DLR - Earnings call 3 2023 | Digital Realty Trust, Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good afternoon, and welcome to the Digital Realty Third Quarter 2023 Earnings Call. Please note, this event is being recorded. [Operator Instructions] I would now like to turn the call over to Jordan Sadler, Digital Realty's Senior Vice President of Public and Private Investor Relations. Jordan, please go ahead.

Jordan Sadler

Thank you, operator, and welcome, everyone, to Digital Realty's Third Quarter 2023 Earnings Conference Call.

Chief call Mercier; and Wright; call chief Officer, underlying Sharp; today's today's and Andy Chief on and on McLean, assumptions statements, Chris Matt Colin including for CFO, Investment and make will me be are on Q&A. Management CEO, President Power; Technology are available Joining also Officer, may the forward-looking Revenue call. Officer, and Greg guidance

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

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

over let few Andy, turn Before me third call I takeaways key the a quarter. our from offer to

to our an megawatt bookings record Leasing resonate. was proposition strong the with segment. plus in segment, value X megawatt First, both category greater overall than primary in X our interconnection customer product continues our across acceleration to and

growth results. Second, for at capital continuation this improvements second metrics. the fundamental is caused in our metrics releasing the guidance consecutive best us pricing, tight year X.X%, quarter, quarter. of to a in the in supportive demand further more and spreads evident our we in than these Strong supply NOI and decade the for cash remains saw was a which cash while eclipsed of X% raise full Same

core announced July, $XXX noncore to sheet raised year-to-date. total date, billion sales, capital $X.X almost continue to to ventures returns. With million expanding Andy capital and with has our that diversify in unlevered enabled increase hyperscale almost two Power. while bringing to we and $X I'd another liquidity the call The of dispositions balance Third, bolster billion our and including this of development we've year President like CEO, and to investment over generate turn in that and double-digit expect that, to delever us our we our raised joint to

Andrew Power

to our everyone thanks Thanks, for Jordan, call. joining and

since current to fourth my The quarter as official marks and X months marks third CEO, being the earnings call. this appointed role

been has as with and as work priorities a this our execute of on realty my the customers globe extraordinary honor and across stakeholders in it these to watch from to company. three highlighted during can my career, digital for XX-plus-year privilege behalf year I a I the of and opportunity been times. At recall key to single has and the our there While volatility about an much have visit colleagues outset year,

two got we've finishing While months year, date left look to and about I am progress to excited forward the in very our strong.

and our you meeting strengthen we key global capacity solutions are: strategic means strategy. priorities place As our scale customer adding first, recall, our connectivity-rich demonstrably value proposition, that are drive to which to

in We providing are of executing ] hyperscale on-ramps, markets. longer-term addition colo capacity this into by of also visibility core the capacity expansion the our markets through and and end our new launch largest [

IT their customers We this by facilities. are are and expanding and within infrastructure making recognizing our strides our landing

For example, the a on we've few cloud over largest from added providers, Oracle. AWS the months, ramps past and including number service of

and is innovate. integrate priority second Our to

into time, region formally accountability. an overall we and organized to company first the created For improve and Americas the regions management X

the bringing under platform. our global moved operations we an Digital global standardization across and addition, consistency experienced In Realty leader,

the we bring first in CTO We customers our our things technology third Osaka, Nvidia also DGX to launch data market, in Japan. quarter, to our announced the under organization. Consistent HXXX-Ready our of all aim center reorganized end with innovation

compute metros infrastructure, challenges. support and colo high-performance across high-density global to offering We AI-related also rolled out data our addressing new XX growth

and data centers sustainability moment. quarter, nice the in And In partners. Service Lumin progress this leaders globally which also which made platform. the connects added BT some enhance our and the other with of on we a open customers to around to world front Fabric in our We our we to partnering the platform, recently our I'll are vein, reach extending circle back

pools our record highlighted to broad-based our geographically since continues Realty megawatt and revenue members to and our highest on with Finally, turns bolster the for we that If into by center that results to in our future. team in private diversify reflected from by long-term sustainable included third our strategic infrastructure set leasing our strongest of tapping in and with deepest XQ in is customers, and funding capacity translate progress and ability data strength our will since the stabilized on capital, out growth by executed quarter the $X the strong the capital key to this development hyperscale NOI remain cash same product, APAC reduced of priorities, completion sources. JVs some both data broad leasing We JVs percent on interconnection results. [ growth in and leasing including confident landscape to with progress to XXXX. The billion in X-plus momentum we've center make date, shareholders. Digital we capital operational than the we as $X-plus plan with growth with record to of XXXX, greater liquidity deliver this record Americas, pricing peak results remains X-megawatt into expect quarter, of near in increased add Demand X the our And the ], EBITDA strong. across the X this of further our for leverage X.X cash we billion, improvement turn, suns hand. better in

to our is limited remain challenges and likely supply New markets availability constrained conditions. tighter to in due chain so top power, of supply growing financial remains and

to our this we enjoyed IT in speaking evolving added and digital for beginning at cloud, Investor and AI hybrid most largely AI support materialize just layer, Chris and last facilities the leasing process to and in and are it. When the innovative new our our compute which densities is already While results customers. high-performance drivers about a intact XXXX, the years, applications of we are for several Day demand transformation have leading-edge the remain our designing in December and including publicly we first have meaningful quarter, architecting ready started

