DLR - Earnings call transcript Q1 2018 | Digital Realty Trust, Inc.

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Operator

Good day, and welcome to the Digital Realty's First Quarter 2018 Earnings Conference Call. All participants will be in listen-only mode. Due to scheduling constraints, this call will be a concluded after 60 minutes. Please note this event is being recorded. At this time, I would like to turn the conference over to John Stewart, Senior Vice President of Investor Relations. sir. ahead, go Please

John J. Stewart

SVP The be and today's assumptions. guidance Investment CFO, Chief may the -looking Sharp; Peterson; Denise. Papes forward Marketing, CEO, also make for are Officer, will the Q&A. Bill and and on and Chris Officer, Stein; Andy and Technology including Sales speakers you, underlying & call Dan will on call be Scott of available Thank statements Power. management Chief The

that involve actual expectations and statements uncertainties materially. cause on Forward-looking are could risks results that based differ to

furnished business discussion our the on available For risks contain to the a further to of website. call our package are This and related non-GAAP with the to filings SEC income our information. Reconciliations in net see and subsequent financial will XX-K included SEC. supplemental

turn results. I hit to our tops Before CEO, our call to I'd first the Bill waves like Stein, of on quarter the the over

new of bookings a First with $XX we of quarterly north all, set high watermark million.

beat end. Second, low out guidance the at consensus consistent by $X.XX we've operational driven performance and by raised we nearly X%, by

over Third track to least, self-funding AFFO achieve deliver maintaining growth race, that, beat share cash but per with to Bill. Last And in through internally turn while our I'd growth operations XXXX. double-digit we capital we to remain expect through flow XXXX from like and target not sales. to call asset generated the and in and leverage plan our to cash on proceeds flow to from this flows

A. William Stein

in Investor shareholders leading weeks, sound In with to Bob on three ability comprising up that our bylaws. Day of our pleased Director, we will March, for to a of X resolution X% Meeting board our corporate right group little shared governance, Shareholders all a Good amend plan with begin our be December, the shareholder us. with our afternoon, providing any our for you joining at the XX giving less to I'd longtime coming and approved REITs to that small our any page industry Annual here to not the report practices. today I'm X% stake that refreshment, to in to keeping a John. a high-quality early on board in joining presentation. thank with believe group ongoing up the you step, a discussion shareholders like disclosed we of this for bylaws. Thanks, and with re-election We or also than other Annual standing governance our Meeting. At commitment two we are propose the for proxy binding company's in Zerbst amendments years With

extend of the and fresh first is service thinking our predecessor for governance GI entire philosophy Partners, of approved. principle XXXX board board CBRE In the Compensation years. past of from the of a addition to on at also role the Chairman Investors, Committee Chairman as I'd our to our to like balancing investment XXXX, Bob board, On and to our thanks as initial four perspectives the He investment when Investment internal equity representative and board, served behalf his Bob The with Committee was on behind years his the in to experience committee new refreshment for private the company. continuity. was

and the sustainable stock, since I paid required We maximize majority long-term the tied compensation our business our all maintains directors' also finally joined directors board years, the IPO. are shareholder a has directors Bob's cooking our six the long-term value de-staggered board X the each Chairman to maintain return. remind ownership requirements board served of have substantial relative our stakeholders. past our plan and our Chairman and in of to who own you of the Following would majority both in is on have to minimum been company, within departure, a like XX since the that whereas investment former of we we in creation management XXXX, to manage believe for senior eating total the incentive stock sizable management's meet compensation and board,

on investment activity. Moving to

have $XX We realizing little year-to-date, of already million. non-core million seven the a proceeds $XXX and sale closed over of on assets of gains generating approximately

ability our has our of XXXX for on million plan. Andy range raise his $XXX prompted our remarks to self-fund capital As an bolstering consistent in will program our us this the additional further address prepared dispositions capital high-end to execution recycling by guidance

active megawatts we Ashburn options holdings also XXX of in land market XXX competitive of lot as metros from metro state-of-the-art most capacity. By to to North in acres is megawatts new world. sufficiently of It In market that blessed provider entrants. choose players both and Let's dynamic support have is which Realty's XXX well of construction the across data the and Digital on primary concentration to highly and The and to the will to is center in is are our robust two however campuses remain X. demand largest diverse turn addition as lift existing future particularly boats. have established same customers market by both build-out of center capacity another the strategic token in a data plenty of largest Virginia, the fundamentals America far on Northern crews active page

dominate not the vacancy with On online, of being center to New is a in quarter as driven by full standout estimate in but Realty each metros balance, expanding megawatts of equilibrium is Amsterdam a across London supply XX% largely deals, leasing quarter locations, on landscape followed North first is absorbed. just signed major the national the shelves now in that have the the approximately XX terms data hyperscale by over region and might dot. released Digital first but in roughly complement at we data this were have representing the the American customers rapidly rate quarter users as tables inventory quarter restock coming in Europe. you first volume. active metros of did continue of center hyperscale league We XX% particularly Frankfurt. the existing did In a at Europe and expect

start DuPont the our also a off a having deployment in second quarter April, with are X to global in strong legacy first in landed We megawatt a deployment top Fabros customer. Amsterdam

the several We see expect Europe further in momentum over next to quarters.

