Second Quarter 2007 FFO Increases 34% Over Second Quarter 2006 Highlights: * Reported net income available to stockholders of $0.04 per diluted share and FFO of $0.51 per diluted share and unit for the second quarter of 2007 * Acquired a 9.4 acre development site in suburban London, England with planning permission for a datacenter facility * Signed leases on approximately 275,000 square feet during the second quarter of 2007 at an average gross annualized rent of $64 per square foot * Commenced leases on over 76,000 square feet during the second quarter of 2007 at an average gross annualized rent of $94 per square foot * Converted 56,400 square feet of redevelopment space to the operating portfolio during the second quarter of 2007 * Completed an underwritten public offering of 7 million shares of 4.375% Series C Cumulative Convertible Preferred Stock generating $169.1 million in net proceedsSAN FRANCISCO, Aug 07, 2007 /PRNewswire-FirstCall via COMTEX News Network/ -- Digital Realty Trust, Inc.
(NYSE: DLR), a leading owner and manager of corporate datacenters and Internet
gateway facilities, today announced financial results for its second quarter
ended June 30, 2007. The Company reported operating revenue of $95.6 million
in the second quarter of 2007. Net income for the second quarter of 2007 was
$7.8 million and net income available to common stockholders was $2.6 million,
or $0.04 per diluted share, compared to $18.6 million, or $0.32 per diluted
share and unit, in the previous quarter (which included an $18.0 million gain
on sale and related minority interests), and $1.7 million, or $0.05 per
diluted share and unit, for the second quarter of 2006. Funds from
operations ("FFO") was $35.6 million in the second quarter, or $0.51 per
diluted share and unit, up 2% from $35.0 million, or $0.50 per diluted share
and unit in the previous quarter; and up 34% from $0.38 per diluted share and
unit in the second quarter of 2006.
Acquisition and Leasing Activity
During the second quarter of 2007 the Company completed the acquisition of
a 9.4 acre development site in suburban London, England -- which the Company
considers to be one of the most supply-constrained markets for datacenter
space worldwide. Digital Realty Trust negotiated a power contract with the
regional utility company that provisions the site with greatly expanded
electrical service. The Company has executed a contract with a global
financial institution to construct a build-to-suit datacenter on the site.
As of August 7, 2007, the Company's portfolio comprises 62 properties,
excluding one property held as an investment in an unconsolidated joint
venture, consisting of 83 buildings totaling approximately 11.4 million
rentable square feet, including 1.7 million square feet of space held for
redevelopment. The portfolio is strategically located in 25 key technology
markets throughout North America and Europe. Excluding space held for
redevelopment, occupancy across Digital Realty Trust's property portfolio was
94.6% at June 30, 2007.
For the quarter ended June 30, 2007, leases commenced on approximately
61,700 square feet of datacenter space at an average annualized rent of
approximately $110.00 per square foot. The Company also commenced leases on
14,500 square feet of non-technical space at an average annualized rent of
approximately $22.00 per square foot. The 274,700 square feet of leases
signed during the second quarter includes over 228,400 square feet of
datacenter space at an average annualized rent of approximately $72.00 per
square foot and 46,300 square feet of non-technical space at an average
annualized rent of approximately $22.00 per square foot.
Over 404,400 square feet of redevelopment space was under construction
during the quarter, consisting of 240,000 square feet of Turn-Key
Datacenter(TM), 39,900 square feet of build-to-suit datacenter and 124,500
square feet of new Powered Base Building(TM) building. Approximately 56,400
square feet space held for redevelopment was converted to the operating
portfolio during the second quarter of 2007, which includes 37,700 square feet
of Turn-Key Datacenter(TM) as well as 18,700 square feet of space that was
leased on a Powered Base Building(TM) basis.
"New corporate applications, regulatory requirements for business
continuity and data storage, as well as the proliferation of content
distributed via the Internet are among the leading factors that continue to
drive demand for high quality datacenter space. As a result, datacenters have
become a critical infrastructure component of the global economy," said
Michael Foust, Chief Executive Officer of Digital Realty Trust. "Our strong
performance is a reflection of our ability to satisfy this demand for space
while offering tenants across industry verticals customer-oriented solutions
that meet their current and long-term datacenter requirements. Our business
fundamentals are solid and we are on track to meet or exceed our goals for the
year."
