DLR - Earnings call 4 2023 | Digital Realty Trust, Inc.

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Operator

Good afternoon, and welcome to the Digital Realty Fourth 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 Fourth Quarter 2023 Earnings Conference Call.

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

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

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

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

a X X First, the to our about wave greater healthy, highlighted second volume we are added. in category pricing across ever new by the was highest than of logos interconnection ability we and the a our of and quarter to seeing megawatt strong robust megawatt the are plus platform, segment, optimistic record execute. quarter in Leasing demand in

target. The metrics $X nearly year proposition high reducing with and plan technology total to able our President and and differentiated to continued on like over strongest to that, billion I'd funding over year off equity our Andy billion the of generation of turn unfolds. With our $X as below quarter $XX to note announced development resonate. Power. center seen the next to spreads new ventures we capped NOI same customers' cash has the in execution needs ATM, our raised XXXX Digital call CEO, support as And completed to billion data in positioned lastly, the issuance a infrastructure be our alone, re-leasing joint XXXX on growth leverage and forma fourth capital bringing cash Realty our our unique Second, and under the capital sources and year-end pro capital than during we've fundamental more years the in value

Andrew Power

our strong despite thanks Thanks, year made and our everyone Jordan, XXXX strategic progress we for for the was volatility milestone toward Realty broader Digital call. in financial as world. objectives and a around significant uncertainty conditions to joining

as the our center on For and service Jio accelerated connectivity-rich and the providers. new of unique ServiceFabric increased an data expanded forefront, me, locations year points venture with its with Realty the to service be its campuses XX also growth while unprecedented industry's composites discrete available XXX scaling center enhance of and like function XXXX directory. for across change wave services that solutions, by data platform landscape. the services by Mediterranean Digital step will capabilities capacity of AI in year arrival enhanced and of addition remembered ushering and the AI's in of with the to hyperscale our the than year-end to adding access We new Reliance leading with driving The over value workloads. We the our more direct added elsewhere; around India new connectivity-oriented a customer of enhanced demand, joint number cloud proposition footprint the our and

NVIDIA next-generation chips consistently data like world. be efficiently around structured to in and pace X faster XXXX the to indicative to our we was adapted integrated our numerous a innovated offering X,XXX a of product at regions to than We our ever We before. H-XXX our year We leadership connects that market growing data the centers. new also demand, connected year, platform portfolio the meet our team added aligned evolving in support strengthened cross and communities.

handle to markets our large XX across is like renewable Germany Jersey of add equipped San requirements. And applications, Francisco, the supporting green power-dense Xx energy power our XXX% solar and deployed capability colo in Sydney. many to continue high-density New these solutions all in Texas, regions power H-XXX PPA Our to we spending and X agreement

of customers a Realty we the support to was requirements. to by And portfolio global balance expected and diversified of decisive action that and partnerships XXXX private data sheet customers' provide our year took the continuing And fast-growing center that our to is rightfully all our us vehicles while did Digital demand. sources of a strengthen that capital our that capital excellence developing operational leader while that enabling

diversify I and our outlined to capital the On plan ago, this a sources. Bolster call year

reduce commitments since on Increase capital. We sources just our year. and sourcing the new capital to and forma the Our on reliance Xx our our to goals and returns these outperformed markets, accelerating on ability over pro our towards meet when closed by for have year-end. our for invested data reducing fund repayment, and liquidity investment our announced leverage to transactions diversify to new our capital of limit the leverage been to were program the for enhance end debt increasing capital center each adjusted capacity of demand $XX billion to or X.Xx of goals, development that

announced our resolution we the the X the joint fourth the X and also year significant existing new and We year, development in relationships. Cyxtera. to successful ended JV out expanded with relationship To X of ventures including transactions partners quarter, our some round with

raised the to yielding Brookfield quickly September. We these run completed of ATM purchase of Frankfurt million $XXX million $XXX since the his $X.X Realty. highlights Cyxtera in famed for leasehold equity million, and Singapore the end Digital net early transaction with $XX along I January, Lindy by our cash also under transactions. In will Greg Triple to Cyxtera's of of of the positions selling through assets billion with of

X end assumed their accelerate the September in Brookfield and to existing addition, In XXXX. portfolio others our X amended expiration leases of to

state, connectivity first enterprise quarter. ] one offering. London's Realty to Digital customary This submarkets PlatformDIGITAL's expected subject cloud a to closing conditions the close of purchase remains to highly exercised and of the towards the transaction readiness Finally, adding obtained and colo center and is and sought-after data end [ option an Cyxtera to

