Digital Realty Trust, Inc. (DLR) 8-K Earnings Release, Regulated Disclosure



Overview					PAGE

Corporate Information					3

Ownership Structure					5

Key Quarterly Financial Data					6

Consolidated Statements of Operations

Earnings Release					8

2018 Outlook					10

Consolidated Quarterly Statements of Operations					12

Funds From Operations and Core Funds From Operations					13

Adjusted Funds From Operations					14

Balance Sheet Information

Consolidated Balance Sheets					15

Components of Net Asset Value					16

Consolidated Debt Analysis and Global Unsecured Revolving Credit Facility					17

Debt Maturities					18

Debt Analysis & Covenant Compliance					19

Internal Growth

Same-Capital Operating Trend Summary					20

Summary of Leasing Activity - Signed					21

Summary of Leasing Activity - Commenced					22

Lease Expirations and Lease Distribution					23

Lease Expirations - By Product Type					24

Top 20 Customers by Annualized Rent					25

Portfolio Summary					26

Portfolio Overview by Product Type					27

Product Overview by Metropolitan Area					28

Occupancy Analysis					29

External Growth

Development Lifecycle - Committed Active Development					30

Development Lifecycle - In Service					31

Construction Projects in Progress					32

Historical Capital Expenditures and Investments in Real Estate					33

Development Lifecycle - Held for Development					34

Acquisitions / Dispositions / Joint Ventures					35

Unconsolidated Joint Ventures					36

Additional Information

Reconciliation of Earnings Before Interest, Taxes, Depreciation & Amortization and Financial Ratios					37

Management Statements on Non-GAAP Measures					38

Forward-Looking Statements					40



		Financial Supplement
Corporate Information		Third Quarter 2018

Corporate Profile

Digital Realty Trust, Inc. owns, acquires, develops and operates data centers. The company is focused on providing data center, colocation and interconnection solutions for domestic and international customers across a variety of industry verticals ranging from cloud and information technology services, communications and social networking to financial services, manufacturing, energy, healthcare, and consumer products. As of September 30, 2018, the company's 198 data centers, including 18 data centers held as investments in unconsolidated joint ventures, contain applications and operations critical to the day-to-day operations of technology industry and corporate enterprise data center customers. Digital Realty's portfolio is comprised of approximately 27.9 million square feet, excluding approximately 3.6 million square feet of space under active development and 1.8 million square feet of space held for future development, located throughout North America, Europe, Asia and Australia. For additional information, please visit the company's website at www.digitalrealty.com.

Corporate Headquarters

Four Embarcadero Center, Suite 3200

San Francisco, California 94111

Telephone: (415) 738-6500

Website: www.digitalrealty.com

Senior Management

A. William Stein: Chief Executive Officer

Andrew P. Power: Chief Financial Officer

Chris Sharp: Chief Technology Officer

Erich Sanchack: Executive Vice President, Operations

Investor Relations

To request more information or to be added to our e-mail distribution list, please visit our website: www.digitalrealty.com

(Please proceed to the Investor Relations section)

Analyst Coverage




	Bank of America
BMO Capital Markets	Merrill Lynch	Barclays Capital	Berenberg	Citigroup
Ari Klein	Michael Funk	Ross Smotrich	Nate Crossett	Michael Rollins
(212) 885-4103	(646) 855-5664	(212) 526-2306	(646) 949-9030	(212) 816-1116


Cowen & Company	Credit Suisse	Deutsche Bank	Green Street Advisors	Guggenheim Securities
Colby Synesael	Sami Badri	Matthew Niknam	Lukas Hartwich	Robert Gutman
(646) 562-1355	(212) 538-1727	(212) 250-4711	(949) 640-8780	(212) 518-9148


J.P. Morgan	Jefferies	KeyBanc Capital	MoffettNathanson	Morgan Stanley
Richard Choe	Jonathan Petersen	Jordan Sadler	Nick Del Deo	Simon Flannery
(212) 662-6708	(212) 284-1705	(917) 368-2280	(212) 519-0025	(212) 761-6432


Morningstar	New Street Research	RBC Capital Markets	Raymond James	Robert W. Baird
Matthew Dolgin	Spencer Kurn	Jonathan Atkin	Frank Louthan	David Rodgers
(312) 696-6783	(212) 921-2067	(415) 633-8589	(404) 442-5867	(216) 737-7341


Stifel	SunTrust	UBS	Wells Fargo	William Blair
Erik Rasmussen	Gregory Miller	John Hodulik	Jennifer Fritzsche	James Breen
(212) 271-3461	(212) 303-4169	(212) 713-4226	(312) 920-3548	(617) 235-7513

This Earnings Press Release and Supplemental Information package supplements the information provided in our quarterly and annual reports filed with the Securities and Exchange Commission. Additional information about us and our data centers is also available on our website at www.digitalrealty.com.



		Financial Supplement
Corporate Information (Continued)		Third Quarter 2018

Stock Listing Information

The stock of Digital Realty Trust, Inc. is traded primarily on the New York Stock Exchange under the following symbols:



Common Stock:		DLR
Series C Preferred Stock:		DLRPRC
Series G Preferred Stock:		DLRPRG
Series H Preferred Stock:		DLRPRH
Series I Preferred Stock:		DLRPRI
Series J Preferred Stock:		DLRPRJ

Symbols may vary by stock quote provider.

Credit Ratings



Standard & Poors
Corporate Credit Rating:	BBB	(Positive Outlook)
Preferred Stock:	BB+

Moody's
Issuer Rating:	Baa2	(Stable Outlook)
Preferred Stock:	Baa3

Fitch
Issuer Default Rating:	BBB	(Stable Outlook)
Preferred Stock:	BB+

These credit ratings may not reflect the potential impact of risks relating to the structure or trading of the company’s securities and are provided solely for informational purposes. Credit ratings are not recommendations to buy, hold or sell any security, and may be revised or withdrawn at any time by the issuing rating agency at its sole discretion. The company does not undertake any obligation to maintain the ratings or to advise of any change in ratings. Each agency’s rating should be evaluated independently of any other agency’s rating. An explanation of the significance of the ratings may be obtained from each of the rating agencies.

