Good day and welcome to Digital Realty's third quarter 2018 earnings conference call. All participants will be in listen-only mode. Due to scheduling constraints, this call will be concluded after 60 minutes. Please note this event is being recorded. At this time, I would like to turn the conference over to John Stewart, Senior Vice President of Investor Relations. Please go ahead, sir.

Thank you, Andrea. The speakers on today's call will be CEO Bill Stein and CFO Andy Power. Chief Technology Officer Chris Sharp is also on the call and will be available for Q&A. Management may make forward-looking statements including guidance and the underlying assumptions. Forward-looking statements are based on expectations that involve risks and uncertainties that could cause actual results to differ materially. For a further discussion of risks related to our business, see our 10-K and subsequent filings with the SEC. This call will contain non-GAAP financial information. Reconciliations to net income are included in the supplemental package furnished to the SEC and available on our website. Before I turn the call over to our CEO, Bill Stein, I'd like to hit the tops of the waves on our third quarter results. First, we followed up our record bookings in the prior quarter with our second highest and our backlog reached another high watermark. Next, we announced our entry into Latin America. Third, we beat consensus by a $0.01 and we remain on track to deliver double-digit growth in AFFO per share for the third time in the past four years. Last but not least, we further strengthened the balance sheet extending our weighted average debt maturity by a full year with the issuance of $520 million of 12-year paper at 3.75% and the refinancing of our $3.3 billion credit facilities. With that, I'd like to turn the call over to Bill.

Thanks, John. Good afternoon and thank you all for joining us. We had a very productive third quarter with consistent execution against our strategic plan. Let's turn to page 2 of our presentation. The highlight of the quarter was the announcement of our entry into Latin America with a definitive agreement to acquire Ascenty for $1.8 billion. Ascenty is the leading data center platform in a rapidly growing market. It's best-in-class management team and proprietary fiber network have made it the partner of choice for the leading global cloud providers, and as a result, it has the largest market share. Ascenty's portfolio is comprised of eight in-service, purpose-built, world-class data centers and another six data centers currently under construction, totaling 106 megawatts of planned capacity. The in-service portfolio was approximately 97% leased as of September 30. While the data centers under construction were approximately 83% pre-leased. Since our announcement, the Ascenty management team has continued to execute generating additional fiber revenue and leasing another 3.6 megawatts in October to two leading global cloud providers, bringing their year-to-date leasing tally to approximately 30 megawatts. Given its high quality portfolio, Ascenty serves a blue chip customer base of 140 logos, including the leading global hyperscale cloud providers. In fact, investment grade or equivalent clients account for over 90% of revenue. In addition more than 75% of Ascenty's contractual cash rent is denominated in U.S. dollars substantially mitigating foreign currency exposure. I might add here that the real has appreciated by 10% since we announced the acquisition just over a month ago. This transaction immediately establishes Digital Realty as a leading data center provider in Latin America. Ascenty enjoys approximately 30% market share in Brazil far outstripping its competitors. We believe we can further accelerate the company's success, capture additional market share and…

Thank you, Bill. Let's begin with our leasing activity here on page 7. We had a very strong quarter with balanced performance across regions, product types and customer segments. The continued demand underscores the values customers see in Digital Realty. We provide the trusted foundation, powering our customers' digital ambitions. Customers choose us for many reasons. We offer them resiliency they can trust. We have secure, compliant and reliable data center solutions, including those powered by renewable energy. Our global footprint of interconnected scale data centers and hyperconnected hubs offers a broad range of solutions when and where our customers need them. And finally, our solutions help customers manage their strategic, financial, operational, and reputational risk. During the third quarter, we signed total bookings of $69 million, including an $8 million contribution from interconnection. We signed new leases for space and power totaling $62 million, with a weighted average lease term of 10 years, including a $10 million colocation contribution. The total bookings number was our second best quarter ever, close on the heels of our $94 million all-time high in the prior quarter, bringing our year-to-date total to $224 million compared to $198 million for the full year in 2017. The $18 million combined colocation and interconnection contribution was likewise the second highest on record. We are seeing solid traction with our Service Exchange platform, powered by our unique partnership with Megaport. This traction is partly due to the continued expansion of our key cloud destinations to include Salesforce, the largest SaaS provider, and top destination requests from many of our enterprise customers. Recent customer testimonials include a global voice solutions and service provider, who reported, "We now have 10 times the bandwidth with painless provisioning to different cloud services." While a company using Digital Realty to accelerate their…

My pleasure, Mr. Power. We will now begin the question-and-answer session. The first question comes from Michael Funk of Bank of America Merrill Lynch. Please go ahead.

