DLR - Earnings call transcript Q1 2019 | Digital Realty Trust, Inc.

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Operator

Good afternoon and welcome to Digital Realty First Quarter 2019 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Today's call will end approximately after 60 minutes. Please note that this event is being recorded. to President conference of like Stewart, to now Vice Senior Investor would turn over the John I Relations. Please go ahead.

John Stewart

Thank call may statements the are and will Andy speakers make Sharp, are on forward-looking Stein, Officer, available the Chief The assumptions. Officer, underlying CFO, call on and Investment Power. you, and and Chief for Chris including Wright, Technology be guidance also CEO, Andrea. Bill Greg today's Q&A. Management

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

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

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

support an in development global we First customers' expansion our foremost, Chile. Santiago, a with requirements of continued and anchor to new to agreement campus

we raises, a with responsible our socially growth and and efficient for all capital stakeholders Next, to energy governance sustainable enhancements. commitment corporate procurement renewable deliver demonstrated

long-term $X.X the of by half turn a than to billion Bill. more And strengthened high Last lowering year Third, dividend like simultaneously duration opportunistic annual balance increase. our we average by coupon but basis average weighted our coupon while redeeming the issuance weighted over the further not points XXth of we our dividend sheet, debt and least, extending stock, consecutive now, call with to X%, the raised capital. preferred I'd XX by

William Stein

and afternoon, thank all you Thanks, us. for John. joining Good

across strength effectively advantages. on Realty quarter We first the demand multiproduct capturing multiple to the the Digital comprehensive our regions. competitive continued our by enterprise of offering press healthy capitalized During team of XXXX,

attractive We rate and initiative by capital in at further joint our Brookfield fixed locking private by long-term balance we with advanced our capital coupons. our venture closing strengthened sheet also

We our X industry-leading strategic the purchases commitment sound platform growth expanded further our XXth Chile, corporate upon here a announced that build with to stakeholders. the to in we governance, shown underway Singapore, and X-megawatt afternoon Realty's in setting with entering sustainable global as for Digital all stage XXXX. we continued for We facility of and and quarter sustainability Page finally, country, are Tokyo earlier land third delivery our presentation, for on of this slated

Our new is is market strategy for follow Chile entry our and to exception. customers, no

World and campus the quantified to politically the highest high-income the global countries with and business-friendly economy a per a in clearly America by of phase are our economically Latin stable be Chile in is provider one investment the climate the Bank considered of first GDP South America. and supporting of is growth in capita leading a be will cloud We Santiago. anchoring pleased who most

Our first with our will vehicle quarter, the within closed the the investment and by December early the region. joint in of conducted exclusive Brookfield, partnership compelling at but our and days still Chilean It's the America. acquisition operations on be for we Ascenty just Brookfield, by since Ascenty obviously in joint center venture South of the team by with the growth venture execution tail are Brookfield and we the opportunity Ascenty end the with encouraged early data

candidates to of gender. pools to renewable and on of power with center January, Late secure January, months, first-ever ESG submitted here must clarify data highlighted green director-candidate corporate race, behalf also late diversity our energy goals. Directors Facebook solar few bond. euro we we We announced long-term a include power purchase megawatts support over our Board past the of advance Page guidelines XX continued February, our issued to In the their of agreement In governance on renewable priorities that to X. ethnicity

also Board a standard our stockholders access approved late in for proxy February. Finally,

committed customers, are we for and focused are delivering on and employees. sound sustainable our to growth and We shareholders principles governance corporate sustainability

market to fundamentals turn X. on Let's Page

primary of As still net America. but dynamic same XXXX context, for bookings, our market current It was digestion but To most Northern North of located of the over center Virginia, you total [states] of of America total activity, America across than of our current are of leasing XX% is XXXX for revenue North aware, XXXX mode. metros in approximately availability. was half accounted XX% true for our at The and year in restocking only a availability are is for in provide XX% our largest our XX% and less absorption XX% record some responsible represents and data revenue. North our

center see for dominated to incremental growth as requirements, absorption data the with phase runway restocking the and in in our recent metros. sovereignty are their year in global next with pickup major inventory the metros. users' expect of of half a adjacency cloud providers been presence activity center coincides sign forcing a America applications major and leasing data to the shelves North driving on to hyperscale architecture, by distributed the existing continuous providers all providers continue throughout cloud next second Europe, We taking a campuses. privacy establish expansions In has growth who rules Data service to

America. also the across for cloud existing Last providers providers leading record in increments clear generally for come deployments cloud multiple than expanding metros. was absorption in exhibit to year major in year a with Europe likewise deployments. preference These a expansions these adjacent North deploying So hyperscale smaller megawatts

initial the is key. landing deployment So

very Campus Asia local power procuring of supply Connected Global in is APAC complexity connectivity Tokyo the outpacing with on largely positioned translating uniquely serve Our The check. frameworks, difficulty to limit is Across several the our adequate supply at these project. the of regions, Osaka and regulatory addition to us see Singapore, capitalize growth At and campus region development campuses, Demand in infrastructure Tokyo come. setting pattern. This remains execution adjacent limited we is years markets, competition. the stages available strategy this up our the a for in Pacific inventory of all capacity pipeline its Osaka. availability for Singapore likely and to for into targeting notably, we as early sites backdrop the and of Asia in still recently runway key medium solid term communications significant announced and to our macro in level, of near attractive markets, Pacific consumption and our build-out, online is bring

in offerings and key of customer as of the our provider. data comprehensive and customers both data global pipeline expansion customer center is view where Finally, and their we provider. our in are Brazil opportunities the believe selection growing we balance, platform differentiators new Chile, now On and existing interconnection center space, power market-leading