Common Stock Price Performance

The following summarizes recent activity of Digital Realty's common stock (DLR):



	Three Months Ended
	30-Sep-18			30-Jun-18			31-Mar-18			31-Dec-17			30-Sep-17
High price		$125.10			$112.07			$115.08			$124.16			$127.23
Low price		$110.80			$100.50			$96.56			$109.19			$108.73
Closing price, end of quarter		$112.48			$111.58			$105.38			$113.90			$118.33
Average daily trading volume	1,192,244			1,121,334			1,565,456			1,206,103			1,405,287
Indicated dividend per common share(1)		$4.04			$4.04			$4.04			$3.72			$3.72
Closing annual dividend yield, end of quarter	3.6		%	3.6		%	3.8		%	3.3		%	3.1		%
Shares and units outstanding, end of quarter(2)	214,607,642			214,553,149			214,611,402			213,959,395			213,916,456
Closing market value of shares and units outstanding (3)		$24,139,068			$23,939,840			$22,615,749			$24,369,975			$25,312,734


(1)	On an annualized basis.

(2)

As of September 30, 2018, the total number of shares and units includes 206,267,055 shares of common stock, 6,411,484 common units held by third parties and 1,929,103 common units and vested and unvested long-term incentive units held by directors, officers and others and excludes all shares of common stock potentially issuable upon conversion of our series C, series G, series H, series I, and series J cumulative redeemable preferred stock upon certain change of control transactions. Also excludes 9,775,000 shares of common stock that may be issued upon full physical settlement of the September 2018 forward sales agreements.


(3)	Dollars in thousands as of the end of the quarter.



Ownership Structure		Financial Supplement
As of September 30, 2018		Third Quarter 2018



Partner	# of Units (1)	% Ownership
Digital Realty Trust, Inc.	206,267,055	96.1	%
Third-Party Unitholders	6,411,484	3.0	%
Directors, Officers and Others (2)	1,929,103	0.9	%
Total	214,607,642	100.0	%

(1)

The total number of units includes 206,267,055 general partnership common units, 6,411,484 common units held by third parties and 1,929,103 common units and vested and unvested long-term incentive units held by directors, officers and others, and excludes all shares of common stock potentially issuable upon conversion of our series C, series G, series H, series I, and series J cumulative redeemable preferred stock upon certain change of control transactions. Also excludes 9,775,000 shares of common stock that may be issued upon full physical settlement of the September 2018 forward sales agreements.


(2)	Reflects limited partnership interests held by our directors, officers and others in the form of common units, and vested and unvested long-term incentive units.



Key Quarterly Financial Data		Financial Supplement
Unaudited and Dollars in Thousands, Except Per Share Data		Third Quarter 2018



Shares and Units at End of Quarter	30-Sep-18		30-Jun-18		31-Mar-18		31-Dec-17		30-Sep-17
Common shares outstanding	206,267,055		206,055,117		205,874,914		205,470,300		205,433,495
Common units outstanding	8,340,587		8,498,032		8,736,488		8,489,095		8,482,961
Total Shares and Partnership Units	214,607,642		214,553,149		214,611,402		213,959,395		213,916,456

Enterprise Value
Market value of common equity (1)	$24,139,068		$23,939,840		$22,615,749		$24,369,975		$25,312,734
Liquidation value of preferred equity	1,266,250		1,266,250		1,266,250		1,266,250		1,266,250
Total debt at balance sheet carrying value	9,179,871		9,106,084		9,147,712		8,648,618		8,484,244
Total Enterprise Value	$34,585,189		$34,312,174		$33,029,711		$34,284,843		$35,063,228
Total debt / total enterprise value	26.5	%	26.5	%	27.7	%	25.2	%	24.2	%

Selected Balance Sheet Data
Investments in real estate (before depreciation)	$17,981,293		$17,722,610		$17,528,976		$17,079,413		$16,535,694
Total Assets	21,462,110		21,411,423		21,581,917		21,404,345		21,232,498
Total Liabilities	10,681,095		10,561,690		10,595,502		10,300,993		9,994,566

Selected Operating Data
Total operating revenues	$768,924		$754,919		$744,368		$731,445		$609,925
Total operating expenses	629,859		610,857		600,555		614,247		543,768
Interest expense	80,851		78,810		76,985		73,989		71,621
Net income (loss)	90,264		88,159		110,095		79,658		12,476
Net income (loss) available to common stockholders	67,268		65,134		86,298		53,306		(4,139)

Financial Ratios
EBITDA (2)	$444,508		$444,853		$461,446		$415,813		$296,892
Adjusted EBITDA (3)	453,467		458,130		450,813		428,311		351,904
Net Debt to Adjusted EBITDA (4)	5.2x		5.2x		5.3x		5.2x		6.0x
GAAP interest expense	80,851		78,810		76,985		73,989		71,621
Fixed charges (5)	111,055		107,401		104,892		102,504		93,619
Interest coverage ratio (6)	5.0x		5.3x		5.3x		5.2x		4.8x
Fixed charge coverage ratio (7)	4.1x		4.3x		4.3x		4.2x		3.9x

