Digital Realty Reports Third Quarter 2023 Results

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Oct 26, 2023, 16:05 ET

AUSTIN, Texas, Oct. 26, 2023 /PRNewswire/ -- Digital Realty (NYSE: DLR), the largest global provider of cloud- and carrier-neutral data center, colocation and interconnection solutions, announced today financial results for the third quarter of 2023. All per share results are presented on a fully diluted basis.

Highlights

Reported net income available to common stockholders of $2.33 per share in 3Q23, compared to $0.75 in 3Q22
Reported FFO per share of $1.55 in 3Q23, compared to $1.55 in 3Q22
Reported Core FFO per share of $1.62 in 3Q23, compared to $1.67 in 3Q22
Reported Constant-Currency Core FFO per share of $1.60 in 3Q23 and $4.96 per share for the nine months ended September 30, 2023
Reported "Same-Capital" cash NOI growth of 9.4% in 3Q23
Reported rental rate increases on renewal leases of 7.4% on a cash basis in 3Q23
Signed total bookings during 3Q23 that are expected to generate $152 million of annualized GAAP rental revenue, including a $42 million contribution from the 0–1 megawatt category and $12 million contribution from interconnection
Narrowed 3Q23 Core FFO per share outlook to $6.58 - $6.62

Financial Results

Digital Realty reported revenues of $1.4 billion in the third quarter of 2023, a 3% increase from the previous quarter and an 18% increase from the same quarter last year.

The company delivered net income of $746 million in the third quarter of 2023, and net income available to common stockholders of $723 million, or $2.33 per diluted share, compared to $0.37 per diluted share in the previous quarter and $0.75 per diluted share in the same quarter last year.

Digital Realty generated Adjusted EBITDA of $686 million in the third quarter of 2023, a 2% decrease from the previous quarter and 11% increase over the same quarter last year.

The company reported Funds From Operations (FFO) of $482 million in the third quarter of 2023, or $1.55 per share, compared to $1.52 per share in the previous quarter and $1.55 per share in the same quarter last year.

Excluding certain items that do not represent core expenses or revenue streams, Digital Realty delivered Core FFO per share of $1.62 in the third quarter of 2023, compared to $1.68 per share in the previous quarter and $1.67 per share in the same quarter last year. Digital Realty delivered Constant-Currency Core FFO per share of $1.60 for the third quarter of 2023 and $4.96 per share for the nine-month period ended September 30, 2023.

"Digital Realty's third quarter results demonstrate strong and broad-based demand across our product spectrum. We posted record leasing in the 0-1 megawatt plus interconnection category and robust leasing in the greater-than-a-megawatt category," said Digital Realty President & Chief Executive Officer Andy Power. "Accelerating Same-Capital cash NOI growth combined with strong progress on our funding plan have enabled the company to de-lever while reinvesting to meet the needs of our customers."

Leasing Activity

In the third quarter, Digital Realty signed total bookings that are expected to generate $152 million of annualized GAAP rental revenue, including a $42 million contribution from the 0–1 megawatt category and a $12 million contribution from interconnection.

The weighted-average lag between new leases signed during the third quarter of 2023 and the contractual commencement date was 12 months.

In addition to new leases signed, Digital Realty also signed renewal leases representing $157 million of annualized GAAP rental revenue during the quarter. Rental rates on renewal leases signed during the third quarter of 2023 increased 7.4% on a cash basis and 9.5% on a GAAP basis.

New leases signed during the third quarter of 2023 are summarized by region and product as follows:


	Annualized GAAP
	Base Rent		Square Feet	GAAP Base Rent			GAAP Base Rent
The Americas	(in thousands)		(in thousands)	per Square Foot		Megawatts	per Kilowatt
0-1 MW		$22,233	96		$230	8.2		$227
> 1 MW		68,378	274		250	40.9		139
Other ⁽¹⁾		1,128	11		100	—		—
Total		$91,739	382		$240	49.1		$154

EMEA ⁽²⁾
0-1 MW		$15,164	56		$270	4.4		$286
> 1 MW		5,193	41		125	3.2		135
Other ⁽¹⁾		188	4		46	—		—
Total		$20,545	102		$202	7.6		$223

Asia Pacific ⁽²⁾
0-1 MW		$4,378	11		$383	1.3		$284
> 1 MW		23,307	132		176	11.9		164
Other ⁽¹⁾		53	1		100	—		—
Total		$27,738	144		$192	13.1		$176

All Regions ⁽²⁾
0-1 MW		$41,776	164		$254	13.9		$251
> 1 MW		96,877	447		217	56.0		144
Other ⁽¹⁾		1,370	16		86	—		—
Total		$140,023	627		$223	69.8		$166

Interconnection		$12,106	N/A		N/A	N/A		N/A

Grand Total		$152,128	627		$223	69.8		$166

Note: Totals may not foot due to rounding differences.
(1)	Other includes Powered Base Building® shell capacity as well as storage and office space within fully improved data center facilities.
(2)	Based on quarterly average exchange rates during the three months ended September 30, 2023.

Investment Activity

As previously disclosed, in July, Digital Realty formed a joint venture in which GI Partners purchased a 65% interest in two stabilized hyperscale data centers in the Chicago metro area. Digital Realty received approximately $743 million of gross proceeds from the sale and the associated financing and maintains a 35% interest in the joint venture. Based on annualized in‐place cash NOI at June 30, 2023 and the benefit of leases signed but not yet commenced, the transaction valued the two facilities at an approximate 6.5% cap rate. Digital Realty also granted GI Partners options to purchase an interest in the third facility on the same data center campus, along with the ability to increase its stake in the assets up to 80%.

Also previously disclosed, in late July, Digital Realty formed a joint venture in which TPG Real Estate purchased an 80% interest in three stabilized hyperscale data centers in Northern Virginia. Digital Realty received approximately $1.4 billion of gross proceeds from the sale and the associated financing and maintains a 20% interest in the joint venture. Based on annualized in‐place cash NOI at June 30, 2023, net of signed leases and known move-outs, the transaction valued the facilities at an approximate 6.0% cap rate.

In addition, Digital Realty previously announced plans to expand its joint venture in India with Brookfield Infrastructure through the addition of Jio, a Reliance Industries, Ltd. company. Upon closing, the new joint venture, 'Digital Connexion: A Brookfield, Jio and Digital Realty Company', will succeed BAM Digital Realty.

