Good afternoon and welcome to the Digital Realty 4th Quarter 2025 Earnings Call. Please note that this event is being recorded. During today's presentation, all participants will be in a listen-only mode. Following the presentation, we will conduct a question and answer session. Callers will be limited to one question, and we will aim to conclude at the top of the hour. I would now like to turn the call over to Jordan Sadler, Digital Realty's Senior Vice President of Public and Private Investor Relations. Jordan, please go ahead.

Thank you, Operator, and welcome everyone to Digital Realty's fourth quarter 2025 earnings conference call. Joining me on today's call are President and CEO Andy Power and CFO Matt Mercier. Chief Investment Officer Greg Wright, Chief Technology Officer Chris Sharp, and Chief Revenue Officer Colin McLean are also on the call and will be available for Q&A. Management will be making forward-looking statements, including guidance and underlying assumptions on today's call. Forward-looking statements are based on expectations that involve risks and uncertainties that could cause actual results to differ materially. For further discussion of risks related to our business, see our 10-K and subsequent filings with the SEC. This call will contain certain non-GAAP financial information. Reconciliations to the most directly comparable GAAP measure are included in the supplemental package furnished to the SEC. and available on our website. Before I turn the call over to Andy, let me offer a few key takeaways from our fourth quarter results. First, we posted $1.86 of core FFO per share in the fourth quarter and $7.39 for full year 2025, up 10% over 2024. Our initial guidance for 2026 implies nearly 8% bottom line per share growth at the midpoint, despite outperforming our original 2025 guidance by almost 500 basis points. Second, we concluded our second consecutive year with more than a billion dollars of total bookings at 100% share, leaving us with a record backlog of nearly $1.4 billion at 100% share. We also posted another record quarter of zero to one megawatt plus interconnection bookings and a record year in 2025 as our team demonstrated its resolve to meet our goal to double digital. Lastly, we ended the year with over $3.2 billion of LP equity commitments to our oversubscribed inaugural close-end fund, marking our official entry into the private markets and evolving digital realty's funding strategy to support the growth of hyperscale data center capacity. With that, I'd like to turn the call over to our president and CEO, Andy Power.