Yeah. Thank you for taking the question tonight. One quick one to begin. So, earlier today there was some commentary on pricing trends in Northern Virginia and the impact that the negative pricing from that perspective is having on project yields. So hoping that you as a dominant operator in that market, maybe add your perspective and the expected returns that you're seeing in that marketplace?

Thanks, Michael. Look I'm not going to speak for the returns that our competitors are earning, but our experience over the last couple quarters is that rents have been flat. And that includes some 20 plus megawatt deals that we've done in each of the last two quarters. I mean just something to keep in mind, we hear a lot about demand in other parts of the world particularly Europe, but year-to-date absorption in Northern Virginia is more than two times the absorption in the rest of Europe combined. So look I mean global scale really matters. It's part of our differentiated product offering, and we can and do provide the opportunities for our customers around the world. But I think the ability to satisfy their needs to both land and expand in Northern Virginia currently on both of our campuses the legacy DuPont campus and the new Digital campus we're building out is absolutely critical. And the Dulles land that we just acquired is a clear reflection of our real estate heritage, our DNA and we view that as a critical piece of our supply chain going forward and our ability to continue to support our customer base. So, I mean, the bottom line is Northern Virginia is a competitive market. But the current market dynamics we believe play to our strengths and enable us to achieve very attractive risk adjusted returns.

I'm going to just follow with one more quick one. I know, you've maintained the guidance for a slight pressure on the rental rates and renewals for the full year and I heard your commentary about still cycling through some of the larger DFT deals, but thinking about fourth quarter and what we've seen year-to-date there, it seems to imply that you're expecting maybe to put at least one of those deals behind you in the fourth quarter, is that the correct read? And what kind of visibility do you have on those larger renewals from the legacy DFT?

Thank you, Michael. It's – this is Andy. I would say, listen, the timing of when any particular renewal gets done and over the finish line is always tricky to map to a quarter because the – our customers obviously don't necessarily march to that same cadence. Based on I'd say some advanced dialogue we've had with few of our larger customers that have a handful of renewals coming up in the next several quarters and years, I think our estimation is that we may get a few of the larger ones done in the fourth quarter hence we have a little bit of more cautious view to the mark-to-market, which has been year-to-date positive 2.5% on cash basis and I think close to 5.5% or so on a GAAP basis, hence the slightly negative on our full-year guidance table.

Our next question is from Jordan Sadler of KeyBanc Capital Markets. Please go ahead.

Thanks. Good afternoon. So I want to just touch base on something of a little bit of a disconnect, obviously fundamentals, leasing, very robust. The equity markets not so much as it relates to data centers or at least it doesn't appear to be fully reflecting the success you guys have had this year in your stock price. So, I'm curious how do you tweak the capital allocation model for a rising interest rate environment given the capital intense business model like yours?

So, Jordan, I think there are a couple of things. First of all, we continue to work to drive down our build costs. We've been quite successful with that. But basically, the bigger the building the more you can build, the lower you can drive your per unit costs. And for example in Northern Virginia, are building out which is you know almost 100 megawatts, it's 96 megawatts. That's up and it's basically leased, it is leased. And we've built that in less than a year. And so it clearly allows you to drive your unit cost down. The other part of that and somewhat related is our vendor management initiative, which – through which we lock in our vendors on three-year deals with fixed price contracts and that too particularly if there's some inflationary pressure, you know, it helps us keep our costs in line. Because of our scale we're able to buy both equipment and power in significant bulk. And similarly with land and we bought over 400 acres of land there next to Dulles Airport at I'd say less than half the market cost per acre. And I'd say the final piece of this in terms of how to function in a rising rate environment as it relates to the balance sheet and it's just – I'd say it's basic real estate fundamentals where you extend your debt. We just did a 12-year sterling deal, you fix your rates and you make sure you have plenty of liquidity and we just announced the refinancing of our revolver, booking upsize and reduced pricing. So I guess, what I'd say is as competition intensifies it's important that we continue to exploit our competitive advantages.

