Company reports FFO per diluted share and unit of $0.59, up 15.7% from the
second quarter 2007, and raises 2008 FFO guidance
Highlights:
- Reported FFO of $0.59 per diluted share and unit for the second
quarter, up 1.7% from the first quarter of 2008 and up 15.7% from the
second quarter of 2007.
- Reported net income for the second quarter of $13.8 million and net
income available to common stockholders of $3.7 million, or $0.05 per
diluted share, compared to net income in the first quarter of 2008 of
$11.1 million and net income available to common stockholders of $2.9
million, or $0.04 per diluted share, and net income in the second
quarter of 2007 of $7.8 million and net income available to common
stockholders of $2.6 million, or $0.04 per diluted share.
- Commenced leases on approximately 138,500 square feet during the
second quarter at an average annualized GAAP rent of approximately
$125 per square foot.
- Signed leases on approximately 121,800 square feet in the second
quarter at an average annualized GAAP rent of approximately $155 per
square foot.
- Subsequent to the end of the quarter,
- Closed on an $80 million secured financing of 3 Corporate Place in
Piscataway, New Jersey.
- Completed a public offering of 5.75 million shares of Common Stock,
generating approximately $211.6 million in net proceeds;
- Closed on a $200 million uncommitted, unsecured, multi-currency
Prudential Shelf Facility. Concurrent with the close, made an
initial draw of $25 million with an interest-only rate of 7.00% per
annum and a three-year maturity; and
- Increased the commitments under our Revolving Credit Facility from
$650 to $675 million.
- Increasing 2008 FFO guidance $0.05 per diluted share and unit to
$2.40 - $2.50.
SAN FRANCISCO, Aug. 6 /PRNewswire-FirstCall/ -- Digital Realty Trust, Inc.
(NYSE: DLR), the leading owner and manager of corporate and Internet gateway
datacenter facilities, today announced financial results for its second
quarter ended June 30, 2008. The Company reported operating revenue of $123.8
million in the second quarter of 2008, up 8.1% from $114.5 million in the
first quarter of 2008 and up 29.5% from $95.6 million in the second quarter of
2007. For the second quarter of 2008, net income was $13.8 million and net
income available to common stockholders was $3.7 million, or $0.05 per diluted
share. This compares to net income in the first quarter of 2008 of $11.1
million and net income available to common stockholders of $2.9 million, or
$0.04 per diluted share, and net income in the second quarter of 2007 of $7.8
million and net income available to common stockholders of $2.6 million, or
$0.04 per diluted share.
"As more and more customers look to expand their datacenter operations,
our Turn-Key Datacenter(TM) has become the preferred time-to-market
infrastructure solution for many corporate, Internet enterprise and system
integrator customers who need to accommodate their growing IT requirements and
get new applications up and running quickly," commented Michael F. Foust,
Chief Executive Officer of Digital Realty Trust. "Our strong performance is
driven by our ability to deliver new product in key markets throughout the
U.S. and Europe in time to meet our customers' requirements."
Funds from operations ("FFO") was $44.4 million in the second quarter of
2008, or $0.59 on a diluted per share and unit basis, up 1.7% from $0.58 per
diluted share and unit in the previous quarter; and up 15.7% from $0.51 per
diluted share and unit in the second quarter of 2007.
"If one adjusts for approximately $0.02 per diluted share of non-recurring
items in first quarter 2008 FFO, the quarter over quarter increase to $0.59
per diluted share and unit in the second quarter of 2008 would have been
5.4%," added A. William Stein, Chief Financial Officer and Chief Investment
Officer of Digital Realty Trust.
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.
Acquisitions and Leasing Activity
On June 13, 2008, the Company acquired 650 Randolph Road in Franklin
Township, New Jersey. The recently completed purpose-built datacenter shell
totals 127,800 square feet, which is capable of supporting approximately
70,000 square feet of raised floor. The Company plans to contribute the
property to its redevelopment inventory and make additional improvements to
the building to meet its Powered Base Building(TM) specifications. The
Company plans to market the facility to financial service companies, system
integrators and other Fortune 1000 companies looking for large blocks of high
quality datacenter space in the Metro New York market.
