Digital Realty at Citi’s Conference: Accelerating Growth and Strategic Moves

On Tuesday, 04 March 2025, Digital Realty Trust Inc. (NYSE: DLR) presented at Citi’s 30th Annual Global Property CEO Conference 2025. CEO Andy Power highlighted the company’s accelerating growth, strong backlog, and strategic initiatives. Despite facing market challenges, Digital Realty is poised for significant expansion, driven by a robust development pipeline and a new hyperscale fund.

Key Takeaways

• Digital Realty added 600 new customers in the last year, boosting its growth trajectory.
• The company has a $7.5 billion development pipeline, over 70% pre-leased, with a 12% ROI.
• A new U.S.-focused hyperscale fund aims for $2.5 billion, with initial commitments of $800 million.
• Digital Realty reported a 5% revenue increase in Q4 2024, reaching $1.4 billion.
• The company maintains a leverage target of 5.5x and has $6 billion in liquidity.

Financial Results

Digital Realty reported solid financial performance in the fourth quarter of 2024:

• Revenue: $1.4 billion, a 5% increase from the previous year.
• Adjusted EBITDA: $751 million, up 7% year-over-year.
• Funds From Operations (FFO): $545 million, or $1.61 per share, compared to $1.53 per share last year.
• Debt: Total debt stood at $16.7 billion, with a net debt-to-EBITDA ratio of 4.8x.
• Mark to Market Guidance: Projected at 4% to 6% for 2025.

Operational Updates

Digital Realty’s operations are underpinned by strong strategic initiatives:

• Backlog: Represents 20% of the revenue base.
• Development Pipeline: $7.5 billion, over 70% pre-leased, with a 12% ROI.
• Hyperscale Fund: Initial commitments of $800 million, targeting $2.5 billion.
• Customer Growth: 600 new customers added in the past year.
• Interconnection Business: 25% year-over-year growth in new signings.
• Land Bank: 3.6 gigawatts owned or under control.

Future Outlook

Digital Realty is optimistic about its future growth prospects:

• Growth Target: Aims for double-digit growth in the zero to one-megawatt and interconnection category.
• FFO per Share Growth: Seeks to improve upon 6% core FFO growth in 2025 and accelerate in 2026.
• Capital Recycling: Plans for $500 million to $1 billion in stabilized hyperscale asset monetizations.
• NOI Growth: Guides to approximately 4% same-store NOI growth.

Q&A Highlights

During the Q&A session, management addressed several key topics:

• Hyperscale Demand: Consistent demand for large capacity blocks in core markets.
• Pricing Trends: Expectation of continued rent growth in core markets in 2025.
• Capital Allocation: Focus on building a strong asset management business around hyperscale.
• Leverage Target: Maintains a target of 5.5x leverage.
• Dividend Policy: Committed to paying out 100% of taxable income.

For further details, readers are encouraged to refer to the full transcript of the conference call.

Full transcript - Citi’s 30th Annual Global Property CEO Conference 2025:

Nick Joseph, Citi Research, Citi: twenty twenty five Global Property CEO Conference. I’m Nick Joseph here with Mike Rollins with Citi Research, and we are pleased to have with us Digital Realty and CEO, Andy Power. This session is for Citi clients only, and disclosures have been made available at the corporate access desk. To ask a question, you can raise your hand or go to liveqa.com and enter code GPC25 to submit any questions. Andy, we’ll turn it over to you to introduce the company and team, provide any opening remarks, tell the audience the top reasons an investor should buy your stock today, and then we’ll get into Q and A.

Andy Power, President and CEO, Digital Realty: Great. Thank you, Nick, for having us back here. To my right is Jordan Satter, Head of Public and Private Investor Relations. To my left is our CFO, Matt Mercier. And Amandy Powers, President and CEO of Digital.