During the third quarter, Digital Realty signed a 50-year right of use agreement related to a 2.7-acre site (MRS5) in Marseille, France, which can support the development of data center capacity with approximately 22 megawatts of IT load, as an extension to its existing highly connected campus in the port of Marseille. The minimum total payments over the next 30 years for MRS5 will be €62 million or $65 million. Marseille is a key connectivity gateway in Europe.

Additionally, Digital Realty secured approximately 27 acres (MRS6) near Marseille for a purchase price of €47 million or $49 million. MRS6 can support the development of data center capacity of up to 50 megawatts of IT load to support the increasing demand from cloud service providers.

Further during the third quarter, Digital Realty sold a non-core data center in Watford, United Kingdom for approximately $146 million of net proceeds representing a 9.8% cap rate based on in-place NOI adjusted for known move-outs. Additionally, Digital Realty sold a non-core data center in Chantilly, Virginia for approximately $43 million, representing a 9.3% cap rate based on in-place NOI at September 30, 2023.

Balance Sheet

Digital Realty had approximately $16.9 billion of total debt outstanding as of September 30, 2023, comprised of $16.3 billion of unsecured debt and approximately $0.6 billion of secured debt and other. At the end of the third quarter of 2023, net debt-to-Adjusted EBITDA was 6.3x, debt-plus-preferred-to-total enterprise value was 32.0% and fixed charge coverage was 4.1x.

During the quarter, Digital Realty settled its previously disclosed forward sales agreements under its ATM program, issuing 3.5 million shares at a weighted average price of $97.23 per share, realizing approximately $336 million of net proceeds.

2023 Outlook

Digital Realty narrowed its 2023 Core FFO per share and constant-currency Core FFO per share outlook to $6.58 - $6.62. The assumptions underlying the outlook are summarized in the following table.


	As of	As of	As of	As of
Top-Line and Cost Structure	February 16, 2023	April 27, 2023	July 27, 2023	October 26, 2023
Total revenue	$5.700 - $5.800 billion	$5.500 - $5.600 billion	$5.500 - $5.600 billion	$5.475 - $5.525 billion
Net non-cash rent adjustments (1)	($55 - $60 million)	($55 - $60 million)	($55 - $60 million)	($55 - $60 million)
Adjusted EBITDA	$2.675 - $2.725 billion	$2.675 - $2.725 billion	$2.675 - $2.725 billion	$2.685 - $2.715 billion
G&A	$425 - $435 million	$425 - $435 million	$425 - $435 million	$425 - $435 million

Internal Growth
Rental rates on renewal leases
Cash basis	Greater than 3.0%	Greater than 3.0%	Greater than 4.0%	Greater than 5.0%
GAAP basis	Greater than 3.0%	Greater than 3.0%	Greater than 8.0%	Greater than 9.0%
Year-end portfolio occupancy	85.0% - 86.0%	85.0% - 86.0%	84.0% - 85.0%	83.0% - 84.0%
"Same-capital" cash NOI growth (2)	3.0% - 4.0%	3.0% - 4.0%	4.0% - 5.0%	6.0% - 7.0%

Foreign Exchange Rates
U.S. Dollar / Pound Sterling	$1.20 - $1.25	$1.20 - $1.25	$1.20 - $1.25	$1.20 - $1.25
U.S. Dollar / Euro	$1.00 - $1.05	$1.05 - $1.10	$1.05 - $1.10	$1.05 - $1.10

External Growth
Dispositions / Joint Venture Capital
Dollar volume	$1.5 - $2.5 billion	$1.5 - $2.5 billion	$2.2 - $3.0 billion	$2.7 - $3.2 billion
Cap rate	0.0% - 10.0%	0.0% - 10.0%	0.0% - 10.0%	0.0% - 10.0%
Development
CapEx (3)	$2.3 - $2.5 billion	$2.3 - $2.5 billion	$2.3 - $2.5 billion	$2.7 - $2.9 billion
Average stabilized yields	9.0% - 15.0%	9.0% - 15.0%	9.0% - 15.0%	9.0% - 15.0%
Enhancements and other non-recurring CapEx (4)	$15 - $20 million	$15 - $20 million	$15 - $20 million	$15 - $20 million
Recurring CapEx + capitalized leasing costs (5)	$230 - $240 million	$230 - $240 million	$230 - $240 million	$230 - $240 million

Balance Sheet
Long-term debt issuance
Dollar amount	$1.0 - $1.5 billion	$1.0 - $1.5 billion	$740 million	$740 million
Pricing	4.5% - 5.5%	5.5% - 6.0%	5.5 %	5.5 %
Timing	First Half 2023	First Half 2023	Completed	Completed

Net income per diluted share	$1.15 - $1.25	$1.15 - $1.25	$1.05 - $1.15	$3.18 - $3.22
Real estate depreciation and (gain) / loss on sale	$5.25 - $5.25	$5.25 - $5.25	$5.25 - $5.25	$3.15 - $3.15
Funds From Operations / share (NAREIT-Defined)	$6.40 - $6.50	$6.40 - $6.50	$6.30 - $6.40	$6.33 - $6.37
Non-core expenses and revenue streams	$0.25 - $0.25	$0.25 - $0.25	$0.25 - $0.25	$0.25 - $0.25
Core Funds From Operations / share	$6.65 - $6.75	$6.65 - $6.75	$6.55 - $6.65	$6.58 - $6.62
Foreign currency translation adjustments	$0.00 - $0.00	$0.00 - $0.00	$0.00 - $0.00	$0.00 - $0.00
Constant-Currency Core Funds From Operations / share	$6.65 - $6.75	$6.65 - $6.75	$6.55 - $6.65	$6.58 - $6.62


(1)	Net non-cash rent adjustments represent the sum of straight-line rental revenue and straight-line rental expense, as well as the amortization of above- and below-market leases (i.e., ASC 805 adjustments).
(2)	The "same-capital" pool includes properties owned as of December 31, 2021 with less than 5% of total rentable square feet under development. It excludes properties that were undergoing, or were expected to undergo, development activities in 2022-2023, properties classified as held for sale, and properties sold or contributed to joint ventures for all periods presented.
(3)	Includes land acquisitions.
(4)	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.
(5)	Recurring CapEx represents non-incremental improvements required to maintain current revenues, including second-generation tenant improvements and leasing commissions.

