Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the condensed consolidated financial statements and notes thereto appearing elsewhere in this report and our Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the United States (“U.S.”) Securities and Exchange Commission (“SEC”). This report contains forward-looking statements within the meaning of the federal securities laws. In particular, statements pertaining to our capital resources, expected use of borrowings under our credit facilities, expected use of proceeds from our ATM equity program, litigation matters or legal proceedings, portfolio performance, leverage policy, acquisition and capital expenditure plans, capital recycling program, returns on invested capital, supply and demand for data center space, capitalization rates, rents to be received in future periods and expected rental rates on new or renewed data center space contain forward-looking statements. Likewise, all of our statements regarding anticipated market conditions, and results of operations are forward-looking statements. You can identify forward-looking statements by the use of forward-looking terminology such as “believes,” “expects,” “may,” “will,” “should,” “seeks,” “approximately,” “intends,” “plans,” “pro forma,” “estimates” or “anticipates” or the negative of these words and phrases or similar words or phrases which are predictions of or indicate future events or trends which do not relate solely to historical matters. You can also identify forward-looking statements by discussions of strategy, plans or intentions. Forward-looking statements involve numerous risks and uncertainties and you should not rely on them as predictions of future events. Forward-looking statements depend on assumptions, data or methods that may be incorrect or imprecise and that we may not be able to realize. We do not guarantee that the transactions and events described will happen as described or that they will happen at all. The following factors, among others, could cause actual results and future events to differ materially from those set forth or contemplated in the forward-looking statements: reduced demand for data centers or decreases in information technology spending; decreased rental rates, increased operating costs or increased vacancy rates; increased competition or available supply of data center space; the suitability of our data centers and data center infrastructure, delays or disruptions in connectivity or availability of power, or failures or breaches of our physical and information security infrastructure or services; breaches of our obligations or restrictions under our contracts with our customers; our inability to successfully develop and lease new properties and development space, and delays or unexpected costs in development of properties; the impact of current global and local economic, credit and market conditions; global supply chain or procurement disruptions, or increased supply chain costs; the impact from periods of heightened inflation on our costs, such as operating and general and administrative expenses, interest expense and real estate acquisition and construction costs; the impact on our customers’ and our suppliers’ operations during an epidemic, pandemic, or other global events; our dependence upon significant customers, bankruptcy or insolvency of a major customer or a significant number of smaller customers, or defaults on or non-renewal of leases by customers; changes in political conditions, geopolitical turmoil, political instability, civil disturbances, restrictive governmental actions or nationalization in the countries in which we operate; our inability to retain data center space that we lease or sublease from third parties; information security and data privacy breaches; difficulties managing an international business and acquiring or operating properties in foreign jurisdictions and unfamiliar metropolitan areas; our failure to realize the intended benefits from, or disruptions to our plans and operations or unknown or contingent liabilities related to, our recent and future acquisitions; our failure to successfully integrate and operate acquired or developed properties or businesses; difficulties in identifying properties to acquire and completing acquisitions; risks related to joint venture investments, including as a result of our lack of control of such investments; risks associated with using debt to fund our business activities, including re-financing and interest rate risks, our failure to repay debt when due, adverse changes in our credit ratings or our breach of covenants or other terms contained in our loan facilities and agreements; our failure to obtain necessary debt and equity financing, and our dependence on external sources of capital; financial market fluctuations and changes in foreign currency exchange rates; adverse economic or real estate developments in our industry or the industry sectors that we sell to, including risks relating to decreasing real estate valuations and impairment charges and goodwill and other intangible asset impairment charges; our inability to manage our growth effectively; losses in excess of our insurance coverage; our inability to attract and retain talent; environmental liabilities, risks related to natural disasters and our inability to achieve our sustainability goals; the expected operating performance of anticipated near-term acquisitions and descriptions relating to these expectations; our inability to comply with rules and regulations applicable to our Company; Digital Realty Trust, Inc.’s failure to maintain its status as a REIT for federal income tax purposes; Digital Realty Trust, L.P.’s failure to qualify as a partnership for federal income tax purposes; restrictions on our ability to engage in certain business activities; changes in local, state, federal and international laws and regulations, including related to taxation, real estate and zoning laws, and increases in real property tax rates; the impact of any financial, accounting, legal or regulatory

issues or litigation that may affect us; and those additional risks and factors discussed in reports filed with the SEC by us from time to time, including those discussed under the heading “Risk Factors” in our most recently filed Annual Report on Form 10-K and in other sections of this report, including under Part II, Item 1A, Risk Factors.

While forward-looking statements reflect our good faith beliefs, they are not guarantees of future performance. We disclaim any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, new information, data or methods, future events or other changes.

The risks included here are not exhaustive, and additional factors could adversely affect our business and financial performance, including factors and risks included in our Annual Report on Form 10-K for the year ended December 31, 2023 and in other sections of this report, including under Part II, Item 1A, Risk Factors. Moreover, we operate in a very competitive and rapidly changing environment. New risk factors emerge from time to time and it is not possible for management to identify all such risk factors, nor can we assess the impact of all such risk factors on the business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Given these risks and uncertainties, you should not place undue reliance on forward-looking statements as a prediction of actual results.

Occupancy percentages included in the following discussion, for some of our properties, are calculated based on factors in addition to contractually leased square feet, including available power, required support space and common area.

As used in this report: “Ascenty entity” refers to the entity which owns and operates Ascenty, formed with Brookfield Infrastructure.

Business Overview and Strategy

Digital Realty Trust, Inc., through its controlling interest in Digital Realty Trust, L.P. and its subsidiaries, delivers comprehensive space, power, and interconnection solutions that enable its customers and partners to connect with each other and service their own customers on a global technology and real estate platform. We are a leading global provider of data center, colocation and interconnection solutions for customers across a variety of industry verticals. Digital Realty Trust, Inc. operates as a REIT for federal income tax purposes, and our Operating Partnership is the entity through which we conduct our business and own our assets.

Our primary business objectives are to maximize:

	(i)	sustainable long-term growth in earnings and funds from operations per share and unit;

	(ii)	cash flow and returns to our stockholders and Digital Realty Trust, L.P.’s unitholders through the payment of distributions; and

	(iii)	return on invested capital.

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We expect to accomplish our objectives by achieving superior risk-adjusted returns, prudently allocating capital, diversifying our product offerings, accelerating our global reach and scale, and driving revenue growth and operating efficiencies. A significant component of our current and future internal growth is anticipated through the development of our existing space held for development, acquisition of land for future development, and acquisition of new properties.

We target high-quality, strategically located properties containing the physical and connectivity infrastructure that supports the applications and operations of data center and technology industry customers and properties that may be developed for such use. Most of our data center properties contain fully redundant electrical supply systems, multiple power feeds, above-standard cooling systems, raised floor areas, extensive in-building communications cabling and high-level security systems. Fundamentally, we bring together foundational real estate and innovative technology expertise around the world to deliver a comprehensive, dedicated product suite to meet customers’ data and connectivity needs. We represent an important part of the digital economy that we believe will benefit from powerful, long-term growth drivers.