and looking tied expand ability with within terms the up signs by early for as region lines behavior, users current customers our Across strategy. Western of location, land same Connected the flexibility are is very of destinations. perfectly acceleration both and driven showing commitment further to which Asia-Pac Campus to demand even In the hyperscale region, within healthy and long-term buying the as remains well

given product of differentiator entry to has which coming remains unproven several sizeable customers to in not data creates view supply barriers prompting demand Net-net prospect the highly to remained of center new new interconnection choice. supply comprehensive a teams. in new said, market. platform as power While requirements of rental we and our is geographies their key potential and The space, are marketplace potential offering selection rate to for fragmented, growth largely That global yet provider new believe our translating check, entrants markets. especially explore dynamic healthy

hyperscale page Much take profitability and Let's our of and of made X. ado the on returns. has turn pricing recent been to pricing I'd moment philosophy to the demand and spate like intersection the share on a on activity of supply to and

X-axis our Along targeted we that and the on stands risk we've as underwrite project accept that would new-build. here on the like to is a outlined It attributes reason we've long-term high new-builds. lease always to a foremost, adjusted would superior primary opposed to a on First I fully returns. return remind page speculative tenant be X, you that to lower pre-leased willing credit a we to somewhat a risk

intuitive be cost In lowest as addition, achieve scale the be. building to may the by able unit it hyperscale, we're that or at case should

lower Finally, denominator shrinking down customer equation. drive for build to return the higher density us have evolving enabled and redundancy costs, preferences the in power

respectable Unrealized risk that above and represent a consider cost returns adjusted spread to still The quite we we a a acceptable As of returns our capital above are hyperscale on also represent spread result, meaningful achieve very builds. pipeline are flipping holdings, on rates. current our returns for able have pipeline we able are since achieve no shareholders. core intention development we value are theoretical, profit cap our of we somewhat to that our the current on development confident margins but significant creating are

to more by quite data gaining number than momentum. will secular remains to of global The nearly page to seem that backdrop the data for long-term forecast hyperscale Index center be Cisco trends environment account X. supportive demand Global data become Hyperscale will by centers double economic the installed the Let's has facilities, heritage Cloud projects data and the centers the all XXXX. future half of Cisco meet within ecosystems. the evolution turn XXXX. Digital and that macro of on data center will The driving of design also XXXX quadruple data traffic for which servers in XX% hyperscale expertise will be this XX% hyperscale will officially Realty foundation demand. and by of compute the the centers housed and

to over Exchange Service access be to secure, the expected five SaaS facilitates applications. the years popular cloud model service most Realty's and Software-as-a-Service critical Digital is private next

is Campus, validating that, an service we Google customers and data continue world's tailored of the a from critical across large offering We as with Connected networks choice Cloud's Digital provides Partner the deployments global Cloud just our to Google service in reach our ability one partnership resulting Earlier Google the was and great to on to growing customers of later enterprise cloud, verticals, Interconnect global on-premises new that Cloud from and growing for we metros to of brought reaching and comprehensive this public exchange Campus a product year to forward. support Realty power centers Cloud customers. supplier our solutions With healthy effect that highlight results. Google building buyers extend global solutions, It and take to for a infrastructure. going deliver year. additional call Digital week, like our Platform, forward largest see as look their Platform our this private with most connectivity start custom to to a platform, Andy and and for to full our new in cloud-based growth. with these connect through of to financial stakeholders, to from Google solutions the the and set turn further Power our continue demanding I'd standard a Interconnect, our along and launched clients on all to and growth anywhere. The believe our Connected markets for we to for international Multi-region role sales given online Google service multinational the stability. are center data nine allows our be you Cloud The We with network services operational momentum are private over customers Partner Realty and platform position setup financial will the announcement offering signaling the suite to from sustainable largest capitalize broad enable favorable Platform demand this the well-positioned all particularly offerings. of

Andrew Power

Thank you, Bill.

balanced and leases first a with lease the delivered lease here We We approximately five in for our X. past million, and of marks quarter signs $XX first every term a This bookings including we've space the eight new The We the month years. million signed colocation the the saw leasing on during million. fourth across interconnection. leases contribution bookings $X average power quarter power $XX quarter contribution. of performance weighted out begin signed totaling space north from during million first the of Let's quarter, and was signed total including page on for activity, quarter. of $XX robust $X first million

global with We from the strong of as customers logos of leading new customers in current new Ashburn remains as signed cloud demand are quarter. the seeing us. A with many service that and during expanded a strong, XX technology Demand couple we well cloud with provider quarters us market. cloud with just in providers after us Chinese first landing service leading and expanding across

and broad pleased are landing customer with in segment, engagements. We our progress enterprise the diverse

that track Cancer data access one as secure entertainment Virginia Realty; Digital as operational and in into higher of Realty applications new and complex and help example, customer to they business Research operational financial of market selecting three application. Phoenix. and Realty National a interconnection capacity future largest reasons proven the excellence capacity selected for when record of of helping immediate of and A quality speed be another of product the our support make Northern will has leading center to Their enterprise content needed world's on the For in quality edge media ease rapid back-end their will well our personal based and from Institution The cited campus And financial cloud-connected red-hot critical consolidate companies provider our track migrating reside to is delivery, and technology needed resiliency; contracting. finance where solutions. storage progress company environment selected everyone density our Digital our their record focused proof systems to growth. within racks on Digital us;

across while and for America data an as activation any and complexity live the expansion. securely center directly point Street ecosystem the media reliably world's extremely to in channel center company operating Digital The video the end users. TV customers of We a stock solve solutions Atlanta utilize of any associated in strength one on two their connecting MOBITV as delivering MOBITV acquisition the network awarded North see our managing connect One deployments. highly required result U.S., and in connected networks, on-demand our delivers was device. XXX screen oldest to content this location exchanges segment. Marietta rights. Realty XX anywhere and media chose to anytime acquired video connected continued data a to systems devices William of of

