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Digital Realty Trust has raised its full-year adjusted funds from operations (FFO) and revenue forecasts after reporting stronger-than-expected second-quarter earnings, supported by sustained demand for data centre capacity from cloud computing and artificial intelligence (AI) customers. The US-based real estate investment trust (REIT) posted a 29% year-on-year increase in quarterly revenue to USD 1.92 billion, exceeding market estimates, while adjusted FFO also surpassed analyst expectations. The company continues to expand its global data centre footprint and is progressing with a USD 3.5 billion acquisition of a larger stake in three data centres in Northern Virginia, reinforcing its presence in the world's largest data centre market.
Digital Realty Trust has raised its financial guidance for FY26 after reporting stronger-than-expected second-quarter results, driven by sustained leasing demand from cloud computing and artificial intelligence (AI) customers that continue to expand their digital infrastructure requirements.
The Austin, Texas-headquartered real estate investment trust (REIT), which owns and operates data centres, colocation facilities and interconnection infrastructure, announced revised projections for adjusted funds from operations (FFO), a key performance metric for REITs, and increased its revenue outlook following robust operational performance during the quarter ended June 30.
The company now expects adjusted FFO for FY26 to range between USD 8.15 and USD 8.20 per share, compared with its earlier guidance of USD 8.00 to USD 8.10 per share. It also revised its full-year revenue forecast upwards to between USD 6.85 billion and USD 6.95 billion, from the previous estimate of USD 6.65 billion to USD 6.75 billion.
Digital Realty reported second-quarter revenue of USD 1.92 billion, representing a 29% increase from the corresponding period last year and exceeding analysts' consensus estimate of USD 1.66 billion, according to data compiled by LSEG. Adjusted FFO for the quarter stood at USD 2.65 per share, significantly above the market expectation of USD 1.86 per share.
The company's performance continues to be supported by rapid growth in demand for AI infrastructure. The increasing adoption of generative AI applications has accelerated requirements for high-capacity data centres capable of supporting large-scale computing workloads, benefiting operators with established global portfolios of digital infrastructure assets.
Digital Realty leases managed data centre facilities to customers across multiple industries, including cloud computing, information technology, communications, social networking and manufacturing. The company has continued to expand its platform through new developments and strategic investments in key global markets to capitalise on rising demand for AI-enabled infrastructure.
As part of its expansion strategy, Digital Realty is proceeding with the acquisition of a larger ownership stake in three data centres located in Northern Virginia from asset manager Blackstone. The USD 3.5 billion transaction, structured as a combination of cash and stock, is expected to strengthen the REIT's position in Northern Virginia, which remains the world's largest data centre market.
The improved financial outlook reflects continued resilience in leasing activity despite broader economic uncertainty, with demand from hyperscale cloud providers and AI-focused customers supporting occupancy and revenue growth. The company's latest guidance indicates confidence that investment in digital infrastructure will remain robust as enterprises continue to expand AI capabilities and cloud-based services.
Source - Reuters
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