Note: The Company does not provide a reconciliation for non-GAAP estimates on a forward-looking basis, where it is unable to provide a meaningful or accurate calculation or estimation of reconciling items and the information is not available without unreasonable effort. Please see Non-GAAP Financial Measures in this document for further discussion.

Non-GAAP Financial Measures

This document contains non-GAAP financial measures, including FFO, Core FFO, Adjusted FFO, Net Operating Income (NOI), "Same-Capital" Cash NOI and Adjusted EBITDA. A reconciliation from U.S. GAAP net income available to common stockholders to FFO, a reconciliation from FFO to Core FFO, a reconciliation from Core FFO to Adjusted FFO, reconciliation from NOI to Cash NOI, and definitions of FFO, Core FFO, Adjusted FFO, NOI and "Same-Capital" Cash NOI are included as an attachment to this document. 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 document.

The Company does not provide a reconciliation for non-GAAP estimates on a forward-looking basis, where it is unable to provide a meaningful or accurate calculation or estimation of reconciling items and the information is not available without unreasonable effort. This is due to the inherent difficulty of forecasting the timing and/or amount of various items that would impact net income attributable to common stockholders per diluted share, which is the most directly comparable forward-looking GAAP financial measure. This includes, for example, external growth factors, such as dispositions, and balance sheet items, that have not yet occurred, are out of the Company's control and/or cannot be reasonably predicted. For the same reasons, the Company is unable to address the probable significance of the unavailable information. Forward-looking non-GAAP financial measures provided without the most directly comparable GAAP financial measures may vary materially from the corresponding GAAP financial measures.

Investor Conference Call

Prior to Digital Realty's investor conference call at 5:00 p.m. ET / 4:00 p.m. CT on October 26, 2023, a presentation will be posted to the Investors section of the company's website at https://investor.digitalrealty.com/. The presentation is designed to accompany the discussion of the company's third quarter 2023 financial results and operating performance. The conference call will feature President & Chief Executive Officer Andy Power and Chief Financial Officer Matt Mercier.

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# 0455927 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 https://investor.digitalrealty.com/.

Telephone and webcast replays will be available after the call until November 26, 2023. 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# 5888857. The webcast replay can be accessed on Digital Realty's website.

About Digital Realty

Digital Realty brings companies and data together by delivering the full spectrum of data center, colocation, and interconnection solutions. PlatformDIGITAL®, the company's global data center platform, provides customers with a secure data "meeting place" and a proven Pervasive Datacenter Architecture (PDx®) solution methodology for powering innovation and efficiently managing Data Gravity challenges. Digital Realty gives its customers access to the connected communities that matter to them with a global data center footprint of 300+ facilities in 50+ metros across 25+ countries on six continents. To learn more about Digital Realty, please visit digitalrealty.com or follow us on LinkedIn and X.

Contact Information

Matt Mercier
Chief Financial Officer
Digital Realty
(737) 281-0101

Jordan Sadler / Jim Huseby
Investor Relations
Digital Realty
(737) 281-0101

Consolidated Quarterly Statements of Operations Unaudited and Dollars in Thousands, Except Per Share Data							Third Quarter 2023

	Three Months Ended					Nine Months Ended
	30-Sep-23	30-Jun-23	31-Mar-23	31-Dec-22	30-Sep-22		30-Sep-23	30-Sep-22
Rental revenues	$886,960	$869,298	$870,975	$834,374	$787,839		$2,627,233	$2,307,114
Tenant reimbursements - Utilities	335,477	330,416	317,148	247,725	251,420		983,041	694,166
Tenant reimbursements - Other	64,876	46,192	40,150	46,045	49,419		151,218	153,618
Interconnection & other	107,305	104,521	101,695	97,286	95,486		313,521	282,354
Fee income	7,819	14,908	7,868	7,508	6,169		30,596	16,998
Other	—	932	887	168	1,749		1,819	4,477
Total Operating Revenues	$1,402,437	$1,366,267	$1,338,724	$1,233,108	$1,192,082		$4,107,428	$3,458,726

Utilities	$384,455	$374,934	$346,364	$268,561	$271,844		$1,105,753	$736,509
Rental property operating	223,089	224,762	224,861	222,430	205,886		672,712	598,317
Property taxes	72,279	46,718	40,424	42,032	39,860		159,420	133,598
Insurance	4,289	4,385	4,355	4,578	4,002		13,029	11,536
Depreciation & amortization	420,613	432,573	421,198	430,130	388,704		1,274,384	1,147,803
General & administration	108,039	105,964	107,766	104,452	95,792		321,769	294,217
Severance, equity acceleration, and legal expenses	2,682	3,652	4,155	15,980	1,655		10,489	7,519
Transaction and integration expenses	14,465	17,764	12,267	17,350	25,862		44,496	51,416
Provision for impairment	113,000	—	—	3,000	—		113,000	—
Other expenses	1,295	655	—	3,615	1,096		1,949	8,823
Total Operating Expenses	$1,344,206	$1,211,407	$1,161,388	$1,112,127	$1,034,701		$3,717,001	$2,989,738

Operating Income	$58,231	$154,860	$177,335	$120,981	$157,381		$390,426	$468,988

Equity in earnings / (loss) of unconsolidated joint ventures	(19,793)	5,059	14,897	(28,112)	(12,254)		164	14,616
Gain / (loss) on sale of investments	810,688	89,946	—	(6)	173,990		900,634	176,760
Interest and other income / (expense), net	24,812	(6,930)	280	(22,894)	15,752		18,162	31,811
Interest (expense)	(110,767)	(111,116)	(102,220)	(86,882)	(76,502)		(324,103)	(212,250)
Income tax benefit / (expense)	(17,228)	(16,173)	(21,454)	17,676	(19,576)		(54,855)	(49,227)
Loss from early extinguishment of debt	—	—	—	—	—		—	(51,135)
Net Income	$745,941	$115,647	$68,839	$763	$238,791		$930,427	$379,564

