 Investor Meetings November 2006 Foundation for the Digital World Exhibit 99.1 |
| Investor Meetings November 2006 Foundation for the Digital World Exhibit 99.1 |
 1 Forward Looking Statements The information included in this presentation contains forward-looking statements.
Such statements are based on management’s beliefs and assumptions made
based on information currently available to management. Such forward looking statements include statements and projections related to growth in
the e- commerce market, the digital communication and distribution
market, and the data storage market, the market effects of regulatory
requirements, the disaster recovery market, the replacement cost of our assets, redevelopment costs in our buildings, and time periods to stabilization of our
development space, the effect new leases will have on our rental revenues
and results of operations, lease expiration rates, the effect of leasing and acquisition on our FFO, and annualized GAAP rent. Such statements are subject to risks,
uncertainties and assumptions and are not guarantees of future performance and may be affected by known and unknown risks, trends, uncertainties and factors that are beyond our control that may cause actual
results to vary materially. Some of the risks and uncertainties include,
among others, the following: adverse economic or real estate developments
in our markets or the technology industry; general and local economic conditions; defaults on or non-renewal of leases by tenants; difficulty acquiring or operating properties in
foreign jurisdictions, changes in foreign laws and regulations, including
those related to taxation and real estate ownership and operation, increased interest rates and operating costs; inability to acquire new properties
(including those we are in the process of acquiring); our failure to obtain
necessary outside financing; increased construction costs; decreased rental
rates or increased vacancy rates; difficulties in identifying properties to acquire and completing acquisitions; our failure to successfully operate acquired properties and operations;
our failure to maintain our status as a REIT; possible adverse changes to
tax law; environmental uncertainties and risks related to natural disasters; environmental or contamination issues at our buildings; financial market
fluctuations; changes in foreign currency exchange rates; and changes in
real estate and zoning laws and increases in real property tax rates.
The risks described above are not exhaustive, and additional factors could
adversely affect our business and financial performance, including those
discussed in our annual report on Form 10-K for the year ended December 31, 2005 and subsequent filings with the Securities and Exchange Commission. We expressly disclaim any responsibility to update forward-looking statements, whether as a
result of new information, future events or otherwise.
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 2 Digital Realty Trust overview Tenants consist of leading global companies diversified across various industries Own 58 properties comprising 11.3 million rentable sq ft which includes 1.5 million sq ft of additional space held for redevelopment (1) Portfolio occupancy of 94.7% and “same store” occupancy of 96.4% (2) Assets strategically located in 25 top technology markets throughout North America and Europe DLR is a leading institutional owner focused on mission critical technology properties throughout North America and Europe 350 East Cermak Road Chicago, IL (1) Includes property acquisitions and one property under contract in Paris, France as
of November 6, 2006. (2) Occupancy is as of September 30, 2006 net of
redevelopment space. |
 3 DLR Investment Highlights Specialized focus in dynamic and growing industries High quality portfolio that is difficult to replicate Proven track record of creating shareholder value Conservative and flexible capital structure Uniquely positioned as both a value and growth REIT 2323 Bryan Street Dallas, TX |
