Digital Realty Trust (DLR) 25 Jul 242024 Q2 Earnings call transcript

Good day, and welcome to the Digital Realty Second Quarter 2024 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Mr. Jordan Sadler. Please go ahead.

welcome, Call. Digital and XXXX Second operator, Conference Earnings you, everyone, Realty's to Quarter Thank

call. on assumptions call Officer, will Q&A. me Chief the CFO, including Technology Joining call today's statements, Chris be Revenue Matt on Power; CEO, Officer, and be are guidance Mercier; making and Officer, Andy and Colin forward-looking chief also and will Management Investment Sharp; Greg today's McLean, Chief are Wright; underlying the President on and for available

statements expectations results uncertainties differ Forward-looking on that could materially. and based involve risks are that cause to actual

to For filings business, SEC and a package further call information. discussion of our SEC. are on the available net our risks will subsequent supplemental related included and to to non-GAAP the financial our Reconciliations furnished XX-K the This website. contain see with income in

turn a offer Before let over second few key call I Andy, quarter. from our to me the takeaways

within $XXX again, leasing favorable which, continue very demand record quarter's to we together one with of with the marking in execute executed in the of drove top year. last environment our First, first a leasing quarters new history, a the of record million half quarter,

see of that Realty and through level, cross-connects opportunity below momentum translated demand-driven target interconnection our and the while recycling in our a issuance we the quarter end, Digital the continue through level of drove revenue front third, spreads to remain to both to we And record record releasing cash to quarter us. leverage new capital continued commencements Second, second in position helping quarter. at same and the operating into our growth reduced in continued equity improvement occupancy a in quarter, X.Xx meaningful to as total capital positive, in firmly long-term

the to turn Andy CEO, Power. over President With call to our and like that, I'd

call. the the first quarter. joining we quarter to and The for second our Jordan, Thanks, in continued thanks momentum everyone experienced in

strong was leasing X-X the plus XXXX, in from our half we half saw first first up steady new the Interconnection activity a from our over The of and with contribution XXX% XXXX, segment. megawatt of

we've Demand remains capacity for data seen, strong markets. blocks capacity especially larger our in core ever as for center as

to our record favorable partners. of well of and continents, this incremental execution X take track shelf could gigawatts advantage and land a of bank environment, development, capital given support leverage positioned of across demand array diverse are reduced We capacity that our growing X-plus and robust

another our We quarter, During $XXX the second second on newest quarter, of in bookings hyperscale within of million one the focused which remain $XX excluded signed key priorities. capital new million leasing we of ventures. private our

the the in were bookings in greater quarter. a way primary no as once driver, from Dallas our Virginia again led there than the largest megawatt hyperscale category was Northern market, While the contribution second

quarters our and Importantly, logos we new bookings the in record megawatt ever categories. the Interconnection X-X X-X in posted of and record of one the megawatt with each plus strongest Interconnection segment, near

product strategy. X,XXX customers growing spectrum from This the leasing a positive that of strength and our reflection base value of realize our full is

year-over-year for strong XX% with forma recycling also growth last the delivered We center operating over revenue completed results data activity capital year. the pro

continue item reflecting billion first the almost fee enjoyed the of we up we capital first with recurring this to new $XX have private addition, in ventures. of hyperscale fee last institutional gather the And half income XXXX, the over would associated growth line ventures XX% of over our In healthy formation to was momentum. expect In year. income half, primarily

Europe to into positioned commence half, to in for in of connected proposition highly we value London remainder expect bottom With our the strengthened of Docklands. data and line to line which complementary in a with enterprise we of entrants through the densely leases the campus, top commencements record submarket backlog well accelerating also into be colocation second the growth quarter center quarter are our city second XXXX and favorably we priced and and of in the to acquisition the for Slough end, healthy existing the the XXXX. ready capabilities Subsequent our

support The new XXX integrate our innovate existing more globally. XXX we an campus cooling X,XXX of second with over in community customers centers HD for than quarter we cross the priorities, continue offering with our across to high-density unveiled X.X of connects. Consistent advanced Colo data supports our and utilizing key deployment liquid-to-chip as

at the Azure just Metro addition, Dallas Amsterdam Microsoft In of week, in with Cloud service campus, new of OnRamp our new market. a ExpressRoute the the and ExpressRoute launch we last along deployment Zurich announced the Azure

significantly our also hyperscale than diversified the of and sources, dispositions. our more bolstered year over balance Realty Digital through private availing $XX capital new capital ventures noncore billion sheet past of and our We

expanded remaining stabilized we quarter, interest of campus. [indiscernible] on our existing with CHX, in the the center During data venture the XX% a Chicago our hyperscale sale

under sold also Core a their campus XX.X% an These additional to over Digital center in to in ]. increasing XX% transactions billion. the $X.X X We in [ just raised data Frankfurt REIT, position total interest together

raised approximately equity raised since follow-on under our our last we billion $X.X billion earnings in May offering including early the $X ATM. and of Finally, call, proceeds

year, of the the Artificial capitalize intelligence demand. and that positioned These on the landscape. balance is transactions, data others capacity to global construct have customers our our together center environment this with innovation unique the sheet past reshaping

reach XX% are to developed is driving capacity to demand XX% world, growth. and incremental applications cloud AI transformation, on and workloads portion significant another Digital cloud in and driving a to infrastructure. industries fueling grow Gartner, grow and is across are Quoting forecast of around AI-related XXXX with data the proliferate over for spending AI robust this the is center computing the billion XXXX, demand $XXX global for services new in worldwide. projected As public

existing data and demand lightning-fast speeds. newly in infrastructure These being with built centers processing being by our upgraded demand on to are center capabilities AI-oriented facilities taking place accommodated Traditional transformation is AI data and and for for already facilities. transfer were hardware specialized digital in massive data pushed limits workloads the suites in parallel cloud where

