Digital Realty (NYSE:DLR) Trust, Inc. DLR delivered third-quarter 2021 core funds from operations (FFO) per share of $1.65, beating the Zacks Consensus Estimate of $1.62. The reported figure also surpassed the year-ago quarter’s $1.54.
The company registered revenues of $1.1 billion in the third quarter, marking an 11% year-over-year jump. The revenue figure also outpaced the Zacks Consensus Estimate of $1.10 billion.
The adjusted EBITDA of $610 million in the quarter marks a 7% increase year on year.
Decent leasing activities and strong signed total bookings aided the company.
According to Digital Realty’s CEO A. William Stein, "Record new logo growth and continued strong bookings in the quarter reflect the global adoption of PlatformDIGITAL, while our robust internal processes enabled us to execute consistently for our growing list of customers."
Quarter in Detail
Signed total bookings during the reported quarter are estimated to generate $113 million of annualized GAAP rental revenues. This is likely to include a $12-million contribution from interconnection. Notably, the weighted-average lag between new leases signed during the second quarter and the contractual commencement date was seven months.
Digital Realty signed renewal leases, marking $223 million of annualized GAAP rental revenues during the September-end quarter. Rental rates on renewal leases signed during the quarter rolled down 5.6% on a cash basis and 3.3% on a GAAP basis.
Portfolio Activity
During the July-September period, Digital Realty closed its proposed joint-venture deal with Brookfield Infrastructure (NYSE:BIPC) Partners in India.
The data-center REIT concluded the sale of a 56-acre land parcel in Mesa, AZ, for $17 million. Moreover, its existing joint venture with PGIM Real Estate closed the sale of a portfolio of 10 data centers in North America for $581 million.
Balance Sheet
Digital Realty exited third-quarter 2021 with cash and cash equivalents of $116 million, down from the $120.5 million recorded at the end of second-quarter 2021. Additionally, as of Sep 30, 2021, the data-center REIT had $14.1 billion of total debt outstanding, of which $13.8 billion was unsecured debt and $0.2 billion was secured debt. Also, as of the same date, its net debt-to-adjusted EBITDA was 6.0X, while fixed charge coverage was 5.8X.
Guidance
Digital Realty raised the estimate for 2021 core FFO per share to $6.50-$6.55 from the $6.45-$6.50. The Zacks Consensus Estimate for the same is currently pegged at $6.50.
It projects full-year total revenues of $4.400-$4.425 billion compared with the $4.325-$4.425 billion projected earlier, and adjusted EBITDA of $2.400-$2.425 billion versus the $2.350-$2.400 billion estimated before.
However, the guidance remains unrevised for the year-end portfolio occupancy of 84-85% and same-capital cash NOI decline of 2.5-3.5%.
Currently, Digital Realty carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Digital Realty Trust, Inc. Price, Consensus and EPS Surprise
Digital Realty Trust, Inc. price-consensus-eps-surprise-chart | Digital Realty Trust, Inc. Quote
We now look forward to the earnings releases of other REITs like CyrusOne (NASDAQ:CONE) Inc. CONE scheduled for Oct 28, Apple Hospitality REIT (NYSE:APLE) APLE and CubeSmart CUBE for Nov 4.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
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