Digital Realty Trust, Inc. Q1 FY2026 earnings call

• Delivered second-highest bookings quarter ever, signed largest megawatt lease and set zero to one megawatt plus interconnection record. • Zero to one megawatt signings boosted 2026 outlook, greater-than-a-megawatt leasing increased backlog to 1.8 billion. • Development pipeline increased over 50% sequentially to 1.2 gigawatts under construction, 61% preleased. • Exceeded earnings expectations, core FFO 2.40 per share. • Strong leasing activity in first quarter, signed over 700 million of new leases. • Expanded global connectivity footprint in Europe and APAC. • Signed largest single lease in company history in Charlotte, had strong greater-than-one-megawatt activity. • Development pipeline scaled by more than 60% to 16.5 billion at 100% share. • Enhanced supplemental report to align with business management, transitioned to power-based occupancy metrics.

Zero to one megawatt signings boosted 2026 outlook; greater-than-a-megawatt leasing increased total backlog to 1.8 billion, or 1.0 billion at Digital Realty Trust, Inc.'s share. Development pipeline increased by over 50% sequentially to 1.2 gigawatts under construction, 61% preleased at 11.4% average expected yield. Signed over 700 million of new leases in the quarter, 423 million at Digital Realty Trust, Inc.'s share. Zero to one megawatt plus interconnection had 98 million of new signings, interconnection bookings 186 million, 24% higher than a year ago. Core FFO of 2.04 per share for the first quarter, up 15% year over year.

• Raised 2026 core FFO per share guidance range by 0.10 to 8.10 per share, midpoint represents 9% growth. • Expect cash renewal spreads of 6.5% to 8.5%, up 50 basis points. • Power-based occupancy expected to improve by 50 to 100 basis points. • Same-capital cash NOI growth of 4% to 5% on constant currency basis. • CapEx, net of partner contributions, poised to increase by another 250 million at midpoint to range of 3.5 billion to 4.0 billion. • Expect recycled capital, with 500 million to 1 billion of dispositions and JV capital slated for later this year.

• Energy costs and supply chain risks due to conflict in the Middle East, though direct earnings exposure limited as ~90% utility expense reimbursed by customers and remaining 10% mostly hedged and contracts allow pricing adjustment. • Supply chain constraints such as skilled labor shortages (especially electricians), utility power delivery delays, local community pushback which can extend construction timelines.

Q: Comment on economics of AI deals versus prior hyperscale deals, pricing, escalators, portfolio with training vs inferencing, inflection point.

A: Andrew P. Power and Christopher Sharp discussed that not seeing dramatic difference in economics, hyperscale contracts 15 years with escalators 3% or higher, AI ticked up to 21% in zero to one megawatt category, demand converted from pilot to production, portfolio well situated.

Q: Idea of additional gigawatt secured, locations, power availability time frame and regions.

A: Gregory S. Wright talked about 870+ acres in greater Atlanta metropolitan area, working on power with power company, acquired land in Hillsboro, Portland, active quarter.

Q: Commencement lags for new leases signed, cause.

A: Matthew R. Mercier said due to largest lease this quarter, 200 megawatt project just started.

Q: Pathway to 100 million in zero to one megawatt segment, interconnection business flow-through.

A: Colin McLean spoke about strong bookings, resiliency in core markets, value proposition in enterprise space, AI becoming part of portfolio.

Q: Hybrid design impact on existing cloud data centers, reprice contracts.

A: Andrew P. Power and Christopher Sharp discussed more often customers working together on contracts, seeing stronger cash mark-to-markets, modularity allowing densification, AI additive to cloud.

Q: Data center delays, supply chain constraints, market rent growth.

A: Andrew P. Power said market rent growth outpacing inflation, working through supply chain challenges.

Q: AI composition of over one megawatt leasing, filling remaining capacity, core FFO per share slowdown.

A: Matthew R. Mercier and Andrew P. Power talked about AI in tens to hundreds of megawatts, rapidly filling capacity, core FFO slowdown due to OpEx ramp, investment spend, capital recycling.

Q: Greater-than-one-megawatt bookings trend for balance of year.

A: Andrew P. Power talked about developments in Charlotte, Atlanta, and other markets.

Q: Total inventory of space and power, growth target.

A: Andrew P. Power said roughly three gigawatts operating, six gigawatts owned, 1.2 gigawatts under construction, highly preleased.

Q: Cost per megawatt increase, NIMBYism impact.

A: Andrew P. Power talked about cost per megawatt influenced by inflation, market rates exceeding inflation, commitment to community with value proposition including job creation and mission-critical support.