Digital Realty Trust, Inc. Q2 FY26 Earnings Analysis

- Digital Realty has a strong growth runway with approximately 3 GW operating and an additional 6 GW owned, including 1.2 GW under construction, representing a near-term 40% expansion. - Development pipeline increased to $16.5 billion, up over 60% from year-end, with 60% pre-leased, indicating robust future revenue visibility. - Record leasing activity with backlog reaching an all-time high, boosting long-term growth visibility. - Core FFO per share guidance for 2026 raised by $0.10 to a range of $8 to $8.10, representing 9% growth over 2025. - Continued strong demand for hyperscale AI-oriented workloads in Americas drives expansion in key markets like Charlotte, Atlanta, Dallas, and Northern Virginia. - Expect 4%-5% same capital cash NOI growth and power-based occupancy improvement by 50 to 100 basis points. - Capital expenditures projected to increase to $3.5-$4 billion to support growth, accompanied by $500 million to $1 billion in planned capital recycling.

- Digital Realty raised its 2026 Core FFO per share guidance range to $8.00-$8.10, implying approximately 9% growth over 2025. - The company expects accelerated same-store cash NOI growth of 4%-5% for the full year on a constant currency basis. - Operating expense growth is expected to ramp in Q2 and Q3 due to increased development spending and capital recycling activities. - Long-term growth is supported by a record backlog of $1.8 billion in leases and a development pipeline of $16.5 billion with 61% pre-leased capacity. - Renewals are anticipated with cash spreads between 6.5% and 8.5%, slightly up from prior forecasts. - Capital expenditures net of partner contributions are increased by $250 million to $3.5-$4 billion for 2026 to support hyperscale growth. - The company is confident its platform and backlog position will deliver sustainable earnings growth into 2027 and beyond.

- Spent $910 million on development CapEx in the quarter (net of partner share). - Delivered 63 megawatts of new capacity; started about 464 megawatts of new data center capacity (~50% pre-leased). - Total development under construction valued at $16.5 billion, up over 60% from year-end. - Nearly 80% of development volume situated in Americas, driven by AI workloads demand. - Acquired 873-acre land parcel in greater Atlanta to support 1-gigawatt data center campus. - Acquired 30-acre land parcel in Hillsboro, Portland to support 160 megawatts of IT capacity. - Made three strategic market entries: Milan, Italy; Sofia, Bulgaria; and Cyberjaya, Malaysia, enhancing global connectivity footprint. - Increased overall growth capacity up to 6 gigawatts. - Completed $3.25 billion U.S. hyperscale data center fund; ~$10 billion available for hyperscale development. - Capital expenditures net of partner contributions expected to rise to $3.5 billion - $4 billion for the year.

- No specific new fundraising through debt or equity was announced in the provided transcript. - The company emphasized maintaining a strong balance sheet with leverage at multiyear lows (debt-to-adjusted EBITDA at 4.7x). - They highlighted having substantial "dry powder" within an $8+ billion hyperscale development joint venture. - A $3.25 billion U.S. hyperscale data center fund was completed recently, leaving approximately $10 billion to support hyperscale development and investment. - Capital recycling via dispositions and JV capital of $500 million to $1 billion is planned, supporting growth while managing leverage. - Overall, the focus is on disciplined growth and leveraging existing capital resources rather than new debt or equity issuance.

- Total backlog at the end of Q1 reached a new record of $1.8 billion. - Digital Realty's share of the backlog stood at $1 billion. - New bookings in Q1 were $423 million, exceeding commencements of $204 million. - Leases scheduled to commence: - $544 million ratably throughout 2026, - $247 million in 2027, - $242 million in 2028 and beyond. - Strong visibility over long-term growth driven by a scaling backlog. - Development pipeline increased dramatically to $16.5 billion while maintaining constant pre-leasing.