Digital Realty Trust Inc DLR

Digital Realty Earnings: Another Really Good Period; Debt Is Coming Down

Digital Realty had a tough act to follow on the heels of the eye-popping bookings and re-leasing spreads it reported last quarter. We realized that type of performance was likely to be an exception, so the consistency the firm followed up with in its second quarter was, in some ways, even more encouraging. While we expect quarter-to-quarter results to remain choppy, Digital is benefitting from strong data center demand, which it largely attributes to artificial intelligence that is driving the need for hyperscale data centers. New bookings and pricing have generally been strong and trending upward for the past couple of years. After paying down nearly $1 billion in debt during the quarter, Digital’s balance sheet appears to be in its best shape in a long time. We’re raising our fair value estimate to $140 from $135 and see shares as fairly valued.