Thanks, Jordan, and thanks to everyone for joining our call. 2025 was a pivotal year for the data center industry and for digital realty. Data centers moved firmly into the global spotlight. As AI adoption accelerated, cloud platforms continued to scale, and power became the industry's primary constraint. Against that backdrop, the digital realty team delivered exceptional execution. We closed the year with record financial performance, exceeding the full-year guidance we laid out last February and finishing ahead of the targets we set for ourselves across revenue, EBITDA, and core FFO per share. Just as importantly, the strategy we articulated over the last several years focused on a global, full-spectrum, and connectivity-rich platform and operational excellence with disciplined capital allocation is clearly gaining momentum. Throughout 2025, demand remained robust across our full product range, and our leasing reflected that breadth. For the second consecutive year in our history, Digital Realty signed over a billion dollars of new leases with a $1.2 billion of bookings in 2025, representing a pace that is nearly 70% above the average bookings achieved over the preceding five-year period. Our zero to one megawatt plus interconnection product set continued to outperform and take share, posting nearly 340 million of bookings, easily a four-year record, and 35-plus percent above 2024 levels, as customers sought proximity, scale, and dense connectivity in the critical tier one markets that we serve. This segment benefited from the continued expansion of platform digital into 31 countries and 56 markets at year end, as well as the evolution of our product set. Our high-density co-location offering enables customers to deploy more compute in the same footprint, while maintaining efficiency and reliability. Service fabric adoption also accelerated meaningfully during the year, now enabling access to over 300 cloud on-ramps and more than 700 interconnected data centers globally, further strengthening the network effects of platform digital. These dynamics help drive a robust inflow of new logos with nearly 600 added for the second consecutive year. Graves and a megawatt bookings got off to a great start early in the year when we signed the largest lease in the company's history. Momentum continued through the fourth quarter with solid hyperscale activity across our footprint, particularly in the Americas. On a 100% share basis, hyperscale leasing exceeded 800 million in 2025, highlighting the underlying strength and durability of hyperscale demand. Also in 2025, we saw early but encouraging customer adoption of our private AI exchange platform. A grown set of AI-driven networking use cases that enable enterprises to connect to compute, data, and models privately and dynamically across clouds, campuses, and partners. By leveraging the scale of our inter-connection portfolio, customers are beginning to move beyond static architectures to support low-latency, secure, and cost-efficient AI inference workflows that span multiple environments. With inference expected to scale in 2026, we see continued expansion of these private AI exchange use cases as a durable driver of interconnection demand. Building on this momentum, our data and AI strategy is centered on delivering AI-ready infrastructure in the Tier 1 metros, where performance, adjacency, and sovereignty matter most. Our roadmap positions us to meet accelerating inference demand with pre-installed liquid cooling capacity, higher density deployments, and a unified platform that provides the coverage, capacity, connectivity, and control enterprise require for long-term AI execution. Finally, we continue to expand our footprint in the APAC region. Last March, we expanded into Indonesia through a joint venture that owns a robust connectivity hub in Jakarta. In January, we announced our continued Southeast Asian expansion with the acquisition of one of Malaysia's most highly connected data centers. Together, these investments further strengthen our presence in fast-growing APAC markets and extend the reach of platform digital into regions where digital demand is accelerating. We continue to believe that not all data centers are created equal. Different types of data centers can be thought of as different tools for different jobs. Our portfolio is largely focused in locations that matter most to our customers and their stakeholders. Interconnection hubs in or near where clouds and data converge create network effects, making the platform more valuable for every participant. The value generated by these network effects, together with our ability to support hyperscale requirements and higher power density workloads, underscores the advantage of Digital Realty's connected campus approach. The key to these network effects is interconnection. Digital has continued to enhance the value that we provide through both physical and virtual products available at our data centers. Customers can use this connectivity to connect to others within the same data center via CrossConnect or another data center across the globe via service fabric and everything in between. customers can connect with their business partners in our data centers and expand their connectivity when they add sites or deepen their integration with cloud data and AI ecosystems the importance of this connectivity grows as enterprise AI and use of inference accelerates inference thrives where data and networks meet in our position in major population and GDP centers together with our robust and diverse connectivity makes us particularly well-positioned to host and scale inference workloads as enterprises continue to operationalize AI. The introduction of ChatGPT a few years ago and the ensuing race between Gemini, Claude, Grock, and others marked the beginning of a new chapter in the digital age, one defined by the convergence of AI, cloud, data, and interconnection at a global scale. Cloud platforms continue to grow at remarkable rates, even at their extraordinary scale, underscoring the depth and durability of this demand. Looking ahead, cloud and AI demand are expected to continue to compound, with AI-specific services growing even faster as generative and inference workloads become embedded directly into business processes we're positioned for the next phase of infrastructure enabling where enterprise ai demands infrastructure that it behaves like the cloud reliable secure and always on as cloud and ai demand scale a combination of power availability and ability to execute have become the defining constraints across global digital infrastructure shaping the timelines for how new data center capacity comes online. In most of our core markets, new supply will continue to arrive gradually as both generation and transmission upgrades continue. Hyperscalers are increasingly making leasing decisions based on who can secure and deliver power capacity on a predictable schedule. As a result, In all, customers are prioritizing operators with verified visibility into the future supply of power and a track record of on-time or even accelerated delivery. Digital Realty continues to leverage its global footprint, 20-plus-year track record, and 5-gigawatt power bank to position incremental capacity for development in some of the world's most power-constrained markets. Before I move on, let me highlight a few recent wins that demonstrate how customers across the globe are using the connectivity in our data centers to deploy critical workloads to create value for their enterprise. A technology services company and new logo is leveraging platform digital in four U.S. locations to create a distributed AI inference-ready ecosystem to support advanced artificial intelligence workloads for a growing enterprise demand. A leading technology and communications company is expanding its footprint to two additional European markets on-platform digital to enable network-optimized platforms, leveraging the interconnected digital infrastructure to reach customers faster and at scale. A global industrial technology and engineering company based in Germany and a new logo for platform digital is enabling advanced data analytics and AI initiatives, leveraging the high-performance digital ecosystems available in a Dallas data center. A leading European AI company and a new logo for Digital Realty is deploying an edge-inference node on-platform digital, leveraging the network and emerging AI ecosystem available on our Paris campus. And a leading multinational manufacturing company is expanding its footprint on platform digital to enable advanced data and AI workloads, leveraging high-density and interconnected digital infrastructure available on our sole campus. These wins demonstrate the continued momentum of our enterprise offering and the value of deploying critical workloads within our connected global communities. And with that, I'll now turn the call over to our CFO, Matt Merceder.