That's fair. Just as a follow-up you took down and you mentioned the incremental land here in Northern Virginia in the quarter anywhere else where you see the need to backfill inventory in terms of land in a significant way?

Yeah, no, absolutely. So, and I think, we announced Sydney in this earnings release; we're looking at a couple of other markets in Asia, as well as Europe where we're going to be adding land. I think we're in pretty good shape in the U.S.

Our next question is from Jonathan Atkin of RBC Capital Markets. Please ahead.

Thanks. Yeah, thank you. So couple of questions on international. So in Brazil, the sizes of those deployments are, they seemed a bit modest given the size of the opportunity and essentially leadership position in that market. And so I'm wondering when do you anticipate that the deal sizes might get larger in Brazil as they have directionally in Australia, Europe and U.S.? And then elsewhere in the region, I'm curious about just any updated thoughts on Mexico and (35:24) and other assets around there and how that might fit into your strategy. And then finally, if you could update us on the Japan joint venture and where things stand there? Thank you.

Hey, Jon, this is Andy. I'll tackle the second – excuse me, I'll tackle the first of, I think, three in here, and I'll toss it to Bill, and he can toss it back to me if he likes. So first on the deal sizes, as we mentioned, a bit of a bring down since we announced the Ascenty transaction we signed, an incremental – or I shouldn't say we signed, the Ascenty team has signed an incremental 3.6 megawatts to two different customers, which speaks to your point that these are top cloud, global cloud service providers buying in the, call it, less than 3.6 megawatts a turn sizing, and that's consistent with their track record for certainly the last 12 months. I think that is very much comparable to their stages of growth for those similar customer profiles here in North America or Europe or Asia, for that matter, going several years back, and we're aware of the fact that the Ascenty team has been in dialogue with several of those customers in taking on certainly larger takes. So we expect, similar to migrations, in terms of size of capacity that the deal sizes will grow. We're quite pleased that the Ascenty platform and team has landed the initial cloud on ramp and compute nodes, and our hit track record is where these customers typically land is where they expand. So we're quite optimistic on that. Maybe I'll hand it over to Bill to talk about Mexico and the other markets, Jonathan Atkin.

Jon, relative to other markets in Latin America, entry there will very much be driven in response to customer demand. We are in close dialogue with almost all of our top cloud customers, as you might imagine. And the extent to which we enter new markets will be driven by what we hear from them. So we're not going to embark upon a build it and they will come strategy as it relates to new markets. It will be very much driven by specific orders, if you will, from key customers. I think it's suffice to say though, there's a high likelihood that we'd enter at least one new market within the next 12 months down there based on what we're hearing.

And then lastly, Jonathan, I think you had asked about also an update on our joint venture with Mitsubishi Corporation Japan. I would say things are going very well on that front. Last quarter we announced a strategic win with a top cloud service provider into the Tokyo asset. The capacity is coming online also in Osaka. I think subsequent to quarter end, we'll announce a new win with a top five cloud service provider on that new campus, and then we have a pretty long runway of growth on that campus and I have seen a substantial amount of customer inquiry. And I'd probably add Tokyo back to the list of locations where we'll be looking to continue to procure additional WAN capacity.

Thank you.