Fortunately, Digital Realty's accommodate is growth can in requirements. The design data modular global. these demand center evolving

We're our it with first, American like is North in and in but EMEA APAC. Amsterdam locations metros demand beyond Paris Singapore and Tokyo London, seeing interest across spread in strong and and

it availability Our processes being their suited it is AI adding an trained digitizing to whether a well or demand, providers enterprise be this global footprint capture business growing model production. cloud to for major service or major zone, into put be

are these in centers to not user is However, alongside demand data its environmental energy-intensive challenges. scaling of According growing IEA, the data this facilities growth without The the requirements. center impact exponential I could of consumed figure Realty's in almost touch absent XXXX X% efficiency highlights improvements. XXXX, electricity sustainability that latest in of Digital moment. on significant will by a global a double

the and continue look data will center interplay global to shape future, between evolution we the AI technology the to landscape. advancements As

IDC years from transformation, XXXX, officially addressing $X worldwide transformation center these positioned while AI, nearly trillion drivers: the X for infrastructure. predicts by come. to accelerating best scale that by sustainability we'll demand providers We spending the data will their believe driven AI benefit on digital further who in can digital to be and cloud capacity concerns, key the reach that

that partners and bring the world. Digital their value the recognizing Realty can are around Customers to applications

us being on A expand research new new new reach quarterly sandbox developing PlatformDIGITAL who partners to Lumen by The engineering are and advanced growing added the world. a number we quarter, one private marking second the by experimentation large quarter include and sales team into Technologies. AI brought federal a of these our and this to logos wins connectivity logos, enterprise, record. a to development of by Global our and XXXX enterprises enable partners, agencies our sourced XXX During efficiently around

assisting Another in AI with to bought provider, APAC example workloads SaaS growing requirement. capacity recognized a PlatformDIGITAL their their respective SaaS virtual their an X own to and costs facilities. same cloud that infrastructure and North And AI-enabled on desktop controls America. efficiency, driving capital another partner natural enable American network X That PlatformDIGITAL, costs logo And base. and public the leading was implement a language PlatformDIGITAL new financial commitment partner cost North services provider Global A large and institutions performance in their manufacturer with network rearchitecting financial is of on hub all to to growth. repatriating extend partnerships, increase synthesis their to an an the save firms both lower and our eliminating is improve is speech expansion their leader and AI is employee are proximity improve while across to PlatformDIGITAL, of current of environments growing yet leveraging the regional where EMEA experience user maintaining XXXX also

progress ESG over during second to I'd Matt, turning touch it to quarter. like our on the Before

and ESG the We XXXX. Time continue by one ] Statista We of world's of companies as meaningful were recognized make to performance. most on progress sustainable [

also released highlighting We responsibly. report and ESG in operate our ongoing efforts annual to our June, develop

the further accounted energy. our renewable water renewable year. our We data and described improved report, in water As XXX% recycled total our last energy of now supplies which consumption with with of centers increased water, use matched ESG XXX efficiency for we expand XX%

to while a engagement stakeholders. for Digital of remain Realty's our We We delivering supplier chain. on growth decarbonization the sustainability to program sustainable launched our committed environment drive supply new impact and minimizing also all through

our CFO, call Matt With that, I'm Mercier. pleased the to to turn over

Thank Andy. you,

results. be leasing landed quarter $XX and in signed $XXX healthy majority second Let interconnection bookings. of greater-than-megawatt of Americas, of EMEA me million of into quarter, the both with into a category, APAC. however, jump from which second leases the contributions million the the $XX Not the to We X/X in falling standout that our X-X-megawatt right new and with million with of overlooked,

our X-X exceeding plus quarter $XX segment. consecutive million fourth Our Interconnection in megawatt

Turning a the largely leasing. leases quarter record million which new to of quarter, commenced strong $XXX our We balanced was this second backlog. by

more signed yet $XXX of by the but million last peak than such, revenue from guidance quarter's commenced full XXXX. and remains total only and moderated of backlog leases for X% As our robust year X% not

million $XXX remainder commence to over next commence through Looking ahead, this year. have scheduled we million to scheduled of with year the over $XXX already

once underlying X after second million we and of cash we quarter, regions. on at spreads Last products the outliers a increase across year-to-date quarter, were out the driving renewal a X.X%. basis, stripping $XXX positive again that leases spreads signed spread X.X%. renewal was During noted renewal Re-leasing to X%

spread in segment a in Our was renewal X.X% greater the the X.X%. the segment up were while X-X-megawatt second cash quarter, than megawatt up

reliably could of that come X-X-megawatt inflationary the reminder, the a movements our segment better of lease are market with shorter-term this expirations As driver X time, with over track outsized or or predictably reducing lease closer deals to them larger megawatt renewals. making escalators. and renew which longer-term thereby the typically overall category, the primary given spreads, re-leasing is weighting in heavier leases

renewals between renewed On side, greater pricing The at environment a per kilowatt expiring megawatt kilowatt per $XXX on than than last the leases. compared the the with quarter. X key $XXX megawatt difference leases the reflected renewals greater rate achieved the on the was quarters strong to

expired expired leases quarter, per of This in while kW, leases at per quarter's segment an at average this last $XXX kilowatt. $XXX

quarter, at and For remained at the immediately was and rate. well backfilled controlled largest X.X%, low an churn improved our termination

