Digital Realty Trust, Inc. · NYSE:DLR
Digital Realty Trust — Q2 2016 Earnings Presentation
31 slides from Digital Realty Trust's earnings presentation, Jul 28, 2016
Slide 1: Sustainable Value Creation
Sustainable Value Creation DIGITAL REALTY 2016 FINANCIAL RESULTS JULY 2016 DIGITAL REALTY
Slide 2: Our Focus
by ZB "“"Wetereet ZZ cal SUPERIOR RETURNS Deliver superior risk-adjusted total returns (2) CAPITAL ALLOCATION Prudently allocate capital to opportunistically extend global campus footprint Our Focus Our philosophy is to deliver superior returns C3] PRODUCT OFFERINGS by capitalizing on our core compe
Slide 3: Expanding the Global Footprint
Expanding the Global Footprint AMSTERDAM Significant Presence i in Top Three European Data Center Markets Total kW ~6,900 USER =AEED { THSR-FETED Total SF. ~53,100 Utilization. 98%, Utilization 85% Total kW ~700 Total kW ~1,300. _ rr. Total S.F. ~10,700 Total SF. ~18,200 : Utilization: 92% Utilizati
Slide 4: Executing on Capital Recycling
Executing on Capital Recycling Redeploying Accretively, Enhancing Portfolio Quality Sales Price / sf. $252 /sf. 2016 Contractual Cash NOI $9 million Gain (Loss) on Sale $27 million Closing Date July 11, 2016 Digital Realty took a $64 million impairment charge on 210 N. Tucker in 4014, The $27 millio
Slide 5: Data Center Supply in Perspective
Data Center Supply in Perspective The Fundamentals Glass is Still Half-Full 4015 1016 2016 Market DLR 94% 96% LTM Digital Realty Deliveries 21 MW 74% Leased Market Absorption-to- Construction 4a15 1016 2016 Marker DLR 91% 92% LTM Digital Realty Deliveries ~2 T11MW & 100% Leased Market Absorption-to-
Slide 6: Decelerating Global Economic Growth Outlook
Decelerating Global Economic Growth Outlook 1016 Call CURRENT Better/ April 28, 2016 July 20, 2016 Global GDP Growth Forecast 2016E: 3.2% 2016E: 3.1% 3.1% 3A% US. GDP Growth Forecast 2016E: 2.4% 2016: 2.2% 22% 25% U.S. Unemployment Rate 5.0% 4.9% 4.8% 4.6% Inflation Rate - U.S. Annual CPI Index 0.9%
Slide 7: a DIGITAL REALTY
a DIGITAL REALTY
Slide 8: Diverse Customer Base + Product Offerings
Diverse Customer Base + Product Offerings Historical Lease Signings Annualized GAAP Annualized GAAP Annualized GAAP Base Rent Base Rent/ sf, Base Rent ® d Base Building® Colocation Sin millions Non-Technical 2 million $60 us r $20 | il | $o 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
Slide 9: Front-Loaded Commencement Schedule
Front-Loaded Commencement Schedule Backlog Roll-Forward + Commencement Timing [i Current Period Backlog [Signings [J Commencements [ii Total Backlog $in millions $125 = || $75 --- moog ] ] $50 I | $90 I | $31 I I $25 $ 1Q16 Backlog Signings Commencements 2Q16 Backlog 2016 2017 2018+ Total Backlog No
Slide 10: Cash Rent Change
Approaching Mark-to-Market Inflection Point Re-Leasing Spreads Cash GAAP * — Signed renewal leases representing $59.4 million of annualized GAAP rental revenue Total * — Rental rates were up ona cash basis by 2.8% and 2.8% 8.1% Data Center increased by 81% on a GAAP basis for total data center space
Slide 11: MSA Scorecard
MSA Scorecard mpleted / On-Track Slightly Behi Off-Track 2016 $385+ million $148+ million UNDERWRITING TARGET 3Q16 $939 million 2Q16 ACTUAL $917 million $38.4 million xcludes synergies i 2Q16 EARNINGS CALL & PRESENTATION | JULY . 28. 2016 1
Slide 12: Operating Outperformance + Cost Savings Drive Upside
Operating Outperformance + Cost Savings Drive Upside 2Q16 Core FFO / Share Reconciliation $1.50 f Consensus | $138 $0.01 $0.01 <$0.01 $1.40 $0.01 Poo ——— — $1.30 $1.20 $1.10 2Q16 Consensus Revenue Operating Expenses G&A Interest Expense 2Q16 Actual Core FFO / Share Core FFO / Share Note: Core FFO is
Slide 13: Consistently Improving Quality of Earnings
& Consistently Improving Quality of Earnings $ in millions @Straight-Line Rental Revenue ¢ Straight-Line Rent as % of Revenue 5.9% 6.0% $30 o ¢ 6% 5.5% 5.5% e 5.2% 4 > 5.0% ° 4.5% 4.3% > $22.7 ¢ $20 yaw $21.3 4% 3.5% ie ie _ sve oe > 31% . > $14.5 $13.4 $13.6 19% $10 ™% $9.5 Wz a % $55, 0% 1013, «20
Slide 14: FX Represents ~50-100 bps Drag on Reported Results
FX Represents ~ 50-100 bps Drag on Reported Results 25% 20% 10% 5% 0% as Reported oa eo | = = = 123.6%, 122.5% |! I mart ; i I my 246% | I 120.4% || I I LF 2Q16 / 2Q15 Revenue Growth 2016 / 2Q15 Adj. EBITDA =| Constant-Currency 2Q16 / 2Q15 Same-Capital Cash NOI Growth © L _ Total Including Telx 2Q16
Slide 15: Currency Mix
USD CAD GBP EURO JPY HKD SGD AUD 4% 13% 5% 75%
Slide 16: Transaction Overview
Transaction Overview Forward sale structure allows DLR to lock in equity financing for the acquisition and avoid per share dilution prior to the acquisition closing Description * Allows DLR to capitalize on market conditions and lock-in future equity capital raise when and if required to fund the ac