Let's below remains to Page turn over X. Global Interbanks unemployment U.S. to receding. war recently a dipped full-blown the economic adopted expansion trade have dovish macro world a and appears the claims XXX,XXX. The the be stance of environment on risk intact.

me drum. GDP drivers, heard who of data a insulated times both are say XXXX than in and growth from you've growing operating the marched be faster As many demand economic fortunate in to secular global customers beat drove own to to center volatility. we hyperscale their before, outsized somewhat demand business levered The

longer-term days of in have in demand. largely the trajectory the XXXX, we of in remained they highly remain this mode Although early digestion confident

up points from the drivers regions as our verticals swath results. the around According X. across $XXX as respondents diverse business of finer highlight XXX Synergy to now in year. a employing couple workload. XXXX, to of our hybrid Page business, total model, by a Separately, the the Research, private resiliency market cloud prior of XX% a broad ecosystem are a on the from To enterprise like of cloud first users, evidenced geographic our an I'd according global to secular addition, model us the XX% same world, the enables passed the put resources revenue point and capture cloud for In IDC demand customer demand on quarter robust to public defined using milestone billion and underpinning of study

offer users solution demand bode back very durability cycles. future hybrid colocation center found recent recently strengths, XX% results IDC address our explain data multi-cloud compute services These that a cloud directly of To to the to storage obviously our effectively the from of and must of XXX well an providers for Finally, market, on-premise. hyperscale. and workload over play global interconnected public help trends have moved the study

we Given macro that, take cash through earnings, the balance we financial are to resiliency deliver to sheet, positioned of like results. call hold I'd over our believe store. well you in the to our With steady to in continue to our dividends, turn industry, business our whatever environment may growth Andy and share flow the per and

Andrew Power

you, Bill. Thank

here on Page X. our with activity begin Let's leasing

$XX average across contribution. and their types We of new able Realty totaling for were platform including quarter who As regions, balanced a including customer the the Bill million top including million total durability from highlighted of $X signed to performance of power XX leverage our across We several global top contribution with million of signed colocation million indicated, Digital $XX years, and the enable our X first with Ascenty, term $X deals lease customers the XX interconnection. outside from regions. a in to space growth product weighted quarter first the a segments. million, our global $X leases U.S., platform bookings were results

serve also applications we global north which provider, campus cloud that cloud, on profile global the leading will customers provider. their segment, enhance deployments into expansion cloud our interconnection Separately, the we expect another the Within developers Coast For well enabled better infrastructure this we X of helping quarter, network a Dallas, as the example, service as landed of sizable from account a with them Texas. global in a of node cloud launch edge border our in provider, APAC. leading the and we West south helping service landed specializes

healthy first the majority bookings, We X/X Page strong global customers, cloud our on just from continue contribution XX. a of added for On segment, particularly our XX logos, the new a quarter our during shown track was business with demand we segment. our as accounted of to but account existing within new with enterprise quarter

of earning safe intelligence scale. simplify, real-time in startup decision-making their vehicles develop global For example, later" gateways for a improve in proprietary their is pay and to selected leveraging a service Afterpay a the application exchanges customers to a Europe Australia production "buy deliver help fintech Their creditworthiness determines the a near to experience. now, Realty on technology U.S. based a platform. software technology retail a leveraging Digital and well-funded autonomous on in center they engine reliable provider and global providing are global their and scale in their data scale, payment and from artificial user

design data company their see the strategy transition a partner their a decommissioned of provider deliver a global support to In their Realty traction extend by into facilitate well able Realty initiatives. data growth global the extend future. now in capability the of with the support from Singapore their center center world. software into able particular, York headquartered to their APAC semiconductor reach. business will continue A multinational to the We data provide as keen partnership facilitate in European-based their and to business services be to New and around organizations -- Digital will in ability presence selected each supported global They Digital centers to full services of region to

their in broadband In solutions high-speed to addition, provide infrastructure new The support logos. operations. their of new will a and of continued to their and for contribute Europe colocation Channel XX% later telecommunications us to comprised the of and XX% launch interconnection our first year Amsterdam with business to company expanding the colocation and for and further satellite quarter required accounted to satellite our partners underpins services provide our solution London British customers. this bookings is

have support their health combining to channel diagnosed cloud-based respond top proprietary events. the way model our and interconnection wearable AWS Digital managed technology and strategic with clinically service and of a compliant cardiac Azure, opportunity that predict requires Service Realty to us One to services, superior to within cloud customer's arrhythmias We're to capabilities. including help cloud we primary won Salesforce Realty the providers providers. cloud low-latency Digital solution connect multiple traction providing access a is with bio-sensing an doctors Their mining care relationships Exchange. company and to the with with the business data partners analytics also are by services. our data The leading brought cloud and redefining required throughout business seeing forged cardiovascular digital ability learning solution machine by HIPAA extensive

