EX-99.1 2 dex991.htm MATERIALS TO BE PRESENTED ON MAY 31, 2006 Materials to be presented on May 31, 2006
34
th
Annual Technology Conference
May 31, 2006
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
2006
FFO,
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;
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
other
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.

2
Digital Realty Trust overview
•
Tenants consist of leading global
companies diversified across various
industries
•
Own 49 properties comprising 10.0
million rentable sq ft which includes
1.2 million sq ft of additional space
held for redevelopment (1)
•
Portfolio occupancy of 93.3% and
“same store”
occupancy of 94.6%
(2)
•
Assets strategically located in top
technology markets in the U.S.,
Canada and Europe
DLR is a leading institutional owner focused on
mission critical technology properties in the US and Europe
350 East Cermak
Road
Chicago, IL
(1)
Includes
property
acquisitions
announced
in
our
Earnings
Release
dated
May
4,
2006.
(2)
Occupancy
is
as
of
our
last
reporting
period,
March
31,
2006
net
of
redevelopment
space.

3
DLR investment highlights
•
Specialized focus in dynamic and
growing industries
•
High quality portfolio that is difficult
to replicate
•
Experienced industry consolidator
with proven ability to acquire assets
below replacement cost
•
Acquisition and leasing pace creates
potential for strong FFO growth
•
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 is unique in its focus on technology properties
Data Centers (35%
(1)
)
Internet Gateways (42%
(1)
)
Financial
Health/Insurance
Communications
Internet Enterprise
•
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 annualized rents using in place leases as of March 31, 2006.
IT Services

6
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)
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
E-Commerce
(1)
Digital
Communication
& Distribution
(2)
Data
Storage
(3)
14%
73%
60%
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

7
•
Former General Manager of Critical Facilities for EDS
•
18+ years of technology infrastructure experience
Ted Martin
Director of Operations
•
Former Director of Sales, Nortel Networks
•
13+ years of technology business experience
Christopher Crosby
SVP Sales & Tech Svcs
•
Former Head of GI Partners real estate acquisitions
•
17+ years of real estate experience
Scott Peterson
SVP Acquisitions
•
Former President & CFO of TriNet
•
24+ years of finance and real estate experience
A. William Stein
CFO/CIO
•
Co-founder of Digital Realty Trust
•
26+ years of real estate and technology experience
Michael Foust
CEO
•
Co-founder of Digital Realty Trust
•
23+ years of real estate and technology experience
Richard Magnuson
Executive Chairman
Senior management leads a complete REIT team
•
Relevant
experience
•
Proven track
record
•
Public
markets
background
DLR is organized and managed to deliver growth
Management is supported by a team of over 60
professionals in the US and Europe
focused on executing DLR’s core strategy

8
8.5%
5.1%
2.7%
77.9%
12.1%
4.9%
0%
20%
40%
60%
80%
100%
DLR
RMS
S&P 500
FY 2005 Total Return
2006 YTD Total Return
DLR continues to outperform the RMS and S&P 500
DLR is a top performing REIT
Note:
YTD
2006
Total
Return
as
of
May
25,
2006
assuming
dividend
reinvestment
as
per
SNL
Financial.
.

9
DLR Presence in 23 Top Markets
Boston
Boston
San Francisco
Los Angeles
Dallas
Chicago
NY Metro
DLR Regional Office
DLR Market
Note:
Reflects
all
owned
assets
as
of
April
30,
2006.
Charlotte
St. Paul
Philadelphia
Phoenix
Denver
Sacramento
Geneva
Dublin
Austin
Toronto
Silicon Valley
Northern
Virginia
Atlanta
Miami
Boston
London
Amsterdam
Houston
# of
Properties
# of
Buildings
Total Rentable
Square Footage
Domestic
44
58
9,691,886
           