Thank you, Andy. As Andy noted, 2025 was a transformative year for digital realty. Over the last 12 months, we posted record financial results and saw a meaningful acceleration in top and bottom line growth. In the fourth quarter, digital realty again posted strong double-digit growth in revenue and adjusted EBITDA, reflecting the momentum in our zero-to-one megawatt plus interconnection business, commencements from our substantial backlog, strong releasing spread, modest churn, and continued strong growth in fee income. We achieved these strong results while keeping our leverage below five turns and maintaining significant liquidity to invest in data center projects across our five gigawatt runway of buildable IT capacity. Core FFO per share grew by 8% year-over-year, while leasing posted a top five quarter in DLR history, with the 0-to-1 megawatts plus interconnection category setting a new quarterly leasing record. During the fourth quarter, we signed leases representing $400 million of annualized rent at 100% share or $175 million at digital realty share. Demand for data center capacity continues to be robust, both for larger capacity blocks to support growth in cloud and AI, and smaller but also scaling co-location capacity, which often supports enterprise digital transformation workloads. Data center supply remains tight, especially within our footprint. New leasing activity was particularly strong in the Americas, representing 65 percent of DLR's share of bookings in the quarter. Our 0 to 1 megawatts plus interconnection products that continued its strong momentum, posting a new leasing record of 96 million, 7% higher than the previous record set in 2Q25. Over the course of 2025, we've averaged 85 million of quarterly leasing in this category, a reflection of our growing value proposition and the consistency of our team's efforts leasing was driven by regional records in north america and emea led by strength in the smaller zero to 500 kilowatt deal tranche the zero to one megawatt plus interconnection product continues to be a significant focus for digital realty and we are encouraged by the growing strength and momentum of our execution Interconnection bookings approached last quarter's record at $18.9 million. Strength in the quarter was driven by record bookings in EMEA and momentum within our service fabric product. Interconnection bookings stepped up noticeably in the second half of 2025, resulting in a 22% increase year-over-year. We signed $78 million within the greater than a megawatt category at our share, with continued strength in the Americas. Pricing in this product segment remained strong, averaging over $180 per kilowatt in the quarter. Monassas, Virginia was the top contributor to the greater than a megawatt signings this quarter, while hyperscalers also signed leases in Tokyo, Osaka, and Paris. Capacity across our nearly 800 megawatts in-place portfolio in Northern Virginia remains very limited, with strong demand queuing for the 300 megawatts of capacity we are readying for delivery in the 2027 to 2029 timeframe. Our total backlog reached a record at year-end of nearly $1.4 billion, reflecting the robust data center fundamentals we are experiencing and our ability to capitalize on this demand. Many remain understandably focused on the pro rata share view of leasing that we have historically provided to enhance transparency and modeling, but we feel it is important to understand the complete picture. The total backlog is a better representation of the aggregate demand being captured across platform digital, and in turn, an important driver of the overall economics enjoyed by DLR shareholders. While the evolution of our funding strategy has impacted some items on our income statement, bottom line economics remain paramount. This evolution has enabled us to more than double our fee income in 2025 while expanding our operational reach to better serve our customers. At Digital Realty Share, the backlog was $817 million at quarter end, as $209 million of commencement exceeded the 175 million of new bookings in the quarter looking ahead to 2026 we have 634 million of leases scheduled to commence somewhat rattly throughout this year and then another 152 million of leases to commence in 2027 and beyond our backlog provides us with strong visibility and predictability during the fourth quarter we signed 269 million of renewal leases at a blended 6.1% increase on a cash basis. As usual, renewals were heavily weighted towards our shorter zero to one megawatt leases with 175 million of co-location renewals at a 4.3% uplift. Greater than a megawatt renewals totaled 88 million at a robust 8.1% cash releasing spread, driven by deals in Northern Virginia, Chicago, and Dublin. For the full year 2025, Cash-releasing spreads were 6.7 percent, surpassing the high end of our guidance range. As for earnings, we reported core FFO of $1.86 per share for the fourth quarter, above 8 percent year-over-year, reflecting strong core growth and continued growth in fee income, offset by seasonally higher expenses. For the full year, we reported core FFO per share of $7.39, just above the high end of our guidance range and 10% higher than 2024. Same capital cash NOI growth continued to be strong in the fourth quarter, increasing by 8.6% year-over-year, driven by 8.2% growth in data center revenue. On a constant currency basis, same capital cash NOI rose 4.5% in the quarter. For the year, same capital cash NOI also grew by 4.5%, consistent with our most recent guidance increase before going any further i want to inform you of some upcoming disclosure enhancements that we expect to make beginning next quarter to better line our reporting with how we manage the business while we have long provided both power and square footage metrics and our disclosures we will be transitioning the focus toward power-based metrics key elements of our reporting including leasing and development activity are already based on power, and we will now bring occupancy in line by highlighting it on an IT load basis. Based on square feet, same capital and total portfolio occupancy ended the year at 83.7 and 84.7 percent, respectively. However, on an IT load basis, same capital and total portfolio occupancy was approximately 91% and 89%, both improving over 50 basis points year-over-year. We believe that this update will better reflect the dynamics of our current business while providing a clearer and more consistent view of utilization across our platform. We also expect to make some modest updates to our quarterly supplemental, pruning unnecessary data points. The objective is to retain our industry-leading transparency, better align reporting with how the business is managed, and improve the overall digestibility of the supplemental. Moving on to our investment activity, we spent $930 million on development capex in the quarter, net of our partner share, bringing full-year spend to $3 billion. Recurring capex increased to $169 million in the seasonally high fourth quarter. During the quarter, we delivered about 90 megawatts of new capacity, 75% of which was pre-leased, while we started about 135 megawatts of new data center projects, increasing our total development to 769 megawatts under construction. At quarter end, a gross data center development pipeline underway stood at just over $10 billion at an 11.9% expected stabilized yield. For the full year, we delivered approximately 289 megawatts of new capacity, reflecting strong execution across our development pipeline in support of customer demand, even as labor and supply chains got tighter. During the fourth quarter, we sold a non-core facility in Dallas for $33 million and acquired land near Portland, Tel Aviv, and Lisbon for future development. Turning to the balance sheet, we were active again in the capital markets during the fourth quarter raising 1.4 billion euros in a dual tranche green euro bond offering the first tranche was for 600 million euros at 3.75 five percent due 2033 and the second tranche was for 800 million euros at 4.25 percent due 2037. we used a portion of the net proceeds to redeem 1.075 billion of euro bonds carrying a two and a half percent coupon that was scheduled to mature in January. The 160 basis point spread between the new and redeemed issues will cause a modest interest expense headwind starting in the first quarter of 2026. Our only remaining debt maturity for 2026 is a modest $275 million Swiss franc note that matures late this year. Looking further out, our maturities remain well laddered through 2037. Leverage remained at 4.9 times, well below our long-term target of 5.5 times, while balance sheet liquidity remained robust at nearly $7 billion. In addition, we maintain approximately $15 billion of dry powder to support hyperscale data center development and investment through our private capital initiatives. As a quick update surrounding the fund, by year end, we had closed $3.225 billion of LP equity into our inaugural closed-end fund, and we anticipate the final $25 million closing prior to our next call. In late December, we contributed another 40% stake in the five stabilized seed assets into the fund, increasing the fund stake to 80% and resulting in an additional $427 million of net proceeds to digital. We are excited to move on to the next stage of our private capital strategy as we work to further support the perpetual capitalization of hyperscale data centers alongside digital realty's public shareholders our balance sheet is positioned to fuel growth opportunities for our customers around the globe consistent with our long-term financing strategy let me conclude with our guidance we are establishing a core ffo guidance range for the full year of 2026 of $7.90 to $8 per share. The midpoint represents 8% year-over-year growth, reflecting underlying strength in our business, balanced by a continued ramp in new investment spending that is geared toward extending our runway for growth. On a normalized and constant currency basis, we anticipate total revenue and adjusted EBITDA growth of more than 10 percent in 2026 same capital cash online growth is expected to grow four to five percent on a constant currency basis we also expect cash renewal spreads of between six to eight percent with upside partly mitigated by the high mix of zero to one megawatt leases expiring together with a portion of fixed rate renewals and are greater than a megawatt portfolio Power-based occupancy should improve by another 50 to 100 basis points from the approximate 89% at year-end 2025. CapEx net of partner contributions are expected to rise to between $3.25 and $3.75 billion, with development yields expected to remain in the double digits. And we will also continue to recycle capital with $500 million to $1 billion of dispositions and JV Capital expected this year. This concludes our prepared remarks, and now we will be pleased to take your questions. Operator, would you please begin the Q&A session?

