Digital Realty Reports Third Quarter Results

                 Digital Realty Reports Third Quarter Results

PR Newswire

SAN FRANCISCO, Oct. 29, 2013

SAN FRANCISCO, Oct. 29, 2013 /PRNewswire/ -- Digital Realty Trust, Inc. (NYSE:
DLR), a leading global provider of data center solutions, announced today
financial results for the third quarter of 2013. All per share results are
shown on a diluted share and unit basis.

Highlights

  oReported FFO per share of $1.10 in 3Q13, vs. $1.13 in 3Q12;
  o3Q13 results include a $10 million ($0.07 per share) non-cash
    straight-line rent expense adjustment;
  oReported core FFO per share of $1.16 in 3Q13, vs. $1.13 in 3Q12;
  oSigned leases during 3Q13 expected to generate $47.3 million in annualized
    GAAP rental revenue, which is the third-highest quarter in the company's
    history;
  oClosed previously announced $369 million joint venture at a 6.7% cap rate;
  oAnnounced a $500 million share repurchase authorization; and
  oRevised 2013 FFO per share outlook to $4.60-$4.62 vs. $4.73-$4.82
    previously, and revised 2013 core FFO per share outlook to $4.65-$4.67 vs.
    $4.74-$4.83 previously.

Funds From Operations

Funds from operations ("FFO"), on a diluted basis, was $151.4 million in the
third quarter of 2013, or $1.10 per share, compared to $1.22 per share in the
second quarter of 2013 and $1.13 per share in the third quarter of 2012.
Excluding certain items that do not represent core expenses or revenue
streams, third quarter 2013 core FFO was $1.16 per share, compared to $1.19
per share in the second quarter of 2013 and $1.13 per share in the third
quarter of 2012. 

Third quarter 2013 results include a $10 million ($0.07 per share) non-cash
straight-line rent expense adjustment related to the company's leasehold
interest at 111 8^th Avenue in New York. In September 2010, Digital Realty
executed an extension and modification of this leasehold interest, which had
been previously scheduled to expire in June 2014, and extended the expiration
of the leaseholdfor another 10 years to June 2024. The company has
determined that it should have adjusted the straight-line rent expense
recorded on this leasehold interest when the modification was executed in
September 2010. The $10 million adjustment recorded during the third quarter
of 2013 represents a catch-up of the non-cash straight-line rent that should
have been recorded from the fourth quarter of 2010 through the third quarter
of 2013 at a run-rate of approximately $830,000 per quarter. The entire prior
period adjustment has been included in FFO, whereas only the current period
portion of $830,000 has been included in core FFO for the third quarter of
2013.

Leasing Activity

"We signed new leases totaling $47 million of annualized GAAP rental revenue
during the third quarter, including nearly $28 million since the second
quarter earnings call in late July. This represents the third-highest quarter
in the company's history, and the dollar volume of leases signed year-to-date
has already exceeded the full-year activity in 2012," said Michael F. Foust,
Digital Realty's Chief Executive Officer.

"We are disappointed with the third quarter financial results, but the robust
leasing velocity gives us confidence in the underlying health of the business
as well as customer demand for Digital Realty's data center solutions. While
lease commencements have lagged our initial expectations, the solid backlog of
leases signed-but-not-yet-commenced represents contractual obligations for
future rental revenue, and sets the stage for healthy growth in cash flows
over the intermediate term."

In addition to the new leases signed, Digital Realty also signed renewal
leases totaling approximately $45 million of annualized GAAP rental revenue
during the third quarter, notably including 480,000 square feet of Powered
Base Building® data centers. Rental rates on renewal leases signed during the
third quarter of 2013 rolled up 2.2% on a cash basis and 24.2% on a GAAP
basis.

New leases signed during the third quarter of 2013 by region and product type
are summarized as follows:

North America    Annualized GAAP Rent   Square Feet GAAP Rent / MW   GAAP Rent
                 (in thousands)                     Sq. Ft.          / kW
Turn-Key Flex    $27,393                202,653     $135        14.6 $156
Custom Solutions 4,029                  23,322      173         2.0  168
Colocation       2,517                  16,154      156         1.0  220
Non-Technical    682                    29,992      23          -    -
Total            $34,621                272,121     $127        17.6 $162
Europe^(1)
Turn-Key Flex    $5,016                 30,468      $165        2.5  $168
Custom Solutions -                      -           -           -    -
Colocation       -                      -           -           -    -
Non-Technical    33                     773         43          -    -
Total            $5,049                 31,241      $162        2.5  $168
Asia Pac^(1)
Turn-Key Flex    $6,695                 32,206      $208        2.0  $279
Custom Solutions -                      -           -           -    -
Colocation       934                    4,741       197         0.3  247
Non-Technical    11                     250         43          -    -
Total            $7,640                 37,197      $205        2.3  $275
Grand Total      $47,309                340,559     $139        22.4 $173

^(1)Based on quarterly average exchange rates during the three months ended
September 30, 2013.