Net income / (loss) attributable to noncontrolling interests	(12,320)	2,538	(111)	3,326	(1,716)		(9,893)	(5,781)
Net Income Attributable to Digital Realty Trust, Inc.	$733,621	$118,185	$68,728	$4,089	$237,075		$920,534	$373,783

Preferred stock dividends	(10,181)	(10,181)	(10,181)	(10,181)	(10,181)		(30,544)	(30,544)
Net Income / (Loss) Available to Common Stockholders	$723,440	$108,003	$58,547	($6,093)	$226,894		$889,990	$343,240

Weighted-average shares outstanding - basic	301,826,890	295,390,446	291,218,549	289,364,739	286,693,071		296,184,154	285,312,314
Weighted-average shares outstanding - diluted	311,341,418	306,818,538	303,064,832	301,712,082	296,414,726		306,734,807	294,257,222
Weighted-average fully diluted shares and units	317,538,689	313,020,947	309,026,076	307,546,353	302,257,518		312,866,880	300,028,470

Net income / (loss) per share - basic	$2.40	$0.37	$0.20	($0.02)	$0.79		$3.00	$1.20
Net income / (loss) per share - diluted	$2.33	$0.37	$0.19	($0.02)	$0.75		$2.93	$1.15

Funds From Operations and Core Funds From Operations
Unaudited and in Thousands, Except Per Share Data					Third Quarter 2023

	Three Months Ended							Nine Months Ended
Reconciliation of Net Income to Funds From Operations (FFO)		30-Sep-23	30-Jun-23	31-Mar-23		31-Dec-22	30-Sep-22		30-Sep-23	30-Sep-22

Net Income / (Loss) Available to Common Stockholders		$723,440	$108,003	$58,547		($6,093)	$226,894		$889,990	$343,240
Adjustments:
Non-controlling interest in operating partnership		16,300	2,500	1,500		(586)	5,400		20,300	8,500
Real estate related depreciation & amortization (1)		410,836	424,044	412,192		422,951	381,425		1,247,072	1,124,914
Depreciation related to non-controlling interests		(14,569)	(14,144)	(13,388)		(13,856)	(8,254)		(42,101)	(8,254)
Unconsolidated JV real estate related depreciation & amortization		43,215	35,386	33,719		33,927	30,831		112,320	89,172
(Gain) / loss on real estate transactions		(810,688)	(89,946)	(7,825)		572	(173,990)		(908,459)	(177,904)
Provision for impairment		113,000	-	-		3,000	-		113,000	-
Funds From Operations - diluted		$481,535	$465,844	$484,745		$439,915	$462,306		$1,432,124	$1,379,667

Weighted-average shares and units outstanding - basic		308,024	301,593	297,180		295,199	292,536		302,316	291,084
Weighted-average shares and units outstanding - diluted (2)(3)		317,539	313,021	309,026		307,546	302,258		312,867	300,028

Funds From Operations per share - basic		$1.56	$1.54	$1.63		$1.49	$1.58		$4.74	$4.74

Funds From Operations per share - diluted (2)(3)		$1.55	$1.52	$1.60		$1.45	$1.55		$4.68	$4.61

	Three Months Ended							Nine Months Ended
Reconciliation of FFO to Core FFO		30-Sep-23	30-Jun-23	31-Mar-23		31-Dec-22	30-Sep-22		30-Sep-23	30-Sep-22

Funds From Operations - diluted		$481,535	$465,844	$484,745		$439,915	$462,306		$1,432,124	$1,379,667
Other non-core revenue adjustments		(27)	27,454	(887)		(3,786)	(1,818)		26,540	12,554
Transaction and integration expenses		14,465	17,764	12,267		17,350	25,862		44,496	51,416
Loss from early extinguishment of debt		-	-	-		-	-		-	51,135
Severance, equity acceleration, and legal expenses (4)		2,682	3,652	4,155		15,980	1,655		10,489	7,519
(Gain) / Loss on FX revaluation		451	(7,868)	(6,778)		14,564	(1,120)		(14,195)	(39,258)
Other non-core expense adjustments		1,295	655	-		3,615	1,046		1,949	8,773
Core Funds From Operations - diluted		$500,402	$507,501	$493,500		$487,638	$487,931		$1,501,403	$1,471,806

Weighted-average shares and units outstanding - diluted (2)(3)		308,539	301,806	297,382		295,519	292,830		302,740	291,461

Core Funds From Operations per share - diluted (2)		$1.62	$1.68	$1.66		$1.65	$1.67		$4.96	$5.05

(1) Real Estate Related Depreciation & Amortization	Three Months Ended							Nine Months Ended
		30-Sep-23	30-Jun-23	31-Mar-23		31-Dec-22	30-Sep-22		30-Sep-23	30-Sep-22

Depreciation & amortization per income statement		$420,613	$432,573	$421,198		$430,130	$388,704		$1,274,384	$1,147,803
Non-real estate depreciation		(9,777)	(8,529)	(9,006)		(7,179)	(7,279)		(27,312)	(22,889)
Real Estate Related Depreciation & Amortization		$410,836	$424,044	$412,192		$422,951	$381,425		$1,247,072	$1,124,914

(2)

Certain of Teraco's minority indirect shareholders have the right to put their shares in an upstream parent company of Teraco to Digital Realty in exchange for cash or the equivalent value of shares of Digital Realty common stock, or a combination thereof. US GAAP requires Digital Realty to assume the put right is settled in shares for purposes of calculating diluted EPS. This same approach was utilized to calculate FFO/share. The potential future dilutive impact associated with this put right will be excluded from Core FFO and AFFO until settlement occurs – causing diluted share count to be higher for FFO than for Core FFO and AFFO. When calculating diluted FFO, Teraco related minority interest is added back to the FFO numerator as the denominator assumes all shares have been put back to Digital Realty.

Three Months Ended

Nine Months Ended

30-Sep-23

30-Jun-23

31-Mar-23

31-Dec-22

30-Sep-22

30-Sep-23

30-Sep-22

Teraco noncontrolling share of FFO

$11,537

$9,645

$11,069

$7,213

$4,706

$32,251

$4,706

Teraco related minority interest

$11,537

$9,645

$11,069

$7,213

$4,706

$32,251

$4,706


(3)	For all periods presented, we have excluded the effect of dilutive series J, series K and series L preferred stock, as applicable, that may be converted into common stock upon the occurrence of specified change in control transactions as described in the articles supplementary governing the series J, series K and series L preferred stock, as applicable, which we consider highly improbable. See above for calculations of diluted FFO and the share count detail section that follows the reconciliation of Core FFO to AFFO for calculations of weighted average common stock and units outstanding. For definitions and discussion of FFO and Core FFO, see the definitions section.
(4)	Relates to severance and other charges related to the departure of company executives and integration-related severance.

