Weekly Real Estate News
Summary
Digital Realty Q3 2026 signed $855 million annualized GAAP rent at 100% share, or $627 million at its share. Signed-but-not-commenced backlog totaled $2.5 billion at full share, $1.8 billion attributable. Weighted average lag to commencement 17 months. Core FFO excluding net promote $2.10/share; renewal cash rent spreads 11.8%.
Digital Realty signed a record volume of data-center leases in the third quarter, adding to a backlog that will take time to become rental revenue as customers build out power-intensive computing capacity.
The real estate investment trust reported bookings representing $855 million in annualized GAAP base rent at a 100% ownership share. Digital Realty’s own economic share was $627 million, according to its October 29 earnings release. The distinction is significant: joint-venture and minority ownership interests mean the gross figure is larger than the revenue attributable to Digital Realty.
Signed leases were expected to begin an average of 17 months after execution, the company reported. That interval reflects the time needed to complete or commission space, provide power and connect customers. Bookings are therefore contractual commitments for future rental streams, not revenue recognized in the quarter.
At September 30, the backlog of signed but not yet commenced leases totaled $2.5 billion in annualized GAAP base rent at 100% share, or $1.8 billion at Digital Realty’s share. The backlog indicates contracted demand, though the timing of lease commencement and delivery obligations remains important for cash flow.
Leasing outpaces current earnings
Digital Realty reported $1.9 billion in quarterly revenue, 21% above the comparable period of 2025. It said revenue increased 10% sequentially when excluding $201 million of promote income booked in the second quarter. That adjustment is needed because a one-time promote can distort a simple quarter-to-quarter comparison.
Net income available to common stockholders was $185 million, or $0.48 per diluted share, compared with $0.15 per share a year earlier. Funds from operations, a common REIT measure that adjusts GAAP earnings for items such as real estate depreciation, rose to $1.97 per share from $1.65. Core FFO excluding net promote was $2.10 per share, compared with $1.89.
FFO and Core FFO are non-GAAP measures. They are useful for comparing property operating performance, but they do not represent free cash flow or eliminate the costs of building and financing data centers.
| Metric | Q3 2026 | Q3 2025 |
|---|---|---|
| GAAP net income to common per share | $0.48 | $0.15 |
| FFO per share | $1.97 | $1.65 |
| Core FFO/share excluding net promote | $2.10 | $1.89 |
Renewal leases signed in the quarter carried an 11.8% increase in cash rental rates and a 17% increase on a GAAP basis. Those renewal spreads apply to the leases renewed during the period, rather than to the entire portfolio. Digital Realty also signed renewals representing $261 million of annualized cash rental revenue.
Among the new bookings, Digital Realty reported $152 million of annualized GAAP base rent from smaller deployments in the 0-to-1-megawatt category and interconnection services at its share. That activity is distinct from large power-intensive campuses and illustrates the continuing role of customers seeking connectivity across multiple networks and locations. The company operates more than 300 facilities in over 55 metropolitan areas globally, giving it a diversified base of markets, though property-level performance can vary considerably.
The 17-month weighted-average lag is especially consequential for developers and lenders. Capital may be spent on land, power equipment and construction well before the corresponding rent starts. The strength of bookings therefore needs to be considered alongside the timing of development expenditures, financing obligations and eventual tenant commencement.
Management raised its full-year Core FFO outlook excluding net promote to $8.30–$8.35 per share. The company also increased its forecast for revenue excluding promote income to $7.05 billion–$7.125 billion. Both are forward-looking ranges subject to construction schedules, lease commencements, currency movements and customer demand.
Capital needs remain substantial
Digital Realty sold approximately 2.4 million common shares during the quarter through its at-the-market program, raising about $450 million in net proceeds. Year-to-date share sales totaled approximately 15.9 million shares and $2.9 billion in proceeds. New equity helps finance development but also increases the share count over which earnings and cash flows are distributed.
In October, the company issued €1 billion of notes due 2036 and approximately CHF508 million of Swiss-franc bonds with maturities from 2029 to 2036. The debt offerings demonstrate access to long-term capital markets while adding future interest and repayment obligations.
The surge in leasing reflects demand for computing infrastructure, including AI workloads, but the industry’s property economics still depend on power availability, customer creditworthiness and delivering buildings on schedule. The recent repricing of data-center mortgage credit is a reminder that financing markets may reassess risk even when operators report strong demand.
Digital Realty’s bookings provide evidence of contracted future activity. The 17-month average gap before those leases start also means investors and developers should be cautious about translating a record signing quarter into an immediate increase in operating cash flow.
