DLR Stock: Dividend vs Core FFO, Backlog, Funding, Debt

The dividend against Core FFO: five quarters and a guidance walk

Digital Realty reports three payout ratios in its supplemental package, each as dividends declared per share over a different per-share measure: FFO, Core FFO and AFFO. Core FFO is the one the company guides and the one its performance awards are tied to (the 10-Q says the financial-based awards use “growth in core funds from operations per share”). The table is the company’s own series, with our arithmetic where marked.

The outlook has moved up in three steps: $7.90 to $8.00 on February 5, $8.00 to $8.10 on April 23 and $8.15 to $8.20 on July 23, 2026. That sounds like a company beating its own numbers, and in the first half it did: Core FFO per share excluding promote was $4.17 against $3.64 a year earlier, up 14.6% (our arithmetic). The midpoint of $8.175 is 10.6% above the $7.39 of 2025 (our arithmetic). But subtract the first half from the full-year range and the second half is $3.98 to $4.03, about $1.99 to $2.02 a quarter, below Q2’s $2.13. Two things explain most of that, and both are in the filings.

• Share count. Q2 Core FFO was divided by 360.6 million weighted diluted shares and units. At June 30 there were 376.7 million, because 12.3 million shares went to Blackstone on the last day of the quarter and the at-the-market program kept selling. Spreading the Q2 Core FFO excluding promote ($767.9 million) over 376.7 million gives $2.04 (our arithmetic), before any Q3 rent growth and before the 3.4 million Teraco and 2.3 million Columbia Capital shares due in the second half.
• One-time items inside Core FFO. The company recognized about $27 million of its $94 million (net of tax) Singapore insurance settlement in Core FFO as business interruption recovery, about $0.07 a share on the Q2 base (our arithmetic). The rest, property damage, it excluded.

What does the 10-Q add? The dividend is a board decision, and the filing says so: cash from operations “has generally been sufficient to fund all distributions,” but “in the future we may also need to utilize borrowings under the Global Revolving Credit Facility to fund all or a portion of distributions.” Operating cash flow in the first half was $1,595.2 million against $876.7 million of dividends and distributions on common stock and units (1.82 times, our arithmetic).

How the dividend was taxed: the 10-K says 2025 distributions were approximately 79% ordinary income and 21% capital gain, with no return of capital; 2024 was 77% and 23% and 2023 was 40% and 60%. Our pages on REIT return of capital and the Section 199A deduction explain what those labels mean on your 1099-DIV.

Backlog, bookings and what renews at higher rent

Digital Realty sells in two ways: large hyperscale leases (above 1 megawatt) that arrive in lumps and commence a year or more later, and smaller 0 to 1 MW and interconnection deals that commence in months. The backlog is the first kind waiting to turn into rent.

Three readings. The Q2 headline renewal increase is not a portfolio-wide rent reset. Renewals above 1 MW rose 66.7% on a cash basis (expiring $159 to renewed $265 per kilowatt on 35.8 MW); renewals below 1 MW rose 5.2% on 34.8 MW. Across all data center renewals the cash increase was 25.6% in Q2, 15.9% year to date and 11.0% over the last twelve months, and the company guides 9.0% to 11.0% for the year, raised from 6.0% to 8.0% in February. The backlog rise is partly bought. The $1.4 billion at Digital Realty’s share is $1.9 billion at 100% share; Q2 bookings of $208 million cannot lift a backlog by about $0.4 billion on their own, and the quarter included the purchase of Blackstone’s stake in three fully leased developments. The company does not break out how much; treat that as our inference, not a filing statement. Bookings are lumpy. Q1’s $423 million included what the CEO called “the largest hyperscale lease in company history”; Q2 was half of it, and July alone brought two more hyperscale leases worth $410 million at 100% share, $205 million at Digital Realty’s share.

Now the other side of the ledger: what expires. Annualized rent at June 30, 2026 was $4.81 billion at Digital Realty’s share. Leases for $571 million (11.9%) expire in the rest of 2026 and $875 million (18.2%) in 2027, 30.1% together (our arithmetic), and the average remaining lease term is 4.1 years. Churn was 1.1% in Q2, 2.4% year to date and 5.5% over twelve months. Renewals are where the mark-to-market shows up, and the next two years carry the largest pile of them.

The 10-Q says the two largest customers were about 11% and 10% of total revenue, and no other was above 10%. The shorter-dated large names matter more than the headline occupancy: a 5.6% customer with 2.5 years left and a 4.4% one with 2.7 years are inside the 2027 to 2029 expiry years, while the long leases (Oracle 10.8 years, the AI chip maker 13.7 years) are far out.

