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DIGITAL REALTY TRUST, INC.

(DLR)
  Report
Delayed Nyse  -  04:00 2022-10-03 pm EDT
100.45 USD   +1.28%
04:16pDigital Realty Schedules Third Quarter 2022 Earnings Release and Conference Call
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09/27Digital Realty Trust, Inc. : Entry into a Material Definitive Agreement, Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant, Other Events, Financial Statements and Exhibits (form 8-K)
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09/27DIGITAL REALTY TRUST, INC. : SEC Filing 8K
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DIGITAL REALTY TRUST, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (form 10-Q)

08/05/2022 | 05:16pm EDT
The following discussion should be read in conjunction with the condensed
consolidated financial statements and notes thereto appearing elsewhere in this
report and our Annual Report on Form 10-K for the year ended December 31, 2021,
and our Quarterly Report on Form 10-Q for the quarter ended March 31, 2022, each
as filed with the United States ("U.S.") Securities and Exchange Commission
("SEC"). This report contains forward-looking statements within the meaning of
the federal securities laws. In particular, statements pertaining to our capital
resources, expected use of borrowings under our credit facilities, expected use
of proceeds from our ATM equity program, expected settlement and use of proceeds
from our forward sale agreements, litigation matters, portfolio performance,
leverage policy, acquisition and capital expenditure plans, capital recycling
program, returns on invested capital, supply and demand for data center space,
capitalization rates, rents to be received in future periods and expected rental
rates on new or renewed data center space contain forward-looking statements.
Likewise, all of our statements regarding anticipated market conditions,
demographics and results of operations are forward-looking statements. You can
identify forward-looking statements by the use of forward-looking terminology
such as "believes," "expects," "may," "will," "should," "seeks,"
"approximately," "intends," "plans," "pro forma," "estimates" or "anticipates"
or the negative of these words and phrases or similar words or phrases which are
predictions of or indicate future events or trends and discussions which do not
relate solely to historical matters. You can also identify forward-looking
statements by discussions of strategy, plans or intentions. Forward-looking
statements involve numerous risks and uncertainties and you should not rely on
them as predictions of future events. Forward-looking statements depend on
assumptions, data or methods that may be incorrect or imprecise and that we may
not be able to realize. We do not guarantee that the transactions and events
described will happen as described or that they will happen at all. The
following factors, among others, could cause actual results and future events to
differ materially from those set forth or contemplated in the forward-looking
statements: 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 impact on our, our customers' and our suppliers' operations during a
pandemic, such as COVID-19; changes in political conditions, geopolitical
turmoil, political instability, civil disturbances, restrictive governmental
actions or nationalization in the countries in which we operate; 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; 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, including impacts of inflation; global supply chain or
procurement disruptions, or increased supply chain costs; our inability to
retain data center space that we lease or sublease from third parties;
information security and data privacy breaches; difficulties 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 and future acquisitions; our
inability to achieve expected revenue synergies or cost savings as a result of
our combination with Interxion; 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;
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

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engage in certain business activities; and 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.

While forward-looking statements reflect our good faith beliefs, they are not
guarantees of future performance. We disclaim any obligation to publicly update
or revise any forward-looking statement to reflect changes in underlying
assumptions or factors, new information, data or methods, future events or other
changes.

The risks included here are not exhaustive, and additional factors could
adversely affect our business and financial performance, including factors and
risks included in our annual report on Form 10-K for the year ended December 31,
2021. Moreover, we operate in a very competitive and rapidly changing
environment. New risk factors emerge from time to time and it is not possible
for management to identify all such risk factors, nor can we 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. Given these risks and
uncertainties, you should not place undue reliance on forward-looking statements
as a prediction of actual results.

Occupancy percentages included in the following discussion, for some of our properties, are calculated based on factors in addition to contractually leased square feet, including available power, required support space and common area.

As used in this report: "Ascenty entity" refers to the entity, which owns and operates Ascenty, formed with Brookfield Infrastructure.

Business Overview and Strategy


Digital Realty Trust, Inc., through its controlling interest in Digital Realty
Trust, L.P. and its subsidiaries, delivers comprehensive space, power, and
interconnection solutions that enable its customers and partners to connect with
each other and service their own customers on a global technology and real
estate platform. We are a leading global provider of data center, colocation and
interconnection solutions for customers across a variety of industry verticals.
Digital Realty Trust, Inc. operates as a REIT for federal income tax purposes,
and our Operating Partnership is the entity through which we conduct our
business and own our assets.

Our primary business objectives are to maximize:

(i) sustainable long-term growth in earnings and funds from operations per share

and unit;

(ii) cash flow and returns to our stockholders and Digital Realty Trust, L.P.'s

unitholders through the payment of distributions; and

(iii) return on invested capital.

We expect to accomplish our objectives by achieving superior risk-adjusted returns, prudently allocating capital, diversifying our product offerings, accelerating our global reach and scale, and driving revenue growth and operating efficiencies. A significant component of our current and future internal growth is anticipated through the development of our existing space held for development, acquisition of land for future development, and acquisition of new properties.


We target high-quality, strategically located properties containing the physical
and connectivity infrastructure that supports the applications and operations of
data center and technology industry customers and properties that may be
developed for such use. Most of our data center properties contain fully
redundant electrical supply systems, multiple power feeds, above-standard
cooling systems, raised floor areas, extensive in-building communications
cabling and high-level security systems. Fundamentally, we bring together
foundational real estate and innovative technology expertise around the world to
deliver a comprehensive, dedicated product suite to meet customers' data and
connectivity needs. We represent an important part of the digital economy that
we believe will benefit from powerful, long-term growth drivers.

We have developed detailed, standardized procedures for evaluating new real estate investments to ensure that they meet our financial, technical and other criteria. We expect to continue to acquire additional assets as part of our growth


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strategy. We intend to aggressively manage and lease our assets to increase their cash flow. We may continue to build out our development portfolio when justified by anticipated demand and returns.

We may acquire properties subject to existing mortgage financing and other
indebtedness or we may incur new indebtedness in connection with acquiring or
refinancing these properties. Debt service on such indebtedness will have a
priority over any cash dividends with respect to Digital Realty Trust, Inc.'s
common stock and preferred stock. We are committed to maintaining a conservative
capital structure. We target a debt-to-Adjusted EBITDA ratio at or less than
5.5x, fixed charge coverage of greater than three times, and floating rate debt
at less than 20% of total outstanding debt. In addition, we strive to maintain a
well-laddered debt maturity schedule, and we seek to maximize the menu of our
available sources of capital, while minimizing the cost.

