Yahoo Finance Digital Realty's (DLR) Q2 FFO Beats Estimates, Revenues Miss
Digital Realty Trust DLR reported second-quarter 2024 core funds from operations (FFO) per share of $1.65, outpacing the Zacks Consensus Estimate of $1.63. However, this compares unfavorably to an FFO of $1.68 per share reported a year ago.
Results reflect healthy leasing activity and an increase in rental rates. However, the company witnessed a rise in rental property expenses and interest expensesin the quarter. DLR maintained its outlook for 2024.
The company registered operating revenues of $1.36 billion in the second quarter, which missed the Zacks Consensus Estimate of $1.38 billion.DLR also reported "Same-Capital" cash net operating income (NOI) growth of 2%.
On a year-over-year basis, operating revenues declined by 0.7% and core FFO per share fell 1.8%.
According to Digital Realty’s president & CEO, Andy Power, "Digital Realty’s second quarter results reflect the continued strength of demand for data center capacity, along with a keen focus on our value proposition.”
Quarter in Detail
In the reported quarter, signed total bookings were estimated to generate $164 million of annualized GAAP rental revenues, including a $40 million contribution from the 0-1-megawatt category and a $14 million contribution from interconnection. The weighted average lag between the new leases signed in the second quarter and the contractual commencement date was 20 months.
Digital Realty signed renewal leases, marking $215 million of annualized cash rental revenues during the April-June quarter. Rental rates on renewal leases signed during the quarter rose 4.0% on a cash basis and 7.5% on a GAAP basis.
In the second quarter, rental property operating expenses increased by 5.7% to $237.6 million, property taxes rose by 6.2% to $49.6 million, and interest expenses jumped by 3.3% to $114.7 million.
Adjusted EBITDA of $727 million in the quarter marked a 4% increase year over year.
Balance Sheet
Digital Realty exited the second quarter with cash and cash equivalents of $2.28 billion, up from $1.19 billion recorded as of Mar 31, 2024.
As of Jun 30, 2024, this data center REIT had $16.3 billion of total debt outstanding, of which $15.6 billion was unsecured debt and $0.7 billion was secured debt and other. As of the same date, its net debt-to-adjusted EBITDA was 5.3X, while the fixed charge coverage was 4.1X.
Its debt maturity schedule is well-laddered with modest near-term maturities, with a weighted average maturity of four years and a 2.87% weighted average coupon as of Jun 30, 2024.
2024 Guidance Revised
Digital Realty maintained its guidance for 2024 core FFO per share in the range of $6.60-$6.75. The Zacks Consensus Estimate is currently pegged at $6.64, which is within the guided range.
The company also maintained its expectations for total revenues in the band of $5.55-$5.65 billion. The consensus mark is pegged at $5.57 billion, within the guided range.
Currently, DLR carries a Zacks Rank #3 (Hold).
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 Iron Mountain IRM and Equinix EQIX, slated to report on Aug 1 and Aug 7, respectively.
The Zacks Consensus Estimate for Iron Mountain’s second-quarter 2024 FFO per share is pegged at $1.06, implying a 12.8% year-over-year increase. IRM currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Equinix’s second-quarter 2024 FFO per share stands at $8.82, indicating a 9.7% rise year over year. EQIX currently has a Zacks Rank #2.
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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