The paragraph is an introduction to the Digital Realty Trust, Inc. First Quarter 2025 Earnings Call. The operator introduces the call, stating it is being recorded and will include a presentation followed by a Q&A session. Jordan Sadler, the senior vice president of investor relations, then welcomes attendees, mentioning the participation of key executives like President and CEO Andy Power and CFO Matt Mercier, among others. The call will include forward-looking statements and non-GAAP financial information, with reconciliations available on their website. Jordan highlights that the company experienced strong leasing activity in the first quarter, amounting to $242 million, which aligns with the record pace set in 2024 and contributed to a backlog of $919 million in booked but not billed leases.

In the second quarter of 2025, Digital Realty Trust, Inc. exceeded expectations with accelerated core FFO per share growth and maintained strong visibility for 2025 and growing momentum for 2026, thanks to a record backlog of signed leases exceeding $1.3 billion. The company successfully formed its first US hyperscale fund to address increasing customer demands while enhancing returns. Despite attention on AI advances, demand for data center capacity remained robust, as evidenced by nearly $400 million in new leasing, with significant contributions from both major product categories. The zero to one megawatt-plus interconnection segment achieved $69 million in leasing, driven by the execution of their meeting place strategy.

In the recent quarter, Digital Realty Trust, Inc. experienced substantial leasing activity, completing nearly $325 million in leases exceeding a megawatt, with $102 million attributable to the company. Demand for large capacity blocks remains strong, driven by digital transformation, cloud, and AI needs. Over the past five quarters, they've consistently surpassed $100 million in this leasing category, with different customers signing significant leases. The first quarter of 2025 set a record for annualized rent. The average leasing rate increased to $244 per kilowatt per month, reflecting the strength in large capacity blocks. The company’s project pipeline is robust and diverse with high customer interest, despite challenges from market uncertainty and capital volatility.

The paragraph focuses on Digital Realty Trust, Inc.'s efforts to meet growing global demand for its data center services, with particular strength in North America. It has expanded its development pipeline by 70 megawatts, with 63% preleased, primarily in Northern Virginia. The company notes strong interregional activity, especially with EMEA as the top importer and strongest enterprise export activity from the Americas and APAC, with EMEA being a preferred destination. Digital Realty's global data center platform offers flexibility for customers, allowing for scalability and future AI access. In the first quarter, 119 new clients were added, including a semiconductor equipment manufacturer and a fintech company expanding their high-performance computing and AI capabilities. Additionally, an Oracle partner is expanding its presence in Zurich to support private cloud solutions while addressing data localization and sovereignty issues.

The paragraph describes several expansion and collaboration efforts by a leading blockchain provider, a Fortune 500 payments company, and an AI company, focusing on expanding the reach and connectivity of "platform digital." The company has entered Indonesia through a partnership with a Jakarta-based data center, expanding their campus with direct connectivity to major networks and internet exchanges. They've also launched a new data center in Crete to enhance connectivity in the Eastern Mediterranean. Collaboratively, Digital Realty Trust and Console Connect are expanding global connectivity options by adding more third-party data centers and cloud on-ramps. Additionally, three new Azure on-ramps have been announced in Atlanta, Brussels, and Vienna.

The paragraph discusses Digital Realty Trust, Inc.'s expansion of its global relationship with Microsoft through 15 cloud on-ramps and the launch of their first US hyperscale data center fund. This fund targets major US metro areas and offers private institutional investors the chance to invest in high-quality data centers. The company has seeded the portfolio with operating assets and development sites, attracting significant interest and commitments from institutional investors. Digital Realty aims to secure $2.5 billion in equity commitments, maintaining a strong alignment with limited partners by holding a 20% interest. With over $1.7 billion already committed, the fund will support approximately $10 billion in data center investment, aiding customer demand and improving returns. The progress positions the company to meet capital recycling targets for 2025 and growth for 2026 and beyond.

In the paragraph, Digital Realty Trust, Inc. highlights its achievements in global sustainability during the first quarter, including the opening of a 16-megawatt data center in Frankfurt optimized for AI and high-performance computing, which operates entirely on renewable energy. The company also achieved 100% renewable energy coverage in Singapore and expanded its renewable energy initiatives through solar installations and a biomass PPA. These efforts contribute to their portfolio of 150 data centers worldwide powered by renewable sources. The paragraph concludes with CFO Matt Mercier discussing the company's strong financial performance, record leasing backlog, and the introduction of a hyperscale fund.