in a of subsector the in continued multi-site telecommunication network, one Our in expansion for global Internet including first in subsectors, demand and and backbone indicate carrier with the demand largest delivery colocation quarter interconnection major wins provider, U.S. scale network content to addition strong infrastructure-as-a-service service providers infrastructure the the

partner continue and referral us Our strategic customers. a source of drive channel growth help and programs to alliances new provide

solutions traction customers. We the who include with they partners capabilities to offer want their into are gaining our

a partners, partnering offer helped with to interconnection migrate We alliance service capabilities. IT solutions technology and customer colocation our Insight's one dated a a perfect Insight overall architecture refresh. For part example, were an of as our from of with paired fit product

their to one the embed to able So have been of strategic direct our customer products capabilities across allow our customers IBM, win comprehensive got first to alliances, to their directly one we solution. With connect first enhancing vertical. enterprise their Through penetrate solutions partnership, strengthening cloud our services. ability campuses our quarter, to our domestic for drove during customers cloud infrastructure and ecosystem, throughout this we internationally our the the and

we program calls, our to substantial previous alliance our programs. sell-to upside for on customers referral, meaningful partnership and and our opportunity discussed we've for As business create our see sell-with partners and over time through

are we continued We results and with pleased the in expect XXXX. growth to-date

project experience. remaining terms alignment remain IT the and avoid tasks. we organizational In and on operations out progress some solid areas of synergy are of winding related focused all are completed The disrupting so Fabros efforts items closing their customer to targets, outstanding DuPont as but activities to intentionally primarily integration, merger with to A related delayed achieving IT functional down. number plans made have towards the our we've our

completed accounting, of We and consolidation finance customer to of through and $XX the million continue on integration all We or will exceed our track bulk year-end. portal applications we by year. loose the tied with the wrapped HR up to we meet the work migration related to ends remain will target the synergy on continue expect network and have of successfully quarter and up second expense end be completely our during the activities migration

backlog lag and signed backlog six scheduled of The later reflecting for all-time leases signed, The high currently commencements between weighted page our under for and commenced $XXX this signings million. space delivery year. but first largely X. to yet reached construction not months Turning average was on current quarter of an

renewal Moving still types. on have lease renewals during first page DuPont cash leasing portfolio, rents average signed market rolled positive and the leases we We to most $XX Fabros the with years million above on addition on leases across notably do within renewal signed. new all re-leasing in product across spreads X% properties. of X, up a renewals leases former to activity term few cash weighted over four was the quarter on The

result, in a for full push red. our XXXX. cash negative for year slightly cash of As any This signed mix the quarter spreads leases guidance releasing given in our reflected the mark-to-market into renewal the could in is

ago, an as overall our a quarter in their points quarter, year last where along Chicago churn Similar over due this in of colocation Boston terms of we be In consolidating center portfolio Boston portion in like is expand product to first customer data little of placed to operating dipped indicated portfolio, within service we our space back projects XXX a space a basis with performance, to event combination a opportunities a will to footprint. other XX.X% took occupancy offering. enterprise the sequentially development repositioned our

the occupancy change. rebound XX% essentially portfolio to year expect quarter, finish also and beginning We and second to in the flat at

the XX. Turning the slight FX on on to rise continue in mitigation dollar during than first hand the debt and target other page. represented U.S. growth as quarter results. our to outstanding. of shown we debt the continued first of we of to less way quarter as economic XX% year-over-year the of end variable Interest the first reminder, at the quarter first were soften our to tailwind risk a rates during bottom And quarter. on The total of By XX% page rate at the

X% XXXX our a matching would share. is point refinancing of well-managed. and our debt, have XXX very risk Given believe a per long-term our move long duration strategy We in assets, lived funding our impact just FFO basis near-term LIBOR of the fixed rate on

was share FX. and internal The forecast driven up XX. Turning upside relative consensus. on primarily came Core $X.XX operational year-over-year was in to X% favorable our by above outperformance per growth and to FFO earnings page

are drivers press a we the asset XXX million except the $XXX offset FFO of the another same-store guidance in from guidance may low share of release, have basis by and range our of you by XXXX FX updated core Most the seen As $X.XX. end end raising of the increase are point per of low partially unchanged for assumptions, for sales. range the the

on of loss fourth rate, share X% cash quarters we from to to double-digit slightly quarterly sales flow in distributions has terms the we expect in approved on cash AFFO We grown be you timing March, remain XX investments before public AFFO a growth dividend in in second I John dip the to every and the guidance, our like dividend. share offering This flowed and page G&A the deliver that leases the to we and line rebounding the have have board recent raised asset see in initial each likewise to growth track sharply and and In as of FFO from flow our give as the early since not to select The share point year NOI increase mentioned, XXXX. third but per the the year as bridge would the per we run marked of among REITs commence. are down of dividend and XXth through typically our straight explicit through to in a per pleased large to group XXXX. do can quarter in due flows the several beat to on out shareholders

debt-to-EBITDA quarter first on the the balance fixed page times XX. X.X X.X at and slightly sheet the coverage to stood let's ticked charge up times. end of to Net turn Finally, at

largely mentioned from structure cash in of Our asset with an ability over and $X operations assist affords self-fund Bill the capital earlier. from cost sales, to development flow XXXX the billion spending and us

commenced target as XXXX benefit rate cash additional result, leverage are debt, to the coverage to continue DFT down are for full our to expect from and need a used As throughout without equity proceeds throughout pay the levels sales common our as year. grow asset synergies the we maintain leases of realized signed and flows run