up Realty's with For specific offer services customers global solution with engaged example, one also a we're customers who provider to with ultra customers proximity greatly cloud's to to performance our to provide We're of major in hyperscale and teaming globe. who end and requirements. cloud wants low-latency expand ubiquitous private this unique cloud. to demonstrate near-field terms best-in-class the services end Alliances capabilities hybrid like storage interconnection around market infrastructure cloud deploy our of Digital the public in infrastructure to close proximity underlying addressable

to of backlog the the the but Turning like full point current little out the rata quarter weighted contribution a share tighter remained Ascenty The The of from forward. signings long-term average shown our I'd our and and end be on leases over backlog current pro backlog $XXX between commencements average lag to shown months. X Ascenty, the than whereas commenced will here Page contribution going stood XX% in first not Page reflects XX XX. yet the million quarter. that at at first on signed our

XX. cash history, their to volume portfolio these X.X%, triple terms, Moving on years addition in leases built-out leasing on the to maximizing as high during heels years, XX global building the platform. were renewals lease nearly net our powered value first quarter, of term on of on these renewals million the footprint and quarterly transaction signed is in while renewals We renewed XX XX activity a from as We rents Page was our all-time for of signed. lease million weighted fully to down flows XQ on sites across for turn-key in new The by facilities. shell a second right renewal capacity 'XX. the cash driven years $XXX well base deployed average on in strategic customer in single primarily renewal as the $XXX highest This come multiple walking leasing

tied opportunity also multi-region a customer. We effectively with strategic the the renewal same expansion to

incremental months, as quarter GAAP $XX mean prime Excluding points an X on over of of the XX. cash long-term to basis, would activity of the annualized we bottom revenue flat on This see incremental a can we have data mark-to-market signed the example from global have essentially relationships that when past first renewals what million a been the on distinct elsewhere customer leasing offerings, you try is locations believe for we whenever with as portfolio. new management. provide business talk business can, we including advantage have a competing We we financial package And when already about our within supporting new holistic, we renewals. a a to relationship approach and global are as are well both multiple customer we our Page comprehensive across

slipped XX.X%, bottom results a strengthen Valley of overall continues first XXX deliveries the to U.S. headwind growth past occupancy to days shown terms over line, to as FX XX point dollar XX. points service the basis our to and due and to basis In quarter The represented roughly reported year-over-year in in Page the customer Chicago the on performance, top in Amsterdam and due and to half half portfolio move-outs Silicon in operating development XX placed Dallas. from

risk manage only natural are to mitigation within from issuing assets given act economic risk a region strategies our We risks perspective. hedge, XX. debt locally our by as to economic so exposed to an net currency denominated Page on currency Turning a

to addition short-term interest financing. variable-rate we by managing foreign debt In fixed-rate also longer-term exposure, currency with proactively out terming rate mitigate risk

basis XXX have to assets debt, impact the share. matching FFO of strategy our year of long-lived than a X% point long-term fixed-rate with less a will LIBOR per duration our Given move-in full

funding capital and well is and funded. plan risk near-term very refinancing Our managed fully is our

and Delta prior above was on up X% to relative primarily per FFO In due in growth, consensus. or core currency terms X% a constant share year-over-year basis of $X.XX expectations came earnings venture to during benefits the funding joint came U.K., due Brookfield first on rate a tax corporate in to as effect reduction well as the in interest quarter. the the tax income which in was

large of forward, periods benefit the the the of dip to We're can in from the due quarterly venture commence. you of in bridge second we the joint leases the In the see terms on back the quarter going and the Ascenty XX. as drawdown, absence expect rate, of equity to second run tax several in as future deconsolidation year the Page half forward revaluing down

share press with exception As core the same-store growth of the seen unchanged, FFO may are have activity outlook. of reduction financing release, the per you our from guidance. XXXX reiterating drivers to Most and we're updating a

related the In addition primary a headwinds, includes change expense first bad prior debt to continued FX forecast the the extend" transaction executed private the and "blend from reseller. during colocation and our of portfolio subscale strategic to component quarter

comparison. property We sizable last also full also second weighs comparison second growth quarter. to of of remains Last the the year, line in face due Page in the quarter year a the let's as balance times debt-to-EBITDA first not we but a quarter on to XX. refund end the same-store least, turn X.X of particularly tax collected Net tough on which certainly at sheet the in

at coverage the joint of times charge coverage X just times. the drawdown, Our X.X and funding over the equity Brookfield's ins just for fixed of and is charge outs over fixed forward Pro debt-to-EBITDA net venture is remains times. and Ascenty X forma healthy

available Over advance Digital notes several of maximizing the minimizing financing all menu we capital of conditions market did while of due XXXX. our costs. the In January, strategy related to past the months, X.XXX% early senior on $XXX capitalized team options million favorable our the