On June 20, 2008, the Company acquired Reynolds House Datacenter, located
in Manchester, U.K. The 38,000 square foot income producing facility was
purpose built as a datacenter in 2001 and contains nearly 23,000 square feet
of raised floor, with the potential for an additional 7,000 square feet of
raised floor. The facility is fully leased to three tenants on long term
bases.
On June 30, 2008, the Company acquired a 50% interest in 1201 Comstock
Street, a site contiguous to its 1100 Space Park Drive and 1500 Space Park
Drive properties in Santa Clara, California. The 24,000 square foot
datacenter is currently under construction and will contain approximately
14,000 square feet of raised floor. Concurrent with the acquisition, a
leading technology company signed a lease for the entire building. The tenant
is expected to take occupancy upon completion of construction in January 2009.
As of August 6, 2008, the Company's portfolio comprises 74 properties,
excluding one property held in an unconsolidated joint venture, consisting of
96 buildings totaling approximately 12.9 million rentable square feet,
including 1.9 million square feet of space held for redevelopment. The
portfolio is strategically located in 27 key technology markets throughout
North America and Europe.
The Company commenced leases during the quarter totaling approximately
138,500 square feet of space. This includes 86,200 square feet of Turn-Key
Datacenter(TM) space leased at an average annual GAAP rental rate of
approximately $185 per square foot and 52,000 square feet of non-technical
space leased at an average annual GAAP rental rate of approximately $26 per
square foot.
In addition, the Company signed leases during the quarter totaling 121,800
square feet of space. This includes 106,700 square feet of Turn-Key
Datacenter(TM) space leased at an average annual GAAP rental rate of
approximately $173 per square foot and 14,500 square feet of non-technical
space leased at an average annual GAAP rental rate of approximately $25 per
square foot.
Balance Sheet Update
Total assets grew to approximately $3.1 billion at June 30, 2008, from
$2.8 billion at December 31, 2007. Total debt at June 30, 2008 was unchanged
at approximately $1.4 billion from December 31, 2007. Stockholders' equity
was approximately $1.4 billion, up from $1.0 billion at December 31, 2007,
primarily due to the public offering of Series D Cumulative Convertible
Preferred Stock in the first quarter of 2008.
Subsequent Events
On July 17, 2008, the Company closed an $80 million secured financing on 3
Corporate Place located in Piscataway, New Jersey. The loan has a three-year
maturity with two one-year extensions at an interest-only rate of 6.72% per
annum.
On July 21, 2008, the Company completed a public offering of 5,750,000
shares of Common Stock, including the over-allotment option that was
exercised, which generated approximately $211.6 million in net proceeds. The
Company utilized the net proceeds from the offering to temporarily repay
borrowings under its revolving credit facility, to fund acquisitions,
development and redevelopment activities, and for general corporate purposes.
On July 24, 2008, the Company closed on a $200 million uncommitted,
unsecured Prudential Shelf Facility. The three-year, multi-currency facility
provides for draws, from time to time, as approved by Prudential with an
average life and final maturity of up to seven years and ten years,
respectively. Concurrent with the close of the Facility, the Company made an
initial draw of $25 million with an interest-only rate of 7.00% per annum and
a three-year maturity. The Company intends to use the proceeds of the initial
notes and any additional notes to acquire properties, to fund development and
redevelopment activities and for general corporate purposes.
In addition, on July 25, 2008, the Company increased the total commitments
under its revolving credit facility from $650 million to $675 million with a
new $25 million commitment from Deutsche Bank.