Certainly. We will now open the call for questions. In the interest of time and to allow a larger number of people to ask questions, callers will be limited to one question. And our first question for today comes from the line of Eric Luchow from Wells Fargo. Your question, please.

Hi, great. I appreciate you taking the question. Andy, I think you mentioned early in the call that, you know, you're starting to see, you know, a pickup in activity, especially in the Americas with some of the hyperscalers. So maybe you could just kind of give us the landscape of what the bookings conversations look like earlier in the year. you're starting to see the hyperscalers look, you know, a little bit further out for power than they perhaps did in 2025, and maybe just give us a rundown of some of the key campuses where you're starting to see that large footprint demand. Thank you.

Sure. Thanks, Eric. So, we were really happy about how we ended this year, which was a great year overall, back-to-back north of a billion dollars total signings, third highest total signings, fourth quarter, $400 million, and Hyperscaler was a big contribution to that. The same suspects are keeping recurring here. So Northern Virginia, incredibly sought after capacity. Beyond that, you have the likes of Charlotte, Atlanta, Dallas, as called the top of the list here in the Americas, although particularly towards the U.S., I can tell you that we're seeing more globalization of the demand, and you can see that in the contributions from Europe having a bigger contribution, greater than megawatt category. As the year went on and as we continue moving to 2026, what is quite attractive is the diversity of demand. As it relates to our numbers, I think now we're seven straight consecutive quarters where our largest signing is from a different hyperscaler or different customer, excuse me. And when we're looking at customers looking at those larger capacity blocks in those markets I just referenced, I can tell you you're seeing more customers calling for the same capacity blocks. There's the consistent looking at the front end. The nearest deliveries are the most popular, but they are looking out a little further on the horizon than they had certainly six months or 12 months prior.

Thank you. And our next question comes from the line. I'm Michael Rollins from Citi. Your question, please.

Thanks, and good afternoon. Andy, you mentioned earlier the expectation for inference to scale in 2026. So I'm curious if you could put some further context around, you know, what you're seeing and what that's going to look like, both for the industry and for digital realty.

Sure. Thanks, Michael. So I think we're seeing that play out on both our hyperscale and our enterprise business. Certainly on the hyperscalers, the desire for the capacity blocks in the cloud zonal markets that I've just referenced is certainly becoming more and more of a priority. I can tell you the dialogue on the designs with our customers, the latest evolutions of cloud is a mix-up of cloud and AI inside the same exact building. So they're looking at cooling that's a mixture of air and liquid and blending both use cases together in the same locations, which certainly leads towards inference. I believe we're still a good ways away from what inference really proliferates in a corporate enterprise context that have the same service level agreements and uptime requirements that cloud exists today. But as AI rolls into much more time-sensitive and critical applications, be it robotics, health and safety, research and science, I don't see why the use of AI is not going to be just as critical as cloud data. In our enterprise business, we had a fantastic year. We had multiple records, record fourth quarter. It was up over the prior record two quarters before that. We were, call it, 35% higher in the enterprise category year over year, a great mix of new logos and existing customers. And now, two quarters doesn't make a trend, but I would say the contribution within that zero to one megawatt and interconnection category was, again, call it, just over 18%, nearly 19%. So you're seeing more enterprises coming to digital realty and thinking about AI use cases. But I think this is going to be a long-tailed demand to evolve.

And our next question comes from the line of Timothy Horan from Oppenheimer. Your question, please.

Thanks, guys.

The hyperscale is giving pretty incredible guidance for CapEx next year,

and it looks like the outlook is not going to change much.

Are you seeing any, you know, what does that kind of mean for the business model? Are you seeing any bottlenecks that are really going to impede your growth at all or any changes to bottlenecks? And what do you kind of think that means for your pricing power the next few years?