Our next question comes from Colby Synesael of Cowen & Company. Please go ahead. Colby Synesael - Cowen & Co. LLC: Great, thank you, two if I may. First off on Ascenty, that deal is expected to close in the fourth quarter. So I was hoping, Andy, you can remind us just how we should be thinking about landing that into our models to get to that 2% dilution, including the equity raise, which was a forward deal. How should we assume that that actually starts to flow into the actual income statement? And then as it relates to expansion, just piling on the last question, I think the market that Ascenty's talked about potentially going into is Chile. So I assume that that's the market within the next 12 months that you just referenced, but I just wanted to confirm that. And then also just wondering what your interest is in markets like Africa as well as others such as India and so forth. Thank you.

Thanks, Colby. So you're correct, closing in the fourth quarter, our estimated timing is probably call it late November-ish. And obviously in conjunction with that we'll close on a portion of the equity offering to fund our share into that venture. We've obviously not given out 2019 guidance just yet given we're standing on the third quarter earnings call, and we'll be happy to give you components of the model for 2019 guidance when the full company guidance comes out. I think the best that I can give you is about 2% dilution in 2019, ultimately then becoming accretive by 2021, a good chunk of that dilution due to the fact that we are mitigating risk through a non-recourse secured debt financing that carries an interest rate double the Digital Realty interest rate. So forgoing that near-term FFO, and this is really a risk mitigating strategy, and we obviously have the financing components, be it the cost of debt and the amount of shares, so I bet you could back into the amount of EBITDA using the three numbers. Maybe I'll toss it back to Bill for thoughts on some of these other international markets.

So, Colby, I gather you're looking for confirmation on whether or not Chile is the next entry point down there. Just keep in mind that when we enter a new market, we have a very rigorous process we go through here looking at the political risk, economic risk, currency risk, and everything that you expect. And at the end of the day, it goes to our board for approval. So I don't want to jump ahead of our board with respect to which new market we could enter next or the next one after that. Relative to Africa, I know you're referring to a specific opportunity there that's in the market, and you can assume that we see everything just because of our size and our history. Again, whether or not we act is really a function of a lot of factors, and that includes how comfortable we are with the risk factors associated with that market and the opportunity.

Our next question comes from Simon Flannery of Morgan Stanley. Please go ahead. Simon Flannery - Morgan Stanley & Co. LLC: Great, thanks. Thanks very much. Good evening. Bill, you talked a lot about the pipeline last quarter. Can you just update us in the various regions how the pipeline looks today, and then any changes in the cost of construction or other inflationary pressures given what we're seeing in the broader economy? Thanks.

We actually have Chris Sharp here in the room, who runs design. And he might be able to speak to construction, given an opportunity to speak, and then we'll turn it over to Andy to talk about the pipeline. Simon Flannery - Morgan Stanley & Co. LLC: Thanks.

Thanks, Simon. So just before we get to fourth quarter, maybe to recap on third quarter, we had a second best in the company's history $69 million total bookings. I would say it was robust and diverse, which is a great thing. We had a market step up in our colo and connectivity signings on a global basis, which included a few multi-market signings, really leveraging the power of the platform. We had a step up in North America colo, and interconnection by itself as well as EMEA and broad-based regional demand with key wins in Asia-Pacific, Europe, and North America, not only the dominant Ashburn market, but also in Chicago and Dallas, which was great to see. Turning to the back half of the year, the last quarter of the year and on to 2019, I think we're seeing a continuation of similar trends on the global accounts. We see the same customers where we've had success in the past continue to build out their footprints where they've previously landed with Digital Realty, and at the same time in active dialogue on some new market locations. Within the enterprise and network sector, this whole past quarter we had 48 new logos, call it 20%-plus step up from prior quarters, just a smidge below prior peaks on new logos, plus another eight new logos we landed through some of our P&A channels. So I think we're charting towards another strong colo interconnect quarter as well across the board driven by some pickup in the enterprise demand, as well as some new names within our network vertical. We're actually aligning some of the legacy network providers and some newer fiber and other over-the-top network providers. Chris, do you want to tackle the construction piece?

