Digital Realty Trust (NYSE:DLR) executives highlighted record leasing activity, accelerating interconnection momentum, and an expanded funding strategy during the company’s fourth-quarter 2025 earnings call, as management pointed to sustained demand for data center capacity amid the global buildout of AI and cloud infrastructure.
Financial performance and 2026 outlook
Senior Vice President of Investor Relations Jordan Sadler said the company posted Core FFO of $1.86 per share in the fourth quarter and $7.39 per share for full-year 2025, which he said was up 10% over 2024. CFO Matt Mercier added that fourth-quarter Core FFO per share increased 8% year-over-year, citing strong core growth and fee income, partially offset by seasonally higher expenses.
Leasing strength, backlog, and interconnection momentum
CEO Andy Power described 2025 as “pivotal” for the industry as AI adoption accelerated and power availability emerged as a primary constraint. He said Digital Realty signed over $1 billion of new leases for the second consecutive year, with $1.2 billion of bookings in 2025, which he characterized as nearly 70% above the average pace of the prior five years.
Mercier said fourth-quarter leasing was a “top five” quarter in the company’s history. During the quarter, Digital Realty signed leases representing $400 million of annualized rent at 100% share (or $175 million at Digital Realty’s share). He added that leasing was strongest in the Americas, representing 65% of the company’s share of bookings in the quarter.
The company’s smaller-capacity colocation and interconnection-oriented segment continued to be a key driver. Power said the 0–1 MW-plus interconnection product set posted nearly $340 million of bookings in 2025, a full-year record and more than 35% above 2024. Mercier reported the category set a new quarterly leasing record of $96 million in the fourth quarter, and said the company averaged $85 million per quarter in that category during 2025.
Interconnection bookings in the fourth quarter were $18.9 million, and Mercier said interconnection bookings increased 22% year-over-year in the second half of 2025, driven by record EMEA bookings and “momentum within our ServiceFabric product.” Power said ServiceFabric now enables access to more than 300 cloud on-ramps and more than 700 interconnected data centers globally.
Digital Realty ended 2025 with what Sadler called a record backlog of nearly $1.4 billion at 100% share. Mercier said Digital Realty’s backlog at quarter-end was $817 million, as $209 million of commencements exceeded $175 million of new bookings in the quarter. Looking to 2026, he said $634 million of leases are scheduled to commence during the year, with another $152 million commencing in 2027 and beyond.
Hyperscale demand, pricing, and supply constraints
Management emphasized continued hyperscale activity, particularly in the Americas. Power said hyperscale leasing exceeded $800 million in 2025 on a 100% share basis. Mercier said the company signed $78 million in the greater-than-a-megawatt category at Digital Realty’s share in the fourth quarter, with pricing averaging over $180 per kW. He cited Manassas, Virginia, as the top contributor to greater-than-a-megawatt signings during the quarter, and said hyperscalers also signed leases in Tokyo, Osaka, and Paris.
Executives repeatedly pointed to power availability and the ability to execute as key constraints shaping new supply. Power said Digital Realty is leveraging its footprint and “5-GW power bank” to position incremental development capacity in power-constrained markets. He added that in Northern Virginia, availability across nearly 800 MW of in-place portfolio capacity remains very limited, while the company is “readying for delivery” 300 MW of capacity in the 2027 to 2029 timeframe.
In Q&A, Power said demand remained strong in Northern Virginia and cited additional U.S. markets including Charlotte, Atlanta, and Dallas, while also noting a “globalization of the demand” with Europe contributing more in the greater-than-a-megawatt category. Chief Revenue Officer Colin McLean said there was keen interest from hyperscale customers “wherever we have large capacity blocks,” including Northern Virginia, Paris, Osaka, Tokyo, Atlanta, and Charlotte, and characterized demand as driven by both AI and “zonal cloud deployments.”
Development pipeline, funding strategy, and reporting changes
Mercier said the company spent $930 million on development capex in the fourth quarter (net of partner share), bringing full-year spend to $3.0 billion. Digital Realty delivered about 90 MW of new capacity in the quarter, which was 75% pre-leased, and started about 135 MW of new projects, bringing total capacity under construction to 769 MW. At quarter-end, the gross development pipeline underway was just over $10 billion at an 11.9% expected stabilized yield. For full-year 2025, the company delivered approximately 289 MW of new capacity.
On the capital markets front, Mercier said Digital Realty raised EUR 1.4 billion in a dual-tranche green Eurobond offering and used part of the proceeds to redeem EUR 1.075 billion of Eurobonds. He said the 160 basis point spread between the new and redeemed debt will create a “modest interest expense headwind” beginning in the first quarter of 2026. Leverage ended the quarter at 4.9x, with liquidity near $7 billion.
Sadler and Mercier also emphasized the company’s entry into private markets. Sadler said Digital Realty ended the year with over $3.2 billion of LP equity commitments to its oversubscribed inaugural closed-end fund. Mercier said the fund had closed EUR 3.225 billion of LP equity by year-end and expects a final EUR 25 million closing before the next call. He added that in late December the company contributed an additional 40% stake in five stabilized seed assets into the fund, increasing the fund’s stake to 80% and resulting in EUR 427 million of net proceeds to Digital Realty. Management also cited approximately $15 billion of “dry powder” tied to private capital initiatives.
Separately, Mercier said the company will begin enhancing disclosures to align with how it manages the business by emphasizing power-based metrics. While same-capital and total portfolio occupancy ended 2025 at 83.7% and 84.7% on a square-foot basis, he said occupancy on an IT load basis was approximately 91% and 89%, respectively.
AI, inference, and enterprise demand
Power said Digital Realty is seeing “early but encouraging” adoption of its Private AI Exchange platform, which he described as enabling enterprises to connect compute, data, and models privately across clouds and partners. He tied expected growth in AI inference workloads to interconnection demand, saying inference “thrives where data and networks meet.”
In Q&A, Power said the company is seeing hyperscalers blend cloud and AI workloads within the same buildings, prompting design discussions that mix air and liquid cooling. He also said enterprise adoption of inference-related use cases may be a “long-tail demand” but noted strong enterprise results in 2025, including records in the 0–1 MW category and a mix of new logos and existing customers. McLean added that Digital Realty is seeing increased interest in larger contiguous enterprise deployments above 500 kW, along with emerging discussions around 5 MW blocks as inference develops, while still seeing strong activity under 500 kW.
About Digital Realty Trust (NYSE:DLR)
Digital Realty Trust, Inc (NYSE: DLR) is a real estate investment trust that owns, acquires and operates carrier-neutral data centers and provides related colocation and interconnection solutions. The company focuses on large-scale, mission-critical facilities that support the physical infrastructure needs of cloud providers, enterprises, network operators and content companies. Digital Realty’s offerings are designed to enable secure, reliable and highly available IT infrastructure with an emphasis on power density, cooling, and physical security.
Digital Realty’s product set spans wholesale data center space, turnkey build-to-suit facilities, and retail colocation suites, complemented by interconnection services that allow customers to establish private and public connections to networks, cloud on-ramps and other ecosystem partners.
