Strong Leasing Volume and Market Momentum
Signed $707M of new leases at 100% share ($423M at DLR share) — the second-highest bookings quarter in company history and ~70% higher than the next-highest quarter.
Digital Realty
· DLR
April 23rd, 2026
Summary
- Earnings Call Date:
- 2026-04-23
- Change Since:
- -2.85%
- Next Earnings Date:
- 2026-07-23
Earnings Call Sentiment
PositiveThe call was predominantly positive: management reported record and near-record leasing activity across product categories (including a historic 200 MW hyperscale lease), expanded backlog and a materially enlarged development pipeline, delivered beat-and-raise financial results (core FFO up ~15% and guidance increased to $8.10), and reduced leverage to multi-year lows while building private capital capacity. Key risks and headwinds were acknowledged — elevated operating expenses, supply-chain and energy uncertainties, rising development costs per MW, longer commencement lags for very large deals, and community/permitting challenges — but management articulated specific mitigants (high prelease rates, utility reimbursements/hedges, diversified capital, and differentiated execution capability). Overall, the positive operational and financial momentum materially outweighs the highlighted challenges.
Company Guidance
Digital raised 2026 core FFO per share guidance by $0.10 to $8.10 (the midpoint implies ~9% growth vs. 2025) after a strong Q1 (core FFO $2.04/sh, +15% y/y); management now expects cash renewal spreads of 6.5%–8.5% (up 50 bps), power‑based occupancy to improve 50–100 bps from year‑end 2025, same‑capital cash NOI growth of 4%–5% on a constant‑currency basis, and net development CapEx of $3.5B–$4.0B (midpoint increased by $250M), with $500M–$1.0B of dispositions/JV capital targeted later this year; guidance is supported by a record $1.8B backlog ($1.0B at DLR share) and scheduled lease commencements of $44M in 2026, $247M in 2027 and $242M in 2028+.
Largest Single Lease in Company History
Executed a 200 MW AI inference-oriented hyperscaler lease in Charlotte — the largest megawatt lease ever for the company and a validation of the hub-and-spoke expansion strategy.
Record Zero-to-One Megawatt Plus Interconnection Activity
Zero-to-one MW plus interconnection signings reached a record $98M in the quarter (a >40% increase vs Q1 2025); AI-oriented bookings comprised a record ~21% of this category; 116 new logos added.
Record Backlog and Improved Visibility
Total backlog reached a record $1.8B ($1.0B at DLR share), with $44M of leases commencing this year, $247M in 2027, and $242M in 2028+ — providing multi-year revenue visibility.
Large-scale Development Pipeline Expansion
Development pipeline value scaled to ~$16.5B (up >60% year-over-year); ~1.2 GW under construction (up >50% sequentially), ~61% preleased at an ~11.4% average expected yield.
Financial Outperformance and Guidance Raise
Reported core FFO of $2.04 per share in Q1 (up ~15% YoY) and raised 2026 core FFO per share guidance by $0.10 to $8.10 (midpoint implies ~9% growth vs 2025).
Strong Rental and NOI Trends
Reported revenue and adjusted EBITDA growth in strong double digits; same-capital cash NOI up 7.9% YoY (2.5% on a constant currency basis) and interconnection bookings up 24% YoY to $186M.
Execution on Hyperscale Supply and Capital Strategy
Demonstrated ability to source, position, and lease hyperscale capacity (ability to deliver hyperscale IT capacity in <18 months); closed a $3.25B U.S. hyperscale fund and maintain material private capital / JV dry powder (~$8B+ JV and incremental capacity).
Reduced Leverage and Strong Balance Sheet Position
Debt to adjusted EBITDA fell to a multi-year low of 4.7x; AFFO payout ratio declined to ~64%; invested $910M of development CapEx (net of partners) while preserving liquidity for growth.
Geographic and Connectivity Expansion
Expanded global connectivity footprint with strategic market entries/acquisitions (Sofia/Bulgaria via Telepoint, land in Portugal and Milan, entry into Cyberjaya/Malaysia) supporting latency-sensitive and interconnection-heavy workloads.
Operator
Good afternoon, and welcome to the Digital Realty Trust, Inc. first quarter 2026 earnings call. Please note this event is being recorded. During today's presentation, all parties will be in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. Callers will be limited to one question, and we will aim to conclude at the top of the hour. I will now turn the call over to Jordan Sadler, Digital Realty Trust, Inc.'s Senior Vice President of Public and Private Investor Relations. Jordan, please go ahead.
Jordan Sadler
Thank you, operator, and welcome, everyone, to Digital Realty Trust, Inc.'s first quarter 2026 earnings conference call. Joining me on today's call are President and CEO, Andrew P. Power, and CFO, Matthew R. Mercier. Chief Investment Officer, Gregory S. Wright, Chief Technology Officer, Christopher Sharp, and Chief Revenue Officer, Colin McLean, are also on the call and will be available for Q&A. Management will be making forward-looking statements, including guidance and underlying assumptions on today's call. Forward-looking statements are based on expectations that involve risks and uncertainties that could cause actual results to differ materially.
For further discussion of risks related to our business, see our 10-Ks and subsequent filings with the SEC. This call will contain certain non-GAAP financial information. Reconciliations to the most directly comparable GAAP measure are included in the supplemental package furnished to the SEC and available on our website. Before I turn the call over to Andrew, let me offer a few key takeaways...
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