of rate is chart against for debt our over hedge the and is XX% debt approximately natural investments see Over the acting recycling. maturity is you rate debt coupon years our a XX% rising dollar unsecured page U.S. nearly, outside five can approximately of flexibility from weighted X.X%. average As denominated environment the weighted guard XX, fixed our the XXX% as non-U.S. is greatest to A FX on and little debt capital average of providing our is for

will duration an sheet our with actively longer that financings the our the across of to We eye side support right asset. continue manage currencies balance towards

side Finally, have as with and of you near-term out we maturities in no a too clear can left see bar the XX, nominal runway tall years. debt the from page

our to begin would to is long-term sheet we globe consistent storm to take balance growth feel concludes session. also the weather Q&A a questions. will poised customers our for be with This positioned you our remarks Our strategy. and financing but opportunities the please pleased your around prepared now Denise,

Operator

Power. My pleasure, Mr.

your one We will one and to now We that questions ask session. question-and-answer limit begin the you follow-up.

The go first question ahead. from Markets. of Jordan will KeyBanc Sadler Capital Please come

Jordan Sadler

Thank afternoon. good you and

I past more just of gotten few of, regarding seems you looks pace X. best First much top the leasing it the quarters, remember. like can over happens to like on healthy I this stable one it page pretty out, pointed two lumpy quarters But as this on the but strong quarters. leasing, say comes has think of And one

but is bias, so volatility would it forward going on execution, be volatility curious what I'm the And see or so congrats and will increased upward we downward? the if

A. William Stein

Jordan. Thanks, Hey.

obtain know you We're guidance. we're pleased don't But our going that give question with to your change as trying might several sense bookings the You over past bookings quarters. guidance to we you're and I trajectory not the from policy. imagine,

a record this We've in correct, You're mix logos had strong very and quarter. products, volume, also great is geographies. a

have confident current momentum. volume growth would that our as expect of that of and on and we term the the bookings like can very long keep obviously how is it. We're I we we quarterly build would trending are to the months, business, recent that's in growth confident XX last the follow been over so back look you If up that business, the will funnel healthy

Jordan Sadler

momentum to a and but well, the development appear just you're seems developer gaining sizable which of as a things also costs, of could costs speak then to And some pipeline be quite and scheme as you increased manifest the moving construction cetera. to skilled to rising tariffs in labor can construction maybe be demand, on Okay. function you sector come rising center How come rents next portfolio customers expect the years, demands themselves returns to your over in et do a data do to these costs the down, couple construction lot, what increases bear up going will or of the are because you in think?

A. William Stein

me question Let that apart. break

been think of of that I value think say, job difficult I be the first real we've much So an affecting it's but because taking of to of going residual out all, without of more out cost to designs, I the estate. our the will take doing excellent costs product,

our We inventory. something VMI vendor which program, put have in stands called place managed for

to We And pricing have lock module. suppliers. been a is like that before in able in three-year items UPS that were place major for generators, where all And of place. put contract in tariffs the put place importantly, for our that major we've we switchgear, in is, what

affected next for least prices. years won't at pricing our be So rising steel three the by

a has only yield I of inverted environment it's the but, has sheet that we're balance the competitive curve. an factor environment that in the our important everyone call keep sheet. with the that not an to for rising an currently, Andy mind I distinct gives way rate just managed on us not data other debt, in the think think investment-grade the center is advantage cost And company balance a but only that's

see out contractors buying very think been one our our de-risk of in a the debt fixed It's funnel and busy most of sales and it's certainly bulk. been of that able for having we to another global labor quite So benefits We've inflation period termed a keeping the also I site. is and will by on time. of

In that markets, data we most costs think affected years. also what's to think we to land, Silicon build in see in of restriction affect going think certainly it We In NIMBY center will which about barriers you and few in if in you it's Loudoun a think we're and entry. a entry, that's see directly some in going terms to by County Valley And supply. the today backyard. not sentiment, we costs to debt see my barriers represent a rents, higher

in I while you're exception growth see the very Valley, near with don't think term. that, So going the Silicon necessarily to rent of

I it the intermediate definitely over you'll see think term. that

Operator

The be RBC. Please next of question Jonathan Atkin ahead. will from go

Jonathan Atkin

Thanks.

having a you're to a bit customers, developments. volume on levels? question or you're the So, or types forward, by you most or The Thanks. appropriately of about would little demand. the And scale kind of to that following of interested pipeline, given that about to seeing the out seeing in of seems are customers be rebound region, by a back sort work-in-process that is the more of And in just consider last are requirements development doing answer feel broadening to the deals? accommodate and kind demand there, what staffed a XXXX you demand scale do demand upsized then, you the basically either traditional vertical going by that of megawatt

A. William Stein

I'm and this there anchor Andy top back will we'll that say, of definitely is question, there one, out we're we but you have I lumpy social more years, more seeing we're though that it seeing on upside. don't going for that question And on we multinational balance to out us. tell part It's If Jonathan's? the and of I balance, than Amsterdam bookings. with If of looking CSPs. I'm last I Jeff, we part first in the of seeing need million. that, grown one. that global of based question and we over our and and X-megawatt out one, this cloud, media, it's depth than of it SaaS be U.S.-based to on CSPs, see on Maybe pipe, of it. of the that of seeing very quarter The take be of requirements definitely and month. that it deal nevertheless, confident we your mentioned level the would business the We to handful to in at on larger a hardware we're take take But players But and and breadth encouraged what requirements second major would – also year that we're I'll demand store ask hit companies. why we're you several software forward what broader. the every but the the has second in going several one, it Andy, I've the calls, see not just can said just will a don't in that Jordan's least $XX that volume out to the that question still do the you transaction by demand both signed this have of the But the say announced downside. hit get we're you of