February coupons successfully green a bond. of offering bond green This to also X-year second the million X.X% January. green against currency executed approximately in Realty's XXX The stock USD issued investors, in data conditions our X.XX% attractive of support coupons. debt sterling gross sustainability and green the X.X% late But the as at we released bond recently financing euro Market long-term early commitment. another $XXX bonds a at first a long-term preferred our our We at on X.XXX% second attractive of perpetual XXXX. our follow fixed-rate bond was K portion in continued well euro due during XXXX capital and And Digital following our euro with of strategy and reduction capital at preferred stock over underscoring series paper all also our under we offering bond of increase offering to industry-leading equity We the bond, with of from was of was improve playbook billion locking received, H the reverse due quarter, raised X.XX%. the perpetual across raised while $XXX the in million well million proceeds green reopened assets first-ever our of XXX permanent quarter. offering both basis the raising announced preferred We our center new same XXXX. we million as $X of this the euro series

our menu manager. our reflection of initiative, with private advanced million joint we platform, Brookfield, successful closing to global on our strategy provides access asset from a growth. public private fund execution apart best-in-class capital, as our enables our us peers which The sets a to leading prudently Finally, well is capital $XXX the us global venture Ascenty the as and against of financial full

a natural our U.S. greatest environment is is of as Nearly As weighted outside you of and capital the half and coupon the guard to a our weighted XX, hedge our for over the by year maturity debt for debt rising XX average recycling. acting providing Page a rate than have little XX% investments extended debt on more schedule maturity can flexibility debt debt unsecured, rate see A lowered recent against our XX% is financings points. our dollar-denominated, non-U.S. by from basis average the FX fixed half

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

a but the Our around balance fuel our also with long-term growth to globe, sheet weather concludes poised consistent remarks. for is our strategy. positioned to This opportunities storm, prepared customers our financing

begin questions. Q&A be take please Now Andrea, would we'd session? the to pleased your you

Operator

from our comes first Atkins Markets. question Capital John [Operator of Instructions] And RBC

John Atkins

potentially your more the pipeline, Or investments sort Asia margin as sales of other more sustainably was year and have a kind see So measly Brazil, margin region to of conceptually, pipeline on looks pipeline EBITDA high anticipated last past as there the by the Pac, making double-digit and late XX%s the the on megawatt opportunity or XX% in of get you see company I earlier year. the do Europe year brings I do of exchanges two if versus of you think an than questions. inventory? opportunities different in are this kind you're you wondering then level? earlier? Or One, about America mix business? North And greater development any rest given And is a it question appropriate notable

Andrew Power

them. a Jon. to is there's, pipeline, to guess, Look, Thanks, speak pipeline so in specific we're don't only -- I me This obviously, a still Overall Andy. we let number. handful there, questions unpack try

the it's at great think healthy quite a quarter, deals terms I composition our first the of look of if across in industries, XX you the new signings size, competition, logos. regions in across

consistent with So and think going the I characterized fairly forward strength. healthy, pipeline that I've

Your double-digit on more on opportunities, coming -- seen megawatt increase with we've I guess, inventory the additional an the, see say, roll double-digit in online. question opportunities whole, megawatt more

case example, phenomenon growth. bit certainly for in London of Frankfurt you customers time, see these needs, and Toronto, could can the see meets where or even now been and where, Osaka, little for a building where larger in a been been immediate out that's inventory campuses it's runway newer their or and for quite or Dallas, we've some to that Nashville Chicago, Amsterdam While

mix continue double-digit going that So think more I megawatt do to continue. deals of you're to see

think Asia, seen think bit Bill I of and I'll that starting that a contrast of question do markets. to was great compare strength efficiently. some little I kind we've mentioned. try in on Maybe the your next

into and nice highlight and to some that their capacity in literally building Back where customers incremental a We've there upon closet newest time runway. competition that Chile at quite the of it adjacent Bill seen and -- in think mentioned inbounds limited. our customer the X-megawatt to us supply Clara. there, think or this very where in Toronto. much great a they recently the I that the customer facilities we some there relates an the little leg and next really I'd for the we've going Santa over but robustness market. our inventory. to lighter customers other exported preview a online. of a an some subject as our in say, not and prepared Osaka, the then on entry also with some in that series you capacity We're to Frankfurt's of where, I on trying bringing from little some to with are broom growing Hopping Tokyo wins in in Americas, my -- remarks, Singapore was campus-like success Dallas most was gave markets U.S. office kind enterprise to as service Ascenty. in our campuses come to of IT A campus highlight SINXX was I Europe, And Tokyo, had smooth our are success Firstly, there, seen signing to extra is our of were in Ashburn, find

was the from see have that it we where I and to here. right, so margins about EBITDA question, So get just Jon, second going

about at guidance is midpoint adjusted So margin. of to our the EBITDA I be guess XX%

I on more leasing or on on margin Right basis I -- could compensation. reminder, ASC of we're from now, a down much growth. more you actually expensing expanding that's should tell say points our over change XXX year-over-year focused focused and for EBITDA expanding industry-leading nonsuccess-based As we're focused less XXX accounting the

platform have further you more margin. we to the volume growth greater new times that Over longer EBITDA is with focus to trajectory continue the we I think to the mentioned it's our But in right with and I closer again, more a scale. longer-term area see and do mentioned. quite a particularly intuitive now, term, expansion, given markets scale pretty EBITDA the feel prioritizing globally, that healthy I up campuses pushing as XX% that

Operator

comes Capital Jordan question of KeyBanc Our next from Sadler Markets.

