conference. This session is for Citi clients only, and disclosures are available in the back of the room next to the AV desk, and we also have them conveniently up here. If you'd like to scroll this electronic copy on the iPad, feel free at any time, and with those housekeeping items out of the way, for those of you who I haven't met, I'm Mike Rollins with Citi Research, and we're pleased to welcome Matt Mercier, CFO of Digital Realty. Matt, thank you so much for being with us today.
Yeah, thanks for having me.
For everyone in the room, we may do some live surveys during our session, so there's QR codes up here. There you can just scan them, and you'll be able to participate in our live surveys. They're anonymous. We're not tracking the results, so look forward to your participation for that. So, Matt, get us started. It's been a busy year for Digital Realty and I think back over the past year and all the things that you know you've progressed with in terms of the business. I'm curious if you could help frame the go-forward strategy on how Digital Realty's positioning itself to grow revenue, profits, and improve return on capital.
Sure. You know, so as you know, Mike, we've gone through a bit of a journey over the last 12 months to 18 months, really with the objective of putting the balance sheet back in better shape, you know, which we've largely accomplished. Bringing leverage down from what was kind of the height of around seven times. We're now down to five, 5.3x , so really put us back into a position where we can be back a little bit more, what you'd say, on offense. $4 billion of liquidity, and really, I think puts us in the position now to be able to take advantage of what is a very robust demand environment.
Being able to leverage the broad global platform that we have available, our capabilities across that from both satisfying greater than a megawatt type requirements, which are getting obviously a lot of the headlines today from AI, but also being driven by more traditional workloads like cloud and digital transformation that are also growing at a nice clip. That demand in what has been an environment of more restricted or constrained supply has also led us into positive pricing environment, which accrues to us not only in our existing operating portfolio through better mark to- markets and better same-store stabilized growth, which we've experienced, you know, after a few years of negative results, now being in positive territory over the last two years.
and is accruing to us in terms of our development pipeline, which is solidly north of 10%, on average, across the call it 430+ MW that we have under development today. So all that being said, has now, I think, put us in a position where, you know, we've talked about, you know, even as we started 2024, you know, as we were giving 2024 guidance, we were, in essence, already giving 2025 outlook at the same time, which we don't typically do.
But we've talked about in terms of setting sort of a baseline for 2025 growth at 5%, as you know, we get the benefits from all the things we just talked about flowing through to not only the top line, but the bottom line from our organic portfolio, but also as those development deliveries come into operation from some of the significant signings that we've accomplished, not only this year, but into last year, which I'm sure we'll talk a little bit more about, but really sets us up for what is, you know, baseline 5% growth in 2025, and I think looking out accelerating beyond that in 2026 and beyond.
So, you know, when you think about the outlook that you mentioned for 2025, the 5% growth, are there even some headwinds that you're experiencing, whether it's continuing to average up that interest cost or delays between some of the recycling and when the commencements take place for the reinvestment of the development, where the underlying organic growth may be different and better than that 5% for 2025 over the longer, you know, term?
I would say, you know, in terms of, in terms of what I call, you know, on the capital recycling front, you know, we did the most of that work. You know, Greg and his teams on the investment side, and really across the company, you know, a tremendous amount of work done in starting sort of the back half of 2023, into the first half of 2024 in doing the capital recycling, forming some of the development joint ventures that we did with Blackstone, which is really a part of being able to satisfy what is a large and growing set of requirements and demand across our hyperscale universe.
So I think the impact from that efforts, which is also getting us in place in terms of bringing the balance sheet back in, back into good standing, better standing, the majority of that impact, I think we're seeing now in 2024. So that should have less of an impact on 2025. What I think sets us up for, you know, sort of improving growth in 2025 beyond, is more as you start to look at, you know, from organic perspective, as you look at our lease rates, from our expiring lease rates, you start to see that, you know, the comps and the rates continue to, you know, get lower over the future years, right?
And given, you know, an expectation that pricing is gonna, you know, remain where it is, if not improve, that's gonna give us, I think, a better opportunity for improved mark-to-markets and better same-store growth in 2026 and beyond. On top of that, I think, you know, we're starting to see some of those hard development deals and projects deliver in 2025. You know, you could look at the considerable backlog we have currently. That's gonna start to hit in 2024, but there's gonna be a decent amount that's 2025, back half of 2025, and beyond, as it takes time for us to, you know, build and deliver those projects. So I think and at yields that we've seen that have been improving.
Those two facts are gonna, I think, be more the catalyst for improved growth in 2026 and beyond.
