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Digital Realty's Q3 FFO Meet Estimates, Revenues Increase Y/Y
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Digital Realty Trust (DLR - Free Report) reported third-quarter 2024 core funds from operations (FFO) per share of $1.67, in line with the Zacks Consensus Estimate. This compares favorably to an FFO of $1.62 per share reported a year ago.
Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.
Results reflect healthy leasing activity and an increase in rental rates. However, the company witnessed a rise in rental property expenses and interest expenses in the quarter. DLR revised its outlook for 2024.
The company registered operating revenues of $1.43 billion in the third quarter, which missed the Zacks Consensus Estimate of $1.44 billion. However, operating revenues increased by 2.1% year over year. DLR also reported a "Same-Capital" cash net operating income growth of 0.8%.
According to Digital Realty’s president & CEO, Andy Power, "In the third quarter, Digital Realty posted over $520 million of new leasing, more than double the record set in the first quarter. Record leasing across both the greater-than-a-megawatt and 0-1 MW plus interconnection segments drove the backlog up nearly 60% above our prior record. Our backlog now represents over 20% of annualized in-place data center revenue, enhancing our visibility and positioning Digital Realty for accelerating longer-term growth.”
Quarter in Detail
In the reported quarter, signed total bookings were estimated to generate $521 million of annualized GAAP rental revenue, including a $50 million contribution from the 0-1-megawatt category and a $16 million contribution from interconnection. The weighted average lag between the new leases signed in the third quarter and the contractual commencement date was 15 months.
Digital Realty signed renewal leases, marking $258 million of annualized cash rental revenues during the July-September quarter. Rental rates on renewal leases signed during the quarter rose 15.2% on a cash basis and 27.5% on a GAAP basis.
Adjusted EBITDA of $758.3 million in the quarter marked a 10.5% increase year over year.
In the third quarter, rental property operating expenses increased by 12% to $249.8 million year over year, and interest expenses jumped by 11.8% to $123.8 million.
Balance Sheet
Digital Realty exited the third quarter with cash and cash equivalents of $2.18 billion, down from $2.28 billion recorded as of June 30, 2024.
As of Sept. 30, 2024, this data center REIT had $17 billion of total debt outstanding, of which $16.2 billion was unsecured debt and $0.8 billion was secured debt and other. As of the same date, its net debt-to-adjusted EBITDA was 5.4X, while the fixed charge coverage was 4.1X.
Its debt maturity schedule is well-laddered with modest near-term maturities. It has a weighted average maturity (assuming the exercise of extension options) of 4.5 years and a 2.86% weighted average interest rate as of Sept. 30, 2024.
2024 Guidance Revised
Digital Realty raised its guidance for 2024 core FFO per share in the range of $6.65-$6.75, from the previous guidance of $6.60-$6.75. The Zacks Consensus Estimate is currently pegged at $6.65, which is within the guided range.
However, the company lowered its expectations for total revenues in the band of $5.55-$5.60 billion, from the prior guidance of $5.55-$5.65 billion. The consensus mark is pegged at $5.58 billion, which is within the guided range.
Currently, DLR carries a Zacks Rank #3 (Hold).
Digital Realty Trust, Inc. Price, Consensus and EPS Surprise
We now look forward to the earnings releases of other REITs like Equinix (EQIX - Free Report) and Iron Mountain (IRM - Free Report) , slated to report on Oct. 30 and Nov. 6, respectively.
The Zacks Consensus Estimate for Equinix’s third-quarter 2024 FFO per share stands at $8.70, indicating a 6.2% rise year over year. EQIX currently has a Zacks Rank #3.
The Zacks Consensus Estimate for Iron Mountain’s third-quarter 2024 FFO per share is pegged at $1.11, implying a 12.1% year-over-year increase. IRM currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO), a widely used metric to gauge the performance of REITs.
