Digital Realty Reports Fourth Quarter And Full-Year 2016 Results
SAN FRANCISCO, Feb. 16, 2017 /PRNewswire/ -- Digital Realty (NYSE: DLR), a leading global provider of data center, colocation and interconnection solutions, announced today financial results for the fourth quarter and full-year 2016. All per share results are presented on a fully-diluted share and unit basis.
Highlights
- Reported net income available to common stockholders per share of $0.49 in 4Q16, compared to net loss available to common stockholders per share of ($0.28) in 4Q15
- Reported net income available to common stockholders per share of $2.20 for the full year of 2016, compared to $1.56 in 2015
- Reported FFO per share of $1.58 in 4Q16, compared to $0.79 in 4Q15
- Reported FFO per share of $5.67 for the full year of 2016, compared to $4.85 in 2015
- Reported core FFO per share of $1.43 in 4Q16, compared to $1.38 in 4Q15
- Reported core FFO per share of $5.72 for the full year of 2016, compared to $5.26 in 2015
- Signed total bookings during 4Q16 expected to generate $33 million of annualized GAAP rental revenue, including a $7 million contribution from interconnection, bringing the full-year 2016 total bookings to $157 million
- Reiterated 2017 core FFO per share outlook of $5.90 - $6.10 and "constant-currency" core FFO per share outlook of $5.95 - $6.25
Financial Results
Revenues were $577 million for the fourth quarter of 2016, a 6% increase from the previous quarter and a 15% increase over the same quarter last year. For the full-year 2016, revenues were $2.1 billion, a 21% increase over the prior year.
Net income for the fourth quarter of 2016 was $96 million, and net income available to common stockholders was $78 million, or $0.49 per diluted share, compared to $1.25 per diluted share in the third quarter of 2016 and net loss available to common stockholders per diluted share of ($0.28) in the fourth quarter of 2015. For the full-year 2016, net income was $432 million and net income available to common shareholders was $332 million, or $2.20 per share, compared to $1.56 per share for 2015.
Adjusted EBITDA was $312 million for the fourth quarter of 2016, a 2% increase from the previous quarter and an 8% increase over the same quarter last year. Adjusted EBITDA was $1.2 billion for the full-year 2016, an 18% increase over 2015.
Funds from operations ("FFO") on a fully diluted basis was $255 million in the fourth quarter of 2016, or $1.58 per share, compared to $1.31 per share in the third quarter of 2016 and $0.79 per share in the fourth quarter of 2015. FFO per share for the full-year 2016 was $5.67 compared to $4.85 in 2015, a 17% increase.
Excluding certain items that do not represent core expenses or revenue streams, fourth quarter of 2016 core FFO was $1.43 per share, a 1% decline from $1.44 per share in the third quarter of 2016, and a 4% increase from $1.38 per share in the fourth quarter of 2015. Core FFO per share for the full-year 2016 was $5.72 per share compared to $5.26 per share in 2015, a 9% increase.
Leasing Activity
"During the fourth quarter, we signed total bookings representing $33 million of annualized GAAP rental revenue, including a $7 million contribution from interconnection," said Chief Executive Officer A. William Stein. "We capped off a very successful year in 2016. Data center demand remains robust, driven by a diverse set of customers across the digital economy. We made substantial progress towards our strategic initiatives in 2016 and we look forward to building on this momentum in 2017, coming together as one team, oriented around our customers".
The weighted-average lag between leases signed during the fourth quarter of 2016 and the contractual commencement date was 3 months.
In addition to new leases signed, Digital Realty also signed renewal leases representing $47 million of annualized GAAP rental revenue during the quarter. Rental rates on renewal leases signed during the fourth quarter of 2016 rolled up 3.5% on a cash basis and up 5.4% on a GAAP basis.
New leases signed during the fourth quarter of 2016 by region and product type are summarized as follows:
Annualized GAAP |
|||||||||||||||
Base Rent |
GAAP Base Rent |
GAAP Base Rent |
|||||||||||||
North America |
(in thousands) |
Square Feet |
per Square Foot |
Megawatts |
per Kilowatt |
||||||||||
Turn-Key Flex |
$13,770 |
88,148 |
$156 |
8 |
$144 |
||||||||||
Colocation |
5,984 |
21,072 |
284 |
2 |
285 |
||||||||||
Non-Technical |
90 |
2,745 |
33 |
— |
— |
||||||||||
Total |
$19,844 |
111,965 |
$177 |
10 |
$170 |
||||||||||
Europe (1) |
|||||||||||||||
Turn-Key Flex |
$1,337 |
7,919 |
$169 |
1 |
$175 |
||||||||||
Colocation |
1,365 |
3,846 |
355 |
— |
340 |
||||||||||
Non-Technical |
249 |
5,752 |
43 |
— |
— |
||||||||||
Total |
$2,951 |
17,517 |
$168 |
1 |
$232 |
||||||||||
Asia Pacific (1) |
|||||||||||||||
Turn-Key Flex |
$2,431 |
10,934 |
$222 |
1 |
$170 |
||||||||||
Non-Technical |
36 |
1,359 |
26 |
— |
— |
||||||||||
Total |
$2,467 |
12,293 |
$201 |
1 |
$170 |
||||||||||
Interconnection |
$7,467 |
N/A |
N/A |
N/A |
N/A |
||||||||||
Grand Total |
$32,729 |
141,775 |
$178 |
12 |
$175 |
Note: Totals may not foot due to rounding differences. |
|
(1) |
Based on quarterly average exchange rates during the three months ended December 31, 2016. |
Investment Activity
Digital Realty did not close any acquisitions, dispositions or joint venture contributions during the fourth quarter of 2016.
Earlier in the year, Digital Realty closed the previously announced acquisition of a portfolio of eight high-quality, carrier-neutral data centers in Europe in a transaction valued at $874 million (based on the exchange rate at the date of announcement). In addition, Digital Realty also acquired four land parcels in Ashburn, VA, Franklin Park, IL and Garland, TX for a total purchase price of $48 million in 2016.
Separately, Digital Realty also completed the sale of six assets in various markets during 2016 for total net proceeds of $360 million.
Balance Sheet
Digital Realty had approximately $5.8 billion of total debt outstanding as of December 31, 2016 substantially all of which was unsecured. At the end of the fourth quarter of 2016, net debt-to-Adjusted EBITDA was 4.8x, debt-plus-preferred-to-total enterprise value was 30.3% and fixed charge coverage was 3.9x.