Jordan Sadler

you to puts The I drag. funding, going I explanation JV XQ down XQ it or forward Because the you of as the little use So on for. sort the equity quarter. guidance backed to some bars, which on if all elucidate then in helpful. little can numbers touched a beat on the follow-up. this tax you do, is a -- I the $X.XX touched forward in year, at when first and maybe or went happen takes, a that XX, bit taking But down. you to $X.XX, question we to know Andy, before the running then the And the have least, the just bit a is sizable it expect Slide versus which little always pretty what step get the on a to quarter prior the at obviously, to equity guess, opposed the I you should better in of the better? like do you're looking I'll benefit, order I at bar? to that's in a per of least through shows implies you seems of could And of is Brookfield a what illustration, out it quarter $X.XX need of guess, full bit separately,

Andrew Power

Jordan. Thanks, Sure.

So the I guess again. components

So day Brookfield closed on its last joint venture quarter. of XX% the very the

investment and And take regulatory compensated tax prepare a not for So current carrying had return. structuring, approvals share us in anticipated with we so to obviously, just the going they've and away. and in but of we that's, for case, long in go their terms legal that did to

than the assets a So deferred tax tax benefit bit adjust non-U.S. liabilities XX%. down onetime this lower a have it's quarter. that to tax London for a And corporate with something rates slightly in U.K. lesser case. revised we of actually I To investments we think, in have to from rate extent, dollar feel the in obviously, our XX% that, or

having benefit as FFO, our So appears well. a that in core to the quarter

in So of in in those counteracted the guidance. are to the to quarter counteract first pains the the that us our in things relative of also several us contributed headwinds, year. full terms original quarter And the will and I'd say outperformance that

I bad I out spelled had expense. we some debt think

have the private and total provide It provide on the a that's headwinds of percentage during to FFO a full reseller more core quarter. pool a small our growth customer We also troubled year-over-year certainly NOI some year portfolio, colo but dampened a share will same-store headwind growth basis. our per of does relatively kind

with to keep X on of consistent equity. room billion now, right the question $X.X do X forward, not sending say, the drawdown there's your quarters, going our practice, I'd starters which into philosophy a a really the guidance we -- gross on locker a is So of equity the And so prior constant. after

have not any drawn down of We it. on

if the the on a We second bit little portion just I'd We're As chart. the you say over at of but left revolver. million X/XX, done the $X.X of from almost couldn't not it, putting quarter. on just -- certainly cash the We the had end had on pay bar that the the of Brookfield billion $XXX portion license drawing of end balance revolver of of quarter. later. a came can a the it all a see we to by million hand. in it going will balance be will sheet the quarter last about say would we're down the bulk, we of day with till day be And be to bar, took literally of of the bulk so second I of even before poetic down revolver that $XXX

Jordan Sadler

it the show on cash -- at sheet because doesn't didn't balance up that's... the Brookfield clarify, to all. Is Just

Andrew Power

because and I'm down to a that we in pay just wire piece. more send couldn't for that the the cash in balance came revolver stating balance sheet at literally day million-or-so $XXX that X/XX, single we have money

Jordan Sadler

Okay. longer of on funding My sort follow-up term. more was

is Mr. recently good a this You've maybe and -- for question Wright.

You've taken potentially, I'm self-funding the or year. it into talked the of after get funding the about sort just recently thinking in assets an be we and gone you've a this model how portfolio, harvesting have Digital's like and update, should a of about few an curious months sort of year what maybe if as market can we looks assessment

Gregory Wright

focused doing said strategy. they when and us And markets continue we the has evaluate what we've heritage consistently, that disposition question. certainly ago, fit a to Look, focus particularly the everyone for nondata that. with continue markets and on sell does sense. previously, anything optimization. on think, Bill in we our reasonably to expect center assumptions, continuing any the we XXXX of longer when recycling although to Thanks company was X remain capital, or as to Jordan. assets, guidance report. not X, our that The to portfolio Yes, source a can I you capital periodically make years properties private assets to opportunities have of those We're no and said, that clearly, include know

capital since. timing strategy. and higher-yielding which we allocation think, I to capital amounts as stabilized Specifically, again, potentially well specific haven't and is assets, redeploy lease We that prudent into look, And any development committed capital. out we certain venture net can as assets that some of triple pull where would venturing joint potentially joint discussed selling assets we we think it a

XXXX. touch again, no multiple specific couple want would funded be we're that to as a are billion could years, through high over announced. but timing say Andy it As on, as fully I

Operator

comes Our Merrill next of of Lynch. Michael Funk America question from Bank

Michael Funk

call, about for half a second XXXX week-or-so help I oversupply. absorption? about you that some hyperscale the the to Maybe your global unit heard with a pickup during their inventory hope from us own mean, expectation in -- couple, Microsoft I the large talk you in regions. center it talking connect pickup half talking the Intel, just comments can maybe made guys. Yes, or and view comments first, your pull back an Bill, we've of absorption on for Contrast a second that the building and some to NTSI, guys. in last together example, there; out about from weakness data of