 4 DLR properties feature advanced technical systems Power backup/redundancy Power management/conversion Precision air cooling/handling Systems and security controls Between $500 and $1,000 psf typically invested in DLR buildings, creating a barrier to exit for tenants and discouraging speculative new supply |
 5 DLR Presence in 25 Top Markets Boston Boston Los Angeles Dallas Chicago NY Metro DLR Regional Office DLR Market Note: Reflects all owned assets and one property under contract in Paris, France as of November 6, 2006. Charlotte St. Paul Philadelphia Phoenix Denver Sacramento Geneva Dublin Austin Toronto Silicon Valley Northern Virginia Atlanta Miami Boston Amsterdam Houston Paris San Francisco London Seattle # of Properties # of Buildings Total Rentable Square Feet Domestic 52 69 10,640,395 International 6 8 662,626 Total 58 77 11,303,021 |
 6 DLR is unique in its focus on technology properties Financial Corporate Communications Internet Enterprise Datacenters (40% (1) ) Internet Gateways (43% (1) ) • Storage/server intensive buildings • Provide a secure 24 x 7 environment for the storage and processing of mission-critical electronic information • Used to house the primary IT operations of leading companies, transaction processing and disaster recovery purposes • Internet and telecom network intensive buildings • Serve as the hub for Internet and data communications within and between major metropolitan areas • Market-dominant position in their respective MSAs • Frequently serve as a super-regional connection point with multiple anchor tenants (1) Calculated based on gross annualized rents using in place leases as of
September 30, 2006. Technology |
 7 Strong trends drive sustained demand for DLR space Other Growth Drivers Increased federal regulatory and legislative requirements for business continuity and records retention Disaster Recovery initiatives prioritized as a result of Hurricanes Katrina and Rita HIPAA patient records security and retention regulations Significant growth in online advertising; up 30% in 2005 to $12.5 billion (4) (1) (2) (3) Primary Drivers – Estimated Annual Growth Rates (1) Forrester Research estimate of US online sales growth from 2005-2010 (2) IDC estimate of US VOIP subscriber growth from 2005 to 2009 (3) Wall Street Journal estimate of corporate data storage capacity growth (4) PriceWaterhouseCoopers 14% 73% 60% 20 40 60 80 E-Commerce Digital Communication & Distribution Data Storage 100% 0% |
 8 0% 10% 20% 30% 40% 50% 60% 70% 80% Q1'02 Q3'02 Q1'03 Q3'03 Q1'04 Q3'04 Q1'05 Q3'05 Q1'06 Q3'06 $0 $100 $200 $300 $400 $500 $600 Avg Utilization Rate (%) Rent psf Total Rent psf Utilized Source: Estimated based on reported cabinet (available and billing), square feet and revenue
data from Equinix and Savvis as per press releases, SEC filings, research reports and internal DLR estimates as of September 30, 2006. Assumes 35 sq ft per
cabinet throughout period if square feet not reported. Equinix
and Savvis, two leading managed service providers that “resell” space leased directly from DLR, are experiencing strong growth in revenues and utilization
Bill rates and utilization rates are escalating Revenue PSF Utilization Rate Revenue PSF (Utilized) $518 psf Revenue PSF (Total) $148 psf Utilization Rate 29% $530psf $337psf 67% |
 9 DLR offers sustained growth Acquisitions Leasing of Turn Key Datacenter Space Redevelopment Portfolio DLR growth is derived from three sources |
 10 Proven Track Record: Strong Acquisition Activity Since its IPO, DLR has more than doubled its total assets through property acquisitions Total Undepreciated Assets ($000) $847.2 $1,044.3 $1,137.4 $1,413.4 $1,508.5 $1,593.6 $1,648.2 $1,794.4 $1,996.1 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 $1,800 $2,000 9/30/2004 12/31/2004 3/31/2005 6/30/2005 9/30/2005 12/31/2005 3/31/2006 6/30/2006 9/30/2006 |