Andrew Power

Sure. Thanks, Jonathan.

as and So to first-hand seen as here related competitors fine of the from up at cadence, your best capital have very the development we're experienced and line in a a best planning doing supply our company. demand our the to we I we've a question our history appropriately It's would we've very robust pipeline. and obviously can. function the regular line that Digital say we stocking with

a that do markets to really harder grow those to customer a have smaller we to think you for I adjacency wins many a base have advantages or translates preference incremental on that their loads, fronts. When to large looking think with competitor provider existing it's grow a new into installed I is in in that some attack. competitive

ended obviously at north also of speculative That's XXX by in capacity our some pre-leased. look you pipeline development XX% total, activity. it's pre-leased almost and fully book If megs,

look at tell with you of delivery it, Virginia, can almost XX which that we're lining that's and north call customers with is XX% just north timelines megawatts isn't Northern our pre-leased, of in megawatts, preleased, to playing in of the their XX that terms If megawatts schedules. I Tetris remaining, XX you move

definitely the fine line right balance have we I we're now. tiptoeing So, that right think and for

Operator

Please of Company. Cowen The next go from Colby will question Synesael & ahead. come

Colby Synesael

the That's could was in some Brazil. was there integration there I then for your retention about been. some are color – your I be particularly including that what was XX%, guess, with and going it's is out news expectations could assets for it – you, disclosures. some Thank largely in, DuPont wondering if where sale, One, you. you. some you below Great. would secondly, be. what's to out curious behind your Thank behind then your forward typically And appetite what that there with as believe, I M&A, provide your ratio I just

Scott E. Peterson

take M&A Scott Colby. Yes, part Hi, look of opportunities. first for the that continue other we to question. here. Yeah. I'll

As we're you know, there out out or not that's market. looking there at on the everything even

but strategic good be have that shareholder our As we're those opportunities be to we us, we of on stewards to focused value capital and going some always, as pursue are always, as opportunities. disciplined

A. William Stein

couple you two. or lofty less they Hey, up a at were And Colby, Andy, some down just look to I are recent add with prices where think I share occurred, When might make And which at margin where the think valuations. question? fairly near-term. the today the the M&A less may where of want to they're from quarter would pick there do on the likely. that of were that you And you that, and trades multiples, argue be that second obviously though. that part that M&A

Andrew Power

Sure.

largely pointing churn. product, think retention you assuming I the So on some TKF just to Scale were related sub-XX%. That the to was

ago or called enterprise I looking some out to an call market the quarter Boston consolidate in two customer a think we'd capacity. was that a

say an back opportunity our colocation offering a particular. capabilities the space and in is customer other campus. moving all and into a to and By larger provides would bad Now take and re-productize in Boston churn than large, episodic market we That customer events thing. where churn do expand that a grow with not footprint colocation here outgrowing some wants to from on the a environment just and us traditional there, positive is have I

domain, capacity. north their those of can part And the So very record, this on major had, call quarter another be low a colo churn the a from maybe to but of not high other retention it on actually we XX% event. positive portfolio moving one product retention, actually customer side,

Operator

Flannery will ahead. Morgan of be Please go Stanley. question from The Simon

Simon Flannery

Thanks Okay, great. much. very

the of you confidence in any Any are themselves to So you they spending a versus of outsourcing tax you the might year? And doing more talked about side in others in seeing something the in benefit that Are mix Thanks. of or any terms times. the you using think hyper-scale for build? on on IM there pipeline later in change it, is there reform or what that expansion? enterprise what few self-performing, healthy between from is they're terms feather

Daniel W. Papes

the the Papes, Simon, you're From Hey it's for thanks right. question. perspective, pipeline Dan

related it's the directly pleased be is like we've or no termed demand no to here in the Simon. quarter, can't second the a the as second enterprise sales obvious in the It that small discussion think take tax remainder but As pleased look seeing Thanks, our about Andy done a tax I'll today, our question. being a that it's the to CSPs may at year. to job reform. but team, we any trace and just back trace back there's with with we of really factor it great there We We're healthy. nothing We let there, it it. we're very We're just really take of by see. to from reform. really

Andrew Power

Sure.

come. space in on come even especially connectivity trend also and we've do-it-yourself a customers where Realty, offering well-capitalized have look their X X in we to megawatt megawatt the X largest size, where years were holdings mix can the I allow to several and to we land grow that for to had signings portfolio X in terms from power business major the and megawatt the a have of of think highly In to markets seen sophisticated, terms at seeking side of versus of signs a that technology the product by the provider more in the to megawatt. just across Digital our full professional quarter to large like I for this very several Digital we

megawatt highest, center and that for a service to platform enterprises own could it capabilities customers, the I was five to of the ability other customers, think different was deliver global X.X our they've megawatt. have cloud in multinationals, data we come large in sophisticated them. total providers, their from U.S. to the top And us X build smattering

Operator

go will next from of question Please The Rollins ahead. be Michael Citi.