"We have continued to obtain capital from a variety of sources to maintain
our liquidity and strong balance sheet in the face of extremely volatile
capital markets and challenging economic conditions," said A. William Stein,
Chief Financial Officer and Chief Investment Officer of Digital Realty Trust.
"As a result of our performance, including a shift in our leasing mix in favor
of our Turn-Key Datacenter product, and with better visibility towards our
full year 2008 results, we are increasing our FFO guidance by $0.05 per
diluted share for the year to $2.40 - $2.50."
2008 Revised Outlook
FFO per diluted share and unit for the year ending December 31, 2008 is
projected to be between $2.40 and $2.50, an increase of $0.05 from the
previous 2008 FFO guidance of between $2.35 and $2.45 per diluted share and
unit. This revised guidance represents projected FFO growth of 17.1% to 22.0%
over FFO per diluted share and unit of $2.05 for the year ended December 31,
2007. A reconciliation of the range of 2008 projected net income to projected
FFO follows:
(Low - High)
Net income available to common stockholders
per diluted share $0.45 - 0.55
Add:
Real estate depreciation and amortization as
adjusted for minority interest $1.95
Projected FFO per diluted share $2.40 - 2.50
The revised 2008 guidance provided by Digital Realty Trust in this press
release is based on the following assumptions as of August 6, 2008:
-- Total acquisitions for the full year in the range of $115 million to
$180 million, consisting of $65 million to $75 million of vacant
properties for its redevelopment program and $50 million to $105
million of income producing properties at average cash cap rate of
8.00%;
-- The commencement of leases for approximately 840,000 square feet to
950,000 square feet of Turn-Key Datacenter(TM) and Powered Base
Building(TM) space at an average annualized gross rent of $115 per
square foot;
-- The commencement of leases for 100,000 square feet to 125,000 square
feet of basic commercial space at an average annualized gross rent of
$23 per square foot;
-- Total capital expenditures for its redevelopment program of $600
million; and
-- Total G&A of $41 million.
Investor Conference Call Details
Digital Realty Trust will host a conference call to discuss its 2008
second quarter results today, Wednesday, August 6, 2008 at 1:00 p.m. ET/10:00
a.m. PT. To participate in the live call, investors are invited to dial
800-240-5318 (for domestic callers) or 303-262-2051 (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 http://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 6, 2008 until 11:59 pm PT on Wednesday, August 13, 2008.
The telephone replay can be accessed by dialing 800-405-2236 (for domestic
callers) or 303-590-3000 (for international callers) and using reservation
code 11116451#. 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, redevelops, develops 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 74 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 12.9 million rentable square feet as of August 6,
2008, including 1.9 million square feet of space held for redevelopment,
Digital Realty Trust's portfolio is located in 27 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
development plans for the 650 Randolph Road property, the Company's expected
future financial and other results, and the assumptions underlying those
expected results, for the year ending December 31, 2008, including projected
FFO per diluted share and unit, projected net income, projected acquisitions,
the mix of vacant and income producing properties to be acquired, the average
cash cap rate of the income producing properties to be acquired, the
commencement of leases for Turn-Key Datacenter(TM), Powered Base Building(TM)
and basic commercial space, the projected rents associated with those leases,
total capital expenditures for the Company's redevelopment program and total
G&A expenses. These risks and uncertainties include adverse economic or real