XX% potential interest In to Income services data in expand are leased in facility project cost under financial The option investment-grade us Realty total of up the for that enabling $XXX purchased of million estimated development obligations the our million. $XXX November, just the $XXX,XXX,XXX closing and tenant [ and to centers projects. We reduced this ] company. received has XX% reinvest to X an capital, remainder to an capital an higher-return funding the of upon the to

transaction the monetization billion our joint accelerates gigawatt of is and $X of involves center Paris, expected Blackstone the through most XX% land in interest of be better our nearly sale nearly with development XX% venture Finally, in forward-looking This of capacity X-plus XXX an JV largest bank. capacity and potential support us hyperscale and to needs. Approximately customers' total to across Northern enables delivered X XXXX. and is Virginia venture's megawatts data XX% our campuses Frankfurt the of

interest ability retain sales X.X developments will these first for in fees and will a I asset quarter We million million. earn follow-on completed an our to roughly from operating announced ventures leverage also week, capital. I Frankfurt managing on interest developing, support these and returns successful mention owned the our and offering invested of accelerating if to jointly facilities. enhancing XX% joint in or and equity incremental last planned customers for driving remiss be the which $XXX acquisition would leasing, in our asset down needed told, XXXX, capacity turns not deliver we peak, did $XXX Digital our REIT's in XX.X% REIT's All Core

the shift acceleration free foundation we our trends growth in our to head long-term brief an into with earnings business. are into flow which our results the lay to of sustainable insights results helped in across seeing Let's a offer we as some I'm take that for shape pleased should for and cash XXXX, recap and XXXX.

XXXX healthy, with our consistent in than record capacity. Leasing new broadly increased continued on quarter, to demonstrate segment our proposition to consecutive the support value improvement types total first positive strength with X were KPIs the in were the regions. in as business Same performance X of to for underlying strong XXX growth product demand year-over-year quarter. new with strength to with growth to a position fifth of logos, for remaining levels more spreads the across remained results annual execute financial quarter our new continue interconnection the the fourth plus Renewal in center and bringing especially continue capital incremental data with our X operating NOI and our targeted of XXX. for XXXX goal cash our we quarters Our X.X%

alongside capacity X low demand demand steady is remained megawatt occupancy significant and at cloud we're combination for to impacted of vacant was development X The interconnection within AI capacity. while the our of unprecedented X%, and enterprise driving by segment. and plus experiencing churn scale controlled hyperscale and And delivery connectivity-oriented well the

to limited and Ongoing portend growing significant proposition potential across that Paris, Singapore power with the particularly Supply we global while worth acceleration availability few have Clara, demand Seoul. Frankfurt, of chain are have there new Virginia, in constraints most is be of our believe Santa by supply pricing to conversations interest inventory the and development for capacity favor, strength we increasing markets, New continued noting, of leasing our a are drive value our Northern larger a pendulum existing including in we driven underway. delays customers spilling though and well pockets blocks, positioned. The development, seems and Jersey, and

our strategy. Our new core markets capacity aligned meeting is place global concentrated in with

increased remain connected thoughtful, center our While that of the infrastructure data scale locations we communities. AI's prioritizing disciplined connectivity arrival, opportunities and enhance and PlatformDIGITAL campus alongside has

potential fourth dedicated the of benefits During an of the signing Digital deployment a to fulfill customers' showcasing enterprise Infrastructure by region the customer, with Oracle and the Realty hybrid services Digital quarter, partners of collaboration our financial demonstrated the with Oracle requirements. cloud collaborating between Cloud

order provides Other a offering offering service broad pre-provisioned client. time to cloud value open recognizing America in PlatformDIGITAL's improve growing managed colo as manufacturing North our An AI and structure. of for to service leveraged and their market PlatformDIGITAL's to high-density provider extend that a AI customers are the AI global

PlatformDIGITAL connectivity and applications XXXX customers Seoul PlatformDIGITAL, and enable sciences more added to scientific A offerings center them a environments and a enabling partner shows leader access to interconnect global node. IT service for consumption-based and to providers upgrade them services A provider hybrid interconnectivity cloud deploy and to enterprise's on model. to AI in a IT and their with Global needed managed for material their data global infrastructure industrial in targeting private provider

company center their X and presence additional sustainability, manufacturer scalability, and on XXXX metros Global services improve security data financial connectivity. goods migrating grew carrier consumer cloud leading XX on-prem and to Global to from a adding IT workloads utilizing A support by diversity. And ServiceFabric resiliency, an is PlatformDIGITAL to PlatformDIGITAL their

Northern market, largest over our Virginia. Moving quick a to update on

XXX over available have in Manassas. nearly capacity available megawatts XXX County lease today lease We and of megawatts for for in Loudoun

We in are a in has currently nothing in capacity though, substantially the rumor for our of contrast with active handful of mill, negotiations finalized customers yet. been just with all Loudoun,

this access to Dallas, gain we are Beyond of have megawatts power XXX beyond. in capacity, capacity another cautiously which we at will and Digital optimistic buildable XXXX

to management We market our benefit XXX-megawatt also this active from over and time. in of ongoing the portfolio expect existing

our Before on progress touch turning over it quarter. the to Matt, during fourth like to I'd ESG

