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    DLR
    Earnings call· Jun 2026(Q2 FY26)

    DIGITAL REALTY TRUST, INC. DLR

    Jul 23, 2026 Source

    Executive summary

    Digital Realty Q2 FY26 — Record Bookings, Strong FFO Growth, and Strategic Expansion

    Digital Realty delivered a record-setting Q2 FY26, driven by robust execution across its colocation, connectivity, and hyperscale segments, alongside strategic private capital initiatives. The company achieved record bookings in its 0-1 megawatt plus interconnection business and exceptional renewal spreads, significantly boosting its backlog and future revenue visibility. Strategic acquisitions and a substantial development pipeline position Digital Realty for sustained double-digit core FFO per share growth into 2027 and beyond, while proactively addressing critical infrastructure demand and sustainability.

    Highlights

    5

    • Core FFO, excluding net promote income, reached $2.13 per share, exceeding expectations and delivering 14% year-over-year growth.

    • Record 0-1 megawatt plus interconnection bookings surpassed $100 million, reaching $108 million.

    • Renewal spreads surged to a record 25%+, with greater than 1 megawatt renewals delivering a remarkable 66.7% mark-to-market.

    • Total backlog reached a new record of $1.9 billion (100% share) or $1.4 billion (DLR share), representing approximately 30% of in-place data center revenue.

    • Announced 4 strategic transactions, including the acquisition of Blackstone's interest in 3 hyperscale data centers (288 MW) and the acquisition of Columbia Capital ($9B+ fund commitments).

    Concerns

    5

    • Seasonal ramp in net utility and R&M expenses

    • Pickup in CapEx spending

    • Asset recycling activity

    • Elimination of FX benefit

    • Episodic nature of promote income

    Guidance & targets

    6
    CategoryTargetConfidence
    Core FFO per share (excluding net promote income)
    $8.15 to $8.20 per share
    high materiality
    High
    Cash renewal spreads
    9% to 11%
    medium materiality
    High
    Same capital cash NOI growth (constant currency)
    4.25% to 5.25%
    medium materiality
    High
    CapEx, net of partner contributions
    $4.25 billion to $4.75 billion
    high materiality
    High
    Dispositions and JV capital
    added another $500 million
    medium materiality
    Medium
    Core FFO per share growth
    double-digit
    high materiality
    High

    Operational metrics

    29
    Core FFO per share (excluding net promote income)
    $2.13up 14% year-over-year
    Q2 FY26

    Exceeded expectations.

    Core FFO per share (including net promote income)
    $2.65
    Q2 FY26

    Includes a $0.52 benefit from net promote income.

    Net promote income
    $0.52
    Q2 FY26

    From Blackstone transaction, net of $14 million related expenses. Gross promote income was $200 million.

    Business interruption insurance proceeds (net)
    $0.07
    Q2 FY26

    Related to lost rent from an incident in Singapore in 2024. Total net gain was $94 million, with $67 million related to property damage excluded from core FFO.

    FX benefit to Core FFO
    $0.02
    Q2 FY26

    Expected to be eliminated in Q3 FY26.

    Same capital cash NOI growth
    8.9%year-over-year
    Q2 FY26

    Driven by 8.2% revenue growth and disciplined expense management.

    Same capital cash NOI growth
    7.2%
    Q2 FY26

    Reflecting higher occupancy, robust renewal spreads, and strength in interconnection.

    Development CapEx (net of partner share)
    $1.1 billion
    Q2 FY26

    Year-to-date capital spending is $2 billion.

    New IT capacity delivered
    76
    Q2 FY26
    Capacity commenced development
    312
    Q2 FY26

    Includes significant available inventory in Northern Virginia and Marseille.

    Development pipeline expansion
    100%
    H1 FY26

    Increased total development pipeline to 1.4 GW under construction at a total cost of $20 billion.

    Development pipeline pre-leased percentage
    63%
    Q2 FY26

    Average expected stabilized yield of 11.5%.

    Development pipeline location
    80%+
    Q2 FY26

    Reflecting outsized demand from hyperscale cloud and AI-oriented workloads.

    Net Debt/Adjusted EBITDA
    4.7xdeclined by approximately 0.4 turns over past 12 months
    Q2 FY26

    Falls below 4.6x when adjusting for timing of Blackstone JV transaction. Long-term threshold is 5.5x.

