Digital Realty Trust, Inc. · NYSE:DLR
Digital Realty Trust — Non-Deal Roadshow (November 2006)
27 slides from Digital Realty Trust's roadshow presentation, Nov 8, 2006
Slide 1: Foundation for the Digital World: Investor Meetings
Exhibit 99.1 Foundation for the Digital World Investor Meetings November 2006
Slide 2: Forward Looking Statements
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 and projecti
Slide 3: Digital Realty Trust overview
Digital Realty Trust overview DLR is a leading institutional owner focused on mission critical technology properties throughout North America and Europe Tenants consist of leading global companies diversified across various industries Own 58 properties comprising 11.3 million rentable sq ft which in
Slide 4: DLR Investment Highlights
DLR Investment Highlights Specialized focus in dynamic and growing industries High quality portfolio that is difficult to replicate Proven track record of creating shareholder value Conservative and flexible capital structure Uniquely positioned as both a value and growth REIT 2323 Bryan Street Dall
Slide 5: DLR properties feature advanced technical systems
DLR properties feature advanced technical systems Power management/conversion Precision air cooling/handling Power backup/redundancy Systems and security controls Between $500 and $1,000 psf typically invested in DLR buildings, creating a barrier to exit for tenants and discouraging speculative new
Slide 6: DLR Presence in 25 Top Markets
DLR Presence in 25 Top Markets Seattle Boston Toronto Boston Boston St. Paul Chicago NY Metro San Francisco Sacramento Philadelphia Northern Silicon Valley Virginia Denver Los Angeles Charlotte Phoenix Dallas Atlanta Austin Houston Miami Dublin London Amsterdam # of # of Total Rentable Paris DLR Reg
Slide 7: DLR is unique in its focus on technology properties
DLR is unique in its focus on technology properties Financial Corporate Communications Internet Enterprise Technology Datacenters (40%(1)) Internet Gateways (43%(1)) • Storage/server intensive buildings • Internet and telecom network • Provide a secure 24 x 7 environment intensive buildings for the
Slide 8: Strong trends drive sustained demand for DLR space
Strong trends drive sustained demand for DLR space Primary Drivers – Estimated Annual Growth Rates Other Growth Drivers 100% Increased federal regulatory and legislative requirements for business 80 continuity and records retention 73% 60 Disaster Recovery 60% initiatives prioritized as a result of
Slide 9: Bill rates and utilization rates are escalating
Bill rates and utilization rates are escalating Equinix and Savvis, two leading managed service providers that “resell” space leased directly from DLR, are experiencing strong growth in revenues and utilization Utilization Rate Revenue PSF 80% $600 $530psf 70% $500 67% 60% Revenue PSF (Utilized) $51
Slide 10: DLR offers sustained growth
DLR offers sustained growth DLR growth is derived from three sources Acquisitions Leasing of Turn Key Datacenter Space Redevelopment Portfolio 9
Slide 11: Proven Track Record: Strong Acquisition Activity
Proven Track Record: Strong Acquisition Activity Since its IPO, DLR has more than doubled its total assets through property acquisitions Total Undepreciated Assets ($000) $1,996.1 $2,000 $1,794.4 $1,800 $1,648.2 $1,593.6 $1,600 $1,508.5 $1,413.4 $1,400 $1,200 $1,137.4 $1,044.3 $1,000 $847.2 $800 $60
Slide 12: 2005 & YTD 2006 Acquisitions
2005 & YTD 2006 Acquisitions DLR has acquired approximately $968M in new properties Purchase Total Rentable Net Rentable Redevelopment Occupancy Property Location Price (M) Sq. Ft. Sq Ft (1) Sq Ft (Net of Redev) 833 Chestnut East Philadelphia 654,758 535,098 119,660 76% 1125 Energy Park Drive St. Pa
Slide 13: Leasing Drives Internal Growth
Leasing Drives Internal Growth DLR has executed 173 leases in the first nine months of 2006, contributing approximately $21.7M in annualized GAAP rental revenues (1) Type of Total SF Annualized Annualized # of Leases Space Leased GAAP Rent PSF GAAP Rent Datacenter 144 185,136 $89.00 $16.5 million Re
Slide 14: Same Store Growth
Same Store Growth ($000) 44,000 97.0% 96.5% 43,000 Same Store Occupancy (1) Increase = 277 bps 96.0% 42,000 95.5% 41,000 95.0% 40,000 94.5% 39,000 94.0% 93.5% 38,000 Same Store Quarterly Operating Revenue (2) Increase = 14.5% 93.0% 37,000 92.5% 36,000 92.0% 35,000 91.5% Jun-05 Sept-05 Dec-05 Mar-06