Balance Sheet Update
Total assets grew to approximately $2.4 billion at June 30, 2007, from
$2.2 billion at December 31, 2006. Total debt at June 30, 2007 was
approximately $1.2 billion compared to $1.1 billion at December 31, 2006.
Stockholders' equity was $936.5 million, up from $709.8 million at December
31, 2006, primarily due to the issuance of 7.0 million shares of Series C
Cumulative Convertible Preferred Stock completed during the quarter resulting
in approximately $169.1 million in net proceeds.
On April 10, 2007 the Company completed the underwritten public offering
of 7 million shares of Series C Cumulative Convertible Preferred Stock. The
Series C Cumulative Convertible Preferred Stock will pay dividends quarterly
at a rate of 4.375% per annum of the $25 liquidation preference per share.
The preferred shares will be convertible, at the holder's option, at an
initial conversion rate of 0.5164 common shares per $25.00 liquidation
preference per preferred share (or an initial conversion price of $48.41 per
common share), subject to adjustment upon the occurrence of certain events.
The initial conversion price represents a 20% conversion premium over the
closing sale price of the Company's common shares on April 3, 2007, which was
$40.34 per share.
During the quarter the Company also closed a construction financing on 3
Corporate Place in Piscataway, New Jersey. This $70.0 million construction
loan has an 18-month maturity with a six-month extension option and a rate of
one-month LIBOR + 225 basis points.
"We are continuing to manage our balance sheet to minimize our cost of
capital, given the current market conditions, while maintaining financial
flexibility to fund our growth," said A. William Stein, Chief Financial
Officer and Chief Investment Officer of Digital Realty Trust.
The Company is not changing its 2007 guidance at this time.
A copy of the Company's second quarter 2007 supplemental financial package
will be available today on its website at www.digitalrealtytrust.com.
Management Note Regarding FFO Presentation
FFO is a supplemental non-GAAP financial measure used by the real estate
industry to measure the operating performance of real estate companies. FFO
should not be considered as a substitute for net income determined in
accordance with U.S. GAAP as a measure of financial performance. A
reconciliation from U.S. GAAP net income available to common stockholders to
FFO and a definition of FFO are included as an attachment to this press
release.
Investor Conference Call Details
Digital Realty Trust will host a conference call to discuss its 2007
second quarter results Wednesday, August 8, 2007 at 1:00 p.m. ET/10:00 a.m.
PT. To participate in the live call, investors are invited to dial 800-218-
8862 (for domestic callers) or 303-262-2130 (for international callers) at
least five minutes prior to start time. A live webcast of the call will be
available via the Investor Relations section of Digital Realty Trust's website
at www.digitalrealtytrust.com. Please go to the website at least 15 minutes
early to register and download and install any necessary audio software. If
you are unable to listen to the live conference call, a telephone and webcast
replay will be available after 12:00 PM PT on Wednesday, August 8, 2007 until
11:59 PM PT on Wednesday, August 15, 2007. The telephone replay can be
accessed by dialing 1-800-405-2236 (for domestic callers) or 303-590-3000 (for
international callers) and using reservation code 11092743#. A replay of the
webcast will also be archived on Digital Realty Trust's website.
About Digital Realty Trust, Inc.
Digital Realty Trust, Inc. owns, acquires, repositions and manages
technology-related real estate. The Company is focused on providing Turn-Key
Datacenter(TM) and Powered Base Building(TM) datacenter solutions for domestic
and international tenants across a variety of industry verticals ranging from
information technology and internet enterprises, to manufacturing and
financial services. Digital Realty Trust's 62 properties, excluding one
property held as an investment in an unconsolidated joint venture, contain
applications and operations critical to the day-to-day operations of
technology industry tenants and corporate enterprise datacenter tenants.
Comprising approximately 11.4 million rentable square feet, including 1.7
million square feet of space held for redevelopment, Digital Realty Trust's
portfolio is located in 25 markets throughout North America and Europe. For
additional information, please visit Digital Realty Trust's website at
http://www.digitalrealtytrust.com.