In the first quarter, Digital Realty Trust, Inc. experienced significant growth and success, with core funds from operations (FFO) increasing by 6.1%. The company signed nearly $400 million in annualized rent leases, marking one of its highest quarters. Notable accomplishments include a 26% increase in development capacity and strong performance in both the zero to one megawatt plus interconnection segment and the greater than a megawatt category, primarily driven by North American hyperscaler leasing. Over 85% of new bookings include rent escalators of at least 4% or are linked to CPI, enhancing long-term sustainable growth. The company's backlog grew to $919 million, ensuring strong visibility for growth into 2025, 2026, and beyond.

The paragraph outlines Digital Realty Trust, Inc.'s financial and operational performance in the first quarter, highlighting a significant increase in their 2026 backlog compared to 2025. They reported strong financial metrics, including a core FFO of $1.77 per share, representing a 6% year-over-year increase, with a slight currency-affected rise to $1.79. Operating expenses were slightly lower due to reduced repair and maintenance costs, and property taxes saw minor refunds. Data center revenue rose by 7%, driven by favorable renewal spreads, rent escalators, and new leases. Adjusted EBITDA grew by 11% year-over-year, aided by revenue growth and cost controls. The company also reported robust investment activity, with nearly $1 billion spent on development CapEx and the delivery of 50 megawatts of new capacity, 83% of which was preleased.

The paragraph details Digital Realty Trust, Inc.'s recent activities and financial status. The company initiated new projects, notably a 200-megawatt project in Northern Virginia and expanded its data center development pipeline to $9.3 billion with a 12.5% expected yield. They invested $95 million in Digital Realty Persama in Indonesia and announced a US hyperscale data center fund aimed at facilitating up to $10 billion in investments. They plan to contribute $1.5 billion worth of assets to meet 2025 disposition goals and have strategically managed their balance sheet to support future opportunities by reducing leverage and diversifying capital sources. The company's leverage is below their target at 5.1 times with over $5 billion in liquidity. They raised €850 million in notes to pay off maturing debt, leaving €650 million in debt through 2025. Their debt profile includes a weighted average maturity of 4.5 years, a 2.6% average interest rate, and nearly all debt is fixed-rate and unsecured, with a significant portion non-US dollar denominated.

The article paragraph discusses an update in financial guidance for 2025, with an increase in the core FFO guidance range to $7.05 to $7.15 per share due to updated foreign exchange assumptions. Despite positive trends, the guidance range remains unchanged due to macro and geopolitical uncertainties. The midpoint suggests a 6% annual growth, balancing business strength with increased development spending and reduced leverage. Revenue and adjusted EBITDA growth are expected to exceed 10%, leading to an increase in guidance by $25 million each, while G&A costs rise by $5 million. Other assumptions remain unchanged. The article concludes by opening the floor for questions in a Q&A session.

Andy Power discusses the strong start to the year in both the enterprise colocation and hyperscale segments, despite recent market volatility and uncertainty. They recently signed a significant deal in March and maintain a robust pipeline in both customer segments. In the enterprise sector, their pipeline is at a record level, while on the hyperscale side, they have a number of sites with large contiguous capacity blocks. Customers have recently requested quotes for these blocks in multiple markets. Power highlights the company's strategy of focusing on markets with robust demand and supply constraints, including enterprise service providers, cloud availability zones, and AI workloads. They remain committed to executing their enterprise and colocation strategies effectively.

The paragraph discusses the company's strategic approach to supporting hyperscale customers by focusing on select areas where they can best serve these clients, emphasizing their strong track record and operational excellence. The conversation then shifts to Richard Cho from JPMorgan questioning how prices and tariffs in the supply chain might impact development costs. Andy Power responds by highlighting the company's established vendor relationships and inventory programs, which help maintain consistency in operations and minimize cost impacts. He notes that current developments suggest a modest impact of less than 5% on build costs due to these factors.

