Digital Realty Trust (DLR) Bank of America 2026 Media,Communications & Entertainment Conference summary

Growth outlook

• Bottom-line growth expectations progressed from low-single-digit 2024 guidance to ~6% expected for 2025 and 10% delivered; the 8% current-year outlook was reset to double-digit growth this year and next, potentially beyond.

• Signed-but-not-commenced leases totaled $1.9B at June 30; including a $400M July lease, backlog reached $2.3B, over 30% of in-place data center revenue.

• Management cited backlog commencements, zero-to-one plus interconnection, hyperscale leasing, and strategic private capital as core growth pillars; signed leases and available capital help de-risk future development.

Leasing and demand

• Zero-to-one plus interconnection leasing hit a quarterly record of $108M; four of the last five quarters were records, versus $50M per quarter two years earlier.

• AI-related workloads represented over 21% of zero-to-one plus interconnection leasing in the quarter; leasing rose 28% YoY in Q2, with AI's share nearly doubling.

• Portfolio re-leasing spreads were 25% for the quarter, versus a 10% full-year expectation; zero-to-one spreads were 5.2%, while greater-than-one-megawatt spreads reached 67%, driven by several APAC renewals.

• About 40% of hyperscale rents roll through 2032; expiring rates average ~$140 versus new leases at $160-$220, creating potential upside over the next five to six years if conditions persist.

Development and capital

• Development yield target is 10%+; $20B was under construction with an expected initial cash yield of 11.5%.

• Cost controls include low-basis land, vendor-managed inventory, scaled procurement, standardized designs, GC guaranteed maximum price agreements, and visibility into capital costs.

• The first closed-end fund raised $3.25B of LP equity to support over $10B of data center investment activity at cost; private capital is intended to fund hyperscale development while preserving a 40% zero-to-one/interconnection and 60% hyperscale mix.

• Leverage was 4.7x debt-to-EBITDA; management plans to continue using private capital for hyperscale capacity and permanent financing.

• Acquired Blackstone's remaining 64% interest in three assets for ~$5B at just over a 6.5% cap rate; the assets had AA- rated credit and 15-year leases.