    Liquidity
    $6 billion
    Q2 FY26

    Ample incremental borrowing capacity below 5.5x leverage threshold.

    Remaining capacity for hyperscale development (private capital)
    $12 billion
    Q2 FY26

    Includes dry powder from U.S. hyperscale development joint venture.

    Renewable energy coverage
    93%
    2025

    Matched 205 sites with 100% renewable and emissions-free energy.

    Contracted renewable energy portfolio
    1.7
    2025
    Portfolio capacity expansion
    24%
    2023 to 2025
    Water consumption growth
    3%
    2023 to 2025

    While limiting water consumption growth to just 3% with nearly half of our water source from non-potable supplies.

    Number of customers
    6,000+
    Q2 FY26

    Participating in PlatformDIGITAL.

    New logos
    142
    Q2 FY26
    Channel bookings contribution
    nearly 40%
    Q2 FY26

    Across the platform.

    Annualized rent commencements
    $208 million
    Q2 FY26

    Third strongest commencement quarter on record.

    Annualized rent commencements
    $635 million
    H2 FY26

    Scheduled to commence.

    Annualized rent commencements
    $480 million
    FY27

    Scheduled to commence.

    Annualized rent commencements
    $312 million
    FY28 and beyond

    Already slated.

    Fee income (normalized, excluding promote)
    $45 million
    Q2 FY26

    A little bit above that.

    Interconnection revenue growth
    17%year-over-year
    Q2 FY26

    Industry KPIs

    2
    MetricValueDetails
    Interconnection revenue$20.5 millionUSD
    Bookings leasing volume signed$108 millionUSD

    Orderbook & backlog

    4
    Total backlog$1.9 billionend of Q2 FY26

    new record

    Excludes $410 million of new hyperscale leases signed in July. Represents approximately 30% of in-place data center revenue.

    Total backlog (Digital Realty's share)$1.4 billionend of Q2 FY26

    increased by 75% since beginning of year

    Excludes $205 million (DLR share) of new hyperscale leases signed in July.

    Development pipeline under construction (total cost)$20 billionQ2 FY26

    100% increase during H1 FY26

    Represents 1.4 gigawatts of IT capacity. 63% pre-leased pro forma July hyperscale leasing. 11.5% average expected stabilized yield.

    Hyperscale development capacity (private capital)$12 billionQ2 FY26

    Remaining capacity to support hyperscale data center development, including dry powder from U.S. hyperscale development joint venture.

    Deals & partnerships

    4
    BlackstoneAcquisition of Blackstone's 64% ownership interest in 3 fully leased hyperscale data centers in Northern Virginia.$1.2 billion in cash and 12.3 million shares (valued at $2.3 billion)

    Assets total 288 megawatts of IT capacity. Assumed partner share of a $725 million loan and remaining CapEx. First 2 facilities expected to stabilize H1 2027, third H1 2028.

    Columbia CapitalAcquisition of 100% of Columbia Capital, a leading asset management platform in digital infrastructure.approximately $485 million

    Columbia Capital has 30+ years of experience. Complements Digital Realty's global operating platform.

    TeracoAcquisition of a 16% interest in Teraco.roughly $650 million of DLR common stock
    Kansas City MetroSecuring 600 megawatts of utility power in Kansas City Metro with a long-term runway of up to 2 gigawatts of utility power.

    Power begins to ramp in early 2028. Over 1,400 acres acquired. Kansas City benefits from strong connectivity and central location, proving an important hub for AI and cloud workloads.

    Capital programs

    1
    Kansas City Metro Developmentannounced
    Start: H2 FY26 (construction)

    Benefit: 600 megawatts of utility power (initial ramp), up to 2 gigawatts (long-term runway)

    Securing 600 megawatts of utility power that begins to ramp in early 2028 with a long-term runway of up to 2 gigawatts of utility power. Construction expected to begin in H2 FY26. Involves over 1,400 acres.

    Risks & headwinds

    5
    Seasonal ramp in net utility and R&M expensesQ3 FY26

    partly balanced by the seasonal ramp

    Pickup in CapEx spendingQ3 FY26

    partly balanced by a pickup

    Asset recycling activityQ3 FY26

    partly balanced by asset recycling activity

    Elimination of FX benefitQ3 FY26

    $0.02 per share

    Episodic nature of promote incomeperiodically over time

    $0.52 per share benefit in Q2 FY26

    Mitigation: Viewed as value creation-oriented gain, potential for additional promote income in the future.