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. Such forward looking statements include statements related to the
Company's expected future financial and other results for 2007, 2007 FFO,
total acquisitions for 2007, the acquisition mix between vacant properties and
income producing properties, acquisition cap rates, the commencement of leases
for turn-key datacenter space, redevelopment space and basic commercial space
and the expected rents related to those leases, total capital expenditures,
total general and administrative expenses, the accretive impact of the
convertible preferred stock offering, the leasing prospects for the
development site located in suburban London, England, the demand and long-term
growth prospects for advanced datacenter facilities, and the expectation that
the Company will achieve its performance objectives. These risks and
uncertainties include adverse economic or real estate developments in the
Company's markets or the technology industry; general economic conditions;
defaults on or non-renewal of leases by tenants; increased interest rates and
operating costs; inability to manage domestic and international growth
effectively; failure to obtain necessary outside financing; decreased rental
rates or increased vacancy rates; difficulties in identifying properties to
acquire and completing acquisitions at acceptable return levels; failure to
successfully operate acquired properties and operations; failure of acquired
properties to perform as expected; failure to successfully redevelop
properties acquired for such purposes or unexpected costs related thereto;
failure to maintain the Company's status as a REIT; environmental
uncertainties and risks related to natural disasters; financial market
fluctuations; changes in foreign currency exchange rates; risks of operating
in foreign markets; and 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
United States Securities and Exchange Commission, including the Company's
annual report on Form 10-K for the year ended December 31, 2006. 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.
Digital Realty Trust, Inc.
Consolidated Statements of Operations
(in thousands, except share data)
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
2007 2006 2007 2006
Operating Revenues:
Rental $78,705 $49,900 $151,993 $95,650
Tenant reimbursements 16,631 12,337 32,310 23,540
Other 247 -- 247 168
Total operating
revenues 95,583 62,237 184,550 119,358
Operating Expenses:
Rental property
operating and
maintenance 23,865 13,205 45,104 24,519
Property taxes 7,342 6,839 14,882 13,422
Insurance 1,419 1,050 2,845 1,922
Depreciation and
amortization 31,832 18,534 61,231 35,071
General and
administrative 8,456 4,674 15,666 8,920
Other 128 150 316 331
Total operating
expenses 73,042 44,452 140,044 84,185
Operating income 22,541 17,785 44,506 35,173
Other Income (Expenses):
Equity in earnings of
unconsolidated joint
venture 216 -- 761 --
Interest and other
income 532 262 1,045 490
Interest expense (15,264) (11,249) (31,858) (21,701)
Loss from early
extinguishment of debt -- (425) -- (482)
Income from
continuing
operations before
minority interests 8,025 6,373 14,454 13,480
Minority interests in
continuing
operations of
operating
partnership (305) (1,312) (806) (3,251)
Income from
continuing
operations 7,720 5,061 13,648 10,229
Income (loss) from
discontinued
operations before
gain on sale of
assets and minority
interests 43 62 1,413 (112)
Gain on sale of
assets -- -- 18,049 --
Minority interests
attributable to
discontinued
operations (5) (28) (3,266) 65
Income (loss) from
discontinued
operations (1) 38 34 16,196 (47)
Net income 7,758 5,095 29,844 10,182
Preferred stock
dividends (5,167) (3,445) (8,612) (6,890)
Net income
available to
common
stockholders $2,591 $1,650 $21,232 $3,292
Net income per share
available to common
stockholders:
Basic $0.04 $0.05 $0.36 $0.11
Diluted $0.04 $0.05 $0.35 $0.11
Weighted average
shares outstanding:
Basic 60,697,740 33,372,240 58,616,035 30,453,957
Diluted 62,970,291 33,872,344 60,732,426 30,944,327
(1) During 2007 and 2006, we sold 7979 East Tufts Avenue (July 2006), 100
Technology Center Drive (March 2007) and 4055 Valley View Lane
(March 2007) We have presented all activity for these properties in
Income (loss) from discontinued operations for all periods presented
above. This will cause individual line items above to differ from
previously published information but does not effect net income
available to common stockholders.