The paragraph discusses a company's approach to managing its supply chain to mitigate potential tariff impacts. The business is primarily focused on US, Mexico, and Canada, benefiting from USMCA agreements, which minimize tariff implications. To address potential volatility, the supply chain team proactively orders components ahead of time. Significant changes in tariffs are not anticipated to affect the business's development cycles for several quarters. The paragraph shifts to addressing a specific question about land acquisitions in Atlanta and Charlotte, where there is retail but limited hyperscale presence. Greg Wright explains that Charlotte is an attractive market due to its alignment with the company's target market criteria, noting that they have operated there for a long time.

The paragraph discusses the development of key connectivity hubs in Uptown Charlotte and plans for a hyperscale campus located within 10 miles of a highly connected facility. This facility boasts over 25 networks, around 40 customers, and recent on-ramp approval, contributing to Charlotte's growth into a tier-one market. The city is attractive due to its low-latency location, financial enterprises, Fortune 500 companies, and competitive power availability. Similar initiatives are planned for Atlanta, where a parcel of land has been purchased for a mix of hyperscale and colocation facilities near downtown Atlanta. The area has low vacancy rates and competitive power availability, making it an attractive market.

The paragraph discusses the evolving landscape of hyperscale and AI investment. Andy Power and Chris address a question from Matt Niknam about changes in capital expenditure plans among cloud and hyperscale customers, particularly regarding AI. Andy notes that not all hyperscale customers are the same, emphasizing the importance of serving diverse markets and avoiding regions with numerous cloud availability zones. He highlights the diversity in demand across different markets, evidenced by robust lease signings from various hyperscale customers, none of which are their top customer. Chris is asked to expand on the implications of deep sea locations in this context.

The paragraph features a conversation during a Q&A session regarding advancements in AI and infrastructure, emphasizing the integration of various hardware, software, and ecosystems to enhance market capabilities. Chris Sharp discusses the importance of inference in AI monetization and supporting private AI deployments. Alex Waters from Bank of America asks Andy Power about a significant lease related to AI. Andy responds by sharing general figures, noting $400 million in total signings, with their share being over $240 million, without detailing specific customer contracts.

The paragraph discusses the current state and future prospects of a company's operations related to AI and previous acquisitions. It highlights that AI signings have reached a new high, driven more by hyperscale needs rather than enterprise demands this quarter. The company sees an increase in the size and quality of its enterprise AI pipeline. Additionally, during a Q&A session, Michael Elias from TD Cowen asks about past acquisitions, Teraco and Ascenty. Greg Wright responds, noting a put-call mechanism related to Teraco that spans from February 1926, and mentions ongoing developments with Ascenty.

The paragraph describes the positive performance and strategic progress of two businesses, one in South Africa and the other, Ascenty, in partnership with Brookfield. Both businesses are seen as performing well, with strong management teams and market positions. Ascenty has made strides in the enterprise sector, moving beyond its historical focus on hyperscale clients, and has adopted strategies from Platform Digital. The speaker expresses satisfaction with the team, assets, and performance of both businesses. Jim Schneider from Goldman Sachs then asks about the record backlog in enterprise and whether the hyperscale backlog is also at a record level, expressing interest in any changes in activity that might affect future leasing quarters. Andy Power responds, indicating he'll address the pipeline and backlog situation.

The paragraph discusses the company's recent performance and future prospects. It highlights a record pipeline on the enterprise side and the fast pace of deal closures, including a notably large deal completed at unprecedented speed. The company is actively engaging with customers for new quotes on large capacity blocks and has a record backlog of signed but not yet commenced contracts, totaling $1.3 billion, with their share just over $900 million. These contracts are long-term and offer attractive rates and escalators. The company expects this to contribute to accelerated bottom-line growth and sustainable growth per share. In response to a question, Andy Power breaks down the performance in the zero to one megawatt side, emphasizing close to 4% cash mark-to-market on new signings, marking the second-highest quarter in the company's history following a record quarter.

The paragraph discusses positive price trends across markets, especially in the zero to one category, with continued momentum and positive price movement in larger deals driven by hyperscale demand and supply constraints. The focus on supporting hyperscale customers in regions with diverse demand and large capacity for growth has kept pricing firm. In response to a question on interest rate volatility and cap rates for data centers, Greg Wright explains that while cap rates have increased, growth rates have more than offset this. Additionally, $1.5 billion of stabilized assets are set to move to a new fund.

