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Digital Realty's (DLR) Q4 FFO & Revenues Top Estimates
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Digital Realty Trust, Inc. (DLR - Free Report) delivered fourth-quarter 2020 core funds from operations (FFO) per share of $1.61, beating the Zacks Consensus Estimate of $1.52. Results highlight better-than-anticipated revenue numbers. However, the reported figure marginally fell short of the year-ago quarter’s $1.62.
The company registered operating revenues of $1.062 billion in the fourth quarter, marking a 34.9% year-over-year jump. The revenue figure also outpaced the Zacks Consensus Estimate of $1.026 billion.
Decent leasing activities and strong signed total bookings aided results. Digital transformation is driving steady demand.
According to Digital Realty’s CEO A. William Stein, “Our book of business outside the Americas has expanded meaningfully, while our colocation and interconnection business represents a rapidly growing share as we continue to gain traction with enterprise customers as well as service providers.”
For 2020, the company reported core FFO per share of $6.22, down from the prior year’s $6.65. Total operating revenues of $3.9 billion increased 21.6% year on year.
Quarter in Detail
Signed total bookings during the reported quarter are estimated to generate $130 million of annualized GAAP rental revenues. This is expected to include a $12-million contribution from interconnection. Notably, the weighted-average lag between leases signed during the fourth quarter and the contractual commencement date was nine months.
Digital Realty signed renewal leases, marking $156 million of annualized GAAP rental revenues during the December-end quarter. Rental rates on renewal leases signed during the quarter rolled up 1% on a cash basis and 3.4% on a GAAP basis.
Also, the company generated fourth-quarter adjusted EBITDA of $578 million, up 2% sequentially and 22% year on year.
Portfolio Activity
During the October-December quarter, Digital Realty closed on the prior-announced acquisition of Lamda Hellix, the largest carrier-neutral colocation and inter-connection provider in Greece. Moreover, the company sealed the previously-announced buyout of the Neckerman expansion parcel within roughly a kilometer of the Hanauer Landstraße campus. This was made for €177 million, or approximately $217 million.
The data-center REIT also acquired a building in Paris, France, that was earlier subject to a leasehold for a total of €6 million, or around $7 million. In addition to this, the company sold a vacant building in Amsterdam, the Netherlands for €6 million, or roughly $7 million.
Balance Sheet
Digital Realty exited 2020 with cash and cash equivalents of $108.5 million, down from the $971.3 million recorded at third-quarter end. Additionally, as of Dec 31, 2020, the data-center REIT had $13.3 billion of total debt outstanding, of which $13.2 billion was unsecured debt and $0.2 billion was secured debt. Also, as of the same date, its net debt-to-adjusted EBITDA was 6.1X, while fixed charge coverage was 5.1X.
Guidance
Digital Realty estimates 2021 core FFO per share in the range of $6.40-$6.50. The Zacks Consensus Estimate for the same is currently pegged at $6.48.
It projects full-year total revenues of $4.25-$4.35 billion, adjusted EBITDA of $2.3-$2.35 billion, year-end portfolio occupancy of 84-85% and same-capital cash NOI to be down 2.5-3.5%.
We, now, look forward to the earnings results of other REITs like Vornado Realty Trust (VNO - Free Report) , Ventas Inc. (VTR - Free Report) and Host Hotels & Resorts, Inc. (HST - Free Report) , scheduled for release next week.
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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Digital Realty's (DLR) Q4 FFO & Revenues Top Estimates
Digital Realty Trust, Inc. (DLR - Free Report) delivered fourth-quarter 2020 core funds from operations (FFO) per share of $1.61, beating the Zacks Consensus Estimate of $1.52. Results highlight better-than-anticipated revenue numbers. However, the reported figure marginally fell short of the year-ago quarter’s $1.62.
The company registered operating revenues of $1.062 billion in the fourth quarter, marking a 34.9% year-over-year jump. The revenue figure also outpaced the Zacks Consensus Estimate of $1.026 billion.
Decent leasing activities and strong signed total bookings aided results. Digital transformation is driving steady demand.
According to Digital Realty’s CEO A. William Stein, “Our book of business outside the Americas has expanded meaningfully, while our colocation and interconnection business represents a rapidly growing share as we continue to gain traction with enterprise customers as well as service providers.”
For 2020, the company reported core FFO per share of $6.22, down from the prior year’s $6.65. Total operating revenues of $3.9 billion increased 21.6% year on year.
Quarter in Detail
Signed total bookings during the reported quarter are estimated to generate $130 million of annualized GAAP rental revenues. This is expected to include a $12-million contribution from interconnection. Notably, the weighted-average lag between leases signed during the fourth quarter and the contractual commencement date was nine months.
Digital Realty signed renewal leases, marking $156 million of annualized GAAP rental revenues during the December-end quarter. Rental rates on renewal leases signed during the quarter rolled up 1% on a cash basis and 3.4% on a GAAP basis.
Also, the company generated fourth-quarter adjusted EBITDA of $578 million, up 2% sequentially and 22% year on year.
Portfolio Activity
During the October-December quarter, Digital Realty closed on the prior-announced acquisition of Lamda Hellix, the largest carrier-neutral colocation and inter-connection provider in Greece. Moreover, the company sealed the previously-announced buyout of the Neckerman expansion parcel within roughly a kilometer of the Hanauer Landstraße campus. This was made for €177 million, or approximately $217 million.
The data-center REIT also acquired a building in Paris, France, that was earlier subject to a leasehold for a total of €6 million, or around $7 million. In addition to this, the company sold a vacant building in Amsterdam, the Netherlands for €6 million, or roughly $7 million.
Balance Sheet
Digital Realty exited 2020 with cash and cash equivalents of $108.5 million, down from the $971.3 million recorded at third-quarter end. Additionally, as of Dec 31, 2020, the data-center REIT had $13.3 billion of total debt outstanding, of which $13.2 billion was unsecured debt and $0.2 billion was secured debt. Also, as of the same date, its net debt-to-adjusted EBITDA was 6.1X, while fixed charge coverage was 5.1X.
Guidance
Digital Realty estimates 2021 core FFO per share in the range of $6.40-$6.50. The Zacks Consensus Estimate for the same is currently pegged at $6.48.
It projects full-year total revenues of $4.25-$4.35 billion, adjusted EBITDA of $2.3-$2.35 billion, year-end portfolio occupancy of 84-85% and same-capital cash NOI to be down 2.5-3.5%.
Currently, Digital Realty carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Digital Realty Trust, Inc. Price, Consensus and EPS Surprise
Digital Realty Trust, Inc. price-consensus-eps-surprise-chart | Digital Realty Trust, Inc. Quote
We, now, look forward to the earnings results of other REITs like Vornado Realty Trust (VNO - Free Report) , Ventas Inc. (VTR - Free Report) and Host Hotels & Resorts, Inc. (HST - Free Report) , scheduled for release next week.
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.
Zacks Top 10 Stocks for 2021
In addition to the stocks discussed above, would you like to know about our 10 best buy-and-hold tickers for the entirety of 2021?
Last year's 2020Zacks Top 10 Stocks portfolio returned gains as high as +386.8%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
Access Zacks Top 10 Stocks for 2021 today >>