Profitability Measures
Net income (loss) per common share - basic	$0.33		$0.32		$0.42		$0.26		($0.02)
Net income (loss) per common share - diluted	$0.33		$0.32		$0.42		$0.26		($0.02)
Funds from operations (FFO) / diluted share and unit (8)	$1.57		$1.64		$1.61		$1.48		$1.23
Core funds from operations (Core FFO) / diluted share and unit (8)	$1.63		$1.66		$1.63		$1.55		$1.51
Adjusted funds from operations (AFFO) / diluted share and unit (9)	$1.54		$1.55		$1.53		$1.35		$1.37
Dividends per share and common unit	$1.01		$1.01		$1.01		$0.93		$0.93
Diluted FFO payout ratio (8) (10)	64.2	%	61.5	%	62.8	%	62.9	%	75.5	%
Diluted Core FFO payout ratio (8) (11)	62.0	%	60.8	%	62.0	%	60.0	%	61.6	%
Diluted AFFO payout ratio (9) (12)	65.4	%	65.4	%	66.0	%	68.7	%	68.1	%

Portfolio Statistics
Data Centers (13)	198		198		199		198		193
Cross-connects	77,000		76,000		75,000		74,000		73,000
Net rentable square feet, excluding development space (13)	27,918,778		27,847,819		27,115,634		26,588,569		26,056,085
Occupancy at end of quarter (14)	89.5	%	89.4	%	89.2	%	90.2	%	90.8	%
Occupied square footage	25,001,127		24,906,210		24,195,848		23,991,756		23,659,177
Space under active development (15)	3,634,830		3,325,092		3,629,821		2,700,156		2,759,858
Space held for development (16)	1,816,366		1,455,841		1,532,682		1,645,175		1,636,300
Weighted average remaining lease term (years) (17)	4.5		4.7		4.9		4.9		5.1
Same-capital occupancy at end of quarter (14) (18)	88.4	%	88.7	%	88.7	%	89.8	%	90.1	%



Key Quarterly Financial Data		Financial Supplement
Unaudited and Dollars in Thousands, Except Per Share Data		Third Quarter 2018

(1)

The market value of common equity is based on the closing stock price at the end of the quarter and assumes 100% redemption of the limited partnership units in our operating partnership, including common units and vested and unvested long-term incentive units, for shares of our common stock. Excludes shares of common stock potentially issuable upon conversion of our series C, series G, series H, series I, and series J cumulative redeemable preferred stock upon certain change of control transactions, as applicable.


(2)	EBITDA is calculated as earnings before interest expense, loss from early extinguishment of debt, tax expense, depreciation and amortization and impairment of investments in real estate. For a discussion of EBITDA, see page 38. For a reconciliation of net income available to common stockholders to EBITDA, see page 37.

(3)

Adjusted EBITDA is EBITDA excluding severance-related expense, equity acceleration, and legal expenses, transaction and integration expenses, (gain) loss on real estate transactions, equity in earnings adjustment for non-core items, other non-core expense adjustments, non-controlling interests, preferred stock dividends, including undeclared dividends, and issuance costs associated with redeemed preferred stock. For a discussion of Adjusted EBITDA, see page 38. For a reconciliation of net income available to common stockholders to Adjusted EBITDA, see page 37.

(4)

Net Debt to Adjusted EBITDA is calculated as total debt at balance sheet carrying value (see page 6), plus capital lease obligations, plus our share of joint venture debt, less unrestricted cash and cash equivalents, divided by the product of Adjusted EBITDA (inclusive of our share of joint venture EBITDA), multiplied by four. For the quarter ended September 30, 2017, Net Debt to Adjusted EBITDA includes all of the debt associated with the DuPont Fabros merger while the annualized third quarter Adjusted EBITDA includes only 17 days of DuPont Fabros operations during the quarter.


(5)	Fixed charges consist of GAAP interest expense, capitalized interest, scheduled debt principal payments and preferred dividends.


(6)	Interest coverage ratio is Adjusted EBITDA divided by GAAP interest expense plus capitalized interest.


(7)	Fixed charge coverage ratio is Adjusted EBITDA divided by fixed charges.


(8)	For definitions and discussion of FFO and core FFO, see page 38. For reconciliations of net income available to common stockholders to FFO and core FFO, see page 13.


(9)	For a definition and discussion of AFFO, see page 38. For a reconciliation of core FFO to AFFO, see page 14.


(10)	Diluted FFO payout ratio is dividends declared per common share and unit divided by diluted FFO per share and unit.


(11)	Diluted core FFO payout ratio is dividends declared per common share and unit divided by diluted core FFO per share and unit.


(12)	Diluted AFFO payout ratio is dividends declared per common share and unit divided by diluted AFFO per share and unit.


(13)	Includes buildings held as investments in unconsolidated joint ventures. Excludes buildings held-for-sale.

(14)

Occupancy and same-capital occupancy exclude space under active development and space held for development. Occupancy represents our consolidated portfolio in addition to our managed portfolio of unconsolidated joint ventures and non-managed unconsolidated joint ventures. For some of our buildings, we calculate occupancy based on factors in addition to contractually leased square feet, including available power, required support space and common area. Excludes buildings held-for-sale.


(15)	Space under active development includes current Base Building and Data Centers projects in progress (see page 30). Excludes buildings held-for-sale.


(16)	Space held for development includes space held for future Data Center development, and excludes space under active development (see page 34). Excludes buildings held-for-sale.


(17)	Weighted average remaining lease term excludes renewal options and is weighted by net rentable square feet.

(18)

Represents buildings owned as of December 31, 2016 with less than 5% of total rentable square feet under development. Excludes buildings that were undergoing, or were expected to undergo, development activities in 2017-2018, buildings classified as held-for-sale, and buildings sold or contributed to joint ventures for all periods presented. Prior period results have been adjusted to reflect current same-capital pool.



Digital Realty Trust
Earnings Release		Third Quarter 2018

DIGITAL REALTY REPORTS THIRD QUARTER 2018 RESULTS

San Francisco, CA — October 25, 2018 — Digital Realty (NYSE: DLR), a leading global provider of data center, colocation and interconnection solutions, announced today financial results for the third quarter of 2018. All per-share results are presented on a fully-diluted share and unit basis.

