Digital Realty Trust, Inc.

Good afternoon and welcome to the Digital Realty third 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. Jordan, please go ahead.

Thank you, Operator, and welcome everyone to Digital Realty's third quarter 2022 earnings conference call. Joining me today on the call are CEO Bill Stein and President and CFO Andy Power. Chief Investment Officer Greg Wright, 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 GAAP net income are included in the supplemental package furnished to the SEC and available on our website. One important item to note this quarter, while Teraco's results are consolidated into our financial statements since closing on August 1st, we have excluded the platform's contribution from leasing, backlog, and other portfolio statistics that will be cited on this call and within our third quarter earnings materials. Before I turn the call over to Bill, Let me offer a few key takeaways from our third quarter. First, we achieved another quarter of record bookings led by robust demand within the greater than a megawatt segment. Second, the signs of improvement in our core portfolio continued to emerge in the quarter with 120 basis point sequential improvement in base data center revenues on a constant currency basis. With the closing on our investment in Terrico, we cemented our position as a leading provider of co-location and connectivity in South Africa. And lastly, our management team, guided by decades of experience, remains focused on navigating the current environment and maximizing the opportunity that lies before us. With that, I'd like to turn the call over to our CEO, Bill Stein.

Thank you, Jordan. And thank you, everyone, for joining our call. The world has experienced significant change so far in 2022, and digital realty is adapting to that change. Our business continues to be levered to powerful long-term secular demand trends, broadly driven by ongoing digital transformation and the growth in IT and data, as our record leasing results underscore. We also have an unmatched global operating footprint that is supported by a strong development pipeline that allows us to capture opportunities wherever they may emerge. As you all understand, global capital markets have become extraordinarily volatile and interest rates have risen sharply from historic lows to levels that we have not seen since 2008. At the same time, the U.S. dollar has strengthened against the euro to levels not seen in nearly 20 years. While you've had to look back over 30 years to find the last time the dollar was this elevated against the pound or the yen. This volatility is being driven by a number of factors from a global economy emerging from the pandemic to the war in Ukraine. And of course the heightened resolve of central bankers to tap down on elevated global inflation. And while the underlying fundamentals of our business remain strong, and fortune can indeed favor the brave, experience has taught us that an ounce of prevention is worth a pound of cure. And we feel that it is most prudent today to adapt to the current environment by, one, prioritizing and sharpening the lens through which we view new investments to ensure that we are focused on the most strategic transactions that offer the highest potential risk-adjusted returns. Two, by pressing our newly gained advantage on pricing and improving our internal growth profile and the longer-term durability of our cash flows. And three, by enhancing liquidity to ensure that we have the capital to meet the commitments that we have made to our customers while maintaining a comfortable cushion. With over 300 data centers around the world and a revenue base of over $4.5 billion, Digital Realty remains focused on how to best position ourselves for the long run. Our third quarter results were strong, with a record $176 million of new bookings, making the third time in the past four quarters that our bookings have exceeded $150 million. Four FFO per share was $1.67, despite stiff FX and interest rate headwinds. On a constant currency basis, we see evidence of the turn that is starting to take shape in our core portfolio. Digital Realty's global platform enables us to capture demand wherever it emerges. North America was the standout this quarter, with our largest deals landing in the region. Multinational companies are using platform digital to enable digital transformation across multiple regions and metros globally. A good example of this is a large, multi-site enterprise built-to-sue transaction signed with a top five financial services company that was inked in the quarter. Looking ahead, sales activity remains healthy as the secular trends driving data center demand remain in place. 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. But the world is changing. We are seeing sales cycle lengthen and global uncertainty extends decision times. Importantly, we are pushing prices higher to reflect tightening supply and rising costs. Admittedly, some of the deals this quarter have been in process for many months and do not fully reflect today's environment. Today, New leases are being priced to reflect current market conditions. And while this will likely be an iterative process, we expect the strong secular trends driving demand toward third-party data centers to continue for years to come. Andy will provide further color on our results and our outlook shortly. During the third quarter, we successfully completed the acquisition of a majority interest in TerraCode. a leading carrier and cloud-neutral data center and interconnection services provider in South Africa. Teraco is a gem, with seven data centers across three metros and robust interconnectivity, including more than 22,000 cross-connects, seven cloud on-ramps, and direct access to seven subsea cables, with more on the way. Teraco has plenty of room to expand, and is expected to generate some of the best growth within our portfolio. Carrico uniquely enhances our position in EMEA, complementing our existing operations in Eastern Africa through iColo, Western Africa through Medallion, and in Europe and the Mediterranean with InterAction, Altus IT, Lambda's Helix, and our newest JV with Mivni in Israel. These are all highly connected assets that leverage subsea cable landing and brings the world closer together, linking Europe, Asia, the Middle East, and Africa. Consistent with that strategy, we recently acquired land on the Greek island of Crete to create an interconnection hub in the eastern Mediterranean to complement our existing hub in Marseille, along with developing hubs in Barcelona and Israel, which will feed additional traffic into Greece, the Balkans, Turkey, and Northern Africa. We expect that this highly differentiated project will generate strong double-digit returns while enhancing the value of our existing facilities in the region. Moving to our dispositions in the quarter, we sold a non-core mixed-use data center property in Dallas for $206 million and reached an agreement with Digital Core REIT to sell a 25% interest in a Frankfurt data center campus for $140 million with an option to acquire up to 90% of the same campus plus a 90% share of one of our Dallas data centers in a larger transaction valued at approximately $750 million. Both transactions are subject to unit holder approval with a vote expected for November. Funding organic new market entry through the disposition of stabilized facilities is our preferred source of capital. It enables us to leverage platform digital to capitalize on value creation opportunities and harvest capital once those facilities have stabilized. We also favor joint ventures like the one in Israel where we leverage the local knowledge and expertise of our partner and pair that with platform digital to expand our global footprint and to better serve our customers. Before turning it over to Andy, I'd like to update you on our ESG success shown on page three of our earnings presentation. We were honored to be recognized by Gresby as the sector leader for technology and science category in the Americas for the second consecutive year, maintaining our five-star rating from this leading investor-driven ESG benchmarking organization. We are proud of our ESG-related efforts, and while the awards and recognition are nice, we are focused on ESG because our customers demand it and because, quite simply, it is the right thing to do. 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. Thank you, Bill.