AI demand helped the data center REIT sign a record $855 million in annualized rent in the third quarter, lifting its core FFO outlook
Digital Realty just had the best leasing quarter in its history, and it isn’t being shy about what that means for the rest of the year.
The data center landlord (NYSE: DLR) raised its full-year guidance for core funds from operations after signing leases worth a record $855 million in annualized GAAP base rent during the third quarter. That figure came in 20% above the company’s previous quarterly high, which is a big jump for a business usually described as steady.
The driver is familiar. Companies building artificial intelligence infrastructure need somewhere to put the hardware, and the supply of ready-to-use data center capacity is getting tight. When space is scarce, landlords get to name their price, and that pricing power is now feeding directly into Digital Realty’s organic growth.
The numbers behind the beat
Digital Realty reported its third-quarter results on October 29, 2026. Here is how the key figures break down.
Leasing: The $855 million in annualized rent is measured at 100% share, meaning it counts the full value of leases signed across the platform. At Digital Realty’s own share, the figure was $627 million. Bookings spanned both hyperscale deals and the company’s colocation and interconnection business.
Earnings: Core FFO came in at $2.10 per share, up 11% from the same quarter a year earlier. Funds from operations is the metric real estate investment trusts use instead of traditional earnings. It strips out real estate depreciation, which makes it a cleaner read on the cash a landlord actually generates.
Guidance: Management lifted its full-year core FFO forecast to a range of $8.30 to $8.35 per share. That implies growth of nearly 13% over the prior year.
Backlog: Signed leases that haven’t started paying rent yet swelled to a record $2.5 billion at 100% share, or $1.8 billion at Digital Realty’s share. That pile represents roughly 40% of in-place data center rental revenue.
The company says this gives it revenue visibility well into 2027 and 2028.
Tenants aren’t leaving, and they’re paying more
The operating metrics underneath the headline numbers were arguably even more telling. Churn, the share of rent lost to departing tenants, fell to a record low of 0.7%.
Tenants who renewed also paid up. Cash re-leasing spreads hit 11.8%, meaning renewing customers agreed to pay meaningfully more than under their prior contracts.
Same-capital cash net operating income grew about 6% year over year. That metric tracks income from properties the company already owned and operated, which separates organic growth from growth bought through new construction or acquisitions.
Stabilized occupancy reached 93.4%.
A $22 billion construction bet
To meet that demand, Digital Realty is building at scale. The company has 1.5 GW of capacity under construction, with an expected cost of approximately $22 billion.
Crucially, 63% of that pipeline is already pre-leased. The company also projects an average stabilized yield of 11.6% on the development, meaning the annual operating income it expects relative to its investment once the projects are up and running.
Why the AI build-out keeps landing here
Digital Realty describes itself as a cloud- and carrier-neutral data center platform. Neutrality means customers can connect to multiple cloud providers and network carriers under one roof, rather than being locked into a single vendor’s ecosystem.
The demand in the third quarter was broad, with AI infrastructure contributing heavily alongside traditional cloud computing and enterprise workloads.
What this means for investors and the data center market
For shareholders, the most important number may not be the record bookings at all. It is the $2.5 billion backlog sitting at about 40% of in-place data center rental revenue.
The risks sit mostly on the execution side. A pipeline with an expected cost of approximately $22 billion requires power, equipment and construction crews to show up on schedule. The 37% of capacity not yet pre-leased also depends on demand holding up through completion.
What to watch next: whether the company can keep bookings near this record pace, how quickly the backlog converts into paying rent through 2027 and 2028, and whether pre-leasing on the 1.5 GW pipeline climbs above its current 63%.
