Digital Realty lifts annual FFO forecast on strong data center demand
Digital Realty Trust raised its annual core funds from operations (FFO) forecast on Thursday, betting on strong demand for data center services, sending its shares up 3.3 per cent in extended trading.
The surge in digital transformation and growing investment by hyperscale customers developing and integrating artificial intelligence models are driving demand for data services, boosting new bookings and renewals for data center operators such as Digital Realty.
"Robust demand across our key product segments drove strong leasing and acceleration in Core FFO per share growth in the first quarter," said CEO Andy Power.
The company now expects annual core FFO to be in the range of $7.05 to $7.15 per share, compared to its prior outlook of between $7.00 and $7.10 apiece.
Analysts' on average had estimated $7.02 per share, according to data compiled by LSEG.
"While it is important to acknowledge the risk posed by elevated uncertainty and capital markets volatility, Digital Realty product pipelines remain near record levels" the company said in a post-earnings call.
The real estate investment trust leases out managed data centers to clients in sectors that range from cloud and information technology to social networking, communications and manufacturing.
Digital Realty forecasts its full-year 2025 revenue to be between $5.83 billion and $5.93 billion, the midpoint of which is in line with analysts' average estimate of $5.88 billion.
The Austin, Texas-based company posted revenue of $1.4 billion for the quarter ended March 31, compared with estimates of $1.43 billion.
Adjusted FFO — a key cash flow measure for REITs — came in at $1.77 per share in the first quarter, from $1.67 each in the previous year.
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