Development, the Fund and the Blackstone buyout: who pays

At June 30, 2026 the company had 1,402 megawatts under construction, about 82% more than at December 31, 2025 and 54% pre-leased, at an estimated pre-tax stabilized cash yield of 11.5% (Americas 1,140 MW, 62% leased, 11.8%; EMEA 183 MW, 12% leased, 10.4%; APAC 80 MW, 47% leased, 11.2%). The total investment is $20.18 billion at 100% share and $13.61 billion at Digital Realty’s share, of which $9.53 billion is still to be spent. Open construction commitments are $4.1 billion, and the company expects $2.8 to $3.3 billion of capital expenditure in the rest of 2026; the 2026 development capex outlook net of partner money was raised to $4.25 to $4.75 billion from $3.25 to $3.75 billion in February.

The pipeline of future capacity is stated three ways in three documents read for this page: “approximately 8.5 gigawatts” of buildable capacity (supplement), about 9 GW of future development capacity (presentation) and “over 7 gigawatts” of additional future development capacity (10-Q). They count different things, so use the 10-Q figure for land not yet under construction.

How it is paid for, as the filings show it:

1. New stock. In the first half, about 13.5 million shares sold for about $2.5 billion at an average $184.94, 1.40 times the $1.78 billion of improvements to real estate (our arithmetic). A new $7.5 billion program replaced the old one on May 4, with $6.3 billion left at June 30. AFFO after dividends and distributions was $686.6 million in the half, or about $498.7 million without the net promote (our arithmetic); that covers a fraction of the build.
2. The private capital fund. The 10-K describes the Digital Realty DC Partners NA Fund (the supplement’s table calls it the U.S. Hyperscale Data Center Fund) as having raised “over $3 billion of equity commitments that can support approximately $10 billion of total data center investment.” In May 2025 the first contribution brought $937 million of gross proceeds and an $873 million gain. In May 2026 two development projects went in for $447 million of gross proceeds (carrying value $439 million, gain about $8 million), which the supplement shows at $436 million at 100% share, with Digital Realty receiving about $170 million. The company now guides $1.0 to $1.5 billion of dispositions and joint venture capital for 2026, up from $0.5 to $1.0 billion. The 10-Q says the Fund held 80% of each original asset and the company 20% as of March 31, 2026; for the two May contributions it retained interests of 58.1% and 62.5%, so the next filing is where to check how much of the build the Fund is carrying.
3. Buying out a partner. On June 29 the company agreed to buy Blackstone’s “blended 64% interests” in two joint ventures that are building three hyperscale data centers (288 MW) in Northern Virginia, for $1,231 million in cash and non-voting common stock valued at $2.35 billion (12,310,249 shares), at a gross value of $7.8 billion including assumed debt and remaining capex, an estimated initial stabilized cap rate of “over 6.5%,” 15-year leases with a blended Aa3/AA- rating and 3.6% annual escalators. It assumed a $726 million construction loan and has about $900 million of capex left. The company says the purchase is expected to be “leverage neutral and accretive to core funds from operations” per share in 2027 and 2028, not in 2026: two of the three buildings are expected to stabilize in the first half of 2027 and the third in the first half of 2028.
4. Smaller deals in 2H 2026. The Teraco put (3,425,031 shares for about 16%, taking ownership from 61% to 77%) and Columbia Capital ($45 million cash and 2,337,036 shares, up to $290 million more on milestones) are both expected to close in the second half. Together with 1,457,506 possible earn-out shares, that is up to about 7.2 million more shares (our arithmetic), 1.9% of the June 30 share and unit count.

The promote deserves its own line. The $187.9 million of net promote in Q2 came from the same Blackstone transaction (“promote income related to achievement of certain performance hurdles associated with the June 2026 Acquisition,” $201 million gross in the 10-Q). Digital Realty was both the buyer and the party earning a performance fee on the same joint ventures, and it excluded the fee from its guidance. The company also writes in the 10-Q that “the growing acceptance by private institutional investors of the data center asset class has generally pushed capitalization rates lower,” and that it anticipates “near-term single asset acquisitions activity to comprise a smaller percentage of our growth.”

For readers who also own Digital Realty-linked vehicles: Realty Income (20%) and Blackstone (50% in one Americas venture, 20% in an EMEA one) are among its unconsolidated partners in the 10-Q. Our Realty Income page covers that partner’s side, and the Form D roundup tracks the private funds that raise this kind of capital.

Debt: the ladder, the new notes and what refinancing costs

Total debt was $18.77 billion at June 30, 2026 at a 2.99% weighted average rate, 93.6% fixed including swaps, with a 4.4 year weighted average term. Net debt was 4.7 times Adjusted EBITDA (4.9 times at year-end), debt was 21.4% of total enterprise value, and fixed charge coverage was 5.2 times. The credit ratings in the supplement are BBB+ stable (S&P), Baa2 with a positive outlook (Moody’s) and BBB stable (Fitch).