You mentioned the capital recycling program. Is that you mentioned you're kind of through a lot of it? So going forward, we're in the last few years had a significant amount of capital brought back to the company to reinvest from non-core assets, converting some hyperscale into JVs. Is there a significant amount of that in the future you can use for funding, or you're kind of now at the steady state asset base that you want to be at?
Yeah, I think we. You know, we've talked about it in terms of, like, you know, sort of step one was diversifying our sources of capital, and I think we're and we've done a lot of that through a lot of the activity that you just talked about through that happened in 2023 and has continued in the first half of 2024. I think we see that there'll still be a need for having a broad and diverse source of capital, so we talk about it more in terms of of evolving our sources of capital.
I think we'll see us continue to look for the right capital partners and the right structure that helps us not only be able to fund and take advantage of what is, you know, probably one of the most robust and strong demand environments that I've seen in quite some time, but also make sure that we're continuing to focus on what is objective one, two, and three, which is back to making sure that we're growing the bottom line in 2025 and putting us in position to be able to improve that growth in 2026 and beyond.
So it's really putting together that right mix of, you know, delivering for our shareholders, but also being able to take advantage of this market, utilize outside capital, for some of these larger developments, so that we're not also overexposed to hyperscale, which has been bread and butter for us for many years. But finding that right mix that gives, you know, continues to put us in position to be able to win, not in, you know, not every deal, but I think the right deals and the right markets where we can provide a better value proposition, and again, you know, focus on that bottom line growth.
So one of the interesting, I think, features of Digital Realty is you offer data center colocation across the broad spectrum of size and connectivity. So as you've continued to operate and evolve the current strategy, you know, how do you look at the success of keeping all these assets together under a single roof and whether this is the optimal strategy going forward for Digital Realty?
Yeah, you know, I think it's been an important part of our strategy to be able to really satisfy that broad product spectrum, as you talked about. So, you know, our heritage, the DLR heritage, has really came from more of that, call it greater than a megawatt. You know, it's been called different things over the years, but call it that scale, hyperscale, greater than a megawatt segment, right? That's you know, been part of our company and our history, having those relationships with those large technology and large enterprise customers.
And so, you know, and we've seen that as it's evolved through from digital transformation to cloud, now to AI, and that customer base has been driving a lot of that, a lot of the activity there. At the same time, you know, we've also seen the benefits of, call it the retail colocation and, you know, and broader enterprise story, you know, in terms of the stability, the stickiness, driving interconnection, and really having that as a solid foundation to our overall platform and our overall strategy. And you get customers that span between those two as well, so some of those larger customers are also taking smaller network-oriented, you know, workloads and nodes within our portfolio.
You know, I think we see an advantage over time, and again, not only sticking to our core markets, which is also part of our strategy, and not extending ourselves, you know, too far beyond, you know, where we have these campuses that can, you know, I think, ideally and optimally bring together both the workloads from scale, hyperscale-type customers, but also being able to utilize the connections that we have to the enterprises and to the networks from our zero to one megawatt and interconnection business.
You're seeing a magnet effect between these two, bringing more parties to your campuses?
Yeah, I think there's, you know, there's obviously uniqueness between each of those segments, but there's also, you know, in the Venn diagram, there's also a powerful connection that I think we see over the long term. Puts us in the best position to be able to, you know, satisfy the workloads of not only the hyperscalers in our core markets, but also, you know, to be able to add on the benefits of networking and other interconnection capabilities within the enterprise segment, and really puts us, I think, in the right position to be able to generate you know, stable, long-term growth to the bottom line.
You mentioned the strong demand environment, so curious if you could frame further the size of the demand that you're seeing, and maybe it's helpful to think about it because of the way you disclose under a megawatt demand versus over a megawatt demand. And just try to think about the funnel and the opportunity, including from Gen AI workloads.
Yep, so I mean, you know, like I said, this is, you know, this is as strong a demand environment as I've seen in quite some time, and I think, you know, a lot of the attention gets on the greater than a megawatt hyperscale AI segment, which, you know, as it should. That's where we're seeing sort of the outsized, you know, growth and where we're seeing the increase in terms of, you know, the material increase in terms of our pipeline from a demand perspective, but I think it's important to note again, that that's - it's not just AI. We still have, within that funnel, you know, a solid amount of demand from the more traditional, you know, cloud and digital transformation workloads as well.