We have developed detailed, standardized procedures for evaluating new real estate investments to ensure that they meet our financial, technical and other criteria. We expect to continue to acquire additional assets as part of our growth strategy. We intend to aggressively manage and lease our assets to increase their cash flow. We may continue to build out our development portfolio when justified by anticipated demand and returns.

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We may acquire properties subject to existing mortgage financing and other indebtedness or we may incur new indebtedness in connection with acquiring or refinancing these properties. Debt service on such indebtedness will have a priority over any cash dividends with respect to Digital Realty Trust, Inc.’s common stock and preferred stock. We are committed to maintaining a conservative capital structure. Our goal is to average through business cycles the following financial ratios: 1) a debt-to-Adjusted EBITDA ratio around 5.5x, 2) a fixed charge coverage of greater than three times, and 3) floating rate debt at less than 20% of total outstanding debt. In addition, we strive to maintain a well-laddered debt maturity schedule, and we seek to maximize the menu of our available sources of capital, while minimizing the cost.

Changes in political conditions, geopolitical turmoil, political instability, civil disturbances, restrictive governmental actions or nationalization in the countries in which we operate, including escalations in political and trade tensions involving the U.S. and regulatory and legislative changes, could potentially result in adverse effects on our, and our customers’, operations.

Our current ratio of debt-to-Adjusted EBITDA is higher than we have historically experienced, which could result in adverse changes in investor perception or our credit ratings. Any such changes could negatively affect our financing activity and the market price of Digital Realty Trust, Inc.’s common stock or other securities. For additional information, please see “Risk Factors—Adverse changes in our Company’s credit ratings could negatively affect our financing activity” in our Annual Report on Form 10-K for the year ended December 31, 2023.

Summary of 2024 Significant Activities

We completed the following significant activities during the three months ended March 31, 2024:

	●	In January 2024, we formed a joint venture with Blackstone Inc. to develop four hyperscale data center campuses across Frankfurt, Paris and Northern Virginia. We received approximately $231 million of net proceeds from the contribution of our data centers to the first phase of the joint venture and retained a 20% interest in the joint venture.

	●	In January 2024, we closed on the sale of our interest in four data centers to Brookfield Infrastructure Partners L.P., or Brookfield, for approximately $271 million. The sale was completed subsequent to Brookfield’s November 2023 acquisition of one of our tenants, Cyxtera Technologies. As a result of the sale, we recognized a total gain on disposition of approximately $203.1 million, of which $194.2 million is included within Gain on disposition of properties, net and $8.9 million is included within Equity in (loss) earnings of unconsolidated entities on our condensed consolidated income statements.

	●	On March 1, 2024, we formed a joint venture with Mitsubishi Corporation, or Mitsubishi, to support the development of two data centers in the Dallas metro area. The facilities were 100% pre-leased prior to construction. We contributed the two data center buildings at a contribution value of approximately $261 million. We received approximately $153 million of gross proceeds from the contribution of our data centers to the joint venture and retained a 35% interest in the joint venture. Mitsubishi contributed such cash in exchange for a 65% interest in the joint venture.

Revenue Base

Most of our revenue consists of rental income generated by the data centers in our portfolio. Our ability to generate and grow revenue depends on several factors, including our ability to maintain or improve occupancy rates. A summary of our data center portfolio and related occupied square feet (in thousands) (excluding space under development or held for development) is shown below. Unconsolidated portfolios shown below consist of assets owned by unconsolidated entities in which we have invested. We often provide management services for these entities under management agreements and receive management fees. These are shown as Managed Unconsolidated Portfolio. Entities for which we do not provide such services are shown as Non-Managed Unconsolidated Portfolio.

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​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	As of March 31, 2024						​	As of December 31, 2023
Region	​	Data Center Buildings	Net Rentable Square Feet (1)	Space Under Active Development (2)	Space Held for Development (3)	Occupancy		​	Data Center Buildings	Net Rentable Square Feet (1)	Space Under Active Development (2)	Space Held for Development (3)	Occupancy
North America	​	103	19,971	1,684	1,333	84.4	%	​	107	20,150	2,590	1,335	83.8	%
Europe	​	111	8,900	2,822	390	76.2	%	​	112	8,873	3,291	319	75.8	%
Asia Pacific	​	11	1,642	83	207	77.0	%	​	11	1,652	73	207	76.7	%
Africa	​	12	1,531	1,581	21	77.8	%	​	12	1,528	1,581	23	71.0	%
Consolidated Portfolio	​	237	32,043	6,170	1,951	80.6	%	​	242	32,203	7,535	1,884	79.8	%
Managed Unconsolidated Portfolio	​	26	3,985	1,313	—	91.9	%	​	22	3,843	364	—	93.7	%
Non-Managed Unconsolidated Portfolio	​	46	3,810	756	2,190	85.2	%	​	45	3,641	571	2,246	85.3	%
Total Portfolio	​	309	39,839	8,239	4,141	82.1	%	​	309	39,688	8,470	4,130	81.7	%

(1)	Net rentable square feet represent the current square feet under lease as specified in the applicable lease agreement plus management’s estimate of space available for lease based on engineering drawings. The amount includes customers’ proportional share of common areas but excludes space held for the intent of or under active development.

(2)	Space under active development includes current base building and data center projects in progress, and excludes space held for development. For additional information on the current and future investment for space under active development, see “Liquidity and Capital Resources—Development Projects”.

(3)	Space held for development includes space held for future data center development and excludes space under active development. For additional information on the current investment for space held for development, see “Liquidity and Capital Resources—Development Projects”.

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Leasing Activities

Due to the capital-intensive and long-term nature of the operations we support, our lease terms with customers are generally longer than standard commercial leases. As of March 31, 2024, our average remaining lease term was approximately five years.

Our ability to re-lease expiring space at rental rates equal to or in excess of current rental rates will impact our results of operations. The subsequent table summarizes our leasing activity in the three months ended March 31, 2024 (square feet in thousands):

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​		​		​	​		​	​		​		​	TI’s/Lease			Weighted
​	​	​	​	​	​	​	​	​	​	​	​	​	Commissions		​	Average Lease
​	​	Rentable	​	Expiring		​	New		​	Rental Rate		​	Per Square		​	Terms
​	​	Square Feet (1)	​	Rates (2)		​	Rates (2)		​	Changes		​	Foot		​	(years)
Leasing Activity (3)(4)				​			​					​	​
Renewals Signed				​			​					​	​
0 — 1 MW		551	​	$	242	​	$	252		4.3	%	​	$	1		1.4
> 1 MW		739	​	$	106	​	$	129		21.6	%	​	$	2		5.9
Other (6)		182	​	$	36	​	$	67		88.1	%	​	$	—		5.9
New Leases Signed (5)			​			​				​	​	​
0 — 1 MW		145	​		—	​	$	275		—	​	​	$	8		4.1
> 1 MW		748	​		—	​	$	265		—	​	​	$	—		10.5
Other (6)		13	​		—	​	$	55		—	​	​	$	—		6.7
Leasing Activity Summary			​			​				​	​	​
0 — 1 MW		696	​		​	​	$	257		​	​	​		​
> 1 MW		1,487	​		​	​	$	197		​	​	​		​
Other (6)		195	​		​	​	$	66		​	​	​		​

(1)	For some of our properties, we calculate square footage based on factors in addition to contractually leased square feet, including power, required support space and common area.