Adjusted Funds From Operations (AFFO)
Unaudited and in Thousands, Except Per Share Data					Third Quarter 2023

	Three Months Ended							Nine Months Ended
Reconciliation of Core FFO to AFFO		30-Sep-23	30-Jun-23	31-Mar-23		31-Dec-22	30-Sep-22		30-Sep-23	30-Sep-22

Core FFO available to common stockholders and unitholders		$500,402	$507,501	$493,500		$487,638	$487,931		$1,501,403	$1,471,806
Adjustments:
Non-real estate depreciation		9,777	8,529	9,006		7,179	7,279		27,312	22,889
Amortization of deferred financing costs		5,776	5,984	4,072		3,753	3,270		15,832	10,234
Amortization of debt discount/premium		1,360	1,339	1,301		1,276	1,146		4,000	3,553
Non-cash stock-based compensation expense		14,062	13,893	13,056		16,042	15,948		41,012	46,201
Straight-line rental revenue		(14,080)	(16,151)	(16,194)		(29,392)	(18,123)		(46,424)	(54,212)
Straight-line rental expense		1,427	520	(515)		(208)	2,679		1,432	4,609
Above- and below-market rent amortization		(1,127)	(1,195)	(1,226)		(762)	(465)		(3,548)	65
Deferred tax (benefit) / expense		(8,539)	1,339	(9,795)		(4,885)	(5,233)		(16,995)	(7,605)
Leasing compensation & internal lease commissions		12,515	11,611	11,067		9,578	9,866		35,193	32,538
Recurring capital expenditures (1)		(90,251)	(53,498)	(40,465)		(109,999)	(66,200)		(184,214)	(156,467)

AFFO available to common stockholders and unitholders (2)		$431,322	$479,873	$463,807		$380,220	$438,097		$1,375,001	$1,373,611

Weighted-average shares and units outstanding - basic		308,024	301,593	297,180		295,199	292,536		302,316	291,084
Weighted-average shares and units outstanding - diluted (3)		308,539	301,806	297,382		295,519	292,830		302,740	291,461

AFFO per share - diluted (3)		$1.40	$1.59	$1.56		$1.29	$1.50		$4.54	$4.71

Dividends per share and common unit		$1.22	$1.22	$1.22		$1.22	$1.22		$3.66	$3.66
									.
Diluted AFFO Payout Ratio		87.3 %	76.7 %	78.2 %		94.8 %	81.5 %		80.6 %	77.7 %

	Three Months Ended							Nine Months Ended
Share Count Detail		30-Sep-23	30-Jun-23	31-Mar-23		31-Dec-22	30-Sep-22		30-Sep-23	30-Sep-22

Weighted Average Common Stock and Units Outstanding		308,024	301,593	297,180		295,199	292,536		302,316	291,084
Add: Effect of dilutive securities		515	213	202		320	294		424	377
Weighted Avg. Common Stock and Units Outstanding - diluted		308,539	301,806	297,382		295,519	292,830		302,740	291,461


(1)	Recurring capital expenditures represent non-incremental building improvements required to maintain current revenues, including second-generation tenant improvements and external leasing commissions. Recurring capital expenditures do not include acquisition costs contemplated when underwriting the purchase of a building, costs which are incurred to bring a building up to Digital Realty's operating standards, or internal leasing commissions.
(2)	For a definition and discussion of AFFO, see the definitions section. For a reconciliation of net income available to common stockholders to FFO and Core FFO, see above.
(3)	For all periods presented, we have excluded the effect of dilutive series J, series K and series L preferred stock, as applicable, that may be converted into common stock upon the occurrence of specified change in control transactions as described in the articles supplementary governing the series J, series K and series L preferred stock, as applicable, which we consider highly improbable. See above for calculations of diluted FFO available to common stockholders and unitholders and for calculations of weighted average common stock and units outstanding.

Consolidated Balance Sheets
Unaudited and in Thousands, Except Share and Per Share Data					Third Quarter 2023

	30-Sep-23		30-Jun-23			31-Mar-23		31-Dec-22		30-Sep-22
Assets
Investments in real estate:
Real estate		$25,887,031		$27,087,769			$27,052,022		$26,136,057		$24,876,600
Construction in progress		5,020,464		4,635,939			4,563,578		4,789,134		4,222,142
Land held for future development		179,959		193,936			194,564		118,452		34,713
Investments in Real Estate		$31,087,453		$31,917,644			$31,810,164		$31,043,643		$29,133,455
Accumulated depreciation and amortization		(7,489,193)		(7,739,462)			(7,600,559)		(7,268,981)		(6,826,918)
Net Investments in Properties		$23,598,260		$24,178,182			$24,209,605		$23,774,662		$22,306,537
Investment in unconsolidated joint ventures		2,180,313		2,040,452			1,995,576		1,991,426		1,912,958
Net Investments in Real Estate		$25,778,573		$26,218,634			$26,205,180		$25,766,088		$24,219,495

Cash and cash equivalents		$1,062,050		$124,519			$131,406		$141,773		$176,969
Accounts and other receivables ⁽¹⁾		1,325,725		1,158,383			1,070,066		969,292		861,117
Deferred rent		586,418		613,796			627,700		601,590		556,198
Customer relationship value, deferred leasing costs & other intangibles, net		2,506,198		2,825,596			3,015,291		3,092,627		3,035,861
Goodwill		8,998,074		9,148,603			9,199,636		9,208,497		8,728,105
Assets held for sale		—		593,892			—		—		—
Operating lease right-of-use assets		1,274,410		1,291,233			1,317,293		1,351,329		1,253,393
Other assets		401,068		414,078			386,495		353,802		384,079
Total Assets		$41,932,515		$42,388,735			$41,953,068		$41,484,998		$39,215,217

