Digital Realty Trust Inc.
), a niche real estate investment trust (REIT), has recently signed
a new lease agreement with Rackspace Hosting Australia Pty Limited
- a premier provider of cloud computing services that uses the
Internet and central remote servers to maintain data and
applications. The lessee would occupy a 480 kW Turn-Key Flex data
center facility in Melbourne, Australia.
The deal would enable Rackspace to mark its footprint in Australia
with the launch of its first data center facility in the region.
Furthermore, the lease agreement strengthens the long-term
relationships of both the participating companies, as Rackspace had
been one of the existing customers of Digital Realty in the U.S.
Earlier at year-end 2011, National Australia Bank had leased a
5,000 square meter data center facility from Digital Realty. The
leased facility was housed in the first of two buildings located at
its acquired development site in Melbourne, Australia. The data
center facility, scheduled for completion in early 2013, would be
one of the two Digital Realty Tier 3 certified data centers in the
offing in Australia, the other being developed at Erskine Park
development site in Sydney.
The internationally recognized tier certifications are provided by
the Uptime Institute, a New York City-based data center
professional service organization. Tier 3 certification signifies
that Digital Realty's data centers could run 24/7, with a design to
avoid downtime in the event of maintenance or hardware replacement.
The data center facilities of Digital Realty feature a
state-of-the-art power and cooling architecture that has been
optimized for green operation. The facilities typically use metered
power system to ensure that clients pay only for the power
consumed. In addition, each data center facility is equipped with
Digital Realty's PowerVU software, which enables centralized
monitoring and management of data center power consumption, energy
efficiency and load analysis to increase client profitability.
The Australian data center market has been a lucrative investment
option for Digital Realty as cities like Melbourne and Sydney are
found to have a limited supply of resilient, scalable data centre
space available to meet increased customer demand. Consequently,
over the years, Digital Realty has been strengthening its operating
platform in Australia with the addition of several new local team
members to deliver secure, reliable and cost effective data center
solutions to customers that are expanding their IT operations in
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 supply is relatively inelastic.
Digital Realty provides flexible and cost effective data center
facilities to a wide range of customers, including domestic and
international companies across multiple industry verticals. Its
portfolio includes 108 properties throughout Europe, Asia,
Australia, and North America spanning approximately 20.8 million
square feet (including 2.2 million square feet of redevelopment
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 in turn has enabled Digital Realty to
continue to pay out solid dividends to its shareholders.
The rating on Digital Realty is currently Neutral and the stock
presently has a Zacks #3 Rank that translates into a short-term
MPG Office Trust Inc.
), one of the peers of Digital Realty, also has a Neutral
recommendation and a Zacks #3 Rank.
DIGITAL RLTY TR (DLR): Free Stock Analysis
MPG OFFICE TRST (MPG): Free Stock Analysis
To read this article on Zacks.com click here.