Summary of 2022 Significant Activities

We completed the following significant activities during the six months ended June 30, 2022:

In December 2021 we entered into a definitive agreement to acquire a majority

? stake in Teraco, South Africa's leading carrier-neutral colocation provider, in

a transaction valuing Teraco at approximately $3.5 billion. The transaction

closed on August 1, 2022.

In January, we issued and sold €750.0 million aggregate principal amount of

1.375% Guaranteed Notes due 2032 (the "2032 Notes"). The 2032 Notes are senior

unsecured obligations of Digital Intrepid Holding B.V. and are fully and

? unconditionally guaranteed by Digital Realty Trust, Inc. and Digital Realty

Trust, L.P. Net proceeds from the offering were approximately €737.5 million

(approximately $835.3 million based on the exchange rate on January 18, 2022)

after deducting managers' discounts and estimated offering expenses.

? In February, we redeemed $450.0 million of 4.750% Notes due 2025. As part of

this redemption, we recorded a $51.1 million loss on extinguishment of debt.

In March, we issued and sold CHF 100 million aggregate principal amount of

0.600% Guaranteed Notes due 2023 (the "2023 Notes") and CHF 150 million

aggregate principal amount of 1.700% Guaranteed Notes due 2027 (the "2027

Notes" and, together with the 2023 Notes, the "Swiss Franc Notes"). The Swiss

? Franc Notes are senior unsecured obligations of Digital Intrepid Holding B.V.

and are fully and unconditionally guaranteed by Digital Realty Trust, Inc. and

Digital Realty Trust, L.P. Net proceeds from the offering of the Swiss Franc

Notes were approximately CHF 248.6 million (approximately $269.2 million based

   on the exchange rate on March 30, 2022) after deducting the managers'
   commissions and certain offering expenses.

In June, we announced the formation of a joint venture with Mivne Real Estate

? (K.D.). The joint venture will operate under the brand name Digital Realty

   Mivne and will develop a multi-tenant data center campus in Israel.


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Revenue Base

Most of our revenue consists of rental income generated by the data centers in
our portfolio. Our ability to generate and grow revenue depends on several
factors, including our ability to maintain or improve occupancy rates. A summary
of our data center portfolio and related square feet occupied (excluding space
under development or held for development) is shown below. Unconsolidated
portfolios shown below consist of assets owned by unconsolidated entities in
which we have invested. We often provide management services for these entities
under management agreements and receive management fees. These are shown as
Managed Unconsolidated Portfolio. Entities for which we do not provide such
services are shown as Non-Managed Unconsolidated Portfolio.

                                    As of June 30, 2022                                      As of December 31, 2021
                               Net     Space Under Space Held                             Net     Space Under Space Held
                    Data     Rentable    Active        for                     Data     Rentable    Active        for
                   Center     Square   Development Development                Center     Square   Development Development
    Region        Buildings  Feet (1)      (2)         (3)     Occupancy   
 Buildings  Feet (1)      (2)         (3)     Occupancy
North America           116 22,142,838   2,790,213     815,238      85.0 %         114 21,751,638   2,327,121     900,357      85.4 %
Europe                  114  7,872,464   4,163,626     188,153      77.5 %         107  7,549,209   3,125,451     191,094      74.6 %
Asia Pacific             12  1,577,915     495,920      87,660      79.7 %          12  1,355,243     806,252           -      76.2 %
Africa                    4     25,834      43,876           -      59.0 %           4     25,825      40,965           -      58.5 %
Consolidated
Portfolio               246 31,619,051   7,493,635   1,091,051      82.8 %         237 30,681,914   6,299,789   1,091,451      82.5 %
Managed
Unconsolidated
Portfolio                16  2,383,729           -           -      95.2 %          16  2,383,729           -           -      95.2 %
Non-Managed
Unconsolidated
Portfolio                35  2,800,027     795,769   1,569,641      86.2 %          34  2,565,185     930,670   1,591,004      86.0 %
Total Portfolio         297 36,802,807   8,289,404   2,660,692      83.9 %         287 35,630,828   7,230,460   2,682,456      83.6 %

Net rentable square feet represents the current square feet under lease as

specified in the applicable lease agreement plus management's estimate of (1) space available for lease based on engineering drawings. The amount includes

customers' proportional share of common areas but excludes space held for the

intent of or under active development.

Space under active development includes current base building and data center (2) projects in progress, and excludes space held for development. For additional

information on the current and future investment for space under active

development, see "Liquidity and Capital Resources-Development Projects".

Space held for development includes space held for future data center (3) development and excludes space under active development. For additional

information on the current investment for space held for development, see

    "Liquidity and Capital Resources-Development Projects".


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Leasing Activities

Due to the capital-intensive and long-term nature of the operations we support,
our lease terms with customers are generally longer than standard commercial
leases. As of June 30, 2022, our average remaining lease term was approximately
five years.

Our ability to re-lease expiring space at rental rates equal to or in excess of
current rental rates will impact our results of operations. The subsequent table
summarizes our leasing activity in the six months ended June 30, 2022:

                                                                                                 TI's/Lease         Weighted
                                                                                                Commissions      Average Lease
                                  Rentable         Expiring          New         Rental Rate     Per Square          Terms
                               Square Feet (1)     Rates (2)      Rates (2)        Changes          Foot            (years)
Leasing Activity (3)(4)
Renewals Signed
0 - 1 MW                             1,055,093     $   238.62     $   246.62         3.4 %        $      0.29               1.5
> 1 MW                                 313,997     $   167.43     $   182.43         9.0 %        $     47.69               3.0
Other (6)                              678,425     $    39.06     $    47.37        21.3 %        $     16.94              12.0
New Leases Signed (5)
0 - 1 MW                               323,841              -     $   229.02           -          $      9.82               3.7
> 1 MW                               1,330,732              -     $   136.60           -          $      3.16               8.5
Other (6)                               71,020              -     $    24.50           -          $      2.39               2.9
Leasing Activity Summary
0 - 1 MW                             1,378,934                    $   242.49
> 1 MW                               1,644,728                    $   145.35
Other (6)                              749,445                    $    45.20

For some of our properties, we calculate square footage based on factors in (1) addition to contractually leased square feet, including power, required

support space and common area.

Rental rates represent average annual estimated base cash rent per rentable

square foot - calculated for each contract based on total cash base rent (2) divided by the total number of years in the contract (including any tenant

concessions). All rates were calculated in the local currency of each

contract and then converted to USD based on average exchange rates for the

period presented.

(3) Excludes short-term leases.

(4) Commencement dates for the leases signed range from 2022 to 2023.

(5) Includes leases signed for new and re-leased space.

(6) Other includes Powered Base Building shell capacity as well as storage and

office space within fully improved data center facilities.