Highlights


•	Reported net income available to common stockholders of $0.33 per share in 3Q18, compared to ($0.02) in 3Q17


•	Reported FFO per share of $1.57 in 3Q18, compared to $1.23 in 3Q17


•	Reported core FFO per share of $1.63 in 3Q18, compared to $1.51 in 3Q17


•	Signed total bookings during 3Q18 expected to generate $69 million of annualized GAAP rental revenue, including an $8 million contribution from interconnection


•	Reiterated 2018 core FFO per share outlook of $6.55 - $6.65

Financial Results

Digital Realty reported revenues for the third quarter of 2018 of $769 million, a 2% increase from the previous quarter and a 26% increase from the same quarter last year.

The company delivered third quarter of 2018 net income of $90 million, and net income available to common stockholders of $67 million, or $0.33 per diluted share, compared to $0.32 per diluted share in the previous quarter and ($0.02) per diluted share in the same quarter last year.

Digital Realty generated third quarter of 2018 adjusted EBITDA of $453 million, a 1% decrease from the previous quarter and a 29% increase over the same quarter last year.

The company reported third quarter of 2018 funds from operations of $338 million, or $1.57 per share, compared to $1.64 per share in the previous quarter and $1.23 per share in the same quarter last year.

Excluding certain items that do not represent core expenses or revenue streams, Digital Realty delivered third quarter of 2018 core FFO of $1.63 per share, a 2% decrease from $1.66 per share in the previous quarter, and an 8% increase from $1.51 per share in the same quarter last year.

Leasing Activity

“In the third quarter, we signed total bookings expected to generate $69 million of annualized GAAP rental revenue, including an $8 million contribution from interconnection,” said Chief Executive Officer A. William Stein. “This represents the second-highest bookings in the company's history, close on the heels of our record in the prior quarter. We also announced our entry into the rapidly growing Brazilian market, and we took proactive steps to secure our supply chain and further strengthen our balance sheet. We look forward to building on this momentum in the months ahead, setting the stage for sustainable growth into 2019 and beyond.”

The weighted-average lag between leases signed during the third quarter of 2018 and the contractual commencement date was five months.

In addition to new leases signed, Digital Realty also signed renewal leases representing $61 million of annualized GAAP rental revenue during the quarter. Rental rates on renewal leases signed during the third quarter of 2018 rolled up 0.2% on a cash basis and up 1.6% on a GAAP basis.



Digital Realty Trust
Earnings Release		Third Quarter 2018

New leases signed during the third quarter of 2018 by region and product type are summarized as follows:



	Annualized GAAP
	Base Rent			GAAP Base Rent			GAAP Base Rent
North America	(in thousands)		Square Feet	per Square Foot		Megawatts	per Kilowatt
Turn-Key Flex		$40,958	330,137		$124	33.3		$103
Colocation	8,527		45,081	189		2.4	294
Non-Technical	978		53,916	18		—	—
Total		$50,463	429,134		$118	35.7		$116

Europe (1)
Turn-Key Flex		$5,076	32,431		$157	3.3		$130
Colocation	1,800		1,869	963		0.4	353
Non-Technical	51		1,715	30		—	—
Total		$6,927	36,015		$192	3.7		$155

Asia Pacific (1)
Turn-Key Flex		$4,163	23,300		$179	2.4		$146
Total		$4,163	23,300		$179	2.4		$146

Interconnection		$7,610	N/A	N/A		N/A	N/A

Grand Total		$69,163	488,449		$126	41.7		$121

Note: Totals may not foot due to rounding differences.

(1) Based on quarterly average exchange rates during the three months ended September 30, 2018.

Investment Activity

During the third quarter of 2018, Digital Realty closed on the sale of 360 Spear Street, a 155,000 square foot data center in San Francisco, California, for $92 million. The facility was 39% leased and was expected to generate cash net operating income of approximately $2 million in 2018, representing a nominal exit cap rate of 1.9%. The sale generated net proceeds of $91 million, and Digital Realty recognized a gain on the sale of approximately $27 million in the third quarter of 2018.

Likewise during the third quarter of 2018, Digital Realty acquired three separate sites in Manassas, Virginia, Sterling, Virginia and Sydney, Australia, totaling 51.5 acres for a combined investment of $40 million, or approximately $773,000 per acre. The three sites are expected to support the development of approximately 138 megawatts of critical power. Digital Realty also entered into an agreement to acquire 424 acres of undeveloped land in Loudoun County, Virginia for a purchase price of $236.5 million, or approximately $558,000 per acre. The site is adjacent to Washington Dulles International Airport and located near bulk transmission lines as well as a major fiber path. The site is also located less than four miles from Digital Realty's existing data center campuses in Ashburn, Virginia. Commencement of development on these various land parcels will be subject to market demand, and delivery will be phased to meet future growth requirements upon build-out and lease-up of the company's existing campuses in Northern Virginia and Sydney, Australia.

Likewise during the third quarter of 2018, Digital Realty entered into a definitive agreement to acquire Ascenty, the leading data center provider in Brazil, from private equity firm Great Hill Partners in a transaction valued at approximately $1.8 billion. Digital Realty separately entered into an independent bilateral equity commitment letter with Brookfield Infrastructure, an affiliate of Brookfield Asset Management, one of the largest owners and operators of infrastructure assets globally, under which Brookfield has committed to fund half of the required initial equity investment, currently estimated to be approximately $613 million, excluding Brookfield’s share of the transaction costs, in exchange for 49% of the total equity interests in a joint venture entity expected to ultimately own Ascenty. The transaction is subject to customary closing conditions and is expected to close in the fourth quarter of 2018.

Balance Sheet

Digital Realty had approximately $9.2 billion of total debt outstanding as of September 30, 2018, comprised of $9.1 billion of unsecured debt and approximately $0.1 billion of secured debt. At the end of the third quarter of 2018, net debt-to-adjusted EBITDA was 5.2x, debt-plus-preferred-to-total enterprise value was 30.2% and fixed charge coverage was 4.1x.

