Detailed Narrative
Record-Setting Leasing Across the Full Product Spectrum
DLR signed over $700M of new leases at 100% share ($423M at its share), its second-highest quarter ever and ~70% above its third-place quarter. Breadth was the theme: the largest lease in company history (200MW AI inference in Charlotte) sat alongside a record $98M of 0-1MW plus interconnection signings and a record 1-3MW leasing band. AI reached 21% of 0-1MW bookings, and 10-plus MW leases were signed in Dallas, Sao Paulo and Tokyo, underscoring demand diversity across geographies and use cases.
Development Pipeline Ramps to Historic Scale
The gross under-construction pipeline scaled >60% from year-end to ~$16.5B at 100% share, with 1.2GW under construction (up from prior quarter), 61% pre-leased at an 11.4% average expected yield. The company delivered 63MW (84% pre-leased) and started ~464MW (nearly 50% pre-leased) in the quarter. Nearly 80% of the pipeline is in the Americas; Charlotte and Atlanta eclipsed Dallas and Chicago as multi-hundred-megawatt developments activated. Total owned growth capacity now stands at ~6GW on top of ~3GW operating.
Charlotte and Atlanta Hub-and-Spoke Expansion
The 200MW Charlotte lease — DLR's first hyperscale deployment in that market and delivered in under 18 months from land to lease — validates the hub-and-spoke strategy anchored on the long-operated Uptown Charlotte interconnection hub. A second 200MW Charlotte building follows building 1, and a separate 200MW Atlanta development (~2028 delivery) launched. An 873-acre contiguous Atlanta parcel (supporting a ~1GW campus) and a 30-acre Hillsboro parcel (160MW, atop 85MW announced last quarter) were acquired to feed future hyperscale demand.
Capital Strategy: De-levering While Scaling Private Capital
Leverage fell to a multiyear low of 4.7x net debt/adjusted EBITDA and the AFFO payout ratio dropped to 64%, even as the pipeline ramped — described as intentional and deliberate. In March, DLR completed its $3.25B U.S. hyperscale data center fund, leaving ~$10B of investment capacity to support hyperscale development, on top of substantial dry powder in its $8B+ hyperscale development JV, which remains ahead of plan. The strategy aims to align long-duration institutional capital with long-lived assets while retaining ownership and management.
Global Connectivity Footprint Expansion
DLR entered Sofia, Bulgaria (via the Telepoint acquisition), Milan, Italy, and Cyberjaya, Malaysia during the quarter, and acquired land in Portugal and Milan to extend along subsea/terrestrial routes complementing Marseille, Athens, Barcelona (soon-to-open) and Singapore/Jakarta hubs. These interconnection-rich campus additions reinforce the low-latency, connectivity-led enterprise value proposition underpinning the record 0-1MW plus interconnection results.
Same-Store NOI and Operating-Expense Dynamics
Same-capital cash NOI grew 7.9% YoY as reported but only 2.5% on a constant-currency basis, reflecting above-trend operating-expense growth — driven by repairs & maintenance and labor against a low prior-year comp, not energy. Management reaffirmed a 4%-5% full-year constant-currency range, expecting opex to normalize and same-store growth to accelerate over the next three quarters. Roughly 90% of utility expense is customer-reimbursed; of the remaining ~10%, most electricity is hedged through 2026 and beyond, limiting direct energy-price exposure.
AI Demand Inflection and Design Evolution
Management described demand converting from pilot to production, with the 200MW Charlotte build being inference. Enterprises are migrating to larger committed capacity blocks, and agentic AI is framed as a demand multiplier (5x-30x more tokens per task). Modularity (HD Colo densifying up to 150kW/rack) and the additive relationship between AI and cloud (AI requiring proximity to cloud data availability zones) support the connected-campus thesis. AI is now visible from sub-1MW enterprise deployments up to hundreds of megawatts of hyperscale.