Top and be continue use North Realty's growth We We U.S. Providers. the of energy global Green a to strong Performer on ratings Top list Digital provider. while all the Rated improved EPA's Data on ESG stakeholders. for XXXX. our #X we Sustainable in for impact quarter environment for remain by were in Power leading America minimizing Regional ESG to delivering named second Partnership and XXX as Center fourth our sustainable top National of a committed the Sustainability We renewable XX in to We recognized Magazine's placed performance on

that, With our CFO, the to Mercier. call over turn pleased to Matt I'm

Matthew Mercier

Andy. you, Thank

finished fourth by Let XXX,XXX region. a sequentially to EMEA grooming. new the bookings me quarter million the strength $XX.X network fourth of and X of million, with in rebounded total the megawatt jump $XX of interconnection continued We $XXX signed year million leasing, in our into right to despite we leases cross-connects quarter led X Interconnection with plus results.

as The backlog signed outran of end our the commencements quarter slide. to leasing quarter. Turning of of increased new million to a in current new million by not-yet commenced backlog $XX record leases $XXX at

majority the scheduled the pick second half backlog X/X commence We XXXX, of nearly to of up the the with to expect commencements in is coming in year. as

renewal year, in of shorter-term a quarter, X.X% fourth increases points renewals $XXX the setting pricing cash During we by million basis, of signed X market. skewed the though watermark was over leases high for with this basis XXX on the

XXXX, up were region spreads market spreads the full and across in or sustainable in XX% renewal spreads X short-term lease environment pricing we in cash growth. positive, year, reflecting positive setting an and XXXX, the For Re-leasing to acceleration principally for firm X.X% extensions. the X.X% near X renewal In to long-term to the expect foundation remain the megawatt for of when product, segment. remain normalizing expirations were weighting

growth, up increased within discussed the quarter. incremental sales organic earnings the $X.XX of development reflect and the year-over-year our core fourth the per and noncore spending of deleveraging recycling, year throughout share terms despite we capital on quarter revenue closed the call. the contributions asset XX% In with drag in year, was as $X.XX strong quarter third third the and stabilized from full our continued impact that for results, from Total JV the range. Earnings FFO together guidance reported

last impacted in noted dynamics also utility and a in reimbursements, volatility Europe. significant we be the results in growth revenue XXXX. be year-over-year proved continued Energy tailwind by for to our particularly positively quarter, costs to As

increases. Assuming the up expect reflecting and upside unit X% prices, will year-over-year, impact $XXX price growth continued energy was in Interconnection more normalized million, revenue related we XXXX. moderate

due Utilities tax the fell fourth summer, increased Net reflecting to quarter. contributions the this adjusted reassessment joint increased were third toward combined with seasonal spending sequentially, to maintenance in expense experienced side. Moving Operating reflecting X% year-over-year. the lower the EBITDA over back levels, the impacts. property elevated taxes Property over seasonally normalized in the movement, onetime quarter. of X% venture expenses

on the capital performance same X.X% a fourth continued X.X% constant cash strong stabilized with quarter year-over-year a in operating up up our currency NOI a in basis. and Improvement

currency were X.X% full NOI the year, constant growth basis. cash and results For also with strong on of X.X% a

across we $X first activity, on of from the in billion and JV investment megawatts XXX of new delivered in our spent November, closing development globe. over on the XXXX, capacity proceeds Focusing development we net received

the to Turning sheet. balance

in third made Cyxtera Blackstone $X.X strengthen our to finishing of the continued goal we achieving with with an equity the the balance the X.Xx. share $XXX Chicago quarter assets S&P to since outlook. lowering additional our CapEx of in Early stake sale ATM the our JV, at year also further quarter, the phase XX%. Pro paid sheet Partners the generated in We balance our on joint our year-end the Xx Income of of and venture, share, which remainder million of of at end bringing of in towards XX% closed gross million and $XXX the development. these for venture. proceeds off stabilized forma on activities' their reduced December closings price franc was an through commitments the joint of exercised year-end, transactions sheet of Swiss and notes the the Realty the the progress progress for first X in average leverage their the billion X.Xx. After and our option GI $XXX upgraded leverage our fourth per project's we recognized our closed of

keep balance on with support sheet and continue at we the significant to billion year-end liquidity over continue to cash $X.X as prioritize development ongoing We to spend.

our to profile. on Moving debt

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

maturities through beyond guidance. than with that, remained Finally, I'll billion XXXX. well have of And in we $X maturing XXXX. laddered debt less our finish

underlying reflecting the guidance by FFO of $X.XX full XXXX. an range per are providing activities of deleveraging We XXXX the our of core for announced offset the $X.XX, the completed business, share growth we to impact year initial or in

that reminder, higher-yielding over our and deliver. development a expect billion increasingly XXXX course pipeline accretive the of as will As XXXX, become $X projects we

grow X% respectively, to revenue our impact at For adjusted for total XX%, revenue normalizing capital grow growth EBITDA by XXXX, EBITDA the and recycling, X% of guidance adjusted by ranges. anticipated this of are to XXXX. total we grow and by and to X% in When the midpoint expect

same expected while expect We occupancy as our backlog our cash to remain spreads, with the re-leasing NOI cash to year is is along capital positive, and leased. improve and commences steadily record GAAP growth available both throughout solidly capacity

of growth expected Total increase year spreads portfolio X.X% XXXX. XXX last year's re-leasing slipped cash fourth colo in is points comparison stable tougher Specifically, be the occupancy our improve to is development is the of grow predominantly end occupancy expectations occupancy the segment. and was in while are as to to energy occupied vacant given by X% our by quarter substantial to X% pricing of by expected delivery basis to the capacity slated XXXX. NOI in to driven capital base for XXX cash versus This FX and total was that XX.X% same-capital XXXX to by expected by Same to X% X%, quarter-over-quarter.