(2)	Rental rates represent average annual estimated base cash rent per rentable square foot – calculated for each contract based on total cash base rent divided by the total number of years in the contract (including any tenant concessions). All rates were calculated in the local currency of each contract and then converted to USD based on average exchange rates for the period presented.

(3)	Excludes short-term leases.

(4)	Commencement dates for the leases signed range from 2024 to 2025.

(5)	Includes leases signed for new and re-leased space.

(6)	Other includes Powered Base Building shell capacity as well as storage and office space within fully improved data center facilities.

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We continue to see strong demand in most of our key metropolitan areas for data center space and, subject to the supply of available data center space in these metropolitan areas, we expect average aggregate rental rates on renewed data center leases for 2024 expirations to be positive as compared with the rates currently being paid for the same space on a GAAP basis and on a cash basis. Our past performance may not be indicative of future results, and we cannot assure you that leases will be renewed or that our data centers will be re-leased at all or at rental rates equal to or above the current average rental rates. Further, re-leased/renewed rental rates in a particular metropolitan area may not be consistent with rental rates across our portfolio as a whole and may fluctuate from one period to another due to a number of factors, including local economic conditions, local supply and demand for data center space, competition from other data center developers or operators, the condition of the property and whether the property, or space within the property, has been developed.

Geographic Concentration

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We depend on the market for data centers in specific geographic regions and significant changes in these regional or metropolitan areas can impact our future results. The following table shows the geographic concentration based on annualized rent from our portfolio, including data centers held as investments in unconsolidated entities.

​	​	​	​
​		Percentage of
​	​	March 31, 2024
Metropolitan Area	​	Total annualized rent (1)
Northern Virginia		17.4	%
Chicago		7.2	%
Frankfurt		5.9	%
Dallas		4.9	%
Singapore		4.9	%
New York		4.8	%
London	​	4.7	%
Silicon Valley		4.5	%
Sao Paulo		4.4	%
Portland		4.3	%
Amsterdam		4.3	%
Paris		3.1	%
Johannesburg		2.6	%
Tokyo		1.9	%
Osaka	​	1.8	%
Other		23.3	%
Total		100.0	%

(1)	Annualized rent is monthly contractual rent (defined as cash base rent before abatements) under existing leases as of the end of the period presented, multiplied by 12. Includes consolidated portfolio and unconsolidated entities at the entities’ 100% ownership level. The aggregate amount of abatements for the three months ended March 31, 2024 was approximately $8.1 million.

Operating Expenses

Operating expenses primarily consist of utilities, property and ad valorem taxes, property management fees, insurance and site maintenance costs, and rental expenses on our ground and building leases. Our buildings require significant power to support data center operations and the cost of electric power and other utilities is a significant component of operating expenses.

Many of our leases contain provisions under which tenants reimburse us for all or a portion of property operating expenses and real estate taxes incurred by us. However, in some cases we are not entitled to reimbursement of property operating expenses, other than utility expense, and real estate taxes under our leases for Turn-Key Flex® facilities. We expect to incur additional operating expenses as we continue to expand.

Costs pertaining to our asset management function, legal, accounting, corporate governance, reporting and compliance are categorized as general and administrative costs within operating expenses.

Other key components of operating expenses include: depreciation of our fixed assets, amortization of intangible assets, and transaction and integration costs.

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Other Income / (Expenses)

Equity in earnings of unconsolidated entities, gain on disposition of properties, interest expense, and income tax expense make up the majority of Other income/(expenses). Equity in earnings of unconsolidated entities represents our share of the income/(loss) of entities in which we invest, but do not consolidate under U.S. GAAP. The largest of these investments is currently our investment in Ascenty, which is located primarily in Latin America. Our second-largest equity-method investment is Digital Core REIT, which is publicly traded on the Singapore Exchange (“SGX”) and which owns a portfolio of 10 properties operating in the United States, Canada, Germany and Japan. Refer to additional discussion of Digital Core REIT and Ascenty in the Notes to the Condensed Consolidated Financial Statements.

Results of Operations

As a result of the consistent and significant growth in our business since the first property acquisition in 2002, we evaluate period-to-period results for revenue and property level operating expenses on a stabilized versus non-stabilized portfolio basis.

Stabilized: The stabilized portfolio includes properties owned as of the beginning of all periods presented with less than 5% of total rentable square feet under development.

Non-stabilized: The non-stabilized portfolio includes: (1) properties that were undergoing, or were expected to undergo, development activities during any of the periods presented; (2) any properties contributed to joint ventures, sold, or held for sale during the periods presented; and (3) any properties that were acquired or delivered at any point during the periods presented.

A roll forward showing changes in the stabilized and non-stabilized portfolios for the three months ended March 31, 2024 as compared to December 31, 2023 is shown below (in thousands):

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​	​	​	​	​	​	​
Net Rentable Square Feet		Stabilized		Non-Stabilized		Total
As of December 31, 2023	​	22,600	​	9,603	​	32,203
New development and space reconfigurations	​	(7)	​	183	​	176
Transfers to stabilized from non-stabilized	​	2,456	​	(2,519)	​	(63)
Dispositions / Sales	​	(328)	​	(18)	​	(346)
Acquisitions	​	—	​	73	​	73
As of March 31, 2024	​	24,721	​	7,322	​	32,043

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Comparison of the Results of Operations for the Three Months Ended March 31, 2024 to the Three Months Ended March 31, 2023

Revenues

Total operating revenues as shown on our condensed consolidated income statements was as follows (in thousands):

​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Three Months Ended March 31,
​		2024			2023			$ Change		​	% Change
Stabilized	​	$	1,058,467	​	$	1,065,737	​	$	(7,270)	​	(0.7)	%
Non-Stabilized	​	​	258,804	​	​	264,231	​	​	(5,427)	​	(2.1)	%
Rental and other services	​	​	1,317,271	​	​	1,329,968	​	​	(12,697)	​	(1.0)	%
Fee income and other	​	​	13,872	​	​	8,755	​	​	5,117	​	58.4	%
Total operating revenues	​	$	1,331,143	​	$	1,338,723	​	$	(7,580)	​	(0.6)	%

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Total operating revenues decreased by approximately $7.6 million in the three months ended March 31, 2024 compared to the same period in 2023.

Stabilized rental and other services revenue decreased $7.3 million in the three months ended March 31, 2024 compared to the same period in 2023 primarily due to:

	(i)	a decrease of $42.8 million, in utility reimbursement largely driven by power price decreases, primarily in EMEA and APAC;

	(ii)	offset by an increase of $23.6 million in new leasing and renewals across all regions; and

	(iii)	an increase of $6.2 million in other tenant reimbursements due to a favorable property tax assessment at one of our North American properties realized in early 2023, which was passed through to our customers.

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Non-stabilized rental and other services revenue decreased $5.4 million in the three months ended March 31, 2024 compared to the same period in 2023 driven primarily by:

	(i)	an increase of $84.5 million due to the completion of our global development pipeline and related lease up operating activities (with the biggest contributions in Northern Virginia, Portland, Toronto, New York, Zurich, Cape Town and Johannesburg); and

	(ii)	offset by a decrease of $89.9 million related to properties sold or contributed after March 31, 2023.