Digital Realty Trust
Consolidated Balance Sheets
(in thousands)
June 30, 2007 December 31, 2006
ASSETS (unaudited)
Investments in real estate
Properties:
Land $273,047 $228,728
Acquired ground leases 1,589 3,028
Buildings and improvements 1,557,335 1,415,236
Tenant improvements 182,363 172,334
Investments in properties 2,014,334 1,819,326
Accumulated depreciation and
amortization (142,022) (112,479)
Net investments in properties 1,872,312 1,706,847
Investment in unconsolidated joint
venture 30,327 29,955
Net investments in real estate 1,902,639 1,736,802
Cash and cash equivalents 48,014 22,261
Accounts and other receivables, net 31,753 31,293
Deferred rent 50,247 40,225
Acquired above market leases, net 41,317 47,292
Acquired in place lease value and
deferred leasing costs, net 254,880 248,751
Deferred financing costs, net 16,396 17,500
Restricted cash 32,605 28,144
Other assets 15,625 13,951
Total Assets $2,393,476 $2,186,219
LIABILITIES AND STOCKHOLDERS' EQUITY
Unsecured revolving credit facility $114,307 $145,452
Mortgage loans 885,500 804,686
Exchangeable senior debentures 172,500 172,500
Accounts payable and other accrued
liabilities 70,591 88,698
Accrued dividends and distributions 24,626 19,386
Acquired below market leases, net 96,813 87,487
Security deposits and prepaid rents 19,886 19,822
Total Liabilities 1,384,223 1,338,031
Minority interests in operating
partnership 72,763 138,416
Stockholders' Equity 936,490 709,772
Total Liabilities and Stockholders'
Equity $2,393,476 $2,186,219
Digital Realty Trust, Inc.
Reconciliation of Net Income Available to Common Stockholders to Funds From
Operations (FFO)
(in thousands, except share and per share and unit data)
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
2007 2006 2007 2006
Net income available to
common stockholders $2,591 $1,650 $21,232 $3,292
Adjustments:
Minority interests in
operating partnership
including discontinued
operations 310 1,340 4,072 3,186
Real estate related
depreciation and
amortization (1) 31,708 20,238 61,351 38,423
Real estate related
depreciation and
amortization related
to investment in
unconsolidated joint
venture 1,010 -- 2,046 --
Gain on sale of assets -- -- (18,049) --
FFO $35,619 $23,228 $70,652 $44,901
Basic FFO per share and
unit $0.52 $0.38 $1.04 $0.75
Diluted FFO per share
and unit $0.51 $0.38 $1.01 $0.75
Total common stock and
units outstanding
Basic 67,956,343 60,459,246 67,936,973 59,744,817
Diluted 70,228,894 60,959,350 70,053,364 60,235,187
(1) Real estate
depreciation and
amortization was
computed as follows:
Depreciation and
amortization per
income statement 31,832 18,534 61,231 35,071
Depreciation and
amortization of
discontinued
operations -- 1,741 379 3,460
Non real estate
depreciation (124) (37) (259) (108)
$31,708 $20,238 $61,351 $38,423
Note Regarding Funds From Operations
Digital Realty Trust 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)
available to common stockholders and unitholders (computed in accordance with
U.S. GAAP), excluding gains (or losses) from sales of property, 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, it provides a performance measure
that, when compared year over year, captures trends in occupancy rates, rental
rates and operating costs. Digital Realty Trust also believes 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 leasing
commissions necessary to maintain the operating performance of our properties,
all of which have real economic effect and could materially impact our 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 as a measure of our performance.
A. William Stein
Chief Financial Officer and Chief Investment Officer
Digital Realty Trust, Inc.
(415) 738-6500
Pamela Matthews
Investor/Analyst Information
Digital Realty Trust, Inc.
(415) 738-6500
SOURCE Digital Realty Trust, Inc.
A. William Stein, Chief Financial Officer and Chief Investment Officer, or Pamela
Matthews, Investor/Analyst Information, both of Digital Realty Trust, Inc.,
http://www.digitalrealtytrust.com/