session? Q&A and begin concludes be prepared to approximately our CapEx spend questions. development rata please XXXX. To this higher This Operator, also development share to X/X your for with ventures in development guidance completed The take to cash in remarks, be spend We midpoint throughout reduction would we'll $X.X retained $X total cash noncore pleased early Realty's when recycle to capital our billion and billion XXXX of pro to hand from capital these year-over-year Along year. range. expected billion this operations, clear, primary flow of funding this of and projects raising our the net be sales the of with balance be close Digital on asset stabilized source January, program will partners' you continue the share. in XX% joint expect should at including CapEx while represents was is this now activity on spend. Nearly $X.XX the our

Operator

[Operator with first Michael comes Instructions] The from Citi. question Rollins today

Michael Rollins

and good couple Thanks, questions. afternoon. of A

just in of more 'XX And shift seeing in X% comes you're what same how capital X.X% cash NOI expectation to of can 'XX? X%, for the from the terms in kind to to describing unpack were you XXXX? relative you First, -- of into growth pricing

Andrew Power

Thanks, Mike.

into maybe bridge trying it you to to whole -- sort the question answer to turn call basis. -- I'll and get the same-store on in to through try roster But stick we'll Matt and of weave So loop to from back. that X give X a

Matthew Mercier

Sure. Thanks, Mike.

couple out. I of that a would things call So

re-leasing and as influence, not I their of, know, off, in year. call the our it, of spreads First, the roll first all calendar terms think we within leases

So in we which is of year. roughly, pricing which of CPI, XX% call is megawatt down of come our over it, therefore, XX% we've mark-to-market the the portfolio X the course and year, the And by XX%, within roll to and of which inflation to a greater terms X seen XX% or that that, in we the category, than you seeing, influenced flip tougher strong the creates market which that category, in in the expiring growth. 'XX, 'XX, of segment. Then despite is other a we're overall comp the in what rents when rents role than over higher in part megawatt saw are

the So side. that's spread on

as 'XX. that which out I And 'XX, in in power pricing, property part are tax benefits we in tailwinds from FX we other saw is well The 'XX, or seeing higher expense. expecting not we're lastly, would as call

portfolio the in 'XX. sort is of results as still not for you're this positive, same-store kind of seeing but together those all putting So positive, why 'XX

Operator

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

David Barden

effect the in higher And that. the decision-making. that sort first, billion this it kind I closing the Matt, like one business, does or of created some something if that as or crowding and of can -- night, that's prices out in some crystal. the I you're bit break that? all -- breakdown colo but little of year? your hearing then about it Maybe of your you was cadence a we lagged $X.XX of follow-up, of billion just wasn't maybe rest $X.XX XXXX if how you a and kind have Kind in What is last And that budgeting could down of heard of could. in of terms seeing peers wondering from talk power

Andrew Power

Thanks, quite I Dave. as This last is experiencing night, what think the heard Andy. exact we're honestly. don't you on power same dynamics

'XX goodbye Matt the as in what you benefited we're -- from repeat not that back itself a in from think and I basis go Matt we environment, and to in volatile the all kind power, not comps think on of heard out -- same-store so nature. assuming power another, growth going it's -- is very call XXXX onetime are almost is to be going pool washed to have this I just benefit we in say this -- 'XX, into we it, once don't

to can same don't due we're I I this a buyer that are it's the the business I in from and market that's And signings. behavior. quarters the new described. XXX; overall can year, what Maybe not capped of Record hedging strong logos, of north it, depending new strong which let's suffering impacted to the off and believe on business benefiting call of don't was focused we overall mix, segment. strategy, degree in results, enterprise you believe the or see on connectivity our a you, period tell colo very identical. standpoint,

was and a in has year. P&L, which in also strong absorption, interconnection both the that through quarter new the net signings a certainly that in been the and had category, flow quarter, You through fourth very and strong accelerating

So power I flowing see don't the through.

rotate so as to move I question per know just Greg, one for don't the trying in of then data? why $X.XX back, billion our we're on the there, get touch guidance you and se components we to

Gregory Wright

of think call it's close. and of a that is already announced billion sort there been call Sure. that, when think, asset Look, billion, joint I of at It's again, you stabilized $X $X.XXX important and that pending Thanks, it, billion a it's look it's it, X ventures, or over are note to And components or either disposition. range noncore really Andy. has there. $X.X is X/X to our -- closed I

the number. it's feel context that clearly in So less much And last year. obviously, of we about good