Investment Activity

Digital Realty did not acquire any income-producing properties during the
third quarter of 2013. 

In August 2013, the company entered the Japan market with the acquisition of a
3.7 acre land site in Osaka for a purchase price of $9.6 million. Digital
Realty expects to commence development of a new data center in the fourth
quarter of 2013, which will be scheduled to open in the fourth quarter of 2014
and deliver 4.0 megawatts of IT capacity.

In September 2013, the company also acquired one land parcel in London and one
in Amsterdam for a total purchase price of $25.9 million. The 11.4 acre land
site in London was acquired for a previously contracted build-to-suit
project. The first stage of this multi-phased development project of a
two-building data center campus is expected to deliver a four-pod building
with 12 megawatts of IT load. The 5.4 acre land site in Amsterdam is a
multi-phased development project that is expected to support a six-pod
building with 11.5 megawatts of IT load.

In September 2013, the company formed a $369 million joint venture with an
investment fund managed by Prudential Real Estate Investors ("PREI"). Digital
Realty contributed to the joint venture nine Powered Base Building^® data
centers totaling 1.06 million square feet and valued at approximately $345 per
square foot. The properties are expected to generate cash net operating
income of approximately $24.5 million in 2013, representing a 6.7% cap rate.
The properties are 100% leased, with an average remaining lease term of
approximately nine years. The PREI^®-managed fund took an 80% interest in the
joint venture and Digital Realty retained a 20% interest.

Balance Sheet

Digital Realty had $4.8 billion of total debt outstanding as of September 30,
2013, comprised of $4.1 billion of unsecured debt and $0.7 billion of secured
debt. At the end of the third quarter, debt-to-adjusted EBITDA was 5.4x,
debt-plus-preferred-to-total-enterprise-value was 44.1% and fixed charge
coverage was 3.5x.

In August 2013, Digital Realty completed the refinancing of its global
revolving credit facility and multi-currency term loan. In the process, the
line of credit was upsized from $1.8 billion to $2.0 billion and the term loan
was upsized from $750 million to $1.0 billion. All-in pricing for the line of
credit was reduced from 150 basis points to 130 basis points, and all-in
pricing for the term loan was reduced from 145 basis points to 120 basis
points. The maturity date for the line of credit was extended by two years to
November 2017, not including two six month extension options. The maturity
date on the term loan is unchanged and remains April 2017, with two six-month
extension options added.

In October 2013, Digital Realty's board of directors approved a $500 million
share repurchase program, which the company may use to opportunistically
reacquire shares based on the then-current share price and capital allocation
alternatives.

Revised 2013 Outlook

"With improved visibility on the range of outcomes for full-year results, we
are revising our 2013 FFO per share outlook to $4.60-$4.62 down from
$4.73-$4.82 previously, and revising our 2013 core FFO per share outlook to
$4.65-$4.67 down from the prior range of $4.74-$4.83," said A. William Stein,
Digital Realty's CFO and Chief Investment Officer.

"The primary drivers behind our revised outlook include: the non-cash
straight-line rent expense adjustment; the near-term reinvestment drag until
proceeds from the joint venture with PREI can be accretively redeployed;
lower-than-expected acquisitions of income-producing properties; and delayed
lease commencements, reflecting the needs of strategic customers for phased
delivery of custom-built space for large-scale requirements on long lease
terms."

The 2013 guidance provided by Digital Realty in this press release is based on
the following assumptions as of October 29, 2013:

  oData center space delivered representing approximately $800 million
    generating ROI of 10%-12%;
  oDigital Design Services revenue of $3 million;
  oAcquisitions of income-producing properties totaling $85-$140 million at
    an average cap rate of 8.5%-9.5%;
  oDevelopment capital expenditures of $1.05-$1.125 billion;
  oRecurring capital expenditures and capitalized leasing costs of $70-$75
    million;
  oTotal G&A expense of $67 million;
  oTransaction expenses of $4-$5 million; and
  oFX rates (USD per currency): Euro = 1.33; Pound = 1.56; SGD = 0.79; and
    AUS = 0.92.

