Volatile Day For DFT After Stellar Quarterly Report


Most people think of real estate investment trusts as plodding stocks that give decent returns over the long haul, but won't report a blow-out quarter that sends the stock into a frenzy.

DuPont Fabros Technology ( DFT ) did just that Thursday when it reported Q2 funds from operation, the REIT equivalent of earnings, of 61 cents a share vs. estimates of 31 cents. That's a 30% increase over the year-ago period. Revenue came in slightly lower than forecasts, $102 million vs. $102.3 million, but up 11%.

The report sent the stock up sharply in the morning, but it gave back the gain plus some in the afternoon.

The typical REIT might invest in office buildings, medical facilities or upscale apartments. But DFT chose a high-growth business: data centers. It's not far from an all-time high of 29 set in July 2012.

With corporations moving quickly into cloud computing, data centers are much in demand. DFT designs, builds and manages them.

It has 10 data centers in Virginia, Chicago, Piscataway, N.J., and Santa Clara, Calif. From the outside, they look like modern office buildings, but without much in the way of windows or parking lots. Inside, they are row upon row of servers.

In June, the company announced it had opened a new phase of its Santa Clara facility with 9.1 megawatts of critical load. The facility was 75% leased on the day it opened. The next phase of the Santa Clara project is due to open next March.

It has also begun construction of a new phase of its Elk Grove Village, Ill., facility that is expected to be complete in the summer of 2015.

When DFT came public in 2007, it offered a 15-cent quarterly dividend. It's now 35 cents, which works out of a 5% annual yield. The last dividend was paid July 15 to shareholders of record July 3.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Personal Finance , Investing Ideas

Referenced Stocks: DFT

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