And on the zero to one megawatt side, you know, I think what we're seeing there is a continued, you know, steady, stable, and growing demand set from within that business. I think part of that is, not only are we continuing to focus on that as a, you know, as a company, as a business, when perhaps some others aren't. You know, so we're able to, I think, take market share within that segment, and really focus on growing that, while we're also able to, I think, utilize the heritage and the relationships we have to continue to grow within the hyperscale segment. And just to, you know, try to frame some of the... You'd asked about the overall, I think, just demand picture to kind of try to frame that.
First quarter of this year, we had a record signings quarter. We had over $250 million of bookings. We followed that up in the second quarter, where we had a little north of $160 million. Not a record, but a very solid quarter in terms of overall signings for us, when you look at it from a historical perspective. You know, that generated a first-half total of north of $400 million of bookings, which is twice the amount that we had in the same time the prior year. Kind of, I think, demonstrates sort of, you know, the type of, you know, demand and pipeline-oriented and success and execution that we've had.
Now, that's the total amount of signings, and within that, we continue to have what I'd say very strong and steady bookings within the 0 to 1 megawatt segment. We've signed over $50 million a quarter the last several quarters, and we've seen pick-up within our interconnection bookings as part of that. So we've, I think we've been able to successfully execute within both of those segments, over this, you know, what's been, again, a rising and steady view of our demand across our global portfolio.
And so if we unpack that a little bit more, so the over $50 million from the under one megawatt side, as you look at the pipeline that you're developing for that, and you look at the demand, is this something that not only may sustain, but you might even be able to augment this opportunity over time? Especially, and over the last few years, this has been an increased point of emphasis and focus for the company.
Yeah, I mean, we're, you know, we're continuing to I'll say, you know, invest and stay focused on growing that segment of the business, you know, you know, globally. And so, you know, we're. You know, the way we're sort of approaching, attacking that, we look at it from both where, you know, within the customer base, you know, where can we expand, you know, call it share of wallet, within the existing enterprise-oriented customers we have? So we have a focus on growing our, you know, within that segment, looking at our enterprises that are, call it, a billion-plus in revenue. Really looking at where we can expand them across, you know, take advantage of PlatformDIGITAL, the 50+, you know, metros we have, the 300 data centers.
You know, where do we think that we can land and expand them, and really, you know, really take advantage of those existing relationships and the value proposition we have, and grow them across our global portfolio? At the same time, working to cultivate, you know, new relationships with customers, and so that's why you hear us, you know, usually every quarter, focus on new logos that we're generating, you know, where we've been generating north of, call it, a hundred new logos a quarter over the last several quarters. You know, it's really part of cultivating, you know, hopefully what would be the next set of large enterprise customers that can grow with us within our, within our portfolio, within that segment, and, you know, and, and really expand.
But for the most part, if you look at our signings, the majority of signings within any given quarter, and this translates to both the zero to one and the greater than a megawatt segment. The majority of our bookings still come from our, you know, our existing in-place customers, which we have over 5,000 of, but we're also making sure that we continue to expand that customer base and provide us opportunities down the road to, you know, to further grow our existing customers and their share of wallet.
As we, you know, shift over to the over one megawatt, it may be easier to ask this question just in totality, whatever is the way that Digital looks at it. What percentage of the demand right now or the bookings are coming from Gen AI workloads and, you know, how does that compare to what's in the pipeline?
Sure, yeah. So, I mean, we... You know, if you, you know, think about it, it's been a little bit over a year of sort of the AI, you know, the AI discussion. So back when NVIDIA kind of first did their blow-out quarter, which was, I think, in May, May-ish timeframe of 2023-... So we started talking about on our, on our third quarter 2023 call in terms of, like, percentage of, of AI that was within our, within our signings. That point in time was- it was called roughly a third of our signings, back at that point. Fourth quarter was relatively de minimis. And, you know, that kind of fits with- within sort of the pattern that those greater than a megawatt, and this is, you know, back when it was more cloud-oriented versus now cloud plus AI.
You know, that is, you know, you do see fluctuations in terms of the overall volume, just given the size of the types of workloads that we're talking about. You know, you then shift over to 2024, the first quarter, which was our record quarter, $250 million. We talked about half of those bookings were AI-oriented. Second quarter, it was around a quarter of those were AI-oriented. And I, you know, in terms of our pipeline, you know, I would say that we're seeing, you know, there's a material amount of our pipeline that's, you know, overall AI-oriented in terms of, you know, expectations. But there's also, you know, 'cause again, that's been the sort of adder on top of our existing pipeline.