FFO second the in executed In this the and year, by operating with substantial $X.XX capital raising the the core of throughout terms quarter activity. course over impact reimbursements, expense of to year. by utility a healthy last rates the of meaningful of impact given organic that is likely continued in year-over-year, decline share, comparison growth was quarter partly decline activity earnings tempered in recycling per results, EMEA reflecting growth, the the we balanced reported along deleveraging capital the persist in electricity Revenue of

X% the track also rental interconnection up headwinds, were Adjusted year-over-year plus last year-over-year. capital first EBITDA since revenue half the remains Despite our XXXX EBITDA Rental and X% revenue to Interconnection second adjusted plus well July, combined deleveraging quarter. for through on XX% and respectively, grew revenues Pro by the year-over-year, guidance. meet basis forma and the a increased recycling in XX% on completed

cash growth NOI growth which up quarter, increased operating capital cash a NOI as rental same year-over-year X.X%. X.X% has were second performance capital operating offset in catch-up saw was X% by data the by with center quarter. Year-to-date, revenue continued property flat Stabilized in last in and Same costs,

impacted points power highlighted the XXX utility NOI elevated to nearly headwinds We XXXX. given be margin have EMEA expected in growth in previously prices same basis capital of year-over-year, is by

XX our consolidated We We $XX our development plus second overall points completions of as Moving on quarter. development to ] our mix activity. million on market sequentially with to North customers basis a megawatts share [ investment new million pipeline and the while quarter result for for a the shift quarter, megawatts of moderated $XXX the on delivered our unconsolidated backfilled new in we across yield of globe XX in of XX.X% average America the starts. XX Blended spent capacity JV starts in the pipeline during another spending. of

the we tracking CapEx, ramp In bit over second spent guidance as with the full towards along newly year see closely a the uplift. projects first commenced our a $X half in year, development of should billion typical half seasonal the from

the to Turning sheet. balance

We continue to sheet strengthen quarter. balance the second in our

report the in by of these of just was over $XXX closing transactions referenced April disclosed quarter's proceeds. With during earlier raised million and Andy, the earnings X we X that gross together, last transactions

in Friday. XXX of GBP May billion and a target. XX.X million net had than shares, to bond while million sold of last end ratio ATM second bond including Additionally, net below million debt-to-EBITDA to report, billion pay which X.Xx, and our using At matured long-term follow-on quarter, raising $X early more on total offering April cash share fell proceeds issuance matured liquidity, XX.X a our we since last $X in hand is and incremental XXX the the that a that of off EUR our million earnings we

Moving on to our debt profile.

and of is capital weighted Approximately XX% interest our is our debt our approximately average ] of X for maturity is recycling. providing rate is [ weighted fixed net rate and of reflecting strategy. debt non-U.S. the platform unsecured, X.X%, hedging Our debt years flexibility XX% is ample denominated, our growth average global dollar of debt and FX XX% our our over

Finally, after remaining in April X the Sterling and paying notes off last year-end. we maturities week, euro have notes through debt

laddered well XXXX. remain maturities through our that, Beyond

our Let me guidance. with conclude

continued are development FFO front capital to company We to to in business, the $X.XX guidance $X.XX by helped fund the the our core core reduce partly strength reported funding and our by share, our range half reflecting the turn per a full in XXXX full for which XXXX of recycling of and position balanced beyond. maintaining leverage activity, weighted better to year

maintaining operating, are well provided. revenue expectations that previously guidance our and and as XXXX ranges also financing investing adjusted We as for total we EBITDA the

per prepared pleased be Looking your moderates. we begin commences share forward to the to the of would And balance as the the prior Q&A? now in deleveraging FFO Operator, This poised XXXX, concludes please backlog of remains half second and core questions. our remarks. the take increase you will impact to

[Operator Your with comes from first Instructions] question Choe Richard JPMorgan.

seeing ask over to category. wanted the I for about the long-term pipeline you're X megawatt

that in you're this forward could right wanted I looking cycle. elevated just And the that think concerns kind sense get pull and of of be far there's now, your environment pipeline we of deals last? of a to out how current kind some at might or