Absolutely, thank you, Andy. So, Simon, great question and it was alluded to earlier by Bill with the fact that we have an industry-leading global supply chain and a part of that is a key element is the VMI program, Bill had walked through. But that VMI program is definitely something that's allowed us to really maintain a relatively the same cost in the same delivery timelines that we have for the last couple of quarters. I'm also trying to emphasize the fact that with the way that we've been building in larger chunks and being able to establish a longer term relationship with a lot of the local construction teams and keeping them on jobs for a longer period of time, have been able to also alleviate any kind of spikes or mishaps in any of the construction projects that we have coming online in the market today. But I'd also emphasize the fact that this is something that Digital has been doing for some time now and we have alluded to the real estate heritage of Digital Realty. I would also allude to the heritage of being a construction company that's operated in more markets around the world than a lot of our competitors. So that has provided us a very phenomenal opportunity to kind of consistently deliver our product offerings and some of the most economical elements possible to our customer base and meeting the stringent timelines that we're seeing from a lot of these larger and smaller customer base that's coming into our asset class. So I would say the short answer is, we don't see any spikes today and we've really locked in a lot of the variability and we continue to deliver I think an industry leading price point to the market today. Simon Flannery - Morgan Stanley & Co. LLC: Do you have any way of quantifying the GAAP sales in your price, your cost per megawatt versus maybe some of these private equity new builds?

That's a great question. It depends on the market. There are so many variabilities. We can't really go into an apples-to-apples comparison, but I would tell you just some of the new money coming into the market, I don't think they really realize the stringent nature of giving power to the facility and securing the right resources and because of the competitive dynamic that exists in the market today, I would tell you that the talent that is required to build out these facilities is becoming extremely scarce. And that's why we continue to secure long-term contract with the appropriate people to do the very complex installs and builds. And that's why I tell you, it's really hard to place a simplistic model against their money coming in, but there are a lot of pitfalls out there that we've seen certain providers – with PE providers and even existing providers fall into on getting that power, getting those resources allocated. And then also the last piece that we've talked about a couple of times the supply chain, right. Making sure you have the available infrastructure and inventory to hit those timelines. And you know we've been able to achieve some industry leading timelines on delivery of shells, delivery of data hauls and just a full fit out. But I would tell you it's hard to give you any specifics, but we definitely are very pleased with some of the teams that we've had in the field for some time now.

Our next question comes from Michael Bilerman of Citi. Please go ahead.

That was close, it's Michael Bilerman. So first question, I don't know if Bill or Andy want to take it. If you think about the Ascenty transaction, you talked a lot about how about how strategic it was. You know at the end of the day the deal was going to be somewhat dilutive to 2019 and 2020, given that there's a lot of development that has to be leased up in that portfolio, but you also talked about how it would accelerate your long-term growth profile. How should investors think about you doing other deals like this that could take down current growth for the potential of growth going forward and perhaps within that context, quantify a little bit how much you think this deal adds to your growth profile on a standalone basis?

Hey, thanks, Michael. This is Andy. I'll maybe start off and Bill and Chris can chime in. I think what we found here was a quite unique and somewhat unusual opportunity to enter a market and essentially step into a dominant market leading position, 30% plus market share, where the next competitor is close to a third in terms of size. So far ahead already landed the initial critical compute nodes in network on ramps for the top and largest buyers of what we offer and essentially have this dominant position to deploy incremental capital to support our customers' growth. Now what's unique about that with it was that close to half of the contractual revenue was associated with a project where the building is being constructed. So there's certainly timelines that these projects need to be delivered and contracts need to commence. And the other unique aspect, which I touched upon earlier is the fact that we went into this with a risk mitigation approach not only by choosing Brookfield as equity partner given their experience in the region for close to 100 years and their massive investments in that region, but we also pursued a non-recourse piece of secured debt financing that covers the cost of debt that is double-digit rate. So, we actively diluted our earnings attributed to heavier coupon debt in order to mitigate risk. And I'd say while it's dilutive to our core FFO and AFFO per share call it 2%, we see call it closer to 1% positive in 2021 and I would say that's on our fairly conservative underwriting really essentially building out the capacity that team in hand has today. And when in reality I think this platform is going to grow not only in Brazil onto the option land they have, but also in other parts of the South America as our platform. I don't think there's a lot of other opportunities that I've seen there in my career inside or outside the data center space or opportunities that I see out there today that really line up like that, like there's another one of these out there, but maybe Bill can chime in a little bit.