Operator

Cowen. The Elias CB next with Michael from question comes

Michael Elias

of the we're about Andy, history. in So in environment recent can talk pipeline strength one I and versus the go-forward you seen we've you demand governor the about being do wondering, for hyperscale last that is there -- on relative of of year. pricing of supply-demand the a can set specifically, see the part the given that, talk middle we're you backdrop And pricing strongest new the seeing? demand pipeline was as for opportunity the that leasing,

Andrew Power

Thanks, Michael.

basis, has Overall, played would hyperscale the to all cloud on So we're has on incremental more hybrid of moved backdrop view called now, I Digital out several the has And quarters of IT, grow described, pipeline we've tremendously tightening in dynamics a Realty. the a pendulum over like changed an that compute. the as say, -- new pricing the in supply-demand to new more -- year-over-year is dynamics call demand, and for certainly heights. on continued of this favor AI the providers fronts. so wave to many has hyperscale enterprise; incremental demand I

call think Listen, rate ceiling? we've quarter, megawatt, run a this just our of seen $XXX there rates highest in that Is million. north a I at reported GAAP tremendously. ever it, segment We,

very the We got came incremental budget these we And calendar fiscal markets large-scale especially on up some for that customers, demand, capacity are where customers to almost with who are we're major things. like -- quotes. after. a larger When XXXX Digital that capacity our terms have some signed wrapped rates cycle contiguous of same campuses we think of in and blocks and Realty, refresh positioned. budget up it's the of continuing put and seeking are appetite we've intersect in our see run what just or with I continue the and are hyperscale often most those with sought back like that in it's years And to one demand. These well in

customers the demand. And of which as can our some now, but what these lot that activate lastly, more a -- capacity right a market, markets hyperscale whether cycle, AI -- development equation a launch business just to in think ability time there's Virginia in major compute our that at to is historically, of of even acknowledgment well, relative enormous to than workloads customers. portion very certainly of for today, of on it a fair services just land I that are good to GPUs be look them first but their many small our is And it are we capture market trying economic footprint, and you or If plays share these you our their Northern other precious life rent, to opportunities to broader a piece many that see times.

Operator

Atkin The next with question comes from RBC. Jonathan

Jonathan Atkin

and if a about issuance kind wondering there was are I terms of you of What the role in of talk year might the could end of of outcomes that? ATM the little bit where some we leverage. issuances, equity as part

Matthew Mercier

Jonathan. Thanks, Sure.

where year the to basis, the execution 'XX, seen When at also you area. recently, through we ATM about did a the we've at in down the but we that we And with the on talked not Greg's only work the sales breaking point team of that. it you've that, did getting on done think -- the I that we're look, forma transactions results So pro on to that getting and closed, actually then in more and look X.Xx. early Xx

going And terms guidance we out and to since the same laid will in had of of go us towards some our we've of marching get got area, plan on the towards did to 'XX. there us that the us. we plan to is continuing capital diverse which we're terms of available start -- messaging we in think a that to we in path. than task want the smaller get which we're level we've we've down and -- X.Xx where area, enable the down of to continue executed here and capital what we've that that recycling that so broad And that's continue sources And to is that 'XX, X.X% given

Operator

Evercore from question comes Irvin ISI. Liu Next with

Jyhhaw Liu

level, Valley an Silicon several of I'll large other mentioned for major demand At such you and markets. one. specifically markets to performance? available among for low capacity stick X some in blocks I for megawatt very key overall markets. these NOVA aggregate supply greater But of of than gating a signings your lower you, some the think in Andy, as factor has been remains capacity

Andrew Power

available have needs in in really -- that's for capacity XXXX. of The I terms offer of Northern shut we what intersect Irvin. until in down capacity these to Thanks, terms potentially say, large opportunity is, today can it a block we hyperscale. or of in maybe market our power AI Virginia would customers, great new be certainly in unparalleled It with a

for throughout But certainly the blocks, Seoul Africa. capacity and we more set off hindsight, to weren't attractive coming at Japan, whether quite more it's proven and of much able gate out to stages Latin weren't joint in as more, the early what first of customers. we Frankfurt, offering these see be suites many Shelves or and didn't diverse online. wasn't deal it, because honestly, for year we into wetland, to of after broader list of we're and gotten the is were just knew XXXX, least customers, we've continue an out online opportunity fortuitous, of because our capacity beyond losing being We've the many or approach, to development. out, goes were some first They providers, those Paris, we commenced. And Clara, and revenue ourselves a even ventures our whereby these at a the approach gates, America mention played has Santa has where because becoming moved go in And XXXX taken as and pad-ready. were the run coming of the are that's call Dallas, took of that, of South not some parts Amsterdam, even

think we'll spend we think don't on, allowed I actually So be rent it'd to have live some late obviously in and so long here be But that to us now -- do can able we blocks right. prove that prudence going. approach urgency -- get too patience some are We I our to and commence and have capacity XXXX.

had out ran I the we're side. the Ashford better ago, sold have it's than known was time, our release power capacity wouldn't be would on lucky all I of have years have luck that we If time. this would sometimes Listen, have But -- to to at -- we would smart.