Michael I. Rollins

taking Hi. was questions. Thanks back go I if One it in deck. to, you for slide the Couple X things could. if I the think is,

And portfolio? XX% that into this the for fits yields XX% And current how of Digital You yield. developing range guidance the X% development XX%? does developing about curious direction to of of shaded to the the aggregate for core-plus say I'm year the for what yields future

Andrew Power

Thanks, is Michael. Andy. This

view genesis unlevered the on to the was we not $X reward for I try illustrative on of an effort an guidance think takes risk this change of reiterated as to incremental table, our provide incremental really spend. on development to chart returns to which billion our XX% XX% cash and to

range in end think that when tilt towards the higher pre-leasing obviously the when more amount we from or we of significant happen tilt De-risk I projects towards of XX% and de-risked. the are can activity, equation. risk there's

Operator

Vincent The Please Bank. Deutsche question come from go Chao ahead. next of will

Vincent Chao

Hey, everyone. good afternoon,

get lot for you the bookings. X.X% comfortable a on biggest clarify sounds quarter. the $XX feeling to this range at Bill, one Just was just tenant, like mentioned least it you But, questions of million the hitting assuming wanted anchor

on for at rate? data a rest curious cap California high of or you're they're dispositions. that tenant, were And that anchor through if great is megawatt then you X the the something centers so question some the So I more X commentary on in could know XXX% an is what maybe read I that leased non-core, to referring that mean you deal portfolio. value of the not But the just give pretty second megawatt traded size? mean when

A. William Stein

Yeah. we that that deal data mentioned, a over there be was sale I deal, on that will in improved which question? But, you the the shell yes, lead associated look keep Andy, will take fair. additional million that asset you handle some likely with to that time. leased mind want $X center mean to space that's

Andrew Power

Scott, Actually, want you hit the do dispose? to

Scott E. Peterson

a the as so not yield some Those that. nail the those which higher robust out one that. potential the, that which can was led of kind vacancy structural towards is with challenged little a were assets Sacramento I market, it, there from non-core buyers on assets a in Also investors demand Yeah. of there. out or market call

Andrew Power

to exit recycling better at that capital leadership the exit in of into markets, And, Vin, of that really kind assets summary, program think I in and redeploy under it's core capital Bill back the continuation a years non-core Scott's returns portfolio. started

Operator

Louthan question of James. next will ahead. from go Frank Please The come Raymond

Frank Garreth Louthan

Great. Thank you.

going obviously How industry to capital some some why not there. the be on seeing and that we think that strong just curious spending should growth on Europe, aggressive market? So trying about more thoughts in is forward? Any

Andrew Power

This thanks, I can Andy. Frank. Hey, take is that one.

grow in few London, working a Asia on market. we're doing or there's looking in I month. the customer think and know in quarter land over to team think a I the with in was the in the a to we because call, on anchor internationally our a campus X where And in Pacific and team turning vertical sales the relationship it the In at were able DFT going outside campus. though next of deal the we is London our popped a the very mentioned delivered Amsterdam. tremendous with everything we've backs, an been the on job legacy of a, of thought activity some our service during XXX I other We're Frankfurt, offering out customer landed to enterprise land so global it landing to megawatts. was into top-five we amount Europe And and moving terms call along executing It very well So it, coming Amsterdam a demand good timing provider. sizable us example markets first on Scale as well is kilowatt as of

to would capacity, So I of terms the point beginning to be continue demand quite have we if fortuitous think end timing very backdrop. quarter Europe. in seen like in of this continues, of quarter, second of to that and the our in we've think inventory investment the the the put first an and seem into increase we coming right online And

Frank Garreth Louthan

you. Great. Okay. Thank

Operator

will The question Choe Please go of Richard ahead. next be JPMorgan. from

Richard Y. Choe

And the And line. going the is it this Is there have is just on else through just dramatically I It one SG&A the going level? How quarter-to-quarter. or something Hi, wanted to follow-up? much there? then really follow-up on base dropped to year rebound this I new seasonal? is

Andrew Power

question. Hey, of terms The answer accruals. partly down for yes step is seasonal bonus did in that and It Richard. Thanks to your to due yes. question

number ratchet past fourth our As the trend and kind in we numbers you quarters. in year. similar quarters, will a the close at know third That look and up of to the bit of can and fourth end that third and performance little

associated dollars We head also our the budget fronts. G&A to investment some with some DFT has step down it our we back up, amount carrying think, those fuel the some really the in to similar finalizing sales but And been count in of do our and comments invest business. engineering in as non-comp work made Investor and expense December, overall Day investments, as IT that to department, in the not be spend marketing both and the and our it of growth our the department, our G&A on were beginning sales our in of acquisition we winding on IT at team, systems, integrations the we will massive

So think I of pick half back in up the year. the do they'll

Richard Y. Choe

expirations the about difference, at of were just to extend out it looking the kind that pushed level, working out. out. of? there is lease supplemental, and something seems been Have ask It expiration XXXX on it we pushed of things be and point you subtle like a Is can have to there been be aware might big on seems but but then it. And you something the wanted it not that customers be to out XXXX a maybe a like should lot just able

Andrew Power

customer rising for looking always we're out say with and customers having contracts to at and push would I contracting fair rates. longer terms us

did renewal chopping call we we quantity was the stuff, term every dollar let's the think renewal term I record five our So a is us. average The which it TKF renewals. of no, keep obviously for through don't larger about $XX weighted million on year. that renewals And, longer years.

customer very business customers a base competitors holistic using use with and to and base helps can. taking that as to installed outcomes together that come some we're a our much customer those think more package mutually competitive our beneficial approach installed, a global embedded than relationships our contracts and more and I advantage of

Operator

be Please will of The Street Advisors. next from Lukas Green Hartwich question go ahead.

Lukas Hartwich

you guys. Thanks. provide increased by a Hey, some base Can fair building amount construction I noticed on this the quarter. pipeline color that?