Here at Digital, we support 5,000 customers, including the leading technology companies around the world and corporate enterprises in 50 plus metropolitan areas on six continents with their digital infrastructure needs: space, power and interconnection. We’ve been a twenty year old public company and been coming to this conference for a long time now and are on the back of a pretty landmark year for our company on multiple fronts, which goes into, I would say, our future. One, first and foremost, we’re accelerating our growth. That’s at the top line, and that is especially at the bottom line with inflection in our core FFO per share growth coming into this year on the heels of a record signings year, strong price and power, record 600 new customers to our platform in the last calendar year. So acceleration to the growth is key, and we’re not done yet in 2025.

Two, we’ve been building our backlog to derisk that. So backlog sits at a 20% of our revenue base at attractive returns, much of which is going into a $7,500,000,000 largely 70 plus percent preleased development pipeline to 12% ROI today. In the meantime, we’ve also had great success at our most core and top priority of our zero to one megawatt interconnection enterprise business, where we had a record third quarter in that category of new signings, followed by a record fourth quarter record new logos that have dated back several quarters of 100 plus customers per quarter added to our platform and 25% increase in those new signings of that category year over year. And 2026, I believe, will be even better than that. And lastly, we have the balance sheet and the funding to support all this growth, having delevered the balance sheet to less than five times, called 4.8 times net debt to EBITDA, $6 plus billion of liquidity.

And on the eve of this conference, we announced the next evolution in our funding model with our first hyperscale fund achievement with the first eight hundred dollars plus of commitments on the way to a $2,500,000,000 hyperscale fund.

Mike Rollins, Citi Research, Citi: Great. That gives us a lot to dig into. Just maybe first on the fund that you’ve created. Can you give us more details in terms of the size of the fund and how you plan to invest those dollars?

Andy Power, President and CEO, Digital Realty: So taking a step back, Mike, this has been an evolution of our funding model for the last few years where we saw a addressable market for hyperscale that was just tremendously capital intensive and only getting bigger and bigger and bigger. That is certainly the heritage of our company. We’ve started at the hyperscale and worked our way into the enterprise colocation interconnection success. But we said we need more arrows in our quiver. We need a bigger boat to navigate this capital intensity.

Historically, we’ve done it in more one off ventures or partnerships on private capital, both stabilized and then development. And this is the next evolution of that funding model. This first vehicle will be seeded with a handful of stabilized assets and also some development assets and will be largely prespecified but will have some unspecified capital as well to deploy along the way. We’re super excited having the first round of new LPs and think we’ll be adding more to that. And again, it’s another arrow in our quiver to fund this extensive hyperscale growth.

This vehicle by itself really U. S. Focused in nature.

Mike Rollins, Citi Research, Citi: And so $2,500,000,000 is the target for the Fund?

Andy Power, President and CEO, Digital Realty: $2,500,000,000 of third party equity.

Mike Rollins, Citi Research, Citi: And can you lever the Fund as well? So we should think about the capacity as significantly larger than that?

Andy Power, President and CEO, Digital Realty: Correct. To double it.

Mike Rollins, Citi Research, Citi: So that’s and so that’s $5,000,000,000 that you can, in some specified, some unspecified projects, put towards development and then you’re able to lever those development projects themselves as well?

Andy Power, President and CEO, Digital Realty: When I doubled, that would include the leverage of the project.

Mike Rollins, Citi Research, Citi: Okay, great. Just wanted to get a sense of the size of the opportunity. So and maybe relative to the opportunity, if you can share with us what you’re seeing in terms of the size of demand and sales pipeline and maybe just provide some perspective on how that compares to past years and how much is coming from AI?

Andy Power, President and CEO, Digital Realty: Sure. So maybe split the categories into both enterprise colo and the hyperscale buckets and the latter being the lion’s share of the capital at this minute. If you look back, as I mentioned, Matt and team and Jordan have been able to navigate the balance sheet down to a sub-5x leverage, which is quite amazing by itself but even more amazing when we took our development capacity at the time north of 50% up in terms of megawatts to now stand a total project spend of $7,500,000,000 So much of that is preleased. It’s 70% pre leased. Within that is colo capacity as well.

So the hyperscale portion is even higher pre leased, including our North America region that’s close to 97 pre leased. As you turn the page from 2024 into 2025, I think we see a consistency of, on the hyperscale side, large contiguous capacity blocks in the core markets as being very precious to those customers. And the nearer the delivery, the more precious it is to those customers. And the reason why is obviously the larger the capacity block, more well suited for their near term AI needs, be it training. But in the core markets where we’re servicing them, they see fungibility with their availability zone needs for their cloud compute as well.