Operator

comes David The Street. with next question Guarino from Green

David Guarino

leases for and heard I very have a than megawatt how kind pretty lease on favorable high next of clauses X that participate take on there greater it as over comments, category, to Or rent least at much have ceiling that fair that into few rates, your is the some that assumption? the consideration limit years. to how mark-to-market rental could you guys in the in able table the chance a a you're Andy, appears I your expiration potentially of might across I Am make upside? opportunity look

Andrew Power

Thanks, David.

I of on don't So these loud move from rates continue center me at they've where to you data markets heard where and bubble peak capacity, likely the if whole and at think have of necessarily. so come rent historical gone or a -- haven't near even clear you or I we're some that think and the where to hit span look they're rates

real been it's issues. and of have on that's and back the inflated constraints build And costs --

are rental moves they are justified. believe So -- I these

is cash favor. to through you renewals mark-to-markets script did think favor. -- continue short-term think pretty we flow will and X% in mark-to-market, this our we that the call inflated quarter, throughout overall We to episodic in in in see cash our call it, had that X% some out last but being, in year I the our category for

And potential we was of market and contracts which When fixed was narrowly our have the of with to we that the vacant the often customers. renegotiation. outcome. deals to some a into in to you're they to what a they But all clauses renewal terms clauses our of box, outside period negotiate yes, of to And collaborate often contract customer, those of roll-ups, whistles. to mutually to we subsections very the these up our certainly agreeable quite it your favor of question opens it do, that customer. and opposite wants come are succumb defined that try other bells that are do And of time duration our when and had that today filling going in the where bigger on capacity, certainly have have was customers

But or come. category XXX I to in years sub long-winded every directly I for that call -- that's wherever able or So to to it, one going the think a to be think those, don't market. or XXX of way we'll we're megawatts saying, of roll up XXX-plus there the is I going we'll do be think some in positive XXX a mark-to-market

Operator

with from Markets. comes question Aryeh Next BMO Capital Klein

Aryeh Klein

think growth mark-to-market from lot and there's pricing you are as normalized that the guidance XXXX deliver here creating for seems a XX% the XXXX you parts should that beyond standpoint? deleveraging for of of what you on the and of guess a while, some as move be the do line can EBITDA noted, Andy, a think impacting dilution, like Matt kind I tailwinds bottom past longer-term it mentioned I growth activity. you headwinds moving

Andrew Power

on Matt, do that you want to off start us one?

Matthew Mercier

Yes. Sure.

of couple So things. a

So thanks. Aryeh,

As of for -- we noted. that activity EBITDA and at in X% XX% a and the do to I expect revenue -- 'XX, looking 'XX, want on hit we some did mention, on in as reiterate, on a growth normalized you normalized transactional lot for what at in 'XX basis we're the and

is And time, already so were first noted a we've close, in of from at as just of got are contract, the impact all some that half timing reminder, Greg where closed in decent those same 'XX, a in earlier, we're the we're that a the second the turn. creating those and on as where 'XX again, that bottom impact they them, that expecting And did the of of part 'XX, delevering 'XX In the transactions we of under line. portion 'XX, over year. so seeing

what we buckets would terms you of look algorithm. in cost growth that, we all through If X of the -- in expect that it at look is sort

growth that, start pool area. those on us we top we gets X% our as On should single that, in would top to to 'XX First on that to and one kind to deliver X% X% yields. see stabilized pricing, to of pipeline, 'XX Together, we that favorable too. -- same-store beyond. the digits expect in mid- to being, of expect and expect see to another have better would looking at And development that our to see high X% of 'XX, in

Operator

The next Frank comes go from ahead. Louthan question with Raymond James. Please

Frank Louthan

companies Sorry and of elongated heard that equipment squeezing about they're from sales several about your seeing some and some cycles some I peers macro issues forth and seeing so you've mentioned with from your from macro of that. of enterprise seen. IT your part you elsewhere grooming that some budgets, like in anything business? some you Are cross-connect sort any or business pressures

Andrew Power

Colin Thanks, want sales we're Frank. enterprise the, have tackle to in call I cycle. seeing it, I'll what

Colin McLean

Appreciate Yes. Thanks, Frank, question. the for it.

across their the robust with the megawatt. below growing above and our highlighted, both Andy and As customers consistently engaging that's is related this pipeline see globally. X We board platform to certainly

So that $XX to needs pretty I back a think, back is we're how to strong million their testimony quarters, supporting well.

companies X,XXX-plus in which, think landed fact, a In is again, testimony. I QX, us growth strong with

year, of highlighted I to overall, close couple hiccups, in to expanded in maybe previously had of time time we QX, think of a early close. terms the In terms QX

really date. We haven't out. honestly, flattened really It's to that, seen

of it's us I really byproduct think up so showing differently. engaging And a

did logo last new engagement, been XXX I The has think, overall logos We particularly strong. new quarter.