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Operating Expenses — Property Level

Property level operating expenses as shown in our condensed consolidated income statements were as follows (in thousands):

​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Three Months Ended March 31,
​		2024			2023			$ Change		​	% Change
Stabilized	​	$	265,035	​	$	295,375	​	$	(30,340)	​	(10.3)	%
Non-Stabilized	​		59,536	​		50,989	​	​	8,547	​	16.8	%
Total Utilities	​	​	324,571	​	​	346,364	​	​	(21,793)	​	(6.3)	%
​	​	​	​	​	​	​	​	​	​	​	​	​
Stabilized	​	​	167,068	​	​	167,052	​	​	16	​	0.0	%
Non-Stabilized	​		57,300	​		57,809	​	​	(509)	​	(0.9)	%
Total Rental property operating and maintenance (excluding utilities)	​	​	224,368	​	​	224,861	​	​	(493)	​	(0.2)	%
​	​	​	​	​	​	​	​	​	​	​	​	​
Total Rental property operating and maintenance	​	​	548,939	​	​	571,225	​	​	(22,286)	​	(3.9)	%
​	​	​	​	​	​	​	​	​	​	​	​	​
Stabilized	​		35,503	​		27,818	​	​	7,685	​	27.6	%
Non-Stabilized	​		8,347	​		16,961	​	​	(8,614)	​	(50.8)	%
Total Property taxes and insurance	​		43,850	​		44,779	​	​	(929)	​	(2.1)	%
​	​	​	​	​	​	​	​	​	​	​	​	​
Total property level operating expenses	​	$	592,789	​	$	616,004	​	$	(23,215)	​	(3.8)	%

​

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Property level operating expenses include costs to operate and maintain the properties in our portfolio as well as taxes and insurance.

Total Utilities

Total stabilized utilities expenses decreased by approximately $30.3 million in the three months ended March 31, 2024 compared to the same period in 2023 primarily due to lower power pricing at certain properties in the stabilized portfolio, primarily in EMEA and APAC.

Total non-stabilized utilities expenses increased by approximately $8.5 million in the three months ended March 31, 2024 compared to the same period in 2023 primarily due to:

	(i)	an increase of approximately $21.9 million due to higher utility consumption in a growing portfolio of recently completed development sites (with the biggest contributions in Northern Virginia, Portland, Toronto, New York, Zurich, Cape Town and Johannesburg);

	(ii)	offset by a decrease in power agreement credits by $4.7 million; and

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	(iii)	a decrease of $19.6 million related to properties sold or contributed after March 31, 2023.

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The cost of electric power comprises a significant component of our operating expenses. Any additional taxation or regulation of energy use, including as a result of (i) new legislation that the U.S. Congress may pass, (ii) the regulations that the U.S. EPA has proposed or finalized, (iii) regulations under legislation that states have passed or may pass, or (iv) any further legislation or regulations in EMEA, APAC or other regions where we operate could significantly increase our costs, and we may not be able to effectively pass all of these costs on to our customers. These matters could adversely impact our business, results of operations, or financial condition.

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Total Rental Property Operating and Maintenance (Excluding Utilities)

Total non-stabilized rental property operating and maintenance expenses (excluding utilities) decreased by approximately $1.0 million in the three months ended March 31, 2024 compared to the same period in 2023 primarily due to a decrease in common area maintenance expense in Northern Virginia offset by an increase in data center labor expense throughout the portfolio.

Total Property Taxes and Insurance

Total stabilized property taxes and insurance increased by approximately $7.7 million in the three months ended March 31, 2024 compared to the same period in 2023 primarily due to a favorable property tax assessment at one of our North American properties realized in early 2023.

Total non-stabilized property taxes and insurance decreased $8.6 million in the three months ended March 31, 2024 compared to the same period in 2023 primarily related to properties sold or contributed after March 31, 2023.

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Other Operating Expenses

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Other operating expenses include costs which are either non-cash in nature (such as depreciation and amortization) or which do not directly pertain to operation of data center properties. A comparison of other operating expenses for the respective periods is shown below (in thousands).

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​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Three Months Ended March 31,
​		2024			2023		​	$ Change		​	% Change
Depreciation and amortization		$	431,102	​	$	421,198	​	$	9,904	​	2.4	%
General and administrative	​	​	115,210	​	​	111,920	​	​	3,290	​	2.9	%
Transaction, integration and other expense	​		31,839	​		12,267	​	​	19,572	​	159.6	%
Other	​		10,836	​		-	​	​	10,836	​	n/m	​
Total other operating expenses	​	​	588,987	​	​	545,385	​	​	43,602	​	8.0	%
Total property level operating expenses	​	​	592,789	​	​	616,004	​	​	(23,215)	​	(3.8)	%
Total operating expenses	​	$	1,181,776	​	$	1,161,389	​	​	20,387	​	1.8	%

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Equity in Earnings (Loss) of Unconsolidated Entities

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Equity in earnings (loss) of unconsolidated entities decreased approximately $30.9 million compared to the same period in 2023. The foreign exchange remeasurement of debt associated with our unconsolidated Ascenty entity creates volatility in our equity in earnings and drove this fluctuation.

Gain on Disposition of Properties, Net

Gain on disposition of properties increased approximately $277.8 million for the three months ended March 31, 2024, as compared to the same period in 2023.

In January 2024, we closed on the sale of our interest in four data centers to Brookfield Infrastructure Partners L.P., or Brookfield, for approximately $271 million. As a result of the sale, we recognized a total gain on disposition of approximately $201.3 million.

In March 2024, we recognized a total gain of $74.4 million from the sale of an easement to a local power provider in Northern Virginia.

​

Loss from Early Extinguishment of Debt

On January 9, 2024, we paid down $240 million on the U.S. term loan facility, leaving $500 million outstanding. The paydown resulted in an early extinguishment charge of approximately $1.1 million during the three months ended March 31, 2024.

Interest Expense

Interest expense increased approximately $7.3 million in the three months ended March 31, 2024 compared to the same period in 2023 driven primarily by higher interest rates on our credit facilities and the non-swapped portion of our term loans.

​

Income Tax Expense

Income tax expense increased by approximately $1.0 million in the three months ended March 31, 2024 as compared to the same period in 2023 due to increased profitability and jurisdictional rate mix in foreign jurisdictions. We carried out an analysis for the purposes of the Model GloBE Rules for Pillar Two and no material top-up tax is expected.

Liquidity and Capital Resources

The sections “Analysis of Liquidity and Capital Resources — Parent” and “Analysis of Liquidity and Capital Resources — Operating Partnership” should be read in conjunction with one another to understand our liquidity and capital resources on a consolidated basis. The term “Parent” refers to Digital Realty Trust, Inc. on an unconsolidated basis, excluding our Operating Partnership. The term “Operating Partnership” or “OP” refers to Digital Realty Trust, L.P. on a consolidated basis.

Analysis of Liquidity and Capital Resources — Parent

Our Parent does not conduct business itself, other than acting as the sole general partner of the Operating Partnership, issuing public equity from time to time, incurring certain expenses in operating as a public company (which are fully reimbursed by the Operating Partnership) and guaranteeing certain unsecured debt of the Operating Partnership and certain of its subsidiaries and affiliates. If our Operating Partnership or such subsidiaries fail to fulfill their debt requirements, which trigger Parent guarantee obligations, then our Parent will be required to fulfill its cash payment commitments under such guarantees. Our Parent’s only material asset is its investment in our Operating Partnership.