data in are a provider multiple running customers incorporate that high-density one one old portfolio compute XX-plus our of from least mean While located in we our will chasing be the we deployments opportunity AI there GPUs. This and non-differentiated of workloads doesn't data And our Nvidia Digital assess that of remotely that far our infrastructure has will We're how of one being in able an opportunities. alone, thoughtful service these are since centers. approach of XX,XXX markets. currently to deployments will center we there accommodate in a Realty markets. smallest at customers' demand mean deployments does set AI in But year in single-tenant longer-term high-density supporting quarter HXXX our last for been to time, continue that were handful core the in large as increase we highly campuses it wide, connected

technology platform our seek expect that our As long-term place we we've that support within certain push markets, forefront across strategic a capabilities. that time, capacity, value always and locations supporting digital. at leading become engaged as have At have connectivity their to that we companies the our selectively support meeting the we offering same been differentiated infrastructure leasing embedded will the consider partners they community in as customers product will our I

third our to move Let's quarter results.

across portfolio. This recovery broad-based throughout activity we types product our to that throughout the was Leasing reflected strong this and quarter demonstrate year. pricing recovery seen the continued fundamental highlighting we've been and have

in of we saw drive quarter, the are routinely which quarter better the point than spreads headline offering, in to XX% sequentially over trends with proposition, re-leasing including strongest put the with signings helping reduced quarter NOI higher highs than on team second returns decade. along increased X-X X-X a While by more of while signings. the lead out pricing remains X% supportive core the during record product of year and record across to and our a on leasing than figures, than we quarter, third nearly recognition with firm a are megawatt segment and it is moved also the posted important Greater investment. In the just growth a Growing megawatt million our cash the same over up megawatt prior achieved by in X.X% X-X was demand category. growth the and contributing climbed record with science higher in period. Total to interconnection segment the X/X new in total availability more capital plus to our basis consecutive greater leasing comprehensive our Americas value region, cash the quarter APAC. Pricing for megawatt with strong led strength notable $XXX X megawatt representing

at logos per extending X.X%, new quarter, new and low added quarter X.X years. our third the During to XXX we churn XXX-plus string remained of customers

Another validation the of in the customers value that around world enterprise digital. recognize platform strong

value focus on-ramp top X serve multisite out for to X providers and on of via on X cloud continents our Digital. Realty. Recently, has expansions Digital Platform campus the access in deepening Our resulted cloud enhanced data-intensive complete of BXB edge workloads

hub in compliance X the Digital months AWS implementing in the their announced deployments Digital, hub insurance Global colo on we location completed expansion a distributed continents health multi-region Oracle sovereign during two Tier added totaling in of is customers. Bank compliance. care vertical provider X a Platform AI cloud. Other HD X in and data first included support key support on facility company the XXXX text connect retail their to logos implementing Platform EU deployed other metros in multi-site, X-site to XXXX Digital, announced quarter Seoul, wins M&A solution. care a data-intensive on companies speech a health new data a availability direct is workloads in Platform Global one addition, XXXX while supportive enterprise the to expanding quarter, the Platform and across a Digital network An AI their multi-metro to market, data XX A Global multiple now the In Madrid FastConnect carrier-neutral second the telco deployment international

year largest new our market, confirm Virginia. churn we in providers select our have the More than we work a to with and for opportunities. constructively power power made through growth that commitments our we to customers since learned provide the over and continued development customers this constraints to to market, Moving the capacity Northern to

discussed megawatts. another XXX we County XX our within development of we potential to bring expect able As available pipeline in capacity almost XXXX. to be the prior last move to megawatts underway forward on market to to current identified XX development of includes the on earnings This and capacity Loudoun that call, megawatts

will and this XXX-megawatt Manassas, ready early ball underway the site XXXX. and buildings to advance construction ash of soon in continue to the are to patent our on first addition we focused be in on of site capacity, support in [ now In two we ] from development officially the

our offer are We very to be to to this excited customers. able availability

Moving team our asset extraordinarily including investment billion Realty already the Digital third investment sales the completed quarter. has had productive on of in activity. year, to and noncore JVs $X.X an

made with during and XXXX. We the joint also in for in the last Texas substantial that sold asset closed to including in we to we the Virginia, Northern development third in and the bucket $XXX in raising ventures, bucket, Chantilly, $XXX more on well July our say totaling expect plan, the this million million quarter. $X.X including the million, tracking the separate noncore and one three the two we two fourth stabilized $XXX funding completed Chicago Within target we're ventures about have contribution other U.K. facilities the almost two progress billion disposition in our proceeds. quarter, in joint in sales the of of assets towards We've noncore quarter, Virginia, of hyperscale noncore

quarter. partnership. we it call make Before top that, seventh technology on liters Water towers for by our the Top The third over to our list Environment Matt, of ESG in on conservation turn save water telecommunication to initiatives, XXX announced ranked water efficiency Singapore. also cooling to progress our solution SINXX U.S. to third while during I'm wider on of providers. We We've the committed including rollout Power now Achievement remain impact a on ranked to our Green Council's water XX%. and project Solutions Mercier. power the National been sustainable each the to touch The like pleased turning the growth and I'd to a inaugural that on stakeholders. Matt in Digital With month X.X initiative and minimizing for is large EPA's at The green progress water saving usage continued also list users Singapore our over the expected million quarter, the improved across Environmental has over of won evaluated Awards. The project Innovations, Award portfolio. In facility Realty's our for across the all the delivering environment CFO, EPA's company XX from Green we the are