Liabilities and Equity
Global unsecured revolving credit facilities		$1,698,780		$2,242,258			$2,514,202		$2,150,451		$2,255,139
Unsecured term loans		1,524,663		1,548,780			1,542,275		797,449		729,976
Unsecured senior notes, net of discount		13,072,102		13,383,819			13,258,079		13,120,033		12,281,410
Secured debt and other, net of premiums		574,231		554,594			560,955		528,870		491,984
Operating lease liabilities		1,404,510		1,420,239			1,443,994		1,471,044		1,363,712
Accounts payable and other accrued liabilities		2,147,103		2,214,820			1,923,819		1,868,884		1,621,406
Deferred tax liabilities, net		1,088,724		1,128,961			1,164,276		1,192,752		1,145,097
Accrued dividends and distributions		—		—			—		363,716		—
Security deposits and prepaid rent		385,521		417,693			392,021		369,654		341,552
Liabilities associated with assets held for sale		—		4,990			—		—		—
Total Liabilities		$21,895,634		$22,916,155			$22,799,620		$21,862,853		$20,230,276

Redeemable non-controlling interests		1,360,308		1,367,422			1,448,772		1,514,680		1,429,920

Equity
Preferred Stock: $0.01 par value per share, 110,000,000 shares authorized:
Series J Cumulative Redeemable Preferred Stock ⁽²⁾		$193,540		$193,540			$193,540		$193,540		$193,540
Series K Cumulative Redeemable Preferred Stock ⁽³⁾		203,264		203,264			203,264		203,264		203,264
Series L Cumulative Redeemable Preferred Stock ⁽⁴⁾		334,886		334,886			334,886		334,886		334,886
Common Stock: $0.01 par value per share, 392,000,000 shares authorized ⁽⁵⁾		3,002		2,967			2,888		2,887		2,851
Additional paid-in capital		23,239,088		22,882,200			22,126,379		22,142,868		21,528,384
Dividends in excess of earnings		(4,900,757)		(5,253,915)			(4,995,982)		(4,698,313)		(4,336,201)
Accumulated other comprehensive (loss), net		(882,996)		(741,484)			(652,486)		(595,798)		(862,804)
Total Stockholders' Equity		$18,190,026		$17,621,456			$17,212,490		$17,583,334		$17,063,920

Noncontrolling Interests
Noncontrolling interest in operating partnership		$441,366		$436,099			$444,843		$419,317		$421,484
Noncontrolling interest in consolidated joint ventures		45,182		47,603			47,342		104,814		69,617

Total Noncontrolling Interests		$486,547		$483,702			$492,185		$524,131		$491,101

Total Equity		$18,676,573		$18,105,158			$17,704,675		$18,107,465		$17,555,021

Total Liabilities and Equity		$41,932,515		$42,388,735			$41,953,068		$41,484,998		$39,215,217


(1)	Net of allowance for doubtful accounts of $46,643 and $33,048 as of September 30, 2023 and December 31, 2022, respectively.
(2)	Series J Cumulative Redeemable Preferred Stock, 5.250%, $200,000 and $200,000 liquidation preference, respectively ($25.00 per share), 8,000,000 and 8,000,000 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively.
(3)	Series K Cumulative Redeemable Preferred Stock, 5.850%, $210,000 and $210,000 liquidation preference, respectively ($25.00 per share), 8,400,000 and 8,400,000 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively.
(4)	Series L Cumulative Redeemable Preferred Stock, 5.200%, $345,000 and $345,000 liquidation preference, respectively ($25.00 per share), 13,800,000 and 13,800,000 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively.
(5)	Common Stock: 302,846,026 and 291,148,222 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively.

Reconciliation of Earnings Before Interest, Taxes, Depreciation & Amortization and Financial Ratios
Unaudited and Dollars in Thousands			Third Quarter 2023

	Three Months Ended
Reconciliation of Earnings Before Interest, Taxes, Depreciation & Amortization (EBITDA) ⁽¹⁾		30-Sep-23		30-Jun-23	31-Mar-23	31-Dec-22	30-Sep-22

Net Income / (Loss) Available to Common Stockholders		$723,440		$108,003	$58,547	($6,093)	$226,894
Interest		110,767		111,116	102,220	86,882	76,502
Income tax expense (benefit)		17,228		16,173	21,454	(17,676)	19,576
Depreciation & amortization		420,613		432,573	421,198	430,130	388,704
EBITDA		$1,272,048		$667,866	$603,420	$493,243	$711,676
Unconsolidated JV real estate related depreciation & amortization		43,214		35,386	33,719	33,927	30,831
Unconsolidated JV interest expense and tax expense		27,000		32,105	18,556	53,481	11,948
Severance, equity acceleration, and legal expenses		2,682		3,652	4,155	15,980	1,655
Transaction and integration expenses		14,465		17,764	12,267	17,350	25,862
(Gain) / loss on sale of investments		(810,688)		(89,946)	—	6	(173,990)
Provision for impairment		113,000		—	—	3,000	—
Other non-core adjustments, net		1,719		22,132	(14,604)	15,127	(94)
Non-controlling interests		12,320		(2,538)	111	(3,326)	1,716
Preferred stock dividends		10,181		10,181	10,181	10,181	10,181
Adjusted EBITDA		$685,943		$696,604	$667,804	$638,969	$619,786


(1)	For definitions and discussion of EBITDA and Adjusted EBITDA, see the definitions section.

