Digital Realty (DLR)

#2 global colocation REIT — the wholesale-leaning sibling to Equinix, riding a 200 MW landmark AI inference deal in Q1 2026.

1. Core Product / Service

Digital Realty operates ~300 data centers across 25+ countries, with a heavier mix of wholesale / hyperscale capacity than Equinix's interconnection-dense retail model. Product spectrum:

PlatformDIGITAL — global colocation + interconnection (Service Exchange, ServiceFabric)
Hyperscale wholesale — multi-MW dedicated halls leased to AWS / Azure / Meta / Oracle on 10-15 year terms
0–1 MW + interconnection — enterprise-scale colo that competes most directly with equinix

The 2025-2026 strategic emphasis is AI-driven leasing, particularly large hyperscaler training/inference deals plus an emerging "AI inference" product targeting medium-density deployments closer to end users.

2. Target Users & Pain Points

Hyperscalers needing 50-200+ MW campuses in established power-rich markets (Northern Virginia, Dallas, Phoenix, Frankfurt)
AI labs / neoclouds subleasing through hyperscalers or directly
Large enterprises seeking PrivateLink / direct cloud connect
Carriers / ISPs for network anchor points

Pain solved: pre-built power, cooling, and (critically in 2025-2026) shovel-ready power capacity in markets where utility interconnect queues now exceed 5 years. DLR's land bank in places like Loudoun County and Manassas is a strategic asset that can't be replicated at speed.

3. Competitive Landscape

Company	Mix	Positioning vs DLR
equinix (EQIX)	~80% retail/interconnect	More expensive per kW, much more cross-connect revenue
qts (Blackstone)	Pure hyperscale	More aggressive build pipeline (3 GW commissioned, $25B development)
iron-mountain	Smaller, growing	Coming off lower base, 1.4 GW pipeline
Aligned Data Centers	Hyperscale wholesale	Private (Macquarie); tier-2 markets focus
Vantage Data Centers	Hyperscale wholesale	Private (DigitalBridge / Silver Lake); global

DLR's edge: balance of wholesale + interconnection, established public REIT capital structure, and a 9-figure power bank in priced-in markets.

4. Unique Observations

Q1 2026 leasing record: $707M annualized rent at 100% share ($423M at DLR share) — second-highest quarter ever — including a landmark 200 MW AI inference contract with an AA-rated hyperscaler in Charlotte, the largest single lease in DLR history [1][2].
0-1 MW + interconnection segment hit a record $98M in new signings, 21% from AI-related bookings [1]. AI is now leaking from training (huge halls) into smaller inference deployments — and DLR's interconnection layer is monetizing it.
Backlog: $1.8B at 100% share, $1.0B at DLR share — visibility into 2027–2028 [1][3]. (Note: Q1 2025 figure was $1.4B; new contracts pushed it higher [4].)
Q1 2026 revenue $1.6B (+16% YoY) [1] — strong but tempered by REIT-typical lower margins than equinix.
AI demand pull-through — DLR's 200 MW Charlotte deal is a tell: hyperscalers are now leasing dedicated AI campuses from colos rather than only self-building. This is the same dynamic powering crusoe-energy and coreweave from a different angle. Hyperscaler "lease vs build" decisions hinge on how fast they need power online — leasing wins when grid interconnect timelines exceed 24 months.
$/MW economics — DLR doesn't disclose exact per-MW build costs but typical hyperscale wholesale builds run $10-12M/MW (industry baseline) vs $20M+/MW for AI-optimized retrofits. Lease economics: long-term hyperscale rents at $130-180/kW/month → ~$1.6-2.2M/MW/year revenue → ~10-12 year payback at current build costs, before margin.
Customer concentration: top 20 customers ~50%+ of recurring revenue (typical wholesale REIT profile). Less concentrated than coreweave but more than equinix.

5. Financials / Funding

Listed: NYSE: DLR, REIT structure
Q1 2026 revenue: $1.6B (+16% YoY) [1]
Q1 2026 leasing: $707M annualized rent at 100% share / $423M at DLR share — second-highest quarter ever [1]
Backlog: $1.8B at 100% share / $1.0B at DLR share [1]
2026 core FFO guidance: $8.10/share (raised mid-quarter), implying ~9% growth at midpoint [1][3]
Notable Q1 deal: 200 MW AI inference lease with AA-rated hyperscaler in Charlotte — largest in DLR history [2]
Footprint: ~300 facilities across 25+ countries

6. People & Relationships

CEO: Andy Power (since 2023); CFO: Matt Mercier
Strategic JVs: Blackstone (joint $7B development), GI Partners (Mitsubishi-affiliated)
Top tenants (disclosed broadly): AWS, Meta, Oracle, IBM, Microsoft, plus the unnamed Q1 2026 AA-rated hyperscaler that signed the 200 MW Charlotte deal
Investor base: large index ownership (REIT inclusion in major indices) plus dedicated infrastructure funds