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Digital Realty's Q3 FFO Meet Estimates, Revenues Increase Y/Y
Digital Realty Trust (DLR - Free Report) reported third-quarter 2024 core funds from operations (FFO) per share of $1.67, in line with the Zacks Consensus Estimate. This compares favorably to an FFO of $1.62 per share reported a year ago.
Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.
Results reflect healthy leasing activity and an increase in rental rates. However, the company witnessed a rise in rental property expenses and interest expenses in the quarter. DLR revised its outlook for 2024.
The company registered operating revenues of $1.43 billion in the third quarter, which missed the Zacks Consensus Estimate of $1.44 billion. However, operating revenues increased by 2.1% year over year. DLR also reported a "Same-Capital" cash net operating income growth of 0.8%.
According to Digital Realty’s president & CEO, Andy Power, "In the third quarter, Digital Realty posted over $520 million of new leasing, more than double the record set in the first quarter. Record leasing across both the greater-than-a-megawatt and 0-1 MW plus interconnection segments drove the backlog up nearly 60% above our prior record. Our backlog now represents over 20% of annualized in-place data center revenue, enhancing our visibility and positioning Digital Realty for accelerating longer-term growth.”
Quarter in Detail
In the reported quarter, signed total bookings were estimated to generate $521 million of annualized GAAP rental revenue, including a $50 million contribution from the 0-1-megawatt category and a $16 million contribution from interconnection. The weighted average lag between the new leases signed in the third quarter and the contractual commencement date was 15 months.
Digital Realty signed renewal leases, marking $258 million of annualized cash rental revenues during the July-September quarter. Rental rates on renewal leases signed during the quarter rose 15.2% on a cash basis and 27.5% on a GAAP basis.
Adjusted EBITDA of $758.3 million in the quarter marked a 10.5% increase year over year.
In the third quarter, rental property operating expenses increased by 12% to $249.8 million year over year, and interest expenses jumped by 11.8% to $123.8 million.
Balance Sheet
Digital Realty exited the third quarter with cash and cash equivalents of $2.18 billion, down from $2.28 billion recorded as of June 30, 2024.
As of Sept. 30, 2024, this data center REIT had $17 billion of total debt outstanding, of which $16.2 billion was unsecured debt and $0.8 billion was secured debt and other. As of the same date, its net debt-to-adjusted EBITDA was 5.4X, while the fixed charge coverage was 4.1X.
Its debt maturity schedule is well-laddered with modest near-term maturities. It has a weighted average maturity (assuming the exercise of extension options) of 4.5 years and a 2.86% weighted average interest rate as of Sept. 30, 2024.
2024 Guidance Revised
Digital Realty raised its guidance for 2024 core FFO per share in the range of $6.65-$6.75, from the previous guidance of $6.60-$6.75. The Zacks Consensus Estimate is currently pegged at $6.65, which is within the guided range.
However, the company lowered its expectations for total revenues in the band of $5.55-$5.60 billion, from the prior guidance of $5.55-$5.65 billion. The consensus mark is pegged at $5.58 billion, which is within the guided range.
Currently, DLR carries a Zacks Rank #3 (Hold).
Digital Realty Trust, Inc. Price, Consensus and EPS Surprise
Digital Realty Trust, Inc. price-consensus-eps-surprise-chart | Digital Realty Trust, Inc. Quote
Upcoming Earnings Releases
We now look forward to the earnings releases of other REITs like Equinix (EQIX - Free Report) and Iron Mountain (IRM - Free Report) , slated to report on Oct. 30 and Nov. 6, respectively.
The Zacks Consensus Estimate for Equinix’s third-quarter 2024 FFO per share stands at $8.70, indicating a 6.2% rise year over year. EQIX currently has a Zacks Rank #3.
The Zacks Consensus Estimate for Iron Mountain’s third-quarter 2024 FFO per share is pegged at $1.11, implying a 12.1% year-over-year increase. IRM currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO), a widely used metric to gauge the performance of REITs.