During the third quarter, Digital Realty executed an offering of 9,775,000 shares of common stock (including 1,275,000 shares from the exercise in full of the underwriters' over-allotment option) at a price of $113.00 per share, subject to forward sale agreements. The company expects to receive net proceeds of approximately $1.1 billion (net of fees and estimated expenses) upon full physical settlement of the forward sale agreements, expected to be no later than September 27, 2019.

Subsequent to quarter-end, Digital Realty closed a £400 million pound sterling-denominated bond offering of 12-year senior unsecured notes at 3.750% per annum.

Likewise subsequent to quarter-end, Digital Realty completed the refinancing of its global credit facilities. The combined facilities total $3.3 billion, comprised of a $2.35 billion global revolving credit facility and approximately $916 million of multi-currency term loans. The company



Digital Realty Trust
Earnings Release		Third Quarter 2018

also completed a five-year, ¥33.3 billion (approximately $300 million) Japanese yen-denominated revolving credit facility. In conjunction with the refinancing, pricing for the global revolving credit facility was tightened by 10 basis points at the company's BBB / Baa2 senior unsecured debt rating, the maturity date was extended by three years and total availability was expanded by $350 million. The refinancing provides funds for acquisitions, development, debt repayment, working capital and general corporate purposes.

2018 Outlook

Digital Realty reiterated its 2018 core FFO per share outlook of $6.55 - $6.65. The assumptions underlying this guidance are summarized in the following table.



	As of	As of	As of	As of	As of
Top-Line and Cost Structure	January 8, 2018	February 15, 2018	April 26, 2018	July 26, 2018	October 25, 2018
2018 total revenue	$3.0 - $3.2 billion	$3.0 - $3.2 billion	$3.0 - $3.2 billion	$3.0 - $3.2 billion	$3.0 - $3.2 billion
2018 net non-cash rent adjustments (1)	($5 - $15 million)	($5 - $15 million)	($5 - $15 million)	($5 - $15 million)	($5 - $15 million)
2018 Adjusted EBITDA margin	58.0% - 60.0%	58.0% - 60.0%	58.0% - 60.0%	58.0% - 60.0%	58.0% - 60.0%
2018 G&A margin	5.5% - 6.5%	5.5% - 6.5%	5.5% - 6.5%	5.5% - 6.5%	5.5% - 6.5%

Internal Growth
Rental rates on renewal leases
Cash basis	Slightly negative	Slightly negative	Slightly negative	Slightly negative	Slightly negative
GAAP basis	Up mid-single-digits	Up mid-single-digits	Up mid-single-digits	Up mid-single-digits	Up mid-single-digits
Year-end portfolio occupancy	+/- 50 bps	+/- 50 bps	+/- 50 bps	+/- 50 bps	+/- 50 bps
"Same-capital" cash NOI growth (2)	0% - 3.0%	0% - 3.0%	1.0% - 3.0%	1.0% - 3.0%	1.0% - 3.0%

Foreign Exchange Rates
U.S. Dollar / Pound Sterling	$1.28 - $1.32	$1.28 - $1.32	$1.35 - $1.40	$1.30 - $1.35	$1.30 - $1.35
U.S. Dollar / Euro	$1.10 - $1.20	$1.10 - $1.20	$1.18 - $1.22	$1.15 - $1.20	$1.15 - $1.20

External Growth
Dispositions
Dollar volume	$0 - $200 million	$88 - $200 million	$187 - $300 million	$199 - $300 million	$292 million
Cap rate	0.0% - 10.0%	0.0% - 10.0%	0.0% - 10.0%	0.0% - 10.0%	0.0% - 10.0%
Development
CapEx	$0.9 - $1.1 billion	$0.9 - $1.1 billion	$0.9 - $1.1 billion	$1.0 - $1.2 billion	$1.2 - $1.4 billion
Average stabilized yields	10.0% - 12.0%	10.0% - 12.0%	10.0% - 12.0%	10.0% - 12.0%	10.0% - 12.0%
Enhancements and other non-recurring CapEx (3)	$25 - $30 million	$25 - $30 million	$25 - $30 million	$25 - $30 million	$25 - $30 million
Recurring CapEx + capitalized leasing costs (4)	$160 - $170 million	$160 - $170 million	$160 - $170 million	$160 - $170 million	$160 - $170 million

Balance Sheet
Long-term debt issuance
Dollar amount	$0 - $500 million	$0 - $500 million	$0 - $500 million	$650 million - $1 billion	$1.2 - $1.8 billion
Pricing	3.25% - 4.25%	3.25% - 4.25%	3.25% - 4.25%	3.25% - 4.50%	3.25% - 4.50%
Timing	Mid-to-late 2018	Mid-to-late 2018	Mid-to-late 2018	Mid-to-late 2018	Mid-to-late 2018


Net income per diluted share	$1.50 - $1.55	$1.50 - $1.55	$1.55 - $1.55	$1.55 - $1.60	$1.55 - $1.60
Real estate depreciation and (gain)/loss on sale	$4.90 - $4.95	$4.90 - $4.95	$4.90 - $4.95	$4.95 - $4.95	$4.95 - $4.95
Funds From Operations / share (NAREIT-Defined)	$6.40 - $6.50	$6.40 - $6.50	$6.45 - $6.50	$6.50 - $6.55	$6.50 - $6.55
Non-core expenses and revenue streams	$0.05 - $0.10	$0.05 - $0.10	$0.05 - $0.10	$0.05 - $0.10	$0.05 - $0.10
Core Funds From Operations / share	$6.45 - $6.60	$6.45 - $6.60	$6.50 - $6.60	$6.55 - $6.65	$6.55 - $6.65


(1)	Net non-cash rent adjustments represent 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).


