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Digital Realty (DLR) Unit Picked by VEXXHOST for Expansion

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Recently, Digital Realty Trust’s (DLR - Free Report) unit — Interxion — was picked by the Canadian cloud computing provider, VEXXHOST, to support the expansion of its public and private hybrid IT solutions worldwide to the rising customer base.

Interxion's dense connectivity in Amsterdam will be particularly leveraged by VEXXHOST for expansion and delivery of its cloud services at scale across PlatformDIGITAL®.

Amid rampant digital transformation, enterprises are deploying data-centric architectures that tackle data localization, governance and compliance. With Interxion being chosen as the primary data-center provider in EMEA, VEXXHOST will be able to scale public and private hybrid solutions, and aid its clients directly deal with data gravity challenges.

Notably, Interxion's connected Amsterdam hub is a crucial center of data exchange on Digital Realty's PlatformDIGITAL®. For VEXXHOST, the implementation there denotes the establishment of its first European public cloud region.

With growth in cloud computing, Internet of Things and big data, and an increasing number of companies opting for third-party IT infrastructure; data-center REITs are seeing a boom market. Also, the estimated growth rates for the artificial intelligence, autonomous vehicle and virtual/augmented reality markets will remain robust over the next five to six years.

Demand is strong in top-tier data center markets and despite enjoying high occupancy, the top-tier markets are absorbing new construction at a faster pace. These are anticipated to drive demand for data centers. Also, data centers are poised to benefit from the heightening reliance on technology in the wake of the coronavirus pandemic. Thus, data-center landlords like Digital Realty, Equinix, Inc. (EQIX - Free Report) , CyrusOne Inc. (CONE - Free Report) and CoreSite Realty Corporation (COR - Free Report) will keep witnessing significant demand.

Banking on such factors and backed by a healthy balance sheet, Digital Realty is expanding its portfolio on accretive acquisition and development efforts, growing its presence outside America.

Last month, Digital Realty delivered better-than-expected first-quarter 2021 core funds from operations (FFO) per share on robust revenue growth. It reported first-quarter 2021 core FFO per share of $1.67, beating the Zacks Consensus Estimate of $1.59. The reported figure also compared favorably with the year-ago quarter’s $1.53.

The company registered operating revenues of $1.1 billion in the first quarter, marking a 32.4% year-over-year jump. The revenue figure also outpaced the Zacks Consensus Estimate of $1.05 billion. Decent leasing activities and strong signed total bookings aided results. The data-center REIT has also raised the core FFO per share outlook for 2021. However, aggressive pricing pressure is likely to prevail in the upcoming period amid the competitive landscape.

Digital Realty currently carries a Zacks Rank #3 (Hold). In the past three months, the company’s shares have gained 7.9%, underperforming the industry’s rally of 8.3%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.


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