DIGITAL REALTY TRUST, L.P. Annual Report - Fiscal Year Ended December 31, 2025

Digital Realty Trust, L.P., a global leader in data center solutions, has released its annual report for the fiscal year ending December 31, 2025. This summary breaks down their operations and financial health, offering investors a clear, concise overview of their performance and strategic direction.

1. What does this company do and how did they perform this year?

Digital Realty Trust, L.P. provides essential data center solutions worldwide. Imagine them as the landlords for the internet – they own, operate, and develop the physical spaces where companies house their critical IT infrastructure and servers. Their primary income streams come from rental and other services related to these data centers, alongside fee income for various managed services.

The fiscal year ending December 31, 2025, marked continued expansion and solid performance. Total revenue from rental and other services, plus fee income, reached $6.13 billion, a healthy increase from $5.90 billion in 2024. This upward trend reflects consistent demand for their services. Digital Realty strategically expanded its global footprint, notably acquiring a key data center in Frankfurt in 2024. They also continued to invest significantly in their Ascenty subsidiary, particularly in high-growth Latin American markets, adding new capacity and securing major pre-leases.

2. Financial performance - revenue, profit, growth metrics

Let's examine the key financial figures:

• Total Revenue Growth: Total revenue grew from $5.90 billion in 2024 to $6.13 billion in 2025, an approximate 4% increase. Their core "rental and other services" primarily fueled this growth, rising from $5.75 billion to $5.98 billion. "Fee income and other" also modestly increased from $145 million to $150 million.
• Geographic Revenue Mix: A significant portion of their 2025 revenue, $3.45 billion, came from robust operations in the United States (up from $3.30 billion in 2024). Their international operations contributed substantially, bringing in $2.68 billion in 2025 (an increase from $2.60 billion in 2024). This highlights a well-diversified global presence across EMEA, APAC, and Latin America.
• Profitability (FFO & Net Income): Funds From Operations (FFO) is a key profitability metric for REITs. Digital Realty reported FFO of $7.25 per share in 2025, up from $7.00 per share in 2024, reflecting operational efficiency and revenue growth. Net income, while less indicative for REITs due to depreciation, reached $850 million in 2025, compared to $800 million in 2024.
• Asset Management Gains: The company continued to generate value through strategic portfolio optimization, reporting a gain of $343.6 million from asset sales in 2025, slightly up from $336.3 million in 2024. This reflects proactive management of their property portfolio.
• Reduced Impairment Charges: Asset impairment charges decreased significantly from $50.2 million in 2023 to $30.2 million in both 2024 and 2025. This reduction suggests improved asset valuation and more effective investment decisions.
• Occupancy & Leasing: Overall portfolio occupancy remained strong at approximately 85% across their global footprint. They signed new and renewal leases totaling 150 megawatts (MW) of power capacity in 2025, demonstrating continued demand and successful customer retention.

3. Major wins and challenges this year

Wins:

• Consistent Revenue & FFO Growth: Steady increases in both top-line revenue and FFO per share underscore strong operational performance and sustained demand for their services.
• Strategic Global Expansion: The Frankfurt acquisition and continued investment in Ascenty (Latin America) solidify their position in critical, high-growth international markets.
• Effective Portfolio Management: Successful asset sales and reduced impairment charges demonstrate their ability to optimize their property portfolio and enhance shareholder value.
• Strong Leasing Activity: Significant new and renewal lease signings highlight robust demand and customer confidence.

Challenges:

• Rising Interest Rates: The current interest rate environment increased the cost of capital, impacting financing for new developments and potentially raising debt service costs.
• Intense Competition: The data center market remains highly competitive, requiring continuous investment in technology and infrastructure to maintain an edge.
• Power Availability and Costs: Securing adequate and affordable power for large-scale data centers, especially in prime locations, continues to pose a significant operational challenge.
• Supply Chain Disruptions: While easing, lingering supply chain issues for critical equipment (e.g., generators, switchgear) sometimes impacted development timelines.

4. Financial health - cash, debt, liquidity

Digital Realty maintains a robust financial position, typical for a leading REIT that strategically uses debt to finance its extensive portfolio:

• Cash and Liquidity: As of December 31, 2025, the company held $250 million in cash and cash equivalents and had approximately $3.0 billion available under its global revolving credit facility, providing ample liquidity.
• Debt Overview:
  • Their unsecured senior notes (debt not backed by specific assets) increased slightly from approximately $19.5 billion in 2024 to $20 billion in 2025, reflecting their preference for flexible, unsecured financing.
  • Conversely, secured debt (backed by specific properties) slightly reduced from $1.6 billion in 2024 to $1.5 billion in 2025.
  • They also strategically reduced their unsecured term loan from $2.1 billion to $2 billion and decreased their utilization of the global revolving credit facility from $600 million to $500 million. This reflects a disciplined approach to managing their debt structure and optimizing borrowing costs.
• Leverage: The company's net debt to adjusted EBITDA stood at approximately 6.5x, which falls within their target range for a global data center REIT.
• Equity and Retained Earnings:
  • Retained earnings (profits reinvested in the business) grew from $10.2 billion in 2024 to $10.5 billion in 2025, reflecting healthy internal capital generation.
  • Additional paid-in capital increased from $24.5 billion to $25 billion, reflecting continued equity investment from shareholders and conversions of operating partnership units.
• Joint Ventures: Investments in unconsolidated joint ventures globally expanded from $2.4 billion in 2024 to $2.5 billion in 2025, highlighting their strategy to leverage partnerships for growth and market penetration.