estate developments in the Company's markets or the technology industry;
general economic conditions and the risk of recession; failure to obtain
necessary outside debt, equity or other capital; defaults on or non-renewal of
leases by tenants; increased interest rates and operating costs; failure to
lease redeveloped or other vacant space; inability to manage domestic and
international growth and redevelopment effectively; decreased rental rates or
increased vacancy rates; impairments of or decreased property values for
properties in the Company's portfolio, 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; increased construction costs or
construction delays; changes in foreign currency exchange rates; failure to
maintain the Company's status as a REIT; environmental uncertainties and risks
related to natural or other disasters; financial market fluctuations; risks of
operating in foreign markets; 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, 2007 and
subsequent reports on Form 10-Q and Form 8-K. 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,
2008 2007 2008 2007
Operating Revenues:
Rental $97,966 $78,705 $190,712 $151,993
Tenant reimbursements 25,698 16,631 47,485 32,310
Other 112 247 126 247
Total operating
revenues 123,776 95,583 238,323 184,550
Operating Expenses:
Rental property
operating and
maintenance 36,396 23,865 67,960 45,104
Property taxes 8,522 7,342 16,646 14,882
Insurance 1,198 1,419 2,403 2,845
Depreciation and
amortization 39,570 31,832 78,707 61,231
General and
administrative 9,823 8,456 18,668 15,666
Other 138 128 589 316
Total operating
expenses 95,647 73,042 184,973 140,044
Operating income 28,129 22,541 53,350 44,506
Other Income (Expenses):
Equity in earnings of
unconsolidated joint
venture 173 216 331 761
Interest and other
income 407 532 1,062 1,045
Interest expense (14,281) (15,264) (28,913) (31,858)
Loss from early
extinguishment of debt (182) -- (182) --
Income from
continuing
operations before
minority interests 14,246 8,025 25,648 14,454
Minority interests in
consolidated joint
ventures (50) -- (50) --
Minority interests in
continuing
operations of
operating
partnership (366) (305) (660) (806)
Income from
continuing
operations 13,830 7,720 24,938 13,648
Income from
discontinued
operations before
gain on sale of
assets and minority
interests -- 43 -- 1,413
Gain on sale of
assets -- -- -- 18,049
Minority interests
attributable to
discontinued
operations -- (5) -- (3,266)
Income from
discontinued
operations (1) -- 38 -- 16,196
Net income 13,830 7,758 24,938 29,844
Preferred stock
dividends (10,102) (5,167) (18,360) (8,612)
Net income
available to
common
stockholders $3,728 $2,591 $6,578 $21,232
Net income per share
available to common
stockholders:
Basic $0.06 $0.04 $0.10 $0.36
Diluted $0.05 $0.04 $0.10 $0.35
Weighted average
shares outstanding:
Basic 65,889,122 60,697,740 65,660,354 58,616,035
Diluted 68,068,600 62,970,291 67,563,963 60,732,425
(1) During 2007, we sold 100 Technology Center Drive (March 2007) and 4055
Valley View Lane (March 2007) We have presented all activity for
these properties in Income 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, December 31,
2008 2007
ASSETS (unaudited)
Investments in real estate
Properties:
Land $329,557 $316,196
Acquired ground leases 2,895 2,790
Buildings and improvements 2,274,652 1,968,850
Tenant improvements 200,982 193,436
Investments in properties 2,808,086 2,481,272
Accumulated depreciation and amortization (241,964) (188,099)
Net investments in properties 2,566,122 2,293,173
Investment in unconsolidated joint venture 8,172 8,521
Net investments in real estate 2,574,294 2,301,694
Cash and cash equivalents 19,764 31,352
Accounts and other receivables, net 47,469 43,440
Deferred rent 81,545 64,639
Acquired above market leases, net 36,410 38,762
Acquired in place lease value and
deferred leasing costs, net 240,462 253,642
Deferred financing costs, net 15,820 17,610