During the fourth quarter of 2016, Digital Realty pre-paid $108 million of secured debt. Subsequent to year-end, Digital Realty retired the $50 million Series E Prudential Unsecured Senior Notes at maturity in January 2017.
As of year-end, 2.375 million shares remained subject to the forward sales agreement originally entered into during the second quarter of 2016. The remainder of the forward sales agreement is expected to settle no later than May 19, 2017.
2017 Outlook
Digital Realty reiterated its 2017 core FFO per share outlook of $5.90 - $6.10. The assumptions underlying this guidance are summarized in the following table.
As of |
As of |
|||
Top-Line and Cost Structure |
Jan. 3, 2017 |
Feb. 16, 2017 |
||
2017 total revenue |
$2.2 - $2.3 billion |
$2.2 - $2.3 billion |
||
2017 net non-cash rent adjustments (1) |
($5 - $10 million) |
($5 - $10 million) |
||
2017 Adjusted EBITDA margin |
57.0% - 59.0% |
57.0% - 59.0% |
||
2017 G&A margin |
6.0% - 7.0% |
6.0% - 7.0% |
||
Internal Growth |
||||
Rental rates on renewal leases |
||||
Cash basis |
Slightly positive |
Slightly positive |
||
GAAP basis |
Up high single-digits |
Up high single-digits |
||
Year-end portfolio occupancy |
+/- 50 bps |
+/- 50 bps |
||
"Same-capital" cash NOI growth (2) |
2.0% - 3.0% |
2.0% - 3.0% |
||
Foreign Exchange Rates |
||||
U.S. Dollar / Pound Sterling |
$1.20 - $1.24 |
$1.20 - $1.24 |
||
U.S. Dollar / Euro |
$1.00 - $1.05 |
$1.00 - $1.05 |
||
External Growth |
||||
Dispositions |
||||
Dollar volume |
$0 - $200 million |
$0 - $200 million |
||
Cap rate |
0.0% - 10.0% |
0.0% - 10.0% |
||
Development |
||||
CapEx |
$0.8 - $1.0 billion |
$0.8 - $1.0 billion |
||
Average stabilized yields |
10.0% - 12.0% |
10.0% - 12.0% |
||
Enhancements and other non-recurring CapEx (3) |
$20 - $25 million |
$20 - $25 million |
||
Recurring CapEx + capitalized leasing costs (4) |
$125 - $135 million |
$125 - $135 million |
||
Balance Sheet |
||||
Long-term debt issuance |
||||
Dollar amount |
$400 - $600 million |
$400 - $600 million |
||
Pricing |
3.50% - 4.25% |
3.50% - 4.25% |
||
Timing |
Mid-to-late 2017 |
Mid-to-late 2017 |
||
Net income per diluted share |
$1.60 - $1.75 |
$1.60 - $1.75 |
||
Real estate depreciation and (gain)/loss on sale |
$4.20 - $4.20 |
$4.20 - $4.20 |
||
Funds From Operations / share (NAREIT-Defined) |
$5.80 - $5.95 |
$5.80 - $5.95 |
||
Non-core expense and revenue streams |
$0.10 - $0.15 |
$0.10 - $0.15 |
||
Core Funds From Operations / share |
$5.90 - $6.10 |
$5.90 - $6.10 |
||
Foreign currency translation adjustments |
$0.05 - $0.15 |
$0.05 - $0.15 |
||
Constant-Currency Core FFO / share |
$5.95 - $6.25 |
$5.95 - $6.25 |
(1) |
Net non-cash rent adjustments represents the sum of straight-line rental revenue, straight-line rent expense as well as the amortization of above- and below-market leases (i.e., FAS 141 adjustments). |
(2) |
The "same-capital" pool includes properties owned as of December 31, 2015 with less than 5% of the total rentable square feet under development. It also excludes properties that were undergoing, or were expected to undergo, development activities in 2016-2017, properties classified as held for sale, and properties sold or contributed to joint ventures for all periods presented. |
(3) |
Other non-recurring CapEx represents costs incurred to enhance the capacity or marketability of operating properties, such as network fiber initiatives and software development costs. |
(4) |
Recurring CapEx represents non-incremental improvements required to maintain current revenues, including second-generation tenant improvements and leasing commissions. Capitalized leasing costs include capitalized leasing compensation as well as capitalized internal leasing commissions. |
Non-GAAP Financial Measures
This press release contains non-GAAP financial measures, including FFO, core FFO, constant-currency core FFO, and Adjusted EBITDA. A reconciliation from U.S. GAAP net income available to common stockholders to FFO, a reconciliation from FFO to core FFO and constant-currency core FFO, and definitions of FFO, core FFO and constant-currency core FFO are included as an attachment to this press release. A reconciliation from U.S. GAAP net income available to common stockholders to Adjusted EBITDA, a definition of Adjusted EBITDA and definitions of net debt-to-Adjusted EBITDA, debt-plus-preferred-to-total enterprise value, cash NOI, and fixed charge coverage ratio are included as an attachment to this press release.
Investor Conference Call
Prior to Digital Realty's investor conference call at 5:30 p.m. EST / 2:30 p.m. PST on February 16, 2017, a presentation will be posted to the Investors section of the company's website at http://investor.digitalrealty.com. The presentation is designed to accompany the discussion of the company's fourth quarter 2016 financial results and operating performance. The conference call will feature Chief Executive Officer A. William Stein and Chief Financial Officer Andrew P. Power.
To participate in the live call, investors are invited to dial +1 (888) 317-6003 (for domestic callers) or +1 (412) 317-6061 (for international callers) and reference the conference ID# 4875948 at least five minutes prior to start time. A live webcast of the call will be available via the Investors section of Digital Realty's website at http://investor.digitalrealty.com.
Telephone and webcast replays will be available one hour after the call until March 16, 2017. The telephone replay can be accessed by dialing +1 (877) 344-7529 (for domestic callers) or +1 (412) 317-0088 (for international callers) and providing the conference ID# 10097947. The webcast replay can be accessed on Digital Realty's website.
About Digital Realty
Digital Realty supports the data center, colocation and interconnection strategies of more than 2,200 firms across its secure, network-rich portfolio of data centers located throughout North America, Europe, Asia and Australia. Digital Realty's clients include domestic and international companies of all sizes, ranging from financial services, cloud and information technology services, to manufacturing, energy, gaming, life sciences and consumer products.
Additional information about Digital Realty is included in the Company Overview, available on the Investors page of Digital Realty's website at www.digitalrealty.com. The Company Overview is updated periodically, and may contain material information and updates. To receive e-mail alerts when the Company Overview is updated, please visit the Investors page of Digital Realty's website.