International
5
5
338,653
              
Total
49
63
10,030,539
         

10
DLR is well diversified by sector
Industry Distribution
Communications
38%
IT Services
30%
Other
Technology
8%
Financial &
Professional
Services
13%
Non-Technology
11%
Note:
Calculated
based
on
annualized
rents
using
in
place
leases
as
of
March
31,
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, 4605 & 4700 Old Ironsides Drive and 200 North Nash Street.
(3) Charlotte Portfolio includes 113 & 125 North Meyers and 731 East Trade Street.
DLR acquired approximately $561M in new properties
Total
Net Rentable
Redevelopment
Occupancy
Property
Location
Sq Ft.
Sq Ft. (1)
Sq Ft.
(Net of Redev)
833 Chestnut East
Philadelphia
654,778
                  
535,098
        
119,680
            
76%
1125 Energy Park Drive
St. Paul
112,827
                  
112,827
        
-
                     
100%
350 East Cermak Road
Chicago
1,133,391
              
870,183
        
263,208
            
92%
85374 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
        
-
                     
86%
Paul van Vlissingenstraat 16
Amsterdam
147,472
                  
112,472
        
35,000
              
62%
Charlotte Portfolio (3)
Charlotte
95,489
                    
71,746
          
23,743
              
98%
115 Second Avenue
Waltham, MA
68,069
                    
12,500
          
55,569
              
N/A
Chemin de l'Epinglier 2
Geneva
59,190
                    
59,190
          
-
                     
100%
251 Exchange Place
Herndon, VA
70,982
                    
70,982
          
-
                     
100%
7500 & 7520 Metro Center Drive
Austin
119,962
                  
45,000
          
74,962
              
100%
3 Corporate Place
Piscataway, NJ
283,124
                  
-
                
283,124
            
N/A
2005 Acquisitions
3,549,060
              
2,693,774
     
855,286
            
4025 Midway Road
Carrollton, TX
99,947
                    
49,947
          
50,000
              
N/A
Clonshaugh Industrial Estate
Dublin, Ireland
20,000
                    
20,000
          
-
                     
100%
Clonshaugh Development Site
Dublin, Ireland
2.6 acres
-
                
-
                     
N/A
6800 Millcreek Drive
Toronto
83,758
                    
83,758
          
-
                     
100%
101 Aquila Way
Atlanta
313,581
                  
313,581
        
-
                     
100%
12001-12245 North Freeway
Houston
300,705
                  
300,705
        
-
                     
93%
YTD 2006 Acquisitions
817,991
                  
767,991
        
50,000
              
Total 2005 & YTD 2006
4,367,051
              
3,461,765
     
905,286
            
Redevelopment
space
has
the
potential
to
convert
to
approx.
540,000
sf
of
raised
floor.

12
Source:  Independent study by CCG Facilities Integration Inc. based on data center projects with improvements similar to DLR.
(1)
Infrastructure
only.
Does
not
include
electronic
equipment.
Assumes
60%
ratio
of
data
center
to
total
building
with
all
cost
allocated
to
raised
floor
area.
(2)  Reflects all owned properties and properties under contract. 
Replacement Cost Estimate
Replacement cost illustrates the value of DLR’s
portfolio
DLR owns over 4.7M sq ft of improved data center space
(2)
Cost per Square Foot
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
Base Building
Data Center
Improvements
(1)

13
DLR’s
Value-Add Redevelopment Program
Growing demand for data centers
Limited supply of existing facilities
Existing data centers often do not satisfy electrical and HVAC
requirements of current web hosting, data storage and IT
applications
Robust demand from diverse industry sectors:
–
Financial services
–
Internet enterprises
–
Telecom applications providers
–
Energy companies
–
Healthcare
Objective:  Achieve attractive returns by providing corporate tenants with
custom data center solutions

