Digital Realty Trust, Inc.

Good afternoon and welcome to the Digital Realty second quarter 2022 earnings call. Please note this event is being recorded. During today's presentation, all parties will be in a listen-only mode. Following the presentation, we will conduct a question and answer session. Callers will be limited to one question plus a follow-up, and we will conclude promptly at the bottom of the hour. I would now like to turn the call over to Jordan Sadler, Digital Realty's Senior Vice President of Public and Private Investor Relations. Please go ahead.

Thank you, operator, and welcome everyone to Digital Realty's second quarter 2022 earnings conference call. Joining me on today's call are CEO Bill Stein and President and CFO Andy Power. Chief Investment Officer Greg Greit, Chief Technology Officer Chris Sharp, and Chief Revenue Officer Corey Dyer are also on the call. and will be available for Q&A. Management may make forward-looking statements, including guidance and underlying assumptions on today's call. Forward-looking statements are based on expectations that involve risks and uncertainties that could cause actual results to differ materially. For a further discussion of risks related to our business, see our 10-K and subsequent filings with the SEC. This call will contain non-GAAP financial information. Reconciliations to net income are included in the supplemental package, furnished to the SEC, and available on our website. Before I turn the call over to Bill, let me offer a few key takeaways from our second quarter. First, the overarching trend of digital transformation remains a secular driver for our business, which was highlighted by yet another quarter of greater than $110 million of bookings and over 100 new logos added, which was well diversified in terms of product and geo. The improved releasing spreads we saw last quarter continued in 2Q, and we remain focused on offsetting the impacts of rising costs throughout our pipeline of new opportunity and development. Third, our transformation into a leading global data center solutions provider remains on track, with our investment in Terrico expected to close within the next two weeks. And finally, our core FFO per share results exceeded consensus for the quarter, though we tempered our expectations for the second half and full year 2022, principally due to continued FX headwinds as we reaffirmed our constant currency core FFO per share guidance for 2022. With that, I'd like to turn the call over to our CEO, Bill Stein.

Thank you, Jordan, and thanks to everyone for joining our call. Digital realty is levered to powerful, long-term secular demand trends. broadly driven by ongoing digital transformation and the growth in IT and data. We have an unmatched global operating footprint along with a strong development pipeline to continue to deepen and expand that footprint to meet our customers' growing needs. Those customers are a growing community of more than 4,000 organizations across the globe, including the world's largest cloud service providers, communication providers that enable the global transport of data, global 2000 enterprises, as well as many multinational and industry-leading companies. Our second quarter results were strong, with $113 million of new bookings and core FFO per share of $1.72, a 12% increase over the second quarter of last year, and a 3% sequential increase despite stiff FX headwinds. The dialogue with our customers surrounding the evolving supply-demand dynamic and our compelling value proposition has started to translate, with price increases driving positive cash renewals, supporting our push for appropriate rent escalators, and helping to maintain stable development returns. Despite generally higher prices, demand for data center solutions remains strong around the world, with notable productivity in each of our regions. EMEA was a standout this quarter, with all five of our largest deals landing in the region as the world's leading cloud service providers continued to utilize our platform to expand their infrastructure and support their growing needs. Looking forward, Our pipeline remains robust as enterprises continue their digital transformation with a growing preference for hybrid cloud architecture, while cloud and connectivity providers continue to expand their infrastructure to better serve their customers around the world. Andy will provide more color on our results shortly. But first, I want to touch on the recent launch of Service Fabric Connect, an open interconnection solution and orchestration platform designed to support the wider industry shift to a hybrid data-centric architecture. This product launch empowers our enterprise and service provider customers to connect to anyone, anywhere, at any time through an open and neutral digital marketplace. Service Fabric Connect is the first of several related interconnection-oriented products that we have on our roadmap and was launched with availability in over 30 markets around the world. We are excited to bring this product to life and we look forward to delivering these enhanced connectivity benefits to our customers. Let's turn to our investment activity on page four. We continue to invest in our global platform through a combination of organic new market entries that enhance our global productivity offering as well as existing market expansions that are designed to meet our customers' longer-term capacity and connectivity solution requirements. Along these lines, in the second quarter, we acquired land in three European markets for ground-up development to support strong demand. In addition, we announced our entry into Israel with the formation of a joint venture with Mivni, a leading Israeli real estate group, Together, we plan to develop a data center campus in Petah Tikva, the primary connectivity hub in Israel. Our presence in Israel will complement our facilities across the Mediterranean and will support the emergence of new connectivity routes that subsea cable operators are developing between the Mediterranean and the Red Sea. Finally, we have received the necessary regulatory approval in South Africa. to close on the acquisition of Terica, the leading co-location and interconnection provider in South Africa. We now expect to close the transaction within the next two weeks. Our active development pipeline remains robust and grew by more than 10% sequentially, with 41 projects underway, supporting over 360 megawatts of IT capacity in 18 strategically important metros around the world. More than half of this capacity is already pre-sold, reflecting strong customer demand. Given the dynamism of the current environment, we know how important it is to make sure that we are being appropriately compensated for the elevated risk throughout the capital markets and the broader economy. We have sought to mitigate these risks through our VMI program, appropriate pricing adjustments, and CPI-based rent escalators that help insulate us from the impact of higher operating costs throughout the life of our customer contracts. Finally, as we have discussed in the past, we remain focused on opportunistically culling our portfolio. Since the end of 2019, we have monetized over $4 billion of assets through a combination of outright sales, joint ventures, and more recently through the contributions to our Singaporean Capital Partner Digital Core REIT. We view these sales and contributions as an important source of capital raising as we continue to expand our diverse global portfolio and accelerate our growth. Before turning it over to Andy, I'd like to highlight an important update to our board and then discuss the success we are having with other ESG initiatives shown on page five of our earnings presentation. In June, Mary Hogan Prussey, a 30-year REIT industry veteran, was named chairman of the board, succeeding Lawrence Chapman. Mary has served on our board since 2017 and has played a critical role in driving digital realty's expansion and innovation as we have pursued our transformation to being a global, full spectrum data center provider. We are fortunate that Lawrence will continue to serve on our board of directors and provide his deep well of experience, understanding, and leadership. Mary's appointment aligns with Digital Realty's commitment to strong governance, our focus on sustainability, and the aim to balance fresh thinking with experience and continuity. I look forward to working with Mary in our new role. We also continue to advance the ball towards our sustainability goals in the second quarter. In addition to publishing our fourth annual ESG report, we became the first data center operator to achieve the milestone of one gigawatt of sustainably certified data center capacity. We also further expanded our renewable portfolio in the US by contracting for 158 megawatts of new solar energy before the recent run-up in power prices supporting our data centers in California and Georgia. Globally, 119 of our data centers are powered by 100% renewable energy. We are committed to minimizing our impact on the environment while delivering sustainable growth for all of our stakeholders. With that, I'd like to turn the call over to Andy to take you through our financial results.