William Stein

So inventory didn't which half. Northern we any Virginia, really coming second and keep in that's strongest be half, in the is market, biggest the and in to in mind going first have our on

others. backing has to product conversations could tends up, cycle of that these not just So sell. -- you we're having It at we've orders. be we mean, others, quantity in Historically, I Virginia smaller highest the is some schedule fact, North spiky. some purchasing than the that, far see been and on buy in orders see America. greater in same in tell can give And seen will and in greater I based volatile. and that smaller regions, on be it -- Europe well, buy least, CSPs CSPs some to all general, orders than versus the us

in the that, we're in some that. I because orders. back in spiky bookings, So resume better we of did quarter that in on there first of the certainly orders ways, the that we the quarter. those despite is so the But doubt -- feel million bookings happy quality will less with CSP no dependent have half lull year. we're I large it's first the And was in think $XX And a

Michael Funk

Okay. And phase. Chile earlier, announced also the in you -- deal the then the talked you first it

deal. can look I additional as of timing, rates well. like, us you at? that kind that kind of future what think give underwriting are commentary commentary phases, the size the announced any Any could you on the you of underwriting What

William Stein

fill of details to like I'd Michael. in Sure, some the here.

this a going growth Digital little our and new data of a too. of be expansion. a another over this And very control center Purely megawatts is runway megawatts be has and our X, derisked but in with initially signing adjacency. -- for consistent Could to land, XX-plus in about with This Santiago, hall by X.X one, particular, So customer entry start ultimately, customer-led. construction. Realty market simultaneous is

in additional as expand heels I see we'll this, market this and looking other think So the -- think I on customers of likely to well.

Michael Funk

then, And real Okay. quick...

William Stein

a and Mike, initial you function that is time-to-market. really is probably leased it, know hall, of structure but the

we is asset. expectation that that purchase will Our

Michael Funk

one then clarification, Andy, I Okay. And could. if quick

at gave is for EBITDA -- notice adjusted the what us So apples-to-apples, some you for XQ? didn't adjustments guidance, I the Ascenty. that

is to there a same or that just was So the guidance, clarify, change there?

Andrew Power

for Sure. you kept the the that throughout But you say, that I bottom, at no The Chile so output EBITDA. across assumptions -- adjusted EBITDA guidance, basis row of we've the change. very I'd guidance we ultimately, each and, think not if table without look gave margin apples-to-apples on an

first our like what the give you I try look to XXX. initial under think weeks to going did 'XX to we ASC in back accounting go change in back of if January, guidance for you the

Michael Funk

Okay.

and the if even JV the contributing though no of difference calculate the your now I adjusted EBITDA. at change, with then supplemental, to the back interest I unconsolidated So noncontrolling that. the there is look

Andrew Power

No. very on to all the I XX mean, first XXX% no the -- day same last but of from accounting on mean, Ascenty, We for Ascenty only right the through December the I -- of is there. difference last quarter. table -- and owned from Brookfield. left the

denominator cats. sure back apples-to-apples of And when financial be on full of charge enough So say, we reconciliation It X% next in really we a actually and -- It day, the for net provider recognized numerator it the unconsolidated on when disclosure quarter XX day you're ownership given X it consolidated literally it's make days. XX%, our coverage that to an and should both P&L. the and its for or on almost our a only venture. XX%, at interest joint on provide I slipped last our for fixed debt-to-EBITDA Brookfield closed share sup. own XX% of leverage we through does those to wasn't venture for And ultimately, did material will on our stats

Operator

from Synesael and of comes Our Colby next Cowen question Company.

Colby Synesael

Great. just high-level I questions. guess X

seeing that you is would Bill, confident, on recently January of perhaps Your trends the mentioned know think Obviously, I last a quarters, no you in assumption change in it, more the curious larger there's 'XX. month? seeing if the in comment X? I call you you something to been second weeks, than of years. key few last potentially last those guess, ago? few last are that more deals a over question, half the thought recent do feel the a in just strategy aspect on Or or you it's based maybe several last And on opportunities of guys have you for Are not I just would your you've as and doubt, then pushback secondly, I'm just your And to the valuations, months year. been M&A. -- to in few some

William Stein

pick up will business I you've assume over Sure, to me if and has very is I'll for in causes will them that's past, just looking really house relatively can I change the -- procure that. report space the function the But buying a a say second day, we wouldn't in absorb. been any Colby, that Greg the the think which January there's has have recent robust. listened you large been. taken a back Obviously blocks history to the we And since the seeing space the need one. similar of Microsoft end on why CSPs of some vein. firms report leet the feel today, And to very these taken -- first the that other It's earnings what to cloud at clearly their do. the operations. and pattern as of I handle time some one And of that

Christopher Sharp

color different to infrastructure is require meet these more that, some on we providing are more particularly providers little of becoming all A the we've market and that that type And been requirements. a services see of services at looking bit launching. Yes. a cloud just the the around Bill. couple complex of their all elements These

so multi-megawatt huge major there Connected about about we a see which ability it's every out the is a data entire provider these across lakes all every deployments cat handful or Campus, of our do And services still new and launching to quarter. cage where

there's -- So infrastructure of that globally. continue the all of market all requires meet demands consumers the to to

