> ## Content Index > Fetch the complete content index at: https://www.sotkn.com/llms.txt > Use this file to discover other available public pages before exploring further. # What Does Digital Realty Do? The Data-Centre Landlord Model - URL: https://www.sotkn.com/stack/ai-data-centers/what-does-digital-realty-do/ - Published: 2026-10-11T01:49:44.000Z - Updated: 2026-10-11T01:49:44.000Z - Description: Digital Realty owns and runs 310 data centres and leases the space, power and connections inside them. In Q2 2026 it signed $307m of new annual rent, carried a record $1.9bn backlog that is signed but not yet paying, and said new leases start paying about nine months after signing. - Author: Sean - Tags: #layer-ai-data-centers Digital Realty owns and runs 310 data centres and leases the space, power and connections inside them. In Q2 2026 it signed $307 million of new annual rent (at 100% share) and carried a record $1.9 billion backlog of leases that are signed but not yet paying. New leases there started paying about nine months after signing. `AI DATA CENTERS` · `Data as at 23 Jul 2026` · `Next update: after Digital Realty's Q3 2026 results` **Affects:** AI Data Centers · Hyperscalers · Neoclouds · US · Singapore Digital Realty is the widest-footprint landlord on the [AI Data Centers layer](https://www.sotkn.com/stack/ai-data-centers/), with 310 data centres. It is a US-listed real estate trust that rents out buildings full of power and cooling. Read [What Is an AI Data Center?](https://www.sotkn.com/explained/what-is-an-ai-data-center/) first, then its closest peer [Equinix](https://www.sotkn.com/stack/ai-data-centers/what-does-equinix-do/), and the Asia-focused [Keppel DC REIT](https://www.sotkn.com/stack/ai-data-centers/what-does-keppel-dc-reit-do/). **In short:** Digital Realty leases data-centre space in two sizes: small deployments and connections for many customers, and very large halls for a few cloud tenants. In Q2 2026 it booked $307m of new annual rent, held a record $1.9bn backlog, and signed two more hyperscale leases worth $410m in July. The model works if signed rent turns into paying rent on time. A signature is not a payment. *Education only, not advice to buy or sell any security. Figures are from Digital Realty's Q2 2026 financial supplement, dated as shown. Bookings and backlog are annualised base rent, not revenue.* ## Numbers that matter Signed-not-yet-paying backlog $1.9bn Annualised base rent at 100% share; $1.4bn at Digital Realty's share · 30 Jun 2026 **Booked** New bookings in Q2 $307m Annualised rent signed, 100% share; $208m at Digital Realty's share · Q2 2026 **Signed** Two hyperscale leases in July $410m Annualised rent at 100% share; $205m at Digital Realty's share · 23 Jul 2026 **After quarter-end** Occupancy 90.2% 2,799 MW occupied of 3,102 MW of IT capacity · 30 Jun 2026 **Filled** Rent change on renewals +25.4% Cash basis on Q2 renewals worth $262m of annual rent · Q2 2026 **Repriced** Core FFO per share, ex promote $2.13 +14% on Q2 2025; reported $2.65 includes $188m of net promote · Q2 2026 **Paid** Status chips are Second Order's read. Bookings are signed leases, not cash. Core FFO is a real-estate profit measure the company reports. ## What does Digital Realty actually do? Three jobs, in order. **Lease. Connect. Build with partners.** 1. **It leases.** Customers rent space and power in a building Digital Realty owns or runs. Its Q2 bookings came in two sizes: small deployments of up to 1 MW plus interconnection brought $108m of the $208m booked at its share, and the remaining $100m came from larger leases (208 − 108, our arithmetic). 2. **It connects.** It had 235,500 cross-connects at the end of Q2 (direct links between customers inside its buildings), up from 229,000 a year earlier by the quarterly table. Interconnection added $20m to Q2 bookings at its share. 3. **It builds and recycles money.