Digital Realty Trust Inc.
), a niche real estate investment trust (REIT), has recently
completed the acquisition of '400 South Akard Street' - a data
center facility spanning 269,600 square feet space in the central
business district of Dallas, Texas. The property was acquired from
an unnamed seller for an undisclosed amount.
The acquisition is in sync with the long-term investment objectives
of the company that focus on investing in institutional-quality
data center facilities in high-barrier-to-entry markets which have
significant potential to generate attractive risk-adjusted return
The seven-storied acquired property, popularly known as 'The
Databank Building', was built in 1921 to house the U.S. Federal
Reserve Bank of Dallas. Subsequently, the building was renovated as
a technology and telecom hub in 2000, and currently includes a host
of exciting features such as large floor-plates, high ceilings, and
robust floor loading. The property, thereby, is one of the most
sought-after data center facilities in the region.
Presently, the facility is 85% leased to eight tenants. The data
center facility delivers approximately 11.7 megawatts of critical
load, with capability for a capacity expansion to 18 megawatts.
The acquisition is expected to provide stabilized cash flow in the
short term, a substantial upside potential in the long term and the
opportunity to expand its footprint in the downtown Dallas market.
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. Data
centers usually incur high costs for building and maintenance, and
as such the 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 105 properties throughout Europe and North
America, spanning approximately 20.0 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 swing experienced
during the recession.
This has in turn enabled Digital Realty to continue paying out
solid dividends to its shareholders. The year-to-date return for
the stock is noteworthy at 10.59% compared to an S&P 500 tally
DIGITAL RLTY TR (DLR): Free Stock Analysis
MPG OFFICE TRST (MPG): Free Stock Analysis
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We presently have a Neutral recommendation for Digital Realty,
which currently has a Zacks #3 Rank that translates into a
short-term Hold rating. However,
MPG Office Trust Inc.
) - one of the competitors of Digital Realty - with an Outperform
recommendation and a matching Zacks #1 Rank (short-term Strong Buy
rating), looks more attractive at current levels.