Richard. Thanks,

they are blocks last large; of very in contiguous say I desiring, if the several the with the and ] play right would So seeing fungible the [ a megawatt service markets markets, quarters. desire category, want that needs to soon one, as measure, as support or multiple miss biggest greater computing now capacity for workloads, where are their out they AI i.e., certainly they customers Gen the than well. continuation cloud training can of we're possible; they but The trends inference as also can two, three,

for demand the those the not the So market. attributes we ease of terms seen pedal in have in

comes question with from Next ISI. Liu Irvin Evercore

muted. was I sorry, Oh,

than on to as decline. of the So segment. That new out. we've X seen Americas, in double-click declined marked sequentially leases for per guess $XXX a I a monthly wanted sequential rate I the well. Similarly, rates couple kilowatt megawatt the rates. stood One items on renewal greater

we driving other quarter us the what's Or about? and ago? understand thinking of help function Was a mostly step So versus there this declines sequential that down of can be industry sort markets a you mix? were should dynamics

Thanks, Irvin.

now mix So than X I is a or pointing just greater X the of market just composition deals. think one in were the American megawatt, deal of you North the to it's

have really our outside market, into we signings strength. actually particular, market. customers available actually just lack this we where X demand still parts we of It's in in options way. Virginia didn't capacity didn't market any Northern the particular this for Dallas [indiscernible] quarter great blocks with quarter, not led some a that And large of which is that for on had have This And quarter. market. But a

but And that discussed. but that you if segments So all apples the only apples be example that's regions to think in the call look be more outliers almost mix I broadly, different metros in uptick I I've like on just it, rates. the gave both other, you, would region one could an had in always

Your from Michael next with Citi. Rollins question comes

could that to Curious to to maturity going ways well investments the capital are participate the past to it's private you assets? opportunities private you hit be in recycling, your shared capital do as on category mechanisms ideas talk partners around trying establish about as those able some if when private other in whether working the kind of of in in where their to react dates center maybe those investments, to to with what data of of other some there's

then expand off Thanks, I'll kick Maybe can Michael. upon and this. Greg

not is topic this So new.

hyperscale journey this progress, great think north of years at call and it, numerous XX of, parties. embarked X.X ago least cumulative we've private I billion $XX made ventures, at call on it, the least or

places, prepared the a we up in our seen the revenue revenue called seen which You've basis step that a a out on remarks, we've fee P&L. few in having recurring

pull great maybe a now our give us it in growth have that certainly defensive an slightest private allow of in forward our evolution product that's next some these initiatives offensive what's for our to posture X private gigawatts that moved posture have customers. sheet preview Greg a comes to bank the . Those north of you Two, I'll projects of you've obviously just And from seen and to capital of initiatives. balance balance strategic runway land our when sheet.

question, Thanks Yes. the Thanks, Michael. Andy. for

think to sources, laid doing. continue ago, to as I we thing first year bolster we're diversify with, out consistent would that's a what these Andy said, going I is and just January, we're capital and say private

the of that months. to did to will. when We're lot And strategy. have something we As last over we report, we said, continuing evolve transactions we a XX

the hyperscale take you expected that because between I and of think note business that grow XXXX itself right of in hyperscale business that to the the it's now at and importance Xx. And non-AI now, the important profile if look a for capital almost to demand hyperscale. includes is AI

look, strategy. think And right that we that as evolve. we we upon yet. something laid have So to that you. the when that But done report on we'll tell out front, it's embarked strategy Andy we're continuing not we the to was and And said,

Your next Atkin question comes from RBC. Jon with

of wonder that on speed deliver equipment so which I the you've kind color of access you new of about supply kind commenced kind chain, there? access to and Any your can recently, at energy, heavy starts forth. to

Thanks, John.

we time larger mean, now colocation ever I are conveyor on it almost product to enterprise was belt certainly That's playing the capacity markets of think blocks. deliver with customers' and trying continuous playing out to than more in -- So our our needs. you for the

to on where we had need to be a book restriction get and they will signed radius was a XX-ish own commence on. land thing This likely and [indiscernible] to it campus only than the quarter, based on and a very one we about [indiscernible] radius really that location-sensitive we was particular That having moving the with serviced the that customer to months. elongated

particular elongated be for obviously that time that to called delivery line So surrounding.

were like called we commencing ] to type [ ] [ that, X.X excluded We basically signed months.

maintaining around land suites obviously and from world. we're in sales, metros delivering production for capacity capacity making adding our new continuously delivery ] vendor sale of to whether active and [ it's relationships we're time and and our So slots sure that XX-plus the

Jon question Jefferies. comes next with The from Petersen

be than sneak question. How some quarters. the expirations lease if in that coming how have the about you can X-megawatt a And of and larger greater fixed I renewal was up much rents? those are follow-up hoping mark-to-market of coming many options can talk I could in

$XXX there's think statement. I in a million the income impairment

is curious Just what that related to.