Contact Information
Andrew P. Power
Chief Financial Officer
Digital Realty Trust, Inc.
+1 (415) 738-6500
John J. Stewart / Maria S. Lukens
Investor Relations
Digital Realty Trust, Inc.
+1 (415) 738-6500
Safe Harbor Statement
This press release contains forward-looking statements which are based on current expectations, forecasts and assumptions that involve risks and uncertainties that could cause actual outcomes and results to differ materially, including statements related to supply and demand for data center and colocation space; the settlement of our forward sales agreements; the contribution of interconnection; market dynamics and data center fundamentals; our strategic priorities; rent from leases that have been signed but have not yet commenced and other contracted rent to be received in future periods; rental rates on future leases; lag between signing and commencement; cap rates and yields; investment activity; and the company's FFO, core FFO, constant-currency core FFO and net income outlook and underlying assumptions. These risks and uncertainties include, among others, the following: the impact of current global economic, credit and market conditions; current local economic conditions in the geographies in which we operate; decreases in information technology spending, including as a result of economic slowdowns or recession; adverse economic or real estate developments in our industry or the industry sectors that we sell to (including risks relating to decreasing real estate valuations and impairment charges); our dependence upon significant tenants; bankruptcy or insolvency of a major tenant or a significant number of smaller tenants; defaults on or non-renewal of leases by tenants; our failure to obtain necessary debt and equity financing; risks associated with using debt to fund our business activities, including re-financing and interest rate risks, our failure to repay debt when due, adverse changes in our credit ratings or our breach of covenants or other terms contained in our loan facilities and agreements; financial market fluctuations; changes in foreign currency exchange rates; our inability to manage our growth effectively; difficulty acquiring or operating properties in foreign jurisdictions; our failure to successfully integrate and operate acquired or developed properties or businesses; the suitability of our properties and data center infrastructure, delays or disruptions in connectivity, failure of our physical and information security infrastructure or services or availability of power; risks related to joint venture investments, including as a result of our lack of control of such investments; delays or unexpected costs in development of properties; decreased rental rates, increased operating costs or increased vacancy rates; increased competition or available supply of data center space; our inability to successfully develop and lease new properties and development space; difficulties in identifying properties to acquire and completing acquisitions; our inability to acquire off-market properties; the impact of the United Kingdom's referendum on withdrawal from the European Union on global financial markets and our business; our inability to comply with the rules and regulations applicable to reporting companies; our inability to comply with the rules and regulations applicable to reporting companies; our failure to maintain our status as a REIT; possible adverse changes to tax laws; restrictions on our ability to engage in certain business activities; environmental uncertainties and risks related to natural disasters; losses in excess of our insurance coverage; changes in foreign laws and regulations, including those related to taxation and real estate ownership and operation; and changes in local, state and federal regulatory requirements, including changes in real estate and zoning laws and increases in real property tax rates. For a further list and description of such risks and uncertainties, see the reports and other filings by the company with the U.S. Securities and Exchange Commission, including the company's Annual Report on Form 10-K for the year ended December 31, 2015, as amended, and Quarterly Reports on Form 10-Q for the quarters ended March 31, 2016, June 30, 2016 and September 30, 2016. The company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
Consolidated Quarterly Statements of Operations
Unaudited and in thousands, except share and per share data |
||||||||||||||||
Three Months Ended |
Twelve Months Ended |
|||||||||||||||
31-Dec-16 |
30-Sep-16 |
30-Jun-16 |
31-Mar-16 |
31-Dec-15 |
31-Dec-16 |
31-Dec-15 |
||||||||||
Rental revenues |
$399,062 |
$395,212 |
$377,109 |
$371,128 |
$365,827 |
$1,542,511 |
$1,354,986 |
|||||||||
Tenant reimbursements - Utilities |
63,956 |
68,168 |
62,363 |
58,955 |
60,800 |
253,442 |
253,017 |
|||||||||
Tenant reimbursements - Other |
23,853 |
27,497 |
25,848 |
25,263 |
30,190 |
102,461 |
106,858 |
|||||||||
Interconnection & other |
55,094 |
53,897 |
48,363 |
46,963 |
41,746 |
204,317 |
40,759 |
|||||||||
Fee income |
1,718 |
1,517 |
1,251 |
1,799 |
1,880 |
6,285 |
6,638 |
|||||||||
Other |
33,104 |
2 |
— |
91 |
— |
33,197 |
1,078 |
|||||||||
Total Operating Revenues |
$576,787 |
$546,293 |
$514,934 |
$504,199 |
$500,443 |
$2,142,213 |
$1,763,336 |
|||||||||
Utilities |
$76,896 |
$85,052 |
$74,396 |
$69,917 |
$70,758 |
$306,261 |
$272,284 |
|||||||||
Rental property operating |
57,269 |
58,685 |
54,731 |
54,109 |
52,563 |
224,794 |
160,511 |
|||||||||
Repairs & maintenance |
35,103 |
33,455 |
30,421 |
30,143 |
32,063 |
129,122 |
117,090 |
|||||||||
Property taxes |
27,097 |
20,620 |
27,449 |
27,331 |
28,472 |
102,497 |
92,588 |
|||||||||
Insurance |
2,369 |
2,470 |