We're still seeing very robust demand from existing, call it traditional workloads around cloud as well.
As we try to think about the bookings opportunity over time for Digital, is there a way to frame just how much physical capacity that your sales team is out there marketing to current and prospective customers? You know, there's, of course, the part of your capacity that's built and, you know, is underutilized relative to its, you know, potential. There's the stuff that's in development, but then there's also projects, right, that sit in kind of the waiting room, where you could just greenlight those if you get the customer demand. So how should we think about, like, the total quantum of opportunity that your sales team's bringing to market?
Yeah, I mean, you know, I'll dive a little bit into this, but the simple answer is, you know, our sales, you know, we've got, you know, close to 3 GW of potential capacity outside of our 2.5 GW of operating capacity today. So in general, we could double the size of our business and, you know, our sales teams can, you know, in essence, market, you know, all of what's available within our operating portfolio and the majority of that 3 GW that could be built out. Breaking that down a little bit further, we've got, you know, close to 430 MW under development today.
Roughly 65% of that's leased, pre-leased, so, you know, there's an immediate availability within that 35%. We're then building around a little over 700 MW of shell capacity. So that's kind of the next stage of most near-term that would be available. We've got line-of-sight on power for the majority of that capacity as well. And then we have, you know, call it close to 2.3 GW, 2.4-ish GW of, in essence, land capacity available. And I mean, we've had. We've had. We talked about last quarter, we had an opportunity in Dallas, you know, where we in essence sold, you know, what was, you know, not even underway. It was land capacity.
You know, and so, you know, we've seen where we've been able to sell through kind of all three of those different stages of potential available capacity within our... You know, that's within reach within our portfolio today.
So with all this capacity that you could tap into and sell, is there an opportunity for another record bookings quarter, second half of the year?
Yeah, I mean, you know, I'd almost go back to, I think, something that Andy had said on, I think it was our first quarter call, when we had our record. You know, that, you know, it's hard to do back-to-back records, which, you know, we didn't do. We've already had the second quarter. But look, we've got, you know, with the demand environment that I think we're in today, the capacity that we have available, that's highly attractive to not only the hyperscale community, but also, again, not to ignore our, you know, zero to one megawatt business that's doing well as well. You know, I think there's definitely opportunity for that potential to happen.
How do you think about the, like, where it goes? Like, what gets funded on balance sheet versus what might go into the joint ventures?
Yeah, I mean, so we've, you know, we've sort of. I mean, not sort of. We have, I mean, we've done that today. We somewhat answered that. So we've done joint venture, you know, our joint ventures, you know, one, aren't necessarily new to Digital. We've had a number of joint ventures over our history. And they largely fit in kind of two broad buckets. One is where we're, you know, utilizing, you know, financial, you know, capital-oriented partners, which is, I think, a little bit more what you're referring to.
Yeah.
Others where, call it more strategic or operational, and those are those would be ones like Ascenty in South America, where there's actually an operating, you know, partner company management team generally behind it. So like Ascenty, Teraco in South Africa, and Mitsubishi in Japan, where it's helpful either from a risk or other strategic rationale, bringing in demand and local more localized expertise in having those partners. From the financial capital partner side, you know, we've expanded on those relationships over the last year. Most notably, I think you're referring to the Blackstone joint venture, which is roughly a $7 billion JV. We've closed the first phase of that, which we did earlier this year.
Expect to close the second phase in sometime in the second half of this year. And, you know, that's roughly 500 MW of capacity across three different markets. Expect to deliver probably 20% of that capacity in 2025. So that's gonna be a multi-year sort of journey, as we look to, you know, which is part of that $7 billion in terms of their capital commitment to those sites. And again, I think that just goes back to the fact that this hyperscale opportunity is large. We think it's prudent to have capital partners with us that can help fund that development. We earn incremental return on our invested capital because we're generating fees, and in some cases, related to development projects, we're generating those fees kind of right away from the start.
So has an impact to our bottom line as well. And so we think, you know, you know, those will continue again as those are just getting started. You know, somewhat of a multi-year journey, you know, as we look out to the capacity that's available within that JV.
One of the questions that we get is whether or not this strong demand cycle is gonna get to a point where there's just, there's been more absorption by the customers than may be needed for the workloads, and it could create some kind of, you know, correction in the supply-demand environment. As you kind of look back to the cloud cycle that you went through, where we saw some of those, you know, ups and downs in terms of supply-demand environment, are there any learnings or indicators that you learned from back then that we should be mindful of today, and because of the power constraints, is this just a fundamentally different environment?