Our Parent’s principal funding requirement is the payment of dividends on its common and preferred stock. Our Parent’s principal source of funding is the distributions it receives from our Operating Partnership.

As the sole general partner of our Operating Partnership, our Parent has the full, exclusive and complete responsibility for our Operating Partnership’s day-to-day management and control. Our Parent causes our Operating Partnership to distribute such portion of its available cash as our Parent may in its discretion determine, in the manner provided in our Operating Partnership’s partnership agreement.

As circumstances warrant, our Parent may issue equity from time to time on an opportunistic basis, dependent upon market conditions and available pricing. Any proceeds from such equity issuances would generally be contributed to our Operating Partnership in exchange for additional equity interests in our Operating Partnership. Our Operating Partnership may use the proceeds to acquire additional properties, to fund development opportunities and for general working capital purposes, including potentially for the repurchase, redemption or retirement of outstanding debt or equity securities.

Our Parent and our Operating Partnership were parties to an ATM Equity OfferingSM Sales Agreement dated August 4, 2023 (the “2023 Sales Agreement”). Pursuant to the 2023 Sales Agreement, Digital Realty Trust, Inc. could issue and sell common stock having an aggregate offering price of up to $1.5 billion through various named agents from time to time. From January 1, 2024 through February 23, 2024, Digital Realty Trust, Inc. generated net proceeds of approximately $99 million from the issuance of approximately 0.6 million common shares under the 2023 Sales Agreement at an average price of $133.43 per share after payment of approximately $0.6 million of commissions to the agents. For the three months ended March 31, 2023, we had no sales under the ATM program.

​

The 2023 Sales Agreement was amended on February 23, 2024 (the “2024 Sales Agreement Amendment”). At the time of the amendment, $258.3 million remained unsold under the 2023 Sales Agreement. Pursuant to the 2024 Sales Agreement Amendment, Digital Realty Trust, Inc. can issue and sell common stock having an aggregate offering price of up to $2.0 billion through various named agents from time to time. As of March 31, 2024, $2.0 billion remained available for future sales under the 2024 Sales Agreement Amendment.

​

The sales of common stock made under the 2023 Sales Agreement will be made in “at the market” offerings as defined in Rule 415 of the Securities Act. Our Parent has used and intends to use the net proceeds from the program to temporarily repay borrowings under our Operating Partnership’s Global Revolving Credit Facilities, to acquire additional properties or businesses, to fund development opportunities and for working capital and other general corporate purposes, including potentially for the repayment of other debt or the repurchase, redemption or retirement of outstanding debt securities.

​

We believe our Operating Partnership’s sources of working capital, specifically its cash flow from operations, and funds available under its Global Revolving Credit Facility are adequate for it to make its distribution payments to our Parent and, in turn, for our Parent to make its dividend payments to its stockholders. However, we cannot assure you that our Operating Partnership’s sources of capital will continue to be available at all or in amounts sufficient to meet its needs, including making distribution payments to our Parent. The lack of availability of capital could adversely affect our Operating Partnership’s ability to pay its distributions to our Parent, which would in turn, adversely affect our Parent’s ability to pay cash dividends to its stockholders.

Future Uses of Cash — Parent

Our Parent may from time to time seek to retire, redeem or repurchase its equity or the debt securities of our Operating Partnership or its subsidiaries through cash purchases and/or exchanges for equity securities in open market purchases, privately negotiated transactions or otherwise. Such repurchases, redemptions or exchanges, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions or other factors. The amounts involved may be material.

​

Dividends and Distributions — Parent

Our Parent is required to distribute 90% of its taxable income (excluding capital gains) on an annual basis to continue to qualify as a REIT for U.S. federal income tax purposes. Our Parent intends to make, but is not contractually bound to make, regular quarterly distributions to its common stockholders from cash flow from our Operating Partnership’s operating activities. While historically our Parent has satisfied this distribution requirement by making cash distributions to its stockholders, it may choose to satisfy this requirement by making distributions of cash or other property. All such distributions are at the discretion of our Parent’s Board of Directors. Our Parent considers market factors and our Operating Partnership’s performance in addition to REIT requirements in determining distribution levels. Our Parent has distributed at least 100% of its taxable income annually since inception to minimize corporate level federal and state income taxes. Amounts accumulated for distribution to stockholders are invested primarily in interest-bearing accounts and short-term interest-bearing securities, in a manner consistent with our intention to maintain our Parent’s status as a REIT.

As a result of this distribution requirement, our Operating Partnership cannot rely on retained earnings to fund its ongoing operations to the same extent that other companies whose parent companies are not REITs can. Our Parent may need to continue to raise capital in the debt and equity markets to fund our Operating Partnership’s working capital needs, as well as potential developments at new or existing properties, acquisitions or investments in existing or newly created joint ventures. In addition, our Parent may be required to use borrowings under the Operating Partnership’s Global Revolving Credit Facility (which is guaranteed by our Parent), if necessary, to meet REIT distribution requirements and maintain our Parent’s REIT status.

Distributions out of our Parent’s current or accumulated earnings and profits are generally classified as ordinary income except to the extent that our Parent recognizes capital gains and declares a capital gains dividend, or that such amounts constitute “qualified dividend income” subject to a reduced rate of tax. Non-corporate stockholders, including individuals, generally may deduct up to 20% of dividends from a REIT, other than capital gain dividends and dividends treated as qualified dividend income, for taxable years beginning before January 1, 2026. Distributions in excess of our Parent’s current and accumulated earnings and profits, to the extent of a stockholder’s U.S. federal income tax basis in our Parent’s stock, are generally classified as a return of capital. Distributions in excess of our Parent’s current and accumulated earnings and profits and in excess of a stockholder’s U.S. federal income tax basis in our Parent’s stock are generally characterized as capital gain. Cash provided by operating activities has been generally sufficient to fund distributions on an annual basis. However, we may also need to utilize borrowings under the Global Revolving Credit Facility to fund distributions.

For additional information regarding dividends declared and paid by our Parent on its common and preferred stock for the three months ended March 31, 2024, see Note 10. “Equity and Capital” to our condensed consolidated financial statements contained herein.

Analysis of Liquidity and Capital Resources — Operating Partnership

As of March 31, 2024, we had $1,193.8 million of cash and cash equivalents, excluding $5.3 million of restricted cash. Restricted cash primarily consists of contractual capital expenditures plus other deposits. As circumstances warrant, our Operating Partnership may dispose of stabilized assets or enter into joint venture arrangements with institutional investors or strategic partners, on an opportunistic basis dependent upon market conditions. Our Operating Partnership may use the proceeds from such dispositions to acquire additional properties, to fund development opportunities and for general working capital purposes, including the repayment of indebtedness. Our liquidity requirements primarily consist of:

	●	operating expenses;

	●	development costs and other expenditures associated with our properties;

	●	distributions to our Parent to enable it to make dividend payments;

	●	distributions to unitholders of common limited partnership interests in Digital Realty Trust, L.P.;

	●	debt service; and

	●	potentially, acquisitions.