So you call it get two birds with one stone when you come with us in these core markets in terms of their customers’ needs. The mix of the customers are shifting. We’re fortunate to serve 5,000 customers in whole and all the biggest customers that are really out there. And we’ve been had a very diverse set of wins from these customers in this pipeline. And I think it’s consistent relatively year over year in terms of pipeline.

Mike Rollins, Citi Research, Citi: Great. And then in terms of just recent developments, customer conversations, has anything changed as there’s been some press around lower cost LLMs or possibly one hyperscaler canceling some of the capacity that they were looking to take? Can you just share some context of how your conversations are going?

Andy Power, President and CEO, Digital Realty: So I think there’s two elements in there that I’ll try to comment on somewhat related, somewhat separately. The rumor mill and the noise is somewhat, call it, an accolades to our strategy or merits to our strategy, where in the last years of AI becoming more of a mainstay theme, we stuck to the core markets, the markets where we see not only robust but diverse demand. We stuck to a strategy of colocation enterprise, interconnection, prioritization, despite what looked like great opportunities at hyperscale at the same time. And we also widened out our customer list at the top of the queue. So if you look at our record $1,000,000,000 of new signings last year, the three biggest quarters had three different customers all having the largest major signing in that quarter, none of which was our top customer and one of which was not even a top 20 customer.

So those lists of major hyperscale customers that are coming to digital has been expanding in recent times, which gives you diversity in demand. And I think that’s very apropos to what we’re seeing is rumors of one horse maybe pulling back in the race while other names are, call it, pulling ahead in terms of demand. As it relates to the element several weeks ago with the advent of DeepSeek, I think I’d look at two things. I’d look at what our customers said and have done since that. You have the series of earnings calls with each one of those executives of those customers, had CapEx budgets that were not decreasing or flat but increasing and pretty much an unwavering view that we need to continue to invest in infrastructure in this AI arms race.

At the same time, I also believe that the that news shows that there’s probably a potential for greater democratization of AI and chips and GPUs down the road here and hopefully pulls forward what comes next in this AI movie as we move from training, as we move to inference, as we move to enterprise applications and use cases, which, yes, it may have pulled it forward. I believe it’s still a long tail of demand that’s going to be out there. And I just look at that at our own use of AI and digital as well as asking many folks at this conference of who’s using, how they’re using it, the applicability. I just think it’s going to take time for those more complicated use cases to really roll out. Should we poll the room?

Question. You know, Jordan wants me to poll the room. How many of the folks are using, OpenAI using Copilot.

Unidentified speaker: Show of hands. Who’s using Copilot today?

Andy Power, President and CEO, Digital Realty: Not many.

Mike Rollins, Citi Research, Citi: Okay. So a question that we’ve been getting from a number of clients relates to then taking the opportunity set And then just trying to think about the pace of annual leasing for Digital Realty, and it’s specifically around the hyperscale. We’ll talk about the under one megawatt opportunity in a few moments. But just given the wide range of outcomes over the last few quarters in terms of the bookings numbers. And so if you look at this whether you do it on a megawatts basis or a dollars basis, is there a right level that investors should expect on an annual basis for your model and with the opportunity that’s in front of you?

Andy Power, President and CEO, Digital Realty: When you dissect it to our most strategic priority, which we put in data in the zero to one megawatt and interconnection category, We grew that last year 25% year over year. We set quotas for another double digit growth in that category. And we see a long runway of that type of growth or CAGR compounding in that segment. Dimun, a massive addressable market, a category we can add tremendous value to our customers. As I mentioned, we’re adding new customers all the time in addition to many existing customers that want to grow with us at digital.

Outside of that segment, as you get to the larger and just much larger capacity blocks, it becomes much more difficult to handicap. At the same time, I by no means view that the $1,000,000,000 we did in a string of four quarters is the top ticket for our productivity as an organization. Quite frankly, if you were to just take the back half of the year, that would have been a record by itself, materially above the prior record. And I say that with the view that this infrastructure that we’re providing is has a long tail of demand for our customers. We are positioned in the best markets that have the most diverse demand and value add to those customers in terms of the supply constraints.

