SAN FRANCISCO, Jan. 4, 2016 /PRNewswire/ — Digital Realty Trust, Inc. (NYSE:DLR, news, filings), a leading global provider of data center solutions, announced today its initial outlook for 2016 along with details for its fourth quarter 2015 earnings release and conference call.
2016 Outlook
Digital Realty expects 2016 core FFO per share to be within a range of $5.45-$5.60, which represents a 7% increase at the midpoint from the midpoint of 2015 core FFO per share guidance. Foreign currency translation is expected to represent a headwind to core FFO per share of 1%-2% in 2016. The remaining assumptions underlying the 2016 outlook are summarized in the table below.
“We are seeing solid demand for Digital Realty’s comprehensive set of data center solutions, which gives us confidence in our ability to achieve accelerating core FFO per share growth in 2016,” commented Andrew P. Power, Digital Realty’s Chief Financial Officer. “We also expect to generate double-digit AFFO per share growth, driven by greater cash flow contribution from our core business, accretion from the Telx acquisition and the continued burn-off of straight-line rent. In short, the quality of earnings is improving, the growth in cash flow is accelerating, and we are optimistic about the prospects for our business in 2016 and beyond.”
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As of |
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January 4, 2016 |
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Internal Growth |
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2016 total revenue |
$2.0 – $2.2 billion |
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2016 net non-cash rent adjustments (1) |
$10 – $20 million |
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2016 adjusted EBITDA margin |
55.0% – 57.0% |
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2016 G&A margin |
7.0% – 7.5% |
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External Growth |
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Dispositions |
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Dollar volume |
$0 – $200 million |
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Cap rate |
0.0% – 10.0% |
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Development |
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CapEx |
$750 – $900 million |
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Average stabilized yields |
10.5% – 12.5% |
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Enhancements and other non-recurring CapEx (2) |
$20 – $25 million |
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Recurring CapEx + capitalized leasing costs (3) |
$145 – $155 million |
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Balance Sheet |
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Long-term debt issuance |
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Dollar amount |
$1.25 – $1.75 billion |
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Pricing |
3.00% – 5.00% |
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Timing |
Mid 2016 |
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Earnings Per Share |
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Funds from Operations / share (NAREIT-defined) |
$5.35 – $5.45 |
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Adjustments for non-core expenses and revenue streams |
$0.10 – $0.15 |
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Core Funds from Operations / share |
$5.45 – $5.60 |
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Foreign currency translation adjustments |
$0.05 – $0.10 |
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Constant-Currency Core Funds from Operations / share |
$5.50 – $5.70 |
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1. |
Net non-cash rent represents the sum of straight-line rental revenue, straight-line rent expense as well as the amortization of above- and below-market leases (i.e., FAS 141 adjustments). |
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2. |
Other non-recurring CapEx represents costs incurred to enhance the capacity or marketability of operating properties, such as network fiber initiatives and software development costs. |
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3. |
Recurring CapEx represents non-incremental improvements required to maintain current revenues, including second-generation tenant improvements and leasing commissions. Capitalized leasing costs include capitalized leasing compensation as well as capitalized internal leasing commissions. |
Fourth Quarter 2015 Earnings Release and Conference Call
Digital Realty plans to release its financial results for the fourth quarter and full-year 2015 after the market closes on Thursday, February 25, 2016. The company will host a conference call to discuss these results at 5:30 p.m. EST / 2:30 p.m. PST on Thursday, February 25, 2016.
To participate in the live call, investors are invited to dial +1 (888) 317-6003 (for domestic callers) or +1 (412) 317-6061 (for international callers) and reference the conference ID #5297568 at least five minutes prior to start time. A live webcast of the call will be available on the Investors section of Digital Realty’s website athttp://investor.digitalrealty.com.
Telephone and webcast replays will be available one hour after the call until 9:00 a.m. EDT onMarch 25, 2016. The telephone replay can be accessed by dialing +1 (877) 344-7529 (for domestic callers) or +1 (412) 317-0088 (for international callers) and using the conference ID #10077984. The webcast replay can be accessed on Digital Realty’s website.
For Additional Information:
Investor Relations
John J. Stewart / Maria S. Lukens
Digital Realty Trust, Inc.
+1 (415) 738-6500
Media Inquiries
John Christiansen / Lindsay Andrews
Sard Verbinnen & Co.