 11 2005 & YTD 2006 Acquisitions (1) Net rentable square feet figures excludes space held for redevelopment. (2) Savvis Portfolio includes 2401 & 2403 Walsh Street, 4650 & 4700 Old Ironsides
Drive and 200 North Nash Street. (3) Charlotte Portfolio includes 113 & 125 North Meyers and 731 East Trade Street. (4) Estimated occupancy based on information provided by the seller. (5) AboveNet Portfolio Includes 1807 Michael Faraday Court, 8100 Boone Boulevard (VA) and 111 Eighth
Street (NY) (6) DLR has a 49% interest in property (7) Converted from EUR to USD using a 1:1.27 exchange rate at September 30, 2006 DLR has acquired approximately $968M in new properties Purchase Total Rentable Net Rentable Redevelopment Occupancy Property Location Price (M) Sq. Ft. Sq Ft (1) Sq Ft (Net of Redev) 833 Chestnut East Philadelphia 654,758 535,098 119,660 76% 1125 Energy Park Drive St. Paul 112,827 112,827 - 100% 350 East Cermak Road Chicago 1,133,739 870,531 263,208 90% 8534 Concord Center Drive Denver 82,229 82,229 - 100% Savvis Portfolio (2) Santa Clara & Los Angeles 560,000 560,000 - 100% 600-780 South Federal Chicago 161,547 161,547 - 87% Paul van Vlissingenstraat 16 Amsterdam 112,472 77,472 35,000 59% Charlotte Portfolio (3) Charlotte 95,499 72,550 22,949 100% 115 Second Avenue Waltham, MA 66,730 10,494 56,236 N/A Chemin de l'Epinglier 2 Geneva 59,190 59,190 - 100% 251 Exchange Place Herndon, VA 70,982 70,982 - 100% 7500 & 7620 Metro Center Drive Austin 119,962 45,000 74,962 38% 3 Corporate Place Piscataway, NJ 283,124 - 283,124 N/A 2005 Acquisitions $466 3,513,059 2,657,920 855,139 4025 Midway Road Carrollton, TX 100,590 36,856 63,734 100% Clonshaugh Industrial Estate Dublin, Ireland 20,000 20,000 - 100% Clonshaugh Industrial Estate Dublin, Ireland 2.6 acres - - N/A 6800 Millcreek Drive Toronto, Canada 83,758 83,758 - 100% 101 Aquila Way Atlanta 313,581 313,581 - 100% 12001 North Freeway Houston 300,705 281,426 19,279 99% 14901 FAA Boulevard Dallas 263,700 263,700 - 100% 120 E. Van Buren Street (4) Phoenix 287,514 206,359 81,155 95% Gyroscoopweg 2E-2F Amsterdam, Netherlands 55,585 55,585 - 100% 600 Winter Street Waltham, MA 30,400 30,400 - 100% 2300 NW 89th Place Miami 64,174 64,174 - 100% AboveNet Portfolio (5) New York & N. Virginia 119,389 119,389 - 100% 2055 East Technology Circle Tempe, AZ 54,612 - 54,612 N/A 2001 Sixth Avenue (6) Seattle, WA 389,460 389,460 - 90% YTD 2006 Acquisitions $450 2,083,468 1,261,265 164,168 114 Rue Ambroise Croizat Paris, France 352,146 150,996 201,150 60% 2006 Significant Pending Acquisition $52 (7) 352,146 150,996 201,150 Total 2005, YTD 2006 & Significant Pending 2006 Acquisitions $968 5,948,673 4,070,181 1,220,457 |
 12 Leasing Drives Internal Growth DLR has executed 173 leases in the first nine months of 2006, contributing approximately $21.7M in annualized GAAP rental revenues (1) (1) GAAP rental revenues include total rent for both renewals and expansions.
$1.3 million $21.00 61,952 24 Non Technical $3.9 million $54.00 71,971 5 Redevelopment $16.5 million $89.00 185,136 144 Datacenter Annualized GAAP Rent Annualized GAAP Rent PSF Total SF Leased # of Leases Type of Space DLR commenced 153 leases in the first nine months of 2006, contributing approximately $23.4M in annualized GAAP rental revenues (1) |
 13 Same Store Growth 35,000 36,000 37,000 38,000 39,000 40,000 41,000 42,000 43,000 44,000 Jun-05 Sept-05 Dec-05 Mar-06 Jun-06 Sep-06 91.5% 92.0% 92.5% 93.0% 93.5% 94.0% 94.5% 95.0% 95.5% 96.0% 96.5% 97.0% Quarterly Operating Revenue Occupancy ($000) Same Store Quarterly Operating Revenue (2) Increase = 14.5% Same Store Occupancy (1) Increase = 277 bps (1) Same Store Occupancy excludes redevelopment space until leased (2) Quarterly Operating Revenue includes rental and tenant reimbursement revenue.
