Digital Realty Trust (NYSE:DLR) raised its 2026 earnings outlook after reporting a second quarter marked by record leasing. Core FFO excluding net promote income reached $2.13 per share, up 14% from a year earlier, while reported core FFO was $2.65 per share, including $0.52 per share from net promote income.
The company reported $108 million of bookings in its zero-to-one-megawatt plus interconnection category during Q2, a third consecutive quarterly record. Interconnection bookings reached a record $20.5 million, up 18% from the prior year.
Total backlog at 100% share at end of Q2
Digital Realty signed more than $261 million of renewals with cash re-leasing spreads above 25%. Renewals in the zero-to-one-megawatt category accounted for 55% of the total and produced a 5.2% cash mark-to-market, while greater-than-one-megawatt renewals accounted for 44% and delivered a 66.7% mark-to-market.
Total backlog reached $1.9 billion at 100% share at end of Q2, or $1.4 billion at Digital Realty's share. The company commenced $208 million of annualized rent during Q2, its third-strongest commencement quarter on record. $635 million of annualized rent is scheduled to commence in H2 2026, followed by $480 million in 2027 and $312 million already scheduled for 2028 and beyond.
After quarter-end, the company signed two additional U.S. hyperscale leases representing about $410 million of annualized rent at 100% share, or $205 million at Digital Realty's share. Digital Realty invested $1.1 billion in development capital expenditures during Q2, net of partner contributions, bringing year-to-date spending to $2 billion.
The company delivered 76 megawatts of new IT capacity, about 60% pre-leased, and began development of 312 megawatts of additional capacity. The development pipeline expanded to 1.4 gigawatts under construction at total cost of $20 billion, doubling during the first half of 2026. The pipeline is 63% pre-leased at an average expected stabilized yield of 11.5%.
More than 80% of active development is in the Americas, with Northern Virginia the largest development market. The company secured 600 megawatts of utility power in the Kansas City metro, beginning to ramp in early 2028, with a long-term runway of up to two gigawatts.
Digital Realty closed a transaction to acquire Blackstone's ownership interest in three fully leased hyperscale data centers in Northern Virginia totaling 288 megawatts of IT capacity. The company paid $1.2 billion in cash, issued 12.3 million shares valued at about $2.3 billion, and assumed Blackstone's share of a $725 million loan for the acquisition. CEO Andy Power said customers deploying AI-enabled applications increasingly need environments that combine power, proximity and connectivity.
The company also announced plans to acquire a 16% interest in Teraco for about $650 million of Digital Realty common stock and Columbia Capital for approximately $485 million. CFO Matt Mercier said the Blackstone transaction generated roughly $200 million of promote income during the quarter, which contributed $0.52 per share to reported core FFO.
Digital Realty ended the quarter with debt to adjusted EBITDA of 4.7 times and has about $6 billion of liquidity, with estimates of more than $12 billion of remaining capacity to support hyperscale data center development.
The company raised its 2026 outlook for cash renewal spreads to 9% to 11% and increased its constant-currency same-capital cash NOI growth forecast to 4.25% to 5.25%. Expected capital expenditures net of partner contributions rose to $4.25 billion to $4.75 billion in 2026.
The company's 2025 impact report includes 93% renewable energy coverage globally, 205 sites matched with 100% renewable and emissions-free energy, and a contracted renewable energy portfolio of about 1.7 gigawatts.