Matt Mercier

Thank you, Andy.

the we our leased $XXX of total We were and continue in to and of million X,XXX the Kong. quarter bookings to bookings. jump greater in finishing Portland a Americas since signings $XX third interconnection remains from with in bookings and allocation We was decisions X-X million XXX,XXX ago. with added consistent each as third groups accounting geographic for again million the execute leases our strength we in of on capital a year XX% a lens our APAC. over as results. new quarter, segment steady primary million record with and product This quarter a strong growth of megawatt one greater in source the megawatt the right than into me place outsized once than a contributions totaled megawatt quarter with $XX we plus This Let across discussed our total strength regard Hong sharpening strategy. Interconnection highest two of $XX total signed the connects another product at cross broad-based global quarter meeting category, cross-connects,

leases most in our across the improve the highest Americas level by within we resulted increased present with signed the schedule growing supplemental. continues returns at greater megawatt a power experienced than the stabilized Our the that average greater the megawatt as Pricing focus globally category in and outsized which segment, markets expected to the development cycle pricing half in pricing implied since returns on life of greater than higher threshold in saw first XXXX. have the on

but of Turning to yet quarter backlog million signed increased our leases backlog $XXX to at not slide. new end. of The a current commenced record

more were by elevated million leasing new $XXX of volume quarter. commencements As the in than offset

We build-outs expect commencing little leases. months, the driven over commencements to the commence development with in and by to quarter ticked throughout nearly signings up to new a scale XX% support of between backlog the and quarter fourth XXXX. The lag in XX XX% larger

During spreads the on quarter, signed strongest with achieved since X.X% of we XXXX. cash third million pricing renewal the increases leases re-leasing a $XXX of basis,

skewed the single our category. was result a other strong transaction overall segments within pricing While and product renewal across our across X regions, upwardly was by

X.X% category with megawatt in continued volume X.X% $XXX growth on to that spreads raising Excluding rates are higher portfolio, megawatt X-X a a throughout strong a X.X%, X.X% spreads quarter. guidance this quarter basis year. With renewal, representative Renewal the We renewals releasing a consistent reflect results, fundamental post steady of the first for the improvement is outlier, a picture in we've more GAAP the the is quarter their Greater have feel this would volume. which cash renewal the we and $XX of on X spreads been up year of on year-to-date cash environment. million full renewal third continued throughout today's albeit that on this basis spreads in basis. improved months and success by renewals we of the with seen million the in year, on higher third cash renewal to with trending seeing the are our broad-based lighter than the climb over

quarter, reported in into share third pricing quarter XXXX. Total redeployment On sales take of sequentially benefits as the impact currency the was In development. impact the sales of share, a accelerated basis, hold. of to the X% equity primarily consensus consistent of $X relative and up per quarter and revenue to than the third FFO versus the down starting terms XX% the was constant but $X.XX the of core FFO $X.XX improved we the in per per the despite increased early and the more asset asset reported of of share in quarter expectations, of and billion completed are the raised capital quarter with year-over-year $X.XX reflecting $X.XX earnings broadly growth, we core second

Year-over-year growth utility in particularly volatility be Importantly, also continues energy reimbursements, to the costs of impacted these customers. by revenue costs and in directly passed are to Most significant through Europe.

and impact total XX% of quarterly another million reimbursements, $XXX year ago marked and the utility the was year-over-year. of XX% Excluding was up revenue other revenue period. Interconnection record higher than

base core reflects X,XXX Excluding Teraco, Quarter-over-quarter highest and organic XXXX cross the revenue and our the growth strength almost the since connects total X% in and was interconnection as up were installed global XX% revenue year-over-year, interconnection was new to added, up interconnection increasing footprint. XXX,XXX. ongoing

the expense partly dispositions warmer off removal the the property given summer ventures. elevated expenses already quarter, months to of over second for and remained were expenses benefit the operating essentially consecutive Moving the Rental high related the seasonally an reflecting base. Utilities flat side. and joint XXXX of to

the noncontrollable properties some elevated higher front, However, spiked in an reassessment by million, expense property driven our to Chicago. $XX quarter-over-quarter of on taxes on

by related but expenses demonstrate seasonally expected IPO-ed adjustment these stock. warmer also X.X% coming utility noncash driving capital in XXXX of While the item investment. Improvement X.X% to stabilized we during largely nonrecurring our growth REIT months. noncash in in share worth period the The with throughout strongest X.X%. sequentially REIT end was digital value These on year-over-year. was $X.XX Even the our the same per this a [ per movement, One NOI core a be in the growth cash our impairment lower quarter, due the third our value bleed September, charge cash ] Singapore the operating moderating and on will of the year-over-year be it been highlighting over at to was share, performance increase adjusted and our the results continued XXXX, holdings valued year-over-year at to the basis, pool in since $XXX in but organic this the of EBITDA NOI passed strong December of at of year. noting million that at carrying $X.XX customers, strong turn increased the quarter capital same currency will constant have fundamentals in disputed years. Net underlying in extends up XX%