We continue to see strong demand in most of our key metropolitan areas for data
center space and, subject to the supply of available data center space in these
metropolitan areas, we expect average aggregate rental rates on renewed data
center leases for 2022 expirations to be slightly positive as compared with the
rates currently being paid for the same space on a GAAP basis and on a cash
basis. Our past performance may not be indicative of future results, and we
cannot assure you that leases will be renewed or that our data centers will be
re-leased at all or at rental rates equal to or above the current average rental
rates. Further, re-leased/renewed rental rates in a particular metropolitan area
may not be consistent with rental rates across our portfolio as a whole and may
fluctuate from one period to another due to a number of factors, including local
economic conditions, local supply and demand for data center space, competition
from other data center developers or operators, the condition of the property
and whether the property, or space within the property, has been developed.
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Geographic Concentration

We depend on the market for data centers in specific geographic regions and significant changes in these regional or metropolitan areas can impact our future results. The following table shows the geographic concentration of annualized rent from our portfolio, including data centers held as investments in unconsolidated entities.

                            Percentage of
                            June 30, 2022
Metropolitan Area     total annualized rent (1)
Northern Virginia                    18.7 %
Chicago                               9.1 %
New York                              6.2 %
London                                5.8 %
Frankfurt                             5.8 %
Silicon Valley                        5.6 %
Dallas                                5.4 %
Singapore                             5.3 %
Sao Paulo                             4.5 %
Amsterdam                             4.1 %
Paris                                 2.2 %
San Francisco                         1.9 %
Portland                              1.8 %
Phoenix                               1.8 %
Atlanta                               1.5 %
Other                                20.3 %
Total                               100.0 %

Annualized rent is monthly contractual rent (defined as cash base rent before

abatements) under existing leases as of the end of the period presented, (1) multiplied by 12. Includes consolidated portfolio and unconsolidated entities

at the entities' 100% ownership level. The aggregate amount of abatements for

the six months ended June 30, 2022 was approximately $55.1 million.

Operating Expenses

Operating expenses primarily consist of utilities, property and ad valorem taxes, property management fees, insurance and site maintenance costs, and rental expenses on our ground and building leases. Our buildings require significant power to support data center operations and the cost of electric power and other utilities is a significant component of operating expenses.

Many of our leases contain provisions under which tenants reimburse us for all
or a portion of property operating expenses and real estate taxes incurred by
us. However, in some cases we are not entitled to reimbursement of property
operating expenses, other than utility expense, and real estate taxes under our
leases for Turn-Key Flex® facilities. We expect to incur additional operating
expenses as we continue to expand.

Costs pertaining to our asset management function, legal, accounting, corporate governance, reporting and compliance are categorized as general and administrative costs within operating expenses.

Other key components of operating expenses include: depreciation of our fixed assets, amortization of intangible assets, and transaction and integration costs.


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Other Income / (Expenses)

Equity in earnings of unconsolidated entities, interest expense, and income tax
expense make up the majority of other income/(expense). Equity in earnings of
unconsolidated entities represents our share of the income/(loss) of entities in
which we invest, but do not consolidate under U.S. GAAP. The largest of these
investments is currently our investment in Ascenty, which is located primarily
in Brazil. Our second-largest equity-method investment is Digital Core REIT,
which is publicly traded on the Singapore Exchange ("SGX") and which owns a
portfolio of 10 properties operating in the United States and Canada. Refer to
additional discussion of Digital Core REIT and Ascenty in the Notes to the
Condensed Consolidated Financial Statements.

Results of Operations

As a result of the consistent and significant growth in our business since the
first property acquisition in 2002, we evaluate period-to-period results for
revenue and property level operating expenses on a stabilized versus
non-stabilized portfolio basis.

Stabilized: The stabilized portfolio includes properties owned as of the beginning of all periods presented with less than 5% of total rentable square feet under development.

Non-stabilized: The non-stabilized portfolio includes: (1) properties that were
undergoing, or were expected to undergo, development activities during any of
the periods presented; (2) any properties contributed to joint ventures, sold,
or held for sale during the periods presented; and (3) any properties that were
acquired or delivered at any point during the periods presented.

A roll forward showing changes in the stabilized and non-stabilized portfolios
for the six months ended June 30, 2022 as compared to December 31, 2021 is
shown
below.

Net Rentable Square Feet                      Stabilized    Non-Stabilized      Total
As of December 31, 2021                       17,095,366        13,586,548    30,681,914
New development and space reconfigurations         9,963           477,254 

487,217

Transfers to stabilized from unstabilized 6,823,169 (6,822,308)

         861
Addition to unstabilized                               -           449,059       449,059
As of June 30, 2022                           23,928,498         7,690,553    31,619,051


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Comparison of the Results of Operations for the three and six months ended June 30, 2022 to the three and six months ended June 30, 2021

Revenues

Total operating revenues as shown on our condensed consolidated income statements was as follows (in thousands):


                               Three Months Ended June 30,                              Six Months Ended June 30,
                      2022           2021         $ Change    % Change        2022           2021         $ Change    % Change

Stabilized $ 863,188 $ 887,660 $ (24,472) (2.8) % $ 1,735,114 $ 1,779,575 $ (44,461) (2.5) % Non-Stabilized 268,349 201,735 66,614 33.0 %

517,973 397,726 120,247 30.2 % Rental and other services 1,131,537 1,089,395 42,142 3.9 %

      2,253,087      2,177,301        75,786       3.5 %
Fee income and
other                    7,785          3,793         3,992     105.2 %         13,557          6,278         7,279     115.9 %
Total operating
revenues           $ 1,139,322    $ 1,093,188    $   46,134       4.2 %   

$ 2,266,644 $ 2,183,579 $ 83,065 3.8 %

Total operating revenues increased by approximately $46.1 million and $83.1
million in the three and six months ended June 30, 2022, respectively, compared
to the same periods in 2021, driven primarily by growth in non-stabilized rental
and other services revenue.

Stabilized rental and other services revenue decreased $24.5 million in the
three months ended June 30, 2022, compared to the same period in 2021 primarily
due to a $35.2 million unfavorable foreign currency translation effect
(primarily related to weaking of the Euro and British pound sterling versus the
U.S. dollar) partially offset by a net increase in tenant reimbursements related
to higher utility consumption of $13.4 million.

Stabilized rental and other services revenue decreased $44.5 million in the six
months ended June 30, 2022, compared to the same period in 2021, primarily due
to a $54.7 million unfavorable foreign currency translation effect (primarily
due to the Euro and British pound sterling versus the U.S. dollar), and a $15.1
million increase in bad debt and straight-line rent reserves, partially offset
by a net increase in tenant reimbursements related to higher utility consumption
of $20.4 million.