(2)	The "same-capital" pool includes buildings owned as of December 31, 2016 with less than 5% of the total rentable square feet under development. It also excludes buildings that were undergoing, or were expected to undergo, development activities in 2017-2018, buildings classified as held for sale, and buildings sold or contributed to joint ventures for all periods presented.


(3)	Other non-recurring CapEx represents costs incurred to enhance the capacity or marketability of operating data centers, such as network fiber initiatives and software development costs.


(4)	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.



Digital Realty Trust
Earnings Release		Third Quarter 2018

Non-GAAP Financial Measures

This press release contains non-GAAP financial measures, including FFO, core FFO, and Adjusted EBITDA. A reconciliation from U.S. GAAP net income available to common stockholders to FFO, a reconciliation from FFO to core FFO, and definitions of FFO, and core FFO are included as an attachment to this document. A reconciliation from U.S. GAAP net income available to common stockholders to Adjusted EBITDA, a definition of Adjusted EBITDA and definitions of net debt-to-Adjusted EBITDA, debt-plus-preferred-to-total enterprise value, cash NOI, and fixed charge coverage ratio are included as an attachment to this document.

Investor Conference Call

Prior to Digital Realty’s investor conference call at 5:30 p.m. EDT / 2:30 p.m. PDT on October 25, 2018, a presentation will be posted to the Investors section of the company’s website at http://investor.digitalrealty.com. The presentation is designed to accompany the discussion of the company's third quarter 2018 financial results and operating performance. The conference call will feature Chief Executive Officer A. William Stein and Chief Financial Officer Andrew P. Power.

To participate in the live call, investors are invited to dial (888) 317-6003 (for domestic callers) or (412) 317-6061 (for international callers) and reference the conference ID# 0813657 at least five minutes prior to start time. A live webcast of the call will be available via the Investors section of Digital Realty’s website at http://investor.digitalrealty.com.

Telephone and webcast replays will be available after the call until November 27, 2018. The telephone replay can be accessed by dialing (877) 344-7529 (for domestic callers) or (412) 317-0088 (for international callers) and providing the conference ID# 10124567. The webcast replay can be accessed on Digital Realty’s website.

About Digital Realty

Digital Realty supports the data center, colocation and interconnection strategies of more than 2,300 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 cloud and information technology services, communications and social networking to financial services, manufacturing, energy, healthcare, and consumer products.

Contact Information

Andrew P. Power

Chief Financial Officer

Digital Realty

(415) 738-6500

John J. Stewart / Maria S. Lukens

Investor Relations

Digital Realty

(415) 738-6500



Consolidated Quarterly Statements of Operations		Financial Supplement
Unaudited and in Thousands, Except Share and Per Share Data		Third Quarter 2018



	Three Months Ended															Nine Months Ended
	30-Sep-18			30-Jun-18			31-Mar-18			31-Dec-17			30-Sep-17			30-Sep-18			30-Sep-17
Rental revenues		$541,073			$534,556			$530,925			$517,356			$440,591			$1,606,554			$1,257,293
Tenant reimbursements - Utilities	105,822			100,084			98,576			97,657			78,134			304,482			209,939
Tenant reimbursements - Other	57,282			55,639			51,503			54,324			29,479			164,424			78,304
Interconnection & other	62,760			61,770			61,373			60,275			59,851			185,903			175,377
Fee income	1,469			2,343			1,133			1,386			1,662			4,945			4,986
Other	518			527			858			447			208			1,903			584
Total Operating Revenues	$768,924			$754,919			$744,368			$731,445			$609,925			$2,268,211			$1,726,483

Utilities		$127,239			$115,470			$112,230			$112,055			$95,619			$354,939			$255,556
Rental property operating	118,732			114,852			113,410			113,445			94,442			346,994			278,560
Property taxes	34,871			27,284			35,263			36,348			32,586			97,418			87,666
Insurance	2,653			2,606			3,731			3,223			2,590			8,990			7,758
Depreciation & amortization	293,957			298,788			294,789			287,973			199,914			887,534			554,491
General & administration	40,997			44,277			36,289			44,311			41,477			121,563			112,399
Severance, equity acceleration, and legal expenses	645			1,822			234			1,209			2,288			2,701			3,522
Transaction and integration expenses	9,626			5,606			4,178			15,681			42,809			19,410			60,367
Impairment of investments in real estate	—			—			—			—			28,992			—			28,992
Other expenses	1,139			152			431			2			3,051			1,722			3,075
Total Operating Expenses	$629,859			$610,857			$600,555			$614,247			$543,768			$1,841,271			$1,392,386

Operating Income	$139,065			$144,062			$143,813			$117,198			$66,157			$426,940			$334,097

Equity in earnings of unconsolidated joint venture		$8,886			$7,438			$7,410			$5,924			$5,880			$23,734			$19,592
Gain on real estate transactions	26,577			14,192			39,273			30,746			9,751			80,042			9,609
Interest and other income	(981		)	3,398			(42		)	324			2,813			2,375			3,331
Interest (expense)	(80,851		)	(78,810		)	(76,985		)	(73,989		)	(71,621		)	(236,646		)	(184,653		)
Tax (expense)	(2,432		)	(2,121		)	(3,374		)	(545		)	(2,494		)	(7,927		)	(7,356		)
Gain from early extinguishment of debt	—			—			—			—			1,990			—			1,990
Net Income	$90,264			$88,159			$110,095			$79,658			$12,476			$288,518			$176,610

Net (income) attributable to noncontrolling interests	(2,667		)	(2,696		)	(3,468		)	(6,023		)	(40		)	(8,831		)	(1,985		)
Net Income Attributable to Digital Realty Trust, Inc.	$87,597			$85,463			$106,627			$73,635			$12,436			$279,687			$174,625