I think this is unique. Mike, this is in some ways a giant construction project, development project with the type of growth return – returns growth which we expect over multi-year period. So, you know while we've talked about unlevered returns that are in the high teens on these development projects, you know the EBITDA growth that I've seen in the underwriting, year one was 50%, year two about 35%. So obviously that's off a low base, but that's certainly accretive to our growth rates on standalone basis.

Right. Second question and this goes back to the minimal lease spreads that you're getting, and I recognize there is some legacy leases that are in there. But overall, the lease spreads are largely uninspiring. And when you think about the two real estate sectors that both have the secular demand trends, industrial and data centers, both have a lot of development going on. A lot of demand for space, industrial is seeing rent spreads in the 20% to 30% range, and the data centers are not seeing much at all. And, I want to know if you guys step back from just a real estate perspective, what is the factor overall because both of these sectors have a lot of supply that supply is being taken up. There's a lot of demand for the assets themselves and there's a lot of institutional capital that's being attracted to the space. So, why do you think the fundamental trends within the data centers are not as strong as they are sort of within industrial?

Mike, I guess my observation and we're not nearly as versed in industrial space as our neighbors at ProLogis, so they can give you maybe they – good thing to ask their view on the same question. But my understanding on industrial space is, it's an asset class that did not have rent growth for a fairly long time. And now a little bit more on the heels of some of the technology trends and the reorganization of the supply chain, you have these fairly attractive rental rate growth and ultimately releasing spreads. Our space certainly not been as long as it's been around as long as industrial space, really has it's a composite of leases that had called it 5 year, 10 year, 15 year leases with 2% to 3% bumps for a long time. And look, I agree with you, what is surprising you're not seeing much more aggressive cash mark-to-market. They're not, I won't say they're 2.5% year-to-date cash mark-to-market is not nothing, it's still decent. I think what you're seeing with our space is a different kind of cycle relative to the in-place leases relative to some of the industrial leases. And I also think what's a little bit different about our asset class and our platform is, and we mentioned a little bit in the prepared remarks, we try to utilize our competitive advantages when we have renewals with a customer like the one I mentioned, at one of our Chicago campuses, we're happy to take a less aggressive posture in that negotiation in order to either contractually tie-up at the same time or to have a happy customer that wants to grow with us. In that example, we renewed a less than 0.5 megawatt deal for the negative cash mark-to-market, but at the same time, we grew them at that same location where they were currently and also at a rough growth campus a total of 3 megawatts across both locations. So it's kind of a win-win, where you look at that just the renewal by itself and you would come away looking fairly negative. But I can tell you economically it was an attractive value proposition for Digital, and I think was attractive for the customer because they were able to enjoy the benefits of our platform.

Our next question comes from Robert Gutman of Guggenheim Securities. Please go ahead.

Hi, thanks for taking my question. Revisiting the pipeline, but I'm focused more on the hyperscale part of the pipeline. So, you've had two back to back very strong quarters with some large deals at both times, and I was wondering on that aspect of the pipeline are you seeing it really replenished or stable or is that part sort of trying to taking a pause. Secondly, similar question on a broader scale, I'd say that the Northern Virginia market absorbed like 168 megawatts in the first half probably eight times the next biggest market in North America. So the same question really on a broader not Digital specific basis, do you think this pace continues the next quarter or the next few quarters or does it take a pause, which is a more rational view.