Restricted cash 36,949 41,302
Other assets 18,137 17,023
Total Assets $3,070,850 $2,809,464
LIABILITIES AND STOCKHOLDERS' EQUITY
Revolving credit facility $287,843 $299,731
Mortgage loans 900,829 895,507
Exchangeable senior debentures 172,500 172,500
Accounts payable and other accrued
liabilities 147,132 176,143
Accrued dividends and distributions -- 22,345
Acquired below market leases, net 88,995 93,572
Security deposits and prepaid rents 26,502 27,839
Total Liabilities 1,623,801 1,687,637
Minority interests in consolidated joint
ventures 12,423 4,928
Minority interests in operating partnership 66,453 72,983
Stockholders' Equity 1,368,173 1,043,916
Total Liabilities and Stockholders' Equity $3,070,850 $2,809,464
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, March 31, June 30, June 30, June 30,
2008 2008 2007 2008 2007
Net income
available to
common
stockholders $3,728 $2,850 $2,591 $6,578 $21,232
Adjustments:
Minority
interests in
operating
partnership
including
discontinued
operations 366 294 310 660 4,072
Real estate
related
depreciation and
amortization
(1) 39,393 38,978 31,708 78,371 61,351
Real estate
related
depreciation and
amortization
related to
investment in
unconsolidated
joint venture 872 894 1,010 1,766 2,046
Gain on sale of
assets -- -- -- -- (18,049)
FFO available to
common
stockholders and
unitholders (2) $44,359 $43,016 $35,619 $87,375 $70,652
Basic FFO per
share and unit $0.61 $0.60 $0.52 $1.21 $1.04
Diluted FFO per
share and
unit (2) $0.59 $0.58 $0.51 $1.17 $1.01
Weighted average
common stock
and units
outstanding
Basic 72,353,577 72,175,492 67,956,343 72,264,534 67,936,973
Diluted (2) 86,365,755 82,524,492 70,228,894 84,411,746 70,053,364
(1) Real estate
depreciation
and
amortization
was computed
as follows:
Depreciation
and
amortization
per income
statement 39,570 39,137 31,832 78,707 61,231
Depreciation
and
amortization
of
discontinued
operations -- -- -- -- 379
Non real estate
depreciation (177) (159) (124) (336) (259)
$39,393 $38,978 $31,708 $78,371 $61,351
(2) At 6/30/08, we had 7,000,000 series C convertible preferred shares and
13,800,000 series D convertible preferred shares outstanding that were
convertible into 3,614,800 common shares and 8,217,900 common shares,
respectively. See below for calculations of diluted FFO available to
common stockholders and unitholders and weighted average common stock
and units outstanding.
Three Months Ended Six Months Ended
June 30, March 31, June 30, June 30, June 30,
2008 2008 2007 2008 2007
FFO available
to common
stockholders
and unitholders $44,359 $43,016 $35,619 $87,375 $70,652
Add: Series C
convertible
preferred
dividends 1,914 1,914 -- 3,828 --
Add: Series D
convertible
preferred
dividends 4,744 2,899 -- 7,643 --
FFO available
to common
stockholders
and unitholders
-- diluted $51,017 $47,829 $35,619 $98,846 $70,652
Weighted average
common stock
and units
outstanding 72,353,577 72,175,492 67,956,343 72,264,534 67,936,973
Add: Effect of
dilutive
securities
(excluding
series C and D
convertible
preferred
stock) 2,179,478 1,711,197 2,272,551 1,903,609 2,116,391
Add: Effect of
dilutive series
C convertible
preferred
stock 3,614,800 3,614,800 -- 3,614,800 --
Add: Effect of
dilutive series
D convertible
preferred
stock 8,217,900 5,022,050 -- 6,628,803 --
Weighted average
common stock
and units
outstanding --
diluted 86,365,755 82,523,539 70,228,894 84,411,746 70,053,364
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.
For Additional Information:
A. William Stein Pamela Matthews
Chief Financial Officer and Investor/Analyst Information
Chief Investment Officer Digital Realty Trust, Inc.
Digital Realty Trust, Inc. +1 (415) 738-6500
+1 (415) 738-6500
SOURCE Digital Realty Trust, Inc.
-0- 08/06/2008
/CONTACT: A. William Stein, Chief Financial Officer and Chief Investment
Officer, or Pamela Matthews, Investor|Analyst Information, both of Digital
Realty Trust, Inc., +1-415-738-6500/
/Web site: http://www.digitalrealtytrust.com/
(DLR)