2,241 |
2,412 |
2,360 |
9,492 |
8,809 |
|||||||||
Change in fair value of contingent consideration |
— |
— |
— |
— |
— |
— |
(44,276) |
|||||||||
Depreciation & amortization |
176,581 |
178,133 |
175,594 |
169,016 |
172,956 |
699,324 |
570,527 |
|||||||||
General & administrative |
40,481 |
43,555 |
32,681 |
29,808 |
29,862 |
146,525 |
100,403 |
|||||||||
Severance, equity acceleration, and legal expenses |
672 |
2,580 |
1,508 |
1,448 |
6,125 |
6,208 |
5,146 |
|||||||||
Transaction and integration expenses |
8,961 |
6,015 |
3,615 |
1,900 |
3,099 |
20,491 |
17,400 |
|||||||||
Other expenses |
236 |
(22) |
— |
(1) |
60,914 |
213 |
60,943 |
|||||||||
Total Operating Expenses |
$425,665 |
$430,543 |
$402,636 |
$386,083 |
$459,172 |
$1,644,927 |
$1,361,425 |
|||||||||
Operating Income |
$151,122 |
$115,750 |
$112,298 |
$118,116 |
$41,271 |
$497,286 |
$401,911 |
|||||||||
Equity in earnings of unconsolidated joint ventures |
$4,742 |
$4,152 |
$4,132 |
$4,078 |
$3,321 |
$17,104 |
$15,491 |
|||||||||
Gain (loss) on real estate transactions |
(195) |
169,000 |
— |
1,097 |
322 |
169,902 |
94,604 |
|||||||||
Interest and other income |
(970) |
355 |
(3,325) |
(624) |
498 |
(4,564) |
(2,381) |
|||||||||
Interest (expense) |
(56,226) |
(63,084) |
(59,909) |
(57,261) |
(61,717) |
(236,480) |
(201,435) |
|||||||||
Tax (expense) |
(2,304) |
(3,720) |
(2,252) |
(2,109) |
(268) |
(10,385) |
(6,451) |
|||||||||
Loss from early extinguishment of debt |
(29) |
(18) |
— |
(964) |
— |
(1,011) |
(148) |
|||||||||
Net Income (Loss) |
$96,140 |
$222,435 |
$50,944 |
$62,333 |
($16,573) |
$431,852 |
$301,591 |
|||||||||
Net (income) loss attributable to non-controlling interests |
(1,065) |
(3,247) |
(569) |
(784) |
590 |
(5,665) |
(4,902) |
|||||||||
Net Income (Loss) Attributable to Digital Realty Trust, Inc. |
$95,075 |
$219,188 |
$50,375 |
$61,549 |
($15,983) |
$426,187 |
$296,689 |
|||||||||
Preferred stock dividends |
(17,393) |
(21,530) |
(22,424) |
(22,424) |
(24,056) |
(83,771) |
(79,423) |
|||||||||
Issuance costs associated with redeemed preferred stock |
— |
(10,328) |
— |
— |
— |
(10,328) |
— |
|||||||||
Net Income (Loss) Available to Common Stockholders |
$77,682 |
$187,330 |
$27,951 |
$39,125 |
($40,039) |
$332,088 |
$217,266 |
|||||||||
Weighted-average shares outstanding - basic |
158,956,606 |
147,397,853 |
146,824,268 |
146,565,564 |
145,561,559 |
149,953,662 |
138,247,606 |
|||||||||
Weighted-average shares outstanding - diluted |
159,699,411 |
149,384,871 |
147,808,268 |
147,433,194 |
145,561,559 |
150,679,688 |
138,865,421 |
|||||||||
Weighted-average fully diluted shares and units |
162,059,914 |
151,764,542 |
150,210,714 |
149,915,428 |
149,100,083 |
153,085,706 |
141,726,268 |
|||||||||
Net income (loss) per share - basic |
$0.49 |
$1.27 |
$0.19 |
$0.27 |
($0.28) |
$2.21 |
$1.57 |
|||||||||
Net income (loss) per share - diluted |
$0.49 |
$1.25 |
$0.19 |
$0.27 |
($0.28) |
$2.20 |
$1.56 |
Funds From Operations and Core Funds From Operations
|
|||||||||||||||
Reconciliation of Net Income to Funds From Operations (FFO) |
Three Months Ended |
Twelve Months Ended |
|||||||||||||
31-Dec-16 |
30-Sep-16 |
30-Jun-16 |
31-Mar-16 |
31-Dec-15 |
31-Dec-16 |
31-Dec-15 |
|||||||||
Net Income (Loss) Available to Common Stockholders |
$77,682 |
$187,330 |
$27,951 |
$39,125 |
($40,039) |
$332,088 |
$217,266 |
||||||||
Adjustments: |
|||||||||||||||
Non-controlling interests in operating partnership |
1,154 |
3,024 |
457 |
663 |
(708) |
5,298 |
4,442 |
||||||||
Real estate related depreciation & amortization (1) |
173,523 |
175,332 |
167,043 |
166,912 |
170,095 |
682,810 |
563,729 |
||||||||
Impairment charge related to Telx trade name |
— |
— |
6,122 |
— |
— |
6,122 |
— |
||||||||
Unconsolidated JV real estate related depreciation & amortization |
2,823 |
2,810 |
2,810 |
2,803 |
2,867 |
11,246 |
11,418 |
||||||||
(Gain) loss on real estate transactions |
195 |
(169,000) |
— |
(1,097) |
(322) |
(169,902) |
(94,604) |
||||||||
(Gain) on settlement of pre-existing relationship with Telx (2) |
— |
— |
— |
— |
(14,355) |
— |
(14,355) |
||||||||
Funds From Operations |
$255,377 |
$199,496 |
$204,383 |
$208,406 |
$117,538 |
$867,662 |
$687,896 |
||||||||
Funds From Operations - diluted |
$255,377 |
$199,496 |
$204,383 |
$208,406 |
$117,538 |
$867,662 |
$687,896 |
||||||||
Weighted-average shares and units outstanding - basic |
161,317 |
149,778 |
149,227 |
149,048 |
148,388 |
152,360 |
141,108 |
||||||||
Weighted-average shares and units outstanding - diluted (3) |
162,060 |
151,765 |
150,211 |
149,915 |
149,100 |
153,086 |
141,726 |
||||||||
Funds From Operations per share - basic |
$1.58 |
$1.33 |
$1.37 |
$1.40 |
$0.79 |
$5.69 |
$4.88 |
||||||||
Funds From Operations per share - diluted (3) |
$1.58 |
$1.31 |
$1.36 |
$1.39 |
$0.79 |
$5.67 |
$4.85 |
||||||||
Three Months Ended |
Twelve Months Ended |
||||||||||||||
Reconciliation of FFO to Core FFO |
31-Dec-16 |
30-Sep-16 |
30-Jun-16 |
31-Mar-16 |
31-Dec-15 |
31-Dec-16 |
31-Dec-15 |
||||||||
Funds From Operations - diluted |
$255,377 |
$199,496 |
$204,383 |
$208,406 |
$117,538 |
$867,662 |
$687,896 |
||||||||
Adjustments: |
|||||||||||||||
Termination fees and other non-core revenues (4) |
(33,104) |
(2) |
— |
(91) |
— |
(33,197) |
680 |
||||||||
Transaction and integration expenses |
8,961 |
6,015 |
3,615 |
1,900 |
3,099 |
20,491 |
17,400 |
||||||||
Loss from early extinguishment of debt |
29 |
18 |
— |
964 |
— |
1,011 |
148 |
||||||||
Issuance costs associated with redeemed preferred stock |
— |
10,328 |
— |
— |
— |
10,328 |
— |
||||||||
Change in fair value of contingent consideration (5) |
— |
— |
— |
— |
— |
— |
(44,276) |
||||||||
Severance, equity acceleration, and legal expenses (6) |
672 |
2,580 |
1,508 |
1,448 |
6,125 |
6,208 |
