1. Digital Realty raises 2026 guidance after record leasing
Digital Realty Trust raised its 2026 earnings outlook on October 29, after the data center operator booked the largest quarter of new leasing in its history. Third-quarter bookings reached $855 million of annualized GAAP base rent when measured at 100% share, or $627 million at the company's own share. Core funds from operations came in at $2.10 per share, and the full-year forecast now stands at $8.30 to $8.35.
The raised guidance, published alongside an investor call that began at 5:00 p.m. Eastern, arrived as operators of computing infrastructure compete for scarce power and floor space. Digital Realty, a real estate investment trust that owns and leases facilities to cloud providers, enterprises and network operators, described the period as one of record leasing, a growing backlog and another quarter of double-digit earnings growth.
Chief Executive Andy Power tied the performance to customer appetite for data center environments rich in network connectivity. For readers following the broader technology and digital asset economy, the figures offer a concrete measure of how much physical capacity the computing industry is committing to well ahead of when that capacity begins generating revenue.
In practical terms, the update combines three signals investors look for in a data center landlord: new contracts at record scale, existing customers renewing at higher rents, and management willing to lift its earnings forecast rather than hold it. Each signal is supported by figures in the company's own earnings release, and together they define the tone of the quarter.
2. How large was the record leasing quarter?
The $855 million of annualized GAAP base rent signed at 100% share is the headline number, and it is the highest quarterly total the company has reported. Digital Realty's own portion was $627 million, a distinction that matters because many of its facilities are held through joint ventures with partners. Of the $627 million, interconnection, the fees customers pay to link directly to one another inside a facility, contributed $22 million.
Annualized base rent is the yearly rent that signed leases will produce once they are up and running, calculated under accounting rules that spread scheduled rent increases across the lease term. It is therefore a forward-looking indicator of future revenue rather than cash received during the quarter. A record figure indicates that customers are committing to more capacity at once than in any previous three-month period.
Renewals told a similar story. Renewal rents rose 11.8% on a cash basis and 17.0% on a GAAP basis, applied to $261 million of annualized cash rental revenue that came up for renewal during the quarter. Positive renewal spreads of that size show that existing tenants are paying more to stay, which usually signals that supply in the markets where Digital Realty operates is tight.
Interconnection accounted for only a small fraction of the $627 million, so the leasing story is overwhelmingly about large capacity commitments rather than network services, although the latter remain a steady, recurring part of the model and tend to deepen customer relationships over time.
3. What is in the backlog, and when does it turn into revenue?
The backlog of signed leases that have not yet begun to pay rent also reached a record, at $2.5 billion at 100% share and $1.8 billion at Digital Realty's share by the end of the quarter. The backlog is a pipeline of contracted revenue: the customers have committed, but the space is still being built out, powered or prepared for handover.
The weighted-average gap between signing a lease and the start of rent was 17 months. That lag explains why record bookings do not appear in income immediately. A lease signed in the third quarter of 2026 would, on average, begin contributing to revenue well into 2028, which is why investors watch the backlog as closely as they watch current earnings.
The lag also means that the company's near-term guidance is largely supported by leases signed in earlier periods, while the record bookings of this quarter underpin growth further out. The gap between the two creates the visibility that real estate investors prize, but it also ties results to the company's ability to deliver capacity on schedule.
4. How did Digital Realty's earnings and revenue perform?
Core FFO per share, which excludes net promote income, was $2.10, up from $1.89 in the third quarter of 2025, an increase of roughly 11%. Core FFO is the standard profit measure for real estate investment trusts because it adds back depreciation and other items that distort the earnings of companies that own large physical assets.
Total revenue was $1.9 billion, a 21% increase from the same quarter a year earlier, and adjusted EBITDA was $978 million, up 13%. Net income per diluted share was $0.48, compared with $0.15 in the prior-year quarter.
Operating metrics also improved. Portfolio occupancy was 91.1% at quarter-end, up from 90.2% at the end of the second quarter, and occupancy in the same-capital portfolio, which covers properties owned and operating throughout both comparison periods, stood at 93.4%. Higher occupancy at higher renewal rents is the combination that lifts profit from existing buildings without new construction.
