Digital Realty Trust Updates 2007 Guidance

Digital Realty's updated guidance for 2007 includes estimates on how much space it expects to lease, and at what price.

Digital Realty Trust, the largest landlord of data center and Internet gateway facilities, today updated its financial guidance for 2007. The company's press release provides additional information on market rates for leasing data center property. In its recent conference call with analysts, DRT mentioned that new leases for turn-key data center space were being signed at an average annualized gross rent of $100 to $120 a square foot, and sometimes higher, while leases on unfinished shell space were being signed at $30 per square foot.

In today's update, Digital Realty's projections for 2007 assume lower average annualized gross rent for both types of space. The company expects to commence leases for approximately 475,000 to 600,000 square feet of turn-key data center space at an average annualized gross rent of $80 per square foot, and commence leases for 100,000 to 125,000 square feet of "basic commercial" (I.e. unfinished) space at an average annualized gross rent of $19 per square foot.

That suggests that either the company's mention of leases at $100-plus on its conference call were based on recent leases in the most competitive markets (which could be expected to fetch above-average prices), or DLR is being conservative in its guidance for the financial community.

Digital Realty also said it expects 2006 funds from operations in a range between $1.57 and $1.59 a unit, compared to an average estimates from six analysts surveyed by Thomson First Call is $1.59 a unit. The company estimates 2007 funds from operations at $1.85 to $1.95 a unit, compared to a First Call average of $1.94.

Digital Realty Trust, Inc. owns, acquires, repositions and manages technology-related real estate. The company's 56 properties comprise approximately 11.2 million rentable square feet, including 1.3 million square feet of space held for redevelopment.