Preliminary 2014 Outlook

Digital Realty is providing its preliminary 2014 outlook in this press
release, based on the following assumptions as of October 29, 2013:

Internal Growth

  oRental rates on renewal leases are expected to be roughly flat on a cash
    basis, and modestly positive on a GAAP basis
  oOperating margin is expected to be approximately 25-75 basis points lower
    than the historical run-rate, reflecting a higher mix of gross leases on
    Turn-Key Flex data centers, and a reduced exposure to triple-net leases on
    Powered Base Building^® product as a result of our contribution of nine
    Powered Base Buildings^® to our joint venture with PREI
  oOverhead load is expected to trend in line with the historical average,
    with G&A at approximately 75-85 basis points on total assets

External Growth

  oAcquisitions of income-producing properties projected to be in the range
    of $0-$400 million at an average cap rate of 7.5%-8.5%
  oPotential joint ventures in the range of $0-$400 million at an average cap
    rate of 6.75%-7.25%
  oDevelopment capital expenditures of $600-$800 million at 10%-12%
    stabilized yields
  oRecurring capital expenditures and capitalized leasing costs of $75-$80
    million

Balance Sheet

  o$100-$250 million preferred equity offering at a 7.5%-8.0% coupon in late
    2013 or early 2014
  o$700-$900 million 10-year USD and/or Sterling bond offerings at
    4.75%-5.25% in late 2013 or early 2014
  oFinancing charges are expected to be higher in 2014, reflecting lower
    capitalized interest on development, front-loading the issuance of
    long-term capital towards the beginning of the year, as well as a rising
    interest rate environment

Funds from Operations

  oMid-single-digit FFO per share growth

Non-GAAP Financial Measures

This press release contains non-GAAP financial measures, including FFO and
Adjusted EBITDA. A reconciliation from U.S. GAAP net income available to
common stockholders to FFO, a definition of FFO, a reconciliation from FFO to
core FFO, and a definition of core FFO are included as an attachment to this
press release. A reconciliation from U.S. GAAP net income available to common
stockholders to Adjusted EBITDA, a definition of Adjusted EBITDA, a definition
of debt plus preferred to total enterprise value, and a definition of fixed
charge coverage ratio are included as an attachment to this press release.

Investor Conference Call

Before the market opens on Wednesday, October 30, 2013, Digital Realty will
post a presentation to the Investors section of the company's website at
http://investor.digitalrealty.com. The presentation is designed to accompany
the conference call Digital Realty will host at 1:00 p.m. EDT / 10:00 a.m. PDT
on Wednesday, October 30, 2013 to discuss its third quarter 2013 financial
results and operating performance. The conference call will feature Michael
F. Foust, Chief Executive Officer, A. William Stein, Chief Financial Officer
and Chief Investment Officer as well as Matt Miszewski, Senior Vice President,
Sales. To participate in the live call, investors are invited to dial +1
(888) 701-6680 (for domestic callers) or +1 (706) 634-5758 (for international
callers) and provide the conference ID # 73325593 at least five minutes prior
to start time. A live webcast of the call will be available via the Investors
section of Digital Realty's website at http://investor.digitalrealty.com.

Telephone and webcast replays will be available until 11:59 p.m. EDT on
Friday, November 29, 2013. The telephone replay can be accessed two hours
after the call by dialing +1 (855) 859-2056 (for domestic callers) or +1 (404)
537-3406 (for international callers) and providing the conference ID #
73325593. The webcast replay can be accessed on Digital Realty's website
immediately after the live call has concluded.

About Digital Realty

Digital Realty Trust, Inc. focuses on delivering customer-driven data center
solutions by providing secure, reliable and cost-effective facilities that
meet each customer's unique data center needs. Digital Realty's customers
include domestic and international companies across multiple industry
verticals ranging from financial services, cloud and information technology
services, to manufacturing, energy, health care and consumer products.
Digital Realty's 130 properties, including twelve properties held as
investments in unconsolidated joint ventures, comprise approximately 23.8
million square feet as of September 30, 2013, including 2.8 million square
feet of space held for development. Digital Realty's portfolio is located in
33 markets throughout North America, Europe, Asia and Australia. Additional
information about Digital Realty is included in the Company Overview, which is
available on the Investors page of Digital Realty's website at
http://www.digitalrealty.com. 