Andrew Power

by bringing as gut, of working the fast of megawatts activity on in were first Northern phase at and really least we've it out on My we're quarter that's and the XX that and of that incremental because the Lukas, unleased it. is on furiously shelves be Virginia. campus, we'll building through driven largely – some the call that's pipeline said, got, are And developments-type like I quickly

something mention. should – also We I

not We take a also the prior had a entirety there within that signed for because a XX in shell it lease the megawatts of shell was well customer as like basis. brought the of on that online including there we initial long-term a X was in megawatts, quarter

the activity quickly. explain are speaks very we're of large in that in market, fully amounts kind that at to particular to when in design So that customers looking and dirt moving literally contracts

Lukas Hartwich

just over a up quick line rent that And by recent helpful. then signings the what's it's line or lease on just That's is looks quarters. kind item, that rent And a item? follow-up. straight driven couple of last free of like driving The line bit little

Andrew Power

the I prior It longer-term on rent. more adjustment. rent quarter your cash that the something that certainly continue between deals to going widen side. leasehold maybe was GAAP was episodic to signing is gap with your say there escalators that and would deflated in think I with

to our I the between to relatively would FFO widening would probably because I the speaking But of of delta is So and that earnings. be narrow say relatively that another quality small AFFO say attributor fairly number. our would the adjustment that

Operator

Robert Please will The Guggenheim. Gutman ahead. of question go next be from

Robert Gutman

taking for question. Thanks the Hi.

on I customer if suddenly color building coming again turned this question, Turn-Key leasing. it provide view? up into think, was I made, and back had about a the much answering was seen some Why read significant does last context Asia based location could wondering the especially this we and power-based So, haven't you for indicate positive And Is quarter. the it for picture? greater you is you demand? the the this anything quite wondering, Pacific, on I similarly, in on while, a comment that.

Andrew Power

the for question. Hey, Thanks Rob.

as and into upon took capacity knowing service they grow a business. time. that seeing lock data large into So, – a think took pointed suite I they're In large rent and we're then growth or from it long-term you other rented cloud seeing to will that shell in providers, five do trend that hyperscalers either example, the grow out shell over one business quantities, they will entire – And it they'll does over are us from top the suite the and these that full looking in us, down delivery, point up in then their trend to the time. point

tackle about think in thinking And I one structures, just business. that long-term to and think I customers are growing it. way of that's something not identical but the growth our their large this necessarily is many

the in both jest, with Singapore import/export large-scale particularly had business customer who's same some I as market with had Asia, and local an they've European incredibly over earlier, the sent to it's in I significant success And also would customer. of America that where Chinese setting some of the really, great the I some bit Turning And And those customers just I customers that in that same portfolio. demand the spent thinking a data coasts up Digital team time tracking there deal. new parts other also and there talented where centers bringing on it's about deals, over of say, with say a leasing into of I'm logo Realty been with North that our in to and we the base. mentioned on into pick local it's but of profile don't demand

team actually. last the in handful Asia-Pacific from the progress great overall, of So, in quarters,

Operator

Del next ahead. MoffettNathanson. from Please question The go Deo come of Nick will

Nicholas Ralph Del Deo

my taking question. Hi. Thanks for

in facilities slice First, Turn-Key if down I changes we specifically, was newer different are versus or further as the some us you're result? resiliency you're them renewal. board? see update hoping Internet what lower higher then or renewal give corporate a fairly there across facilities bit versus the like into hoping you drill see older you if to resiliency, was ways, versus or an second, gateways similar portfolio characterize More rent at benefit that at And your service starting seeing facilities on you're differences customer undertaking in you I any of would to just and the initiatives

Andrew Power

Nick, the the I'll service to customer first to and Hey, tackle Sure. team out on talk it one, toss side. I'll about

challenging mark-to-markets, driven the approaching by those are which the would turned the of expirations offerings, of either of is driven positive dense, in But It's provider. And XX not table by the peak bulk Internet a capacity, if colocation have the the cash to as move to of in can that's through that, our that the you've in expirations and terms customer customer closer type our offering. both, supp, limited to have network vintage offerings. out product XX, some you definitely product in X.X% the and kind we large, within It's profile. quarters. incredibly breaks megawatts multiple page move it's of capacity on typically you colocation as you scale, see most Turn-Key We all larger cycled gateways our gateways, And those And fall XX% XX or of renewals, back mentioned, really the that that mark-to-market maybe the to of of financial or but by and into our product was is new couple typically with last little I terms Internet cash leases say retention. bit see outcome a Flex, a had X%. exclusively, footprint. had

through how renewal a or transactional gateway, try in positive into on near-term in Asia a cash a to touch a win terms little and network think agnostic value, more approach, in the we scale for our bit pieces business, And the and with customer and experience, table just to often Digital. Maybe portfolio we the but mark-to-market, to economic it little to customer also to treat bring try really over turn may the North that to bring win real an is a to renewal holistic which a it it's customer of as think business delivering holistic those take translate may Europe, the Internet bit about a we more talk future. signings node of I'll at in and I product, The customer of campuses, a a flow for that the that more America and equations customer service many softer in we initiative. be want in Dan quickly to is, other and or one the bring fashion or than in thing

Daniel W. Papes

the few now. at Nick, We confidence last over Thanks, the right our question. pipeline for the quarters Andy. look performance and Thanks, our in

demand like we to we're significant on I customer think a our making from ask because feel in quite it's seeing customers. your the services is difference valid question pipeline that

