Digital Realty Trust: Strong Bookings, Backlog, and Commencements, with Rapidly Improving Pricing Outlook; Multi-Year Double Digit Core FFOPS Growth Guidance Shows High Confidence

Research evidence excerpt

Digital Realty Trust: Strong Bookings, Backlog, and Commencements, with Rapidly Improving Pricing Outlook; Multi-Year Double Digit Core FFOPS Growth Guidance Shows High Confidence

3,685 3,891 5.6%

secure a longer term, which allowed DLR to bring the rate up to market levels.

Quarterly Forecasts (FYE Dec)Despite this, the overall pricing environment continues to trend in a positive

Adj. EPS ($)

direction as supply and demand remain imbalanced and NIMBYism concerns 2025A 2026E 2027E

further constrain new capacity. Importantly, the backlog and timing of Q1 0.28 0.47A 0.77

commencements now gives DLR “a high degree of confidence” in the growth Q2 2.91 1.21A 0.78

outlook as the company is now anticipating double digit core FFOPS growth from Q3 0.16 0.52 0.85

Q4 0.25 0.57 0.89

2026-2028. We now estimate core FFOPS of $8.20 in 2026 (excluding promote FY 3.58 2.76 3.28

income; $8.72 if included) growing by 11.0% y/y excluding promote income

and18.0% if included. We look for core FFOPS of $9.07 in 2027, up 10.6% y/y Style Exposure

(excluding promote income in 2026), and $10.05 in 2028, up 11.1%. We maintain

our Overweight rating and establish a December 2027 price target of $235 (vs.

Dec-26 PT of $230 prior).

• Guidance raised on strong releasing performance; promote income

benefits the quarter but is excluded from guide. DLR increased full year

2026 guidance across total revenue (excluding promote income), adj.

EBITDA, and core FFOPS as releasing rates remain strong as demand

continues to outstrip available supply, further exacerbated by mounting

NIMBYism concerns. Results for the quarter benefited from ~$200m of

promote income tied to DLR’s buy out of Blackstone’s ~64% interest in 3 fully

leased Northern Virginia data centers and $113m of proceeds from an