North America Telecommunications Infrastructure: New York State Set to Ban Data Center Construction for Up to a Year

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North America Telecommunications Infrastructure: New York State Set to Ban Data Center Construction for Up to a Year

e and Asia, and unfavorable currency movements could impact reported financial performance;

and 5) rising rates create a risk for a higher cost of capital and potential dilution to future FFOPS and AFFOPS that could put

pressure on DLR shares.

Risks to Digital Realty and the category more broadly clearly relate to the supply and demand dynamics that govern pricing for

the industry. The challenge is that industry demand for bits is difficult to quantify into bookings, and the supply-demand

dynamics sit at the micro-market level, whereas we are looking at performance on a national or global level. The balance

between supply and demand could also be impacted by changes in technology that can create sudden shifts in either supply,

demand, or both. Most of these concerns are expressed as longer-term risks for the data center stocks that result in stranded

capital either temporarily or permanently. We generally believe that it is hard to find a technology change that becomes an

absolute positive or absolute negative for the nature of communications infrastructure-based business models like towers and

data centers, and we believe each development needs to be generally considered in the context of the growth prospects for the

secular demand underlying those services. Economic weakness/strength could cause revenue and cash flow to fall

below/above our expectations.

The potential for faster deployment of capital into its Hyperscale Investment Fund, higher development yields from its retail-

centric assets, and stronger sales and pricing from the limited supply hyperscale portfolio could provide opportunities for