​

The Global Revolving Credit Facilities provide for borrowings up to $3.9 billion (including approximately $0.2 billion available to be drawn on the Yen revolving credit facility) based on currency commitments and foreign exchange rates as of March 31, 2024. The Global Revolving Credit Facility provides for borrowings in a variety of currencies and can be increased by an additional $750 million, subject to receipt of lender commitments and other conditions precedent. Both facilities mature on January 24, 2026, with two six-month extension options available.

These facilities also feature a sustainability-linked pricing component, with pricing subject to adjustment based on annual performance targets, further demonstrating our continued leadership and commitment to sustainable business practices.

The Global Revolving Credit Facility provides for borrowings in a variety of currencies and includes the ability to add additional currencies in the future. We have used and intend to use available borrowings under the Global Revolving Credit Facilities to acquire additional properties, fund development opportunities and for general working capital and other corporate purposes, including potentially for the repurchase, redemption or retirement of outstanding debt or equity securities. For additional information regarding our Global Revolving Credit Facility, see Note 8. “Debt of the Operating Partnership” in the Notes to our Condensed Consolidated Financial Statements.

Future Uses of Cash

Our properties require periodic investments of capital for customer-related capital expenditures and for general capital improvements. Depending upon customer demand, we expect to incur significant improvement costs to build out and develop additional capacity. At March 31, 2024, we had open commitments, related to construction contracts of approximately $2.0 billion, including amounts reimbursable of approximately $75.6 million.

We currently expect to incur approximately $1.4 billion to $1.9 billion of capital expenditures for our development programs during the remainder of 2024. This amount could go up or down, potentially materially, based on numerous factors, including changes in demand, leasing results and availability of debt or equity capital.

Development Projects

The costs we incur to develop our properties is a key component of our liquidity requirements. The following table summarizes our cumulative investments in current development projects as well as expected future investments in these projects as of the periods presented, excluding costs incurred or to be incurred by unconsolidated entities.

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Construction Projects in Progress	​	As of March 31, 2024								​	As of December 31, 2023
​	​	Current		​	Future		​	​		​	Current		​	Future		​	​	​
(in thousands)		Investment (1)			Investment (2)			Total Cost			Investment (3)			Investment (2)			Total Cost
Future Development Capacity (4)		​	2,161,311	​	​	562,481		​	2,723,792			2,222,062	​	​	337,681	​		2,559,743
Data Center Construction		​	2,032,674	​		2,111,105		​	4,143,779			2,116,335	​		2,231,747	​		4,348,082
Equipment Pool and Other Inventory (5)		​	184,706	​		—		​	184,706			203,821	​		—	​		203,821
Campus, Tenant Improvements and Other (6)		​	232,389	​		107,835		​	340,224			211,187	​		130,260	​		341,447
Consolidated Land Held and Development Construction in Progress		$	4,611,080	​	$	2,781,421	​	$	7,392,501		$	4,753,405	​	$	2,699,688	​	$	7,453,093

(1)	Represents cost incurred through March 31, 2024.

(2)	Represents estimated cost to complete scope of work pursuant to approved development budget.

(3)	Represents costs incurred through December 31, 2023.

(4)	Includes land and space held or actively under construction in preparation for future data center fit-out.

(5)	Represents long-lead equipment and materials required for timely deployment and delivery of data center fit-out.

(6)	Represents improvements in progress, which benefit space recently converted to our operating portfolio and is composed primarily of shared infrastructure projects and first-generation tenant improvements. Includes $3.0 million included in our condensed consolidated balance sheet related to fair value adjustments on Teraco portfolio projects that were partially constructed as of August 1, 2022.

​

Future development reflects cumulative cost spent pending future development and includes ongoing improvements to building infrastructure in preparation for future data center fit-out. We expect to deliver the space within 12 months; however, lease commencement dates may significantly impact final delivery schedules.

Capital Expenditures (Cash Basis)

The table below summarizes our capital expenditure activity for the three months ended March 31, 2024 and 2023 (in thousands):

​

​	​	​	​	​	​	​
​	​	Three Months Ended March 31,
​		2024			2023
Development projects	​	$	549,522	​	$	644,910
Enhancement and improvements	​		7,738	​		2,796
Recurring capital expenditures	​		47,676	​		40,465
Total capital expenditures (excluding indirect costs)	​	$	604,936	​	$	688,171

​

Our development capital expenditures are generally funded by our available cash and equity and debt capital.

Indirect costs, including interest, capitalized in the three months ended March 31, 2024 and 2023 were $54.4 million and $50.5 million, respectively. Capitalized interest comprised approximately $28.5 million and $26.8 million of the total indirect costs capitalized for the three months ended March 31, 2024 and 2023, respectively. Capitalized interest in the three months ended March 31, 2024 increased, compared to the same period in 2023, due to an increase in qualifying activities and higher interest rates.

Excluding capitalized interest, indirect costs in the three months ended March 31, 2024 increased compared to the same period in 2023 due primarily to capitalized amounts relating to compensation expense of employees directly engaged in construction activities. See “Future Uses of Cash” for a discussion of the amount of capital expenditures we expect to incur during the year ending December 31, 2024.

Consistent with our growth strategy, we actively pursue potential acquisition opportunities, with due diligence and negotiations often at different stages at different times. The dollar value of acquisitions for the year ending

December 31, 2024 will depend upon numerous factors, including customer demand, leasing results, availability of debt or equity capital and acquisition opportunities. Further, the growing acceptance by private institutional investors of the data center asset class has generally pushed capitalization rates lower, as such private investors may often have lower return expectations than us. As a result, we anticipate near-term single asset acquisitions activity to comprise a smaller percentage of our growth while this market dynamic persists.

We may from time to time seek to retire or repurchase our outstanding debt or the equity of our Parent through cash purchases and/or exchanges for equity securities of our Parent in open market purchases, privately negotiated transactions or otherwise. Such repurchases or exchanges, if any, will depend upon prevailing market conditions, our liquidity requirements, contractual restrictions or other factors. The amounts involved may be material.

Sources of Cash

We expect to meet our short-term and long-term liquidity requirements, including payment of scheduled debt maturities and funding of acquisitions and non-recurring capital improvements, with net cash from operations, future long-term secured and unsecured indebtedness and the issuance of equity and debt securities and the proceeds of equity issuances by our Parent. We also may fund future short-term and long-term liquidity requirements, including acquisitions and non-recurring capital improvements, using our Global Revolving Credit Facilities pending permanent financing. As of May 1, 2024, we had approximately $2.0 billion of borrowings available under our Global Revolving Credit Facilities.

On July 13, 2023, we formed a joint venture with GI Partners, and GI Partners acquired a 65% interest in two stabilized hyperscale data center buildings in the Chicago metro area that we contributed. We retained a 35% interest in the joint venture. As a result of transferring control, we derecognized the data centers. In addition, GI Partners had a call option to increase their ownership interest in the joint venture from 65% to 80%. The call option top-up election notice was delivered to the Company on December 21, 2023. On January 12, 2024, GI Partners made an additional cash capital contribution in the amount of $68 million, resulting in an additional 15% ownership in the joint venture. Currently, GI Partners has an 80% interest in the joint venture, and we have retained a 20% interest.

