Digital Realty Trust, Inc. Q1 FY2022 Earnings Call

· Earnings call transcript and AI-powered summary

Quarter Highlights

  • Record quarterly bookings of $167M in annualized rent (compared to record levels also in Q4 2021). Strength came primarily from leases larger than 1MW; smaller leases and interconnection were steady.
  • Re-leasing spreads improved meaningfully: +3.3% cash renewal rate in Q1 2022 versus negative spreads in prior quarters. Excluding a short-term extension, spreads would have been +2.5%.
  • Core FFO per share was $1.67, flat year-over-year and sequentially. Despite FX headwinds, the result exceeded consensus expectations.
  • Backlog grew 15% sequentially to a record $436M in annualized rent (up from $378M in Q4 2021), with about two-thirds commencing later in 2022.
  • Company expects slightly positive re-leasing spreads for full-year 2022, up from “flat” guidance last quarter.
  • Active development pipeline at an all-time high: 44 projects under construction across 28 metros totaling 300MW of IT capacity; 58% pre-leased.
  • Continued progress toward closing the Teraco acquisition (major African platform) in 1H 2022; expected partial-year revenue/EBITDA contributions remain unchanged.
  • Strong balance sheet actions included issuing €750M of 10.5-year notes at 1.375% and CHF 250M at 1.25%, and redeeming $450M of 4.75% USD debt.
  • Pro forma leverage ratio at 5.9× (after forward equity), fixed-charge coverage at 5.7×.

Operational Performance & Trends

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Operator: Good afternoon and welcome to the Digital Realty First Quarter 2022 Earnings Call. Please note this event is being recorded. [Operator Instructions] I would now like to turn the call over to Jordan Sadler, Digital Realty's Senior Vice President of Public and Private Investor Relations. Jordan, please go ahead. Jordan Sadler: Thank you, operator and welcome, everyone, to Digital Realty's first quarter 2022 earnings conference call. Joining me on today's call are CEO, Bill Stein; and President and CFO, Andy Power. Chief Investment Officer, Greg Wright; Chief Technology Officer, Chris Sharp; and Chief Revenue Officer, Corey Dyer are also on the call and will be available for Q&A. Management may make forward-looking statements, including guidance and underlying assumptions on today's call. Forward-looking statements are based on expectations that involve risks and uncertainties that could cause actual results to differ materially. For a further discussion of risks related to our business, see our 10-K and subsequent filings with the SEC. This call will contain non-GAAP financial information. Reconciliations to net income are included in the supplemental package furnished to the SEC and available on our website. Before I turn the call over to Bill, let me offer a few key takeaways from our first quarter. First, we kicked off the year on a high note with record bookings of $167 million, led by strength in the leases greater than 1 megawatt and supported by steady bookings

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