Digital Realty Trust, Inc.
CEO : Mr. Andrew P. Power
Quarterly earnings growth(YoY,%)
| Period | Revenue | Operating Income | EPS | Release Date |
|---|---|---|---|---|
| 2022 Q4 | 11.0% YoY | 7.5% | -100.5% | 2023-02-16 |
Andy Power says,
CEO Transition and Strategic Priorities
- New CEO introduces strategic priorities
- Focus on strengthening customer value proposition, integrating and innovating capabilities, and diversifying sources of capital
Q4 2022 Performance
- Core FFO landed within the guidance range
- New lease signings remained strong with a rebound in 0 to 1 megawatt segment and record interconnection bookings
- Geographic demand was broad-based across APAC, Americas, and EMEA
- Added 106 new customers, including Avnet, a leading global technology distributor, and solution provider
- Pricing on new leases signed increased for the fourth consecutive quarter in 2022, along with positive leasing spreads on renewals, supporting a positive inflection for the full year 2022
Investment Activity
- Sold 25% interest in Frankfurt data center to digital core REIT generating $150 million in proceeds
- Acquired land in 5 different metros for future development, including new market entries in Rome and Akra
ESG Progress
- Recognized by NAREIT, Sustainalytics, Newsweek, and JUST Capital for ESG success
Outlook
- Demand for data centers remains strong and is supported by ongoing digital transformation and migration to the cloud
- Growth in high-performance compute infrastructure may spur the next wave of demand with the introduction of AI, driving demand for compute infrastructure at scale
- Market conditions are expected to remain supportive with a further inflection in positive pricing trend
Greg Wright says,
Demand for stabilized and development JVs
- Private markets have a strong bid for these assets due to their quality
- Stability of the income stream and creditworthiness of customer base contribute to the demand
- Data center space has seen a significant rotation from private capital
- Pricing has held up and recent transactions indicate strong value
Cap rates for non-core asset sales
- Caps rates will vary based on the specific conditions of each asset
- Previous non-core asset sales totaled $2 billion with roughly $1.5 billion remaining
- Cap rates range from 0% to 10%
- Land sales have a zero cap rate
Q & A sessions,
Positive pricing dynamics
- The pricing pendulum has been moving in favor of Digital Realty for several quarters, primarily due to supply and demand and the company’s value proposition
- The less than 1 megawatt category led the way in revenue; however, the greater than 1 megawatt category has also moved in positive territory, resulting in the first overall inflection to positive territory and cash mark-to-markets in several years
- For 2023, the company is guiding towards the best cash mark-to-market inflection in close to 10 years for its business
Three-point plan
- Demonstrably strengthening customer value proposition by harnessing the full customer spectrum with a diverse array of capabilities to deliver on a global scale and consistency with true local expertise to accelerate pricing power, internal and organic growth
- Integrating and innovating with a focus on completing integration work and digital transformation to make it easier for internal and external customers while advancing on innovation for connectivity and the physical infrastructure front
- Diversifying and bolstering capital sources by completing non-core disposes and expanding private capital partnership programs for both stabilized and development hyperscale assets to enhance capital efficiency, accelerate growth and returns to digital shareholders
AI-related applications driving incremental demand
- The impact of AI on the demand for data centers is expected to be significant as AI continues to gain traction and more businesses adopt AI-powered solutions, resulting in an increase in demand for data storage and processing
- A few examples of AI-related applications that could drive incremental demand for data centers include autonomous vehicles, virtual reality, and personalized medicine
Power delivery constraints in Ashburn market
- The incremental power deliveries into the Ashburn market, the largest and most robust in the world, are expected to be restrained for several years
- The company is confident that it can deliver on customer commitments, which represents almost 80 megawatts in its development cycle and is optimistic about being creative in terms of bringing on some incremental power deliveries in this bottleneck period
Three-point plan
- Demonstrably strengthening customer value proposition by harnessing the full customer spectrum with a diverse array of capabilities to deliver on a global scale and consistency with true local expertise to accelerate pricing power, internal and organic growth
- Integrating and innovating with a focus on completing integration work and digital transformation to make it easier for internal and external customers while advancing on innovation for connectivity and the physical infrastructure front
- Diversifying and bolstering capital sources by completing non-core disposes and expanding private capital partnership programs for both stabilized and development hyperscale assets to enhance capital efficiency, accelerate growth and returns to digital shareholders
No bad stock 