    What to watch in Q3 FY26

    5

    Core FFO per share (excluding net promote income)

    Q3 FY26
    Current$2.13 per share (Q2 FY26)
    TargetModeration in Q3 FY26

    Why it matters

    To assess the impact of seasonal expenses, CapEx, asset recycling, and the absence of FX benefit on underlying profitability.

    Looking forward to the third quarter, we expect reported core FFO excluding promote to moderate slightly as strong commencements are partly balanced by the seasonal ramp in net utility and R&M expenses, a pickup in CapEx spending and asset recycling activity as well as elimination of the $0.02 FX benefit we enjoyed in 2Q.

    Q&A highlights

    6

    How will accretion from recent deals (Blackstone, Teraco, Columbia Capital) and higher CapEx funding balance to achieve multi-year double-digit FFO growth?

    Management highlighted multiple growth levers: strong renewal execution (25%+ spreads), continued hyperscale leasing building a multi-year backlog, record 0-1MW bookings driving immediate revenue, and private capital funding capacity while generating fee income. These factors collectively provide confidence for extending double-digit core FFO growth into 2027 and beyond.

    “it's all these things coming together that you've seen this year that, again, goes back to giving us confidence in our ability to extend that double-digit core FFO growth per share into not only this year, but into '27 and beyond.”

    asked by Eric Luebchow · answered by Matt Mercier

    2 min read6 chapters

    Detailed Narrative

    01

    Colocation & Connectivity Momentum

    Digital Realty achieved a record $108 million in 0-1 megawatt plus interconnection bookings, doubling the average from two years prior. This segment, crucial for AI deployments requiring power, proximity, and connectivity, saw strong activity across all regions, with EMEA setting a new record. The company's PlatformDIGITAL ecosystem now connects 6,000 cloud, network, enterprise, and service provider customers across 300+ data centers, supporting diverse AI-enabled applications.

    02

    Hyperscale Demand & Strategic Expansion

    Demand for large-scale deployments remains robust and global, with strong activity in the Americas (especially South America) and a growing pipeline in APAC. Post-quarter, Digital Realty signed two additional hyperscale leases in the U.S., adding $410 million in annualized GAAP base rent. The acquisition of Blackstone's interest in three Northern Virginia hyperscale data centers (288 MW) and expansion into Kansas City (600 MW utility power, up to 2 GW long-term) further extend the company's development runway and capacity for hyperscale, cloud, and AI workloads.

    03

    Strategic Private Capital Platform Growth

    Digital Realty is leveraging private capital to scale hyperscale development beyond its balance sheet, enhancing returns for shareholders. The agreement to acquire Columbia Capital, a leading asset management platform with over $9 billion in fund commitments, will significantly scale Digital Realty's private capital business. This expands expertise into adjacent digital infrastructure sectors (fiber, mobility, enterprise tech) and strengthens investment capabilities for the AI infrastructure ecosystem, driving fee income and product availability.

    04

    Sustainability & Community Engagement

    The company is actively addressing increased public attention on data centers by operating responsibly and sustainably. In 2025, Digital Realty achieved 93% renewable energy coverage globally, matched 205 sites with 100% renewable energy, and expanded its contracted renewable energy portfolio to 1.7 GW. Water consumption growth was limited to 3% despite a 24% portfolio capacity expansion, with nearly half from non-potable sources, demonstrating efficient resource use.

    05

    Robust Development Pipeline & Future Growth

    Digital Realty's development pipeline expanded to 1.4 GW under construction at a total cost of $20 billion, representing a 100% increase in H1 FY26. This pipeline is 63% pre-leased at an 11.5% average expected stabilized yield, with over 80% located in the Americas to meet hyperscale and AI demand. This substantial pipeline, combined with a record $1.9 billion backlog, provides strong visibility for future revenue and earnings growth into 2027 and beyond.

    06

    Exceptional Renewal Spreads & Pricing Power

    Renewal activity was exceptional, with $261 million of renewals signed at cash re-leasing spreads over 25%. This reflects growing supply-demand imbalances in key markets and the embedded value within Digital Realty's portfolio. Greater than 1 megawatt renewals delivered a remarkable 66.7% mark-to-market, particularly strong in APAC (Singapore), underscoring attractive repricing opportunities in supply-constrained markets.

    AI-generated summary of the company’s earnings call. Not investment advice.