had to that rate we sheet billion to for the Turning year on This our closings, $X into and The a plan. and borrowings full second balance in repay by as our $X.X billion the funding the result, little balance today, program the settlement of sales noncore We our over development our credit at raised $XXX meaningfully cash, a forward. third credit used Roughly raising USD earning kept generated quarter. In cost strengthened of we we've our quarter, was million have amount asset on the JV capital excess our under driven remaining sheet. during progress borrowings continues consecutive equity the facility. remaining success facility. was third redeployed a higher from the and in quarter, over proceeds interest was target

quarter in CHF to our that notes X.Xx we that paid execute the within in quarter net fell and plan. had end near distance our year-end. out the on goal ventures our in development are asset we a and revised left ability of debt and $X achieve result, off we the end, end are now and leverage sheet the over set XXX additional spitting quarter, are sales upwardly by at As joint funding from at matured our to we X.Xx to million Since cash confident that down leverage billion EBITDA, October balance Xx our of of to of on second

debt our profile. Moving to

of X.X our weighted dollar recycling. growth ample Approximately average debt unsecured, FX of is of debt providing is our our maturity X.X%. our non-U.S. is hedging of and XX% capital our is and interest debt weighted years, strategy. our the debt denominated, reflecting for flexibility platform rate fixed Our is XX% over and average rate XX% global Approximately net

of billion remain that, $X beyond than debt through XXXX. and in our laddered less have maturing we well XXXX Finally, maturities

guidance. our to turn let's Lastly,

$X.XX year tightening core per XXXX to high midpoint are our $X.XX $X.XX the a the guidance of FFO new low share. range and to maintaining share full $X.XX of by the at We per range for per ends share,

of range We are the tightening EBITDA, year $X.X billion. full our affirming year guidance midpoint for also full adjusted

in midpoint to being year full Our down lower is impact EMEA. billion adjusted in of $X.XXX given new tenant by pass-through X% a to billion range to oriented utility reflect moderation pricing guidance electricity revenue range the of $X.XXX reimbursements about the at the

last but of $X.XX see quarter. rent a and related per recall that due the that guidance including bankrupt we quarter's was per from to quarter, a customer we the our this $X.XX impact dilution of In the reflected customer FFO Importantly, customer, $X.XX expect realized utility second received share another in the incur across you'll portfolio, $X.XX from to that up core we to related expenses share all a we to this quarter. fourth did in unpaid write-off $X.XX could third

Chicago In the to of acceleration property of front $X.XX and related drag as addition, drag capitalize increased on seeing we are assessment related development we in increase carryforward and of opportunities of up the of we spend could the us. tax see $X.XX to to

our XX%, cash continued X% NOI up the the and occupancy center Same full GAAP With to and are nondata X%, a delayed fundamentals re-leasing in a points X%, increase we year-end growth between our versus year vacant and supporting the prior basis reflecting portfolio. sale capital organic to during a of operating over representing also including of our metrics the in from the timing XX% updating guidance, X%. quarter, guidance XXX portfolio reduction improvement cash of in asset of spreads

reflecting for development demand at $XXX million level line to $X.X the is our $XXX full $X.X midpoint. dispositions we increasing execution with representing billion guidance to to on spend our the increase at million guidance million increased representing Given of embedded development expected which our updated pipeline, our executed to $X.X Similarly, the increase quarter midpoint, XXXX, year funding a also JV increase the in and our plan this are have third the leasing within for in successful capital the the continued billion, in we the spend year. to $X.X for and date, billion

While us headwinds been at to term, on seeing rates. This at opportunities In capitalize borrowing of interest short cost from sharp incrementally borrowings higher weighted is driver our of last interest experiencing important [ capitalized on at levels, development requires the dilutive and in we've ] development of year, X our increasing we the burns growing than completed are rate regime interest our assets [ underway at caps words, whereas off. ], to X%. the other less in earnings. These similar are sold average growth capitalize and projects the liner low spend today, decade, has an the are near-term yields for the change new GAAP to our relatively we

your concludes now will become our share. remarks, completions this is mitigate FFO prepared dilution. This please to be portion accretive Operator, begin a development of and are that to session. expect increasingly to Q&A helping We per we'll take core The questions. news fundamentals the good pleased

Operator

Instructions] first comes from RBC of Atkin Markets. Capital question Jon [Operator Our

Jonathan Atkin

per share for us in alluded JVs related of like imminent development point give FFO a that, or leverage the you we sense was then of It and that Can I should the And headwinds you something tailwinds to next expect? reduction couple transactions. there's maybe So to benefit year. that affect interested core that sounds relatively might a the the to.