Safe Harbor Statement

This press release contains forward-looking statements which are based on
current expectations, forecasts and assumptions that involve risks and
uncertainties that could cause actual outcomes and results to differ
materially, including statements related to supply and demand for data center
space; leasing volume and pipeline; rent from leases that have been signed but
have not yet commenced and other contracted rent to be received in future
periods; rental rates on future leases; our joint venture with PREI, expected
cash net operating income from these properties and strategy of accessing
capital; development plans and expected timing, size and IT capacity of
development projects; expectations regarding the company's future growth,
financial resources and success; the company's revised 2013 FFO, core FFO and
net income outlook and underlying assumptions; and the company's 2014
preliminary outlook, FFO guidance and underlying assumptions. These risks and
uncertainties include, among others, the following: the impact of the recent
deterioration in global economic, credit and market conditions, including the
downgrade of the U.S. government's credit rating; current local economic
conditions in our geographic markets; decreases in information technology
spending, including as a result of economic slowdowns or recession; adverse
economic or real estate developments in our industry or the industry sectors
that we sell to (including risks relating to decreasing real estate valuations
and impairment charges); our dependence upon significant tenants; bankruptcy
or insolvency of a major tenant or a significant number of smaller tenants;
defaults on or non-renewal of leases by tenants; our failure to obtain
necessary debt and equity financing; increased interest rates and operating
costs; risks associated with using debt to fund our business activities,
including re-financing and interest rate risks, our failure to repay debt when
due, adverse changes in our credit ratings or our breach of covenants or other
terms contained in our loan facilities and agreements; financial market
fluctuations; changes in foreign currency exchange rates; our inability to
manage our growth effectively; difficulty acquiring or operating properties in
foreign jurisdictions; our failure to successfully integrate and operate
acquired or developed properties or businesses; the suitability of our
properties and data center infrastructure, delays or disruptions in
connectivity, failure of our physical infrastructure or services or
availability of power; risks related to joint venture investments, including
as a result of our lack of control of such investments; delays or unexpected
costs in development of properties; decreased rental rates or increased
vacancy rates; increased competition or available supply of data center space;
our inability to successfully develop and lease new properties and space held
for development; difficulties in identifying properties to acquire and
completing acquisitions; our inability to acquire off-market properties; our
inability to comply with the rules and regulations applicable to reporting
companies; our failure to maintain our status as a REIT; possible adverse
changes to tax laws; restrictions on our ability to engage in certain business
activities; environmental uncertainties and risks related to natural
disasters; losses in excess of our insurance coverage; changes in foreign laws
and regulations, including those related to taxation and real estate ownership
and operation; and changes in local, state and federal regulatory
requirements, including changes in real estate and zoning laws and increases
in real property tax rates. For a further list and description of such risks
and uncertainties, see the reports and other filings by the company with the
U.S. Securities and Exchange Commission, including the company's Annual Report
on Form 10-K for the year ended December 31, 2012 and Quarterly Reports on
Form 10-Q for the quarters ended March 31, 2013 and June 30, 2013. The
company disclaims any intention or obligation to update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise.



For Additional Information:
A. William Stein            John J. Stewart
Chief Financial Officer and Senior Vice President
Chief Investment Officer    Investor Relations
Digital Realty Trust, Inc   Digital Realty Trust, Inc.
+1 (415) 738-6500           +1 (415) 738-6500