We've managers Program, from the mentioned XX Delivers customers a deployed have team effectively pipeline to existing that. is say when have any making difference feedback we and to inside the just where out as cultural client very across stay we talked getting the click company. in response on our time their we feedback field building very for customer customer role at what that in feedback in happier are again, customers, needs sales customers all and us up success and program us us. company hyperlink We tactical spending leadership believe, end our clients, That's sponsor well and while the on into a then, about so that of the executive And strategic our positive us in well. bottom the regard which our customers. get working and our they and has We a that. in, Digital more and really with big to out basically close hours, positive and of our changes invested of finally to base. a new repeat the us previously focus for emails very, That's team centricity much well customer make decisions We've informed understanding for able that are, makes much

Operator

go Sami in grew XXXX? Thank Suisse from come us in that Megaport, performance from just you. there. give X% Badri you color that? go is, could on Sami of us considering to you the give interconnection on more another in work will a little offering? Credit with a question why million give of that, LLC you And can ahead. follow-on on more a second Badri also actually Suisse. next color Securities - the after you're equity I part invested doing $X Could the around And more Credit XQ And (USA) just color your Please the you context Hi. us quarter, could And

Andrew Power

on on add commentary touch the Sharp, and Sure. over I'll I'll interconnection then the and on question full and just toss give the CTO some on Thanks, the signings Megaport on to also that had. to Sami. our P&L tour to Maybe the Chris you revenue

So being it pointed the to it – a tell was I colocation front the largely at colocation interconnection attribute And still where some I basis, is around little of peak down, it, of on while we're kind of at I north with that that connectivity call you, can't at number on our the prior the larger obviously bulk serviced. signings. but satisfied not quarter-over-quarter hand-in-hand completely deals. XX%. bit and specific signings just look with. were often quarter step-up that execution I'd signings episodic pipeline on a level lower versus the something to a not signings a the

to products So those XXX and little deals kilowatts, our lines kilowatts, on XXX XXX a there and some kilowatts. colocation blurring kilowatts, sub the XXX in product call question dynamic between bit megawatt, half additional another news going good as I and breadth of is company the in which product open in colo some of about the capture some to it and that I well. – type larger on scale terms think of of are connectivity And colo. nine of with fallen into have scale were a maybe types on the product But that to I landed add us tick I'll But strong. TKF Megaport product large outside of deals, think prime should to megawatt or have and touch outside We allows telecommunication suite. ensuing is X.X quarters up, the pretty saw that looking pipeline the net-net close or a that were types XXX colo. outside A deals was it locations colo it's that I actually for a to of colo up example kilowatt actually XX% about for half landed think because in sub Chris our us

Chris Sharp

are that unique Megaport today. Sami, place a market. happy with in very absolutely have correct. Thanks, very partnership the We're And partnership in we the with It's you're Andy. out yeah,

I we're service from and really is that some to up lot a hybrid one One of on of their the service is, to access performance their able more set a reasons of the complexity their Azure hosting that partner that of their exchange recently the lastly, stand Netgain today where, only us having our due services that service and – the broaden differentiated of Microsoft top customer emphasize Megaport vertical. going really be them is remove and in which allowing after that the to in environment robust, They much deployments part dialogue aware And one in exchange always to architectures the is a we of fact last us most the And really platform. cloud. which dynamic customers for cloud and conjoined London highlights Frankfurt allows a the a our not to with why all customers horizons allowing allowing the provide point and service Amsterdam, mean, provider component quarter of to cloud then changing core came are providers is exchange key but accessing that because accelerate exchange the them with we we've the work, and very it's of able win things really fact that in provide the reasons It's overall healthcare a IT financial the delivering cloud managed allows been customer this for and are Netgain. solve services they're very really picked five the more to to a have launch the future to deployment Digital demand to able the them their we is recently cloud of to fact market and that market that into working to cloud on one that's exchange. leverage that the most to services across future and set of cloud

So, Microsoft Oracle Google that's AWS, Azure, IBM. Cloud, and including

with customer value have a base. dialogue So it's really allowing to based us our

to portfolio. So place we we're our with with Megaport to happy in service look have functionality expand very the the continue partnership across and we exchange

Operator

and will closing our gentlemen, the session. hand his conclude that question-and-answer like Stein to remarks. ladies And back I over Bill for to conference would

A. William Stein

the outlined today Thanks, by as of presentation. wrap recapping our quarter page our I'd like the first call on up our to here highlights last Denise. for

the continue the customer we record to capitalizing DuPont on Fabros realize integration on revenue execute to reaching First, and base backlog. the high installed synergies of of value bookings

dividend financial shareholders very recently to We giving current shareholders per we've has year our believe solid results Last making which given XXth flow, a in also rising distributions cash board best-in-class increase approved earnings delivered shareholders. as share board a our balance is guidance. our binding in to the the in and the approved our well the distributions not particularly resolution environment. as in this that right least consensus amendments raise straight this our bylaws. growth in And achieved on to but X% rate of has a being raising a the growth our we to propose We shareholders Three through a critical flowed differentiator, sustainable dividend. preserving while our to sheet

you to NAREIT hard consistent As whose execution. and like we hope and all entire today for the I I'd for thank in work dedication you of team, directly do conclude Realty every this Thank Digital saying joining is many responsible us to to quarter, by see June. you at

Operator

sir. has Ladies today's now for Thank presentation. attending conference you gentlemen, you, and concluded. Thank the

may line. disconnect your You now

Digital Realty Trust (DLR) 26 Apr 182018 Q1 Earnings call transcript