Thanks, Tim. So maybe I'll call and expand on the hyperscale or demand, and then I'll come back on the bottlenecks. But, I mean, what's called happening here is less of the waves of one customer ramping and another customer called on the sidelines, and there's more consistency and diversity of the customers all seeking capacity. And you're seeing that in the commitments to accelerating their build-outs for this infrastructure from their earnings calls, and we're seeing it in terms of their interest growing for our large capacity blocks. But I'll let Colin touch on that, and I can circle back to some of the bottlenecks we're seeing in the business.

Yeah, thanks, Andy. Tim, regarding the interest from our Hyperscale partners, you saw a strong contribution in Q4 in terms of performance. Our largest booking being nearly 100 megawatts. And I can tell you, wherever we have large capacity blocks, whether it's northern Virginia or Paris or Osaka or Tokyo or Atlanta or Charlotte, There's keen interest from our Hyperscale partners to deploy in that infrastructure. So really over 2026 through 2028, you know, we're seeing continued conversations where we have that continuous blocks of capacity for our Hyperscale partners. And, again, as Andy's talked about multiple times, this is not just AI. This is also, you know, zonal cloud deployments that continue to be resilient as it relates to the demand profile that we're seeing.

And just on the bottlenecks and the cost equations, Tim, there's no question this race for scaling critical digital infrastructure, support cloud computing, support AI, comes with a cost. And it's a cost of labor. It's a cost in our build costs. And listen, we pick our spots where we think we can have the greatest value to our customers, those hyperscalers in particular. And that's based on our track record, our supply chain, our runway for growth. And that's been able to garner significant interest and attractive rates and ultimately returns.

Thank you. And our next question comes from the line of Richard Cho from JPMorgan. Your question, please.

Hi, I just wanted to ask about the recurring CapEx and capitalized leasing costs.

It kind of had a big move up for this year from 300-ish last year to over 400.

What's going on there?

Yeah. Thanks, Richard. I think you're referring to – just to be clear, I think you're referring to 25 and then versus 26 guides. So, we came in – for 25, we came in a little bit light in terms of where we were in guidance towards the low end, so, you know, despite our typical Q4 pickup. and so some of that increase in for 26 is a carryover of some of the projects that didn't complete in 25 and and the rest is is basically us looking to continue to build out our space and improve our portfolio for what has been a strong enterprise leasing as we've talked about for uh as part of the call in terms of putting up records in our zero to one um and i I would say it's all within, I think, around 7% of our revenue, which is, I think, pretty well in line with where the industry is on that metric.

And our next question comes from the line of Irvin Liu from Evercore ISI. Your question, please.

Thank you for the question, and congrats on a nice set of numbers and your outlook. Just in the context of your greater than 5 gigawatts of developable capacity, Any sense on the timing of when we should see this capacity become available for lease? If I'm comparing your development lifecycle on page 25 of your supplementals versus a quarter ago, I think the implied availability seems to be kind of consistent on a quarter-over-quarter basis. So should we be expecting a step-function increase in sellable inventory as we progress through the year? Thank you.

Thank you, Irvin, for the kind words. So that schedule is a consistent, like, conveyor belt of activity. So we are delivering great projects, often ahead of schedule for our customers. And I think that's another defining reason our customers are picking us in this environment where it is not easy to bring on infrastructure. And at the same time, we are greenlighting suites into now a record 10-plus billion of projects underway at attractive double-digit returns. We're activating shells, and we're adding all the way to the left of that schedule with incremental land capacity. And so we are continuing to replenish as fast as we deliver, if not faster. And something in one column can very expeditiously move to the right column, i.e. activating the new shell on land that is pad-ready, or going live with suites and shells that either are completed or underway, and obviously leasing and delivery and so on. So I would not interpret anything on that schedule other than we'll continue to accelerate our runway for growth. For, yes, both our enterprise customers that are a small amount of those megawatts, but certainly our hyperscale customers that are seeing those large capacity blocks in numerous markets around the world as very attractive.

And our next question comes from the line of Ari Klein from BMO Capital Markets. Your question, please.

Thank you. Following up on zero to one, how much of the strengths in that business do you think is from share gain versus underlying demand strength? And I'm curious, do you expanded the lens a little bit? It's zero to two, zero to three. Does it look any different? Or maybe how are deal sizes evolving? And do you think that increases with enterprise AI adoption or inference? Thanks. Thanks, Ari.

I'm going to have Colin to unpack that answer for you.

Thanks, Ari. I appreciate the question. So just a quick reminder, record quarter in Q4, that's three of the last five record quarters in zero to one, strong contributions on the channel side, which is really driving that business forward, strong contributions from new logos, which was really a big piece of the pie. So as it relates to your question on the demand cycle as well as taking market share, we are unquestionably taken market share with our focus around execution. We start in the year saying this is a big part of our good market, and we were successful in that. Undoubtedly, the ability for us to deliver high, you know, contiguous capacity in a mixed density environment, we're seeing more and more enterprises have larger pieces of their pie and high density oriented solutions is absolutely a core part of our value proposition. They also have commented consistently the ability to support the full spectrum of capabilities, so cabinet, suite, hall, building is significant across a global scale, because that's where they have to serve their needs, is really effective, supported by a strong interconnection story, which, again, will be second highest quarter on record. So that's coming together, produces results and consistency that, again, we've seen now quarter of quarter.

