Digital Realty Trust Inc.
), a niche real estate investment trust (REIT), has recently made
public the closure of the acquisition of three-property data
centre portfolio in Paris. The company shelled out €60 million
($80 million) for this purchase from Bouygues Telecom, the third
largest telecommunications operator in France.
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Spanning about 87,000 rentable square feet, the three properties
have around five megawatts of IT capacity in total. It was
structured as a sale-leaseback transaction and for all the three
facilities, Bouygues Telecom penned a long-term, triple net
leases agreement with Digital Realty. This portfolio in Paris
comprises one Tier III+ facility at Montigny-le-Bretonneux and
two Tier III facilities in Bievres and Saclay.
The acquisition is in line with the long-term investment
objectives of Digital Realty that focus on investing in
institutional-quality data center facilities in
high-barrier-to-entry markets that have substantial prospect to
generate attractive risk-adjusted return on investments.
Particularly, the European market is crucial for the company and
this acquisition in Paris is in sync with the July 2012
acquisition of the Sentrum Portfolio - a three-building data
center portfolio spanning 761,600 square feet space in London,
Moving forward, the Paris deal is expected to offer stabilized
cash flow in the short term, a significant upside potential in
the long term, and a lucrative opportunity to expand its
footprint in one of the strategic global data center markets in
With the rise in the demand for digital storage facilities 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 swing experienced
during the recession.
Digital Realty operates data centers and digital storage
facilities, which are primarily used by telecommunication
companies to maintain their Internet presence or augment their
data networks. Data centers usually incur high costs for building
and maintenance, and as such the supply is relatively inelastic.
Digital Realty is scheduled to release its fourth-quarter 2012
results on Feb 15, 2013, prior to the opening bell. The Zacks
Consensus Estimate for the company's fourth-quarter FFO (funds
from operations) is currently pegged at $1.16 per share.
The Earnings ESP (Expected Surprise Prediction), the percentage
difference between the Most Accurate Estimate and the Zacks
Consensus Estimate, for Digital Realty is +1.72%. This, combined
with its Zacks Rank #3, will auger well for the company and help
beat the Zacks Consensus Estimate in the fourth quarter.
One of Digital Realty's peers,
DuPont Fabros Technology Inc.
) currently holds a Zacks Rank #2 (Buy).