Digital Realty Trust, Inc. and Subsidiaries
Condensed Consolidated Income Statements
(in thousands, except share and per share data)
(unaudited)
                      Three Months Ended            Nine Months Ended
                      September 30,  September 30,  September    September 30,
                      2013           2012           30, 2013     2012
Operating Revenues:
                      $        $        $       $      
 Rental                  290,712                         
                                     260,052       858,064      717,809
 Tenant               88,059         78,878         240,657      197,162
 reimbursements
 Construction         671            2,497          2,205        6,903
 management
 Other                14             1,052          402          7,457
    Total operating   379,456        342,479        1,101,328    929,331
    revenues
Operating Expenses:
 Rental property
 operating and        128,291        106,660        341,407      274,081
 maintenance
 Property taxes       26,074         17,982         66,490       49,793
 Insurance            2,144          2,463          6,587        6,953
 Construction         51             623            729          1,412
 management
 Depreciation and     121,198        101,840        348,688      274,835
 amortization
 General and          16,275         14,409         50,117       43,768
 administrative
 Transactions         243            504            3,497        5,789
 Other                3              923            56           1,260
    Total operating   294,279        245,404        817,571      657,891
    expenses
    Operating income  85,177         97,075         283,757      271,440
Other Income
(Expenses):
 Equity in earnings
 of unconsolidated    2,174          1,520          6,839        6,402
 joint ventures
 Gain on insurance    -              -              5,597        -
 settlement
 Gain on contribution
 of properties to     115,054        -              115,054      -
 unconsolidated joint
 venture
 Interest and other   (127)          83             (92)         2,008
 income
 Interest expense     (47,742)       (41,047)       (143,403)    (116,758)
 Tax expense          (352)          (710)          (1,765)      (2,637)
 Loss from early
 extinguishment of    (704)          -              (1,205)      (303)
 debt
Net Income            153,480        56,921         264,782      160,152
 Net income
 attributable to      (2,882)        (1,529)        (4,997)      (4,384)
 noncontrolling
 interests
Net Income
Attributable to       150,598        55,392         259,785      155,768
Digital Realty Trust,
Inc.
 Preferred stock      (11,726)       (9,777)        (31,179)     (28,921)
 dividends
Net Income Available  $        $        $       $      
to Common                138,872                        
Stockholders                         45,615        228,606      126,847
 Net income per share
 available to common
 stockholders:
                      $        $        $       $      
 Basic                                              
                      1.08           0.37           1.79       1.12
                      $        $        $       $      
 Diluted                                            
                      1.06           0.37           1.79       1.12
 Weighted average
 shares outstanding:
 Basic                128,427,444    122,026,421    127,771,419  112,995,512
 Diluted              135,301,765    122,353,511    127,955,769  113,275,221



Digital Realty Trust, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands)
                                September 30, 2013       December 31, 2012
ASSETS                          (unaudited)
Investments in real estate
Properties:
 Land                        $             $          
                                      684,644           661,058
 Acquired ground leases      14,355                   13,658
 Buildings and improvements  8,357,786                7,662,973
 Tenant improvements         466,616                  404,830
Total investments in properties 9,523,401                8,742,519
Accumulated depreciation and    (1,459,055)              (1,206,017)
amortization
Net investments in properties   8,064,346                7,536,502
Land held for sale              11,015                   -
Investment in unconsolidated    53,066                   66,634
joint ventures
Net investments in real estate  8,128,427                7,603,136
Cash and cash equivalents       55,118                   56,281
Accounts and other receivables, 191,715                  168,286
net
Deferred rent                   369,979                  321,715
Acquired above market leases,   54,446                   65,055
net
Acquired in place lease value
and deferred leasing costs,     484,445                  495,205
net
Deferred financing costs, net  39,132                   30,621
Restricted cash                 42,457                   44,050
Other assets                    60,322                   34,865
Total Assets                    $             $          
                                    9,426,041           8,819,214
LIABILITIES AND EQUITY
Global revolving credit         $             $          
facility                              498,082           723,729
Unsecured term loan             950,205                  757,839
Unsecured senior notes, net of  2,382,059                1,738,221
discount
Exchangeable senior debentures  266,400                  266,400
Mortgage loans, net of premiums 683,651                  792,376
Accounts payable and other      652,720                  646,427
accrued liabilities
Accrued dividends and           -                        93,434
distributions
Acquired below market leases,   133,625                  148,233
net
Security deposits and prepaid   178,730                  154,171
rents
Total Liabilities               5,745,472                5,320,830
Equity:
Stockholders' equity            3,643,482                3,468,305
Noncontrolling interests        37,087                   30,079
Total Equity                    3,680,569                3,498,384
Total Liabilities and Equity    $             $          
                                    9,426,041           8,819,214