And then, Art, two other pieces of your question. I mean, we're always dissecting the bands here of business, and obviously the trend has been to larger capacity blocks. You've certainly seen that up in the hyperscale level, but also it's playing out in a smaller level in enterprise, more power density. All these things, I think, are incremental wind to our sales to take more market share, which has been playing out for some time over the last several quarters. If you look at just, like, the last eight quarters at, let's call it a megawatt to three megawatts, you probably average, like, up to $10 million a gap that could fall in that category, but it's ranged. It's been as low as, like, just under $2 million, and it's been as high as, called, $15 or $16 million. So there's always scenarios where an enterprise customer wants north of a megawatt customer to land with digital, and there's definitely been a gradual densification and increasing the size of the deal bands.

And our next question comes from the line of Frank Louthon from Raymond James. Your question, please.

Great. Thank you. So if we look out past 26, there's a fair amount of capacity coming on in the industry in 27 and 28.

I just want to see what your thoughts are on how that might affect your bookings and demand. And then how far out have you secured the labor for your capital growth that you have under contract now?

So, Frank, so going in reverse order, anything that we're essentially building, We've got some type of security around workforce, supply chain, et cetera. So that is certainly the entirety of that 10 plus billion under construction projects, as well as shells that may not be part of that live data haul delivery piece of the equation. And the labor, I will confess, it's getting more challenging by the day. I think we're a great partner to work with, given our consistency. We just didn't show up yesterday to build a data center. We've been doing this for years. We try to bundle our work for our customers. We try to make it consistent so they go from one building on our campus to the next. And so I think that makes us a very attractive partner for the vending landscape. When we look at 27 and 28, we're not seeing a tremendous amount of competitive unleashed capacity. We are seeing that those 27s are pretty exceptional and sought after for our customers with multiple customers seeking those capacity blocks. And I think 28 is going to be at that same level of attractiveness. The thing to remember here, Frank, is we're probably one of the few in the industry actually taking a little bit more risk in the development of this and getting pad ready, long land, green lighting shells, and even green lighting suites before we have a customer in hand. Most of all the other private capital folks are waiting for that lease to get signed, right, because that lease secures the financing and the lion's share of the dollars of their project, right? That is accrued to our benefit because customers have come and said, I need this desperately. Can you help me? And we're able to deliver that because we didn't wait for them to say, here's the ink on my lease way, way back in time when you would have had it started. So I think we're still looking at an outlook here that is attractive demand, rational and rationed supply, and great places where we could help our customers.

And our next question comes from the line of Nick Daldia from Moffitt Nathanson. Your question, please.

Hey, thanks for taking my question. You know, there have been a couple of high-profile data center transactions recently, you know, very attractive valuations, to the extent that we can tell based on info that's leaked out. And, you know, debt securitizations from private players imply really rich valuations too. Do you think there's a meaningful disconnect between public and private data center valuations? And if you do, are there steps that you can take to narrow or capitalize any gap, like lean on your private capital initiatives harder?

Why don't I let Greg give his view on that answer? I've got my own view. We'll see if it's the same.

Thanks for the question, Nick. Look, I think there's a couple of things you have to look at. And one is the mix of the asset base, because where this pricing really becomes distorted, it depends on the asset that's being purchased, how much of it is, for example, land versus cash-generating asset. And that obviously is going to skew the multiple. So that's not necessarily a disconnect between public and private market pricing. It can just be the mix of assets, if you will. But we would agree. We think our valuations continue to be strong. But, look, I think what's driving that, when you look at the underlying dynamics of the business right now, you know, you're looking at a demand profile that's going to, you know, expect it to increase two and a half to three times over the next five years. And you're looking at a supply environment, and this is across the globe, whether it's power, whether it's NIMBYism, whether it's zoning, whatever it may be, it's severely constrained. So those things are going to drive, you know, value for existing product in the market. So, you know, look, it's hard to say that there's a big disconnect because you haven't had, for example, you know, one stabilized asset versus another stabilized assets. We'd go back and make those adjustments for risk premiums and the like. So, you know, look, I think it depends on the mix of the assets. Some obviously are more expensive than others, depending on where it is geographically. But most of the differential in multiple has to do with asset mix.

And just to add on to that, Nick, what are we doing about it? Well, that goes back to call it evolving our financing strategy, our funding strategy, right? So the successfully oversubscribed initial fund on the backs of other private capital partnerships, tolling 15 plus billion of data center investments at our ready, in addition to our strong liquidity and balance sheet, essentially lets us to call pull in both private and public capital levers to fund the growth of our customers in our balance sheet for specifically hyperscale. And I think if you look in totality, we now have record backlog, 1.4 billion of backlog for our customers. We are executing well above expectations in our zero to one. We just had a record year and have the momentum carrying in. And all those things are now flowing to the bottom line. They flow to the bottom line throughout quarter by quarter in 2025 and set us up for a strong 2026, and we want to keep that acceleration going.

Thank you, and our next question comes from the line of John Peterson from Jefferies. Your question, please.

Okay, thank you. I was hoping you could talk a little more about the investments in Malaysia, Israel, and Portugal. Those look like smaller, more interconnection-focused facilities, but I know maybe in some of those markets there's also some larger hyperscaler projects that are going on, so maybe just talk about the decision-making when you enter a new market on going with more, like, interconnection-focused colo versus building larger hyperscale data centers?