Three Months Ended

Financial Ratios

30-Sep-23

30-Jun-23

31-Mar-23

31-Dec-22

30-Sep-22

Total GAAP interest expense

$110,767

$111,116

$102,220

$86,882

$76,502

Capitalized interest

29,130

27,883

26,771

24,581

17,304

Change in accrued interest and other non-cash amounts

44,183

(60,612)

38,137

(67,909)

31,860

Cash Interest Expense ⁽²⁾

$184,081

$78,387

$167,128

$43,554

$125,666

Preferred stock dividends

10,181

Total Fixed Charges ⁽³⁾

$150,079

$149,181

$139,172

$121,645

$103,987

Coverage

Interest coverage ratio ⁽⁴⁾

4.3x

4.5x

4.7x

5.3x

6.1x

Cash interest coverage ratio ⁽⁵⁾

3.4x

7.4x

3.7x

11.9x

4.6x

Fixed charge coverage ratio ⁽⁶⁾

4.1x

4.2x

4.4x

4.9x

5.5x

Cash fixed charge coverage ratio ⁽⁷⁾

3.2x

6.6x

3.5x

10.0x

4.3x

Leverage

Debt to total enterprise value ⁽⁸⁾⁽⁹⁾

30.6 %

33.3 %

37.3 %

35.2 %

34.5 %

Debt plus preferred stock to total enterprise value ^(9)(10)

32.0 %

34.7 %

38.9 %

36.8 %

36.2 %

Pre-tax income to interest expense ⁽¹¹⁾

7.7x

2.0x

1.7x

1.0x

4.1x

Net Debt to Adjusted EBITDA ⁽¹²⁾

6.3x

6.8x

7.1x

6.9x

6.7x


(2)	Cash interest expense is interest expense less amortization of debt discount and deferred financing fees and includes interest that we capitalized. We consider cash interest expense to be a useful measure of interest as it excludes non-cash-based interest expense.
(3)	Fixed charges consist of GAAP interest expense, capitalized interest, and preferred stock dividends.
(4)	Adjusted EBITDA divided by GAAP interest expense plus capitalized interest (including our pro rata share of unconsolidated joint venture interest expense).
(5)	Adjusted EBITDA divided by cash interest expense (including our pro rata share of unconsolidated joint venture interest expense).
(6)	Adjusted EBITDA divided by fixed charges (including our pro rata share of unconsolidated joint venture fixed charges).
(7)	Adjusted EBITDA divided by the sum of cash interest expense, and preferred stock dividends (including our pro rata share of unconsolidated joint venture cash fixed charges).
(8)	Mortgage debt and other loans divided by market value of common equity plus debt plus preferred stock.
(9)	Total enterprise value defined as market value of common equity plus debt plus preferred stock.
(10)	Same as (8), except numerator includes preferred stock.
(11)	Calculated as net income plus interest expense divided by GAAP interest expense.
(12)	Calculated as total debt at balance sheet carrying value, plus capital lease obligations, plus Digital Realty's pro rata share of unconsolidated joint venture debt, less cash, and cash equivalents (including Digital Realty's pro rata share of unconsolidated joint venture cash) divided by the product of Adjusted EBITDA (including Digital Realty's pro rata share of unconsolidated joint venture EBITDA), multiplied by four.

Definition

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, in the Nareit Funds From Operations White Paper - 2018 Restatement. FFO represents net income (loss) (computed in accordance with GAAP), excluding gains (or losses) from real estate transactions, provision for impairment, real estate related depreciation and amortization (excluding amortization of deferred financing costs), unconsolidated JV real estate related depreciation & amortization, non-controlling interests in operating partnership, depreciation related to non-controlling interests 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 data centers 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 data centers, 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 other REITs' FFO. 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 (Core FFO):
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) other non-core revenue adjustments, (ii) transaction and integration expenses, (iii) loss from early extinguishment of debt, (iv) gain on / issuance costs associated with redeemed preferred stock, (v) severance, equity acceleration, and legal expenses, (vi) gain/loss on FX revaluation, and (vii) 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 calculate Core FFO differently than we do and 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.

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) straight-line rental revenue, (vi) straight-line rental expense, (vii) above- and below-market rent amortization, (viii) deferred tax expense / (benefit), (ix) leasing compensation and internal lease commissions, and (x) recurring capital expenditures. Other REITs may calculate AFFO differently than we do and, 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, unconsolidated joint venture real estate related depreciation & amortization, unconsolidated joint venture interest expense and tax, severance, equity acceleration, and legal expenses, transaction and integration expenses, gain on sale / deconsolidation, provision for impairment, other non-core adjustments, net, non-controlling interests, preferred stock dividends, and issuance costs associated with redeemed preferred stock. Adjusted EBITDA is EBITDA excluding unconsolidated joint venture real estate related depreciation & amortization, unconsolidated joint venture interest expense and tax, severance, equity acceleration, and legal expenses, transaction and integration expenses, gain on sale / deconsolidation, provision for impairment, other non-core adjustments, net, non-controlling interests, preferred stock dividends, and gain on / 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 and, accordingly, our EBITDA and Adjusted EBITDA may not be comparable to 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, 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. Same-Capital Cash NOI represents buildings owned as of December 31, 2021 of the prior year with less than 5% of total rentable square feet under development and excludes buildings that were undergoing, or were expected to undergo, development activities in 2022-2023, buildings classified as held for sale, and buildings sold or contributed to joint ventures for all periods presented (prior period numbers adjusted to reflect current same-capital pool). However, because NOI and cash NOI exclude depreciation and amortization and capture neither the changes in the value of our data centers 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 data centers, 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 calculate NOI and cash NOI differently than we do and, accordingly, our NOI and cash NOI may not be comparable to other REITs' NOI and cash NOI. 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 as total debt at balance sheet carrying value, plus capital lease obligations, plus Digital Realty's pro rata share of unconsolidated joint venture debt, less cash, and cash equivalents (including Digital Realty's pro rata share of unconsolidated joint venture cash) divided by the product of Adjusted EBITDA (including Digital Realty's pro rata share of unconsolidated joint venture 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 stock dividends. For the quarter ended September 30, 2023, GAAP interest expense was $111 million, capitalized interest was $29 million and scheduled debt principal payments and preferred stock dividends was $10 million.


