Digital Realty's Q2 2026 revenue rose 28.9% to $1.92B, helped by a $201M one-time promote fee. GAAP EPS fell to $1.21 from $2.94 against a year-earlier $932M sale gain, while core FFO per share excluding the promote rose 13.9% to $2.13 and full-year guidance was raised.
Revenue
$1.9B
+28.9% YoY
Net income
$443M
-56.6% YoY
Diluted EPS
$1.21
-58.8% YoY
What happened
Digital Realty owns and runs data centers: the buildings where cloud providers, big tech companies and ordinary businesses rent space, power and cooling for their servers. Total revenue in the second quarter of 2026 (April–June) was $1.924 billion, up 28.9% from a year earlier. About $201 million of that was a one-time "promote", a performance fee Digital Realty earned when it bought out a joint-venture partner (explained below). Without it, revenue was about $1.72 billion, up roughly 15%, which is closer to the underlying growth rate. Rent and services revenue alone grew 14.9%.
GAAP net income available to common stockholders (profit under standard accounting rules, after paying preferred shareholders) fell 57% to $443 million, or $1.21 per diluted share against $2.94. That fall is misleading. Q2 2025 included a $932 million gain on property sales, and this quarter's gain was only $8 million. Take that gain out and this quarter's operating results are well ahead of last year's.
Why a REIT is judged on core FFO, not net income
Digital Realty is a REIT (real estate investment trust): a company that owns property, pays little corporate tax and must pay out most of its taxable income as dividends. Standard accounting treats buildings as if they lose value every year and charges that as depreciation, which was $507 million this quarter. For well-located data centers, that often isn't what happens economically. GAAP net income also swings with one-off property sales, as it did here.
To strip those effects out, REITs report FFO (funds from operations): net income with real-estate depreciation added back and property-sale gains removed. Core FFO also removes deal costs and other items the company treats as non-recurring. It is the closest thing a REIT has to "recurring earnings per share", and it is what management's guidance is based on.
Per diluted share
Q2 2026
Q2 2025
YoY Change
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FFO per share is from the 10-Q. Core FFO figures are from the company's Q2 earnings release and financial supplement (8-K Exhibit 99.1).
The last line is the one to watch. Core FFO excluding the promote rose 13.9%, even though the average diluted share count was about 4.6% higher than a year earlier, because the company has been selling new stock (see Financing).
Key figures
Metric
Q2 2026
Q2 2025
YoY Change
Total operating revenue
$1,924.0M
$1,493.2M
+28.9%
Rental and other services revenue
$1,674.6M
$1,457.4M
+14.9%
Fee income and other (incl. $201M promote)
$249.4M
$35.8M
+596.9%
Net income available to common stockholders
$443.1M
$1,022.0M
-56.6%
Diluted EPS
$1.21
$2.94
-58.8%
Gain on disposition of properties
$8.0M
$931.8M
-99.1%
Core FFO per share (excl. net promote)*
$2.13
$1.87
+13.9%
Portfolio occupancy, end of quarter*
90.2%
89.7%
+0.5 pts
Same-capital occupancy*
92.5%
91.5%
+1.0 pt
*From the Q2 2026 earnings release and financial supplement.
Year to date (six months):
Revenue: $3,559.2M (+22.7%).
Net income available to common stockholders: $612.2M, against $1,121.8M (-45.4%).
Diluted EPS: $1.68, against $3.21.
Core FFO excluding promote: $4.17 per share, against $3.64 (+14.6%, per the supplement).
Operating cash flow: $1,595.2M, against $1,040.3M.
Where the revenue growth came from
The 10-Q splits rent and services revenue into two groups:
Stabilized buildings (mature, mostly leased): +$95.8M (+8.2%). The drivers were new leases, renewals and higher utility reimbursements (customers pay back the power bill) "across all regions". A stronger euro, British pound and Singapore dollar also helped, because rent earned in those currencies converts into more dollars.