Non-stabilized rental and other services revenue increased $66.6 million in the
three months ended June 30, 2022, compared to the same period in 2021 driven
primarily by:

(i) an increase of $73.4 million due to the completion of global development

pipeline and related lease up operating activities;

(ii) $26.2 million generated from an APAC property, which was not operational for

the three months ended March 31, 2021;

offset by a $27.4 million decrease from the impact of properties sold in

(iii) 2021 and the unfavorable foreign currency translation effect primarily due

to the Euro versus the U.S. dollar of approximately $8.7 million.

Non-stabilized rental and other services revenue increased $120.2 million in the six months ended June 30, 2022, compared to the same period in 2021, driven primarily by:

(i) an increase of $148.4 million due to the completion of global development

pipeline and related lease up operating activities;

(ii) $58.4 million generated from an APAC property, which was not operational for

      the three months ended March 31, 2021;


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offset by a $68.3 million decrease from the impact of properties sold in

(iii) 2021 and the unfavorable foreign currency translation effect primarily due

       to the Euro versus the U.S. dollar of approximately $13.1 million.


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Operating Expenses - Property Level

Property level operating expenses as shown in our condensed consolidated income statements were as follows (in thousands):


                                Three Months Ended June 30,                 

Six Months Ended June 30,

                         2022         2021       $ Change    % Change      2022         2021       $ Change    % Change
Stabilized             $ 317,625    $ 312,250     $  5,375       1.7 %   $ 643,989    $ 633,048    $  10,941       1.7 %
Non-Stabilized           103,877       70,966       32,911      46.4 %     213,106      111,947      101,159      90.4 %
Rental property
operating and
maintenance              421,502      383,216       38,286      10.0 %     857,095      744,995      112,100      15.0 %

Stabilized                40,868       38,692        2,176       5.6 %      81,337       79,322        2,015       2.5 %
Non-Stabilized            10,181        9,806          375       3.8 %      19,936       21,679      (1,743)     (8.0) %
Property taxes and
insurance                 51,049       48,498        2,551       5.3 %     101,273      101,001          272       0.3 %

Total Property
Level Expenses         $ 472,551    $ 431,714     $ 40,837       9.5 %   $ 958,368    $ 845,996    $ 112,372      13.3 %

Property level operating expenses include costs to operate and maintain the properties in our portfolio as well as taxes and insurance.

Stabilized property operating and maintenance expenses increased by approximately $5.4 million in the three months ended June 30, 2022, compared to the same period in 2021 primarily due to:

(i) $17.6 million increase in utility consumption and higher rates at certain

properties in the stabilized portfolio;

offset by a $12.2 million decrease in rental property operating expenses as

(ii) a result of the expiration of enhanced COVID janitorial and security

screening protocols and data center labor.

Stabilized property operating and maintenance expenses increased $10.9 million in the six months ended June 30, 2022, compared to the same period in 2021 primarily due to:

(i) $26.7 million increase in utility consumption and higher rates at certain

properties in the stabilized portfolio;

offset by a $15.8 million decrease in rental property operating expenses as

(ii) a result of the expiration of enhanced COVID janitorial and security

screening protocols and data center labor.

Non-stabilized property operating and maintenance expenses increased $32.9 million and $101.2 million in three and six months ended June 30, 2022, respectively, compared to the same periods in 2021, primarily due to higher utility consumption in a growing portfolio of recently completed development sites of approximately $20.8 million and $76.9 million, respectively.


The cost of electric power comprises a significant component of our operating
expenses. Any additional taxation or regulation of energy use, including as a
result of (i) new legislation that the U.S. Congress may pass, (ii) the
regulations that the U.S. EPA has proposed or finalized, (iii) regulations under
legislation that states have passed or may pass, or (iv) any further legislation
or regulations in the EU, APAC or other regions where we operate could
significantly increase our costs, and we may not be able to effectively pass all
of these costs on to our customers. These matters could adversely impact our
business, results of operations, or financial condition.

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Other Operating Expenses
Other operating expenses include costs which are either non-cash in nature (such
as depreciation and amortization), or which do not directly pertain to operation
of data center properties. A comparison of other operating expenses for the
three and six months ended June 30, 2022 and 2021 is shown below.

                                Three Months Ended June 30,                 

Six Months Ended June 30,

                         2022         2021      $ Change    % Change        2022           2021       $ Change    % Change
Depreciation and
amortization           $ 376,967    $ 368,981   $   7,986       2.2 %    $   759,099    $   738,714   $  20,385       2.8 %
General and
administrative           105,776       97,492       8,284       8.5 %        204,289        197,486       6,803       3.4 %
Transaction,
integration and
other expense             13,586        7,075       6,511      92.0 %         25,554         21,195       4,359      20.6 %
Other                         70        2,298     (2,228)        97 %          7,727          2,041       5,686     278.6 %
Total Other
Operating Expenses       496,399      475,846      20,553       4.3 %        996,669        959,436      37,233       3.9 %
Property level
operating expenses       472,551      431,714      40,837       9.5 %        958,368        845,996     112,372      13.3 %
Total Operating
Expenses               $ 968,950    $ 907,560      61,390       6.8 %    $

1,955,037 $ 1,805,432 149,605 8.3 %

Equity in earnings (loss) of unconsolidated entities


Equity in earnings (loss) of unconsolidated entities decreased approximately
$86.0 million and $2.2 million in the three and six months ended June 30, 2022,
respectively, compared to the same periods in 2021. The foreign exchange
remeasurement of debt associated with our Ascenty unconsolidated entity creates
volatility in our equity in earnings.

Gain on Disposition of Properties, Net

Gain on disposition of properties decreased approximately $0.5 million and
$331.7 million in the three and six months ended June 30, 2022, respectively,
compared to the same periods in 2021, because we recognized a gain of
approximately $333.3 million in March 2021 associated with sale of a portfolio
of 11 data centers in Europe (four in the United Kingdom, three in the
Netherlands, three in France and one in Switzerland) to Ascendas Reit, a
CapitaLand sponsored REIT, for total purchase consideration of approximately
$680.0 million.

Loss from Early Extinguishment of Debt


Loss from early extinguishment of debt increased approximately $32.8 million in
the six months ended June 30, 2022 compared to the same period in 2021. The
increase is primarily due to the redemption of the 4.750% Notes due 2025 in
February 2022, which resulted in a $51.1 million loss, offset by the redemption
2.750% Notes due 2023 in February 2021, which resulted in a $18.3 million loss.

Income Tax Expense

Income tax expense decreased by $31.2 million and $25.5 million during the three
and six months ended June 30, 2022, respectively, compared to the same periods
in 2021. The decrease was driven primarily by an increase in the corporate tax
rate that increased deferred tax expense in the United Kingdom from 19% to 25%
during the quarter ended June 30, 2021.