5,146 |
||||||||
Bridge facility fees (7) |
— |
— |
— |
— |
3,903 |
— |
3,903 |
||||||||
Loss on currency forwards |
— |
— |
3,082 |
— |
— |
3,082 |
— |
||||||||
Other non-core expense adjustments (8) |
236 |
(22) |
— |
(1) |
75,269 |
213 |
75,261 |
||||||||
Core Funds From Operations - diluted |
$232,171 |
$218,413 |
$212,588 |
$212,626 |
$205,934 |
$875,798 |
$746,158 |
||||||||
Weighted-average shares and units outstanding - diluted (3) |
162,060 |
151,765 |
150,211 |
149,915 |
149,100 |
153,086 |
141,726 |
||||||||
Core Funds From Operations per share - diluted (3) |
$1.43 |
$1.44 |
$1.42 |
$1.42 |
$1.38 |
$5.72 |
$5.26 |
||||||||
(1) Real Estate Related Depreciation & Amortization: |
Three Months Ended |
Twelve Months Ended |
|||||||||||||
31-Dec-16 |
30-Sep-16 |
30-Jun-16 |
31-Mar-16 |
31-Dec-15 |
31-Dec-16 |
31-Dec-15 |
|||||||||
Depreciation & amortization per income statement |
$176,581 |
$178,133 |
$175,594 |
$169,016 |
$172,956 |
$699,324 |
$570,527 |
||||||||
Non-real estate depreciation |
(3,058) |
(2,801) |
(2,429) |
(2,104) |
(2,861) |
(10,392) |
(6,798) |
||||||||
Impairment charge related to Telx trade name |
— |
— |
(6,122) |
— |
— |
(6,122) |
— |
||||||||
Real Estate Related Depreciation & Amortization |
$173,523 |
$175,332 |
$167,043 |
$166,912 |
$170,095 |
$682,810 |
$563,729 |
(2) |
Included in Other expenses on the Income Statement, offset by the write off of straight-line rent receivables related to the Telx Acquisition of $75.3 million. |
(3) |
For all periods presented, we have excluded the effect of dilutive series E, series F, series G, series H and series I preferred stock, as applicable, that may be converted upon the occurrence of specified change in control transactions as described in the articles supplementary governing the series E, series F, series G, series H and series I preferred stock, as applicable, which we consider highly improbable. See above for calculations of diluted FFO available to common stockholders and unitholders and page below for calculations of weighted average common stock and units outstanding. |
(4) |
Includes lease termination fees and certain other adjustments that are not core to our business. |
(5) |
Relates to earn-out contingencies in connection with the Sentrum and Singapore (29A International Business Park) acquisitions. The Sentrum earn-out contingency expired in July 2015 and the Singapore earn-out contingency will expire in November 2020 and will be reassessed on a quarterly basis. During 2015, we reduced the fair value of the earnout related to Sentrum by approximately $44.3 million. The adjustment was the result of an evaluation by management that no additional leases would be executed for vacant space by the contingency expiration date. |
(6) |
Relates to severance and other charges related to the departure of company executives and integration related severance. |
(7) |
Bridge facility fees included in interest expense. |
(8) |
For the quarter ended December 31, 2015, includes write off of straight-line rent receivables related to the Telx Acquisition of $75.3 million. Includes reversal of accruals and certain other adjustments that are not core to our business. Construction management expenses are included in Other expenses on the income statement but are not added back to core FFO. |
Adjusted Funds From Operations (AFFO)
|
|||||||||||||||
Three Months Ended |
Twelve Months Ended |
||||||||||||||
Reconciliation of Core FFO to AFFO |
31-Dec-16 |
30-Sep-16 |
30-Jun-16 |
31-Mar-16 |
31-Dec-15 |
31-Dec-16 |
31-Dec-15 |
||||||||
Core FFO available to common stockholders and unitholders |
$232,171 |
$218,413 |
$212,588 |
$212,626 |
$205,934 |
$875,798 |
$746,158 |
||||||||
Adjustments: |
|||||||||||||||
Non-real estate depreciation |
3,058 |
2,801 |
2,429 |
2,104 |
2,861 |
10,392 |
6,798 |
||||||||
Amortization of deferred financing costs |
2,455 |
2,550 |
2,643 |
2,260 |
2,121 |
9,909 |
8,481 |
||||||||
Amortization of debt discount/premium |
693 |
693 |
689 |
647 |
611 |
2,722 |
2,296 |
||||||||
Non-cash stock-based compensation expense |
3,774 |
4,041 |
4,630 |
3,420 |
604 |
15,865 |
11,748 |
||||||||
Straight-line rental revenue |
(5,210) |
(6,032) |
(5,554) |
(7,456) |
(9,530) |
(24,253) |
(50,977) |
||||||||
Straight-line rental expense |
5,096 |
6,402 |
5,933 |
5,655 |
5,698 |
23,086 |
5,944 |
||||||||
Above- and below-market rent amortization |
(2,048) |
(2,002) |
(1,997) |
(2,266) |
(2,479) |
(8,313) |
(9,336) |
||||||||
Deferred non-cash tax expense |
(1,279) |
(189) |
669 |
637 |
(757) |
(162) |
1,546 |
||||||||
Capitalized leasing compensation (1) |
(3,644) |
(2,795) |
(2,455) |
(2,695) |
(2,563) |
(11,589) |
(10,216) |
||||||||
Recurring capital expenditures (2) |
(21,246) |
(15,252) |
(17,914) |
(21,064) |
(35,386) |
(75,476) |
(91,876) |
||||||||
Capitalized internal leasing commissions |
(1,835) |
(1,786) |
(1,677) |
(2,024) |
(1,460) |
(7,322) |
(4,081) |
||||||||
AFFO available to common stockholders and unitholders (3) |
$211,984 |
$206,843 |
$199,985 |
$191,844 |
$165,654 |
$810,656 |
$616,485 |
||||||||
Weighted-average shares and units outstanding - basic |
161,317 |
149,778 |
149,227 |
149,048 |
148,388 |
152,360 |
141,108 |
||||||||
Weighted-average shares and units outstanding - diluted (4) |
162,060 |
151,765 |
150,211 |
149,915 |
149,100 |
153,086 |
141,726 |
||||||||
AFFO per share - diluted (4) |
$1.31 |
$1.36 |
$1.33 |
$1.28 |
$1.11 |
$5.30 |
$4.35 |
||||||||
Dividends per share and common unit |
$0.88 |
$0.88 |
$0.88 |
$0.88 |
$0.85 |
$3.52 |
$3.40 |
||||||||
Diluted AFFO Payout Ratio |
67.3 |
% |
64.6 |
% |
66.1 |
% |
68.8 |
% |
76.5 |
% |
66.5 |
% |
78.2 |
% |
|
Three Months Ended |
Twelve Months Ended |
||||||||||||||
Share Count Detail |
31-Dec-16 |