And every segment gets keeps getting larger. The smalls are becoming mediums. The mediums are becoming largest. The largest are becoming extra larges. And some of the size of the capacity blocks are off the T shirt charts.

And we have a 3.6 gigawatt owned or under control runway of Shell and land bank. So I can’t promise you it’s going to be the next set of four quarters, but I think the overall productivity, we have the organizational bandwidth, the key ingredients in the right markets, in a market that needs this infrastructure to put up that productivity over time.

Mike Rollins, Citi Research, Citi: Just to dig into your comments just for a few more moments. So just in terms of timing, you mentioned you have 20% of the rent in backlog. You’re highly pre leased on the $7,500,000,000 that you’re building. So does that inherently mean that anything you’re selling today is really for late ’twenty six and ’twenty seven? And is that part of what might be complicating the sales process over the next couple of quarters?

Andy Power, President and CEO, Digital Realty: The enterprise colo piece is much shorter signed to commencement. So that’s filling as we and that’s a moving machine. We’re delivering new capacity. We’re filling new capacity. So that’s happening live.

That’s the two fifty plus bookings we did into last year. But you’re correct. Anything that’s large or really large, it’s just building our backlog. That is going to go in North and it’s building a further runway of growth for the company.

Mike Rollins, Citi Research, Citi: And then you mentioned about the hyperscale market expanding. Can you give us a sense of how many customers you kind of consider in that core opportunity that would fit into large capacity blocks of demand and where you might see that in terms of opportunity over the next few years?

Andy Power, President and CEO, Digital Realty: I mean, we’re still in a universe that’s probably 10 or less realistically. But you don’t need 40 or 100 types of those customers to create competitive tension to especially in the backdrop of supply constraints to have a healthy equilibrium in terms of rates and returns. And quite frankly, all you’re going to need is two at the same time. So having more of these customers seeking similar needs, especially at the same or near times, creates competitive tension for our product that we’re able to garner great rates and returns.

Mike Rollins, Citi Research, Citi: And you mentioned the 3.6 gigawatts of runway room, shell and land, how do you think about the energy availability and any permitting constraints that certain markets may create and the pace of which that could become available as sellable capacity to your customers?

Andy Power, President and CEO, Digital Realty: In today’s framework, all of that land has a path to power in the reasonable future. Now I’d say, call it, a gig change of it is the most nearest horizon, the 26s, the 27s, the 28s, starting to dip into the 29s. But we’ve been adding to that, and we’ve been adding it’s not been a LIFO or FIFO version. We haven’t the most recent land we bought is not the last land we’re going to develop. So we’ve been filling in gaps where we bring assemblages together in places we’re already operating.

We did that in Richardson A Quarter Or Two ago and added in other markets as well. So we’re not sitting idly here in making sure that our customers have this runway for growth, which is us having the key ingredients in terms of land, access to power, ability to build as well as the funding model to execute.

Mike Rollins, Citi Research, Citi: And then maybe just switching gears to the under one megawatt plus interconnection, you talked about the acceleration. What specifically is driving that success for Digital Realty? And how much do you look at it as an expanding market opportunity versus the share that you’re taking?

Andy Power, President and CEO, Digital Realty: I look at it as a combination of both, but probably more share taking in the end of the day. If you look at our history as a company, which I touched on where we started to where we are, we had to make some tremendous foundational moves of putting the puzzle pieces together to be stretching across six continents in 50 metropolitan areas with the capabilities to deliver enterprise quality. We had to unite our brands. We had to evolve our go to market. We had to bring in new sales leadership.

We’ve done many things in terms of reorienting our approach to partners. And I think success in that category has happened slowly and then more recently all at once. And at the same time, what gives me such optimism is the record quarter in the third quarter followed by a record in the fourth, I honestly believe that was a fork and knife way to success where we just rolled up our sleeves, we drove the culture of the company to focus on this as the priority, and we delivered results. And the things we’re doing now in the midst of two record quarters are really what’s going to even pave a brighter future and give you that conviction for twenty twenty five and 2026. In a quarter where we had good results in our partners and alliances, we brought in a new head of partners and alliances to take us to the next level.