** It develops halls with partners, books a promote fee when a joint-venture project does well ($188m net promote in Q2 from three data centres), buys stakes in leased halls, and raises equity and debt to keep going. | Job | What it means | Where the risk sits | | ------------------- | ------------------------------------------------------------------------------------- | --------------------------------------------- | | Lease | Base rent from multi-year contracts, starting at a set commencement date | The gap between signing and the first payment | | Connect | Monthly fees per link; more customers make each building more useful | Needs many customers in the same building | | Build with partners | Joint ventures and funds hold part of the cost; Digital Realty earns fees and promote | Promote income is lumpy and does not repeat | Q2 shows how the building plan works. It bought a 64% stake in three fully leased data centres in Northern Virginia holding 288 MW at a gross value of about $7.8bn, with an expected starting yield above 6.5%. It also bought land in the Kansas City area for about $475m to support up to 2 GW of utility power, and added land near Atlanta that, with a parcel bought earlier, is expected to support over 1 GW. Asia shows up in small steps. Digital Realty bought two data centres in Malaysia with 16.5 MW of IT capacity and a land parcel for up to 14 MW more, for about $134m in total. In Singapore, our [Singapore note](https://www.sotkn.com/markets/singapore/singapore-data-centre-licence-october-2026/) records that the government handed 50 MW each to four operators in August, Digital Realty among them. Land and power come first. Leases follow. --- ## How does Digital Realty make money? It gets paid base rent once a lease starts, rent bumps when leases renew, fees for connections, and sometimes a promote. Four things drive the line: - **Commencement** — a signed lease earns nothing until its start date. New leases signed in Q2 had a weighted-average lag of nine months to that date. - **Renewal pricing** — Q2 renewals reset 25.4% higher in cash terms (32.0% on a GAAP basis). That is repricing of space that is already full. - **Connections** — cross-connects are a small fee per link, but they stack across 235,500 links. - **Promote and capital recycling** — $188m of net promote in Q2, plus asset deals. That is real, but it does not repeat every quarter. **Our arithmetic.** Of the $2.65 reported Core FFO per share, $0.52 came from promote (2.65 − 2.13), which is 19.6% of the reported figure. Strip it out and the company's own number is $2.13, up 14% from $1.87\. The backlog of $1.9bn is about 6.2 times Q2's $307m of bookings (1,900 ÷ 307), so it is roughly six quarters of signing at that pace waiting to start. The two July hyperscale leases at $410m were 1.34 times the whole of Q2 bookings (410 ÷ 307). Empty space: 3,102 MW of capacity less 2,799 MW occupied leaves 303 MW, or 9.8%. Funding is the other line. Total debt was about $18.6bn at 30 June, with net debt at 4.7 times adjusted EBITDA. Year to date Digital Realty has also raised about $2.5bn by issuing new shares through its at-the-market programme, at an average of $184.94 per share. Part of its growth is paid for by issuing stock, which is not free. **Who gets paid.** Digital Realty, then the construction and power-equipment firms that build its halls, then lenders and shareholders. **Who pays.** Enterprises, networks and cloud tenants. Money sticks once a lease has started and renewed; before that it is a signature. --- ## What limits it? Lag first. Power and land second. Funding third. 1. **Signed is not paying.** A $1.9bn backlog only turns into rent when each hall is ready and the lease starts. The nine-month lag is the company's own average for Q2, not a promise for every lease. 2. **Power and land set the pace.** The Kansas City purchase was sized by utility power (up to 2 GW). The Atlanta campus is sized the same way. In Singapore, the government allots new megawatts, so the growth path there is not Digital Realty's to set. 3. **Growth is partly bought with new equity.** About $2.5bn of shares were issued through the at-the-market programme year to date. If those raises slow, the building plan has to slow too, or lean harder on debt. 4. **One-offs flatter a quarter.