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Liquidity and Capital Resources


The sections "Analysis of Liquidity and Capital Resources - Parent" and
"Analysis of Liquidity and Capital Resources - Operating Partnership" should be
read in conjunction with one another to understand our liquidity and capital
resources on a consolidated basis. The term "Parent" refers to Digital Realty
Trust, Inc. on an unconsolidated basis, excluding our Operating Partnership. The
term "Operating Partnership" or "OP" refers to Digital Realty Trust, L.P. on a
consolidated basis.

Analysis of Liquidity and Capital Resources - Parent

Our Parent does not conduct business itself, other than acting as the sole
general partner of the Operating Partnership, issuing public equity from time to
time, incurring certain expenses in operating as a public company (which are
fully reimbursed by the Operating Partnership) and guaranteeing certain
unsecured debt of the Operating Partnership and certain of its subsidiaries and
affiliates. If our Operating Partnership or such subsidiaries fail to fulfill
their debt requirements, which trigger Parent guarantee obligations, then our
Parent will be required to fulfill its cash payment commitments under such
guarantees. Our Parent's only material asset is its investment in our Operating
Partnership.

Our Parent's principal funding requirement is the payment of dividends on its common and preferred stock. Our Parent's principal source of funding is the distributions it receives from our Operating Partnership.


As the sole general partner of our Operating Partnership, our Parent has the
full, exclusive and complete responsibility for our Operating Partnership's
day-to-day management and control. Our Parent causes our Operating Partnership
to distribute such portion of its available cash as our Parent may in its
discretion determine, in the manner provided in our Operating Partnership's
partnership agreement.

As circumstances warrant, our Parent may issue equity from time to time on an
opportunistic basis, dependent upon market conditions and available pricing. Any
proceeds from such equity issuances would generally be contributed to our
Operating Partnership in exchange for additional equity interests in our
Operating Partnership. Our Operating Partnership may use the proceeds to acquire
additional properties, to fund development opportunities and for general working
capital purposes, including potentially for the repurchase, redemption or
retirement of outstanding debt or equity securities.

Our Parent and our Operating Partnership were parties to an at-the-market (ATM)
equity offering sales agreement dated January 4, 2019, as amended in 2020 (the
"2020 Sales Agreement"). In accordance with the 2020 Sales Agreement, following
the date of the 2020 amendment, Digital Realty Trust, Inc. could offer and sell
shares of its common stock having an aggregate offering price of up to $1.0
billion. The 2020 Sales Agreement was terminated when Digital Realty Trust, Inc.
and Digital Realty Trust, L.P. entered into a new ATM equity offering sales
agreement dated April 1, 2022 (the "2022 Sales Agreement"). At the time of the
termination, $577.6 million remained unsold under the 2020 Sales Agreement.
Pursuant to the 2022 Sales Agreement, Digital Realty Trust, Inc. can issue and
sell common stock having an aggregate offering price of up to $1.5 billion
through various named agents from time to time. The sales of common stock made
under the 2022 Sales Agreement will be made in "at the market" offerings as
defined in Rule 415 of the Securities Act. Our Parent has used and intends to
use the net proceeds from the program to temporarily repay borrowings under our
Operating Partnership's global revolving credit facilities, to acquire
additional properties or businesses, to fund development opportunities and for
working capital and other general corporate purposes, including potentially for
the repayment of other debt or the repurchase, redemption or retirement of
outstanding debt securities.

On September 13, 2021, Digital Realty Trust, Inc. completed an underwritten
public offering of 6,250,000 shares of its common stock, all of which were
offered in connection with forward sale agreements it entered into with certain
financial institutions acting as forward purchasers. The forward purchasers
borrowed and sold an aggregate of 6,250,000 shares of Digital Realty Trust,
Inc.'s common stock in the public offering. Digital Realty Trust, Inc. did not
receive any proceeds from the sale of our common stock by the forward purchasers
in the public offering. The Company may receive gross proceeds of approximately
$1.0 billion (based on the offering price of $155.69 per share) upon full
physical settlement of the forward sale agreements, which is to be no later than
March 13, 2023. Upon physical settlement of the

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forward sale agreements, the Operating Partnership is expected to issue general
partner common partnership units to Digital Realty Trust, Inc. in exchange for
contribution of the net proceeds. The forward purchasers had also granted to the
underwriters an option, exercisable until October 13, 2021, to purchase up to
937,500 additional shares at a price of $155.69, which represents the initial
price to the public less the underwriting discount. The underwriters opted not
to exercise their option within the specified time period.

We believe our Operating Partnership's sources of working capital, specifically
its cash flow from operations, and funds available under its global revolving
credit facility are adequate for it to make its distribution payments to our
Parent and, in turn, for our Parent to make its dividend payments to its
stockholders. However, we cannot assure you that our Operating Partnership's
sources of capital will continue to be available at all or in amounts sufficient
to meet its needs, including making distribution payments to our Parent. The
lack of availability of capital could adversely affect our Operating
Partnership's ability to pay its distributions to our Parent, which would in
turn, adversely affect our Parent's ability to pay cash dividends to its
stockholders.

Future Uses of Cash - Parent


Our Parent may from time to time seek to retire, redeem or repurchase its equity
or the debt securities of our Operating Partnership or its subsidiaries through
cash purchases and/or exchanges for equity securities in open market purchases,
privately negotiated transactions or otherwise. Such repurchases, redemptions or
exchanges, if any, will depend on prevailing market conditions, our liquidity
requirements, contractual restrictions or other factors. The amounts involved
may be material.

Dividends and Distributions - Parent


Our Parent is required to distribute 90% of its taxable income (excluding
capital gains) on an annual basis to continue to qualify as a REIT for federal
income tax purposes. Our Parent intends to make, but is not contractually bound
to make, regular quarterly distributions to its common stockholders from cash
flow from our Operating Partnership's operating activities. While historically
our Parent has satisfied this distribution requirement by making cash
distributions to its stockholders, it may choose to satisfy this requirement by
making distributions of cash or other property. All such distributions are at
the discretion of our Parent's Board of Directors. Our Parent considers market
factors and our Operating Partnership's performance in addition to REIT
requirements in determining distribution levels. Our Parent has distributed at
least 100% of its taxable income annually since inception to minimize corporate
level federal and state income taxes. Amounts accumulated for distribution to
stockholders are invested primarily in interest-bearing accounts and short-term
interest-bearing securities, which are consistent with our intention to maintain
our Parent's status as a REIT.