Preferred stock dividends, including undeclared dividends	(20,329		)	(20,329		)	(20,329		)	(20,329		)	(16,575		)	(60,987		)	(48,473		)
Issuance costs associated with redeemed preferred stock	—			—			—			—			—			—			(6,309		)

Net Income (Loss) Available to Common Stockholders	$67,268			$65,134			$86,298			$53,306			($4,139)			$218,700			$119,843

Weighted-average shares outstanding - basic	206,118,472			205,956,005			205,714,173			205,448,689			170,194,254			205,931,031			163,481,306
Weighted-average shares outstanding - diluted	206,766,256			206,563,079			206,507,476			206,185,084			170,194,254			206,555,627			164,371,096
Weighted-average fully diluted shares and units	214,937,168			214,895,273			214,802,763			214,424,363			174,169,511			214,824,010			166,937,862

Net income (loss) per share - basic	$0.33			$0.32			$0.42			$0.26			($0.02)			$1.06			$0.73
Net income (loss) per share - diluted	$0.33			$0.32			$0.42			$0.26			($0.02)			$1.06			$0.73



Funds From Operations and Core Funds From Operations		Financial Supplement
Unaudited and in Thousands, Except Per Share Data		Third Quarter 2018



Reconciliation of Net Income to Funds From Operations (FFO)	Three Months Ended															Nine Months Ended
	30-Sep-18			30-Jun-18			31-Mar-18			31-Dec-17			30-Sep-17			30-Sep-18			30-Sep-17

Net Income (Loss) Available to Common Stockholders		$67,268			$65,134			$86,298			$53,306			($4,139	)		$218,700			$119,843
Adjustments:
Non-controlling interests in operating partnership	2,700			2,700			3,480			2,138			(79		)	8,880			1,632
Real estate related depreciation & amortization (1)	290,757			295,750			291,686			284,924			196,871			878,193			545,328
Unconsolidated JV real estate related depreciation & amortization	3,775			3,722			3,476			3,323			2,732			10,973			8,243
(Gain) on real estate transactions	(26,577		)	(14,192		)	(39,273		)	(30,746		)	(9,751		)	(80,042		)	(9,609		)
Non-controlling interests share of gain on sale of property	—			—			—			3,900			—			—			—
Impairment of investments in real estate	—			—			—			—			28,992			—			28,992
Funds From Operations		$337,923			$353,114			$345,667			$316,845			$214,626			$1,036,704			$694,429

Funds From Operations - diluted		$337,923			$353,114			$345,667			$316,845			$214,626			$1,036,704			$694,429

Weighted-average shares and units outstanding - basic	214,289			214,288			214,009			213,688			173,461			214,199			166,048
Weighted-average shares and units outstanding - diluted (2)	214,937			214,895			214,803			214,424			174,170			214,824			166,938

Funds From Operations per share - basic	$1.58			$1.65			$1.62			$1.48			$1.24			$4.84			$4.18

Funds From Operations per share - diluted (2)	$1.57			$1.64			$1.61			$1.48			$1.23			$4.83			$4.16




	Three Months Ended															Nine Months Ended
Reconciliation of FFO to Core FFO	30-Sep-18			30-Jun-18			31-Mar-18			31-Dec-17			30-Sep-17			30-Sep-18			30-Sep-17

Funds From Operations - diluted		$337,923			$353,114			$345,667			$316,845			$214,626			$1,036,704			$694,429
Adjustments:
Termination fees and other non-core revenues (3)	(518		)	(3,663		)	(858		)	(447		)	(208		)	(5,039		)	(584)
Transaction and integration expenses	9,626			5,606			4,178			15,681			42,809			19,410			60,367
Gain from early extinguishment of debt	—			—			—			—			(1,990		)	—			(1,990		)
Issuance costs associated with redeemed preferred stock	—			—			—			—			—			—			6,309
Equity in earnings adjustment for non-core items	—			—			—			—			—			—			(3,285		)
Severance, equity acceleration, and legal expenses (4)	645			1,822			234			1,209			2,288			2,701			3,522
Bridge facility fees (5)	—			—			—			—			3,182			—			3,182
Other non-core expense adjustments	2,269			152			431			2			3,051			2,852			3,075
Core Funds From Operations - diluted		$349,945			$357,031			$349,652			$333,290			$263,758			$1,056,628			$765,025

Weighted-average shares and units outstanding - diluted (2)	214,937			214,895			214,803			214,424			174,170			214,824			166,938

Core Funds From Operations per share - diluted (2)	$1.63			$1.66			$1.63			$1.55			$1.51			$4.92			$4.58



(1) Real Estate Related Depreciation & Amortization:	Three Months Ended															Nine Months Ended
	30-Sep-18			30-Jun-18			31-Mar-18			31-Dec-17			30-Sep-17			30-Sep-18			30-Sep-17

Depreciation & amortization per income statement		$293,957			$298,788			$294,789			$287,973			$199,914			$887,534			$554,491
Non-real estate depreciation	(3,200		)	(3,038		)	(3,103		)	(3,049		)	(3,043		)	(9,341		)	(9,163		)

Real Estate Related Depreciation & Amortization		$290,757			$295,750			$291,686			$284,924			$196,871			$878,193			$545,328

(2)

For all periods presented, we have excluded the effect of dilutive series C, series F, series G, series H, series I and series J preferred stock, as applicable, that may be converted into common stock upon the occurrence of specified change in control transactions as described in the articles supplementary governing the series C, series F, series G, series H, series I, and series J preferred stock, as applicable, which we consider highly improbable. See above for calculations of diluted FFO available to common stockholders and unitholders and the share count detail section of the reconciliation of core FFO to AFFO for calculations of weighted average common stock and units outstanding.


(3)	Includes lease termination fees and certain other adjustments that are not core to our business.


(4)	Relates to severance and other charges related to the departure of company executives and integration-related severance.


(5)	Bridge facility fees are included in interest expense.