Gregory Wright

a And it We especially. you may opportunities, so to be. everything. look public this at time, mentioned it M&A We're monitor can right. private seeing take and as we've Look, now, all your responding of the the the market the potential constantly you a see Greg, imagine, market we At whenever before. position, whether markets, M&A think in I given think in private lot is point question. I when is landscape our and opportunities the right This

deals only we've M&A looking purchases in continue land strategies. M&A, of well leg commitment we appropriate I the believe you risk-adjusted that but that's that's I to return, and think as make that another the to stool, past company's not we're true. and necessarily our and to With growth. the -- continue going do that to that is remains also the we're at fact and to fairly that pricing said, it's the said, way due strategic think also to sense shown the discipline our fund robust, With pursue

we well the land at in we is strategy look all and appropriate what our as and we portfolio customers and by we both M&A, our look market So one-off us weigh or driving think different any may are X we factors acquisitions. activity. are and we monitor acquisitions; those market. embark that what portfolio is each this really: prongs, our as what change whether back returns public reality But private; -- and determine at go it's again, market, private before upon And M&A

Operator

next comes from question of Rasmussen Erik Our Stifel.

Erik Rasmussen

pressure you're we're things what the on so what market. there just some putting we're pricing. But of the kind bit half Hearing we've lot a market dynamics sort a some just that with and inventory maybe pickup. a you just second more slowdown give seeing from in of But that hearing hearing a reported Maybe seen market? clarity? absorption from Northern circling back all in can those just of far and of color Obviously, of Virginia. jives customers there's in some talk this can slower I in -- little know kind on and to of you

Andrew Power

that. Andy. to try Eric, tackle this is I mean, I'll

So months, inventory certainly existing enterprise pretty demand all leased. much amount of demand XX-plus across we've and been It's this say Bill latest to close the largest largest market mentioned, in and it's of monitoring great phenomenal would historically I the XX have obviously cloud megawatts also where had had a robust competitive the been arena. We've, closely. success it, most quite and most diverse the customers. market and as been all to of point call our service pretty providers the

So prior year anticipate would that incremental when inventory. although grown to came -- a now happen have we going up was we not we did short,

competitiveness. monitoring closely we I we think are think way that about market, the relative tackling

adjacency, a customers to We are with selling short the large are have they very customer have road very, a incremental growing a for and we to fiber suite, suites. very pleased the utilizing landed base. fact And walk Many already these fully adjacent take plan conduit want capacity customers across want really who us their of that or already out grow buildings, adjacent once many that existing with with the be that pulled. game installed to rounded to they're

inventory a -- competitive advantage So having in online of to is our bear that fruit certainly and our new comes inventory base will the latest installed half date, XXXX. think as I that back

of tool it sell customer And opportunities, any grow competitor for is bringing rate and portfolio opportunities utilize Tokyo customers or we Singapore The I'd the muscle returns say global rare other of defending market in of more in be pretty together multiproduct that our beholden supply unique thing only has that various these for profitability. constrained much is not the and really our or and of private or has the to necessarily one-off competitive do or is patching flexing anything kind opportunities to Frankfurt America, rate. South more -- Osaka

tools think that in company. more will and sell the obviously, to for have I be close we've for got more the even So market. a value sure we I toolkit some and come. to maximize to good But inventory to proposition as make against front that we value lines market pretty tremendous our

Erik Rasmussen

great. So

lot pricing lot customers not market incremental it's capacity will what out maybe -- of deals, base, come capacity first had in in game go-around, business that that, a competitive or online. or waiting of hearing like on not that back of was it's out of lost because for And you is installed come that's you have could losing advantage this if your a kind even be even and on a so you again, are if this or you may lost though I'm to sign there of And out inventory. because that just or

to capture fair So way is a that that?

Andrew Power

is coincided for Honestly, a and demand inventory market. I pause in would a bit of say kind that the tightness that timing of of taking us

of really deals think on several that digest quarter. our the there rates There lost that they in commentary some inventory. in even to first at lack months competitive months and with look tremendous And lost amount restocking to landed then want back more of goes of of based the we come So the kind capacity a not often we product mode, sure at was if take to in with I out of our our grow to were XX we and of to that due I'm on, market the out adjacency. prior back Bill's XX large consumers

from certainly regrettable think of So have competitors beyond value-add market a of today, even offering do many that losses substance, with there any just I that pricing other don't customers in there's any not fairly competitive opportunities a new really for our their out price.

Operator

Michael Rollins next from of Our comes question Citi.

Michael Rollins

you Just can for curious unpack if a of the bit NOI more same-store XXXX.

into we same-store renewals look the about the As have how XXXX, NOI you that change business you in in for should year? the of based on mix think next

William Stein

kind start a just it I'll don't make to bridge why guidance -- maybe table, to and with Michael, -- kind of put I more of clear. actuals

headwinds that least X colo and revenue that XX the business cash normal that sure. reseller that the had least our that obviously same-store during negative hit points came coprivate coming would pool. X number year-over-year quarter. the X.X%. bad in I from the X% debt is NOI us expense X would customer more the quarter. That's net to And we episodic within more into the there's NOI against our at for a it mentioned at -- closer course So or or basis splice positive, were I at NOI episodic have for is cash had positive there same-store

We think is and some out same-store FX blend there. path pool. a X.X with years, dollar, NOI in the we while renewals on you'll XX-year PBB a, call the And now doing relationship headwinds them which of had in for on The customer see TKF because like left cut unlevered we it, our years and renewal, the hedge XX had some pushed rate now also then rate, maximization now the we XX lowered from And then have you multimarket that also are track global we value an component. leases extend which basis our had renewals, X.X-plus which years. and those