As a result of this distribution requirement, our Operating Partnership cannot
rely on retained earnings to fund its ongoing operations to the same extent that
other companies whose parent companies are not REITs can. Our Parent may need to
continue to raise capital in the debt and equity markets to fund our Operating
Partnership's working capital needs, as well as potential developments at new or
existing properties, acquisitions or investments in existing or newly created
joint ventures. In addition, our Parent may be required to use borrowings under
the Operating Partnership's global revolving credit facility (which is
guaranteed by our Parent), if necessary, to meet REIT distribution requirements
and maintain our Parent's REIT status.

Distributions out of our Parent's current or accumulated earnings and profits
are generally classified as ordinary income whereas distributions in excess of
our Parent's current and accumulated earnings and profits, to the extent of a
stockholder's U.S. federal income tax basis in our Parent's stock, are generally
classified as a return of capital. Distributions in excess of a stockholder's
U.S. federal income tax basis in our Parent's stock are generally characterized
as capital gain. Cash provided by operating activities has been generally
sufficient to fund distributions on an annual basis. However, we may also need
to utilize borrowings under the global revolving credit facility to fund
distributions.

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For additional information regarding dividends declared and paid by our Parent
on its common and preferred stock for the six months ended June 30, 2022, see
Note 10. "Equity and Capital" to our condensed consolidated financial statements
contained herein.

Analysis of Liquidity and Capital Resources - Operating Partnership

As of June 30, 2022, we had $99.2 million of cash and cash equivalents, excluding $10.0 million of restricted cash. Restricted cash primarily consists of contractual capital expenditures plus other deposits. Our liquidity requirements primarily consist of:

? operating expenses;

? development costs and other expenditures associated with our properties;

? distributions to our Parent to enable it to make dividend payments;



 ? distributions to unitholders of common limited partnership interests in Digital
   Realty Trust, L.P.;


 ? debt service; and


 ? potentially, acquisitions.


Future Uses of Cash

Our properties require periodic investments of capital for customer-related capital expenditures and for general capital improvements. Depending upon customer demand, we expect to incur significant improvement costs to build out and develop additional capacity. At June 30, 2022, we had open commitments, related to construction contracts of approximately $1.9 billion, including amounts reimbursable of approximately $55.1 million.

We currently expect to incur approximately $1.3 billion to $1.5 billion of capital expenditures for our development programs during the six months ending December 31, 2022. This amount could go up or down, potentially materially, based on numerous factors, including changes in demand, leasing results and availability of debt or equity capital.

On August 1, 2022, we completed the acquisition of a 55% majority interest in
Teraco, a leading carrier-neutral data center and interconnection services
provider in South Africa. The total purchase price was $1.7 billion cash, funded
by our global revolving credit facility and a partial settlement of the forward
sale agreements. The transaction is expected to position Digital Realty as the
premier data center and connectivity provider on the African continent.

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Development Projects

The costs we incur to develop our properties is a key component of our liquidity
requirements. The following table summarizes our cumulative investments in
current development projects as well as expected future investments in these
projects as of the periods presented, excluding costs incurred or to be incurred
by unconsolidated entities.

Development Lifecycle                                As of June 30, 2022                                                      As of December 31, 2021
                             Net Rentable          Current             Future                          Net Rentable           Current             Future
(dollars in thousands)      Square Feet (1)     Investment (2)     
Investment (3)     Total Cost      Square Feet (1)     Investment (4)      Investment (3)     Total Cost
Land held for future
development (5)                         N/A    $         37,460    $              -    $    37,460                 N/A    $        133,683    $              -    $   133,683
Construction in Progress
and Space Held for
Development
Land - Current
Development (5)                         N/A    $      1,036,470    $              -    $ 1,036,470                 N/A    $        974,464    $              -    $   974,464
Space Held for
Development (6)                   1,091,051             232,514                   -        232,514           1,091,451             210,903                   -        210,903
Base Building
Construction                      3,384,304             510,711             633,859      1,144,570           3,319,999             545,529             460,595      1,006,124
Data Center Construction          4,109,331           1,493,446           2,834,864      4,328,310           2,979,791           1,409,403           1,825,369      3,234,772
Equipment Pool and Other
Inventory                               N/A              14,926                   -         14,926                 N/A               7,881                   -          7,881
Campus, Tenant
Improvements and Other                  N/A              74,047             136,184        210,231                 N/A              65,209              99,118        164,327
Total Construction in
Progress and Land Held
for Future Development            8,584,686    $      3,399,574    $      3,604,907    $ 7,004,481           7,391,241    $      3,347,072    $      2,385,082    $ 5,732,154

We estimate the total net rentable square feet available for lease based on a

number of factors in addition to contractually leased square feet, including (1) available power, required support space and common areas. Excludes square

footage of properties held in unconsolidated entities. Square footage is

based on current estimates and project plans and may change upon completion

of the project due to remeasurement.

(2) Represents balances incurred through June 30, 2022.

(3) Represents estimated cost to complete specific scope of work pursuant to

contract, budget or approved capital plan.

(4) Represents balances incurred through December 31, 2021.

(5) Represents approximately 803 acres as of June 30, 2022 and approximately 849

acres as of December 31, 2021.

(6) Excludes space held for development through unconsolidated entities.

Land inventory and space held for development reflect cumulative cost spent
pending future development. Base building construction consists of ongoing
improvements to building infrastructure in preparation for future data center
fit-out. Data center construction includes 7.5 million square feet of Turn Key
Flex® and Powered Base Building® product. We expect to deliver the space within
12 months; however, lease commencement dates may significantly impact final
delivery schedules. Equipment pool and other inventory represent the value of
long-lead equipment and materials required for timely deployment and delivery of
data center construction fit-out. Campus, tenant improvements and other costs
include the value of development work which benefits space recently converted to
our operating portfolio and is composed primarily of shared infrastructure
projects and first-generation tenant improvements.

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Capital Expenditures (Cash Basis)

The table below summarizes our capital expenditure activity for the six months ended June 30, 2022 and 2021 (in thousands):

                                                    Six Months Ended June 30,
                                                     2022                 2021
Development projects                           $        897,251     $        945,735
Enhancement and improvements                              8,697            

160

Recurring capital expenditures                           90,267            

78,753

Total capital expenditures (excluding
indirect costs)                                $        996,215     $     

1,024,648

Our development capital expenditures are generally funded by our available cash and equity and debt capital.


Indirect costs, including interest, capitalized in the six months ended June 30,
2022 and 2021 were $70.8 million and $56.8 million, respectively. Capitalized
interest comprised approximately $28.9 million and $23.0 million of the total
indirect costs capitalized for the six months ended June 30, 2022 and 2021,
respectively. Capitalized interest in the six months ended June 30, 2022
increased, compared to the same period in 2021, due to an increase in qualifying
activities.