Andrew Power

color? the we some don't not activity, spear like development don't X been some of you which on touch we haven't quarter, just give on our announcements JVs, us but you But great progress. been X couldn't it's let but last the why idle why Actually Greg, and tip Greg time they're making unfortunately, his

Gregory Wright

Andy in last had TPG quarter, hope in more look, demand, which Yes. we And we're same we in obviously, Virginia -- as GI we the Northern demand assets. process we remains even $X.X center and and is holds more even already which have joint And about I private than Thanks, hard, we John. were at development proceeds. guidance to development report. stabilized true. We're announced, Look, we and investor with ventures that. encouraged. I the go two invest data potential than order here Chicago, mentioned, think Other robust very can market, in right the assets found to to that and to billion greater generated you of was was All demand working look in what I strong, -- say it's continuing relatively and we see as stabilized demand short But far now, would we you remain something no as that, for tell when JVs. our

Operator

of next of comes Bank America. from David The Barden question

David Barden

supposed interconnection follow about decade were greater and level at little I we of guess When up pushing year and over I was we've XXXX. want talking we first accretive re-leasing sub-megawatt you the a year the in than of to growth year a on year here be about the X NOI bit improvements X, in than same-store to and dilutive was than in confidently the then leasing couldn't began Teraco X lapped the are. frequently thinking X, in neutral and mid-Xs we say year We're question, and second leasing. Andy, how zero megawatt acquisition, which would be greater which part you Jonathan's X. greater about cash megawatt, talked XXXX, looking in it's now X%. towards And

all feels pointing it I'm like accounting I needles XXXX. are So the wrong. outside of tell And of where kind too me excited, before into some get issues, up

Andrew Power

I call, prepared with just you tell chime a give XXXX hand on weren't just to you off I we which in this to guidance for. I'll Before can Matt some color.

were the that headwinds and no that on our continue on I think of saw we balloon whether pricing both mark-to-market ROIs fronts. continuing. But your asking you're the the guidance, outset working with Matt story, tried value that out multiple our through. year, resonating. our been product cash is right, I don't a take And talk this we're at saw show-me can trend development rates, you mean I in has environment to of at to why firming Matt, air we But bit So it's a We but friend proposition Matt the and environment signal still before the we and obviously there early [indiscernible] that the of thoughts? pipeline are sets, would say momentum,

Matt Mercier

have it at market they've and think thing only that term online. until a we've on We're some supply-demand we than as Yes, into made kind clear on I towards dynamic to the year. that we'll progress capital strong and to a close -- opportunities follow-through substantial near [ this level progress prudent as it a but are we a about with. about deleverage, an is what therefore, of the advantage was. this year. I take that of of sure. you impact going as start at doing we're also Thanks, at comes capacity higher talked And we're that's end time have I sales we And but think, the see see on. We of but asset not we that we've recycling year to dealing that -- the been billion year, capital we're desire started part the billion, been, think like pretty $X.X where capital, one, fundamentals mean of coming opportunity deploy to David. bit it's do, I looking making that my it's but the next we've which where in $X to doing dilutive know, cost prepared to through we're little ]. a the stated of about remarks, And is we're are we been And great today at

Operator

comes Elias question from The Michael of TD Cowen. next

Michael Elias

I you help really when equity you mean but selling the about you it, could sources assets And cost $XXX. have funding? your was would lower that raised at rate. equity at what $XX didn't by call share, stock a raise think a that of Presumably, is been at, cap First, X% than the equity us of

Just target that, you're wondering I as towards call about it, then you use march have thinking how of follow-up. next a year? leverage the X.Xx equity And

Andrew Power

new call. rules get sure make playing least So on the by guys one to at question Jordan's everyone

on you get but we'll one So follow-up. the to for next question, we've your round got try

of the we I any here, moved July actions I this stool. joint hopefully think major month or private leg on our haven't next to capital the our conviction dispose into than issuance think of being hyperscale venture or stabilized year we equity the followed speaking the with next that ventures the our tremendous on common additional both assets. dribbling And had of in development joint with fact noncore speaks half whereby of the the are louder stock, first the by forward success leg of raisings words

some those future think are incremental believe before -- strategic different taken think going progress. on on will reporting. are to down, the quarters where we that period in right sheet So ready. And -- that experience, projects put X.X in that these bottom what back we've cash these are literally to our fundamentals be mean doesn't seen the company quorum of and some not-so-distant We've at we're and X of things the I here averse share massive projects issuing But relative wins of long-term got for That prior flow is right turns to time at and milestones the allow or line. of the this the and are we're tremendous in of price. XXX% great capital-intensive board the balance I large, the the to ever EBITDA, equity right worth through we flow we've to

news pleased come. good to that with would So the -- progress, we and and say more so I I'm have

dispos, last to Before clarify think because I you what hand thing. should the I want -- a -- means we noncore really that one to made to that us. on Greg just comment over

Gregory Wright

Look, don't different -- nova they're from I you're us? assets, Watford, Hi to versus noncampus think rate stand-alone X% the when a Yes. are it's Chantilly. What an right? X are cap a of our so major One is these older, when [ neither to with say at limited that you And mean these right? you mean markets of [ the And right? assets ], they're look Manassas assets. connectivity, those a X% we at what assets, allocation asset on Andy. I things. ones Michael, multiple Chantilly, at in perspective, In noncore your selling right company. ], One's sold, minds, look assets Lauder implied capital Thanks, it's Wilton in does your very is they're

portion these this But is our of very business. a we call small out. very, assets Now

don't here that's cap we X us, versus noncore very a or forward different assets of These analysis. going a nonstrategic selling assess are and I and So X think business core to business. part not can sit on rate in the equity that assets our are