I think there's a little bit of the two parts, both of those parts that you just mentioned. So from a power constraint position, I mean, you know, we haven't seen this type of constraint environment, you know, in the history of data centers. Meaning, it's not. You know, what started as a focus on power constraint, largely within the Ashburn market, which is the largest data center market in the world, you know, has now extended across multiple markets, not only in the U.S., but also globally.
So I think that that constraint alone has kind of, you know, call it, created a level of ceiling where it's more difficult to, you know, bring power and be able to satisfy the demand that's out there today, which is also what's led to, you know, improvement, substantial improvement in some markets in terms of pricing. So has accrued to, I think, us, you know, us as an operator, especially an operator with, you know, one of the largest existing operating capacities, you know, across several of these markets, including Ashburn and Northern Virginia. So I think that kind of sets sort of the stage around, you know, how things are a little bit different this go around.
In addition to that, I think from our lens or from, you know, how we're- how we look at it, and, you know, a little bit to your point on, you know, what have we learned? I think one of the things we're also doing is we're sticking to our core markets. So part of what, part of what's happened is you've seen some of this demand go into, you know, spillover, secondary, tertiary, or however you want to describe it, other markets within, you know, largely within the U.S., because that's where most of the AI demand is oriented today. Although that's starting, you know, along the same, some of the lines of cloud to trickle through into EMEA and into APAC, but still in the early innings of that.
But we're sticking to our core markets, where we think over time, you know, we see a diversity of demand that I think should enable us to withstand any sort of, you know, disruption or slowdown that might occur. Although based on what we're seeing in the pipeline, I mean, we're not seeing that or expecting that anytime soon, and I think that, you know, in addition to that, you know, where we are starting developments, I mean, some of the data points we already mentioned, you know, we have a development pipeline that's already 65% pre-leased. We're leasing these to customers over a long-term basis with, you know, good annual escalators and 3%-4%, you know, area.
So I think kind of, and most of these, you know, most if not all these customers, are very high credit quality customers. So giving that sense of security, stability around what we're doing and looking out into the future to, you know, be able to sustain any sort of, you know, disruption, minor or major, from our lens.
We switch gears to pricing for a moment. So with pricing, you know, you and the team over the last number of months have talked about the positive pricing conditions. If you just take out some of the outliers, whether it's helpful or hurtful outliers, is there a way to frame kind of the average rate growth you're seeing? And I realize it's you can look at renewals, but really more from a spot price market perspective, what you're seeing, and are you still seeing that growth now continue into this third quarter?
I mean, the short answer is, I mean, yes, we are continuing to see positive pricing momentum across the majority of our major markets, and that, you know, there are different degrees of that, as you mentioned. I mean, you know, Ashburn has seen sort of the largest, it had the largest decline over several years ago, and as a result, has also seen the biggest uptick and reversal of that trend, so that might be one of the kind of outliers you mentioned, but, you know, to use that as an example, we've seen rates, you know, that were in the 80s, now they're in the 160 and beyond.
You know, so we've seen that, that sort of, you know, relatively quickly rebound in pricing there. But I would say, you know, broadly across most of our global markets, we've seen, you know, sort of over the last, call it, two years, which is where a lot of, you know, a lot of this kind of supply-demand imbalance started to really take shape. We've probably seen anywhere from mid to high single digits, sort of annual growth in terms of where rates are across most of those major core markets.
Are customers changing the way they engage with the renewal schedule? So are you seeing any change in behavior because of the pricing conditions? Customers may wanna come to you early and say, "You know what? Let's just extend the leases now off what the market is today," and defer the risk of things even getting more expensive as they look out over a couple of years?
I mean, we're seeing, you know, it's, I would say it's, that's relatively isolated at this point, but we have seen that. So we talked about, we actually talked about one of those on the first quarter. We had sort of an outsized mark-to-market in the first quarter, and we had sort of talked about that in terms of sort of a preview, if you will, or an illustration of an outer year expiration that was pulled forward into 2024. So kind of demonstrating the pricing potential and the uplift for as you get sort of further out into our lease expiration schedule. So we've seen that in certain instances, not...
I wouldn't say that's a widespread phenomena. But, you know, I think there's opportunity for that, you know, as we start to move through, you know, and this environment, you know, continues in terms of a supply-constrained environment. There's potential for that to continue to happen.