Non-stabilized buildings (new or still filling up): +$121.4M (+43.1%). Newly completed buildings added $145.1M, with the biggest contributions from Northern Virginia, Frankfurt, Paris and Johannesburg. Properties sold or moved into joint ventures since mid-2025 took away $23.7M.
Part of this growth is passed-through power costs rather than profit. Utility expense rose 16.8% to $396.5M. Data centers use large amounts of electricity, and customers largely reimburse it.
Two one-off items boosted the quarter
The $201M promote (fee income). On June 30, Digital Realty bought out its partner's 64% stake in two joint ventures. The ventures own three fully leased Northern Virginia data centers with 288 MW of capacity (MW, or megawatts, measures how much power a building can supply to servers).
Price: about $3.5B, paid as $1.2B in cash plus 12.3 million new Digital Realty shares. Digital Realty also took on a $726M construction loan.
Why a fee: the venture had beaten its return targets, which triggered a $201M incentive fee for Digital Realty, less $14M paid to employees under its carried-interest plan.
Value: the release puts the gross value of the assets at about $7.8B, with an expected stabilized cap rate (yearly operating income divided by value) above 6.5%. The buildings are expected to be fully stabilized in the first half of 2027 and the first half of 2028.
Singapore insurance settlement. Final proceeds for a September 2024 incident at a Singapore data center added $112.8M to other income, per the 10-Q. Income tax expense rose $20.8M, mainly because of tax on this settlement. The release says the settlement was $94M after tax, and only about $27M of it (the recovery for lost revenue) was counted in core FFO.
Neither item will recur. That is why management excludes the promote from its main per-share measure.
Leasing: demand, AI and pricing power
Bookings (new leases signed; figures from the earnings release): new leases worth $307M a year in rent at 100% share, or $208M at Digital Realty's share.
$88M came from small deployments of 0–1 MW and $20M from interconnection (fees for direct cable links between customers in the same building). This was the first quarter those two categories together passed $100M.
Large (>1 MW) "hyperscale" deals, which are mostly big cloud and tech tenants, added about $100M.
July: the company signed two more hyperscale leases worth $410M a year in rent at 100% share, or $205M at its share.
Backlog: a record $1.9B a year of rent at 100% share ($1.4B at Digital Realty's share) was signed but not yet being paid. New leases signed in Q2 were due to start paying about nine months after signing on average. This is revenue already under contract for coming quarters.
AI: neither the 10-Q nor the release breaks out AI-related revenue. The supplement's customer list shows a "Leading AI Chip Maker" as the ninth-largest customer, at 1.6% of rent with 13.7 years left on its leases on average. Oracle is the second-largest customer, at 10.0%.
Renewal pricing is the standout. Customers who renewed in Q2 agreed to rents 25.4% higher on a cash basis and 32.0% higher on a GAAP basis than on their expiring leases, according to the release. The 10-Q's six-month table shows where most of that came from:
Large (>1 MW) renewals rose from $150 to $248 of cash rent per kilowatt, about +65%.
Small (0–1 MW) renewals rose from $302 to $318, about +5%.
Our read: older hyperscale leases were signed when capacity was cheaper, and they are now being repriced sharply upward as they expire.
Occupancy
Portfolio occupancy was 90.2%, against 89.7% a year earlier. Same-capital occupancy, which tracks a like-for-like set of mature buildings, was 92.5% against 91.5% (both from the supplement).
The 10-Q's regional split for consolidated buildings shows the gains were not uniform:
Americas: 95.2%, up from 93.6% at year-end 2025.
APAC: 85.9%, up from 84.2%.
EMEA: 81.9%, down from 83.8%.
Development pipeline and capital spending
1,402 MW under construction, up about 82% since December 2025. 54% of it is already pre-leased. The company has over 7 GW of land and power for future building (10-Q).
Land: in April the company bought about 1,440 acres near Kansas City for $482M, with land for up to 2 GW of utility power per the release. It also bought land in Atlanta and Marseille and two data centers in Malaysia.
