How is Digital Realty really faring in Latin America?

US digital infrastructure investment fund Digital Realty has been sending mixed signals in terms of the outlook and demand for its Latin American operations.

On the one hand, its management has indicated that activity is high, but the figures tell a slightly different story.

In the region, the group co-owns the Brazil-based datacenter company Ascenty with Brookfield Infrastructure Partners. Ascenty has 36 sites throughout Latin America, including projects that are active and still under development.

Of the total sites, 25 are in São Paulo, two in Rio de Janeiro and one in Fortaleza, all in Brazil; three are in Querétaro, Mexico; three are in Santiago, Chile; and there are two in Bogotá, Colombia. New launches are yet to materialize, Digital Realty CEO Andrew Power told investors in a 3Q24 earnings call.

“They aren't ready – the available capacity in those specific locations that comes next isn't necessarily powered today, but those deliveries are approaching rapidly,” the executive said before naming some markets, including South America.

Despite that, he said that “those all aggregate north of 3GW of capacity, including shell capacity, that we can activate quickly.”

Power also said that Digital Realty is buying land and purchasing power in most of the company's existing markets, citing South America among them, but without giving further details.

For the past few months, Digital Realty has not added any extra land or power to its backlog in Latin America, according to the group’s bookings.

CAPACITY AND OCCUPANCY 

As of end-September, Ascenty’s datacenter backlog amounted to 150MW in capacity, or white IT space load, with 118MW of the total in São Paulo.

This regional capacity has not changed from the second or first quarters.

The same is true of the occupancy rates of the datacenters. These remain, at 91.9% for the São Paulo area datacenters, 90.1% for Santiago and 22% for Fortaleza. Querétaro and Rio de Janeiro are at 100%.

Ascenty’s Fortaleza site was projected to have 10MW in total power and sit on a 9,000m2 site. Currently, it has 6.2MW in white IT space load.

The rest of Ascenty’s capacity is divided as follows: 10.2MW for Santiago, 8MW for Querétaro and 8MW for Rio de Janeiro. All of which are unchanged from the previous quarter.

In Colombia, the company has not yet started actively developing its two planned datacenters.

Ascenty reserved 5,600m³ for the project, a plot that has remained listed as “space held for development” rather than “space under active development” in Digital Realty’s bookings for the past two quarters.

The activation of the group's first datacenter in Bogotá, initially scheduled for later this year, has been pushed back to 2025. 

Ascenty does not see Colombia's enterprise market as fully mature yet, and Ascenty COO Marcos Siqueira told BNamericas earlier this year that “We're not in a hurry. We're always accelerating or holding back our investments according to demand. In Colombia, I already have the two buildings ready, another lot of land secured, the permits granted and the energy as well.

LEASING

Overall, Digital Realty reported US$208mn in annualized base rent for Ascenty’s datacenters. 

The rate represents the monthly contractual base rent (defined as cash base rent before abatements) under existing leases as of September 30, multiplied by 12. 

The group posted global revenues of US$1.4bn for the quarter, up 2% year-on-year.

Globally, Digital Realty delivered 36MW capacity during 3Q24 and had 644MW of datacenter capacity under construction.

“The overall pipeline is now 74% pre-leased, up from 66% at the end of 2Q, with an average expected yield of 12%," said CFO Matt Mercier. 

"Almost all the development underway in the Americas is pre-leased," he added.