** $188m of promote and a $94m insurance settlement (about $27m of it in Core FFO) helped Q2\. The $2.13 per share is the cleaner number. The honest uncertainty is hyperscale pricing and timing. The release gives annual rent for big leases, not megawatts or lease lengths for each one, so we do not work out a rent per megawatt. --- ## Who else does this? Roles, not a league table. | Company | What it does | What makes it different | | ------------------------------------------------------------------------------------------------ | ------------------------------------------------------------ | ------------------------------------------------------------ | | **Digital Realty** | Owns and leases 310 data centres | 2,799 MW occupied of 3,102 MW; $1.9bn backlog at 100% share | | **[Equinix](https://www.sotkn.com/stack/ai-data-centers/what-does-equinix-do/)** | Rents space and connections; many customers share a building | $2.625bn Q2 revenue, about 90% recurring | | **[Keppel DC REIT](https://www.sotkn.com/stack/ai-data-centers/what-does-keppel-dc-reit-do/)** | Singapore-listed trust that owns 25 data centres | 62.8% of assets in Singapore; 6.7-year average lease by area | | **[NEXTDC](https://www.sotkn.com/stack/ai-data-centers/what-does-nextdc-do/)** | Builds and runs data centres in Australia | 740.1 MW contracted, 175.0 MW billing | | **[Applied Digital](https://www.sotkn.com/stack/ai-data-centers/what-does-applied-digital-do/)** | Builds AI campuses and leases them to a few large tenants | 1.41 GW leased, 250 MW live at one campus | What separates them is customer mix and who carries the build. Digital Realty has both small connected customers and very large leases. Applied Digital builds for a handful of tenants on long leases. Keppel DC REIT and NEXTDC are the Asia-Pacific angles: one owns finished halls, the other builds them. --- ## What would change this view? The read on the model weakens if: - The nine-month lag from signing to rent stretches materially, or the backlog stops growing while capex keeps rising. - Renewal increases fall well below the Q2 pace of 25.4% cash. - Occupancy slips below 90% while new halls keep opening. - A quarter without a large promote shows Core FFO growth well under the 14% ex-promote pace. It stays intact while the backlog keeps converting to rent on the stated lag, renewals keep resetting upward, and share issuance does not have to rise to fund the build. --- ## Practical takeaways - Digital Realty's model is Lease → Connect → Build with partners: base rent after a lag, fees for connections, and promote on successful joint ventures. - Q2 2026 (23 Jul): $307m booked, $1.9bn record backlog, nine-month average lag, +25.4% cash renewals, 90.2% occupied. - Our arithmetic: promote was about 20% of reported Core FFO per share; the backlog is about six quarters of Q2-pace bookings. - Funding: about $18.6bn of debt at 4.7 times EBITDA, plus about $2.5bn of shares issued year to date. - The stuck step is lease commencement, the day a signature becomes a payment. --- ## FAQ **What does Digital Realty do?** Digital Realty owns and runs data centres and leases the space, power and connections inside them to businesses, networks and cloud companies. At 30 June 2026 it had 310 data centres. **How does Digital Realty make money?** It earns base rent from leases once they start, rent increases when leases renew, fees for network connections, and sometimes a promote fee from joint-venture projects that go well. In Q2 2026 it booked $307m of new annual rent at 100% share. **What is a backlog in data centres?** It is rent that has been signed in a lease but has not started paying yet. Digital Realty's record backlog was $1.9bn of annual base rent at 100% share at the end of Q2 2026\. It becomes revenue only when each lease starts. **What is Core FFO?** Core FFO is a profit measure real-estate companies use. It adds back property depreciation and strips some one-off items. Digital Realty reported $2.65 per share for Q2 2026, or $2.13 excluding a net promote. **How is Digital Realty different from Equinix?