We also granted GI Partners an option to purchase an interest in the third facility on the same hyperscale data center campus in Chicago. On April 16, 2024, we expanded our existing joint venture with GI Partners with the sale to GI Partners of a 75% interest in this third facility. We received approximately $385 million of gross proceeds from the contribution of our data center to the joint venture and the associated financing and retained a 25% interest in the joint venture.

On January 11, 2024, we formed a joint venture with Blackstone Inc. to develop four hyperscale data center campuses across Frankfurt, Paris and Northern Virginia. The campuses are planned to support the construction of 10 data centers with approximately 500 megawatts of potential IT load capacity. The first phase of the joint venture closed on hyperscale data center campuses in Paris and Northern Virginia, while the second phase is scheduled to close later in 2024, upon obtaining the required approvals. We received approximately $231 million of net proceeds from the contribution of our data centers to the first phase of the joint venture and retained a 20% interest in the joint venture. Each partner will fund its pro rata share of the remaining $3.0 billion estimated development cost for the first phase of the joint venture, which is slated for completion in various stages, contingent on customer demand, which began in the first quarter of 2024.

In January 2024, we closed on the sale of our interest in four data centers to Brookfield Infrastructure Partners L.P., or Brookfield, for approximately $271 million. Two of the data centers were consolidated by us; while two of the data centers were owned by Digital Core REIT. The sale was completed subsequent to Brookfield’s November 2023 acquisition of one of our tenants, Cyxtera Technologies. The acquisition was part of Cyxtera’s plan of reorganization under its Chapter 11 bankruptcy proceedings. In conjunction with the sale, we bought out Cyxtera’s leases in three data centers located in Singapore and Frankfurt for approximately $57 million. In addition, Brookfield assumed the leases on three facilities previously leased to Cyxtera and amended the leases on three additional data centers in North America, accelerating the expiration date to September 2024. As a result of the sale, we recognized a total gain on disposition of approximately $203.1 million, of which $194.2 million is included within Gain on disposition of properties, net and $8.9 million is included within Equity in (loss) earnings of unconsolidated entities on our condensed consolidated income statements.

On March 1, 2024, we formed a joint venture with Mitsubishi Corporation, or Mitsubishi, to support the development of two data centers in the Dallas metro area. The facilities were 100% pre-leased prior to construction. We contributed the two data center buildings at a contribution value of approximately $261 million. We received approximately $153 million of gross proceeds from the contribution of our data centers to the joint venture and retained a 35% interest in the joint venture. Mitsubishi contributed such cash in exchange for a 65% interest in the joint venture. Each partner will fund its pro rata share of the remaining $140 million estimated development cost for the first phase of the project, which is slated for completion in late 2024.

Distributions

All distributions on our units are at the discretion of our Parent’s Board of Directors. For additional information regarding distributions paid on our common and preferred units for the three months ended March 31, 2024, see Note 10. “Equity and Capital” to our condensed consolidated financial statements contained herein.

Outstanding Consolidated Indebtedness

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The table below summarizes our outstanding debt as of March 31, 2024 (in millions):

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​	​	​	​	​
Debt Summary:		​		​
Fixed rate	​	$	11,869	​
Variable rate debt subject to interest rate swaps	​		2,836	​
Total fixed rate debt (including interest rate swaps)	​		14,705	​
Variable rate—unhedged	​		2,420	​
Total	​	$	17,125	​
Percent of Total Debt:	​			​
Fixed rate (including swapped debt)	​		85.9	%
Variable rate	​		14.1	%
Total	​		100.0	%
​	​	​	​	​
Effective Interest Rate as of March 31, 2024	​			​
Fixed rate (including hedged variable rate debt)	​		2.58	%
Variable rate	​		4.63	%
Effective interest rate	​		2.58	%

​

Our ratio of debt to total enterprise value was approximately 27% (based on the closing price of Digital Realty Trust, Inc.’s common stock on March 31, 2024 of $144.04). For this purpose, our total enterprise value is defined as the sum of the market value of Digital Realty Trust, Inc.’s outstanding common stock (which may decrease, thereby increasing our debt to total enterprise value ratio), plus the liquidation value of Digital Realty Trust, Inc.’s preferred stock, plus the aggregate value of Digital Realty Trust, L.P. units not held by Digital Realty Trust, Inc. (with the per unit value equal to the market value of one share of Digital Realty Trust, Inc.’s common stock and excluding long-term incentive units, Class C units and Class D units), plus the book value of our total consolidated indebtedness.

The variable rate debt shown above bears interest based on various one-month SOFR, EURIBOR, BBR, HIBOR, TIBOR, SARON and Base CD Rate rates, depending on the respective agreement governing the debt, including our Global Revolving Credit Facilities and unsecured term loans. As of March 31, 2024, our debt had a weighted average term to initial maturity of approximately 3.9 years (or approximately 4.1 years assuming exercise of extension options).

As of March 31, 2024, our pro-rata share of secured debt of unconsolidated entities was approximately $1,382.1 million.

Cash Flows

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The following summary discussion of our cash flows is based on the condensed consolidated statements of cash flows and is not meant to be an all-inclusive discussion of the changes in our cash flows for the periods presented below.

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Comparison of Three Months Ended March 31, 2024 to Three Months Ended March 31, 2023

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The following table shows cash flows and ending cash, cash equivalents and restricted cash balances for the respective periods (in thousands).

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​	​	​	​	​	​	​	​	​
​	Three Months Ended March 31,
​	2024			2023			Change
Net cash provided by operating activities	$	352,275	​	$	349,726	​	$	2,549
Net cash provided by (used in) investing activities		6,619	​		(749,007)	​		755,626
Net cash provided by (used in) financing activities		(809,714)	​		390,908	​		(1,200,622)
Net (decrease) in cash, cash equivalents and restricted cash	$	(450,820)	​	$	(8,373)	​	$	(442,447)

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The changes in the activities that comprise the decrease in net cash used in investing activities for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023 consisted of the following amounts (in thousands).

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​	​	​
​	Change
​	2024 vs 2023
Increase in net cash used in business combinations / asset acquisitions	$	(23,580)
Decrease in cash used for improvements to investments in real estate	​	79,362
Increase in cash contributed to investments in unconsolidated entities, net	​	(88,762)
Increase in net cash provided by proceeds from sale of real estate	​	814,101
Other changes		(25,495)
Decrease in net cash used in investing activities	$	755,626

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The decrease in net cash used in investing activities was primarily due to:

​

	(i)	an increase in spend due to the acquisition in 2024 of land parcels in Paris;

	(ii)	a decrease in spend on development projects of approximately $79 million;

	(iii)	an increase in cash contributed to various investments in unconsolidated entities;

	(iv)	an increase in cash provided by the contribution of data centers to our joint ventures with Blackstone and Mitsubishi, for gross proceeds of approximately $231 million and $153 million, respectively; and

	(v)	the sale of four data centers to Brookfield for gross proceeds of approximately $271 million, the sale of a land parcel in Sydney for gross proceeds of approximately $68 million and the sale of an easement to a local power provider in Northern Virginia for gross proceeds of approximately $92 million.

