Digital Realty Books Historic Hyperscale Leases as AI Demand Accelerates (DLR Q1 2026 Earnings Call)
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Digital Realty continues to capitalize on the insatiable global demand for digital infrastructure, delivering a blockbuster quarter defined by historic hyperscale lease signings and accelerating enterprise activity. Driven by a rapidly materializing artificial intelligence deployment cycle, the data center REIT has pushed its backlog to record heights while expanding its massive multi-gigawatt development pipeline to secure future growth.
Record Core FFO Driven by Robust Quarterly Leasing
Digital Realty reported an outstanding first quarter, with Core FFO jumping 15% year-over-year to $2.04 per share. Total new lease signings surpassed $700 million, representing the company's second-highest bookings period ever. Despite aggressively funding its massive development pipeline, the REIT improved its balance sheet health, pushing its debt to adjusted EBITDA down to a multiyear low of 4.7x.
Management Raises Full-Year Earnings Guidance
Boosted by broad-based demand and strong initial execution, management raised its 2026 Core FFO guidance by ten cents to a new range of $8.00 to $8.10 per share. This updated outlook implies roughly 9% growth at the midpoint. Additionally, the company expects cash renewal spreads between 6.5% to 8.5% and anticipates constant currency same capital cash NOI to grow in the 4% to 5% band for the fiscal cycle.
Backlog Surges Following Historic Hyperscale Signing
The data center operator's total backlog swelled to a record $1.8 billion following a landmark quarter in both enterprise and hyperscale segments. Notably, Digital Realty signed the largest individual lease in its history—a massive 200-megawatt AI inference agreement with a highly rated cloud provider in Charlotte. On the enterprise side, the highly profitable sub-megawatt interconnection category hit an all-time high of $98 million in bookings, fueled by surging AI requirements. The under-construction pipeline also scaled aggressively to 1.2 gigawatts.
Land Banking Accelerates Amid Intense Supply Chain Constraints
During the Q&A, executives emphasized their aggressive land acquisition strategy to circumvent power and supply chain bottlenecks. The company recently secured an 873-acre parcel in Greater Atlanta and a supplementary plot in Hillsboro. Chief Technology Officer Chris Sharp noted that artificial intelligence demand has definitively crossed from pilot to production, requiring modular infrastructure capable of supporting extreme density requirements as enterprise and hyperscale customers lock in capacity for future deployments.