Yeah, thanks, John. This is Greg. Look, I think, look, you're highlighting the point that acquisitions remains a key component of our growth strategy across the globe. And, too, you've highlighted here, like, you know, we're continuing to execute on strategic APAC acquisitions, for example, in Malaysia. Well, as you know, we play across the product spectrum and getting these, we've always said, getting network-dense, highly connected assets in key markets is a key component of our strategy. So if you take a look at the recent, you know, Malaysia transaction, right, that's a key emerging market strategically located in Southeast Asia. You know, Cyberjaya is about 25 kilometers south of Kuala Lumpur. You know, it's a traditional data center hub. You know, and the asset we acquired is, you know, the most well-connected asset in the market. And not only did we buy the, initial asset, but we bought expansion land immediately on next door. They'll give us 10 times expansion capacity for the existing asset. So that's Malaysia. Not materially different than what we did in Indonesia. I mean, the team's been busy in APAC here over the last year when we went into Jakarta. Slightly different, but we went in and we partnered with a group that had one of the most highly connected assets in the market with significant expansion potential. So, when we look at that, you know, that, as you know, buying those kinds of assets has always been a key component of our strategy. And again, as you go over, you know, to EMEA, same thing, right? Portugal, it's a highly connected assets, you know, terminations from subsea cable landing stations and the like, you know, with the ability to grow. Israel, same thing, most highly connected asset in the area of Petitiba, which is, you know, the most highly connected area of Israel. So, again, there's a similar theme there, and that stream plays into how we play across the product spectrum and go for those kinds of assets. Now, finally, the last market, and even in the U.S., if you look at it over the last year, we've had strategic colo-slash-enterprise acquisitions in Charlotte, in L.A., and the like. Now, that's all on, obviously, that all touched on colo and network-dense, highly-connected assets. That doesn't exclude hyperscale, right? If you look in the U.S. as well, over the last year, we acquired multiple land parcels in the U.S. In tier one markets, that's supporting our hyperscale business in areas, as Andy and Colin mentioned earlier, Atlanta, Charlotte, Dallas, Portland, and Chicago. So I would say our strategy is consistent with playing across the globe

and across the product spectrum. Thank you. And our next question comes on the line of John Hudlick from UBS. Your question, please.

Hey, great. Maybe two quick ones. First, a follow-up to those last comments. Just given how strong demand is for AI compute infrastructure, including, as we just heard tonight, $380 billion just between Amazon and Google alone this year, any updated thoughts on potentially building out some large footprint sites and, say, more remote power-capable markets? That's number one. And then there seems to be a growing list of efforts to reduce the impact of the data center industry on consumer electric rates by either requiring behind-the-meter solutions or deprioritization. Does this change your guys' view on reliance on the grid for power in future developments? Thanks.

Thanks, John. So I think some of the names that Greg just ran out at the end of his world tour of where we're making strategic acquisitions both to support our interconnection enterprise customers and our hyperscalers, The theme of called cloud zonal markets that are numerous cloud customers, numerous sources of demand is consistent. That's a Charlotte up and coming. That's an Atlanta. That's a Dallas, Chicago, Hillsborough, most of which we already had either the leading interconnection or enterprise footprint and support of some form of hyperscale and now growing. They're all getting bigger. So whether it's 200 megawatt land sites, 400 megawatt land sites, and they're going to continue to get bigger. And that's where I think we have a major role to help our customers, where it's tougher, where the stakes are raised for what the utilities are requiring, where the size of the dollars are just getting much bigger and beyond what many can fund. That ties into your second comment here. we as an industry are facing a tremendous amount of nimbyism or pushback on data centers. And I think it's unfair, and I think it's not the right – it's not reality when it pertains to digital reality in particular. We've been long-term major contributors to the communities that we live, build, and operate in. Our investments in the grid are stabilizing the grid. We often do demand response for those customers in those utilities, which those hot summer days or those cold winter nights benefit those also on those same grids. We've not given up on the grid utility source. and we are thinking anything we're thinking about quote behind the meter is some form of bridging of some form of duration and can be various sizes to help the grid as it brings the reinforcement for transmission for distribution I think in times like this we're doing our best to clear up the misconception make sure our story is told our impact whether it is the jobs So I think it's six to one jobs come from a data center that benefit the local communities, whether it is a limited use or impact on water. I think Digital Realty's 300-plus data centers use less than 18 California golf courses worth of water. I think there's close to 16,000 golf courses in just the U.S. So we need to fix the misconception. But when it's times like it's hard like this, this is where our customers value what we do, right? Our value add shines, and we're continuing to deliver.

And our next question comes from the line of Michael Elias from TD Cowan. Your question, please.

Great. Thanks for taking the question. You know, a lot of focus on hyperscale demand, but I take it a different way and ask about enterprise. Andy, you were talking about the bands elongate or widening in terms of enterprise. You know, one of the themes that, you know, came up more recently in industry was enterprise AI demand. More specifically, let's call it the 5 to 15 megawatt capacity blocks. You know, just curious, what are you seeing there? Are you seeing a pickup in that kind of activity? And maybe as part of that, do you think that that is a leading indicator potentially in some more inference-specific demand?