** Both rent space and connections. Digital Realty also signs very large leases for hyperscale tenants. In July 2026 it signed two worth $410m of annual rent at 100% share, more than its whole Q2 bookings of $307m. **Is Digital Realty a good investment?** We do not make buy or sell calls, and nothing here is a recommendation. We can tell you what it does, how it gets paid and which numbers would change the picture. The decision is yours. --- ## Keep reading on the map - **The layer:** [AI Data Centers](https://www.sotkn.com/stack/ai-data-centers/) - **The term:** [What Is an AI Data Center?](https://www.sotkn.com/explained/what-is-an-ai-data-center/) - **Peers:** [What Does Equinix Do?](https://www.sotkn.com/stack/ai-data-centers/what-does-equinix-do/) · [What Does Keppel DC REIT Do?](https://www.sotkn.com/stack/ai-data-centers/what-does-keppel-dc-reit-do/) · [What Does NEXTDC Do?](https://www.sotkn.com/stack/ai-data-centers/what-does-nextdc-do/) - **A build-first campus:** [What Does Applied Digital Do?](https://www.sotkn.com/stack/ai-data-centers/what-does-applied-digital-do/) - **Where it happens:** [Singapore](https://www.sotkn.com/markets/singapore/) · [Malaysia](https://www.sotkn.com/markets/malaysia/) · [the US](https://www.sotkn.com/markets/us/) The members cut on a stuck step is already live: [When utilities bill data centers before power, where does cash stick?](https://www.sotkn.com/analysis/utilities-bill-data-centers-before-power-where-cash-sticks/). This page stays the free Stack read of the Digital Realty model. ## Sean Writes Second Order by TKN — a plain-English map of AI infrastructure. Who gets paid, where money sticks, which step is stuck. Not investment advice. [Author page →](https://www.sotkn.com/author/sean/) · [Editorial standards →](https://www.sotkn.com/editorial-standards/) ## How we check this Figures come from Digital Realty's Q2 2026 financial supplement and earnings release, filed with the U.S. SEC on 23 July 2026, and from the peer releases listed below, each dated. Where we work something out ourselves, the arithmetic is shown in full. We do not estimate rent per megawatt for hyperscale leases because the release does not give megawatts per lease. **Last reviewed:** 11 Oct 2026 · **Next review:** after Digital Realty's Q3 2026 results Spot an error? Tell us and we will correct it and note the change here. [Our editorial standards →](https://www.sotkn.com/editorial-standards/) ## References 1. Digital Realty, [Second Quarter 2026 Financial Supplement and earnings release](https://www.sec.gov/Archives/edgar/data/1297996/000110465926086270/dlr-20260723xex99d1.htm?ref=sotkn.com) (company, SEC exhibit 99.1), 23 Jul 2026 — bookings, backlog, 310 data centres, 2,799 MW occupied of 3,102 MW, Northern Virginia stake, debt 2. Equinix, [Equinix Reports Second-Quarter Results, Raises 2026 Guidance and Long-Term Outlook](https://www.sec.gov/Archives/edgar/data/1101239/000110123926000145/a991eqix-q226xpr.htm?ref=sotkn.com) (company, SEC exhibit 99.1), 29 Jul 2026 — revenue by line and region, adjusted EBITDA, debt, 2026 guidance, 2027–2029 outlook 3. Keppel DC REIT, [Unaudited results for the first half year ended 30 June 2026 (media release)](https://www.keppel.com/file/media/2026/jul/23-jul-kdcr/kdcr-1h-2026-financial-highlights-mrel.pdf?ref=sotkn.com) (company, SGX filing), 23 Jul 2026 — distributable income, DPU, occupancy, WALE, leverage, cost of debt 4. NEXTDC, [FY26 Record Results and Record FY27 Growth Guidance (ASX release)](https://announcements.asx.com.au/asxpdf/20260827/pdf/073c04gt4ts40y.pdf?ref=sotkn.com) (company, ASX filing), 27 Aug 2026 — contracted and billing MW, forward order book, FY27 guidance, capex, liquidity, power position 5. Applied Digital, [Applied Digital Reports Fiscal First Quarter 2027 Results](https://ir.applieddigital.com/news-events/press-releases/detail/163/applied-digital-reports-fiscal-first-quarter-2027-results?ref=sotkn.com) (company), 7 Oct 2026 — 1.41 GW leased, 250 MW live, about $36bn contracted, HPC and hosting revenue, debt and cash