"Hey, capital it a right that or signed say, think to right that noncore capital folks I allocation as the caution just therefore, a of play would were here's assets because of the I cost were that's not couple X, is. So

Operator

next David question of Green The from Guarino Street. comes

David Guarino

just leasing you feels reaching Page out your new the like it put of they presentation keep sky. On today, to bars, X those

there's starts is think digestion in as activity pace for there a again? a [ to Realty whole? broadly, a is the the dirty maybe even industry that pace word vocuabulary for Digital risk You sustainable sustainable maybe a and back Or phase it of ] come

Andrew Power

Thanks, David.

of XX%, flywheel investing close and labor. been was than It I Less this just quarter foundation. to of more size number, harvesting the dramatically, even I I the our signings customers, in that in into but year-over-year, is but the mean, historically as think And X% a remarks, more what not line and quarter-over-quarter across with record. about broad-based that megawatt what's start is up a fruits it great bar, regions, led that success and really it just to interconnection a went at call including quantity usually top that it. So see the not we important was was tremendous of more starting just interconnection said with to off we've but prepared the

been On deal, not the of certainly exhausted. When even And fast how one you continuation was the deal it our pace of IT. was playing the little at bigger a have cloud not largest while, not It as is a of the are these demand geos trends portion single here that, the but to signings. total hybrid for well. broad-based look across that is of growing, transformation, digital X/X

our in demands incremental coming to just the of And is where like think look supporting for densities. XXX anywhere is seeing overall. an years and artificial tailwind That doesn't I largely which many blossom hand You power the we've our of around high-performance [ starting capacity ] the we're feel the something to a for industry globe compute logo in demand is in it enterprise new that numbers. digestion from just intelligence, at is near base had amount contribution period

Operator

Luebchow next of The Eric from Fargo. comes Wells question

Eric Luebchow

So of for to quarters. on couple the I been renewal pretty touch kind wanted have last of which your outlook spreads, strong

rents look. So your look in-place if I more start look looks to at your attractive the out you expiration it like really further schedule, even

of of maybe like? rents? outlook. subdued it to would of there you kind in-place little terms the these rents as contractual have push ability Is footprint you then about be as may more that near-term high larger limit maybe So through you any And can a higher talk contracts any to are going work your your some that as

Matt Mercier

Thanks. Sure.

we year X%. And put in environment we had our where feel but continue where think first spreads note, right pretty this expect we'll that pricing and to increase across expect -- we think we've think, I we that renewal types. I been, guidance call as I still continued about environment quarter called see that demonstrated that we're positive the off, into slight out releasing product we it, all into we some outliers, than fourth pricing of a said we'll we strong spreads our and the have So with that the we greater items -- a now confident that

where we're nothing not into that next pricing all the different. to suggests environment our compared those continue Again, again, won't strong basis going against alluding would say I against. the back come there's that in. of giving pricings that be to think might what I across major to guidance, strong year, is which I markets, things were be robust you is that are and mean,

seeing renewal give more able spreads next that, still guidance that we'll not I once but in year. the we'll level to next that are granularity provide is be quarter. the expect terms We same, of we positive have

Operator

of The James. Louthan Raymond next from question comes Frank

Frank Louthan

looking sort nowhere AI deal, and with conversations they're a that that campuses is are guys having deal what of AI versus you the customer primarily at that that's for when of maybe middle you we've of some an win heard of kind to you less the thing. it So expensive an coming when about

from to players? peers So the what private some get of some versus in how are of they're winning looking digital you And AI? is it your or

Andrew Power

there's I still build-out toss infrastructure. going I and and reiterate, be to many in [ a of going call of to I'm -- what's early to is second. a of required AI, just forms just this shapes ] vast But innings

private change. model outweighing well as training, called capacity and many intersection to to the location dawn So into workloads of now AI everything enterprise, the incremental to latency-sensitive inference consumption in the expansion the and we're existing or point enterprise the needs. The implications our hopefully that's adjacent of single where consumption many, for And obviously, supporting it's right is contiguous world will multiple consumer large inference going the megawatt of the in -- between. about language a megawatts X of -- AI in or

and -- front your come it is and case, grow So think, demand like going Colin, line you favor. our why change I I experience customers? with in speak this think But don't this of to is to the feels some

Colin McLean

Thanks, demand is really of Andy. customer amplify would our you're plays Sure. saying I to question. broad-based what requirements not across the platform, about Andy appreciate Frank. I the a mean well talking which portfolio. just is are monolithic. wide I principles the gamut

dynamic [indiscernible], a as as requirements densities. do also job having to but any of base in we mixed good requirements support think terms broad I So

pretty is think data we I [ so what well. again, to customer we that across workload XXX-plus And to map right centers, to that to serve try market do right ]. And can right

core for also remain to feel this that is still AI pretty and proximity market i.e., GDP requirement going core workload. much strongly orientation, a of We eyeballs to

to like feel assets our of maps globe. that well we So really across course the

Operator

question next from Liu Evercore The of ISI. Ivan comes

Jyhhaw Liu

you weeks, in and mentioned especially sensed more Greg when in in recent JVs strength potential the appetite So light shifts volatile have any rate but partners? in environment, for you're meaningful for the development with demand discussing of JVs, stabilized a both

