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Total operating revenues were $1.635 billion, up 16.2% from $1.408 billion in the year-ago quarter. Revenues also topped the consensus mark of $1.609 billion by 1.6%, supported by strong leasing activity and healthy commencements from a growing backlog.
DLR’s Leasing Strength Drives a Strong Quarter
Signed total bookings in the quarter are expected to generate $707 million of annualized GAAP base rent at 100% share, with $423 million attributable to Digital Realty’s share. Management pointed to record demand in smaller deployments and interconnection, alongside the largest hyperscale lease in company history.
Within bookings at DLR share, more than 1 megawatt activity accounted for $324.5 million of annualized GAAP base rent, while the 0-1 megawatt category contributed $78.9 million, and interconnection added $18.6 million. Pricing for larger deployments remained healthy, with management noting average pricing of $181 per kilowatt for greater than 1 megawatt deals.
DLR’s Backlog Improves Long-Term Visibility
Digital Realty ended the first quarter of 2026 with a record total backlog of $1.8 billion of annualized GAAP base rent at 100% share, or $1.0 billion at the company’s share. Backlog growth was driven by new signings outpacing commencements, which totaled $204 million in the quarter.
The weighted average lag between the new leases signed in the first quarter and the contractual commencement date was 19 months. Management highlighted that the backlog represents 23% of in-place annualized rent, helping extend growth visibility into 2027 and 2028.
Renewal activity also reflected a firm pricing environment. Digital Realty signed renewals representing $193 million of annualized cash rental revenues, with rental rates on renewal leases rising 5% on a cash basis and 6.3% on a GAAP basis during the quarter.
DLR’s Profitability and Leverage Remain Supportive
Adjusted EBITDA increased to $920 million in the first quarter of 2026, up 16% year over year, reflecting double-digit revenue growth and continued operating momentum.
On operations, portfolio occupancy ended the quarter at 90.1%. Development activity remained elevated, with the company spending $910 million on development capital expenditures in the quarter (net of partner contributions) and reporting 1.2 gigawatts under construction at quarter-end.
Balance sheet metrics improved as well. Digital Realty reported approximately $18.14 billion of total debt outstanding at quarter-end and reduced net debt to Adjusted EBITDA to 4.7X, down from 4.9X as of Dec. 31, 2025, supported by EBITDA growth and retained cash flow.
DLR Expands Land Bank and Connectivity Footprint
DLR kept investing for long-term growth in the first quarter, buying an 873-acre Atlanta-area land parcel for $95 million (expected to support more than 1 GW of IT capacity) and a 30-acre Portland-area parcel for $50 million (expected to support 160 MW). The company also expanded its connectivity footprint with the Telepoint acquisition in Sofia for €66.5 million ($76.6 million) and bought two land parcels near Milan for €56.5 million ($65.1 million).
Digital Realty also agreed to acquire TelcoHub 1 in Malaysia (an operational 1.5-MW site plus adjacent land supporting up to 14 MW), expected to close in the first half of 2026, and after quarter-end, the company bought a 15-MW Cyberjaya development for about $117 million. As part of capital recycling, DLR sold a non-core Boston data center for roughly $6.4 million and closed the sale of a non-core Atlanta-area asset for $24 million after quarter-end.
DLR Raises 2026 Outlook After Q1 Execution
Reflecting better-than-anticipated execution early in the year, Digital Realty raised its 2026 core FFO per share outlook to $8.00-$8.10 from the earlier guided range of 7.90-$8.00. The Zacks Consensus Estimate of $7.94 lies below the guided range.
The company also increased its 2026 total revenue outlook to $6.65-$6.75 billion, up from $6.60-$6.70. The consensus estimate stands at $6.66 billion. Adjusted EBITDA is also expected to be in the band of $3.65-$3.75 billion, up from $3.60-$3.70 billion.
This data center REIT projects rental rates on renewal leases to be within 6.5-8.5% on a cash basis and 9.5-11.5% on a GAAP basis. The year-end portfolio occupancy is expected to increase by 50-100 bps. The same-capital cash NOI is estimated to grow 4-5%.
On the investment side, management raised 2026 development capital expenditure guidance (net of partner contributions) to $3.5-$4.0 billion while keeping planned dispositions and joint venture capital recycling at $500 million-$1.0 billion for the year.
We now look forward to the earnings releases of other REITs like Public Storage (PSA - Free Report) and Ventas (VTR - Free Report) , both slated to report on April 27.
The Zacks Consensus Estimate for Public Storage’s first-quarter 2026 FFO per share is pegged at $4.13, implying a marginal year-over-year increase. PSA currently carries a Zacks Rank #3.
The Zacks Consensus Estimate for Ventas’ first-quarter 2026 FFO per share is pegged at 91 cents, calling for an 8.3% year-over-year jump. VTR currently carries a Zacks Rank #2 (Buy).
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO), a widely used metric to gauge the performance of REITs.
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DLR Q1 Earnings Beat on Leasing Momentum and AI Demand, View Raised
Key Takeaways
Digital RealtyTrust (DLR - Free Report) posted first-quarter 2026 core funds from operations (FFO) of $2.04 per share, up 15.3% from $1.77 a year ago. The results beat the Zacks Consensus Estimate of $1.94, delivering a 5.15% earnings surprise.
