Digital Realty Trust Inc.
), a niche real estate investment trust (REIT), has recently signed
a new long-term agreement with Ecritel, a provider of internet
hosting and managed services for businesses, to lease its
datacenter facility in Paris for an undisclosed amount.
With the deal, Ecritel is expected to better manage the increase
in demand for its Infrastructure-as-a-Service (IaaS) solutions
without building datacenter facilities on its own, as clients
continue to migrate huge volume of data into hosted and cloud-based
environments. On the other hand, the lease agreement offers solid
revenue generating potential for Digital Realty. The deal,
therefore, is a win-win situation for both the participating
As demand for high-end technology, robust security, and
guaranteed availability are becoming critical for the success of
IaaS solutions, datacenter facilities like those of Digital Realty
are increasingly gaining in prominence for the sustainability of
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 102 properties throughout Europe and North
America, spanning approximately 19.1 million square feet of space
(including 2.2 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 presently have a Neutral recommendation for Digital Realty,
which currently has a Zacks #3 Rank, translating into a short-term
Hold rating. We also have a Neutral recommendation and a Zacks #2
Rank (short-term Buy rating) for
MPG Office Trust Inc.
), one of the competitors of Digital Realty.
DIGITAL RLTY TR (DLR): Free Stock Analysis
MPG OFFICE TRST (MPG): Free Stock Analysis
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