Digital Realty Trust, Inc. and Subsidiaries
Reconciliation of Net Income Available to Common Stockholders to Funds From
Operations (FFO)
(in thousands, except per share and unit data)
(unaudited)
                         Three Months Ended               Nine Months Ended
                         September  June 30,  September   September  September
                         30, 2013   2013      30, 2012    30, 2013   30, 2012
                         $                $       $      $    
Net income available to        $                      
common stockholders                47,077   45,615   228,606   126,847
                         138,872
Adjustments:
Noncontrolling interests 2,757      936       1,574       4,517      4,821
in operating partnership
Real estate related
depreciation and         120,006    114,913   100,994     345,609    272,173
amortization (1)
Real estate related
depreciation and
amortization related to  788        797       710         2,418      2,481
investment
inunconsolidated joint
ventures
Gain on contribution of
properties to            (115,054)  -         -           (115,054)  -
unconsolidated joint
venture
Gain on sale of assets
held in unconsolidated   -          -         -           -          (2,325)
joint venture
FFO available to common  $                $       $      $    
stockholders and               $                      
unitholders (2)                   163,723   148,893    466,096   403,997
                         147,369
                         $      $     $       $      $    
Basic FFO per share and                                
unit                           1.25                         
                         1.13                1.18       3.58      3.44
                         $      $     $       $      $    
Diluted FFO per share                                  
and unit (2)                   1.22                         
                         1.10                1.13       3.47      3.28
Weighted average common
stock and units
outstanding
Basic                    130,977    130,974   126,243     130,287    117,291
Diluted (2)              137,851    137,787   137,304     137,728    129,439
(1) Real estate related
depreciation and
amortization was
computed as follows:
Depreciation and
amortization per income  121,198    115,867   101,840     348,688    274,835
statement
Non-real estate          (1,192)    (954)     (846)       (3,079)    (2,662)
depreciation
                         $                $       $      $    
                               $                      
                                  114,913   100,994    345,609   272,173
                         120,006
(2) At September 30, 2013, we had 0 series D convertible preferred
shares outstanding, as a result of the conversion of all remaining
shares on February 26, 2013, which calculates into 629 common
shares on a weighted average basis for the nine months ended
September 30, 2013. At September 30, 2012, we had 5,098 series D
convertible preferred shares outstanding that were convertible into
4,219 common shares on a weighted average basis for the three
months ended September 30, 2012. At September 30, 2012, we had 0
series C convertible preferred shares (as a result of the
conversion of all remaining shares on April 17, 2012) and 5,098
series D convertible preferred shares outstanding that were
convertible into 1,087 common shares and 4,310 common shares on a
weighted average basis for the nine months ended September 30,
2012, respectively. For the three months ended September 30, 2013,
June 30, 2013 and September 30, 2012, we have excluded the effect
of dilutive series E, series F and series G preferred stock, as
applicable, that may be converted upon the occurrence of specified
change in control transactions as described in the articles
supplementary governing the series E, series F and series G
preferred stock, as applicable, which we consider highly
improbable; if included, the dilutive effect for the three months
ended September 30, 2013, June 30, 2013 and September 30, 2012
would be 12,734, 11,949 and 6,784 shares, respectively. For the
nine months ended September 30, 2013 and September 30, 2012, we
have excluded the effect of dilutive series E, series F and series
G preferred stock, as applicable, that may be converted upon the
occurrence of specified change in control transactions as described
in the articles supplementary governing the series E, series F and
series G preferred stock, as applicable, which we consider highly
improbable; if included, the dilutive effect for the nine months
ended September 30, 2013 and September 30, 2012 would be 10,851 and
5,289 shares, respectively. In addition, we had a balance of
$266,400 of 5.50% exchangeable senior debentures due 2029 that were
exchangeable for 6,684, 6,610 and 6,515 common shares on a weighted
average basis for the three months ended September 30, 2013, June
30, 2013 and September 30, 2012, respectively, and were
exchangeable for 6,628 and 6,471 common shares on a weighted
average basis for the nine months ended September 30, 2013 and
September 30, 2012, respectively. See below for calculations of
diluted FFO available to common stockholders and unitholders and
weighted average common stock and units outstanding.
                         Three Months Ended               Nine Months Ended
                         September  June 30,  September   September  September
                         30, 2013   2013      30, 2012    30, 2013   30, 2012
FFO available to common  $                $       $      $    
stockholders and               $                      
unitholders                       163,723   148,893    466,096   403,997
                         147,369
Add: Series C
convertible preferred    -          -         -           -          1,402
dividends
Add: Series D
convertible preferred    -          -         1,723       -          6,515
dividends
Add: 5.50% exchangeable
senior debentures        4,050      4,050     4,050       12,150     12,150
interest expense
FFO available to common  $                $       $      $    
stockholders and               $                      
unitholders -- diluted            167,773   154,666    478,246   424,064
                         151,419
Weighted average common
stock and units          130,977    130,974   126,243     130,287    117,291
outstanding
Add: Effect of dilutive
securities (excluding
series C and D
convertible preferred    190        203       327         184        280
stockand 5.50%
exchangeable senior
debentures)
Add: Effect of dilutive
series C convertible     -          -         -           -          1,087
preferred stock
Add: Effect of dilutive
series D convertible     -          -         4,219       629        4,310
preferred stock
Add: Effect of dilutive
5.50% exchangeable       6,684      6,610     6,515       6,628      6,471
senior debentures
Weighted average common
stock and units          137,851    137,787   137,304     137,728    129,439
outstanding -- diluted
Digital Realty Trust, Inc. and Subsidiaries
Reconciliation of Funds From Operations (FFO) to Core Funds From Operations
(CFFO)
(in thousands, except per share and unit data)
(unaudited)
                         Three Months Ended               Nine Months Ended
                         September  June 30,  September   September  September
                         30, 2013   2013      30, 2012    30, 2013   30, 2012
FFO available to common  $                $       $      $    
stockholders and               $                      
unitholders -- diluted            167,773   154,666    478,246   424,064
                         151,419
Termination fees and
other non-core revenues  (14)       (140)     (1,052)     (402)      (8,876)
^(3)
Gain on insurance        -          (5,597)   -           (5,597)    -
settlement
Significant transaction  243        1,491     504         3,497      5,789
expenses
Loss from early          704        501       -           1,205      303
extinguishment of debt
Straight-line rent
expense adjustment
attributable to prior    9,155      -         -           7,489      -
periods ^(4)