Slide 17: One-Way Draw-Down
One-Way Draw-Down GS in billions) Forward Equity Offering $11Bn_ — European Portfolio Acquisition $0.9 Bn Underwriters' Over-Allotment Option $0.2Bn Mortgage Debt Maturities $0.2 Bn Four-Property Portfolio Sale $0.1Bn Preferred Equity Redemption $0.3 Bn Paris Option Property $0.2 Bn = Additional Inv
Slide 18: Pro Forma Leverage Expected to Drop Below 5.0x
Pro Forma Leverage Expected to Drop Below 5.0x PRO FORMA NET DEBT / LQA ADJUSTED EBITDA 6.0x 5.2x 47x (0.2x) \ y Ej = oa 4,0x 2.0x 2Q16 Equity European Leverage Issuance Portfolio Acquisition @ Pro Forma for Pro Forma 3Q16 Sales® Leverage“ 2016 CAPITAL MARKETS HIGHLIGHTS . $13 billion Equity Issuanc
Slide 19: Delivering Current Results, Seeding Future Growth
Delivering Current Results, Seeding Future Growth Successful 2Q16 Initiatives EXTENDING GLOBAL FOOTPRINT EXCEEDING EXPECTATIONS DELIVERING DOUBLE-DIGIT AFFO GROWTH RAISING GUIDANCE STRENGTHENING THE BALANCE SHEET 1) 2016 net income per share of $0.19. 2 Fora description of AFFO and a reconciliation
Slide 20: Appendix
Slide 21: U.S. Major Metro Area Data Center Supply
U.S. Major Metro Area Data Center Supply °? Supply Largely Concentrated in Most Active Markets in megawatts 2016 Current Supply © “New Construction Digital Realty Inventory 80 60 40 } > ———- Lo .~__ Boston Chicago Dallas Houston N Virgina NY Metro Phoenix Silicon Valley " 1Q16 Current Supply “? “New
Slide 22: Appendix
Appendix The information included in this presentation contains certain non-GAAP financial measures that management believes are helpfulin understanding our business, as further described below. Our definition and calculation of non-GAAP financial measures may differ from those of other REITs, and,
Slide 23: Appendix
Appendix EBITDA AND ADJUSTED EBITDA: We believe that earnings before interest, loss from early extinguishment of debt, income taxes and depreciation and amortization, or EBITDA, and Adjusted EBITDA (as defined below), are useful supplemental performance measures because they allow investors to view
Slide 24: Forward-Looking Statements
G Forward-Looking Statements The information included in this presentation contains forward-looking statements. Such statements are based on management's beliefs and assumptions made based on information currently available to management. Such forward-looking statements include statements relating t
Slide 25: Reconciliation of Core EBITDA
Reconciliation of Core EBITDA (unaudited) (in thousands) Three Months Ended June 30, 2016 Net Loss ($8,185) Income Tax Expense (Benefit) 58 Interest Expense, net 857 Depreciation & Amortization 39,996 EBITDA $32,726 Plus: Non-Cash Rent 7,740 Plus: Non-Cash Compensation 429 Plus: Transaction Expenses
Slide 26: Reconciliation of Non-GAAP Items
Reconciliation of Non-GAAP Items To Their Closest GAAP Equivalent Digital Realty Trust, Inc. and Subsidiaries Reconciliation of Net Income Available to Common Stockholders to Funds From Operations (FFO) Cin thousands, except per share and unit data) (unaudited) Three Months Ended Six Months Ended. J
Slide 27: Reconciliation of Non-GAAP Items
Reconciliation of Non-GAAP Items To Their Closest GAAP Equivalent Digital Realty Trust, Inc. and Subsidiaries Reconciliation of Funds From Operations (FFO) to Core Funds From Operations (CFFO) in thousands, except per share and unit data) unaudited) Three Months Ended Six Months Ended June 30, 2016
Slide 28: Reconciliation of Non-GAAP Items
Reconciliation of Non-GAAP Items To Their Closest GAAP Equivalent Digital Realty Trust, Inc. and Subsidiaries Reconciliation of Same Capital Cash Net Operating Income Cin thousands) (unaudited) Three Months Ended Six Months Ended June 30, 2016 June 30, 2015 June 30, 2016 June 30, 2015 Rental revenue
Slide 29: Reconciliation of Non-GAAP Items
Reconciliation of Non-GAAP Items To Their Closest GAAP Equivalent Digital Realty Trust, Inc. and Subsidiaries Reconciliation of Funds From Operations CFFO) to Core Funds From Operations CCFFO) Cin thousands, except per share and unit data) Cunaudited) Year Ended December 31, 2015 FFO available to co
Slide 30: Reconciliation of Non-GAAP Items
Reconciliation of Non-GAAP Items To Their Closest GAAP Equivalent Digital Realty Trust, Inc. and Subsidiaries Reconciliation of Net Income Available to Common Stockholders to Funds From Operations (FFO) Cunaudited> Cin thousands, except per share and unit data) Year Ended December 31, 2015 Net incom
Slide 31: Reconciliation of Non-GAAP Items
Reconciliation of Non-GAAP Items To Their Closest GAAP Equivalent Three Months Ended Reconciliation of Core FFO to AFFO June 30, 2016 June 30, 2015 Core FFO available to common stockholders and unitholders $212,587 $180,773 Adjustments: Non-real estate depreciation 2429 1326 Amortization of deferred