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 14 Case studies: DLR’s value-add leasing Recent leasing illustrates effectiveness of DLR’s leasing and engineering team
• Executed new 36,000 sf lease with global energy company at an average of $23 psf NNN for 5 yr term • Provided base building improvements; tenant invested in datacenter build out • Managed custom datacenter design and construction • 36,000 sf vacant shell redevelopment space • Executed new 10,000 sf suite lease with IT services company at approx. $100 psf for 10 yr term • Executed new 22,300 sf lease with financial institution at an average of $79 psf for 2.5 yr term • Invested approx. $2.5M to fully condition 10,000 sq. ft. on a speculative basis • Designed and constructed custom datacenter facility for major international financial institution • 35,000 sf previously vacant • Prior rate approx. $25 psf • Executed 15,750 sf lease with global chemical company at approx. $73 psf for 10 yr term to commence upon substantial completion of improvements • Invested $350,000 to customize turn key datacenter facility to be delivered to tenant upon substantial completion in late 2006 • 15,750 sf existing vacant turn key datacenter • Executed new 21,000 sf lease with global technology company at approx. $85 psf for 10 yr term • Invested approx. $7.9M to design, construct and operate custom datacenter facility for tenant • 21,000 sf vacant shell space Result DLR Action Opportunity |
 15 DLR Redevelopment Opportunities Inventory totals 1.5 million sf of vacant, redevelopment space with potential for up to 900,000 sf of datacenter: – Approximately 55% of inventory in income producing properties – Remaining 45% of inventory in 5 recently acquired vacant buildings Redevelopment costs vary by building – Base building power, structural upgrades: $35 - $50 psf – Custom datacenter: $350 to $800 psf (often funded by tenants) Stabilized income projected over the next 24 to 36 months
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 16 DLR’s Competitive Advantage: Dedicated Technical Professionals Over 25 DLR professionals in the areas of – IT sales – Datacenter sales engineers – Design and construction – Datacenter operations Technical professionals collaborate with our tenants to develop cost effective solutions for their datacenter requirements DLR possesses the necessary scale to support these specialized professionals
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 17 Source: Independent study by CCG Facilities Integration Inc. based on datacenter
projects with improvements similar to DLR. (1) Infrastructure only. Does not include electronic equipment. Assumes 60% ratio of
datacenter to total building with all cost allocated to raised floor area. (2) DLR estimate based on Equinix press release dated September 19, 2006. (3) Reflects all owned properties and one property under contract in Paris, France as of November 6, 2006. Replacement Cost Estimate Replacement cost illustrates the value of DLR’s portfolio DLR owns over 6.4M sq ft of improved datacenter space (3) Cost per Square Foot Equinix (2) Cost Components Low High Land $40 $70 Building Shell 60 150 Electrical Systems $297 $396 Mechanical Systems (HVAC) 92 122 Fire Protection 21 29 Other Construction and Fees 130 173 Sub Total $540 $720 Total Development Costs $640 $940 $1,250 Base Building Data Center Improvements (1) |
 18 1.9% 1.1% 3.9% 5.6% 9.3% 17.1% 1.6% 7.4% 5.0% 15.8% 26.0% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Thereafter DLR’s model features long-term, stable leases 6.9% in through 2008 The stability of our long-term leases complements our growth Note: Excludes vacant square footage of 0.5 million square feet and space held for redevelopment as of September 30, 2006. Lease Expiration as a % of Net Rentable Square Feet • The average lease term is approximately 12 years with 7 years remaining • Leases typically contain 3% annual rent bumps |
 19 DLR 2006 Guidance Internal Growth 2006 projected FFO Per Share Guidance (1)(2) : $1.55 to $1.65 External Growth (1) Based on Company guidance confirmed in our November 6, 2006 earnings call. (2) FFO and AFFO is a non GAAP financial measure. For a description of FFO and AFFO see