Thanks, Michael. Let me touch on for a second. I want to call on to really dig in on that. I think that, and I was just talking to a CTO of a major financial institution a couple of days ago, I think that lends it to our sweet spot here. We are about building a attractive community of interest or ecosystem for 5,000-plus customers and rapidly growing. That certainly includes the hyperscales in 30, 40, 50, 60 locations, but it also includes enterprises of all sizes, shapes, and forms around the globe. We are, unlike a lot of the private competition that would rather build one data center and lease the whole thing to one customer because the financing is easier, et cetera. We want to curate our buildings on our campus with multiple customers that can grow. We think that's the best way to deliver for all the customers, as well as drive long-term value. But I'll turn to Colin to talk a little bit about some of that enterprise engagement.

Thanks, Michael. Appreciate the question. So, again, highlighting record performance in Q4 and continued strong pipelines. So we have as strong a pipeline in zero to one as we've seen, and that's made up of larger contiguous blocks. unquestionably. So our enterprise clients are seeing more and more value in contiguous blocks above 500kw, and there's emerging conversations here pulling around that kind of five-megawatt block as inference starts to emerge. So we feel like that we're well set up for that, again, coming from our heritage and the ability to support mixed entities across the globe, 300-plus data centers. So those conversations are very active. I would say the ability to deliver that connectivity at scale as well. We've announced our private AI connectivity story, which is really helping the narrative, I think, with our enterprise clients who really value our expertise and how we can deliver that consistently across the globe. I will add, though, just in terms of contributions within zero to one, we saw a really strong continued push under 500 kW in Q4, which, again, speaks to resiliency of ability to scale up and down the platform, whether it's large footprint contiguous or smaller, more network-oriented deployments

across our portfolio. Thank you. And our final question for today comes from the line of Michael

Funk from Bank of America. Your question, please. Yeah, great. I just have one question, Andy. So, you know, based on the strong releasing spreads that you've reported and you're forecasting for 2026, what is your capacity and interest to go shorter duration on contract and or maybe shift to higher rates each year for the escalators. Love to hear your thoughts on that.

Thanks, Mike. Well, maybe I'll let Matt pick that up here. Just to the high level, I can tell you we've been pushing on the escalators, and we're living in an inflationary environment. We're working through that, right? And I'm not talking on a national stage. I'm talking about data centers are racing to deliver infrastructure. And that is inflationary to our cost-based and our operating model. But this is critical what we're doing. And we've essentially, I don't know if we have that set off the top of our hands, but pushing escalators of minimum 3%, as high as 4% or just above that, CPI linked. So that's certainly something that we've been trying to push through our base upon renewals, on new deals, given the broader environment. Matt, anything else you want to add there?

I mean, I think Andy covered, but I mean, just to maybe round out, you know, and I know your commentary is, I think, more directed towards or greater than a megawatt. But, you know, our zero to one megawatt, you know, typically we're closer to market. Those are shorter term contracts, typically rolling up at inflation or CPI. So we generally have, you know, an opportunity to do that on a more recurring basis. And then for our larger contracts, you know, those don't come up that frequently in terms of the amount of volume that churned, just given that they're already long-term leases. Some of those also have embedded renewal options. But I think, you know, we're looking at ways to continue to make sure that we're getting the right price for the value that we're delivering to our customers, you know, each and every year as we look at not only new deals but renewals.

Thank you. And our next question comes from the line of Bikram Malhotra from Mizzou. Your question, please.

Thanks for squeezing me in. I just wanted to clarify two things. I guess you've mentioned like record pipelines in the zero to one megawatt. Maybe you can just expand upon that for the larger segment. And if you can just marry that with like what's available capacity that you have to leave and bringing on over the next two years in some of your major markets by megawatt, that would be helpful.

Thank you, Vikram. I mean, I think the commentary is called record pipeline is called across both segments and obviously then in totality here. And this is coming off the back of like a really strong year when it comes to zero to one, up 35% on a year-over-year basis and back-to-back billion-plus years of new signings. I think the major markets I ran through, hundreds of megawatts in Northern Virginia that are prized possessions for our customers, Charlotte, Atlanta. And let's not forget, again, this demand is globalized with the hyperscalers. I think you'll see a continuation of demand growing into Europe, South America, and Asia has been a great contributor as well. So we're really delighted to be able to help these customers support their long-term growth here.

Thank you. This does conclude the question and answer session of today's program. I'd like to hand the program back to President and CEO, Andy Power, for any further remarks.

Thank you, Jonathan. The fourth quarter capped a very strong year for digital realty. We delivered record financial performance for our investors while executing with the reliability that our customers expect. We posted another year with over a billion dollars of total leasing, including record performance in our zero to one megawatt plus interconnection business and an $800-plus million backlog that provides tremendous visibility throughout this year and into next. We continue to expand our footprint and evolve our funding strategy with the successful raise of our inaugural hyperscale data center fund. Operationally, we remain in a very strong position to serve our growing roster of nearly 6,000 customers with a 3 gigawatts of in-place data center capacity and another 5 gigawatts of development capacity in our core markets around the world. Digital Realty has never been better positioned, and I owe that to my fellow Digital Realty teammates who have worked hard to deliver these results and have already started 2026 off on the right foot. Thank you all, and thanks to all of you who have joined us today for the call.

Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.