The paragraph discusses the stability of cap rates in the market, despite higher interest rates, due to expectations of greater growth. It mentions that a cap rate of around high fives applies to assets worth over $1.5 billion. The question from Irvin Liu shifts the focus to pricing trends for new leases, particularly in the Americas. Andy Power attributes recent pricing strength to increased demand in the US from enterprise IT, digital transformation, cloud computing, and AI, particularly in Northern Virginia, Dallas, and Chicago. He anticipates this trend will eventually globalize, similar to cloud computing, driven by countries investing in AI and digital data infrastructure.

The paragraph is a conversation between Eric Luebchow from Wells Fargo and two executives, Andy Power and Colin McLean, discussing the enterprise segment's performance and outlook. Eric asks if recent macroeconomic concerns and tariffs are affecting enterprise-level decision-making and if the growth in bookings for projects under one megawatt remains on track. Andy and Colin affirm the strong demand and impressive performance in the enterprise segment, emphasizing record-level enterprise funnels, robust demand across regions, and strong performance in the less than one megawatt category, with Q1 being the second-highest booking quarter to date.

The paragraph is part of a conversation about a company's recent performance and future outlook. The company reported a strong performance in the zero to one megawatt segment for the third consecutive quarter, with significant contributions from large enterprises, which accounted for 53% of overall bookings. There was a notable performance in industry subsegments and interconnection, highlighting the platform's value. The future pipeline is reportedly the largest on record for the zero to one megawatt segment, with numerous use cases emerging in global accounts, particularly in hybrid network and compute enterprises. The commercial segment also shows strong new logo pipeline performance, with partners contributing 33% to the overall pipeline. Key trends include hybrid cloud, data localization, and early stages of AI. During the Q&A, Vikram Malhotra from Mizuho asked for insights on demand visibility between hyperscale and cloud or enterprise segments, noting past discussions on delayed decision-making and whether this year could still be a record year. Andy Power responded to this inquiry.

The paragraph discusses recent achievements and future plans of a company involving significant signings worth $2,024,000,000 and the acquisition of around 600 new customers. It highlights the company's success in various segments and expresses optimism for the remainder of the year. Colin McLean addresses the similarities and differences between enterprise and hyperscale cloud demand, noting that enterprise buying cycles are shorter and have not changed significantly. Michael Rawlings from Citi inquires about opportunities to expedite new developments, particularly where energy constraints may exist, and whether faster timelines could result in earlier sales.

In the paragraph, Andy Power emphasizes the importance of compressing timelines to improve win probabilities and outcomes. He highlights several strategies contributing to this, including maintaining a strong balance sheet with $5 billion liquidity, having commitments for a growth fund, and setting up efficient supply chains. Power also mentions a development pipeline worth $9.5 billion, with 55% preleased, predominantly in prime markets like Northern Virginia. Additionally, he notes the competitive advantage of recently acquired land and how these factors enable the company to seize opportunities and deliver results. The discussion also acknowledges a question from Nick Del Deo regarding collaboration with a major Neo Cloud customer.

In the paragraph, Andy Power discusses the company's strategy regarding their Neo Cloud customers. They are carefully expanding their customer base in this area, aiming to preserve and create long-term value. While they have won their fair share of business from Neo Cloud customers, they maintain a balanced approach and avoid overexposure. Some of their existing major customers occasionally demand services more quickly or have critical needs, prompting prioritization. Neo Cloud customers have been successful, and Digital Realty Trust (led by Andy Power) is looking to expand its hyperscale customer base. The conclusion of the call is noted, with the operator passing it back to Andy Power for closing remarks. Power highlights strong results in 2025, building on previous momentum from 2024.

The demand for data center capacity is strong and widespread, driven by global technological growth. Digital Realty Trust, Inc. is supporting customer needs with an expanding development pipeline and an evolving funding model. The company is focusing on strategic priorities to achieve bottom-line growth by 2025 and ensure long-term sustainable growth. The CEO expresses gratitude to the team for their dedication and is optimistic about the future. The conference then concludes.

This summary was generated with AI and may contain some inaccuracies.