30-Sep-16 |
30-Jun-16 |
31-Mar-16 |
31-Dec-15 |
31-Dec-16 |
31-Dec-15 |
||||||||
Weighted Average Common Stock and Units Outstanding |
161,317 |
149,778 |
149,227 |
149,048 |
148,388 |
152,360 |
141,108 |
||||||||
Add: Effect of dilutive securities |
743 |
1,987 |
984 |
867 |
712 |
726 |
618 |
||||||||
Weighted Avg. Common Stock and Units Outstanding - diluted |
162,060 |
151,765 |
150,211 |
149,915 |
149,100 |
153,086 |
141,726 |
(1) |
Beginning in the first quarter of 2015, we changed the presentation of certain capital expenditures. Infrequent expenditures for capitalized replacements and upgrades are now categorized as Recurring capital expenditures (categorized as Enhancements and Other Non-Recurring capital expenditures in 2014). First-generation leasing costs are now classified as Development capital expenditures (categorized as recurring capital expenditures in 2014). Capitalized leasing compensation for 2015 and 2016 includes only second generation leasing costs. |
(2) |
For a definition of recurring capital expenditures, see our supplemental operating and financial data package. |
(3) |
For a definition and discussion of AFFO, see below. For a reconciliation of net income available to common stockholders to FFO and core FFO, see above. |
(4) |
For all periods presented, we have excluded the effect of dilutive series E, series F, series G, series H and series I preferred stock, as applicable, that may be converted upon the occurrence of specified change in control transactions as described in the articles supplementary governing the series E, series F, series G, series H and series I preferred stock, as applicable, which we consider highly improbable. See above for calculations of diluted FFO available to common stockholders and unitholders and above for calculations of weighted average common stock and units outstanding. |
Consolidated Balance Sheets
|
||||||||||
31-Dec-16 |
30-Sep-16 |
30-Jun-16 |
31-Mar-16 |
31-Dec-15 |
||||||
Assets |
||||||||||
Investments in real estate: |
||||||||||
Real estate |
$10,630,514 |
$10,607,440 |
$10,223,946 |
$10,226,549 |
$10,066,936 |
|||||
Construction in progress |
732,430 |
681,189 |
594,986 |
720,363 |
664,992 |
|||||
Land held for future development |
195,525 |
223,236 |
161,714 |
156,000 |
183,445 |
|||||
Investments in Real Estate |
$11,558,469 |
$11,511,865 |
$10,980,646 |
$11,102,912 |
$10,915,373 |
|||||
Accumulated depreciation & amortization |
(2,668,509) |
(2,565,368) |
(2,441,150) |
(2,380,400) |
(2,251,268) |
|||||
Net Investments in Properties |
$8,889,960 |
$8,946,497 |
$8,539,496 |
$8,722,512 |
$8,664,105 |
|||||
Investment in unconsolidated joint ventures |
106,402 |
105,819 |
105,673 |
106,008 |
106,107 |
|||||
Net Investments in Real Estate |
$8,996,362 |
$9,052,316 |
$8,645,169 |
$8,828,520 |
$8,770,212 |
|||||
Cash and cash equivalents |
$10,528 |
$36,445 |
$33,241 |
$31,134 |
$57,053 |
|||||
Accounts and other receivables (1) |
203,938 |
208,097 |
165,867 |
180,456 |
177,398 |
|||||
Deferred rent |
412,269 |
412,977 |
408,193 |
412,579 |
403,327 |
|||||
Acquired in-place lease value, deferred leasing costs and other real estate intangibles, net |
1,522,378 |
1,526,563 |
1,331,275 |
1,368,340 |
1,391,659 |
|||||
Acquired above-market leases, net |
22,181 |
24,554 |
26,785 |
30,107 |
32,698 |
|||||
Goodwill |
752,970 |
780,099 |
330,664 |
330,664 |
330,664 |
|||||
Restricted cash |
11,508 |
11,685 |
18,297 |
19,599 |
18,009 |
|||||
Assets associated with real estate held for sale |
56,097 |
55,915 |
222,304 |
145,087 |
180,139 |
|||||
Other assets |
204,354 |
190,384 |
110,580 |
75,489 |
54,904 |
|||||
Total Assets |
$12,192,585 |
$12,299,036 |
$11,292,375 |
$11,421,975 |
$11,416,063 |
|||||
Liabilities and Equity |
||||||||||
Global unsecured revolving credit facility |
$199,209 |
$153,189 |
$88,535 |
$677,868 |
$960,271 |
|||||
Unsecured term loan |
1,482,361 |
1,521,613 |
1,545,590 |
1,566,185 |
923,267 |
|||||
Unsecured senior notes, net of discount |
4,153,797 |
4,238,435 |
4,252,570 |
3,662,753 |
3,712,569 |
|||||
Mortgage loans, net of premiums |
3,240 |
111,750 |
248,711 |
249,923 |
302,930 |
|||||
Accounts payable and other accrued liabilities |
824,878 |
823,906 |
598,610 |
570,653 |
608,343 |
|||||
Accrued dividends and distributions |
144,194 |
— |
— |
— |
126,925 |
|||||
Acquired below-market leases |
81,899 |
86,888 |
90,823 |
96,475 |
101,114 |
|||||
Security deposits and prepaid rent |
168,111 |
163,787 |
128,802 |
147,934 |
138,347 |
|||||
Liabilities associated with assets held for sale |
2,599 |
2,820 |
13,092 |
4,974 |
5,795 |
|||||
Total Liabilities |
$7,060,288 |
$7,102,388 |
$6,966,733 |
$6,976,765 |
$6,879,561 |
|||||
Equity |
||||||||||
Preferred Stock: $0.01 par value per share, 110,000,000 shares authorized: |
||||||||||
Series E Cumulative Redeemable Preferred Stock (2) |
— |
— |
$277,172 |
$277,172 |
$277,172 |
|||||
Series F Cumulative Redeemable Preferred Stock (3) |
$176,191 |
$176,191 |
176,191 |
176,191 |
176,191 |
|||||
Series G Cumulative Redeemable Preferred Stock (4) |
241,468 |
241,468 |
241,468 |
241,468 |
241,468 |
|||||
Series H Cumulative Redeemable Preferred Stock (5) |
353,290 |
353,290 |
353,290 |
353,290 |
353,290 |
|||||
Series I Cumulative Redeemable Preferred Stock (6) |
242,012 |
242,012 |
242,012 |
242,014 |
242,014 |
|||||
Common Stock: $0.01 par value per share, 215,000,000 shares authorized (7) |
1,582 |
1,581 |
1,460 |
1,459 |
1,456 |
|||||
Additional paid-in capital |
5,764,497 |
5,759,338 |
4,669,149 |
4,659,484 |
4,655,220 |
|||||
Dividends in excess of earnings |
(1,547,420) |
(1,483,223) |
(1,541,265) |
(1,440,028) |
(1,350,089) |
|||||
Accumulated other comprehensive (loss) income, net |
(135,608) |
(131,936) |
(129,657) |
(104,252) |