Reconciliation of Net Operating Income (NOI)	Three Months Ended						Nine Months Ended
(in thousands)	30-Sep-23		30-Jun-23		30-Sep-22		30-Sep-23		30-Sep-22

Operating income		$58,231		$154,860		$157,381		$390,426		$468,988

Fee income		(7,819)		(14,908)		(6,169)		(30,596)		(16,998)
Other income		—		(932)		(1,749)		(1,819)		(4,477)
Depreciation and amortization		420,613		432,573		388,704		1,274,384		1,147,803
General and administrative		108,039		105,964		95,792		321,769		294,217
Severance, equity acceleration, and legal expenses		2,682		3,652		1,655		10,489		7,519
Transaction expenses		14,465		17,764		25,862		44,496		51,416
Provision for impairment		113,000		—		—		113,000		—
Other expenses		1,295		655		1,096		1,949		8,823

Net Operating Income		$710,505		$699,629		$662,572		$2,124,099		$1,957,291


Cash Net Operating Income (Cash NOI)

Net Operating Income		$710,505		$699,629		$662,572		$2,124,099		$1,957,291

Straight-line rental revenue		(14,185)		12,116		(17,505)		(18,395)		(38,168)
Straight-line rental expense		1,632		722		2,499		1,844		3,536
Above- and below-market rent amortization		(1,127)		(1,195)		(465)		(3,548)		65

Cash Net Operating Income		$696,826		$711,272		$647,101		$2,104,000		$1,922,725



Constant Currency CFFO Reconciliation	Three Months Ended						Nine Months Ended
(in thousands)	30-Sep-23		30-Jun-23		30-Sep-22		30-Sep-23		30-Sep-22

Core FFO ⁽¹⁾		$500,402				$487,931		$1,501,403		$1,471,806
Core FFO impact of holding '22 Exchange Rates Constant ⁽²⁾		(5,393)				—		(683)		—

Constant Currency Core FFO		$495,009				$487,931		$1,500,720		$1,471,806
Weighted-average shares and units outstanding - diluted		308,539				292,830		302,740		291,461
Constant Currency CFFO Per Share		$1.60				$1.67		$4.96		$5.05


1)	As reconciled to net income above.
2)	Adjustment calculated by holding currency translation rates for 2023 constant with average currency translation rates that were applicable to the same periods in 2022.

This document contains forward-looking statements within the meaning of the federal securities laws, which are based on current expectations, forecasts and assumptions that involve risks and uncertainties that could cause actual outcomes and results to differ materially. Such forward-looking statements include statements relating to: our economic outlook, our expected investment and expansion activity, anticipated continued demand for our products and service, our liquidity, our joint ventures, supply and demand for data center and colocation space, our acquisition and disposition activity, pricing and net effective leasing economics, market dynamics and data center fundamentals, our strategic priorities, our product offerings, available inventory, 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, the company's FFO, Core FFO, constant currency Core FFO, adjusted FFO, and net income, 2023 outlook and underlying assumptions, information related to trends, our strategy and plans, leasing expectations, weighted average lease terms, the exercise of lease extensions, lease expirations, debt maturities, annualized rent at expiration of leases, the effect new leases and increases in rental rates will have on our rental revenue, our credit ratings, construction and development activity and plans, projected construction costs, estimated yields on investment, expected occupancy, expected square footage and IT load capacity upon completion of development projects, backlog NOI, NAV components, and other forward-looking financial data. Such statements are based on management's beliefs and assumptions made based on information currently available to management. Such statements are subject to risks, uncertainties and assumptions and are not guarantees of future performance and may be affected by known and unknown risks, trends, uncertainties, and factors that are beyond our control. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated, or projected. Some of the risks and uncertainties that may cause our actual results, performance, or achievements to differ materially from those expressed or implied by forward-looking statements include, among others, the following:

reduced demand for data centers or decreases in information technology spending;
increased competition or available supply of data center space;
decreased rental rates, increased operating costs or increased vacancy rates;
the suitability of our data centers and data center infrastructure, delays or disruptions in connectivity or availability of power, or failures or breaches of our physical and information security infrastructure or services;
our dependence upon significant customers, bankruptcy or insolvency of a major customer or a significant number of smaller customers, or defaults on or non-renewal of leases by customers;
our ability to attract and retain customers;
breaches of our obligations or restrictions under our contracts with our customers;
our inability to successfully develop and lease new properties and development space, and delays or unexpected costs in development of properties;
the impact of current global and local economic, credit and market conditions;
our inability to retain data center space that we lease or sublease from third parties;
global supply chain or procurement disruptions, or increased supply chain costs;
information security and data privacy breaches;
difficulty managing an international business and acquiring or operating properties in foreign jurisdictions and unfamiliar metropolitan areas;
our failure to realize the intended benefits from, or disruptions to our plans and operations or unknown or contingent liabilities related to, our recent acquisitions;
our failure to successfully integrate and operate acquired or developed properties or businesses;
difficulties in identifying properties to acquire and completing acquisitions;
risks related to joint venture investments, including as a result of our lack of control of such investments;
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;
our failure to obtain necessary debt and equity financing, and our dependence on external sources of capital;
financial market fluctuations and changes in foreign currency exchange rates;
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 and goodwill and other intangible asset impairment charges;
our inability to manage our growth effectively;
losses in excess of our insurance coverage;
our inability to attract and retain talent;
impact on our operations and on the operations of our customers, suppliers and business partners during a pandemic, such as COVID-19;
environmental liabilities, risks related to natural disasters and our inability to achieve our sustainability goals;
our inability to comply with rules and regulations applicable to our company;
Digital Realty Trust, Inc.'s failure to maintain its status as a REIT for federal income tax purposes;
Digital Realty Trust, L.P.'s failure to qualify as a partnership for federal income tax purposes;
restrictions on our ability to engage in certain business activities;
changes in local, state, federal and international laws and regulations, including related to taxation, real estate and zoning laws, and increases in real property tax rates; and
the impact of any financial, accounting, legal or regulatory issues or litigation that may affect us.

The risks included here are not exhaustive, and additional factors could adversely affect our business and financial performance. Several additional material risks are discussed in our annual report on Form 10‑K for the year ended December 31, 2022, and other filings with the U.S. Securities and Exchange Commission. Those risks continue to be relevant to our performance and financial condition. Moreover, we operate in a competitive and rapidly changing environment. New risk factors emerge from time to time and it is not possible for management to predict all such risk factors, nor can it assess the impact of all such risk factors on the business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. We expressly disclaim any responsibility to update forward-looking statements, whether as a result of new information, future events or otherwise. Digital Realty, Digital Realty Trust, the Digital Realty logo, Interxion, Turn-Key Flex, Powered Base Building, ServiceFabric, AnyScale Colo, Pervasive Data Center Architecture, PlatformDIGITAL, PDx, Data Gravity Index and Data Gravity Index DGx are registered trademarks and service marks of Digital Realty Trust, Inc. in the United States and/or other countries. All other names, trademarks and service marks are the property of their respective owners.

SOURCE Digital Realty