DIGITAL REALTY TRUST, INC. Annual Report - A Comprehensive Investor Summary

Business Overview

Digital Realty Trust, a global leader in data center solutions, provides the critical infrastructure powering today's digital economy. The company owns, operates, and develops highly connected data centers where businesses, cloud providers, and communication companies store and process their essential data. Its extensive global portfolio supports the digital transformation needs of thousands of customers worldwide, offering secure and reliable environments for their mission-critical IT operations.

Financial Performance (Year Ending December 31, 2025)

Last year, Digital Realty showcased its operational strength and strategic capital management.

• Revenue Growth: Total operating revenues reached approximately $5.2 billion in 2025, a solid increase from $4.8 billion in 2024. This growth reflects strong demand for the company's data center services and successful occupancy of new capacity.
• Net Income: The company reported Net Income of $650 million in 2025, up from $580 million in 2024. Revenue growth and strategic asset management primarily drove this increase.
• Funds From Operations (FFO): FFO per share, a key profitability metric for real estate investment trusts (REITs), stood at approximately $6.85 in 2025, a modest increase from $6.70 in 2024. This indicates stable operational profitability.
• Interest Expense: Interest costs rose from $336.3 million in 2024 to $343.6 million in 2025, a 2.15% increase. Higher prevailing interest rates on variable-rate debt and new borrowings to fund growth initiatives primarily caused this rise, despite the company's active debt management.
• Strategic Asset Sales: Digital Realty generated a significant gain of $502 million from asset sales in 2025. This reflects a deliberate strategy of selling non-core or mature assets to optimize the portfolio and fund higher-growth development projects, rather than being part of regular business operations.
• Dividends: The company maintained its commitment to shareholder returns, paying a quarterly dividend of $1.22 per share, totaling $4.88 annually.

Risk Factors (Key Risks)

While Digital Realty holds a strong market position, investors should understand potential risks:

• Interest Rate Sensitivity: As a capital-intensive REIT, rising interest rates can increase borrowing costs, impacting profitability and the expense of funding new developments.
• Competition: The data center market is highly competitive. Numerous global and regional players vie for market share, potentially pressing pricing and occupancy rates.
• Technological Obsolescence: Rapid technological advancements (e.g., AI, edge computing) require continuous investment in infrastructure upgrades to remain competitive and meet evolving customer demands.
• Economic Downturns: A general economic slowdown could reduce enterprise IT spending and demand for data center services.
• Geopolitical and Regulatory Risks: Operating globally exposes the company to various geopolitical tensions, currency fluctuations, and differing regulatory environments.
• Cybersecurity Risks: The company faces risks from data breaches, cyberattacks, and other security incidents. These could disrupt operations, harm its reputation, and incur significant costs.
• Environmental and Climate Change Risks: Physical risks from extreme weather events and transitional risks from evolving environmental regulations could impact operations and costs.

Management Discussion and Analysis (MD&A) Highlights

The MD&A section offers management's perspective on the company's financial health and operating results, including key trends, events, and uncertainties.

• Strategic Growth and Portfolio Management: Digital Realty continued to execute its global expansion and portfolio optimization strategy:
  • Global Joint Venture: In early 2024, Digital Realty formalized a significant joint venture with Brookfield Infrastructure Partners. This partnership aims to develop and operate data centers in key global markets, including Singapore, Frankfurt, and Paris. It leverages shared capital and expertise to accelerate expansion in high-demand regions, with the venture expected to deploy over $8 billion in capital over the next several years.
  • Acquisition Integration & Expansion: The company successfully continued integrating assets from its prior strategic acquisitions, including Teraco in South Africa. This significantly expanded its footprint in a high-growth emerging market. Additionally, through its Digital Core REIT, Digital Realty acquired a new data center in Frankfurt in 2024, further solidifying its presence in a critical European hub.
  • Development Pipeline: Digital Realty invested approximately $2.5 billion in capital expenditures during 2025. This investment primarily focused on developing new data center capacity and expanding existing facilities across its global platform to meet anticipated customer demand, particularly in areas like AI and cloud computing.
  • Focus on Interconnection: A core strategic pillar involves enhancing interconnection capabilities within its data centers. This provides customers with direct, secure, and low-latency access to a vast ecosystem of networks, cloud providers, and enterprises.
• Results of Operations: The MD&A further details the drivers behind revenue growth, changes in operating expenses, and how strategic initiatives impact profitability.
• Liquidity and Capital Resources: This discussion covers the company's sources and uses of cash, capital expenditure plans, and strategies for managing debt and funding future growth.

Financial Health

Digital Realty maintains a disciplined approach to financial management, prioritizing liquidity, capital structure, and debt management.

• Debt Profile: Total consolidated debt stood at approximately $18.5 billion at year-end 2025. The company actively manages its debt maturity profile and cost of capital through various financing strategies, including unsecured notes, term loans, and credit facilities.
• Cash and Cash Equivalents: The company maintains a prudent level of cash and cash equivalents to support operational needs and short-term obligations.
• Liquidity: Operating cash flows, available capacity under its revolving credit facilities, and access to capital markets support Digital Realty's liquidity position. The company uses these resources to fund ongoing operations, capital expenditures, debt service, and dividend payments. It regularly assesses its ability to meet future obligations and fund growth initiatives.

Future Outlook

Digital Realty is strategically positioned to capitalize on the accelerating demand for digital infrastructure. The company's focus on global expansion, capital recycling, and enhancing interconnection capabilities aims to drive sustainable growth and deliver long-term value to shareholders. It also actively manages its debt profile and adapts to market dynamics. Digital Realty anticipates continued demand for its data center solutions, driven by trends such as cloud adoption, AI, 5G, and enterprise digital transformation.

Competitive Position

Digital Realty operates in a highly competitive global data center market but maintains a strong competitive position due to several key factors:

• Global Scale and Reach: As a leading global provider, Digital Realty benefits from an extensive portfolio of data centers across major metropolitan areas worldwide. This offers customers a broad geographic footprint and consistent service delivery.
• Interconnection Ecosystem: The company's focus on developing highly connected data centers creates a robust ecosystem of networks, cloud providers, and enterprises. This offers customers critical low-latency access and choice, serving as a significant differentiator.
• Operational Expertise: Digital Realty possesses deep expertise in designing, developing, and operating mission-critical data center infrastructure, ensuring high reliability and uptime for its customers.
• Diverse Customer Base: Serving a wide range of customers—from cloud providers and internet companies to enterprises and financial services firms—diversifies revenue streams and reduces reliance on any single industry segment.
• Development Capabilities: The company's proven ability to develop new capacity and expand existing facilities allows it to meet evolving customer demands and capture growth opportunities in high-demand markets.