Hey, Rob, thanks for the question. So on the hyperscale platform to have two quarters in a row with 20 plus megawatt deals is fantastic. I can't tell you that I'm confident there's going to be definitely another one in the fourth quarter. At the same time, looking at the pipeline, we're in numerous active dialogues with customers in numerous markets around the globe supporting their growth and they're in all shapes and sizes, but when you get into the hyperscale arena with these customers, be it top five health service providers or other customers with similar profiles, the deals do tend to be larger. And I think, we – based on what we're seeing, we think there's going to be continuation of these customers growing and rolling out their infrastructures, not only in North America, but in all other markets as well. Turning to your Ashburn comments, so we've – I think we've averaged or we've done about 100 megawatts of leasing in Ashburn over the last four quarters or so. And obviously, based on the fact that we bought, I believe, the largest non-contiguous land capacity in megawatts was recently Ashburn. I think we're big believers in the continued growth of this market. I think, we have conviction around it based on a large and growing installed base of customers who keep coming back to us for the second, third and fourth takes and new customers who are coming in the market. When you get to these large numbers, you never know what quarter, you're not going to have another record for that market. But I think I very much like our value propositions for any customer looking to tour Ashburn because it's not just an Ashburn location. And I think we got – it's a conversation about the whole Digital Realty platform. I think we have a lot of other competitive advantages relative to other peers in the market. Chris, do you want to add anything on either of those?

Absolutely. Thanks, Andy. You had highlighted this earlier, Andy, about proximity. And I think that's something that you have to look at, particularly in that market where we have these immense data lakes or immense set of infrastructure that's already deployed there. So that's why we're looking at this longer-term contiguous land where you have availability of power in a very proximate location. And there's a bunch of benefits that are afforded to a lot of our top customers and being able to provide them that. And so that's one element of why we see it growing within that market. And in particular, we're also seeing the fact that there are so many new applications coming to market. And we highlighted this at our Investor Day, where we talked about the second generation of cloud and the next wave of cloud infrastructure. So any of the AI or any of the new blockchain and any of the new technologies coming out, Ashburn is a critical epicenter to be able to leverage the existing data to support these new services. So they're not standalone silos, they need a consistent set of infrastructure to efficiently launch them at the global scale needed. But that's why we believe very strongly in the Ashburn market.

Great, thanks.

Our next question comes from Sami Badri of Credit Suisse. Please go ahead. Sami Badri - Credit Suisse Securities (USA) LLC: Hi, thank you. My question pertains to interconnection revenue growth that is decelerating on a year-on-year basis consistently through year-to-date 2018. And on the interconnection signings it looks like you were flat quarter on quarter, and I just wanted to get a better understanding of the dynamics that are at play here. Is it because wholesale is just predominantly taking off and diluting out the effects of interconnection? And do you anticipate a complete swing the other way around, maybe in about a year or two years' time, regarding the interconnection business? Is there a scenario where this accelerates? Maybe you can give us some color on that, especially as it pertains to some of these new applications you just mentioned in the prior question.

Sure. Thanks, Sami. I'll talk a little bit about the most recent trends in both the interconnection revenue recognized through the P&L and also signings, where we think both are going, and then I'll ask Chris to chime in about applications and the implications from the applications. So obviously we had somewhat muted year-over-year growth in the P&L from the interconnection revenue, closer to mid-single-digits. I'm certainly not pleased where we think that product offer can go. We are – I would say a little bit in the results, you saw a little bit of headlines from some of the M&A consolidation on the telco space, where those buyers are just not as demonstrably large buyers of the interconnection offering when two of those companies have combined. And that trend has been playing out in the M&A world for a while and now starting to flow through a little bit on the P&L. I would say I remain optimistic for the ensuing quarters or next year in getting that revenue line item to be getting closer to high single digits, if not double digits on the P&L. What gives me optimism is we have been putting up more solid signings quarters, about $8 million for the last couple quarters. The composition of those signings have been from – you can see some of these in anecdotes we put from the customer signings about multi-market, re-architecting the backbones, multi-sites where they need new interconnection. And also what gives me confidence is the new logo trends, which have been trending up quarter over quarter each quarter this year to 48 new logos plus the eight through our P&A channel. And as we've seen in prior experiences, when new logos land, they obviously take initial connectivity offering, but then they substantially grow their customers' connectivity profile in the high teens. So the new logo connecting within our ecosystem spurs incremental interconnection revenue. The composition of the locations, it's certainly been the dominant North America sites, including New York City markets, Chicago, Atlanta, and then London and Europe. And I think one thing that's been a pretty good uplift is actually we've seen a material pickup in our interconnection or connectivity bookings within Ashburn, which I'd say is on the heels of launching some fairly quite successful colocation and interconnection offerings in that market. I'm not sure if we're going to do our second or third part that it gets that off. And so all these things to me in my mind are going to drive incremental interconnection bookings. And maybe I'll let Chris speak to a little bit of the longer-term trends.

