Digital Realty Trust, Inc.
DLR · NYSE
Next quarter
Reports Oct 22, 2026.
Consensus is $1.98 EPS for Sep 2026 across 7 estimates, ranging $1.77 to $2.14.
DLR Jun 2026
- 7.58%
- +11.01%
- $1.98
- $2.13
- —
- —
Highlights
- Core FFO beat: Core FFO excluding net promote was $2.13 per diluted share, versus consensus of $1.98, a 7.58% surprise; the figure rose from $2.04 in Q1 2026 and $1.87 in Q2 2025.
- Revenue accelerated: Total operating revenue was $1.924 billion, up 18% sequentially and 29% year over year, helped by higher rental revenue, tenant reimbursements and $248.9 million of fee income.
- Leasing demand strengthened: Second-quarter bookings represented $208 million of annualized GAAP base rent at Digital Realty’s share, including $108 million from 0-1 MW and interconnection bookings; backlog reached a record $1.4 billion at DLR’s share.
- Renewal pricing improved: Renewal leases achieved 25.4% cash rent growth and 32.0% GAAP rent growth, prompting the company to raise its 2026 renewal-rate outlook to 9.0%-11.0% cash and 12.0%-14.0% GAAP.
- Guidance increased: 2026 Core FFO excluding net promote guidance rose to $8.15-$8.20 per share from $8.00-$8.10 previously; constant-currency guidance increased to $8.10-$8.15.
- Promote boosted reported results: Core FFO included $188 million of net promote income from three developed and leased joint-venture data centers; Core FFO including promote was $2.65 per share, versus $2.04 in Q1.
- GAAP earnings were mixed by comparison: Diluted GAAP EPS was $1.21, versus $0.46 in Q1 but $2.94 in Q2 2025, when a $931.8 million property-disposition gain lifted earnings.
- External growth expanded: DLR acquired a 64% interest in three fully leased Northern Virginia data centers totaling 288 MW at a gross value of approximately $7.8 billion, with consideration of about $3.5 billion including $1.2 billion of cash and 12.3 million shares.
- Capital remained active: The company issued 6.2 million ATM shares for approximately $1.2 billion during the quarter and $2.5 billion year to date; total debt was $18.6 billion and net debt-to-adjusted EBITDA was 4.7x.
Analysis
Digital Realty’s second quarter was a strong operating print with a non-GAAP earnings beat, accelerating leasing and higher guidance, although reported GAAP comparisons were distorted by last year’s large asset-sale gain and this quarter’s promote income. Core FFO excluding net promote rose to $2.13 per share from $2.04 in Q1 and $1.87 a year ago, exceeding the $1.98 consensus estimate by 7.58%. Including $188 million of net promote income, Core FFO reached $2.65 per share. GAAP diluted EPS was $1.21, up from $0.46 sequentially but down from $2.94 in Q2 2025, which included a $931.8 million disposition gain.
The operating backdrop was the central positive. Revenue increased 18% sequentially to $1.924 billion and 29% year over year, while adjusted EBITDA rose 6% sequentially and 19% year over year to $978 million. DLR signed $208 million of bookings at its share and ended with record backlog of $1.4 billion, while renewal cash spreads reached 25.4%. Management raised full-year Core FFO excluding promote guidance to $8.15-$8.20 per share. The quarter also marked substantial expansion of the capital base: DLR bought into 288 MW of Northern Virginia hyperscale assets, added development land in Kansas City, Atlanta and Marseille, and funded growth with $1.2 billion of quarterly ATM proceeds.
Leasing and pricing
Customer demand strengthened across both smaller deployments and hyperscale capacity, with the company emphasizing the contribution from its connectivity-rich portfolio. The nine-month average lag between signing and commencement means much of the quarter’s leasing should feed future periods rather than current revenue.
- Bookings: New leases signed in Q2 represented $307 million of annualized GAAP base rent at 100% share and $208 million at DLR’s share. The 0-1 MW category contributed $88 million and interconnection contributed $20 million at DLR’s share.
- Backlog: Signed but not commenced leases totaled a record $1.9 billion of annualized GAAP base rent at 100% share, or $1.4 billion at DLR’s share.
- Renewals: DLR signed $262 million of annualized cash rent renewals. Cash rental rates increased 25.4% and GAAP rates increased 32.0%, while churn was 2.0%.
- Portfolio: End-of-quarter occupancy increased to 90.2% from 90.1% in Q1 and 89.7% a year earlier; same-capital occupancy rose to 92.5% from 91.6% in Q1.