Thanks, Sure. Jonathan.

call pursuant terms our have lease less say So half period. of than -- us reasons. of a I options than increases. than few in renewed so that leases must One, That those greater that's is of would But with that significantly the typically fixed provide our for are proper happen. to renewal expirations, And [indiscernible] megawatt less customers within options. what notice I'd doesn't always generally

must come essence, any So changes. renewals without in

that So additional if up contract. any changes space, the anything there's opens term,

as also customers in and, past, third some up think I the of end about talked churning. we've those

your are put to think assets, -- to the So we point secondary of an given able ends associated all done recycling market our context that that second us did also all gives I our generated, from bring noncore few And impairment year. period. last those we've rolling I'd billion the on of the part which majority $X.X the within disposition with the over for those have what have did plans, to located fact be efforts capital contracts we gains we've are ability that a up impairment, and of to a over yes, that On of market. in in

Aryeh with from Klein Your comes BMO Capital Markets. question next

what's on development appetite XX% of add with strong leased, including of should quarters of some your XX% seems the pipeline the demand? trend CapEx what to like markets the comments from guess here? given X Americas, the domestic I leasing new And coming broadening very expect then we in off how to pipeline, and

markets. new don't why overall, Colin kind the to of as just first of pipeline that side little can Aryeh, well then and the I development talk about speak let as

[indiscernible] below record right from question. megawatts the transformation, trending as we pipeline well, megawatt overall X I as AI. heading and in direction cloud driven positively deem which pipeline megawatt, Thanks. as digital the Andy X appreciate highlighted important

our XX% Indirect indirectly. and saw directly which positive pipeline being sign think there. You we trending a proposition that picked both now to positively quarter, of execution value up results and is we're [indiscernible] indirect, has last in our

highlighted the real We're hyperscalers the and the and Andy of the that in across the that and cycle. things One globe proximity enterprises [indiscernible]. particularly key value we of metros key have in play demand seeing value is with metro like metrics see

both across of ] to value grow Finally, enterprises low spectrum really above capacities the for the ability and X and keen scale hyperscalers and [ and of megawatt

Aryeh X part IT them markets, cloud your we our on remain Then nearly the numerous the compute second diverse continents. of we on on enterprise markets, core customer of focused of robust hybrid very Those XX and talking question, north XX from countries around CSPs, honestly, world, and continuously see the long-term all ultimately, and moving and speaking shelves markets. see in core we activation to to in be [ ] sizable of really those is service providers markets where those And actions our X-plus bank in from our piece land shells on delivered gigawatt barriers. into to same demand, our suites be

Your with Bank comes America. next David from of question Barden

leasing customers revisit XX% on AI-related. last XX% talked how record these period, Andy, But obviously if non-AI there's could, was X, about an were you point new pattern? of new you quarter, basis, XQ leasing guess of still versus Could kind it guess, from AI I were this I your what about an to sequentially. seems of It roughly how like very lengthening some large delivery the type unfolded I the bookings versus quarter. So number apples-and-apples down the of stepped in

second you will this be laid and XXXX. first in going Also, know that to a that historically, periods. out your this? kind That offensive, for we more offensive forward-looking now is position what in which secure meant dilution there you my would you've in you're seasonality I be thing? question sheet to of an to and do guys is to going And of been of more growth, kind less it's sort be is, meaningful you've there generated about question. when that think a And XXXX, growth of back a just defensive was hope future $X.XX FFO, how opportunities. core guiding the I growth said balance Is then And to the

things the kind all So I the bottom top and at great growth line was these line wondering happening of, take to growth. into could if for it revisit case you are bull Andy, that turn

Thanks, Dave.

to didn't AI count that thinking evolving computing, the the the there need they deal and density power towards and I certainly category about quarter in caveat of still AI a quarter, design not of to would that not from a that quarter that use means we would say, in few or I One, envelope that's but our [indiscernible] the like, probably great signings, a quarter, last cases. block in But that X-X and And in guess, say ] was it. the of a top ultimately on also on as cloud a as to is the certainly with of a what ways. be traditional that, scale megawatt So that's we're that demand contribution with will that both to down record has them think near X nearly Interconnection would would a already [indiscernible] signings. pushing contribution, modularity speaks this our say quarter transformation, would able in is demands capacity we customers well XX% [ to infrastructure close I I think apples-to-apples which road overall plus record pin quarter signed closer the digital I winning and the is demand . as AI X we're signs, my I drivers, to how our supporting

The first want of the don't word your question, to second off, part confuse I offense with M&A.

I with relationship, the X-plus converting which this digits. external years been now. didn't that And Cyxtera we development word you [indiscernible] I for returns and think of bank assembled turning our the lemons can years, when land customers double and growth now And our but used M&A just go real we've out play several that the yesterday expand a over anything. of done any maybe lemonade resolution on that's than and we've making I into seeing think, the more great buy or the land out I not that crescendoing into mean say that offense, was, to investment. product you've schedule for gigawatt great

value in You've power, pricing our you're seen in core across the resonate proposition markets. our of really our seeing that customer all segments

going our bottom accelerating, to of we've compounding diversifying strategy integrated those come. share accelerating [indiscernible] for driving we're months lastly, sure years to our proposition, ago, and called, were where innovating, all That's per and XX That's value resources. capital it's FFO about and And our growth things price line. bolstering [indiscernible] be making And reoriented continuous

been no next of year. what XXXX for the said divergence XXXX next there's in of and So conviction what we about comes rest that

comes from Wells question Erik Luebchow with Next Fargo.

it. out to XX% have you Appreciate growth then kind development future, what into XX% development metros your as as relative do to And type your year you to whether rent year, move growth on that's you an outstrip of market market this the higher? see some continue evolve of maybe right key you to pipeline yields basis comment continue to now last could Andy, of see the can for rent an look opportunity has in seeing in and on your apples-to-apples even you're we progressed. costs

to that continuing is move couch favor. mean Erik. rent market our Thanks, I would in I growth