5. Key risks that could hurt the stock price

Investors should be aware of several key risks:

• Interest Rate Fluctuations: As a capital-intensive REIT, rising interest rates can increase borrowing costs, reduce property valuations, and impact profitability.
• Intense Competition: The data center market is highly competitive, with new entrants and existing players vying for market share, potentially leading to pricing pressure or reduced occupancy.
• Technology Obsolescence: Rapid advancements in technology could render existing data center infrastructure less efficient or desirable, requiring significant capital expenditure for upgrades.
• Customer Concentration: While diversified, a significant loss of a major customer could materially impact revenue and profitability.
• Regulatory and Environmental Changes: Evolving data privacy laws, energy efficiency regulations, and climate change initiatives could impose additional costs or operational restrictions.
• Access to Capital: The ability to raise capital (debt and equity) on favorable terms is crucial for funding expansion and managing debt maturities.
• Cybersecurity Threats: As a provider of critical IT infrastructure, the company faces ongoing risks from cyberattacks that could disrupt operations or compromise customer data.

6. Competitive positioning

Digital Realty maintains a leading competitive position as one of the largest global providers of data center solutions. Their advantages include:

• Global Scale and Reach: With a vast portfolio spanning North America, EMEA, APAC, and Latin America, they offer unparalleled global connectivity and deployment options for multinational enterprises.
• Diverse Product Offering: Their full spectrum of data center solutions, from colocation and cross-connects to hyperscale facilities, caters to a wide range of customer needs.
• Strong Customer Relationships: A diversified customer base includes major cloud providers, financial services firms, and enterprises, many holding long-term contracts.
• Operational Expertise: They possess extensive experience in designing, building, and operating highly reliable and secure data centers.

Digital Realty competes with other major data center REITs like Equinix, CyrusOne, and CoreSite, as well as various private data center operators and cloud providers.

7. Leadership and strategy changes

The company reported no significant changes to its executive leadership team in 2025. Digital Realty's strategy continues to focus on:

• Global Platform Expansion: Prioritizing growth in key global markets, particularly in EMEA and Latin America, through strategic acquisitions and new development.
• Portfolio Optimization: Actively managing their asset base through selective dispositions of non-core assets and reinvesting capital into higher-growth opportunities.
• Customer-Centric Solutions: Enhancing their offerings to meet evolving customer demands, including hybrid cloud solutions, AI-ready infrastructure, and increased connectivity options.
• Sustainability Initiatives: Investing in energy-efficient designs and renewable energy sources to reduce their environmental footprint and meet customer sustainability goals.

8. Future outlook

Digital Realty anticipates continued strong demand for data center capacity, driven by megatrends such as artificial intelligence (AI), cloud adoption, 5G deployment, and the Internet of Things (IoT). For 2026, the company projects:

• FFO per share growth in the range of 3-5%.
• Revenue growth of approximately 4-6%.
• Continued investment in new development projects, particularly in high-growth regions and for hyperscale customers, with planned capital expenditures of $2.0-$2.2 billion.

They expect to benefit from their global platform, strong customer relationships, and strategic focus on providing critical infrastructure for the digital economy.

9. Market trends or regulatory changes affecting them

Several key market trends and regulatory changes are shaping Digital Realty's operating environment:

• Explosive Growth of AI: The demand for high-density, AI-ready data center infrastructure is rapidly increasing, requiring specialized cooling and power solutions. Digital Realty actively develops and deploys such capabilities.
• Cloud Adoption & Hybrid IT: Enterprises continue to migrate workloads to the cloud, but often maintain significant on-premise or collocated infrastructure, driving demand for hybrid IT solutions and interconnection services.
• Data Sovereignty & Privacy Regulations: Global regulations like GDPR (Europe) and various national data residency laws necessitate localized data center presence, which benefits Digital Realty's global footprint.
• ESG and Sustainability Demands: Customers and investors increasingly prioritize Environmental, Social, and Governance (ESG) factors. This drives demand for data centers powered by renewable energy and built with sustainable practices, prompting Digital Realty to invest in green initiatives.
• Supply Chain Resilience: Geopolitical events and global disruptions continue to emphasize the importance of resilient supply chains for data center equipment and construction materials.