Guidance and earnings quality
The guidance increase reflects better internal growth assumptions and a larger development program, but the quarter’s headline Core FFO included a material one-time promote. The cleaner underlying measure, Core FFO excluding net promote, still improved year over year and sequentially.
- Underlying growth: Core FFO excluding net promote was $2.13 per share, up 4% from $2.04 in Q1 and 14% from $1.87 a year earlier.
- Promote contribution: Net promote added $187.9 million to Core FFO, resulting in $2.65 of Core FFO per share versus $2.04 in the prior quarter.
- Other item: DLR recognized a $94 million after-tax insurance settlement, including approximately $27 million of business-interruption recovery in Core FFO.
- Raised outlook: Full-year Core FFO excluding net promote guidance increased to $8.15-$8.20 per share from $8.00-$8.10. Constant-currency guidance increased to $8.10-$8.15.
- Operating assumptions: The company raised its 2026 renewal-rate outlook to 9.0%-11.0% on a cash basis and 12.0%-14.0% on a GAAP basis, while same-capital cash NOI growth guidance rose to 4.25%-5.25%.
Hyperscale expansion
External growth was unusually large for the quarter, centered on Northern Virginia hyperscale assets and additional land that extends DLR’s development runway. The Northern Virginia acquisition is expected to be fully stabilized in the first half of 2027 and first half of 2028.
- Northern Virginia acquisition: DLR acquired the remaining 64% interest in three fully leased data centers totaling 288 MW. The assets had a gross value of approximately $7.8 billion and an expected initial stabilized cap rate above 6.5%.
- Consideration: Total consideration for the partner interest was approximately $3.5 billion, comprising $1.2 billion of cash and 12.3 million DLR shares; the company also assumed a $726 million construction loan.
- Development land: DLR acquired Kansas City land for approximately $475 million supporting up to two gigawatts of utility power, while Atlanta land holdings now support a campus of more than one gigawatt.
- Capital program: Development capex guidance increased to $4.25-$4.75 billion for 2026, from $3.50-$4.00 billion previously, with expected average stabilized yields of at least 10%.
Same-capital performance
The stabilized portfolio continued to deliver durable internal growth, with rent increases and higher occupancy more than offsetting higher operating costs. Currency helped reported cash NOI, but constant-currency growth remained positive.
- Same-capital revenue: Revenue increased 8.2% year over year to $1.272 billion and 1.9% from Q1.
- Cash NOI: Same-capital cash NOI rose 8.9% year over year to $697.5 million, or 7.2% on a constant-currency basis.
- Six-month trend: First-half same-capital cash NOI increased 8.4% year over year, or 4.9% on a constant-currency basis.
- Occupancy: Same-capital occupancy ended at 92.5%, up from 91.6% in the prior quarter and 91.5% a year earlier.
Balance sheet and funding
DLR funded its acquisition and development agenda with a combination of equity issuance, joint-venture capital and debt capacity. Leverage remained broadly stable despite the significant expansion in assets.
- Equity issuance: DLR sold 6.2 million shares through its ATM program at a weighted average price of $191.63, generating approximately $1.2 billion of net proceeds in the quarter. Year-to-date issuance totaled 13.5 million shares and $2.5 billion.
- Leverage: Total debt was approximately $18.6 billion at quarter-end, with net debt-to-adjusted EBITDA of 4.7x versus 4.7x in Q1 and 5.1x a year earlier.
- Coverage: Fixed-charge coverage improved to 5.2x from 4.9x in Q1 and 4.7x in Q2 2025.
- Dividend: The quarterly common dividend remained $1.22 per share, while the diluted AFFO payout ratio fell to 49.5% from 63.6% in Q1.
Reported earnings bridge
GAAP earnings benefited from stronger property operations, higher fee income and the insurance settlement, but the year-ago comparison remains misleading because Q2 2025 included a large property-sale gain. Fee income rose sharply this quarter primarily because of the promote.
- Revenue mix: Rental revenue was $1.146 billion, tenant utility reimbursements were $352.9 million, interconnection and other revenue was $130.4 million, and fee income was $248.9 million.
- Operating income: Operating income before disposition gains was $459.3 million, up from $266.9 million in Q1 and $211.7 million a year earlier.
- Net income: Net income was $457.6 million and net income available to common stockholders was $443.1 million, compared with $174.8 million and $169.1 million, respectively, in Q1.
- Year-ago distortion: Q2 2025 included a $931.8 million gain on property dispositions, producing $1.047 billion of net income and $2.94 of diluted EPS despite lower recurring operating results.
