Yahoo Finance Digital Realty (DLR) Q1 FFO Beats, Revenues Increase Y/Y
Digital Realty Trust DLR reported first-quarter 2023 core funds from operations (FFO) per share of $1.66, beating the Zacks Consensus Estimate by a whisker. The figure, however, fell short of the year-ago quarter’s $1.67.
The company experienced year-over-year growth in operating revenues during the quarter. However, rising rental property operating expenses acted as a dampener. DLR maintained its guidance for 2023 core FFO per share but lowered its expectations for full-year revenues.
The company registered operating revenues of $1.34 billion in the first quarter, increasing 18.8% year over year. However, the same missed the Zacks Consensus Estimate by 1.73%. Rental property operating expenses flared up 15.7% from the prior-year quarter, while total operating expenses increased 17.8%.
Adjusted EBITDA of $667.8 million in the quarter marked a 10.7% increase year over year.
Quarter in Detail
In the reported quarter, signed total bookings were estimated to generate $83 million of annualized GAAP rental revenues, including a $34 million contribution from the 0-1 megawatt category and a record $14 million contribution from interconnection. The weighted-average lag between the new leases signed in the first quarter and the contractual commencement date was 16 months.
Digital Realty signed renewal leases, marking $155 million of annualized GAAP rental revenues during the January-March quarter. Rental rates on renewal leases signed during the quarter jumped 4.5% on a cash basis and rose 6.4% on a GAAP basis.
In the reported quarter, MC Digital Realty acquired a three-acre land parcel in Osaka, Japan, for ¥950 million or $7 million. The parcel can support up to 24MW of IT load.
Balance Sheet
Digital Realty exited the first quarter with cash and cash equivalents of $131.4 million, down from the $141.8 million recorded as of Dec 31, 2022.
As of Mar 31, 2023, this data center REIT had $17.9 billion of total debt outstanding, of which $17.3 billion was unsecured debt and $0.6 billion was secured debt and other. As of the same date, its net debt-to-adjusted EBITDA was 7.1X, while the fixed charge coverage was 4.4X.
2023 Guidance Revised
Digital Realty maintained its guidance for 2023 core FFO per share in the range of $6.65-$6.75. The Zacks Consensus Estimate is currently pegged at $6.75, within the guided range.
However, DLR now projects total revenues in the band of $5.5-$5.6 billion, which is lower than the prior-guided range of $5.7-$5.8 billion. The consensus mark is pegged at $5.75 billion, ahead of the guided range.
Adjusted EBITDA remains unchanged in the range of $2.675-$2.725 billion.
This data center REIT retained its projections for rental rates on renewal leases, which is expected to be greater than 3.0% on both cash and GAAP basis, and year-end portfolio occupancy between 85% and 86%. The same-capital cash NOI is estimated to grow 3-4%, marking no change from the prior-guided range.
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
Performance of Other REITs
Crown Castle Inc. CCI reported first-quarter 2023 AFFO per share of $1.91, lagging the Zacks Consensus Estimate of $1.94. The figure, however, compared favorably with the year-ago period’s $1.87. Our estimate for the same was pegged at $1.98.
Higher operating expenses in the quarter were a deterrent. Nonetheless, the rise in site-rental revenues amid elevated tower space demand aided CCI’s year-over-year top-line growth. The company maintained its outlook for 2023.
American Tower Corporation AMT reported first-quarter 2023 AFFO per share, attributable to AMT common stockholders, of $2.54, beating the Zacks Consensus Estimate of $2.38. The figure also surpassed our estimate of $2.44.
Results reflected improving revenues across its Property segment. American Tower recorded healthy year-over-year organic tenant billings growth of 6.4% and total tenant billings growth of 7.3%. It also revised its 2023 outlook.
Alexandria Real Estate Equities, Inc. ARE reported first-quarter 2023 AFFO per share of $2.19, surpassing the Zacks Consensus Estimate of $2.15. The reported figure climbed 6.8% from the year-ago quarter’s tally. We estimated AFFO per share for the quarter to be $2.14.
ARE’s results reflected better-than-anticipated revenues on healthy leasing activity and solid rental rate growth.
Note: Anything related to earnings presented in this write-up represent FFO — a widely used metric to gauge the performance of REITs.
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