Digital Realty Trust Inc. (DLR - Snapshot Report), a niche real estate investment trust (REIT), recently signed a new agreement with DataBank Holdings, Ltd. to lease its datacenter facility in Dallas for an undisclosed amount.
The first phase of the four-phased construction process is scheduled to come online in the fourth quarter of 2012. The stand-alone datacenter in Digital Realty's Datacenter Park Dallas facility would have dedicated power delivery via dual 10MW utility feeds.
Digital Realty operates datacenters and digital storage facilities, which are primarily used by telecommunication companies to maintain their Internet presence or augment their data networks. Datacenters usually incur high costs for building and maintenance, and as such supply is relatively inelastic.
Digital Realty provides flexible and cost effective datacenter facilities to a wide range of customers, including domestic and international companies across multiple industry verticals. Its portfolio includes 103 properties throughout Europe, North America, Singapore, and Australia, spanning approximately 19.7 million square feet of space (including 2.3 million square feet of redevelopment space).
With demand for digital storage facilities increasing in recent years, Digital Realty has benefited greatly by negotiating favorable lease terms and maintaining strong occupancy rates. The long-term lease agreements have also insulated the company from short-term volatility and unfavorable market swings experienced during the recession. This has enabled Digital Realty to continue paying out solid dividends to its shareholders.
We have a Neutral recommendation for Digital Realty, which currently has a Zacks #3 Rank, translating into a short-term Hold rating. However, we have an Outperform recommendation and a Zacks #1 Rank (short-term Strong Buy rating) for MPG Office Trust Inc. , one of the competitors of Digital Realty.