Thank you, Andy, and yeah, Sami, so I think you're very aware of the interconnection dynamics that exist out there, but one of the other elements I would highlight is just some of the new cloud on-ramps that are coming into our facility. So those have a bit of a lag in picking up and customers really starting to be able to leverage that new interconnect paradigm that's core to digital. And I would tell you that as the interconnection shifts to where the actual clouds reside, it's creating a brand new opportunity, where you probably hear a lot of people talk about a cloud-first world. One of the things we've often looked at is we have to provide a different type of interconnect model to meet these new application demands. And so I would tell you that with these on-ramps coming into our connected campus and getting set up to where they can leverage the broader markets, and these are enterprise customers and it's across all the verticals, but they can leverage our Service Exchange to start to seamlessly consume all of these major cloud services privately in a much more secure broader manner. I definitely see that picking up. And one of the things we've also referenced at a high level is just some of the newer cloud applications that we've brought onto the Service Exchange, where it's not just about your traditional IaaS infrastructure, it's about SaaS. And so with the recent announcement of our Salesforce.com capability and bringing that SFDC infrastructure online so you can consume it privately as well, it's definitely setting us apart and making more and more ecosystems represented inside of our Digital Realty campus so that customers can get value out of that. And so there's not a new application coming to…

Sure. Thanks, Sami. So listen this is a – as I mentioned another robust and diverse and successful quarter on the signings, six of the last seven quarters now, over $50 million, and it was a short strength across the product offerings and sectors. If you look at the, call it $69 million of bookings that the colocation and interconnection piece of the pie, which was call it approaching $18 million that has much more of a monthly cadence to it. So obviously, we have an idea of pipeline but those deals move from upside to outlook and commit every month in a monthly close. So let's call it just a little bit less than a third of the signings. On the larger end on the bigger side including the 20-plus megawatt deal that work, and that deal started well before June 30. And it probably went on for a couple quarters. The tricky thing about that is, it's a large massive project and aligning contractually and with deliveries and operationally takes a lot of work and a very talented sales team, remember taking the lead on that one, but really supported by the entire Digital Realty organization to bring that over. And that could have signed on September 1 or September 30, there's no – nobody can control that the destiny of that deal. After that you got several in the call it 1 megawatts to 5 or so megawatts, and they're all on the different tracks with different customers and different markets. And then we also have a handful deals in the middle. So I think the key is maintaining a very large and diverse pipeline and making sure we are delivering for the customers, and try to bring, meet their timelines as fast as possible.

Ladies and gentlemen, that will conclude our question-and-answer session. I would like to hand the conference back over to Bill Stein for his closing remarks.

Thank you, Andrea. I'd like to wrap up our call today by recapping our highlights for the third quarter. As outlined here on the last page of our presentation. We advanced our top priority of deepening connections with our customers, delivering our second highest quarterly bookings on record. And our backlog reached another all-time high. We further extended our global platform with a definitive agreement to acquire Ascenty, the leading data center provider in the rapidly growing Brazilian market. We once again delivered solid current period financial results being in consensus by a $0.01 and we remain on track to deliver double-digit growth in AFFO per share again in 2018. Last but not least we further strengthened our balance sheet raising $1.1 billion of common equity to fund our future growth and refinancing our $3.3 billion of credit facilities to extend the weighted average maturity of our debt by a full year. As I do every quarter, I'd like to conclude today by saying thank you to the entire Digital Realty team whose hard work and dedication is directly responsible for this consistent execution. Thank you all for joining us and for your interest in the company and we look forward to seeing many of you at NAREIT in November.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.