(96,590) |
|||||
Total Stockholders' Equity |
$5,096,012 |
$5,158,721 |
$4,289,820 |
$4,406,798 |
$4,500,132 |
|||||
Non-controlling Interests |
||||||||||
Non-controlling interest in operating partnership |
$29,687 |
$31,088 |
$29,095 |
$31,648 |
$29,612 |
|||||
Non-controlling interest in consolidated joint ventures |
6,598 |
6,839 |
6,727 |
6,764 |
6,758 |
|||||
Total Non-controlling Interests |
$36,285 |
$37,927 |
$35,822 |
$38,412 |
$36,370 |
|||||
Total Equity |
$5,132,297 |
$5,196,648 |
$4,325,642 |
$4,445,210 |
$4,536,502 |
|||||
Total Liabilities and Equity |
$12,192,585 |
$12,299,036 |
$11,292,375 |
$11,421,975 |
$11,416,063 |
(1) |
Net of allowance for doubtful accounts of $7,446 and $5,844 as of December 31, 2016 and December 31, 2015, respectively. |
(2) |
Series E Cumulative Redeemable Preferred Stock, 7.000%, $0 and $287,500 liquidation preference, respectively ($25.00 per share), 0 and 11,500,000 shares issued and outstanding as of December 31, 2016 and December 31, 2015, respectively. |
(3) |
Series F Cumulative Redeemable Preferred Stock, 6.625%, $182,500 and $182,500 liquidation preference, respectively ($25.00 per share), 7,300,000 and 7,300,000 shares issued and outstanding as of December 31, 2016 and December 31, 2015, respectively. |
(4) |
Series G Cumulative Redeemable Preferred Stock, 5.875%, $250,000 and $250,000 liquidation preference, respectively ($25.00 per share), 10,000,000 and 10,000,000 shares issued and outstanding as of December 31, 2016 and December 31, 2015, respectively. |
(5) |
Series H Cumulative Redeemable Preferred Stock, 7.375%, $365,000 and $365,000 liquidation preference, respectively ($25.00 per share), 14,600,000 and 14,600,000 shares issued and outstanding as of December 31, 2016 and December 31, 2015, respectively. |
(6) |
Series I Cumulative Redeemable Preferred Stock, 6.350%, $250,000 and $250,000 liquidation preference, respectively ($25.00 per share), 10,000,000 and 10,000,000 shares issued and outstanding as of December 31, 2016 and December 31, 2015, respectively. |
(7) |
Common Stock: 159,019,118 and 146,384,247 shares issued and outstanding as of December 31, 2016 and December 31, 2015, respectively. |
Reconciliation of Earnings Before Interest, Taxes, Depreciation & Amortization (EBITDA) (1) |
Three Months Ended |
|||||||||
31-Dec-16 |
30-Sep-16 |
30-Jun-16 |
31-Mar-16 |
31-Dec-15 |
||||||
Net Income (Loss) Available to Common Stockholders |
$77,682 |
$187,330 |
$27,951 |
$39,125 |
($40,039) |
|||||
Interest |
56,226 |
63,084 |
59,909 |
57,261 |
61,717 |
|||||
Loss from early extinguishment of debt |
29 |
18 |
— |
964 |
— |
|||||
Tax expense |
2,304 |
3,720 |
2,252 |
2,109 |
268 |
|||||
Depreciation & amortization |
176,581 |
178,133 |
175,594 |
169,016 |
172,956 |
|||||
EBITDA |
$312,822 |
$432,285 |
$265,706 |
$268,475 |
$194,902 |
|||||
Severance-related expense, equity acceleration, and legal expenses |
672 |
2,580 |
1,508 |
1,448 |
6,125 |
|||||
Transaction and integration expenses |
8,961 |
6,015 |
3,615 |
1,900 |
3,099 |
|||||
(Gain) loss on real estate transactions |
195 |
(169,000) |
— |
(1,097) |
(322) |
|||||
Non-cash (gain) on lease termination (2) |
(29,205) |
— |
— |
— |
— |
|||||
(Gain) on settlement of pre-existing relationship with Telx |
— |
— |
— |
— |
(14,355) |
|||||
Loss on currency forwards |
— |
— |
3,082 |
— |
— |
|||||
Other non-core expense adjustments |
236 |
(22) |
— |
(1) |
75,269 |
|||||
Non-controlling interests |
1,065 |
3,247 |
569 |
784 |
(590) |
|||||
Preferred stock dividends |
17,393 |
21,530 |
22,424 |
22,424 |
24,056 |
|||||
Issuance costs associated with redeemed preferred stock |
— |
10,328 |
— |
— |
— |
|||||
Adjusted EBITDA |
$312,139 |
$306,963 |
$296,904 |
$293,933 |
$288,184 |
(1) |
For definition and discussion of EBITDA and Adjusted EBITDA, see below. |
Definitions
Funds from Operations (FFO):
We calculate funds from operations, or FFO, in accordance with the standards established by the National Association of Real Estate Investment Trusts, or NAREIT. FFO represents net income (loss) (computed in accordance with GAAP), excluding gains (or losses) from sales of property, excluding a gain from a pre-existing relationship, impairment charges, real estate related depreciation and amortization (excluding amortization of deferred financing costs) and after adjustments for unconsolidated partnerships and joint ventures. Management uses FFO as a supplemental performance measure because, in excluding real estate related depreciation and amortization and gains and losses from property dispositions and after adjustments for unconsolidated partnerships and joint ventures, it provides a performance measure that, when compared year over year, captures trends in occupancy rates, rental rates and operating costs. We also believe that, as a widely recognized measure of the performance of REITs, FFO will be used by investors as a basis to compare our operating performance with that of other REITs. However, because FFO excludes depreciation and amortization and captures neither the changes in the value of our properties that result from use or market conditions, nor the level of capital expenditures and capitalized leasing commissions necessary to maintain the operating performance of our properties, all of which have real economic effect and could materially impact our financial condition and results from operations, the utility of FFO as a measure of our performance is limited. Other REITs may not calculate FFO in accordance with the NAREIT definition and, accordingly, our FFO may not be comparable to such other REITs' FFO. Accordingly, FFO should be considered only as a supplement to net income computed in accordance with GAAP as a measure of our performance.