page 26. 6.5 – 10.0% FFO (2) Per Share Growth Lease-Up 125,000 to 150,000 sq ft of basic commercial space (gross rent $19 / sq ft) 200,000 to 300,000 sq ft of highly improved tech & redevelopment space (gross rent $40 / sq ft) Acquisitions $300 - $400 million at 8.0% to 9.0% cap rate 6.5 – 10.0% FFO Per Share Growth 13.0 – 20.0% Overall FFO Per Share Growth |
 20 Digital Realty Financial Overview Strong and Consistent FFO (1) Growth – $0.41 per diluted share and unit for 3Q06, + 17% from 3Q05 and + 8% from 2Q06 Well Supported Dividend – 3.4% yield (2) – FFO / AFFO payout ratio of 66% / 90% (3) for 3Q06 – Increased quarterly common dividend in 4Q06, +8% Proven Access to Capital – Expanded credit facility to $500M from $350M, increasing liquidity and financial flexibility – Raised $172.5M of 4.125% convertible debt – Raised $134.0M in net proceeds from common stock offering DLR has Achieved a Total Return Since IPO of 218% (4) (1) FFO and AFFO is a non GAAP financial measure. For a description of FFO and AFFO see
page 26. (2) Based on most recent quarterly dividend annualized. Dividend yield based on
November 6, 2006 closing stock price of $33.83. (3) FFO payout ratio is dividend declared per common share and unit divided by diluted FFO
per share and unit. AFFO payout ratio is dividend declared per common share and unit divided by diluted AFFO per share and unit. For a
description of FFO and AFFO see page 26. (4) Based on November 6, 2006 closing stock price of $33.83. |
     21 Improving overall credit quality of DLR portfolio + = + = Approximately $18 million of base rental income, or over 11% of overall income, has
experienced an improvement in credit quality. (1) As a result of a sublease relationship with Microsoft for 200,000 sq ft of space that
is leased directly by Savvis. (2) On June 30, 2006, SAVVIS completed the exchange of its Series A Preferred stock for
37.4 million shares of common stock. (1) (2) |
 22 DLR’s top tenants have experienced a robust increase in equity capitalization (1) Significant Equity Capitalization Improvement in Top Tenants $0.6 $0.4 $1.4 $0.7 $1.2 $1.7 $16.9 $6.1 $10.6 0.0 2.0 At IPO Dec-05 Current At IPO Dec-05 Current At IPO Dec-05 Current $18.0 6.0 (1) Increase in equity capitalization calculated as of November 6, 2006 from DLR IPO
date of November 1, 2004 12.0 |
 23 Fixed Rate Debt 25.8% Variable Rate Debt 3.1% Preferred Stock 4.8% Equity 66.2% DLR employs a conservative capital structure Wtd Average Cost of Debt: 5.64%; Approximately 89% fixed rate debt (4) Periodically refinancing high cost debt with lower rate, longer term, fixed rate financing No debt maturing through 2009 (assuming extensions) Total Enterprise Value (1) $3,459.6M (1) Based on closing price and shares outstanding of DLR common stock ($33.83) at November 6, 2006. (2) Excludes $2.0 million of unamortized debt premium for 1125 Energy Park Drive & 731 East Trade Street. (3) Unsecured credit facility as of November 6, 2006. (4) $172.5 million of convertible debt. Dividend Yield / Rate: 3.4% / $1.145 (2)(4) (1) (3) |
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 25 Definition of Non-GAAP Financial Measures This presentation includes certain non-GAAP financial measures that management
believes are helpful in understanding our business, as further described
below. Our definition and calculation of non-GAAP financial measures may differ from those of other REITs, and, therefore, may not be comparable. The non-GAAP financial measures should not be
considered an alternative to net income or any other GAAP measurement of
performance and should not be considered an alternative to cash flows from operating, investing or financing activities as a measure of liquidity. Funds from Operations (FFO) We calculate Funds from Operations, or FFO, in accordance with the standards established
by the National Association of Real Estate Investment Trusts, or
NAREIT. FFO represents net income (loss) (computed in accordance with GAAP), excluding gains (or losses) from sales of property, real estate related depreciation and amortization (excluding
amortization of deferred financing costs) and after adjustments for unconsolidated partnerships and joint ventures. Management uses FFO as a supplemental performance measure because, in excluding real estate related depreciation and amortization and gains and
losses from property dispositions, 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 properties that result from use or market conditions,