America are waves the in up now look terms their key terms these. You've demand trajectory of you've got computing, other fair of were hybrid elements seen in bit growth. catch-up to a getting the AI of digital happening, North this be And of at in of of in and that most seen catching you've also set where transformation, IT in precious cloud in like I just outside going Northern it some were -- U.S. continue these rates. a markets blocks records phenomenon capacity the X new Virginia markets

see the of not notch happening from The we'll these will at supply to if outstrip ROIs terms elements it's and is inflationary on large And I maintain continue [indiscernible]. we least believe also then up slightly believe costs whatever they and likely I be higher. in build those execute costs been that avenues increases quarters. rates that constrained. ultimately we've able and the dynamic of to for in And in backdrop supply-constrained And several numerous resulting are

with The Jim next from comes question Goldman Sachs. Schneider

horizon, relative to to the the power see development On have you constrained supply same more power think projects topic the is contemplating. and months, constrained, about XX XX to transmission, for do you less with time or getting you or say, relative of either new staying under availability constraints let's outlook the environment,

phenomenons Clara And I -- now getting think that popped up we're and of other rearview be to way I mirror. constraints non-U.S. our in a it is Northern which mean, happening. destinations I few [indiscernible] inching we're markets there's a obviously in Jim, well. or think resolutions in as some Santa a there's One, XXXX Virginia, years close these of you're supposedly --

that At still the are not that of projects multifaceted These power good approached can power construction stand delivery same may the time. time, the potential deliver dates a time, At the constraints, require same substations, was as obviously [indiscernible], while there's constrained. the we be the up projects. demand

an X we're wouldn't health It I very with have are of issues [indiscernible] elements just other and was pin lastly, But market it in municipalities I and more focused deliveries, issues sustainability And markets. a power we're about power. think more Yes, the pervasive trying on on got has folks lines this that also there certain not other universe the of to becoming center broader substation of and backyards you're more hearing navigate the generation Northern coming Virginia, topic. through got the is that seeing of rather in world. moratoriums concerns, transmission transmission been parts green. It's economy that there. not

mention And I get repeat it could also a if a so that propensity it this does itself here. think even history has would could fixed which multifaceted supply that is that I constraint,

deliver this value I proposition and is compelling our with going more make our customers even valuable to what the we to end day. think the So at of

Next question comes [indiscernible] from Mizuho. with

a I bit. guess the in rent leasing about talked over what's but market greater time picture, versus, quite market, X improving referenced you've differential growth megawatt of expiring just also guess, given improving I bigger than spreads you

spreads a Can the maybe just just the frame a the demand but recent comments set oversupply over X wondering, just that and but from time down pipe. that theoretically coming megawatt much you greater versus with than from just near-term supply. or just sort opportunity the the there's standpoint takes from bookings puts you a in of a and of pricing some see more supply I'm just hyperscaters, of lot risk talking there is too so improve, risk the about CapEx. So a

even our maybe the really schedule, I'll leasing the more take stair Matt about can question, it, exploration second part I spreads, talked coming of call the guess, of your in comment which does, attractive our years. step on on kind in outlook

a the second I mainstream more What Is over AI media think, the of question next? come I the heart your is this you're is Vikram, of think on broader dining? AIC could hearing question bubble?

robust cases customer peaks hybrid if grow from IT use service to XXX% I diverse markets of We're not doing it think companies in business, we're mentioned seeing. not that doing even AI one markets we're CSPs, technology is, before, all blocking Two, the it And demand years traditional moment numerous largest, this are I long-term to centers. valleys. contracts our is data being constraints. with most most real the in lastly, years we're to And focused that the this XX believe We're probably with reason when supply in and necessarily demand. we continuing territories. AI, signing XX the core Are unproven what some are of provider over we in ever. supply-constrained long-term has some computing cloud to And last say that. comes is out established enterprise and chasing and happening and remaining that of of the on time

-- on I you So its even somewhat convinced based how our don' breather trajectory hit sector and not volatility I'm AI that innovation volatility, on think that Matt, on we're if the that pursuing sure takes [indiscernible]. insulated from I long-term But we are don't in it. a we're why

Sure.

the look, XXX -- rate -- to next if is, by as rate greater steps area. I expiring, the as you to average gradually leases on look pretty megawatt XXXX. the down XX call low But call it, XXX then months, what get at the you than are So the XXX time to that what that in

categories. I continued but our in than only to greater releasing not spreads going positive all so think on a X megawatt see I think And you're category, also trajectory across

you'd think positive or better. have recall spreads our typically our type been I those within I think are more So throughout history, XX, also regular, inflationary increases steady

think where of in continue we'll supply a grow accrue rates I releasing and I now see constraints I our we spreads some and are as positive this in where remain continuing time. where go to think, So good are, position, us market through to market to the rates puts think to continue a we benefits

with comes Raymond question James. next from Frank Louthan Your

So that in megawatt should part that? you're mentioned a that How before, elevated. prioritizing talking that Is forward? reason little of retail kind hyperscale. of remained going and about have we over about practically How think colo bookings track the the think trend sub we you've should bit

highlights through Colin, why the a don't you walk spending now. that's great bigger with the Colin, obviously -- lot why we're right don't of quarter. deals on of But you question time because a the