Jordan Sadler

any ] [ your has later? ringing Greg, phone been

Gregory Wright

for Look, Everything right? data quality they Remember, different term look think of quality at to invest. today, strong business on the look is the centers good answer basis. the no. best customer is investors are out there relative at making the base, but organic investors them No. it's in today. It's a the of I lease, place question, sectors, the a of investments in the the growth the and when facility, when And the

time, investing sovereign demand through a fact, niche when data investing to play over there, of going it's you're than and centers funds, like. continue In I becoming pension at wealth out look level you the argue mainstream rather see whether more would to that endowments, funds the

unlevered, interesting no, as -- they're earlier, pockets I of be this capital patient to for there's wait and do also and Ivan, down. And an that's that there's demand mean, side. so wait an we'll think I back it's come to willing your driven So leverage on and are for think I I rates point, also, the outsized to that development mentioned what even

demand, a development. fact higher if environment in the that you more rate towards will, is we're think I driving

not. but we have no, So --

In way. fact, I for that we've acceleration I development demand seen say in an the the would would JVs. other go

Operator

The next from question Rollins comes Michael of Citi.

Michael Rollins

target balance the the take development and for ventures, development a you When will on range bit backlog the demand of of digital you can capital us that give place XXXX? preview that sheet a seeing, the you're joint the on in

Andrew Power

partner we're think how funding large-scale And in but to -- the believe reduce framed what customers, to Listen, the and that a will a campuses through time ourselves And support meetings some our taking large news. we I and we are all to for megawatts. priorities. one my business flexibility, their growth I do is we mean on of top So to looking player we've back had this here are NAREIT These strategic multiple this we're even largest we're the to are the three going of was targeted global projects. be fall isn't or ]. investor not projects [ at a change new supporting space in going at I are -- the tie

is XXX% we those funding we change are at projects weren't North adventure bottom growth. And an of would Europe, to So think already I date given mostly think in type to drive like not to that business our you concentration shared of invest the little partner is is looking like-minded a right was bit that for best-in-class class smaller trying find I in in think think and in and capital source the to for America And that the to Latin America can alongside asset a APAC. their in it's noncore targeted very all things looking going more in and line terms strategy we wants vision to the industry. this be invest if of our a really

Operator

of The Bank. comes from Deutsche Niknam next Matt question

Matthew Niknam

cash on one flow. Just

another looks the over been increased and $XXX like receivable it's drag year-to-date. So million $XXX sequentially, of a million accounts it

think you for color there's reversal this? can any share quarters? on upcoming if what's in then wondering prospects of any sort about Just to how maybe the And driving

Matt Mercier

Yes. is as Thanks, well. Matt. This Matt

other as last I little it's increased half here revenue of trade period, points we've roughly particularly over yes, our receivables And last half way two over when we internationally as EMEA. When really only we've down well. actually the -- amount been of receivables, only look our had, tied more So increase in as in increased are receivables trade tied are payables liability which doesn't we've VAT the which has out appear good that or offset what call the of much payables, balance, chunk has actually trade which it also accounts -- in billings that sent to bring also trade the think total over well. fairly again, I you the our is we've payables of in substantially, has to couple things. in growing are But related been the to again, actually I as and been line are our a A roughly I'd balance of part that our with increase increased. But rent of important but two balance quarters half well. over that have which at that result only our -- sailing to construction is are majority think that had that been of able points a seen been quarters the receivables couple a construction, call that's customers. receivable the One, actual to what VAT the tied has the to

Operator

from comes Aryeh of Capital question Markets. BMO next Klein The

Aryeh Klein

It your there there's ] are it lot the Maybe you on to believe following versus and perhaps rethought Fundamentals funding Obviously, feels have [ are there. strong. upside the considerations. a you essentially JV really keeping But runway up of JV going own yourself? on like Singa for at question.

Andrew Power

or partner next terms shared good built is in have partners the large, for advent the an is then all year. I've way different this inflection maximize much experiencing So joint base to development we able that earnings targets call has strategy I not intelligence remains are the We'll when that two move in back terms the this Matt's value we but deleveraging modest been the of we digital and into -- again, to long-term, it the reiterated -- it, debt it, measures here to call, hybrid this of coming on that line. And headwinds the to operating down drive upon doing of tying levers And some of how to to I a a share development said this right tremendous for to more the call be as view in right our due as deleveraging when right? has third question consistent throttle time, to those we transformation, accelerate to, we capital throughout comes results amount I have the refinancing, don't joint of public year. We've private be, allowed we capital-intensive laid computing, amount our with This fundamentals us year, shareholders. in certainly on getting are believe it out. cloud tapping rounding a also and ventures And ourselves really the to our think ago, to venture opportunity artificial road. comes now what to that in IT both space, be and really and with coming fruition so bottom

Operator

Simon of The Flannery Morgan next question comes Stanley. from

Simon Flannery

you're on you just this for If you the I could through just bit pulling increase little stuff We've existing what at we're couple being $XXX point. Is higher the year. here. else months the seeing contributing just forward raised be on some check Could a that of million per to development spent a might left in coming Again, increase? year, midpoint got from go on? that of what the next obviously through your CapEx cost megawatt projects guidance

Andrew Power

biggest called I the or that, It's now overruns it pinch County the But and demand we goes -- anything our mean through anything up, call not can Loudoun freeing I'm which landscape. is in in think run success And point that. budget in Virginia, it. caan like Matt conviction But I piece Northern XXX-plus is to missing it, back there? activating megawatts else the Matt,

Matt Mercier

No.