Core Funds from Operations:
We present core funds from operations, or core FFO, as a supplemental operating measure because, in excluding certain items that do not reflect core revenue or expense streams, it provides a performance measure that, when compared year over year, captures trends in our core business operating performance. We calculate core FFO by adding to or subtracting from FFO (i) termination fees and other non-core revenues, (ii) transaction expenses, (iii) loss from early extinguishment of debt, (iv) costs on redemption of preferred stock, (v) change in fair value of contingent consideration, (vi) severance-related expense, equity acceleration, and legal expenses, (vii) bridge facility fees, (viii) loss on currency forwards and (ix) other non-core expense adjustments. Because certain of these adjustments have a real economic impact on our financial condition and results from operations, the utility of core FFO as a measure of our performance is limited. Other REITs may not calculate core FFO in a consistent manner. Accordingly, our core FFO may not be comparable to other REITs' core FFO. Core FFO should be considered only as a supplement to net income computed in accordance with GAAP as a measure of our performance.
Constant-Currency Core Funds from Operations:
We calculate constant-currency core funds from operations by adjusting the core funds from operations for foreign currency translations.
Adjusted Funds from Operations (AFFO):
We present adjusted funds from operations, or AFFO, as a supplemental operating measure because, when compared year over year, it assesses our ability to fund dividend and distribution requirements from our operating activities. We also believe that, as a widely recognized measure of the operations of REITs, AFFO will be used by investors as a basis to assess our ability to fund dividend payments in comparison to other REITs, including on a per share and unit basis. We calculate AFFO by adding to or subtracting from core FFO (i) non-real estate depreciation, (ii) amortization of deferred financing costs, (iii) amortization of debt discount/premium, (iv) non-cash stock-based compensation expense, (v) non-cash stock-based compensation expense, (vi) straight-line rent revenue, (vii) straight-line rent expense, (viii) above- and below-market rent amortization, (ix) deferred non-cash tax expense, (x) capitalized leasing compensation, (xi) recurring capital expenditures and (xii) capitalized internal leasing commissions. Other REITs may not calculate AFFO in a consistent manner. Accordingly, our AFFO may not be comparable to other REITs' AFFO. AFFO should be considered only as a supplement to net income computed in accordance with GAAP as a measure of our performance.
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 our performance without the impact of non-cash depreciation and amortization or the cost of debt and, with respect to Adjusted EBITDA, change in fair value of contingent consideration, severance related expense, equity acceleration, and legal expenses, transaction expenses, gain (loss) on sale of property, gain on settlement of pre-existing relationship with Telx, loss on currency forwards, other non-core expense adjustments, noncontrolling interests, and preferred stock dividends. Adjusted EBITDA is EBITDA excluding change in fair value of contingent consideration, severance related expense, equity acceleration, and legal expenses, transaction expenses, gain (loss) on sale of property, gain on settlement of pre-existing relationship with Telx, loss on currency forwards, other non-core expense adjustments, noncontrolling interests, preferred stock dividends and issuance costs associated with redeemed preferred stock. In addition, we believe EBITDA and Adjusted EBITDA are frequently used by securities analysts, investors and other interested parties in the evaluation of REITs. Because EBITDA and Adjusted EBITDA are calculated before recurring cash charges including interest expense and income taxes, exclude capitalized costs, such as leasing commissions, and are not adjusted for capital expenditures or other recurring cash requirements of our business, their utility as a measure of our performance is limited. Other REITs may calculate EBITDA and Adjusted EBITDA differently than we do; accordingly, our EBITDA and Adjusted EBITDA may not be comparable to such other REITs' EBITDA and Adjusted EBITDA. Accordingly, EBITDA and Adjusted EBITDA should be considered only as supplements to net income computed in accordance with GAAP as a measure of our financial performance.
Net Operating Income (NOI) and Cash NOI:
Net operating income, or NOI, represents rental revenue, tenant reimbursement revenue and interconnection revenue less utilities expense, rental property operating expenses, repair and maintenance expenses, property taxes and insurance expenses (as reflected in the statement of operations). NOI is commonly used by stockholders, company management and industry analysts as a measurement of operating performance of the company's rental portfolio. Cash NOI is NOI less straight-line rents and above and below market rent amortization. Cash NOI is commonly used by stockholders, company management and industry analysts as a measure of property operating performance on a cash basis. However, because NOI and cash NOI exclude depreciation and amortization and capture neither the changes in the value of our properties that result from use or market conditions, nor the level of capital expenditures and capitalized leasing commissions necessary to maintain the operating performance of our properties, all of which have real economic effect and could materially impact our results from operations, the utility of NOI and cash NOI as measures of our performance is limited. Other REITs may not calculate NOI and cash NOI in the same manner we do and, accordingly, our NOI and cash NOI may not be comparable to such other REITs' NOI and cash NOI. Accordingly, NOI and cash NOI should be considered only as supplements to net income computed in accordance with GAAP as measures of our performance.
Additional Definitions
Net debt-to-Adjusted EBITDA ratio is calculated using total debt at balance sheet carrying value, plus capital lease obligations, plus our share of JV debt, less unrestricted cash and cash equivalents divided by the product of Adjusted EBITDA (inclusive of our share of JV EBITDA) multiplied by four.
Debt-plus-preferred-to-total enterprise value is mortgage debt and other loans plus preferred stock divided by mortgage debt and other loans plus the liquidation value of preferred stock and the market value of outstanding Digital Realty Trust, Inc. common stock and Digital Realty Trust, L.P. units, assuming the redemption of Digital Realty Trust, L.P. units for shares of Digital Realty Trust, Inc. common stock.
Fixed charge coverage ratio is Adjusted EBITDA divided by the sum of GAAP interest expense, capitalized interest, scheduled debt principal payments and preferred dividends. For the quarter ended September 30, 2016, GAAP interest expense was $63 million, capitalized interest was $4 million and scheduled debt principal payments and preferred dividends was $22 million.
SOURCE Digital Realty
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