Digital Realty Trust, Inc. (DLR) Presents at Bank of America 2026 Media,Communications & Entertainment Conference Transcript

At a Bank of America conference, Digital Realty was asked about its shift in growth framing from high-single-digit core FFO growth to expectations for double-digit growth beginning in 2027 and beyond. The revised outlook appears to reflect greater confidence in development-driven growth and other operating catalysts, although the excerpt provides no new financial figures, formal guidance, or management response.

Analysis

The investable issue is whether DLR can convert its development backlog into durable per-share FFO acceleration without reopening the balance sheet. A higher long-term growth framing supports multiple expansion only if leasing converts on schedule and incremental returns remain above DLR's cost of capital; otherwise, the market will treat it as a capital-intensity story rather than an AI-infrastructure beneficiary. Near-term, the conference appearance is unlikely to change estimates absent new leasing, funding, or yield-on-cost detail.

The key second-order read-through is favorable for interconnection-heavy and power-secured data-center assets, but it raises competitive pressure for capital. Private infrastructure funds, hyperscalers, and peers EQIX, COR and IRM are all competing for constrained powered land, equipment and construction labor. DLR's relative advantage is its global footprint and development pipeline, while its relative vulnerability is that sustained high rates can erase the value of growth funded through external capital faster than headline demand improves.

Consensus may be underestimating the timing mismatch: AI demand can drive preleasing quickly, but grid interconnection, transmission upgrades and construction completion can delay revenue recognition by multiple quarters. Over 6-18 months, scarcity of delivered megawatts should support rent and renewal pricing; over 1-3 months, investors should focus on signed leases, stabilized occupancy, development yields and net debt/EBITDA rather than management's terminal growth language. The thesis is falsified by weaker preleasing, development yields falling toward funding costs, or an upward reset in leverage/funding guidance.

Key Decisions for Investors

• Maintain a watch-to-buy stance on DLR rather than chase conference commentary. Add only following independently verifiable evidence of incremental hyperscale leasing or raised 2027 FFO guidance; target a 6-12 month position with upside driven by both estimate revisions and a growth-multiple rerating.
• Use a relative-value expression: long DLR / short a broad office REIT proxy such as BXP over 6-12 months. The trade isolates data-center power scarcity and AI-related leasing from general commercial-real-estate duration risk; exit if DLR development yields compress materially or leasing conversion slows.
• For a lower-beta data-center allocation, compare DLR against EQIX after each company's next earnings release. Favor the name demonstrating the stronger combination of booked power capacity, pricing growth and funding discipline; do not assume demand alone accrues to equity holders.
• Set alerts for DLR's next quarterly disclosure: new lease signings/preleasing, stabilized occupancy, development yield-on-cost, net debt/EBITDA and equity issuance. A guidance increase supported by these metrics is actionable; qualitative growth language without them is not.