14
DLR’s
competitive advantage
Inventory totals 1.2 million sf
of vacant, redevelopment space:
–
Primarily located in Internet Gateway income producing
properties
•
Approximately 735,000 sf
has the potential to convert to approx.
440,000 sf
of raised floor
–
Stand alone, vacant buildings that possess electrical and
structural infrastructure necessary for conversion to data
center operations
•
Approximately 500,000 sf
located in Boston, NY Metro, Dallas and
Austin
has
the
potential
to
convert
to
approx.
300,000
sf
of
raised
floor
Redevelopment costs vary by building
–
Base building power, structural upgrades: $35 -
$50 psf
–
Custom data center:  $450 to $650 psf
(often funded by tenants)
Stabilized income projected within 12 to 24 months
DLR’s
unmatched sales and technical team offers tenants design, construction
management, engineering and facilities management expertise

15
1.8%
2.4%
3.0%
6.3%
11.9%
11.7%
1.7%
11.2%
6.8%
16.6%
19.9%
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Thereafter
DLR’s model features long-term, stable leases
•
The average lease term is 12 years with over 7 years remaining
•
Leases typically contain 3% annual rent bumps
7.3% in next 3 yrs
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
March
31,
2006.
Lease Expiration as a % of Net Rentable Square Feet

16
Digital Realty’s financial results
Reported FFO
(1)
of $21.7 million for 1Q06, up 37% from $15.8 million for
1Q05; or $0.36 per diluted share and unit for 1Q06, up 20% from $0.30
per diluted share and unit for 1Q05
Reported 1Q06 EBIDTA of $36.6 million, or approx. $146.2 million
on an
annualized basis
DLR’s
stock generated a total return to common shareholders of 78% in
2005
Increased quarterly common dividend 8.7% on an annualized basis to
$1.06 per share in November 2005
Priced follow on offering of 4 million shares of common stock for
approximately $95 million of net proceeds on May 23, 2006
(1) FFO and AFFO  is a non GAAP financial measure. For a description of FFO and AFFO see page 23.

17
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 300,000 sq ft of space that is leased directly by Savvis.
(1)

18
DLR employs a conservative capital structure
Reduced ratio of debt to total market
capitalization to 30.8% as of 1Q06
from 33.3% at year-end 2005
Improved debt service coverage
ratio
(2)
to 3.6x for 1Q06 versus 3.4x
for the same period in 2005 and
maintained our fixed charge
coverage ratio
(3)
at 2.4x for 1Q06
consistent with the same period in
2005
Wtd
Average Cost of Debt: 5.9%;
Approximately 75% fixed rate debt
$204M outstanding on the $350M
credit facility at March 31, 2006
No debt maturing through 2008
(assuming extensions)
Total Market
Capitalization
(1)
$2,511.1M
Note:
Based on March 31,2006 financial statements.
(1)
Based
on
closing
price
and
shares
outstanding
of
DLR
common
stock
($24.31) at May 25, 2006.
(2)
Adjusted
EBITDA
divided
by
Fixed
Charges
at
March
31,
2006.
Fixed
Charges include Cash Interest Expense, Scheduled Debt Principal Payments,
and Preferred Dividends.
See page 24 for a reconciliation of this ratio using cash
interest expense and GAAP interest expense.
(3) Adjusted EBITDA divided by Cash Interest Expense at March 31, 2006. See
page 24 for a reconciliation of cash interest expense to GAAP interest expense.
(4) Excludes $2.1 million of unamortized debt premium for 1125 Energy Park
Drive & 731 East Trade Street.
Dividend Yield / Rate:    4.4% / $1.06
Fixed Rate Debt
(4)
$607.1M
Variable Rate
Debt $204.4M
Preferred Stock
$166.8M
Equity
$1,532.8M
24%
7%
61%
8%

