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Digital Realty (DLR) Q4 FFO Tops Estimates, Revenues Up Y/Y
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Data-center REIT Digital Realty Trust, Inc.’s (DLR - Free Report) fourth-quarter 2018 core funds from operations (FFO) per share of $1.68 outpaced the Zacks Consensus Estimate by a penny. The figure also comes in higher than the year-ago tally of $1.55.
The company reported operating revenues of $778.3 million for the fourth quarter, which marked a 6.4% year-over-year rise. However, the revenue figure missed the Zacks Consensus Estimate of $790 million. The company has reaffirmed its 2019 core FFO per share outlook.
Signed total bookings during the quarter under review are estimated to generate $44 million of annualized GAAP rental revenues. This would include a $7-million contribution from inter-connection. Notably, the weighted-average lag between leases signed during fourth-quarter 2018 and the contractual commencement date was three months.
Moreover, the company signed renewal leases, marking $138 million of annualized GAAP rental revenues. Rental rates on renewal leases signed during the quarter rolled down 2.6% on a cash basis and ascended 3.2% on a GAAP basis.
For full-year 2018, the company reported core FFO per share of $6.60, which compares favorably with the 2017 figure of $6.14. This was backed by a 23.9% year-over-year increase in revenues to nearly $3.05 billion in 2018.
Notable Portfolio Activity
During the Dec-end quarter, Digital Realty completed the previously-announced acquisition of Ascenty, a data-center provider in Brazil, in a transaction valued at around $1.8 billion. The company also completed the acquisition of 424 acres of undeveloped land in Loudoun County, VA, for $236.5 million. It is situated near the Washington Dulles International Airport, and positioned near bulk transmission lines and a major fiber path.
Digital Realty also acquired the freehold interest to Sovereign House — a 96,000-square-foot multi-story property — neighboring its Meridian Gate data center and Lawn House parking garage in London for £40 million, or around $51 million.
Moreover, the company acquired a seven-acre land parcel alongside its present holdings in Osaka, Japan, which is likely to support the development of up to 25 megawatts of critical power. This acquisition was made for ¥500 million, or approximately $5 million.
Balance Sheet
Digital Realty exited 2018 with cash and cash equivalents of around $126.7 million, up from the $46.2 million recorded at the prior-quarter end.
Additionally, as of Dec 31, 2018, the company had around $11.1 billion of total debt outstanding, of which $10.4 billion was unsecured debt and around $0.7 billion secured debt. Also, as of the same date, its net debt-to-adjusted EBITDA was 6.2x, while fixed charge coverage was 4.0x.
Outlook Reiterated
Digital Realty reiterated its 2019 core FFO per share outlook of $6.60-$6.70. The Zacks Consensus Estimate for the same, currently pegged at $6.64, lies within this range.
The full-year outlook provided by the company is backed by revenue projections of $3.2-$3.3 billion, year-end portfolio occupancy growth of +/- 50 bps, and "same-capital" cash NOI growth of +/-2.0%.
Our Take
Solid fundamentals of the data-center market help Digital Realty ride on its growth curve through accretive acquisitions and development efforts. The company also focuses on maintaining an investment grade balance sheet, enjoys ample liquidity and has a well-laddered debt maturity schedule.
Nevertheless, the company faces intense competition in the industry. Amid this, aggressive pricing pressure might continue in the upcoming period. Furthermore, the company has a substantial debt burden and hence, rate hike adds to its woes.
We now look forward to the earnings releases of other REITs like Medical Properties Trust, Inc. (MPW - Free Report) , Macerich Company (MAC - Free Report) and Ventas, Inc. (VTR - Free Report) , which are slated to report their quarterly numbers this week.
Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
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Digital Realty (DLR) Q4 FFO Tops Estimates, Revenues Up Y/Y
Data-center REIT Digital Realty Trust, Inc.’s (DLR - Free Report) fourth-quarter 2018 core funds from operations (FFO) per share of $1.68 outpaced the Zacks Consensus Estimate by a penny. The figure also comes in higher than the year-ago tally of $1.55.
The company reported operating revenues of $778.3 million for the fourth quarter, which marked a 6.4% year-over-year rise. However, the revenue figure missed the Zacks Consensus Estimate of $790 million. The company has reaffirmed its 2019 core FFO per share outlook.
Signed total bookings during the quarter under review are estimated to generate $44 million of annualized GAAP rental revenues. This would include a $7-million contribution from inter-connection. Notably, the weighted-average lag between leases signed during fourth-quarter 2018 and the contractual commencement date was three months.
Moreover, the company signed renewal leases, marking $138 million of annualized GAAP rental revenues. Rental rates on renewal leases signed during the quarter rolled down 2.6% on a cash basis and ascended 3.2% on a GAAP basis.
For full-year 2018, the company reported core FFO per share of $6.60, which compares favorably with the 2017 figure of $6.14. This was backed by a 23.9% year-over-year increase in revenues to nearly $3.05 billion in 2018.
Notable Portfolio Activity
During the Dec-end quarter, Digital Realty completed the previously-announced acquisition of Ascenty, a data-center provider in Brazil, in a transaction valued at around $1.8 billion. The company also completed the acquisition of 424 acres of undeveloped land in Loudoun County, VA, for $236.5 million. It is situated near the Washington Dulles International Airport, and positioned near bulk transmission lines and a major fiber path.
Digital Realty also acquired the freehold interest to Sovereign House — a 96,000-square-foot multi-story property — neighboring its Meridian Gate data center and Lawn House parking garage in London for £40 million, or around $51 million.
Moreover, the company acquired a seven-acre land parcel alongside its present holdings in Osaka, Japan, which is likely to support the development of up to 25 megawatts of critical power. This acquisition was made for ¥500 million, or approximately $5 million.
Balance Sheet
Digital Realty exited 2018 with cash and cash equivalents of around $126.7 million, up from the $46.2 million recorded at the prior-quarter end.
Additionally, as of Dec 31, 2018, the company had around $11.1 billion of total debt outstanding, of which $10.4 billion was unsecured debt and around $0.7 billion secured debt. Also, as of the same date, its net debt-to-adjusted EBITDA was 6.2x, while fixed charge coverage was 4.0x.
Outlook Reiterated
Digital Realty reiterated its 2019 core FFO per share outlook of $6.60-$6.70. The Zacks Consensus Estimate for the same, currently pegged at $6.64, lies within this range.
The full-year outlook provided by the company is backed by revenue projections of $3.2-$3.3 billion, year-end portfolio occupancy growth of +/- 50 bps, and "same-capital" cash NOI growth of +/-2.0%.
Our Take
Solid fundamentals of the data-center market help Digital Realty ride on its growth curve through accretive acquisitions and development efforts. The company also focuses on maintaining an investment grade balance sheet, enjoys ample liquidity and has a well-laddered debt maturity schedule.
Nevertheless, the company faces intense competition in the industry. Amid this, aggressive pricing pressure might continue in the upcoming period. Furthermore, the company has a substantial debt burden and hence, rate hike adds to its woes.
Digital Realty currently has 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 now look forward to the earnings releases of other REITs like Medical Properties Trust, Inc. (MPW - Free Report) , Macerich Company (MAC - Free Report) and Ventas, Inc. (VTR - Free Report) , which are slated to report their quarterly numbers this week.
Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It's not the one you think.
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