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​

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The changes in the activities that comprise the increase in net cash used in financing activities for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023 consisted of the following amounts (in thousands).

​

​	​	​
​	Change
​	2024 vs 2023
Decrease in cash provided by short-term borrowings	$	(209,306)
Decrease in cash provided by proceeds from secured / unsecured debt	​	(785,394)
Increase in cash used for repayment on secured / unsecured debt	​	(236,919)
Increase in cash provided by proceeds from issuance of common stock, net of costs	​	98,047
Increase in cash used for dividend and distribution payments		(50,549)
Other changes, net	​	(16,501)
Increase in net cash used in financing activities	$	(1,200,622)

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The increase in net cash used in financing activities was primarily due to:

​

	(i)	a decrease in cash proceeds from short-term borrowings;

	(ii)	a decrease in cash provided by proceeds from secured / unsecured debt due to the closing of the U.S. term loan facility in January 2023;

	(iii)	an increase in cash used for repayment of $240 million on the U.S. term loan facility;

	(iv)	an increase in cash provided by proceeds from the issuance of approximately 0.6 million shares of common stock, net of costs, of approximately $99 million under our ATM program; and

	(v)	an increase in dividend and distribution payments due to an increased number of common shares and common units outstanding.

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Noncontrolling Interests in Operating Partnership

Noncontrolling interests relate to the common units in Digital Realty Trust, L.P. that are not owned by Digital Realty Trust, Inc., which, as of March 31, 2024, amounted to 2.1% of Digital Realty Trust, L.P. common units. Historically, Digital Realty Trust, L.P. has issued common units to third party sellers in connection with our acquisition of real estate interests from such third parties.

Limited partners have the right to require Digital Realty Trust, L.P. to redeem part or all of their common units for cash based on the fair market value of an equivalent number of shares of Digital Realty Trust, Inc. common stock at the time of redemption. Alternatively, Digital Realty Trust, Inc. may elect to acquire those common units in exchange for shares of its common stock on a one-for-one basis, subject to adjustment in the event of stock splits, stock dividends, issuance of stock rights, specified extraordinary distributions and similar events. As of March 31, 2024, approximately 0.2 million common units and incentive units of Digital Realty Trust, L.P. are classified within equity, except for certain common units issued to certain former DuPont Fabros Technology, L.P. unitholders in the Company’s acquisition of DuPont Fabros Technology, Inc., which are subject to certain restrictions and, accordingly, are not presented as permanent equity in the condensed consolidated balance sheet.

Inflation

Many of our leases provide for separate real estate tax and operating expense escalations. In addition, many of the leases provide for fixed base rent increases. We believe that inflationary increases may be at least partially offset by the contractual rent increases and expense escalations described above. A period of inflation, however, could cause an increase in the cost of our variable-rate borrowings, including borrowings under our Global Revolving Credit Facilities, borrowings under our Euro Term Loan Facilities and USD Term Loan Facility and issuances of unsecured senior notes.

Funds from Operations

We calculate funds from operations, or FFO, in accordance with the standards established by the National Association of Real Estate Investment Trusts (Nareit) in the Nareit Funds From Operations White Paper - 2018 Restatement. FFO is a non-GAAP financial measure and represents net income (loss) (computed in accordance with GAAP), excluding gain (loss) from the disposition of real estate assets, provision for impairment, real estate related depreciation and amortization (excluding amortization of deferred financing costs), our share of unconsolidated JV real estate related depreciation & amortization, net income attributable to noncontrolling interests in operating partnership and, depreciation related to noncontrolling interests. Management uses FFO as a supplemental performance measure because, in excluding real estate related depreciation and amortization and gains and losses from property dispositions and after adjustments for unconsolidated partnerships and joint ventures, it provides a performance measure that, when compared year over year, captures trends in occupancy rates, rental rates and operating costs. We also believe that, as a widely recognized measure of the performance of REITs, FFO will be used by investors as a basis to compare our operating performance with that of other REITs. However, because FFO excludes depreciation and amortization and captures neither the changes in the value of our data centers that result from use or market conditions, nor the level of capital expenditures and capitalized leasing commissions necessary to maintain the operating performance of our data centers, all of which have real economic effect and could materially impact our financial condition and results from operations, the utility of FFO as a measure of our performance is limited. Other REITs may not calculate FFO in accordance with the Nareit definition and, accordingly, our FFO may not be comparable to other REITs’ FFO. FFO should be considered only as a supplement to net income computed in accordance with GAAP as a measure of our performance.

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Reconciliation of Net Income Available to Common Stockholders to Funds From Operations (FFO)

(unaudited, in thousands, except per share and unit data)

​

​	​	​	​	​	​	​	​
​		Three Months Ended March 31,					​
​		2024			2023		​
GAAP Net Income Available to Common Stockholders	​	$	271,327	​	$	58,545	​
Non-GAAP Adjustments:	​			​			​
Net income attributable to non-controlling interests in operating partnership	​		6,200	​		1,500	​
Real estate related depreciation and amortization (1)	​		420,591	​		412,192	​
Depreciation related to non-controlling interests	​	​	(8,017)	​	​	(13,388)	​
Unconsolidated JV real estate related depreciation and amortization	​	​	47,877	​	​	33,719	​
Gain from the disposition of real estate assets	​	​	(286,704)	​	​	(7,825)	​
FFO available to common stockholders and unitholders (2)	​	$	451,273	​	$	484,742	​
Basic FFO per share and unit	​	$	1.42	​	$	1.63	​
Diluted FFO per share and unit (2)(3)	​	$	1.41	​	$	1.60	​
Weighted average common stock and units outstanding	​			​			​
Basic	​		318,469	​		297,180	​
Diluted (2)(3)	​		326,975	​		309,026	​
​	​	​	​	​	​	​	​
(1) Real estate related depreciation and amortization was computed as follows:
​	​	​	​	​	​	​	​
Depreciation and amortization per income statement		$	431,102		$	421,198	​
Non-real estate depreciation		​	(10,511)	​	​	(9,006)	​
​	​	$	420,591	​	$	412,192	​

(2)

As part of the acquisition of Teraco in 2022, certain of Teraco's minority indirect shareholders have the right to put their shares in an upstream parent company of Teraco to the Company in exchange for cash or the equivalent value of shares of the Company common stock, or a combination thereof. U.S. GAAP requires the Company to assume the put right is settled in shares for purposes of calculating diluted EPS. This same approach was utilized to calculate FFO per share. When calculating diluted FFO, Teraco related minority interest is added back to the FFO numerator as the denominator assumes all shares have been put back to the Company. The Teraco noncontrolling share of FFO was $9,768 and $11,069 for the three months ended March 31, 2024 and 2023, respectively.

(3)	For all periods presented, we have excluded the effect of the series J, series K and series L preferred stock, as applicable, that may be converted into common stock upon the occurrence of specified change in control transactions as described in the articles supplementary governing the series J, series K and series L preferred stock, as applicable, as they would be anti-dilutive.

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​	​	​	​		​		​
​	Three Months Ended March 31,
​	2024				2023
Weighted average common stock and units outstanding		318,469					297,180
Add: Effect of dilutive securities		8,506					11,846
Weighted average common stock and units outstanding—diluted	​	326,975			​		309,026

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