Digital Realty Trust, Inc.
Analysis
Digital Realty has become a builder first: it signs huge AI leases, then constructs the campus, and increasingly lets outside investors pay for the build. The rent arrives years after the spending does.How much of the $1.9 billion backlog starts paying rent in 2026?
- AI went from a side line to the whole leasing story.
Q1 FY2026 brought the company's largest ever lease, a 200-megawatt AI deal in Charlotte, and two more hyperscale leases followed Q2. Space gets rented before it is built, which is why the backlog hit another record.Which markets hold the unleased capacity coming online in 2027 and 2028?
- Existing buildings are repricing far above inflation.
Renewals signed at a record spread above 25% in Q2 FY2026, with big leases in tight markets like Singapore rolling to much higher rents. That is cash from buildings already paid for, and it carries the company while the new ones get built.
- The building bill is running well ahead of the rents it buys.
Development under construction doubled to $20 billion in six months while capex guidance rose again. Same-capital cash NOI grew just 2.5% in Q1 FY2026, and part of the latest quarter's profit came from one-off payments rather than rent.
- Tenants keep signing before the buildings are finished. Most of the new space is already rented before it opens, so the company builds against signed contracts, not guesses.
- Outside investors keep paying for most of the construction. Outside money covers most of the build, so the company grows without footing the whole bill and earns a managing fee.
- Renewals keep landing well above the old rent. Each repriced building lifts income from space already owned, and that pays the bills while new campuses are built.
- The new campuses do not lease at the rents the plan assumes. It would still owe construction bills on half-empty buildings while income from the space it already owns barely grows.
- Each megawatt keeps costing more to build. Rising land, labour and cooling costs mean each new centre earns less than the last unless rent climbs as fast.
- Power and permits stop arriving on schedule. A campus that cannot get power on time still costs money, and the rent it is counting on arrives even later.
| Politician | Transaction | Amount | Traded | Filed |
|---|---|---|---|---|
Donald Trump Republican · Executive | Sale | ≥$100K | Aug 26 | Oct 8 |
Donald Trump Republican · Executive | Sale | ≥$500K | Jul 20 | Sep 22 |
Donald Trump Republican · Executive | Purchase | ≥$15K | Mar 25 | May 13 |
Donald Trump Republican · Executive | Purchase | ≥$50K | Mar 23 | May 13 |
Donald Trump Republican · Executive | Purchase | ≥$500K | Mar 17 | May 13 |
Congressional trading data provided by QuiverQuant
How Digital Realty Trust turned $6.1B of revenue into $658.5M of operating income.
| Revenue | ||
|---|---|---|
| Rental And Other Services | $6.0B | ▲ 8.87% YoY |
| Fee Income And Other | $143.8M | ▲ 98.32% YoY |
| Total revenue | $6.1B | |
| Gross profit | $3.4B | 55.4% |
| Operating income | $658.5M | 10.8% |