Adjusted Funds From Operations (AFFO)		Financial Supplement
Unaudited and in Thousands, Except Per Share Data		Third Quarter 2018



	Three Months Ended															Nine Months Ended
Reconciliation of Core FFO to AFFO	30-Sep-18			30-Jun-18			31-Mar-18			31-Dec-17			30-Sep-17			30-Sep-18			30-Sep-17

Core FFO available to common stockholders and unitholders		$349,945			$357,031			$349,652			$333,290			$263,758			$1,056,628			$765,025
Adjustments:
Non-real estate depreciation	3,200			3,038			3,103			3,049			3,043			9,341			9,163
Amortization of deferred financing costs	3,066			2,953			3,060			3,092			2,611			9,079			7,572
Amortization of debt discount/premium	902			882			875			858			816			2,659			2,226
Non-cash stock-based compensation expense	5,823			8,419			5,497			3,923			4,636			19,741			13,977
Straight-line rental revenue	(10,511		)	(8,489		)	(10,266		)	(8,705		)	(1,692		)	(29,266		)	(7,860		)
Straight-line rental expense	2,482			2,669			2,547			(635		)	4,212			7,698			12,742
Above- and below-market rent amortization	6,552			6,794			6,666			6,562			(873		)	20,012			(4,792		)
Deferred non-cash tax expense	(1,783		)	(1,137		)	(216		)	(1,100		)	284			(3,135		)	(1,812		)
Capitalized leasing compensation (1)	(2,606		)	(2,825		)	(2,998		)	(3,567		)	(2,945		)	(8,429		)	(8,319		)
Recurring capital expenditures (2)	(22,500		)	(34,447		)	(27,328		)	(45,298		)	(34,664		)	(84,275		)	(90,992		)
Capitalized internal leasing commissions (1)	(2,547		)	(2,822		)	(2,049		)	(1,217		)	(1,225		)	(7,418		)	(4,073		)

AFFO available to common stockholders and unitholders (3)		$332,023			$332,066			$328,543			$290,252			$237,961			$992,635			$692,857

Weighted-average shares and units outstanding - basic	214,289			214,288			214,009			213,688			173,461			214,199			166,048
Weighted-average shares and units outstanding - diluted (4)	214,937			214,895			214,803			214,424			174,170			214,824			166,938

AFFO per share - diluted (4)		$1.54			$1.55			$1.53			$1.35			$1.37			$4.62			$4.15

Dividends per share and common unit		$1.01			$1.01			$1.01			$0.93			$0.93			$3.03			$2.79

Diluted AFFO Payout Ratio	65.4		%	65.4		%	66.0		%	68.7		%	68.1		%	65.6		%	67.2		%




	Three Months Ended					Nine Months Ended
Share Count Detail	30-Sep-18	30-Jun-18	31-Mar-18	31-Dec-17	30-Sep-17	30-Sep-18	30-Sep-17

Weighted Average Common Stock and Units Outstanding	214,289	214,288	214,009	213,688	173,461	214,199	166,048
Add: Effect of dilutive securities (excludes 5.50% debentures)	648	607	794	736	709	625	890

Weighted Avg. Common Stock and Units Outstanding - diluted	214,937	214,895	214,803	214,424	174,170	214,824	166,938


(1)	Includes only second-generation leasing costs.

(2)

Recurring capital expenditures represent non-incremental building improvements required to maintain current revenues, including second-generation tenant improvements and external leasing commissions. Recurring capital expenditures do not include acquisition costs contemplated when underwriting the purchase of a building, costs which are incurred to bring a building up to Digital Realty's operating standards, or internal leasing commissions.


(3)	For a definition and discussion of AFFO, see the definitions section. For a reconciliation of net income available to common stockholders to FFO and core FFO, see above.

(4)

For all periods presented, we have excluded the effect of dilutive series C, series F, series G, series H, series I and series J preferred stock, as applicable, that may be converted into common stock upon the occurrence of specified change in control transactions as described in the articles supplementary governing the series C, series F, series G, series H, series I, and series J preferred stock, as applicable, which we consider highly improbable. See above for calculations of diluted FFO available to common stockholders and unitholders and for calculations of weighted average common stock and units outstanding.



Consolidated Balance Sheets		Financial Supplement
Unaudited and in Thousands, Except Share and Per Share Data		Third Quarter 2018



	30-Sep-18			30-Jun-18			31-Mar-18			31-Dec-17			30-Sep-17
Assets
Investments in real estate:
Real estate		$16,062,402			$15,969,938			$15,654,932			$15,163,846			$14,693,479
Construction in progress	1,464,010			1,323,998			1,470,065			1,399,684			1,405,740
Land held for future development	284,962			261,368			236,415			352,406			330,101
Investments in real estate		$17,811,374			$17,555,304			$17,361,412			$16,915,936			$16,429,320
Accumulated depreciation and amortization	(3,755,596		)	(3,588,124		)	(3,439,050		)	(3,238,227		)	(3,075,294		)
Net Investments in Properties		$14,055,778			$13,967,180			$13,922,362			$13,677,709			$13,354,026
Investment in unconsolidated joint ventures	169,919			167,306			167,564			163,477			106,374
Net Investments in Real Estate		$14,225,697			$14,134,486			$14,089,926			$13,841,186			$13,460,400

Cash and cash equivalents		$46,242			$17,589			$22,370			$51			$192,578
Accounts and other receivables (1)	308,709			282,287			309,328			276,347			258,490
Deferred rent	454,412			445,766			442,887			430,026			420,348
Acquired in-place lease value, deferred leasing costs and other real estate intangibles, net	2,734,158			2,823,275			2,928,566			2,998,806			3,052,277
Acquired above-market leases, net	135,127			150,084			165,568			184,375

Digital Realty Trust, Inc. (DLR) SEC Filing 8-K Material Event for the period ending Thursday, October 25, 2018

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