Digital Realty Trust, Inc. (DLR) Presents at BofA NY Global Real Estate Conference 2026 Transcript

Digital Realty CEO Andrew Power highlighted the company’s outlook for double-digit core FFO per-share growth through 2027 and beyond, an acceleration versus its prior growth framing. At the BofA Global Real Estate Conference, investors focused on the operational milestones and key assumptions supporting that longer-term data-center growth outlook, although the excerpt does not provide detailed assumptions or updated financial figures.

Analysis

The investable issue is whether DLR can convert its development backlog into per-share growth without diluting returns through equity issuance or higher-cost debt. A sustained double-digit FFO trajectory would justify a narrowing of DLR's historical valuation discount to Equinix (EQIX), but only if signed capacity converts to commencements on schedule and leasing remains weighted toward high-margin interconnection and hyperscale campuses rather than lower-return wholesale deployments.

Near term, the conference commentary is unlikely to alter estimates without incremental bookings, pricing, or capital-spending disclosure. Over the next 1-3 months, watch for evidence that power availability—not customer demand—is becoming the binding constraint: constrained markets can raise preleasing and cash yields, but also extend construction timelines and delay FFO recognition. The important second-order beneficiary is electrical infrastructure—ETN, HUBB and PWR—if data-center operators accelerate grid interconnection and on-site power investment.

The consensus risk is treating AI-related capacity demand as uniformly accretive to REIT earnings. Larger AI deployments require substantially more power and cooling capital per MW; if utility upgrades, financing costs, or tenant concentration force DLR to fund infrastructure ahead of rent commencement, asset growth can outpace per-share FFO. A meaningful rise in Treasury yields or a reduction in development yields versus DLR's marginal cost of capital would quickly challenge the multiple-expansion case.

Key Decisions for Investors

• Maintain or initiate a 6-12 month long DLR / short EQIX pair only if DLR's valuation discount remains materially wider than its historical spread; thesis is convergence from confirmed FFO delivery, while the short leg hedges data-center demand and rate-duration risk.
• Use the next earnings release as the decision catalyst: add to DLR only if management raises or reconfirms the out-year per-share growth algorithm while disclosing stable development yields, limited equity funding needs, and no material slippage in lease commencements.
• Set a thesis stop if DLR reports a material increase in projects awaiting utility power, reduced development yields, or financing that implies per-share dilution; these would indicate that nominal backlog is not translating into distributable cash flow.
• For a cleaner AI-power bottleneck expression, consider a 6-18 month basket long ETN, HUBB and PWR rather than adding broad data-center REIT exposure; this captures incremental electrical spend even if data-center landlords face rent-commencement delays.