in total leasing for 2024, with significant contributions from the 0-1 megawatt plus interconnection segment.
• The company raised over $2 billion in new debt and equity capital, boosting liquidity to over $6 billion and reducing leverage to 4.8 times by year-end.
• Digital Realty Trust Inc (NYSE:DLR) reported a 6% growth in core FFO per share in the fourth quarter, indicating strong financial performance.
• The company expanded its development pipeline by over 75% to $7 billion, with 70% of projects pre-leased, ensuring future growth.
• Digital Realty Trust Inc (NYSE:DLR) made significant progress in ESG initiatives, including the construction of a 120-megawatt solar power plant in South Africa and community solar agreements in Chicago.

Negative Points

• Greater-than-a-megawatt bookings dipped sequentially, indicating potential volatility in larger capacity block demand.
• The company faces challenges in maintaining consistent cash renewal spreads, with a forecast of 4% to 6% for 2025, down from 9% in 2024.
• Supply chain constraints, particularly in power delivery, remain a concern, potentially impacting project timelines and costs.
• The company's reliance on capital recycling and joint ventures for funding may introduce variability in financial outcomes.
• Despite strong leasing activity, the lumpiness in bookings, especially in larger capacity blocks, could lead to uneven revenue recognition.

Q & A Highlights

Q: How does the recent DeepSeek development impact Digital Realty's outlook, especially in relation to hyperscalers' CapEx plans? A: Andrew Power, CEO, explained that despite DeepSeek's efficiency improvements, hyperscalers remain committed to significant AI infrastructure investments. The CapEx from top customers is expected to continue growing, supporting Digital Realty's positive outlook. Chris Sharp, CTO, added that AI democratization will drive demand for Digital Realty's facilities, emphasizing the company's AI-ready infrastructure.

Q: Can you elaborate on the cash renewal outlook for 2025, given the 9% achieved in 2024? A: Matthew Mercier, CFO, stated that the 4% to 6% guidance for 2025 does not assume any packaged deals like those in 2024, which contributed to the 9% result. The current guidance reflects positive mark-to-market conditions, with an improving outlook for future years.

Q: Is the $1 billion annual bookings rate sustainable, and how does it relate to your development capacity? A: Andrew Power, CEO, noted that while the $1 billion bookings in 2024 were a record, future bookings will depend on larger capacity blocks and other categories. The development pipeline is 70% pre-leased, and the company is not in a rush to fill remaining capacity, focusing on strategic customer outcomes.

Q: What factors could potentially derail Digital Realty's growth thesis for 2025 and beyond? A: Andrew Power, CEO, emphasized the importance of executing in the 0-1 megawatt interconnection segment and filling portfolio vacancies. The company aims to maintain strong commercial outcomes and leverage its funding tools to support growth, with a focus on accelerating bottom-line growth in 2026 and beyond.

Q: How does Digital Realty view its pricing power in light of current market dynamics? A: Andrew Power, CEO, indicated that the company is not in a rush to trade volume for price in the greater-than-a-megawatt segment. In the 0-1 megawatt category, cash mark-to-market is close to 5%, with pricing holding firm due to strong demand and increased volume.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.