Excluding capitalized interest, indirect costs in the six months ended
June 30, 2022 increased compared to the same period in 2021 due primarily to
capitalized amounts relating to compensation expense of employees directly
engaged in construction activities. See "Future Uses of Cash" for a discussion
of the amount of capital expenditures we expect to incur during the year ending
December 31, 2022.

Consistent with our growth strategy, we actively pursue potential acquisition
opportunities, with due diligence and negotiations often at different stages at
different times. The dollar value of acquisitions for the year ending December
31, 2022 will depend upon numerous factors, including customer demand, leasing
results, availability of debt or equity capital and acquisition opportunities.
Further, the growing acceptance by private institutional investors of the data
center asset class has generally pushed capitalization rates lower, as such
private investors may often have lower return expectations than us. As a result,
we anticipate near-term single asset acquisitions activity to comprise a smaller
percentage of our growth while this market dynamic persists.

We may from time to time seek to retire or repurchase our outstanding debt or
the equity of our Parent through cash purchases and/or exchanges for equity
securities of our Parent in open market purchases, privately negotiated
transactions or otherwise. Such repurchases or exchanges, if any, will depend
upon prevailing market conditions, our liquidity requirements, contractual
restrictions or other factors. The amounts involved may be material.

Sources of Cash


We expect to meet our short-term and long-term liquidity requirements, including
payment of scheduled debt maturities and funding of acquisitions and
non-recurring capital improvements, with net cash from operations, future
long-term secured and unsecured indebtedness, non-core asset sales and/or
contributions to capital partner vehicles and the issuance of equity and debt
securities and the proceeds of equity issuances by our Parent. We also may fund
future short-term and long-term liquidity requirements, including acquisitions
and non-recurring capital improvements, using our global revolving credit
facilities pending permanent financing. As of August 3, 2022, we had
approximately $0.8 billion of borrowings available under our global revolving
credit facilities.

Our global revolving credit facilities provide for borrowings up to $4.05
billion (including approximately $0.3 billion available to be drawn on the Yen
revolving credit facility). We have the ability from time to time to increase
the size of the global revolving credit facility by up to $750 million, subject
to the receipt of lender commitments and other conditions precedent. Both
facilities mature on January 24, 2026, with two six-month extension options
available. These facilities also feature a sustainability-linked pricing
component, with pricing subject to adjustment based on annual performance
targets, further demonstrating our continued leadership and commitment to
sustainable business practices.

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We have used and intend to use available borrowings under the global revolving credit facilities to fund our liquidity requirements from time to time.

Distributions

All distributions on our units are at the discretion of our Parent's Board of
Directors. For additional information regarding distributions paid on our common
and preferred units for the six months ended June 30, 2022, see Note 10. "Equity
and Capital" to our condensed consolidated financial statements contained
herein.

Outstanding Consolidated Indebtedness

The table below summarizes our outstanding debt as of June 30, 2022 (in millions):


Debt Summary:
Fixed rate                                               $ 12,620.8
Variable rate debt subject to interest rate swaps               8.0

Total fixed rate debt (including interest rate swaps) 12,628.8 Variable rate-unhedged

                                      1,781.4
Total                                                    $ 14,410.2
Percent of Total Debt:
Fixed rate (including swapped debt)                            87.6 %
Variable rate                                                  12.4 %
Total                                                         100.0 %

Effective Interest Rate as of June 30, 2022
Fixed rate (including hedged variable rate debt)               2.19 %
Variable rate                                                  1.67 %
Effective interest rate                                        2.25 %


Our ratio of debt to total enterprise value was approximately 27% (based on the
closing price of Digital Realty Trust, Inc.'s common stock on June 30, 2022 of
$129.83). For this purpose, our total enterprise value is defined as the sum of
the market value of Digital Realty Trust, Inc.'s outstanding common stock (which
may decrease, thereby increasing our debt to total enterprise value ratio), plus
the liquidation value of Digital Realty Trust, Inc.'s preferred stock, plus the
aggregate value of Digital Realty Trust, L.P.'s units not held by Digital Realty
Trust, Inc. (with the per unit value equal to the market value of one share of
Digital Realty Trust, Inc.'s common stock and excluding long-term incentive
units, Class C units and Class D units), plus the book value of our total
consolidated indebtedness.

The variable rate debt shown above bears interest based on various one-month USD
LIBOR, EURIBOR, SONIA, SORA, BBR, HIBOR, TIBOR, CDOR, and for Korean Won the
base CD rates, depending on the respective agreement governing the debt,
including our global revolving credit facilities. As of June 30, 2022, our debt
had a weighted average term to initial maturity of approximately 5.7 years (or
approximately 5.8 years assuming exercise of extension options).

As of June 30, 2022, our pro-rata share of secured debt of unconsolidated entities was approximately $788.8 million.

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Cash Flows

The following summary discussion of our cash flows is based on the condensed
consolidated statements of cash flows and is not meant to be an all-inclusive
discussion of the changes in our cash flows for the periods presented below.

Comparison of Six Months Ended June 30, 2022 to Six Months Ended June 30, 2021

The following table shows cash flows and ending cash, cash equivalents and restricted cash balances for the respective periods (in thousands).


                                                   Six Months Ended June 

30,

                                               2022            2021         

Change

Net cash provided by operating activities $ 783,578 $ 850,491 $ (66,913) Net cash (used in) investing activities (1,427,832) (558,645)

(869,187)

Net cash provided by (used in) financing
activities                                       633,091      (275,348)    

908,439

Net increase in cash, cash equivalents and
restricted cash                            $    (11,163)    $    16,498   

$ (27,661)



The changes in the activities that comprise the increase in net cash used in
investing activities for the six months ended June 30, 2022 as compared to the
six months ended June 30, 2021 consisted of the following amounts (in
thousands).

                                                                   Change
Decrease in cash used for improvements to investments in
real estate                                                 $             

14,419

Increase in cash contributed to investments in
unconsolidated entities                                                 

(206,076)

Decrease in net cash provided by proceeds from sale of real estate

(703,936)

Other changes                                                             

26,406

Increase in net cash used in investing activities           $           

(869,187)

The increase in net cash used in investing activities was primarily due to (i)
sale of investments related to the sale of 11 data centers in Europe in March
2021, (ii) investments in various unconsolidated entities, offset by (iii) a
decrease in cash used for improvements to investments in real estate.

                                                                      

Change

Increase in cash used in/provided by short-term borrowings          $  569,550
Decrease in cash provided by proceeds from secured / unsecured debt   (93,199)
Decrease in cash used for repayment on secured / unsecured debt        436,226
Increase in cash used for dividend and distribution payments          (49,493)
Other changes                                                           

45,355

Increase in net cash provided by financing activities               $  

908,439

The increase in net cash provided by financing activities was primarily due to
(i) an increase in cash proceeds from short-term borrowings, (ii) a decrease in
cash used for repayment of unsecured notes (in 2022, we redeemed the 4.750%
Notes due 2025 ($450 million); in 2021 we redeemed 2.750% Notes due 2023 ($300
million) and paid down the remaining balance of our unsecured term loan ($537
million)), and (iii) an increase in dividend and distribution payments due to an
increased dividend amount per share of common stock and common unit.