that I'm an want not set. to We platform sure how emphasize a Thanks have the for prioritize. offering the word to use question. definitely full

performance from customers remarks, with this Global indirect contribution the consecutive to enterprises of particularly also a side. which requirements well, are highlighted in strong Channel over for Overall. in from million serve also, our driven XX% point I the side. XXXX is earlier new , which from most as ever solid . of had Xth the ever X-X from and full coming I strong on really XX logos -- the XXX which ability service Andy's the also So . Across Over terms X-X in with and the consistency pretty booking QX highest third strong indirect spectrum our focus is quarter. as think was was opening on think particular of at was providers. XX% We

view proposition continuing client out to we segment as our this set. So our value

win And platform. also key want transformation, to in Andy and X,XXX AI on Andy couple namely X-X about requirements of their a a the me, desktop And are virtual the highlight strong on into offering client talked representation and excuse cloud the lot service we of highlight of opening wins Fortune global and launch manufacturing you providers. highlighted out around a Dallas, of side. which Fortune digital driver XXX segment across -- have the enterprises the I our really Microsoft ExpressRoute like feel particular clients, playing is also the enterprise remarks,

with comes Elias TD from Cowen. Michael Next question

line and accordion expand the talked growth. you that in Andy, you've being the contract past, to solving end for an bottom of consistent CapEx about

to the of solving algorithm? hitting really that growth you've as So the of enterprise had like the and as success clear, If in FFO over it, about that as hyperscale on are and to that guys time X expanding now part part explicit accordion CapEx. last is the both and And want for given opportunity I what quarters that gas thinking that, I'm the be so, just be is the that leasing also share market you per

Thanks, Michael.

outlining how pulled at Just concept, You about intensity, to very your it's same capacity, it, The clarify, forward, ultimately, CapEx shell talked I think you're the a highly [indiscernible] fund I pipeline would the it's more we say development think this in CapEx pre-leased attractive I which returns. suites of is is being quarter question. leased, right?

to for balance rates, call ourselves position our that our capital of compounding the essentially, So growth And then do we're what it, strength of a growth come. returns using acceleration seeing positioned increase. we've get leverage only our we're business consistent the years next capital. greater back that of great supporting and trying our CapEx customers We're and and in in just year our liquidity a method from that intensity And to our standpoint top great [indiscernible] great further of mid-single to, use numerous and markets. public sources intersecting private of levers to digits at and from but numerous capital diverse sheet for not do on now is,

using of capital line it's really So consistent to drive public framework. levers private and and a levels those that bottom on to

Guarino Your next Street. question David with comes Green from

declining which the specifically But presentation. higher vacancy guys is level about statistics industry you portfolio, around I that. look the in investor wanted vacancy And than when your aske global your X%. Xx appreciate is to stabilized I I at included about you the highlighted,

demand So the resembles seeing long it's to portfolio then before do we're I And it like industry, is? across think higher? Digital's given industry record take guess, the first, the more much why is so how second, you going

which pretty You our buildings many just all is markets, think literally right? can the got very data hyperscale. pool. I same-store have the they occupancy business up is more We're lens. leased front. is And or this quarter-over-quarter. that the my that the we in gut not hyperscale walk, a actually chart, was to of big portfolio which about XXX% can And hyperscale a basis occupancy remember XXX in to points of on be much do portion And I pleased best they call it center same-store

we for convert it not those actively suites X, and one back taking to occupancy come as X, scale, X [indiscernible] colo backward, an customers' to mountain. vacant We're take It's when step sometimes steps and also well. growth in forward our colo

more arena. moving is that this been do we the we're in needle. So occupancy, and have We moving going to to said the we be got needle, the that year with

going think -- you're move if you look also at a And I to So can up. number of get you applies. apples see look it to to

you smaller had parse like megawatt there markets, much If if very don't they it, type a just heavily at Virginia, I are and that running less business, colo markets a have wish or to just XX% now, much vacancy are through Northern we I by that . on especially weighted you show look of than we're vacancy that basis, we sell towards just their and occupancy, hyperscale way certain

Deutsche Next Bank. Niknam comes from question with Matt

follow-ups. X have I

prospect macro base? megawatt year. back so getting for this on secondly, sizes line a leverage side, potential record do the from in macro change relative new wondering quarter. growth I'm to impacts about talked terms potential the in about turns, X.X dividend next incremental First, investments dividend of different you logos, growth And the improving XXX, then cited just any you the within forward in under that business? across perspective, think sub-X the colo customer How bottom and the the some of you

bit handle the a Matthew, puzzle. enterprise the of Colin and I piece question little dividend first can and demand the overseeing

Yes, sure.

thanks, Matt. So

So I terms it's back we've what Look, said to of in of think kind historically. dividend, the

as take one I advantage to is what the of opportunity growth a our generated here that funds. forms of internally see opportunity we've easiest throughout within portfolio. cheapest and of unique we tremendous global think capital got

top try we're we growth cash line strategy so think also that keenly on continue of to to accelerating and on mentioned look that, focused And growing on as of throughout this bottom to that our funding maximize we've outer call, our -- part . front. as years. And we're flow in I also the

is keep look per with So in well. growth bottom grow as share we we as going bottom but which to our accrue growth the to line, benefit line AFFO, then dividend and to down line that benefits to then FFO, core only

