Digital Realty Trust, Inc.

good afternoon and welcome to the digital realty first quarter 2025 earnings call please note this event is being recorded during today's presentation all parties will be in listen only mode following the presentation we will conduct a question and answer session callers will be limited to one question and we will aim to conclude at the top of the hour i would now like to turn the call over to jordan sadler Digital Realty Senior Vice President of Public and Private Investor Relations. Jordan, please go ahead.

Thank you, Operator, and welcome everyone to Digital Realty's first quarter 2025 earnings conference call. Joining me on today's call are President and CEO Andy Power and CFO Matt Mercier. Chief Investment Officer Greg Wright, Chief Technology Officer Chris Sharp, and Chief Revenue Officer Colin McLean are also on the call and will be available for Q&A. Management will be making 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 the most directly comparable GAAP measure, are included in the supplemental package, furnished to the SEC, and available on our website. Before I turn the call over to Andy, let me offer a few key takeaways from our first quarter results. First, we posted strong overall leasing in the first quarter of $242 million, consistent with the record pace set in 2024, and driving our backlog of book-not-billed leases to a new record of $919 million. The activity was robust across our primary product segments. Second, core FFO per share growth accelerated ahead of our expectations for the quarter, and with our record backlog, have strong visibility for the remainder of 2025 and growing momentum for 2026. And third, we further evolved our funding model this quarter, following the successful formation of our first U.S. hyperscale fund. enabling us to meet the growing needs of our customers while scaling our balance sheet and enhancing our returns. With that, I'd like to turn the call over to our President and CEO, Andy Power.