Total operating revenues were $1.635 billion, up 16.2% from $1.408 billion in the year-ago quarter. Revenues also topped the consensus mark of $1.609 billion by 1.6%, supported by strong leasing activity and healthy commencements from a growing backlog.
DLR’s Leasing Strength Drives a Strong Quarter
Signed total bookings in the quarter are expected to generate $707 million of annualized GAAP base rent at 100% share, with $423 million attributable to Digital Realty’s share. Management pointed to record demand in smaller deployments and interconnection, alongside the largest hyperscale lease in company history.
Within bookings at DLR share, more than 1 megawatt activity accounted for $324.5 million of annualized GAAP base rent, while the 0-1 megawatt category contributed $78.9 million, and interconnection added $18.6 million. Pricing for larger deployments remained healthy, with management noting average pricing of $181 per kilowatt for greater than 1 megawatt deals.
DLR’s Backlog Improves Long-Term Visibility
Digital Realty ended the first quarter of 2026 with a record total backlog of $1.8 billion of annualized GAAP base rent at 100% share, or $1.0 billion at the company’s share. Backlog growth was driven by new signings outpacing commencements, which totaled $204 million in the quarter.
The weighted average lag between the new leases signed in the first quarter and the contractual commencement date was 19 months. Management highlighted that the backlog represents 23% of in-place annualized rent, helping extend growth visibility into 2027 and 2028.
Renewal activity also reflected a firm pricing environment. Digital Realty signed renewals representing $193 million of annualized cash rental revenues, with rental rates on renewal leases rising 5% on a cash basis and 6.3% on a GAAP basis during the quarter.
DLR’s Profitability and Leverage Remain Supportive
Adjusted EBITDA increased to $920 million in the first quarter of 2026, up 16% year over year, reflecting double-digit revenue growth and continued operating momentum.
On operations, portfolio occupancy ended the quarter at 90.1%. Development activity remained elevated, with the company spending $910 million on development capital expenditures in the quarter (net of partner contributions) and reporting 1.2 gigawatts under construction at quarter-end.
Balance sheet metrics improved as well. Digital Realty reported approximately $18.14 billion of total debt outstanding at quarter-end and reduced net debt to Adjusted EBITDA to 4.7X, down from 4.9X as of Dec. 31, 2025, supported by EBITDA growth and retained cash flow.
DLR Expands Land Bank and Connectivity Footprint
DLR kept investing for long-term growth in the first quarter, buying an 873-acre Atlanta-area land parcel for $95 million (expected to support more than 1 GW of IT capacity) and a 30-acre Portland-area parcel for $50 million (expected to support 160 MW). The company also expanded its connectivity footprint with the Telepoint acquisition in Sofia for €66.5 million ($76.6 million) and bought two land parcels near Milan for €56.5 million ($65.1 million).
Digital Realty also agreed to acquire TelcoHub 1 in Malaysia (an operational 1.5-MW site plus adjacent land supporting up to 14 MW), expected to close in the first half of 2026, and after quarter-end, the company bought a 15-MW Cyberjaya development for about $117 million. As part of capital recycling, DLR sold a non-core Boston data center for roughly $6.4 million and closed the sale of a non-core Atlanta-area asset for $24 million after quarter-end.
DLR Raises 2026 Outlook After Q1 Execution
Reflecting better-than-anticipated execution early in the year, Digital Realty raised its 2026 core FFO per share outlook to $8.00-$8.10 from the earlier guided range of 7.90-$8.00. The Zacks Consensus Estimate of $7.94 lies below the guided range.
The company also increased its 2026 total revenue outlook to $6.65-$6.75 billion, up from $6.60-$6.70. The consensus estimate stands at $6.66 billion. Adjusted EBITDA is also expected to be in the band of $3.65-$3.75 billion, up from $3.60-$3.70 billion.
This data center REIT projects rental rates on renewal leases to be within 6.5-8.5% on a cash basis and 9.5-11.5% on a GAAP basis. The year-end portfolio occupancy is expected to increase by 50-100 bps. The same-capital cash NOI is estimated to grow 4-5%.
On the investment side, management raised 2026 development capital expenditure guidance (net of partner contributions) to $3.5-$4.0 billion while keeping planned dispositions and joint venture capital recycling at $500 million-$1.0 billion for the year.
Currently, DLR 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
Upcoming Earnings Releases
We now look forward to the earnings releases of other REITs like Public Storage (PSA - Free Report) and Ventas (VTR - Free Report) , both slated to report on April 27.
The Zacks Consensus Estimate for Public Storage’s first-quarter 2026 FFO per share is pegged at $4.13, implying a marginal year-over-year increase. PSA currently carries a Zacks Rank #3.
The Zacks Consensus Estimate for Ventas’ first-quarter 2026 FFO per share is pegged at 91 cents, calling for an 8.3% year-over-year jump. VTR currently carries a Zacks Rank #2 (Buy).
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO), a widely used metric to gauge the performance of REITs.