Land bank and market selection
Q: Jon Petersen with Jefferies asked about the recent land bank additions in Indianapolis and Charlotte and the rationale for entering these markets.
A: Andy Power and Greg Wright explained that Digital Realty targets markets with robust demand, diverse workloads, and proximity to fiber routes and cloud hyperscalers, noting Indianapolis's strong manufacturing base and favorable power costs.
Edge inference and interconnection opportunities
Q: Michael Elias with TD Securities asked about the medium- to long-term opportunity on the edge inference side and its impact on interconnection.
A: Andy Power highlighted Digital Realty's global reach, connectivity-rich environments, and AI-ready infrastructure with operational liquid cooling across more than 25 locations.
Cost of capital and development inflation
Q: Eric Luebchow with Wells Fargo asked if market rent growth is outpacing development costs and how Digital Realty mitigates inflation.
A: Andy Power stated that development yields exceed 11.5% with 63% pre-leasing, while Matt Mercier noted recent debt and equity raises including $1.7 billion in debt at a nearly 4% blended average rate.
Stabilized hyperscale data center acquisition strategy
Q: Michael Ng with Goldman Sachs asked about the buy box and value-add opportunities for the stabilized hyperscale data center acquisition strategy.
A: Greg Wright explained that this perpetual life strategy is designed to match long-term institutional capital with stabilized assets, targeting core-plus returns.
0 to 1 megawatt business growth
Q: Aryeh Klein with BMO Capital Markets asked if the 0 to 1 megawatt leasing level is sustainable and inquired about pricing opportunities.
A: Colin McLean responded that the segment saw its fourth consecutive quarterly record, driven by hybrid cloud adoption, data sovereignty, and AI use cases.
Hyperscale pricing and development pipeline
Q: Michael Rollins with Citi asked about hyperscale pricing yields and the capacity left to sell for upcoming vintages.
A: Andy Power noted robust volume with an average lease length of 16 years and roughly 1.5 gigawatts under development for 2027 and 2028.
M&A opportunities and valuations
Q: Matt Niknam with Truist asked about the latest M&A opportunities and valuations given the company's clean balance sheet and global scale.
A: Greg Wright outlined their history of targeted M&A across the three growth pillars of colocation, hyperscale, and strategic private capital.
Development delays and supply chain management
Q: Michael Funk with Bank of America asked if Digital Realty is experiencing industry-wide development delays and how they are avoided.
A: Andy Power emphasized that their two-decade heritage, local community engagement, and vendor management allow them to maintain their track record.