We are evolving our sales segmentation to push more account coverage in a flow business to commercial inside sales so sellers can spend more time on higher propensity, higher value multi market, multi product type accounts. We’ve reoriented our marketing dollars to not just be as focused on new logo hunting but to mine that installed base. We have 5,000 existing customers. We have over 1,000 key cohort customers that we know can grow with us to the second, third site or incremental product. Our systems road map, we’re investing have been investing a lot in our systems.

The benefits of a unified one customer portal, sales force, inventory tracking system, all those things are not even going to deliver to our internal or external customers till 2026. So I look at that as we got a tremendous opportunity. It’s a fantastic category, and we have a major, major right to win.

Nick Joseph, Citi Research, Citi: A handful of questions come in through a lot of QA, so we’ll try to get to some of those. First of all, No balance

Andy Power, President and CEO, Digital Realty: sheet questions for Matt and Troy.

Nick Joseph, Citi Research, Citi: No balance sheet ones yet, but if you want to enter one in, I’ll ask it for you.

Mike Rollins, Citi Research, Citi: It was two years ago.

Matt Mercier, CFO, Digital Realty: It was so last year.

Nick Joseph, Citi Research, Citi: To what extent do you feel comfortable holding back new build inventory to potentially capture better pricing down the road versus pre leasing more aggressively?

Andy Power, President and CEO, Digital Realty: I think this is germane to commentary from the call. We’re not holding any inventory hostage, and we’re not treating all inventory the same. We have some markets we’re in 50 markets, right? So we have some markets where we do not have the strongest hand in all 50. And we have some markets with truly precious to our customers’ capacity.

And all we’re doing is setting up and being judicious when you have a record year that you’ve leased so much and you’ve built so much of your development pipeline that’s already spoken for and your next delivery doesn’t come on until 2026. Let’s let the customers all take a fair swing at that opportunity. We’re not here to pick our favorite customer one over another. We’re here to support all their growth, and we want to get them to the table. And that competition, just we just we’re just we don’t we have patience on that precious inventories is what we’re doing essentially.

Mike Rollins, Citi Research, Citi: Maybe that’s a segue just to broader pricing trends. What are you seeing in terms of pricing? I realize it’s market by market, but if you can give us some general sense of how that’s flowing.

Unidentified speaker: Do you want to talk cash mark to markets? Or are you thinking just market pricing? Well, let’s take both.

Andy Power, President and CEO, Digital Realty: Okay. I mean, never give them options to take both. So the so I can do mark to market. Matt will touch on mark to market. I’ll maybe do spot rate trends.

Matt Mercier, CFO, Digital Realty: So I mean mark to market, so we guided towards 4% to 6% this year. I think a couple of things that are important to keep in mind are and that’s coming off of what we basically the same point where we started in 2024 was 4% to 6%. Now we outperformed that in 2024, but that was largely due to what we call package deals that we were able to execute on within the year that pushed us to roughly 9% all in on our mark to markets. If you had excluded those, we’ve been down to 5%, which is right where we started. And coming in again to 25%, we’ve got it in similar place 4% to six The reason for that is largely you’ve actually seen our expiring rents are pretty similar and actually slightly higher when you look forward.

And I’m talking mainly in our greater than a megawatt, slightly higher in ’25 than same place we were in ’24. But I think what’s probably more important is as you start to look out in the outer years, you see those expiring rates start to step down, which puts us in a position where even if market rates remain flat, which we don’t assume that they’re going to do, but puts us in a position where we see an improving outlook for mark to market over the next four plus years. So that should help accrue to our overall, call it, stabilized growth. On the zero to one, which generally tends to be the majority of our role within a given calendar year, we’re still seeing good mark to markets. We just came off of a quarter where we were almost close to 5%.

And we see that in, call it, generally in that 3% to 5% areas where we’re mark to marking on the 0% to 1% category. And we see that continuing over the next several years as well.

