Thursday, October 25, 2018

Digital Realty reports continued growth data center leasing

Digital Realty reported revenues of $769 million for Q3 2018, a 2% increase from the previous quarter and a 26% increase from the same quarter last year. Net income was $90 million, and net income available to common stockholders of $67 million, or $0.33 per diluted share, compared to $0.32 per diluted share in the previous quarter and ($0.02) per diluted share in the same quarter last year.

“We continue to execute our core business strategy focused on high-value customer deployments, which favor direct interconnection to networks and cloud on-ramps. We are expanding our customer ecosystem and benefiting from strong organic growth,” said Paul Szurek, CoreSite’s Chief Executive Officer. “Our core retail colocation business continued its consistent leasing performance at good pricing, acquiring valuable new logos and expanding with key strategic customers and we made good progress on construction and development activities which will strengthen our scale leasing to edge deployments over the next eighteen months.”

"In the third quarter, we signed total bookings expected to generate $69 million of annualized GAAP rental revenue, including an $8 million contribution from interconnection," said Chief Executive Officer A. William Stein.  "This represents the second-highest bookings in the company's history, close on the heels of our record in the prior quarter.  We also announced our entry into the rapidly growing Brazilian market, and we took proactive steps to secure our supply chain and further strengthen our balance sheet.  We look forward to building on this momentum in the months ahead, setting the stage for sustainable growth into 2019 and beyond."

Key metrics:

  • Digital Realty has 198 data centers worldwide
  • Digital Realty closed on the sale of 360 Spear Street, a 155,000 square foot data center in San Francisco, for $92 million.  The facility was 39% leased and was expected to generate cash net operating income of approximately $2 million in 2018, representing a nominal exit cap rate of 1.9%.  The sale generated net proceeds of $91 million, and Digital Realty recognized a gain on the sale of approximately $27 million in the third quarter of 2018.
  • Digital Realty acquired three separate sites in Manassas, Virginia, Sterling, Virginia and Sydney, Australia, totaling 51.5 acres for a combined investment of $40 million, or approximately $773,000 per acre.  The three sites are expected to support the development of approximately 138 megawatts of critical power.  Digital Realty also entered into an agreement to acquire 424 acres of undeveloped land in Loudoun County, Virginia for a purchase price of $236.5 million, or approximately $558,000 per acre.  
  • Digital Realty entered into a definitive agreement to acquire Ascenty, the leading data center provider in Brazil, from private equity firm Great Hill Partners in a transaction valued at approximately $1.8 billion. 
  • Digital Realty had approximately $9.2 billion of total debt outstanding as of September 30, 2018, comprised of $9.1 billion of unsecured debt and approximately $0.1 billion of secured debt.