So X.X% as NOI. negative cash reported

on to the X.X guidance blend quarter that decrease renewal we with year. have once, would that the every to don't once for If and of much back expense into for our table that do kind if of say due seeing been the say quarter something overall, outcomes actuals would extend positive. a other available renew every full short for half, out have X that have I say the year, you bad duration half and translate And I you we're renewal, say the We the I'd then or the capacity that's renewal. it were many kind about of I'd half of in strategic that Again, expiration, resets. bad not potential do would other let's just say the customers FX NOI debt and about the FX, to just at is and potential re-leasing. and what debt, and downtime you

we're new, same-store tremendously more around nothing maybe looking So the just cautious pool. at

the business new I of that let to your to one the puzzle piece cash mark-to-markets. amount you call, same-store do tied existing is pool get remind tremendous the second on have a I just like of our would renewals. leasing and Before others question, you We

called mark-to-markets cash on that actually and deck of to was the a million flat that our X%. GAAP basis the And subset us. about basis, did customers of $XX one we've been think with out on I X% slides GAAP positive have in the on

versus accretive relationship to same-store capacity our actually renewed revenue. So return a on splicing, versus to it's and flow our cash

Michael Rollins

how next do And you that then think for about year?

William Stein

way finding the this really Next renewals our year, year. through major we're

talked we've sites customer portfolio big not about So XX was CSP. the strategic that of a

lot customer beginning of at XXX,XXX legacy a it, pretty XX-plus think, feet, other a talk I'd XXXX. say ago, terms attractive X the legacy second executed just company headwinds. them through And for acquired a X is about I'd one And XXXX now. at with a waters say call here in that megawatts renewal getting of really from we'll finer I are digital quarter of years XX in certainly years the these And I term. than about CSP, to, square renewal, top very long-term kind we're a we've renewal and We less in think

Operator

Jon question next Jefferies. from Our of comes Petersen

Jon Petersen

to think guidance, quickly. Maybe wanted it's just I to asking very will know want keep about clarify. not I I just people it, in but the just

So the got benefit, initial from you were not the and Brookfield U.K. in tax the was payment that those expected? guidance onetime contemplated or

William Stein

expect the planning with the part year, did the to a not Brookfield share not that to expect of that and to guidance, incentive us our exchange We end for honestly. close XX first into XX% of Jon, It's year. didn't was the assure but quite the Brookfield thought going with we close we in structuring our in them to now transaction transaction for business. of days that in very of early quarter. Brookfield we're in deal the And prior

us being for they compensate ended fronting XX As for they've up and navigated approvals, regulatory over capital their what their days. were to just legal called

not So our change that in did -- and corporate U.K. rates guidance. in we contemplated contemplate was tax not tax the

Operator

comes Choe Richard Our question of from JPMorgan. next

Richard Choe

about coming end especially at the on with dividend to -- great. is In kind the get that on slowing if think rate, a look you help focusing of can on terms fund that growth, the growth it follow-up growth development the aspect? the kind commentary the numbers? would the And made law of on sense that you of of Or we large growth Does year. the make dividend just to be at about how

William Stein

Richard. Thanks,

X% a between the and income zero-sum just cash now, We're beyond. the as of top And our game growth the flows is quarter. AFFO investing and the on a on growth grow ratio. last Really increase line I dividend heels dividend CF you'd call predicated is our dividend future P/E of figure, the don't 'XX XX% I onto in the it, flows. really taxable for a to see REIT cash under this So That's growth think think ultimately growth. platform as

certainly Always capital to At the up. our good time, I on prevent kind external not dividend accelerating see say, lean towards investing of overdistributing are growth same opportunities. focusing growth. in and and I'll think -- what the move the our you'll our waxed lines we maintaining order of on portion developmental markets I'd for a funding

interconnection points few obviously, for our kind a It's, growth across made Head of We've board. the Global some and that's focus deliver These or on enterprise top I think Corey the a of one the of thing to simultaneously. emphasize both seeking I to don't I platform. we and further Dyer. kind new another. missions our are customer that changes this global But think, Marketing, can and on again, mind think of is colocation Sales I accelerate think

Operator

remarks. conference Bill back This concludes the our question-and-answer closing any over to session. for I'd turn Stein like to Mr.

William Stein

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

expanded announcing our the global in venture Brookfield, global our First, growth entry aspirations. metros support into we key strategic strategic customers' closing Chile our further platform, joint and with Ascenty landholdings global of in securing

Second, renewable we raises, contracts and governance also underscored efficient and energy stakeholders commitment responsible our sustainable delivering all to for growth capital with corporate socially enhancements.

way equity dividend, preferred inception raised debt of we've further our with Last long-term issuance consecutive capital. not of Third, XXXX. strengthened and the redemption X%, and we billion our of the dating high raised sheet balance back in the dividend least, XXth all but the $X.X year opportunistic by we the coupon to

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

Operator

now concluded. you Thank presentation. The conference today's has for attending

now disconnect.+ You may

Digital Realty Trust (DLR) 26 Apr 192019 Q1 Earnings call transcript