5. What changed in the full-year 2026 outlook?
The company lifted its 2026 Core FFO forecast to a range of $8.30 to $8.35 per share, up from $8.15 to $8.20 in its July outlook. On a constant-currency basis, which strips out the effect of exchange rate moves on its international operations, the range is $8.25 to $8.30.
Other targets moved higher as well. Same-capital cash net operating income growth is now expected at 5.25% to 5.75%, compared with 4.25% to 5.25% previously. The company projects cash renewal rent increases of 10.0% to 12.0% for the year and expects year-end occupancy to improve by 75 to 125 basis points. Adjusted EBITDA is forecast at $3.80 billion to $3.85 billion.
On the spending side, Digital Realty expects development capital expenditure, net of contributions from partners, of $4.25 billion to $4.75 billion, with average stabilized yields of 10.0% or higher. A stabilized yield is the annual return a project is expected to earn once it is fully leased and operating, measured against its cost.
6. How much capacity and land does the company control?
Digital Realty reports about 3.2 gigawatts of IT capacity in its portfolio, along with roughly 9.8 gigawatts of buildable capacity that is either under active development or held for future development. Power, measured in gigawatts, has become the primary unit by which data center size is compared, because available electricity rather than floor area now limits how quickly new facilities can open.
During the quarter the company acquired $742 million of land. The sites include locations near Indianapolis, Atlanta, Chicago, Charlotte, Frankfurt and Crete. Buying land and securing power connections years in advance is a central part of the strategy, since both can take far longer to obtain than the buildings themselves take to construct.
The geographic spread, spanning several US regions plus European sites, also indicates where the company expects customers to need capacity. Frankfurt is one of Europe's largest connectivity hubs, while the US locations extend its footprint beyond the most established data center markets.
7. Why does data center demand matter beyond real estate?
A data center operator sits between two industries: the real estate sector that finances and owns buildings, and the technology sector whose software and hardware fill them. When a landlord of this kind reports record bookings, it reveals how much capacity technology customers are reserving, and it does so through signed contracts rather than forecasts or announcements.
That makes the quarterly figures a useful reference point for anyone tracking computing demand, including participants in digital asset markets, where mining operations, exchanges, validators and node providers also depend on reliable, well-connected facilities. Competition for power and space among all of these users tends to show up first in lease pricing, which is why the 11.8% cash renewal increase draws attention.
It also illustrates the financial structure of the business. Data centers require large upfront investment, with development spending guided at $4.25 billion to $4.75 billion this year, and they earn returns only after tenants take occupancy and begin paying rent. Pre-committed leases reduce the risk that new capacity sits empty, which is why a growing backlog is treated as a sign of confidence in future cash flow.
The balance between growth and discipline remains the central question. Higher yields and stronger renewal pricing support the case for continued expansion, but the capital commitments are substantial and depend on timely delivery of power, equipment and construction. The raised guidance indicates management's confidence that it can meet those demands in the current year.
8. What should investors watch next?
The next test is whether leasing stays near record levels in coming quarters and how quickly the $2.5 billion backlog converts into paying rent. Because the average lag between signing and commencement is 17 months, the pace of construction and the availability of power and equipment will determine when that revenue shows up.
Management is scheduled to appear at several investor conferences in the weeks ahead: Nareit REITweek in Atlanta on November 17 and 18, the UBS Global Real Estate CEO/CFO Conference in London on December 1, and the Wells Fargo Annual TMT Summit in Rancho Palos Verdes on December 7. Those appearances give analysts opportunities to press executives on demand, pricing and delivery timelines.
The company's next quarterly report will show whether the raised guidance holds and whether renewal pricing stays within the 10.0% to 12.0% range now projected for the full year. A durable pattern of record bookings, rising renewal rents and growing occupancy would reinforce the picture of a market in which demand for connected, power-rich data center space continues to outrun supply.