Business Context and Reporting Period
Company: Digital Realty Trust, Inc. (DLR) and Digital Realty Trust, L.P.
Filing Type: Form 10-Q (Quarterly Report)
Period Ended: June 30, 2026
Business Overview: A leading global provider of data center, colocation, and interconnection solutions. The company operates as a single global business segment with a portfolio of 310 data centers. As of June 30, 2026, the consolidated portfolio occupancy was 89.8%.
Key Financial Metrics
| Metric | Three Months Ended June 30, 2026 | Six Months Ended June 30, 2026 |
|---|---|---|
| Total Operating Revenues | $1,924.0 million | $3,559.2 million |
| Net Income (GAAP) | $457.6 million | $632.4 million |
| Net Income Available to Common Stockholders | $443.1 million | $612.2 million |
| Funds From Operations (FFO) | $981.9 million | $1,682.3 million |
| FFO Per Share (Diluted) | $2.73 | $4.73 |
| Net Cash Provided by Operating Activities | N/A | $1,595.2 million |
| Total Debt Outstanding | $18,767.6 million | $18,767.6 million |
| Cash and Cash Equivalents | $1,864.8 million | $1,864.8 million |
| Weighted Average Shares Outstanding (Diluted) | 361.5 million | 357.4 million |
Material Changes vs. Prior Period
- Revenue Growth: Total operating revenues increased 28.9% year-over-year for the quarter and 22.7% for the six-month period. This was driven by a 43.1% increase in non-stabilized revenue due to development completions and a significant $201 million "promote income" recognized from the June 2026 Acquisition.
- Net Income Decline: Net income decreased significantly compared to the prior year (from $1.05 billion to $458 million for the quarter). This decline is primarily due to the absence of a $932 million gain on disposition of properties recorded in the same period in 2025.
- Acquisitions: The company completed the acquisition of 64% blended partnership interests in the Digital Carver Dulles 9 JV and Digital Carver Brickyard JV for approximately $3.5 billion in total consideration (including cash and stock). Additional acquisitions included land in Atlanta, data centers in Malaysia, and a site in France.
- Capital Expenditures: Net cash used in investing activities increased to $4.25 billion for the six months ended June 30, 2026, compared to $742 million in the prior year period, reflecting heavy investment in acquisitions ($2.17 billion) and development projects.
Guidance, Outlook, and Risks
- Capital Expenditure Outlook: Management expects to incur approximately $2.8 billion to $3.3 billion in capital expenditures for the remainder of 2026, including joint venture contributions.
- Development Pipeline: As of June 30, 2026, 1,402 megawatts of projects are underway, representing an 82% increase in capacity under development compared to the prior year-end. Approximately 54% of this capacity is pre-leased.
- Equity Program: The company entered a new $7.5 billion "At-The-Market" (ATM) equity offering program in May 2026. Approximately $1.2 billion was raised under this program in the second quarter.
- Debt Structure: Total debt is $18.8 billion with a weighted average interest rate of 2.99%. Approximately 93.6% of debt is fixed-rate (including swaps). The company remains in compliance with all financial covenants.
- Risks: Key risks include the impact of inflation on operating costs (particularly energy), geopolitical instability, supply chain disruptions, and the ability to successfully integrate recent large-scale acquisitions. The company also faces foreign currency exchange risk, primarily related to the Euro, British pound, and Singapore dollar.
Investor Verification Checklist
- Acquisition Integration: Verify the stabilization timeline and lease-up progress for the $3.5 billion Digital Carver joint venture acquisition closed in June 2026.
- FFO vs. GAAP Reconciliation: Review the reconciliation of Net Income to Funds From Operations (FFO) to understand the impact of non-cash depreciation and the exclusion of one-time gains/losses.
- Debt Maturities: Confirm the schedule of debt maturities, noting that $825 million is due in the remainder of 2026 and $2.16 billion in 2027.
- Noncontrolling Interests: Monitor the settlement of the Teraco put option, where shareholders exercised their right to sell approximately 16% of the interest, expected to be settled in the second half of 2026 via stock issuance.
- Capital Allocation: Assess the utilization of the new $7.5 billion ATM facility and the balance between funding development ($2.8B-$3.3B expected for remainder of 2026) versus debt repayment.