Agree.

in On the a new that question. just maybe highlight question, to of trends, logo couple

believe So the in really hybrid world. first, we it's

much global between that data seeing and split our XXXX that Number the well trend base. very cloud the XXX continued commercial accounts. served we're new So are of across logo logo hybrid new was two requirements Global in that is mix platform. work really

can or platform our mentioned, continued tell density yet that as necessarily growing larger clients the clients spectrum. capacity, really you serves more in sees which their this of platform value, sure of real customers with well that Not across in particular can base smaller across in global particular a base I I seeing but we're requirements. So the interest the who the we frequency to and buy in point

you early would Chris, [indiscernible], one, colo just on segment the the just uptick chime why say, Enterprise I in HD in And the reads with don't an

No.

cool you, market. right density doing the power with think the I agree of some the coming just higher on I with really requirements macro colos, trend these what to aligning Andy, HD we're capability into of

or customers blocks higher-density capacity a can XXX of solutions I the really interesting lot of offerings X And we brought about XX is that market about capabilities capabilities to market the We think the facilities. challenging months that see to to colo across traditional in the like are a so to we've that trying less. weeks for to And are but started see X that where in ago. what's execute bring larger, definitely the your we lot are getting come

preprocure these we've so lot been to that of of kind a ahead X the market But in capabilities kilowatts. to get current And just X able today to densities challenge. are of rack

seeing with requirement that. we at the then end an what kilowatts. meet put And is health like, under we're the you're really customer rack And one are a And the In XX NVIDIA last GXXX, XXX most AI XX I kilowatts, you're so the we in to of capabilities I of gaming, of kilowatts on HD a fashion software context it. to think new have can a we some day, of these with quarter. lot little rack, seeing colo things recent in? support that a think can of current requirements the care state-of-the-art kilowatts But of the And coming hitting runway so XX-week requirement our offerings. XX

that definitely market. in So of a lot seeing growth

comes question Anthony Next with Securities. from Truist Hau

period are But I ? take type are they new for customers XXXX space are are to to deliveries. assuming far [indiscernible] average are, looking for this leases what away, of XX commencement of XXXX? probably looking I'm noticed most these months sign out toward leases customers that up leases the If

in trying comes it when especially future-proof really are, gigawatts to that's our they're of larger growth and handy. customers blocks, mean X where I comes to capacity

-- deliveries nearest [indiscernible] they So ahead. the term are years precious certainly but

much -- mentioned, market growth, where customer [indiscernible] on example, eyesight customer support capacity. elongated we I could can about months [indiscernible] restrictions particular had particular a grow and that one particular because Now then their the where their that was XX literally as they we're very and

were it fast certainly on that So excluding do deliver be X.X one call months. wouldn't probably you think we more as -- will we elongated, I And as those able outlier we consistently could, but to that sporadic. I to close outliers

with Next from Nispel question Brandon Markets. comes Capital KeyBanc

that some out. the Question you acquisition moving at guidance Can updating you all? called the for FX not recent and Maybe Matt. pieces from talk there's about

it, midpoint at half the and needs your while at if was year the adjusted EBITDA to actually guidance. would I really looking need you as the revenue to be of hit annualize it, Just of look accelerate to backward, first

timing are the uncertainty terms some you So there Or that just that is, commencement, could it of hoping for question unpack maybe is unusual conservative? in as expenses, guidance FFO us? of

Sure. probably I'd the -- again, line. I focus of on there's -- kind look, I bottom don't would

are pressure of than If the having little would core a efforts this through little that at we you be the expected closing FFO a quarter year, that talked look we and where less halfway quarter. the we're out recycling because about -- of through halfway and income this related midpoint the of concluded we from CHX have we've our guidance, come would capital with bit --

the we've come obviously given and expect in And guidance, the wide look accelerating half as the are and accelerate up But as we as achieve think We able range. you we're feel of where going so we a in to us second is midpoint what XXXX. and see being we're growth, nicely haven't pretty that. expectations this half, look, and back at, I improve about for think, good set the to expecting backlog deals we the to year I changed signings if for which the guidance of will online very

I'd CEO, call. portion Andy to turn the ahead. go Thank Power call today's closing now to Andy, Q&A back remarks. please of over you. like That concludes President the and for

half, continued Realty in to quarter the elevated Realty pricing in Digital quarter center bottom to the healthy an demand strong posted for how and leasing you. with Thank support commencements Digital infrastructure. second data poised continue level volume, in of record line XQ demonstrating see drive record to first leasing with another strength acceleration through the robust is Fundamental positioned we growth.

cloud our the new We continue the integrate out and with stabilized recycling repositioned And in the Platform Colo have sheet HD of innovate reducing balance diversifying and Digital leverage. by capital of access of sources and the quarter. Onramps our rollout capital to X.X to we addition

profile an growing needs. supporting this of done customers' towards while improving with was our our eye growth All

turning. We the position thank about Realty data optimistic thank exceptional market. keep who for quarter's and this everyone and in like the us remain and digital are and demand would team at outlook to center our world like to today we excited you. joining Digital our dedicated for I'd Thank the results, about

has now you Thank today's presentation. concluded. The conference joining for

disconnect. now may You