So seen pipeline the we've then think whole, on side, the I strong on the on interest, and pretty execution enterprise whole.

Chris Sharp

on thing bit more the I'd a Right. And spread detail to like one equipment.

deploy to we to of program anticipation regions lot that only we're the higher allow in that pre-buying to kilowatts coming bit timely colo last a XX is, our very a what and type not end a year deployments XX launched With kind fashion, of to capability new lot coming markets that high-density doing a of part market. also the of of that rack, power but a able really of market, density expedites private X is that technology of being AI a in around the support do customers offering to the AI to

Operator

question Deutsche Matt next Bank. comes The with Niknam from

Matthew Niknam

Financial question.

X basis, potential turns leverage now and investments M&A? with in back potential business now forward the about pro incremental forma So how dividend do the you to growth think under relative and/or a on

Andrew Power

Thanks, Matt.

of last Jio. to with Reliance or to mean, in works just press at set how in of I'm we've look growing linear where months going taxable explain income the to call set. resolving you multifaceted, why the I Cyxtera M&A, topic the think I the dividend relationship So to several of recent just through could addition it distribution and done our in events Matt terms hand Because releases our platform dividend the is and India to is the

noncore key to in the some We also space our and of a with a just markets. assets assets, leader across announcement to recently had big stabilized GPU strategically JVs, landholdings disposing adding

incredibly on So active pieces we've of been that.

don't you up? don't out nature really Matt, hit like, to there I to call from of speed broader at -- more most over. why have we I additive that any, extending global think And that the our Matt and it, picked most I ]. the be of on context think activity critical advantages key kind pieces have. really, of gems M&A, been brought dividend would [ bolt-on in see strategic here puzzle are, platform our our because what the

Matthew Mercier

that income. talked taxable income in of there X similar to mean, mean, that and about major I then those, 'XX. also There's operations, from the dividend to Sure. sizable on are from that's terms the get had and in ordinary we've what executing generated have we and 'XX, I related components our the we income the from transactions we which amount gains there's related a

are. and looking still even transaction there'll still have flow to related that $X.X about billion, we our that to in start as I earlier. cash flow over income we dividend be our algorithm cash we'll grows, goal to as at the about and able from less see And as in AFFO where support we're we'll billion guide, we so expect 'XX, talked and growth the talked think the Now long after size you we the target we to expect term dividend we saw we is that. but ultimately, just be And that $X which related grow

Operator

next with Flannery question Morgan Simon from The comes Stanley.

Simon Flannery

almost had like the you That's the plus X X megawatt. looks XX% few interconnection. It about rising than wanted to between the coming been X to I the from to talk X last greater gradually just over X mix quarters. and

to around we should -- XX-XX? the the mix think on higher this Or as that it be do about forward? has So how jumping is in it focus Your trend going than going past? done

Andrew Power

Simon. Thanks,

continue top So over of acceleration on most to granular megawatt interconnection one is as X the logos. delivering the new X,XXX customers that and in to top, as focus priorities our to largest to customers, volume our top, X enterprise our connectivity of an well cohort,

that where to the customers, vacant where a accelerate our rates, multi-market, customers at continues quarters place believe more we the the it's It's has capacity. consistently, of the and long-term our enterprise recently, represents filling larger done we is greatest and it most existing deliver like that is large, and wins value by can and multi-geo durable. and in highest So to increasing piece our mix

largest we've also be of world. one compute they else. to will those are excellence, we've at can faltered want percentage. will ], There metropolitan where That's quarters the our continuous with where where areas, they've be hyperscalers XX-plus because or have to Az from capacity of We're places lower bringing supporting that our of a around our customers, that likely that add because no [ our we the But their in really episodic long likely where can that's operational not capacity execution. half already over some value at runway grow they where we growth landed get

lumpier be deals, blocks. And we'll where quarters be those larger, obviously, capacity signing would into those

So markets think each that large a distinct we we have value on these competitive executing are moat both every focus addressable continue we'll to day. and and where a of proposition

Operator

comes question Stifel. with Rasmussen next from Erik The

Erik Rasmussen

is the the call, the seems most of workloads. heard And to the inferencing earnings you it It versus opportunity? AI. much maybe, we their relates from inferencing. as same has contributed sort strength in to But most on AI were to from just seeing the fact, from that or expected customers? of Are quantify in AI then size was, way training early Azure and how your for on stages demand demand seeing that from they come of the said patterns Microsoft Maybe any they the of

Andrew Power

Thanks, Erik.

at you just company. opportunity and the is connectivity tremendously I on chapter and through in a little This from wheelhouse. with AI Chris colo this is this piece touch came hyperscale bit me then it of a hand organically build where business a to our verse. We Let walk capabilities as the look heritage and to and our inorganically.

tell higher larger for We power X are pushing power boundaries engineering our Digital joined that using years prowess taking are densities on you, their and often before over and customers at workloads can halls to work I densities. ago. were enterprise I AI at

deployments where last just one had customers that have of at out existing our live of year, ago year. end live on fitted At the which of a out of was one get customers to be year. retrofits a company, done the We've end I this fit for touring that on just last needing our environments to years Paris services for facilities, going AI partner cooling to financial meant they multinational liquid

