Digital Realty Sees Growth, Investment in 2012

Digital Realty Trust (DLR) appears confident about the industry's prospects for 2012. The company, which is the largest owner of data center properties, expects revenue to improve at least seven percent over its 2011 performance.

Data center developer Digital Realty Trust appears confident about the industry's prospects for 2012. The company, which is the largest owner of data center properties, expects revenue to improve at least seven percent over its 2011 performance. It also reported strong leasing for the fourth quarter of 2011.

Digital Realty (DLR) now projects funds from operation (FFO) for 2012 in a range between $4.34 and $4.48 per share. That translates to expected FFO growth of 7.2 percent to 11.4 percent over the 2011 range of $4.02 to $4.05 a share. The company said it expected to spend $300 to $400 million acquiring income producing properties, and invest between $700 million and $900 million in redeveloping data center space.

On the leasing front, Digital Realty signed leases for 446,000 square feet of space in the fourth quarter of 2011, representing $50.9 million in annualized GAAP rental revenue. This includes approximately 165,000 square feet of Turn-Key Datacenter space at a rate of $178 per square foot, 87,000 square feet of Powered Base Building space $730 a square foot, 177,000 square feet of Built-to-Suit space leased at an average $84 per square foot, and 17,000 square feet of non-technical space at $18 per square foot. In addition, leases signed for colocation space totaled approximately $2.1 million of annualized GAAP rental revenue, bringing total annualized GAAP rental revenue to approximately $53.0 million in the fourth quarter of 2011.

'Strongest Performances to Date'

"Lease signings in both the fourth quarter and full year 2011 represented our strongest performances to date," said Michael Foust, Chief Executive Officer of Digital Realty. "Markets that experienced the highest level of activity during the year included Dallas, Northern Virginia, Silicon Valley, Los Angeles, Amsterdam, Singapore and Melbourne.

"In addition to the quality of our global sales and portfolio management teams, we believe that the strength of our leasing program is the result of our geographically diverse portfolio," Foust added. "This enables us to deploy growth capital to meet our customers' data center requirements across multiple markets, while mitigating exposure to any one market."

Of the total leases signed during the fourth quarter of 2011, approximately 325,000 square feet was for space in the company's U.S. portfolio. This includes:

  • 104,000 square feet of Turn-Key Datacenter space leased at an average annual GAAP rental rate of $151.00 per square foot
  • 28,000 square feet of Powered Base Building space at $30 per square foot
  • 177,000 square feet of Build-to-Suit space at $84 per square foot
  • 16,000 square feet of non-technical space leased at an average $17.00 per square foot.

Digital Realty also leased 114,000 square feet of space in Asia, and 6,000 square feet of Turn-Key Datacenter space in Europe.

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