DLR Digital Realty
Intrinsic value$186.14
Price (at call)$192.10
Margin of safety
-3.1%
vs market (rating basis)
+60.3%
AI demand fuels growth, but at 21x FFO the margin of safety is thin.
The story
Global data center REIT riding AI/cloud demand with 9%+ revenue CAGR and expanding margins (29.2% latest). Singapore 50MW win extends an already robust development pipeline. Balance sheet supports growth, but long-duration cash flows create meaningful rate sensitivity at ~21x FFO.
AI-driven leasing and Singapore expansion sustain near-term double-digit FFO growth; terminal growth capped below risk-free given supply risk and rate sensitivity. AFFO ratio unchanged at 0.76 reflecting data center recurring capex for power and cooling systems. Beta held slightly above REIT anchor due to tech-tenant exposure.
Value drivers
| AFFO growth (Y1) | 10.0% |
| Terminal AFFO growth | 4.2% |
| AFFO / FFO ratio | 76.0% |
| Beta | 0.97 |
| Failure probability | 0.8% |
| Cost of equity | 9.0% |
Valuation bridge
| PV of AFFO (explicit) | 24.12B |
| PV of terminal value | 45.49B |
| Equity value | 69.06B |
| ÷ shares → per share | $186.14 |
News
score · 8 articles
- American Tower (AMT) Down 2% Since Last Earnings Report: Can It Rebound?
- Digital Realty Trust (DLR) Wins Singapore Data Center Slot, Is It Still 14% Undervalued?
- Realty Income Diversifies Funding: Will This Boost Long-Term Growth?
- Digital Realty Trust (DLR) Wins 50MW Singapore Low Carbon Data Center Project
- The AI Debt Boom Is Helping Push Everyone’s Cost of Capital Higher
- 3 Data Center Stocks Powering the AI Buildout
- Digital Realty Trust (DLR) Crossed Above the 20-Day Moving Average: What That Means for Investors
- 3 REITs to Beat Rising Interest Rates, According to a Real Estate Pro
Projected AFFO
| Yr | FFO | AFFO | Growth | PV |
|---|---|---|---|---|
| 1 | 3.66B | 2.78B | 10.0% | 2.55B |
| 2 | 4.00B | 3.04B | 9.4% | 2.56B |
| 3 | 4.35B | 3.31B | 8.7% | 2.55B |
| 4 | 4.70B | 3.58B | 8.1% | 2.53B |
| 5 | 5.05B | 3.84B | 7.4% | 2.49B |
| 6 | 5.40B | 4.10B | 6.8% | 2.44B |
| 7 | 5.73B | 4.35B | 6.1% | 2.38B |
| 8 | 6.04B | 4.59B | 5.5% | 2.30B |
| 9 | 6.33B | 4.81B | 4.8% | 2.21B |
| 10 | 6.60B | 5.02B | 4.2% | 2.11B |
Key risks
- Interest rate sensitivity on long-duration data center cash flows
- Hyperscaler supply overbuild in key US/EMEA markets
- Tenant credit concentration among large cloud platforms
Catalysts
- AI workload acceleration driving above-market leasing demand
- Singapore and APAC expansion adding incremental AFFO