Change in fair value of
contingent consideration (943)      (370)     -           (13)       -
^(5)
Other non-core expense   3          17        923         56         1,260
adjustments ^(6)
CFFO available to common $                $       $      $    
stockholders and               $                      
unitholders -- diluted            163,675   155,041    484,481   422,540
                         160,567
                         $      $     $       $      $    
Diluted CFFO per share                                 
and unit                       1.19                         
                         1.16                1.13       3.52      3.26
(3) Includes one-time fees, proceeds and certain other adjustments that are
not core to our business.
(4) Impact for the three months ended June 30, 2013 and September 30, 2012 and
the nine months ended September 30, 2012 would have resulted in additional
expense of $833, $833 and $2,499, respectively. CFFO per share and unit, as
adjusted, would have been $1.18, $1.12 and $3.25 for the above periods,
respectively.
(5) Relates to earn-out contingency in connection with Sentrum Portfolio
acquisition.
(6) Includes reversal of accruals and certain other adjustments that are not
core to our business.
Digital Realty Trust, Inc. and Subsidiaries
Reconciliation of Net Income Available to Common Stockholders to Earnings
Before Interest, Taxes, Depreciation and Amortization (EBITDA) and Adjusted
EBITDA
(in thousands)
(unaudited)
                         Three
                         Months
                         Ended
                         September
                         30, 2013
                         $    
Net income available to      
common stockholders       
                         138,872
Interest                 47,742
Loss from early          704
extinguishment of debt
Taxes                    352
Depreciation and         121,198
amortization
EBITDA                   308,868
Straight-line rent
expense adjustment       9,155
attributable to prior
periods
Gain on contribution of
properties to            (115,054)
unconsolidated joint
venture
Noncontrolling interests 2,882
Preferred stock          11,726
dividends
                         $    
Adjusted EBITDA              
                          
                         217,577



A reconciliation of the range of 2013 projected net income to projected FFO
and core FFO follows:
                                                                  Low - High
Net income available to common stockholders per diluted share $2.02 – 2.04
 Add:
Real estate depreciation and amortization                         $3.62
 Less:
Dilutive impact of convertible stock                              ($0.15)
 Less:
Gain from change in control of investment properties              ($0.89)
 Projected FFO per diluted share              $4.60– 4.62
Adjustments for items that do not represent core expenses and     $0.05
revenue streams
 Projected core FFO per diluted share         $4.65– 4.67