Slide 15: Case studies: DLR's value-add leasing
Case studies: DLR’s value-add leasing Recent leasing illustrates effectiveness of DLR’s leasing and engineering team Opportunity DLR Action Result • 21,000 sf vacant shell space • Invested approx. $7.9M to • Executed new 21,000 sf lease design, construct and operate with global technology custom dat
Slide 16: DLR Redevelopment Opportunities
DLR Redevelopment Opportunities Inventory totals 1.5 million sf of vacant, redevelopment space with potential for up to 900,000 sf of datacenter: – Approximately 55% of inventory in income producing properties – Remaining 45% of inventory in 5 recently acquired vacant buildings Redevelopment costs v
Slide 17: DLR's Competitive Advantage: Dedicated Technical Professionals
DLR’s Competitive Advantage: Dedicated Technical Professionals Technical professionals collaborate with our tenants to develop cost effective solutions for their datacenter requirements Over 25 DLR professionals in the areas of – IT sales – Datacenter sales engineers – Design and construction – Data
Slide 18: Replacement cost illustrates the value of DLR's portfolio
Replacement cost illustrates the value of DLR’s portfolio Replacement Cost Estimate Cost per Square Foot Equinix (2) Cost Components Low High Land $40 $70 Base Building Building Shell 60 150 Electrical Systems $297 $396 Mechanical Systems (HVAC) 92 122 Data Center (1) Fire Protection 21 29 Improveme
Slide 19: DLR's model features long-term, stable leases
DLR’s model features long-term, stable leases Lease Expiration as a % of Net Rentable Square Feet 26.0% 17.1% 15.8% 6.9% in through 2008 9.3% 7.4% 5.6% 5.0% 3.9% 1.9% 1.6% 1.1% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Thereafter • The average lease term is approximately 12 years with 7 year
Slide 20: DLR 2006 Guidance
DLR 2006 Guidance (1)(2) 2006 projected FFO Per Share Guidance : $1.55 to $1.65 Lease-Up 125,000 to 150,000 sq ft of basic commercial space (gross rent 6.5 – 10.0% $19 / sq ft) Internal Growth FFO (2) Per Share Growth 200,000 to 300,000 sq ft of highly improved tech & redevelopment space (gross rent
Slide 21: Digital Realty Financial Overview
Digital Realty Financial Overview Strong and Consistent FFO (1) Growth – $0.41 per diluted share and unit for 3Q06, + 17% from 3Q05 and + 8% from 2Q06 Well Supported Dividend – 3.4% yield (2) – FFO / AFFO payout ratio of 66% / 90% (3) for 3Q06 – Increased quarterly common dividend in 4Q06, +8% Prove
Slide 22: Improving overall credit quality of DLR portfolio
Improving overall credit quality of DLR portfolio Approximately $18 million of base rental income, or over 11% of overall income, has experienced an improvement in credit quality. + = + = (1) (2) (1) As a result of a sublease relationship with Microsoft for 200,000 sq ft of space that is leased dire
Slide 23: Significant Equity Capitalization Improvement in Top Tenants
Significant Equity Capitalization Improvement in Top Tenants DLR’s top tenants have experienced a robust increase in equity capitalization (1) $18.0 $16.9 12.0 $10.6 $6.1 6.0 2.0 $1.7 $1.4 $1.2 $0.6 $0.7 $0.4 0.0 At IPO Dec-05 Current At IPO Dec-05 Current At IPO Dec-05 Current (1) Increase in equit
Slide 24: DLR employs a conservative capital structure
DLR employs a conservative capital structure Wtd Average Cost of Variable Rate Debt Debt: 5.64%; 3.1% (3) Preferred Stock 4.8% Fixed Rate Debt Approximately 89% fixed 25.8% (2)(4) rate debt (4) Periodically refinancing high cost debt with lower rate, longer term, fixed Equity (1) rate financing 66.2
Slide 25: Digital Realty Trust
DIGITAL REALTY TRUST connecting the worlds of technology and real estate
Slide 26: Definition of Non-GAAP Financial Measures
Definition of Non-GAAP Financial Measures This presentation includes certain non-GAAP financial measures that management believes are helpful in understanding our business, as further described below. Our definition and calculation of non-GAAP financial measures may differ from those of other REITs,
Slide 27: Reconciliation of non GAAP items to their closest GAAP
Reconciliation of non GAAP items to their closest GAAP Cash paid for interest (including discontinued operations) Funds from operations (1) Q306 Q206 Q305 FY2005 Q306 Q206 FY2005 Total GAAP interest expense (including Net income available to common stockholders $11,342 $1,650 $1,326 $6,087 discontin
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