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Digital Realty (DLR) Q1 FFO Beats Estimates, Revenues Up Y/Y
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Digital Realty Trust, Inc.’s (DLR - Free Report) first-quarter 2017 funds from operations (“FFO”) per share of $1.50 came 7.9% higher than the year-ago tally of $1.39. Further, core FFO per share of $1.52 exceeded the year-ago quarter tally of $1.42 by 7.0%. The Zacks Consensus Estimate for the quarter was pegged at $1.47. Results were driven by growth in revenues.
The company reported revenues of $550.6 million for the first quarter, reflecting a 9.2% increase year over year. The revenue figure also marginally surpassed the Zacks Consensus Estimate of $550.4 million.
Quarter in Detail
During the first quarter, the company signed total bookings which represented $50 million of annualized GAAP rental revenue, including a $9 million contribution from interconnection. Notably, the weighted-average lag between leases signed during first-quarter 2017 and the contractual commencement date was three months.
Moreover, the company signed renewal leases denoting $46 million of annualized GAAP rental revenue. Rental rates on renewal leases signed during the reported quarter rolled up 3.1% on a cash basis and expanded 4.5% on a GAAP basis.
Notably, during the quarter, the company acquired a seven-acre land parcel next to its existing development project in Osaka, Japan, for $13.6 million. The location is expected to support the development of 25 megawatts of critical power.
Balance Sheet
Digital Realty exited the first quarter with cash, cash equivalents of around $15.0 million, up from $10.5 million at year-end 2016.
Further, as of Mar 31, 2017, the company had around $6.2 billion of total debt outstanding, substantially all of which was unsecured. Also, as of the same date, the company’s net debt-to-adjusted EBITDA was 4.9x, while fixed charge coverage was 4.2x.
Outlook
Digital Realty raised its 2017 core FFO per share outlook to $5.95–$6.10 from the prior guided range of $5.90–$6.10. This is backed by revenue expectations of $2.2–$2.3 billion, year-end portfolio occupancy growth of +/- 50 bps and "same-capital" cash NOI growth of 2.0–3.0%.
The Zacks Consensus Estimate for the same is currently pegged at $6.02.
Our Take
Digital Realty is poised to ride on the growth curve backed by robust fundamentals of the data center market. The company’s business has significantly grown since its launch. Further, its accretive acquisitions and development efforts augur well for long-term growth. However, exposure of earnings to foreign currency translation, cut-throat competition in the industry and a substantial debt burden remain concerns.
We are now looking forward to the earnings releases of GGP Inc. , Vornado Realty Trust (VNO - Free Report) and HCP Inc. (HCP - Free Report) , all of which are expected to report earnings in the next week.
Note: All EPS numbers presented in this write up represent funds from operations (“FFO”) per share. FFO, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.
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Starting now, for the next month, I invite you to follow all Zacks' private buys and sells in real time from value to momentum...from stocks under $10 to ETF to option movers...from insider trades to companies that are about to report positive earnings surprises (we've called them with 80%+ accuracy). You can even look inside portfolios so exclusive that they are normally closed to new investors.
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Digital Realty (DLR) Q1 FFO Beats Estimates, Revenues Up Y/Y
Digital Realty Trust, Inc.’s (DLR - Free Report) first-quarter 2017 funds from operations (“FFO”) per share of $1.50 came 7.9% higher than the year-ago tally of $1.39. Further, core FFO per share of $1.52 exceeded the year-ago quarter tally of $1.42 by 7.0%. The Zacks Consensus Estimate for the quarter was pegged at $1.47. Results were driven by growth in revenues.
The company reported revenues of $550.6 million for the first quarter, reflecting a 9.2% increase year over year. The revenue figure also marginally surpassed the Zacks Consensus Estimate of $550.4 million.
Quarter in Detail
During the first quarter, the company signed total bookings which represented $50 million of annualized GAAP rental revenue, including a $9 million contribution from interconnection. Notably, the weighted-average lag between leases signed during first-quarter 2017 and the contractual commencement date was three months.
Moreover, the company signed renewal leases denoting $46 million of annualized GAAP rental revenue. Rental rates on renewal leases signed during the reported quarter rolled up 3.1% on a cash basis and expanded 4.5% on a GAAP basis.
Notably, during the quarter, the company acquired a seven-acre land parcel next to its existing development project in Osaka, Japan, for $13.6 million. The location is expected to support the development of 25 megawatts of critical power.
Balance Sheet
Digital Realty exited the first quarter with cash, cash equivalents of around $15.0 million, up from $10.5 million at year-end 2016.
Further, as of Mar 31, 2017, the company had around $6.2 billion of total debt outstanding, substantially all of which was unsecured. Also, as of the same date, the company’s net debt-to-adjusted EBITDA was 4.9x, while fixed charge coverage was 4.2x.
Outlook
Digital Realty raised its 2017 core FFO per share outlook to $5.95–$6.10 from the prior guided range of $5.90–$6.10. This is backed by revenue expectations of $2.2–$2.3 billion, year-end portfolio occupancy growth of +/- 50 bps and "same-capital" cash NOI growth of 2.0–3.0%.
The Zacks Consensus Estimate for the same is currently pegged at $6.02.
Our Take
Digital Realty is poised to ride on the growth curve backed by robust fundamentals of the data center market. The company’s business has significantly grown since its launch. Further, its accretive acquisitions and development efforts augur well for long-term growth. However, exposure of earnings to foreign currency translation, cut-throat competition in the industry and a substantial debt burden remain concerns.
Digital Realty currently 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. Quote
We are now looking forward to the earnings releases of GGP Inc. , Vornado Realty Trust (VNO - Free Report) and HCP Inc. (HCP - Free Report) , all of which are expected to report earnings in the next week.
Note: All EPS numbers presented in this write up represent funds from operations (“FFO”) per share. FFO, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.
Zacks' Hidden Trades
While we share many recommendations and ideas with the public, certain moves are hidden from everyone but selected members of our portfolio services. Would you like to peek behind the curtain today and view them?
Starting now, for the next month, I invite you to follow all Zacks' private buys and sells in real time from value to momentum...from stocks under $10 to ETF to option movers...from insider trades to companies that are about to report positive earnings surprises (we've called them with 80%+ accuracy). You can even look inside portfolios so exclusive that they are normally closed to new investors.
Click here for Zacks' secret trade>>