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Noncontrolling Interests in Operating Partnership


Noncontrolling interests relate to the common units in Digital Realty Trust,
L.P. that are not owned by Digital Realty Trust, Inc., which, as of
June 30, 2022, amounted to 2.2% of Digital Realty Trust, L.P. common units.
Historically, Digital Realty Trust, L.P. has issued common units to third party
sellers in connection with our acquisition of real estate interests from such
third parties.

Limited partners have the right to require Digital Realty Trust, L.P. to redeem
part or all of their common units for cash based upon the fair market value of
an equivalent number of shares of Digital Realty Trust, Inc. common stock at the
time of the redemption. Alternatively, we may elect to acquire those common
units in exchange for shares of Digital Realty Trust, Inc. common stock on a
one-for-one basis, subject to adjustment in the event of stock splits, stock
dividends, issuance of stock rights, specified extraordinary distributions and
similar events. As of June 30, 2022, approximately 0.2 million common units of
Digital Realty Trust, L.P. that were issued to certain former unitholders of
DuPont Fabros Technology, L.P. in connection with the Company's acquisition of
DuPont Fabros Technology, Inc. were outstanding, which are subject to certain
restrictions and, accordingly, are not presented as permanent capital in the
condensed consolidated balance sheet.

Inflation

Many of our leases provide for separate real estate tax and operating expense escalations. In addition, many of the leases provide for fixed base rent increases. We believe that inflationary increases may be at least partially offset by the contractual rent increases and expense escalations described above.

Funds from Operations


We calculate funds from operations, or FFO, in accordance with the standards
established by the National Association of Real Estate Investment Trusts
(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 sales of property, a gain from a pre-existing relationship,
impairment charges and 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 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.

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  Reconciliation of Net Income Available to Common Stockholders to Funds From
                                Operations (FFO)

           (unaudited, in thousands, except per share and unit data)

                                                               Three Months

Ended June 30, Six Months Ended June 30,

                                                                 2022                2021             2022              2021
Net Income Available to Common Stockholders                 $       53,246 

$ 127,369 $ 116,346 $ 499,775 Adjustments: Non-controlling interests in operating partnership

                   1,500               3,200            3,100           13,000
Real estate related depreciation and amortization (1)              369,327             363,640          743,489          728,337
Unconsolidated JV real estate related depreciation and
amortization                                                        29,022              20,983           58,341           40,361
Gain on real estate transactions                                   (1,144)               (499)          (3,914)        (334,420)

FFO available to common stockholders and unitholders (2) $ 451,951

$ 514,693 $ 917,362 $ 947,053 Basic FFO per share and unit

                                $         1.56  

$ 1.78 $ 3.16 $ 3.28 Diluted FFO per share and unit (2)

                          $         1.55      $         1.78    $        3.16     $       3.27
Weighted average common stock and units outstanding
Basic                                                              290,528             288,843          290,346          288,588
Diluted (2)                                                        290,944             289,485          290,716          289,219

(1) Real estate related depreciation and amortization was computed as follows: Depreciation and amortization per income statement $ 376,967

$ 368,981 759,099 738,714 Non-real estate depreciation

                                       (7,640)             (5,341)         (15,610)         (10,377)
                                                            $      369,327      $      363,640    $     743,489     $    728,337


    For all periods presented, we have excluded the effect of the series C,

series J, series K and series L preferred stock, as applicable, that may be (2) converted into common stock upon the occurrence of specified change in

control transactions as described in the articles supplementary governing the

series C, series J, series K and series L preferred stock, as applicable, as

they would be anti-dilutive.


                                   Three Months Ended June 30,          Six Months Ended June 30,
                                     2022                2021              2022              2021
Weighted average common stock
and units outstanding                  290,528             288,843           290,346         288,588
Add: Effect of dilutive
securities                                 416                 642               370             631
Weighted average common stock
and units outstanding-diluted          290,944             289,485           290,716         289,219


                                       57

  Table of Contents

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All news about DIGITAL REALTY TRUST, INC.
04:16pDigital Realty Schedules Third Quarter 2022 Earnings Release and Conference Call
PR
09/27Digital Realty Trust, Inc. : Entry into a Material Definitive Agreement, Creation of a Dir..
AQ
09/27DIGITAL REALTY TRUST, INC. : SEC Filing 8K
CO
09/26North American Morning Briefing: Stock Futures -2-
DJ
09/23Barclays Downgrades Digital Realty Trust to Underweight From Equalweight, Adjusts Price..
MT
09/22Digital Realty Trust Prices $550 Million Senior Notes Offering
MT
09/22Digital Realty Announces Pricing of Senior Notes Offering
PR
09/22Singapore Stocks End Marginally Higher; 9R Shares Zoom 7% on Deal to Acquire Malaysian ..
MT
09/22Digital Core REIT to Acquire 25% Stake in Data Center in Germany for $146 Million
MT
09/19Insider Buy: Digital Realty Trust
MT
More news
Analyst Recommendations on DIGITAL REALTY TRUST, INC.
More recommendations
Financials (USD)
Sales 2022 4 691 M - -
Net income 2022 315 M - -
Net Debt 2022 15 555 M - -
P/E ratio 2022 92,0x
Yield 2022 4,90%
Capitalization 28 505 M 28 505 M -
EV / Sales 2022 9,39x
EV / Sales 2023 8,73x
Nbr of Employees 3 030
Free-Float 97,2%
Chart DIGITAL REALTY TRUST, INC.
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Technical analysis trends DIGITAL REALTY TRUST, INC.
Short TermMid-TermLong Term
TrendsBearishBearishBearish
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus OUTPERFORM
Number of Analysts 22
Last Close Price 99,18 $
Average target price 151,00 $
Spread / Average Target 52,2%
EPS Revisions
Managers and Directors
Arthur William Stein Secretary, Chief Financial & Investment Officer
Andrew P. Power President & Chief Financial Officer
Laurence A. Chapman Chairman
Christopher Sharp Chief Technology Officer
Ed Diver Chief Information Officer
Sector and Competitors
1st jan.Capi. (M$)
DIGITAL REALTY TRUST, INC.-43.92%28 505
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ALEXANDRIA REAL ESTATE EQUITIES, INC.-37.12%22 875
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IRON MOUNTAIN INCORPORATED-15.98%12 781