Funds From Operations

Digital Realty calculates Funds from Operations, or FFO, in accordance with
the standards established by the National Association of Real Estate
Investment Trusts, or NAREIT. FFO represents net income (loss) available to
common stockholders and unitholders (computed in accordance with U.S. GAAP),
excluding gains (or losses) from sales of property, impairment charges, real
estate related depreciation and amortization (excluding amortization of
deferred financing costs) and after adjustments for unconsolidated
partnerships and joint ventures. Management uses FFO as a supplemental
performance measure because, in excluding real estate related depreciation and
amortization and gains and losses from property dispositions, it provides a
performance measure that, when compared year over year, captures trends in
occupancy rates, rental rates and operating costs. Digital Realty also
believes that, as a widely recognized measure of the performance of REITs, FFO
will be used by investors as a basis to compare our operating performance with
that of other REITs. However, because FFO excludes depreciation and
amortization and captures neither the changes in the value of our properties
that result from use or market conditions, nor the level of capital
expenditures and leasing commissions necessary to maintain the operating
performance of our properties, all of which have real economic effect and
could materially impact our financial condition and results from operations,
the utility of FFO as a measure of our performance is limited. Other REITs
may not calculate FFO in accordance with the NAREIT definition and,
accordingly, our FFO may not be comparable to such other REITs' FFO.
Accordingly, FFO should be considered only as a supplement to net income as a
measure of our performance.

Core Funds from Operations

We present core funds from operations, or CFFO, as a supplemental operating
measure because, in excluding certain items that do not reflect core revenue
or expense streams, it provides a performance measure that, when compared year
over year, captures trends in our core business operating performance. We
calculate CFFO by adding to or subtracting from FFO (i)termination fees and
other non-core revenues, (ii) significant transaction expenses, (iii) loss
from early extinguishment of debt, (iv) costs on redemption of preferred
stock, (v) significant property tax adjustments, net and (vi) other non-core
expense adjustments. Because certain of these adjustments have a real
economic impact on our financial condition and results from operations, the
utility of CFFO as a measure of our performance is limited. Other REITs may
not calculate CFFO in a consistent manner. Accordingly, our CFFO may not be
comparable to other REITs' CFFO. CFFO should be considered only as a
supplement to net income computed in accordance with GAAP as a measure of our
performance. 

EBITDA and Adjusted EBITDA

We believe that earnings before interest expense, income taxes, depreciation
and amortization, or EBITDA, and Adjusted EBITDA (as defined below), are
useful supplemental performance measures because they allow investors to view
our performance without the impact of non-cash depreciation and amortization
or the cost of debt and, with respect to Adjusted EBITDA, straight-line rent
expense adjustment attributable to prior periods, gain from change in control
of investment properties, noncontrolling interests, and preferred stock
dividends. Adjusted EBITDA is EBITDA excluding straight-line rent expense
adjustment attributable to prior periods, gain from change in control of
investment properties, noncontrolling interests, and preferred stock
dividends. In addition, we believe EBITDA and Adjusted EBITDA are frequently
used by securities analysts, investors and other interested parties in the
evaluation of REITs. Because EBITDA and Adjusted EBITDA are calculated before
recurring cash charges including interest expense and income taxes, exclude
capitalized costs, such as leasing commissions, and are not adjusted for
capital expenditures or other recurring cash requirements of our business,
their utility as a measure of our performance is limited. Other REITs may
calculate EBITDA and Adjusted EBITDA differently than we do; accordingly, our
EBITDA and Adjusted EBITDA may not be comparable to such other REITs' EBITDA
and Adjusted EBITDA. Accordingly, EBITDA and Adjusted EBITDA should be
considered only as supplements to net income computed in accordance with GAAP
as a measure of our financial performance.

Additional Definitions

Debt-to-Adjusted EBITDA ratio is calculated using total debt at balance sheet
carrying value less unrestricted cash and cash equivalents divided by the
product of Adjusted EBITDA multiplied by four.

Debt plus preferred to total enterprise value is mortgage debt and other loans
plus preferred stock divided by mortgage debt and other loans plus the
liquidation value of preferred stock and the market value of outstanding
Digital Realty Trust, Inc. common stock and Digital Realty Trust, L.P. units,
assuming the redemption of Digital Realty Trust, L.P. units for shares of
Digital Realty Trust, Inc. common stock.

Fixed charge coverage ratio is Adjusted EBITDA divided by the sum of GAAP
interest expense, scheduled debt principal payments and preferred dividends.
For the quarter ended September 30, 2013, GAAP interest expense was $47.7
million and scheduled debt principal payments and preferred dividends was
$14.9 million.

SOURCE Digital Realty Trust, Inc.

Website: http://www.digitalrealtytrust.com
 
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