Digital Realty (DLR - Free Report) has been selected by cloud hosting provider — Hostway — as its data-center partner for global expansion. Moreover, Hostway will associate with the Digital Realty Service Exchange in order to offer its own clients access to public cloud providers, including Amazon Web Services (AWS), Microsoft Azure and Google Cloud Platform.
Hostway caters services to SaaS, healthcare, financial services, e-commerce, and Internet of Things (IoT) customers. Globally, the company has nine locations, of which the latest is situated in Digital Realty's Austin facility.
The company’s superior customer service, greater reliability as well as low latency connectivity are the reasons for being selected by Hostway. In addition, the wide roll of public cloud providers offered by the Digital Realty Service Exchange help it stand apart. As such, Hostway plans to leverage on Digital Realty’s global presence to drive the company’s growth.
Notably, Digital Realty is a notable name in the date-center real estate market. The company offers data center, colocation and interconnection solutions for domestic and international tenants through its portfolio of data centers located throughout North America, Europe, Asia and Australia. Its clients range from financial services, cloud and information technology services, to manufacturing, energy, gaming, life sciences and consumer products.
In addition, growth in cloud computing, IoT and big data is not only helping tech companies, but also driving demand for data-center REITs. In fact, demand is outpacing supply in top-tier data-center markets, and these are absorbing new construction at a faster pace despite enjoying high occupancy. Also, data-center REITs pulled in their capital and scored well on the return book in the first 11 months of 2017, registering total returns of 30.9%.
Along with strong demand, accretive acquisitions, development efforts and a solid balance sheet augur well for Digital Realty’s long-term growth. However, intense competition in the industry and interest-rate hike remain concerns.
Shares of Digital Realty have outperformed the industry it belongs to, in the year so far. This Zacks Rank #3 (Hold) company’s shares have rallied 14.6%, while the industry recorded growth of 3.7% during this time frame. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Better-ranked stocks in the REIT space include Franklin Street Properties (FSP - Free Report) , Columbia Property Trust (CXP - Free Report) and MedEquities Realty Trust (MRT - Free Report) . All three carry a Zacks Rank of 2 (Buy).
Franklin Street Properties’ Zacks Consensus Estimates for 2017 FFO per share remained unchanged at $1.05 over the past month. Its share price has ascended 7.6% in three months’ time.
Columbia Property Trust’s FFO per share estimates for the current year have moved up 2.7% to $1.15 in a month’s time. Its shares have gained 4.7% over the past three months.
MedEquities Realty’s FFO per share estimates for 2017 inched up 0.9% to $1.12 over the past month. Its shares have gained 3.5% during the same time frame.
Note: All EPS numbers presented in this report represent funds from operations (FFO) per share. FFO, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.
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