Andy Power, President and CEO, Digital Realty: And on the larger stuff, the larger hyperscale stuff, I think the context is very important here. We’re still in an inflationary environment, right? We’re still so costs are going up. We’re still in an environment where cost of capital is staying steady, not eroding, right? All these headlines you see if people want to invest in data centers, they’re not running for low returns in data centers.

I have no one come bang down with George and say, can you please invest in lower return data centers, right? So that’s a broader backdrop. Two, we deliberately focus on markets where we saw robust and diverse demand and supply constraints of some shape or form, right? These markets versus markets we do not play in or did not choose to proceed are different and have different characteristics. And then most of these markets, we have established customers that have location sensitive workloads.

They have cloud AZs with radius restrictions of growth. They have needs to be there that it’s not just about the price that is driving them to these locations. So yes, there may be a market like Northern Virginia where we’re out in the market at rates now in the $200 range that you’d say, Hey, that didn’t increase from last month. It’s in a healthy place to be in. Now there’s a lot of other markets that never got it that high, that have been coalescing into the 150 area, including the international markets, which did not have a major benefit from AI to date but has the propensity to change as the nationalist themes go of data sovereignty just like it did with cloud sovereignty.

So I think market rents still have room to run, broadly speaking, in the core markets we are in 2025.

Mike Rollins, Citi Research, Citi: Very helpful. And just one more follow-up on the package deals. Is there some room for package deals in 2025 to give you a little help or upside on that renewal spread?

Andy Power, President and CEO, Digital Realty: Those events are very much star, sun, moon aligning events where you have the combination of an existing relationship with existing contracts that are not new contracts, I. E, not already at market, also intersecting with the customer having a need that really only we can provide. We caught lightning in the bottle two times last year. I’m not forecasting a third time in 2025. We always in good times and back in bad times, we always try to have holistic relationships and conversations with our customers, bring everything to the table, places we can work together to partner.

So that’s always on the docket. And maybe things won’t happen to the grand size and scale, but I can tell you as we’re helping customers in smaller increments, we’re talking out further in our exploration schedule about, hey, how will we talk about those expirations in eighteen months a little sooner. So we’re actively on the balls of our feet on that topic, but I can’t promise anything.

Mike Rollins, Citi Research, Citi: We’ve been getting some questions over the last couple of days just on the forward financial prospects and just how the model works for Digital Realty in terms of translating this demand into core FFO per share growth beyond the 2025 guidance that you provided. Can you give us an update on the multi year opportunity to improve core FFO per share growth?

Matt Mercier, CFO, Digital Realty: Sure. Yes. So let’s start with kind of breakdown maybe 2025 is called a baseline. So we start kind of at the foundation. We talk generally about roughly 4% growth in our stabilized pool.

So that’s coming from the mark to markets, some level of occupancy improvement that we’ve also guided to that’s around 100 basis points. So that gives us like a great solid foundation for growth in ’twenty five. Then sort of offsetting that slightly is we do have headwinds from refinancing roughly $1,000,000,000 of debt maturities that we have over the next several years. Given today’s rates, those are, generally speaking, about 1% of headwind that’s going to offset that as we refinance that debt in a higher interest rate environment. We talked about that as being a headwind, call it, a year ago.

That’s going to continue for some period of time. And then on top of that, we’ve got what we talked about also, which is a healthy development pipeline starting to bring online the, call it, $350,000,000 of backlog into revenue this year. That’s giving us basically another, call it, roughly 3% to our growth profile that’s getting to that, call it, 6%, rounding up slightly at the midpoint to our bottom line core FFO growth. What we see going forward, and this goes back to kind of my mark to market questions, is within that stabilized pool, we see an improving outlook on mark to market that should give us an opportunity to continue to push that forward up into the right. And we’ve got still a robust demand environment that is going to allow us to continue to lease into it at healthy yields and deliver that 3% plus growth from our, call it, development pipeline, potentially pushing further, but also balancing that with capital needs that are going to need to go into spend to bring that capacity online and some of the private capital or JV partners that are sharing in that.

