Data center REIT Digital Realty Trust, Inc.’s (DLR - Free Report) first-quarter 2018 funds from operations (FFO) per share of $1.61 outpaced the Zacks Consensus Estimate of $1.58. The figure also came in higher than the year-ago quarter tally of $1.50.
Core FFO per share came in at $1.63 in the first quarter, up from $1.52 reported in the prior-year quarter. Results were supported by growth in revenues.
The company reported revenues of $744.4 million for the first quarter, which also surpassed the Zacks Consensus Estimate of $741.8 million. The revenue figure also marked an impressive 35.2% year-over-year growth. Further, the company raised its 2018 core FFO per share outlook.
Signed total bookings during the reported quarter are estimated to generate $61 million of annualized GAAP rental revenues. This would include a $7-million contribution from interconnection. Notably, the weighted-average lag between leases signed during first-quarter 2018 and the contractual commencement date was six months.
Moreover, the company signed renewal leases, marking $57 million of annualized GAAP rental revenues. Rental rates on renewal leases signed during the reported quarter rolled up 3.9% on a cash basis and ascended 9.7% on a GAAP basis.
Notable Portfolio Activity
During first-quarter 2018, Digital Realty closed on the sale of 34551 Ardenwood Boulevard — a 323,000-square-foot technology manufacturing property — in Fremont, CA, for $73 million, as well as 200 Quannapowitt Parkway — a considerably vacant 211,000-square-foot data-center redevelopment project — in Wakefield, MA, for $15 million. Furthermore, the company closed on the sale of 3065 Gold Camp Drive and 11085 Sun Center Drive — two data centers aggregating 109,000 square feet — in Rancho Cordova, CA, for $51 million.
Balance Sheet
Digital Realty exited first-quarter 2018 with cash and cash equivalents of around $22.4 million, up from the $0.05 million recorded at the prior-year end.
Additionally, as of Mar 31, 2018, the company had around $9.1 billion of total debt outstanding, of which $9.0 billion was unsecured debt and around $0.1 billion secured debt. Also, as of the same date, its net debt-to-adjusted EBITDA was 5.3x, while fixed charge coverage was 4.3x.
Outlook Raised
Digital Realty raised its 2018 core FFO per share outlook to $6.50-$6.60 from $6.45-$6.60. The Zacks Consensus Estimate for the same, currently pegged at $6.54, lies within this range.
The full-year outlook provided by the company is backed by revenue projections of $3.0-$3.2 billion, year-end portfolio occupancy growth of +/- 50 bps and "same-capital" cash NOI growth of 1-3%.
Our Take
Digital Realty’s better-than-expected performance in the first quarter is impressive. Notably, solid fundamentals of the data-center market offer scope to the company to ride on the growth curve. Additionally, its accretive acquisitions and development efforts augur well for long-term growth. Nevertheless, the company faces cut-throat competition in the industry. It also has a substantial debt burden. Furthermore, rate hike adds to its woes.
Digital Realty currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
We now look forward to the earnings releases of other REITs like Alexandria Real Estate Equities, Inc. (ARE - Free Report) , Essex Property Trust Inc. (ESS - Free Report) and Regency Centers Corporation (REG - Free Report) . Alexandria and Regency Centers are scheduled to release results on Apr 30, while Essex Property is slated to report its numbers on May 2.
Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
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Data center REIT Digital Realty Trust, Inc.’s (DLR - Free Report) first-quarter 2018 funds from operations (FFO) per share of $1.61 outpaced the Zacks Consensus Estimate of $1.58. The figure also came in higher than the year-ago quarter tally of $1.50.
Core FFO per share came in at $1.63 in the first quarter, up from $1.52 reported in the prior-year quarter. Results were supported by growth in revenues.
The company reported revenues of $744.4 million for the first quarter, which also surpassed the Zacks Consensus Estimate of $741.8 million. The revenue figure also marked an impressive 35.2% year-over-year growth. Further, the company raised its 2018 core FFO per share outlook.
Signed total bookings during the reported quarter are estimated to generate $61 million of annualized GAAP rental revenues. This would include a $7-million contribution from interconnection. Notably, the weighted-average lag between leases signed during first-quarter 2018 and the contractual commencement date was six months.
Moreover, the company signed renewal leases, marking $57 million of annualized GAAP rental revenues. Rental rates on renewal leases signed during the reported quarter rolled up 3.9% on a cash basis and ascended 9.7% on a GAAP basis.
Notable Portfolio Activity
During first-quarter 2018, Digital Realty closed on the sale of 34551 Ardenwood Boulevard — a 323,000-square-foot technology manufacturing property — in Fremont, CA, for $73 million, as well as 200 Quannapowitt Parkway — a considerably vacant 211,000-square-foot data-center redevelopment project — in Wakefield, MA, for $15 million. Furthermore, the company closed on the sale of 3065 Gold Camp Drive and 11085 Sun Center Drive — two data centers aggregating 109,000 square feet — in Rancho Cordova, CA, for $51 million.
Balance Sheet
Digital Realty exited first-quarter 2018 with cash and cash equivalents of around $22.4 million, up from the $0.05 million recorded at the prior-year end.
Additionally, as of Mar 31, 2018, the company had around $9.1 billion of total debt outstanding, of which $9.0 billion was unsecured debt and around $0.1 billion secured debt. Also, as of the same date, its net debt-to-adjusted EBITDA was 5.3x, while fixed charge coverage was 4.3x.
Outlook Raised
Digital Realty raised its 2018 core FFO per share outlook to $6.50-$6.60 from $6.45-$6.60. The Zacks Consensus Estimate for the same, currently pegged at $6.54, lies within this range.
The full-year outlook provided by the company is backed by revenue projections of $3.0-$3.2 billion, year-end portfolio occupancy growth of +/- 50 bps and "same-capital" cash NOI growth of 1-3%.
Our Take
Digital Realty’s better-than-expected performance in the first quarter is impressive. Notably, solid fundamentals of the data-center market offer scope to the company to ride on the growth curve. Additionally, its accretive acquisitions and development efforts augur well for long-term growth. Nevertheless, the company faces cut-throat competition in the industry. It also has a substantial debt burden. Furthermore, rate hike adds to its woes.
Digital Realty currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
We now look forward to the earnings releases of other REITs like Alexandria Real Estate Equities, Inc. (ARE - Free Report) , Essex Property Trust Inc. (ESS - Free Report) and Regency Centers Corporation (REG - Free Report) . Alexandria and Regency Centers are scheduled to release results on Apr 30, while Essex Property is slated to report its numbers on May 2.
Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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