Digital Realty Trust, a global provider of datacentre and colocation solutions, has announced financial results for the second quarter of 2015.
Financial Results
Revenues were $420 million for the second quarter of 2015, a 3% increase from the previous quarter and a 5% increase over the same quarter last year.
Adjusted EBITDA was $243 million for the second quarter of 2015, a 2% increase from the previous quarter and a 4% increase over the same quarter last year.
Funds from operations on a diluted basis was US$176 million in the second quarter of 2015, or US$1.26 per share, compared to US$1.56 per share in the first quarter of 2015 and US$1.20 per share in the second quarter of 2014.
Excluding certain items that do not represent core expenses or revenue streams, core FFO was US$1.30 per share for the second quarter of 2015 compared to US$1.27 per share in the first quarter of 2015, and US$1.21 per share in the second quarter of 2014.
Net income for the second quarter of 2015 was US$138 million, and net income available to common stockholders was US$117 million, or US$0.86 per diluted share, compared to US$0.75 per diluted share in the first quarter of 2015 and US$0.31 per diluted share in the second quarter of 2014.
Leasing Activity
“Consistent execution on our strategic plan against a backdrop of steadily improving data center fundamentals set the stage for another quarter of solid results, highlighted by new leases representing US$37 million in annualized GAAP rental revenue,” commented Chief Executive Officer A. William Stein.
“In mid-July we announced an agreement to acquire Telx, a leading provider of colocation and interconnection data center solutions, and we look forward to leveraging our combined strengths to offer the most comprehensive set of data center solutions on an open, connected, and global platform. We expect the combination of our two complementary platforms to create a powerful connection for our customers and a promising growth opportunity for our shareholders.”
The weighted-average lag between leases signed during the second quarter of 2015 and the contractual commencement date was 2.5 months.
In addition to new leases signed, Digital Realty also signed renewal leases representing US$23 million of annualized GAAP rental revenue during the quarter. Rental rates on renewal leases signed during the second quarter of 2015 rolled up 1% on a cash basis and up 5% on a GAAP basis.
Investment Activity
During the second quarter of 2015, Digital Realty closed the previously announced sale of 833 Chestnut Street, a 705,000 sq ft mixed-use building in downtown Philadelphia, for US$161 million, or US$228 per square foot. The property was expected to generate cash net operating income of approximately US$9.3 million in 2015, representing a cap rate of 5.8%. The sale is expected to generate net proceeds of US$150 million, and Digital Realty recognized a gain on the sale of approximately US$77 million in the second quarter of 2015.
In April 2015, the company acquired a 4.1-acre site adjacent to its existing Digital Deer Park campus in Melbourne, Australia, for a purchase price of US$2 million. This site is capable of supporting an 86,000 sq ft Turn-Key Flex datacentre building. The timing and commencement of any future development will be subject to market conditions.
In June 2015, the company acquired a 144,000 sq ft warehouse for redevelopment in Singapore for a purchase price of US$45 million. Upon completion, the project is expected to support 10 to 15 megawatts of IT load. Digital Realty expects to deliver the first three Turn-Key Flex datacentre suites by early 2016.
Subsequent to the end of the quarter, Digital Realty announced a definitive agreement to acquire Telx from private equity firms ABRY Partners and Berkshire Partners in a transaction valued at US$1.886 billion. The combination is expected to double Digital Realty’s footprint in the rapidly growing colocation business and provide the company’s customers access to a leading interconnection platform. Digital Realty expects to fund the acquisition with proceeds from the recent forward equity offering and a mix, subject to market conditions and other factors, of preferred equity and debt. The acquisition is expected to close later this year and is subject to customary closing conditions.