So we're starting to learn more from some of our other coverage around hyperscalers signing twenty-year IRUs for fiber. And curious, you know, first, if you know if some of these fiber deals are going to your data centers, and if the IRUs are being signed for those longer durations, I think that's longer than the typical initial contract for your hyperscalers. Does this just reinforce the durability of the leasing opportunity, you know, from this evolution in workloads?
Yeah, I mean, we, so we've started to see some of that. I mean, most of our, you know, the majority of our portfolio, we are, you know, we already... For most of it, we already have, you know, existing connectivity. So I think we're starting to see this in some of the new builds that we have in building out sort of that connectivity-oriented, some of which we help procure, some of which, depending on the size and how much of the data center a customer has, there can be the ones more on the forefront of procuring some of that, some of the dark fiber.
But that's always been part of, you know, again, back to sort of that, you know, being able to combine both not just the hyperscale, but being connectivity oriented. You know, we've been working with our customers, as well as the network providers, to bring in connectivity to, you know, all of our sites as much as we can. And in addition to that, you know, working with our customers to also connect sites within a campus. So I think one of the things we're seeing that, you know, is preferred by customers, but again, it kind of depends on the mix of how much power is available and, you know, their time to market.
But there, what we're seeing is there's a preference for customers to land sort of AI requirements near cloud compute, 'cause cloud's where a lot of the data is held. So their ability to connect from a building that's on the same campus to where they have an AI workload, and using pathways and other, you know, connectivity options to bring those two data sources together, I think is an ideal environment and something that we're helping our customers to solve.
Maybe pivoting over to the financials. So in terms of capital allocation, dividend's been flat for, I think, at least a couple of years now, the annual dividend?
A little over a year, yes.
A little over a year. What's the path, and what should investors look for on the possibility for a dividend per share to return to annual growth?
Yeah, so I mean, you know, we're, you know, our... The way we, the way we look at it, I mean, we, we view our best, our best source of capital is internally generated cash flow. So so that's also focuses driving growth in internal cash flow that can, we can then deploy into development yields that are in the 10+% area. You know, and, you know, I think as we, as we look to do that, and as we start to grow the bottom line, ultimately, that's, that's gonna be sort of the trigger to then look at and say, "Okay, you know, we're, we've, we've now looking to grow ultimately our dividend in lockstep with our, with our bottom line," call it Core FFO, AFFO per share growth.
But also looking to, again, maximize, I think, the amount of cash flow that we're able to retain, you know, which is not easy, given that we're restructured, so we're distributing the majority of our cash to begin with. But to the extent we can, we can satisfy both, we can maximize cash flow available from operations after dividends to help fund some of the development growth and the higher yields that we're seeing, and also, you know, start to continue to grow our dividend as our bottom line growth takes shape as well.
In the past of over the last number of months, you framed the conversation on equity as around partly opportunistic, related to the demand environment. Is that still the way that you look at the possibility of equity, or do you prefer, especially now that you have the additional capital partners that you have, to, you know, create more of a self-funding model for Digital with the internal cash flow and the benefit you get from levering EBITDA growth to kind of fund the investment needs for the business?
... Yeah, I mean, in the most ideal world, I mean, we'd, you know, we'd be able to satisfy our capital needs from, you know, from self-funding. You know, I think we're right now in our environment, though, I think we're in a place where that's why we've set out on a path to have a diversity of capital sources available. I think the statements still hold around, you know, equity being demand-oriented, right? I mean, we're seeing that as part of this capital deployment investment in our development pipeline, where, you know, again, we're earning 10+% returns, which I think is a good use of overall capital, and I think good returns that most shareholders would be happy with.
I think we're looking at how we can, again, you know, put together the right mix of capital sources across not only cash flow from operations, leveraging EBITDA growth that we have now that our balance sheets, you know, balance sheet and leverage are in a good place, access to debt capital markets, and then supplementing the equity side with a mix of both JV capital partner sources, as well as public equity where needed.
Just to finish up, you spent a good amount of time, I think, in with investors since the earnings. Are there any aspects of the Digital Realty strategy story opportunity that you feel may be underappreciated at the moment?
I don't know if anything's underappreciated. Look, I think we've done a lot over the last year, again, in terms of getting the balance sheet, you know, back in place. And you know, ultimately, this is around growing the bottom line, which is why that's our first, second, and third focus. And you know, we're in the environment where, you know, we see a path to be able to do that, just given the positive pricing environment, you know, the yields we're seeing on developments and the overall demand environment. I think sets us up well to be able to execute and deliver on that.
Matt, thanks for joining us today.
Yeah, thanks again for having me.
Thank you.