Thanks, Jordan, and thanks to everyone for joining our call. The first quarter of 2025 was fraught with attention-grabbing headlines focused on advances in AI and the potential implications for the ongoing AI infrastructure build-out. But Digital Realty continued to execute our full-spectrum meeting place strategy and posted strong results. With the strength of our 1Q results and the visibility provided by a record backlog, we remain confident in our 2025 growth targets and are encouraged by the 40-plus percent increase in our 2026 backlog since the beginning of this year. At 100% share, our backlog of signed but not commenced leases exceeded $1.3 billion at March 31, 2025. Despite the headlines, demand for data center capacity remains strong, and our value proposition continues to resonate, evidenced by nearly $400 million of new leasing completed in the quarter or $242 million of new leasing at digital share. With healthy contributions, from both our major product categories. Leasing in our zero to one megawatt plus interconnection segment was 69 million, our second highest ever, behind only last quarter's record. This quarter's total included 15 million of interconnection bookings. The leasing achieved in the first quarter in this segment was ahead of pace relative to last year's record 250 million of leasing, which is a reflection of our team's intense focus and execution on our meeting place strategy. We completed nearly $325 million of greater than a megawatt leasing in the quarter, reflecting the demand we are capturing and executing across platform digital in the quarter. At our share, greater than a megawatt leasing was $172 million. Demand for large capacity blocks remains strong and diverse. Over the past five quarters, we've topped 100 million of leasing volume in the greater than a megawatt category four times, with four different customers signing the largest lease in each of those quarters, including this quarter. In fact, the single largest lease in the first quarter of 2025 set a new record for digital realty in terms of total annualized rent signed. In our experience, hyperscale customer activity is more likely to rhyme rather than repeat. Each customer typically beats to its own drum, so when some slow or pause, others push forward. Today, we continue to be encouraged by the secular demand drivers of digital transformation, cloud, and AI, which have been in place for the last several quarters and are supporting consistent interest across our portfolio, including large capacity blocks. Reflecting this dynamic, pricing reached a new milestone in the quarter, with the overall rate on new data center leasing reaching $244 per kilowatt per month, up 10% from the prior record, reflecting strength within the greater than a megawatt category. Looking ahead, our pipeline remains healthy and diverse. Customer and partner interest and engagement were high throughout the quarter and continued into 2Q. customers continue to see significant value in contiguous capacity in core markets that can support multiple use cases, from network optimization to hybrid clouds to artificial intelligence. While it is important to acknowledge the risk posed by elevated uncertainty and capital markets volatility, digital realty's product pipelines remain near record levels. In the meantime, We continue to focus on serving our 5,000-plus customers in the major markets around the world. This quarter, bookings were strongest in North America hyperscale, but we are seeing demand from all regions and for both products. To meet this growing demand, we increased our development pipeline by another 170 megawatts since year end to 814 megawatts at 100% share. Of this total, 63% is pre-leased, with the lion's share of the remaining hyperscale availability focused in Northern Virginia. We continue to see healthy inter-region activity across our global platform in the first quarter. EMEA was the biggest importer, with strong activity from all other regions. We also had very strong enterprise export activity from the Americas and APAC, with EMEA as the preferred destination from each region. It is clear that our global full-spectrum data center platform is a key differentiator for digital realty. It is a key component of our value proposition as customers may onboard to platform digital with just a cabinet, but can then scale to a cage that leverages hyperscale cloud compute and will soon provide access to AI for all customers. During the first quarter, we added another 119 new logos including a leading global semiconductor equipment manufacturer deploying high-performance computing in pairs to take advantage of the well-developed cloud and network communities, along with an emerging AI community on platform digital. Other key wins in the quarter include a leading high-frequency trading fintech is expanding on platform digital, to add private AI by increasing their HPC platform to a new market while improving cloud access and business continuity. An Oracle partner is expanding its footprint on platform digital to Zurich to support Oracle's dedicated region integrated solution for private cloud to address data localization and data sovereignty. A leading blockchain provider is also expanding to a new metro on platform digital. to deploy infrastructure to support decentralized private and public networks. A Fortune 500 payments and transactions company is expanding their global presence on Platform Digital into the Nordics to solve compliance and data localization needs. And an AI inference and training company and a new logo is utilizing the connectivity available on Platform Digital to provide a scalable solution for their AI inference applications. We continue to expand the reach and connectivity of platform digital during the first quarter with our entrance into Indonesia. We partnered with a leading Jakarta-based carrier-neutral data center platform to create Digital Realty Bersama, which will expand its connected campus, offering direct access to a wide array of networks and services, including a direct connection to Indonesia's largest internet exchange provider. Supported by a young and large population, growing cloud adoption, and access to multiple subsea cables, Jakarta is an attractive expansion location that complements our existing APAC footprint. We also launched our Heraklion-1 data center in Crete earlier this month, which complements our Athens campus and adds a key connectivity hub in the Eastern Mediterranean. Strategically linking Europe with Asia, the Middle East, and East Africa, via a dense network of highly connected subsea cables. Also during the quarter, Digital Realty and Console Connect announced a strategic collaboration that will expand the reach of Service Fabric to more than 100 new third-party data centers with access to more than 75 new cloud on-ramps, enriching the global connectivity options available to enterprises across platform digital. In closing out our connectivity-oriented advances, This morning we announced the addition of three new Azure on-ramps, one in Atlanta, one in Brussels, and one in Vienna. These on-ramps expand our global relationship with Microsoft as we now host 15 cloud on-ramps across four continents. Moving over to the financing side of the business, after more than a year of hard work across our team, this year we announced our first U.S. hyperscale data center fund. continuing to evolve our funding model and further expanding the pool of capital available to support the growth of hyperscale data center capacity. The fund offers a unique opportunity for private institutional investors to invest directly in hyperscale data centers alongside the world's largest data center provider. It is dedicated to investing in high-quality hyperscale data centers located across top-tier U.S. metros, including Northern Virginia, Dallas, Atlanta, Charlotte, New York Metro, and Silicon Valley. We've seeded the portfolio with five operating assets and four land sites for data center development and have received very strong interest and limited partner commitments from some of the world's savviest investors, including sovereign wealth funds, pension funds, insurance companies, endowments, and other institutional investors. The investors have done their due diligence committed capital, and placed their trust in digital realty. We are targeting $2.5 billion of equity commitments from our LPs, and we expect to maintain a 20% or greater interest to ensure alignment. All told, the fund will support approximately $10 billion of hyperscale data center investment, enabling us to serve the robust demand of our customers while enhancing our returns through fees. We received more than $1.7 billion of commitments through our first closing, placing us ahead of schedule relative to our year-end target, and we continue to field investor interest. As Matt will discuss in a moment, our progress puts us well on track to meet our capital recycling guidance for 2025 and to fund growth in 2026 and beyond. Before turning it over to Matt, I'd like to touch on our global sustainability progress. During the first quarter, we opened Fra18, a 16-megawatt data center, adaptively reusing the historic and iconic site while delivering cutting-edge technology solutions with a deep focus on sustainable performance and water conservation. Fra18 is optimized for AI and high-performance compute applications with advanced liquid cooling along with the integration of service fabric, for enhanced data security and connectivity. Importantly, this state-of-the-art brownfield development is powered by 100% renewable sources, as are all our facilities in EMEA. This sustainable building in Frankfort continues Digital Realty's leadership in the industry with high-performance green buildings. We added 190 megawatts of third-party certified green data centers in 2024. Also in the first quarter, Digital Realty reached 100% renewable energy coverage for operations in Singapore, a top priority in that market given the country's resource constraints and its Smart Nation initiative. We have installed solar on our facilities over the past couple of years and in the first quarter signed a PPA with Tuas Power for biomass and other regionally sourced renewables to fully cover our load. This further expands the more than 150 data centers around the world that are matched with 100% renewable electricity and adds to our portfolio of 1.5 gigawatts of contracted renewable capacity. And with that, I'm pleased to turn the call over to our CFO, Matt Mercier.