Construction spending (development capex): $1,477.1M in the first half, against $1,251.8M a year earlier. At quarter-end the company had $4.1B of open construction commitments. It expects to spend $2.8–3.3B more in the rest of 2026, and it raised full-year development capex guidance to $4.25–4.75B (from $3.5–4.0B in April).
Joint ventures and fund management
Digital Realty increasingly builds with outside investors' money:
Fund contribution: in May it moved two development projects into its Digital Realty DC Partners NA Fund for $447M. That returned cash for new building and produced an $8M gain.
Guidance: its target for asset sales and joint-venture capital this year was raised to $1.0–1.5B.
Columbia Capital: the CEO also cited a pending deal to acquire Columbia Capital, a digital-infrastructure investment firm (release).
The June promote shows the other side of this model. When a partnership does well, Digital Realty earns fees on top of its own share of the returns.
Financing, leverage and the dividend
Debt: $18.6B in total. Net debt-to-adjusted EBITDA fell to 4.7x from 5.1x a year ago. This ratio compares debt with a year of operating cash earnings before interest, tax and depreciation, and it is below the company's long-run target of about 5.5x. Fixed-charge coverage was 5.2x. 93.6% of debt is fixed-rate or swapped to a fixed rate, and the effective interest rate is 2.99% (10-Q). Interest expense rose only $4.6M, partly because more interest was capitalized into construction projects (added to their cost instead of expensed).
New shares: construction is funded largely by issuing stock. Year to date the company sold 13.5M shares for about $2.5B (average $184.94) through its at-the-market program, which sells shares gradually into the market. In May it set up a new $7.5B program. Common shares outstanding were 370.0M, against 340.4M a year earlier (+8.7%), including the 12.3M issued for the Virginia buyout. This dilution is why per-share growth trails total growth.
Liquidity: $1.86B of cash, plus about $3.6B available on its credit lines as of July 29.
Dividend: $1.22 per quarter ($4.88 a year), unchanged. The reported core FFO payout ratio was 46.0%, pulled down by the promote. Measured against core FFO excluding promote ($2.13), the dividend takes about 57% of recurring earnings (our calculation). A year ago the ratio was 65.2%. That leaves room to keep funding construction.
Takeaway: The 57% fall in GAAP profit says nothing about the business. It reflects last year's $932M property-sale gain. The number that matters, core FFO per share excluding the one-time promote, rose 13.9% even with 8.7% more shares outstanding. Renewal rents up 25% in cash terms and a record $1.4B own-share backlog show that demand for data-center space is still outrunning supply.
Outlook
Management raised full-year 2026 guidance for the second time this year (earnings release):
2026 guidance item
February
April
July
Core FFO/share (excl. net promote)
$7.90–$8.00
$8.00–$8.10
$8.15–$8.20
Total revenue (excl. promote)
$6.60–$6.70B
$6.65–$6.75B
$6.85–$6.95B
Renewal rent increase, cash basis
6.0–8.0%
6.5–8.5%
9.0–11.0%
Development capex (net)
$3.25–3.75B
$3.5–4.0B
$4.25–4.75B
Net income per diluted share
$2.55–$2.65
$2.65–$2.75
$3.10–$3.15
The first half already produced $4.17 of core FFO per share excluding promote. To reach the $8.175 midpoint, the second half only needs about $4.00, or roughly $2.00 a quarter. That is below both Q1 ($2.04) and Q2 ($2.13). Part of the gap has an explanation: Q2 included about $27M of insurance business-interruption recovery in core FFO, and that will not repeat. Even so, the guidance leaves room to spare unless second-half costs or dilution from new shares rise noticeably.
Our view: the $1.4B own-share backlog, the July hyperscale signings and continued renewal repricing make growth into 2027 fairly visible. The risks are execution and funding. The company is spending more than $4B a year on construction and paying for a large share of it by issuing stock. Per-share growth therefore depends on new buildings reaching the 10%+ stabilized yields management targets. EMEA occupancy, which fell this year, and whether the backlog starts paying rent on schedule are the two things to watch in Q3.