XX North majority vast Andy, hit megawatts. specifically. think, megawatts pipeline roughly our Northern you of development I Virginia that the mean new the of We had increased was XXX it. call starts majority of and in America I in

roughly look megawatt, you cost at been flat. per has think our globally our supplemental If broadly quarter-over-quarter, I

development get quickly it's of a possible. as view those just looking starts completed to as new So

of we're So customers advantage for take and if the we that time can deliver our in. market on

Operator

Del from question MoffettNathanson. next The comes Nick Deo of

Nicholas Del Deo

Do add product? to you being to what have you feel about higher and how of about and share is lines, like deals trying desired where you're you like feel offer accept. company's each talked those at targeted customers' you your for returns along more perceptions or the disciplined reposition your of you're winning returns you more the do you've strategic kind Andy, value with of value And deals sort assets? of consistent successfully

Andrew Power

Thanks, Nick.

quarter was growth top yesterday, multifaceted. So how of And commence operational availability across can quarter, recurring fabric dialogue was the a elements, and it can theaters zones, integrating XXX and their on concentrated plus just added from how on cloud next were customers faster. had this onto ranges their the team I we and our my I X,XXX the it called greater There's cloud service consumption we check in could that and their obviously you from how how can natively. customers. their one our them existing we all our to services with It in support drive we also we're tell

that paying think we as seeing it, think are I we destinations, And in results -- dividends so the that in accelerating. litany as pickup you're magnetic well seeing And of, characterize be on-ramps world it in interconnection announced that the call I customer as demand and the the less megawatt the appreciation. around than those we you're

So a connection I do see there.

mean supply there's win their they that really campuses a these have time. and growth, but of a shop being customers, And their that in also I through of their that metropolitan large being where like ] to we're of a of or in build needs. probably for top think amount just trying the if tremendous need, question obviously, one-stop value with we think honest larger business XX our something share, the was XXX% bottom areas, stand can chain, them safe, excellence value doesn't improving of durable really I a that's other. and transparent customers customers, that we're some just try secure to lines dovetails to really delivered XX some we're help And to we that hyperscales future-proof we and And operational to their other XX when market and your I adds and think fashion. we've our line all [ a test our no

yes. that's So a answer I long-winded to long, think

Operator

Rasmussen from Erik comes Stifel. question of next The

Erik Rasmussen

it disposition the $XXX good efforts. ] Just like than Is missing still year. commentary, that your I And and the the guidance recycling to represent? seems deal I from raised getting piece range development that is a saw for this? the this But capital back -- guess, This you [ more in one JV. obviously for the there's can

Gregory Wright

] yes, The Greg. is good on a answer are yes, working one. still deal. is we than this And Eric, $XXX [ more is

Operator

is a next TD The from follow-up Elias Michael question Cowen. of

Michael Elias

for to hyperscale. about environment, I ask So particularly wanted unlevered return the

think double-digit to where top larger over, you footprint think some thinking When mentioned the it, I the with call, doing part that seeing of you're you're deals something of evolve earlier do about And this clear? effect in those just to the could you deals these next call unlevered that, curious of as where yields. your customers, year?

Andrew Power

into our point dramatically. I deals whole I'd double schedule, think across I the digits digit the the call in is is for call current proverbial been value in in I I -- at double an the I megawatts of look double it, say, risk So state moved with you cost think creating think ascend the I digits, XX think big episodic general, we by But largest obviously the many award, of the to where don't ways. America, the you quarter-over-quarter. zone for scenarios itself category end would and portfolio, in given home when current deals up North which on development has increase go that it, there's kind now returns to of, board the hyperscalers once including could in where, of terms in, higher. you're has capital

value globe to lot support think customers' lot create the around hand diverse, a stakeholders. we've incremental remains feel So outpacing robust world of of dynamic and shifts for I stair a beyond abating. be growth the supply. the I on in I great stiffs a where time demand of to bank got does not And That wouldn't a that. But and think tremendous in we're

Operator

go his turn President to call. the for I'd Please That of portion like back Andy now Power, the CEO, and question-and-answer concludes call closing over today's ahead. remarks. to

Andrew Power

Digital Andrea. had strong third quarter. you, Realty a Thank

Our X-X results with our re-leasing and a record all strengthening with decade. that megawatt customers. spreads best cash of bookings, results posted proposition over value demonstrate our quarter in our is organic resonating growth We operating another same-capital strong

world enabling customers' we I'd growing delever support are to the billion not thank year, needs, of first new raised and capital, to and meeting of at joining us yet. the to keep We updating spinning. to done my many us L.A. digital like at our Realty gratitude reinvesting months in we've personal over $X.X forward express a exceptional team to you. NAREIT in look the progress Digital our for meaningfully while weeks. Thank X During everyone dedicated and today you and you with our of few on to

Operator

has conference for you disconnect. now The attending may presentation, concluded. you now and today's Thank

Digital Realty Trust (DLR) 26 Oct 232023 Q3 Earnings call transcript