Digital Realty Trust (DLR) risk factors, FY2024 10-K

Risks Related to Our Business and Operations

1. 01Our business depends upon the demand for data centers
2. 02Index to Financial Statements
3. 03We depend upon third-party suppliers for power and we are vulnerable to service failures and price increases by such suppliers and to volatility in the supply and price of power in the open market
4. 04We face significant competition, which may adversely affect the occupancy and rental rates of our data centers
5. 05Any failure of our physical or information technology or operational technology infrastructure or services could lead to significant costs and disruptions
6. 06We and our third-party providers are vulnerable to cyberattacks and security breaches that could materially disrupt or compromise our operations, data and results
7. 07We depend on significant customers, and many of our data centers are single-tenant properties or are currently occupied by single tenants
8. 08Failure to attract, grow and retain a diverse and balanced customer base, including key magnet customers, could harm our business and operating results
9. 09Our contracts with our customers could subject us to significant liability
10. 10Certain of our customer agreements may include restrictions on the sale of our properties to certain third parties, which could have a material adverse effect on us
11. 11Our data centers may not be suitable for re-leasing without significant expenditures or renovations
12. 12We may be unable to lease vacant or development space, renew leases, or re-lease space as leases expire
13. 13Even if we have additional space available for lease at any one of our data centers, our ability to lease this space to existing or new customers could be constrained by our ability to provide sufficient electrical power
14. 14Our portfolio depends upon local economic conditions and is geographically concentrated in certain locations
15. 15Our business and operations, and our customers, suppliers and business partners may be adversely affected by epidemics, pandemics or other outbreaks
16. 16We lease or sublease certain of our data center space from third parties and the ability to retain these leases or subleases could be a significant risk to our ongoing operations
17. 17We and our customers may experience supply chain or procurement disruptions, or increased supply chain costs, which may lead to delays
18. 18We may not be able to adapt to changing technologies and customer requirements, and our data center infrastructure may become obsolete
19. 19We depend on third parties to provide network connectivity to the customers in our data centers and any delays or disruptions in connectivity may materially adversely affect our operating results and cash flow
20. 20Our portfolio included 187 data centers, including 56 held in unconsolidated entities, located outside of the United States as of December 31, 2024. We have acquired and developed, and may continue to acquire and develop, and operate data centers outside the United States
21. 21Our recent acquisitions may not achieve the intended benefits or may disrupt our plans and operations
22. 22Any one of these risks could result in increased costs, decreases in the amount of expected revenue and diversion of our management’s time and energy, which could have a material adverse effect on our business, financial condition, results of operations and cash flows
23. 23We may be subject to unknown or contingent liabilities related to our recent acquisitions, for which we may have no or limited recourse against the sellers
24. 24Joint venture (JV) investments could be adversely affected by our lack of sole decision-making authority, our reliance on our JV partners’ financial condition and disputes between us and our JV partners
25. 25Any delays or unexpected costs in the development of our existing space and developable land and new properties acquired for development may delay and harm our growth prospects, future operating results and financial condition
26. 26Many of our costs, such as operating and general and administrative expenses, interest expense and real estate acquisition and construction costs, could be adversely impacted by periods of heightened inflation
27. 27We have substantial debt and face risks associated with the use of debt to fund our business activities, including refinancing and interest rate risks
28. 28Our growth depends on external sources of capital which are outside of our control
29. 29Declining real estate valuations, impairment charges and illiquidity of real estate investments could adversely affect our earnings and financial condition
30. 30Our success depends on key personnel whose continued service is not guaranteed
31. 31We may have difficulty managing our growth
32. 32Potential losses may not be covered by insurance
33. 33We could incur significant costs related to environmental matters, including from government regulation, private litigation, and existing conditions at some of our properties
34. 34We may incur significant costs complying with applicable laws and governmental regulations, including the Americans with Disabilities Act
35. 35Our business could be adversely impacted if there are deficiencies in our disclosure controls and procedures or internal control over financial reporting

Risks Related to Our Organizational Structure

1. 36The interests of Digital Realty Trust, Inc.’s stockholders may conflict with the interests of Digital Realty Trust, L.P.’s unitholders
2. 37Digital Realty Trust, Inc.’s charter, Digital Realty Trust, L.P.’s partnership agreement and Maryland law contain provisions that may delay, defer or prevent a change of control transaction
3. 38These provisions may discourage others from trying to acquire control of Digital Realty Trust, Inc. and may delay, defer or prevent a change of control transaction that might be in the best interests of Digital Realty Trust, Inc.’s stockholders and Digital Realty Trust, L.P.’s unitholders
4. 39The conversion rights of Digital Realty Trust, Inc.’s preferred stock may be detrimental to holders of Digital Realty Trust, Inc.’s common stock
5. 40Digital Realty Trust, Inc.’s rights and the rights of its stockholders to take action against its directors and officers are limited

Risks Related to Taxes and Digital Realty Trust, Inc.’s Status as a REIT

1. 41In certain circumstances, Digital Realty Trust, Inc. may be subject to federal and state taxes as a REIT, which would reduce its cash available for distribution to its stockholders
2. 42Dividends payable by REITs do not qualify for the reduced tax rates available for some dividends
3. 43The tax imposed on REITs engaging in “prohibited transactions” may limit our ability to engage in transactions which would be treated as sales for U.S. federal income tax purposes
4. 44Complying with REIT requirements may cause us to forgo otherwise attractive opportunities or liquidate otherwise attractive investments
5. 45The power of Digital Realty Trust, Inc.’s Board of Directors to revoke Digital Realty Trust, Inc.’s REIT election without stockholder approval may cause adverse consequences to Digital Realty Trust, Inc.’s stockholders and Digital Realty Trust, L.P.’s unitholders
6. 46Tax liabilities and attributes inherited in connection with acquisitions may adversely impact our business
7. 47Changes in U.S. or foreign tax laws and regulations, including changes to tax rates, legislation and other actions may adversely affect our results of operations, our stockholders, Digital Realty Trust, L.P.’s unitholders and us
8. 48Forward-Looking Statements