19
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)
noncash
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.
EBITDA
and
Adjusted
EBITDA
We
believe
that
earnings
before
interest,
income
taxes,
depreciation
and
amortization,
or
EBITDA
and
Adjusted
EBITDA
(as
defined
below),
are
useful
supplemental
performance
measures
because
they
allow
investors
to
view
our
performance
without
the
impact
of
noncash
depreciation
and
amortization
or
the
cost
of
debt
and
with
respect
to
Adjusted
EBITDA
preferred
dividends
and
minority
interests.
Adjusted
EBITDA
is
EBITDA
excluding
minority
interests
and
preferred
stock
dividends.
In
addition,
we
believe
EBITDA
and
adjusted
EBITDA
are
frequently
used
by
securities
analysts,
investors
and
other
interested
parties
in
the
evaluation
of
REITs.
Because
EBITDA
and
adjusted
EBITDA
are
calculated
before
recurring
cash
charges
including
interest
expense
and
income
taxes,
and
are
not
adjusted
for
capital
expenditures
or
other
recurring
cash
requirements
of
our
business,
their
utility
as
a
measure
of
our
performance
is
limited.
Accordingly,
EBITDA
and
Adjusted
EBITDA
should
be
considered
only
as
supplements
to
net
income
(computed
in
accordance
with
GAAP)
as
a
measure
of
our
financial
performance.
Other
equity
REITs
may
calculate
EBITDA
and
Adjusted
EBITDA
differently
than
we
do;
accordingly,
our
EBITDA
and
Adjusted
EBITDA
may
not
comparable
to
such
other
REITs’
EBITDA
and
Adjusted
EBITDA.
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
the
earnings,
FFO
or
acquisition
guidance
we
confirmed
on
our
Earnings
Conference
Call
dated
March
2,
2006
and
available
on
our
website
at
www.digitalrealtytrust.com.

20
Reconciliation of non GAAP items to their closest GAAP
Q106
Q105
FY 2005
Q106
Q105
FY 2005
Interest expense per financial statements
11,388
8,121
39,122
Amortization of deferred financing costs
(754)
(754)
(2,921)
Net income available to common stockholders
$1,642
$1,468
$6,087
Noncash
items
(390)
49
(1,145)
Cash interest expense
$10,244
$7,416
$35,056
Minority interests in operating partnership
1,846
2,159
8,268
Real estate related depreciation and amortization
18,185
12,143
62,171
Funds from operations (FFO)
$21,673
$15,770
$76,526
Adjusted EBITDA
36,562
25,159
125,711
Non real estate depreciation
71
-
61
Fixed charges including GAAP interest
expense
16,257
11,230
56,397
Amortization of deferred financing costs
795
675
2,965
Fixed charges including cash interest
expense
15,113
10,525
52,331
Non cash compensation
431
52
481
Fixed charge coverage ratio including
GAAP interest expense
2.2
2.2
2.2
Loss from early extinguishment of debt
57
125
1,021
Fixed charge coverage ratio including cash
interest expense
2.4
2.4
2.4
Straight line rents
(3,843)
(2,553)
(13,023)
Above and below market rent amortization
(433)
(439)
(1,717)
Capitalized leasing compensation
(764)
-
(781)
Recurring capital expenditures and tenant improvements
(904)
(519)
(2,897)
Capitalized leasing commissions
(265)
(180)
(3,051)
Adjusted funds from operations (AFFO)
$16,818
$12,931
$59,585
Q106
Q105
FY 2005
Net income available to common stockholders
$1,642
$1,468
$6,087
Interest
11,388
8,121
39,122
Depreciation and amortization
18,256
12,143
62,232
Earnings before interest, taxes and depreciation and
amortization (EBITDA)
$31,286
$21,732
$107,441
Minority interests
1,831
2,156
8,256
Preferred stock dividends
3,445
1,271
10,014
Adjusted Earnings before interest, taxes and
depreciation and amortization (Adjusted EBITDA)
$36,562
$25,159
$125,711
Funds
from
operations
and
Adjusted
Funds
from
Operations
Cash
interest
expense
Fixed
charge
coverage
ratio
EBITDA
and
Adjusted
EBITDA