nor the level of capital expenditures and leasing commissions necessary to
maintain the operating performance of our properties, all of which have real economic effect and could materially impact our 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 such other REITs’ FFO. Accordingly, FFO should be considered only as a supplement to net income as a measure of
our performance. Adjusted Funds From Operations (AFFO) We present adjusted funds from operations, or AFFO, as a supplemental operating measure
because, when compared year over year, it assesses our ability to fund
dividend and distribution requirements from our operating activities. We also believe that, as a widely recognized measure of the operations of REITs, AFFO will be used by investors as a basis to assess our ability to fund dividend payments in comparison to other REITs. We calculate adjusted funds from operations, or
AFFO, by adding to or subtracting from FFO (i) non-real estate
depreciation, (ii) amortization of deferred financing costs (iii) non cash compensation (iv) loss from early extinguishment of debt (v) straight line rents (vi) fair value of lease revenue amortization (vii) capitalized leasing payroll (viii) recurring tenant improvements and (ix) capitalized leasing commissions. Other equity REITs may not
calculate AFFO in a consistent manner. Accordingly, our AFFO may not be comparable to other equity REITs’ AFFO. AFFO should be considered only as a supplement to net income computed in accordance with GAAP as a measure of our operations. Each of FFO and Adjusted EBITDA exclude items that have real economic effect and could
materially impact our results from operations, and therefore the utility of
FFO and Adjusted EBTIDA as a measure of our performance is limited. Nothing
contained herein is intended to revise or confirm the earnings, FFO or acquisition guidance we confirmed on our Earnings Conference Call held on November 6, 2006 and available on our website at
www.digitalrealtytrust.com. |
 26 Reconciliation of non GAAP items to their closest GAAP Funds from operations (1) Cash paid for interest (including discontinued operations) Q306 Q206 Q305 FY2005 Q306 Q206 FY2005 Net income available to common stockholders $11,342 $1,650 $1,326 $6,087 Total GAAP interest expense (including discontinued operations) $14,533 $12,181 $39,122 Amortization of deferred financing costs (916) (749) (2,921) Minority interests in operating partnership including discontinued operations 8,464 1,340 1,628 8,268 Capitalized interest 917 1,058 279 Real estate related depreciation and amortization (2) 24,454 20,238 16,929 62,171 Noncash interest (1,674) 806 (1,424) Gain on sale of assets (18,016) - - - Cash paid for interest $12,860 $13,296 $35,056 Funds from operations (FFO) $26,244 $23,228 $19,883 $76,526 Funds from operations (FFO) per diluted share $ 0.41 $ 0.38 $ 0.35 $ 1.37 Net income per diluted share available to common stockholders $ 0.30 $ 0.05 $ 0.05 $ 0.25 Funds from operations (FFO) $26,244 $23,228 $19,883 $76,526 Non real estate depreciation 285 37 28 61 Amortization of deferred financing costs 916 937 790 2,965 Non cash compensation 430 435 50 481 Loss from early extinguishment of debt 40 425 - 1,021 Straight line rents (3,856) (4,233) (3,815) (13,023) Above and below market rent amortization (2,837) (1,504) (416) (1,717) Capitalized leasing compensation (185) (888) (549) (781) Recurring capital expenditures and tenant improvements (338) (338) (240) (2,897) Capitalized leasing commissions (1,523) (1,682) (757) (3,051) Adjusted funds from operations (1) $19,176 $16,417 $14,974 $59,585 (2) Real estate depreciation and amortization was computed as follows: Q306 Q206 Q305 FY2005 Depreciation and amortization per income statement $24,739 $19,511 $16,309 $59,616 Depreciation and amortization of discontinued operations at 7979 East Tufts Avenue - 764 648 2,616 Non real estate depreciation (285) (37) (28) (61) $24,454 $20,238 $16,929 $62,171 Weighted-average shares outstanding - diluted 64,397 60,959 57,526 55,761 (1) Funds from operations and Adjusted Funds from operations for all periods presented above includes the results of 7979 East Tufts Avenue, a property which we sold on July 12, 2006.
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