Debt due through 2027 is 15.9% and through 2029 is 48.6% (our arithmetic). The cheap paper is what rolls first: the 0.200% Swiss franc notes in December and the 3.700% dollar notes in 2027 (2.485% after swaps). On October 6 and 9, 2026, after the quarter, the company sold €1 billion of 5.125% notes due 2036 at 99.289% (about €51 million of annual interest at the coupon, our arithmetic) and CHF 510 million in three tranches at 1.6803% (2029), 2.0600% (2032) and 2.4150% (2036). The euro coupon is 87.5 basis points above the 4.250% notes due 2037 issued in November 2025 on a year-shorter maturity (our arithmetic). The July outlook already assumed $1.5 to $2.0 billion of long-term debt at 4.5% to 5.5%, up from 4.0% to 4.5% in February, which is the company telling you the cost of replacing 2.99% debt.

Liquidity at June 30: $1.86 billion of cash, and about $3.6 billion available under the revolving credit facilities as of July 29, 2026, plus the unused ATM. The 10-Q shows no covenant pressure (it was in compliance with all revolver and note covenants). The pressure point is cost, not access.

For how Digital Realty compares with the other data center REITs on AFFO, debt and customers, see our three-company comparison; this page does not repeat it. For another large listed REIT that issued shares to fund a cross-border deal, see Prologis, and for the difference between holding a listed REIT and a non-traded one, non-traded vs publicly traded REITs.

What to watch before the Q3 2026 10-Q

As of October 16, 2026 the 10-Q for the quarter ended September 30, 2026 is not filed, and neither is a Q3 earnings 8-K. The latest filing on EDGAR is the October 9 8-K for the euro notes. Last year the Q3 earnings 8-K was filed October 23, 2025 and the 10-Q October 31, 2025; the Q2 2026 pair was July 23 and July 31. Digital Realty has not told us a Q3 date in any filing read for this page, so late October is our expectation from the pattern, not a company statement. The checklist the filings suggest:

• Core FFO per share excluding promote against about $2.00. Q2 was $2.13; the guidance implies about $2.00 in each half-year quarter. A Q3 number above $2.04 means rent is outrunning the new shares.
• Weighted shares and units. Q2 was 360.6 million; period-end was 376.7 million. Q3 will include the Blackstone shares for the full quarter, and perhaps Teraco and Columbia.
• Backlog and the lag. $1.4 billion at Digital Realty’s share at June 30; July added $205 million. A fall means leases commencing, a rise means more signing.
• Fund activity and the guide. Whether the $1.0 to $1.5 billion of dispositions and joint venture capital is raised again, and whether the 58.1% and 62.5% retained stakes are sold down.
• EMEA occupancy and Amsterdam. 81.9% EMEA and 79.7% Amsterdam at June 30, down from 83.8% and 87.0%.
• The 2027 expiry wall. 18.2% of rent; the renewal spread on those leases is the next test of the 25.4% headline.
• Debt cost. The weighted average rate (2.99% at June 30) after the euro and Swiss franc issues, and the amount drawn on the revolver.
• Ratings. Moody’s has a positive outlook; S&P and Fitch are stable.

What a holder or reader can do with this

This page is analysis of public documents, not investment, legal or tax advice. What the filings let you check yourself:

• Use the right payout. The company’s Core FFO payout was 46.0% in Q2 and 57.3% without the promote (our arithmetic); its guidance puts 2026 at about 60%. Both are covered with room, so the question is growth in Core FFO per share, not cover.
• Read per-share growth against the share count. Common shares outstanding went from 343.6 million to 370.0 million between December 31, 2025 and June 30, 2026, and Core FFO per share excluding promote grew 14.6% in the half. The second half implies slower per-share growth because the share base is bigger.
• Separate what is signed from what is paying. The $1.4 billion backlog is rent not yet started; the 1,402 MW under construction is only 54% leased; the Blackstone buildings stabilize in 2027 and 2028.
• Know the dated items. Q3 results (expected late October, not announced in a filing), Teraco and Columbia Capital closings in the second half, the December 15, 2026 Swiss franc maturity and the 2027 lease expiries.
• Size the position. Data center REITs are a large part of REIT ETFs (see REIT ETF holdings); an index fund plus a direct stake doubles up, and so does a non-traded fund that owns the same customers.

If a large part of your income or portfolio depends on one REIT that is funding a build with new shares and debt, a conversation with a qualified adviser about position size and how it fits the rest of your holdings may be worth having.

FAQ

All figures are from SEC filings of Digital Realty Trust, Inc. (CIK 1297996; the operating partnership, Digital Realty Trust, L.P., CIK 1494877, files the same combined reports) read on EDGAR on October 16, 2026: Form 10-K for 2025 (accession 0001104659-26-015365); Form 10-Q for the quarter ended June 30, 2026 (0001104659-26-089296, filed July 31, 2026); earnings releases and supplemental information attached to Forms 8-K for Q4 2025 (0001104659-26-010887), Q1 2026 (0001104659-26-047702) and Q2 2026 (0001104659-26-086270); Forms 8-K of May 4 (0001193125-26-202581), June 22 (0001193125-26-276844), June 29 (0001193125-26-288761), October 6 (0001193125-26-415814 and -415815) and October 9, 2026 (0001193125-26-419168). Our arithmetic is shown where used. This is analysis of public documents, not investment, legal or tax advice.