+1 (415) 618-8750
Non-GAAP Financial Measures
This press release contains non-GAAP financial measures, including Funds from Operations, Core Funds from Operations and Constant-Currency Core Funds from Operations. The following table provides a reconciliation of each of these non-GAAP measures to the range of 2016 projected net income:
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Low – High |
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Net income available to common stockholders per diluted share |
$0.35 – $0.45 |
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Add: Real estate depreciation and amortization |
$5.00 |
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Projected Funds from Operations per diluted share |
$5.35 – $5.45 |
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Add: Adjustments for items that do not represent core expenses and revenue streams |
$0.10 – $0.15 |
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Projected Core Funds from Operations per diluted share |
$5.45 – $5.60 |
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Add: Foreign currency translation adjustments |
$0.05 – $0.15 |
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Projected Constant-Currency Core Funds from Operations per diluted share |
$5.50 – $5.70 |
About Digital Realty
Digital Realty Trust, Inc. supports the data center and colocation strategies of more than 1,000 firms across its secure, network-rich portfolio of data centers located throughout North America, Europe, Asia and Australia. Digital Realty’s clients include domestic and international companies of all sizes, ranging from financial services, cloud and information technology services, to manufacturing, energy, gaming, life sciences and consumer products. www.digitalrealty.com
Additional information about Digital Realty is included in the Company Overview, available on the Investors section of Digital Realty’s website at www.digitalrealty.com. The Company Overview is updated periodically, and may disclose material information and updates. To receive e-mail alerts when the Company Overview is updated, please visit the Investors page of Digital Realty’s website.
Safe Harbor Statement
This press release contains forward-looking statements which are based on current expectations, forecasts and assumptions that involve risks and uncertainties that could cause actual outcomes and results to differ materially, including statements related to expectations regarding the company’s future growth, financial resources and success; foreign currency translation; expected cash flow contributions from the company’s core business; expected accretion from the acquisition of Telx; straight-line rent; and the company’s 2016 revenue, net income, core FFO, FFO and constant-currency core FFO guidance and underlying assumptions. These risks and uncertainties include, among others, the following: the impact of current global economic, credit and market conditions; current local economic conditions in the geographies in which we operate; decreases in information technology spending, including as a result of economic slowdowns or recession; 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); our dependence upon significant tenants; bankruptcy or insolvency of a major tenant or a significant number of smaller tenants; defaults on or non-renewal of leases by tenants; our failure to obtain necessary debt and equity financing; 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; financial market fluctuations; changes in foreign currency exchange rates; our inability to manage our growth effectively; difficulty acquiring or operating properties in foreign jurisdictions; our failure to successfully integrate and operate acquired or developed properties or businesses; the suitability of our properties and data center infrastructure, delays or disruptions in connectivity, failure of our physical infrastructure or services or availability of power; risks related to joint venture investments, including as a result of our lack of control of such investments; delays or unexpected costs in development of properties; decreased rental rates, increased operating costs or increased vacancy rates; increased competition or available supply of data center space; our inability to successfully develop and lease new properties and development space; difficulties in identifying properties to acquire and completing acquisitions; our inability to acquire off-market properties; our inability to comply with the rules and regulations applicable to reporting companies; our failure to maintain our status as a REIT; possible adverse changes to tax laws; restrictions on our ability to engage in certain business activities; environmental uncertainties and risks related to natural disasters; losses in excess of our insurance coverage; changes in foreign laws and regulations, including those related to taxation and real estate ownership and operation; and changes in local, state and federal regulatory requirements, including changes in real estate and zoning laws and increases in real property tax rates. For a further list and description of such risks and uncertainties, see the reports and other filings by the company with the U.S. Securities and Exchange Commission, including the company’s Annual Report on Form 10-K for the year ended December 31, 2014 and Quarterly Reports on Form 10-Q for the quarters ended March 31, 2015, June 30, 2015 andSeptember 30, 2015. The company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
Funds from Operations
Digital Realty calculates funds from operations, or FFO, in accordance with the standards established by the National Association of Real Estate Investment Trusts, or NAREIT. FFO represents net income (loss) (computed in accordance with GAAP), excluding gains (or losses) from sales of property, impairment charges, 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 such other REITs’ FFO. Accordingly, FFO should be considered only as a supplement to net income computed in accordance with GAAP as a measure of our performance.
Core Funds from Operations
We present core funds from operations, or core FFO, as a supplemental operating measure because, in excluding certain items that do not reflect core revenue or expense streams, it provides a performance measure that, when compared year over year, captures trends in our core business operating performance. We calculate core FFO by adding to or subtracting from FFO (i) termination fees and other non-core revenues, (ii) gain on sale of investment, (iii) significant transaction expenses, (iv) loss from early extinguishment of debt, (v) change in fair value of contingent consideration, (vi) equity in earnings adjustment for non-core items, (vii) severance accrual, equity acceleration, and legal expenses and (viii) other non-core expense adjustments. Because certain of these adjustments have a real economic impact on our financial condition and results from operations, the utility of core FFO as a measure of our performance is limited. Other REITs may not calculate core FFO in a consistent manner. Accordingly, our core FFO may not be comparable to other REITs’ core FFO. Core FFO should be considered only as a supplement to net income computed in accordance with GAAP as a measure of our performance.
Constant-Currency Core Funds from Operations
We calculate constant-currency core funds from operations by adjusting the core funds from operations for foreign currency translations.
SOURCE Digital Realty Trust, Inc.
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