So all that being said is we’re looking at 6% growth in 2025, and we see an opportunity to continue to improve on that, as we mentioned, in terms of improving and accelerating growth in ’twenty six and beyond.

Mike Rollins, Citi Research, Citi: And then when you think about capital allocation, what role does now you have more financial capacity with the fund that you’re creating. Where does capital recycling fit into the priorities for Digital Realty?

Andy Power, President and CEO, Digital Realty: I think we’re whittled down. Although we are consistent portfolio managers of what we where we own and operate and invest, I think we’re whittling down to the noncore to a much smaller component. What’s exciting to me is not just the big transactions that we’ve accomplished in bolstering our liquidity and be able to grow our investment opportunities with a stronger balance sheet, but evolving that into something that, yes, a $2,500,000,000 first fund is potentially modest in the scheme of our category, but it’s a foundational building block of what could be a tremendous, call it, asset management business around our hyperscale. We have all the key ingredients to do that and the track record when it comes to our category. And that doesn’t mean we’re divorced from doing hyperscale on our own balance sheet whatsoever, but we just see this opportunity.

It’s all around us, and it’s growing rapidly to harness the private capital with multiple different vehicles, both stabilized and development along the way that I think is going to be scaled to many, many billions quite rapidly.

Unidentified speaker: And maybe just to reconcile that to the guidance. So the stabilized hyperscale asset monetizations into the Fund for this year are embedded in our $500,000,000 to $1,000,000,000 full year guidance.

Mike Rollins, Citi Research, Citi: Matt, don’t want to leave you without a balance sheet question. So on leverage, you’re below I think previously you’ve talked about a mid-5x leverage ratio. You’re now below five. What is the right target for Digital Realty? And is there as just debt products are evolving, do you see that influencing the level of leverage that you want to employ in your business?

Matt Mercier, CFO, Digital Realty: I mean, the simple answer is, I mean, we still view the 5.5 times as a good target for Digital Realty. We are below that today, as you mentioned. We’re 4.8. But that’s with the view that as we look forward, we see, again, a lot of what we bring together, a lot of what we talked about today, we see a strong development pipeline that’s growing. We see good demand backdrop from our customers.

And we want to be ahead in terms of our ability to fund and be ahead of the capital needs that we have today. So we’re sitting here today with $6,000,000,000 in liquidity below leverage target and an ability to kind of see through and fund what is our $25,000,000,000 capital needs and likely into ’26 especially considering that doesn’t even include the in terms of liquidity, the $500 to $1,000,000,000 that we’ve talked about in our guide that we expect to come in from some of the non core asset sales and the private capital initiatives that we’ve also discussed.

Mike Rollins, Citi Research, Citi: And as you look at the growth opportunities ahead as well as the investments that you want to make in development, what does this mean for the dividend policy going forward?

Matt Mercier, CFO, Digital Realty: Yes. I mean, so it’s a good question in terms of like how we’re looking at funding and being able to fund the business going forward. I think our, call it, key priorities are around maximizing our operating cash flow because we see that as an efficient use of funding cost of capital for us given the 12% -plus development yields that we have overall today. Increasing our EBITDA, giving us leverage capacity on a normalized basis, our EBITDA has grown plus 10%. So that’s another avenue for source of capital.

The executing on the private capital non core asset sales is another avenue. And ultimately, bringing those all together so that we’re reducing overall our need and reliance on public capital for to fund our growth. So I think our dividend policy in general is to pay out our

Nick Joseph, Citi Research, Citi: to our pay

Matt Mercier, CFO, Digital Realty: out 100% of our taxable income, which we’ve been able to do and also use that as part of the non core recycling as well as some of the joint ventures. So I think that policy will continue going forward.

Nick Joseph, Citi Research, Citi: All right. And now we have forty five seconds here, so we’ll do rapid fire quickly. What will same store NOI growth be for data center sector overall next year in 2026?

Matt Mercier, CFO, Digital Realty: We’re guiding to roughly, call it, midpoint 4%, so I think 4% plus.

Nick Joseph, Citi Research, Citi: Next year. Great. And then will there be more fewer, the same number of public data center companies one year from now?

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