So give verticals to don't why been some you've color right bit hundred last the and seen and our it, of see of category of the that been call this, domain this piece wheelhouse, kilowatt do you as this Chris, you some winning year where a well? that. several we've megawatt is in as in little in on testimonials to we've and going winning the in XX-plus the,

Chris Sharp

and question great a It's Erik. Yes. appreciate it,

we're asset. some couple workload the durable That's deployed into because for a a are that that been long-term looking to training just selective of on. something touched dynamics The with for there And being training watching time. environments inference. we're think the we've I some you of

lot we tail kind see private see training are the And so actually of market, also in of happening because today value inside another availability the doing of just long time their of definitely customers but a section of AI. of and and of or inference GPUs sheer we inference to that training then the

allows density at where, a and with Andy colo then customers support higher will, capability, coming us to able of versatile of And you this these scale of type so a our our being market a seeing high level, with heritage if come requirements need support power from to we're alluded and designs. types to to evolve

that being the think of foundational may with being a And their hyperscale inference customers be and element so embedded on top has customers And overlooked I is lot mind. focused of of for in that this lot today services then is another capabilities. highly as top lot our a of been cloud a

current been you Copilot, that they've their when in and Microsoft read product you with about, work AI referenced capabilities. is think lot So of a embedded I that enhancing doing and the

infrastructure being And inference and together. something is we're constantly proximate because AI, all to so that infrastructure that watching that very how data excited and but oceans evolves, the exist workload proximate Realty, from that culminates existing that their current we're the benefits the Digital absolutely being about within to how

So play over it's out this see something year. you'll

they're I think where good new we product just where case vertical. private financial deployment a for with little had offerings generate of KakaoBank study really and that's able a highlighted around to AI do a bit R&D

So out you're play about. XXXX these we're excited are in things very that the to see going

Operator

The next with . question Del comes Deo from MoffettNathanson Nick

Nicholas Del Deo

range you to broader and could about if to for look cash on of a assuming for X X% you're spreads the X categories? the just Are you you bit are greater wondering making environment changes? get versus pricing to spreads. lease was X% assumptions basically how about X I environment Or other renewal little the prices taking the expand share increases or expected current anything renewal can as And a you the further kind given? to

Andrew Power

Sure. take that? Matt, you why don't

Matthew Mercier

Yes.

from the With of the So of had, back I'll thanks, I I go first I comments questions. to think to one some -- Nick. regard think,

to inflation is where regard be that's and with CPI tends to by escalation megawatt, on So influenced X the in. to both X coming renewals

So And are to come range. X% in North whether have EMEA. that's those going more be America the since last leases rolling, be they to that in that and down across X% spread versus year

assuming, market by And the versus pricing current megawatt, the on heavily call I rates than it, that. more influenced a as and greater now expiring mentioned, we're are that's where

the X% we've that to and towards. which still the within greater the we're that's assuming total guided positive in is segment, X% resulting So megawatt than

Operator

with question The comes from Capital next Markets. Brandon KeyBanc Nispel

Brandon Nispel

quick a question. Just

about this your guidance a versus basis? 'XX I development to, time for the 'XX capital, will think the actually on outlay in maybe is you talk it's been total Can look capital first of like in contributions. like-for-like net guided what capital

Matthew Mercier

Sure. Yes.

comparison, I So, with that in looking -- be Phase established we in 'XX, the would under particular it we've will XX% given that the basis, than gross year. development the amount $X.X X And over 'XX, and ventures mean, later Phase -- close would that north throughout joint announced Blackstone, in if we'd XXXX. we're of also the closed contract which a gross in in and in X obviously, billion is -- total 'XX, higher are that expecting, one terms be spent already you're of net we from is with is on it CapEx the be at spending a basis in roughly and

Operator

over turn to call the back now That concludes Q&A his call. Power, portion like CEO, and I'd the President of closing to remarks. Andy for today's

Andrew Power

fourth capital partners, array Thank and you, commitments key for Betsy. highlighted transformative Digital that capital hyperscale future. $XX a new elements: strong private our billion an and of Realty was off XXXX sourced of the over from balance a with the capped we X sheet by deleveraging positioning first, company quarter

growth Second, results organic another are decade, just and of the NOI in a nearly quarter the cash operating same-capital we on wave the cusp we demand. of improving posted best of with AI

with accelerating our and to our growing around XXXX deliveries to capacity footprint we needs world grow the of continue the Third, in record meet customer base.

enable even whether along help their that us IT solutions, to journeys. transformation enterprises cloud look AI, customers or to digital These their is

for resonating. Digital at is who to digital value the dedicated world Our joining team thank thank special and exceptional to with you you. everyone proposition keeps our us a like I'd Realty, Thank today turning.

Operator

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

now disconnect. You may

Digital Realty Trust (DLR) 15 Feb 242023 Q4 Earnings call transcript