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Digital Realty Eyes New Growth With Telx Acquisition

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B ig Data isn't going anywhere any time soon. The term refers to data sets so large or complex that traditional data processing applications aren't enough. That's good news forDigital Realty Trust ( DLR ), a real estate investment trust that provides data center colocation services where businesses can rent space for servers and other computing hardware.

Over the summer, Digital Realty agreed to buy a connectivity company Telx from a couple of private equity firms for $1.89 billion. The deal, which is expected to drive growth for Digital Realty, closed earlier this month.

The acquisition basically doubled Digital Realty's presence in the colocation business but more importantly gave it access to a robust interconnection platform.

As its name implies, interconnection enables the exchange of information among communications service providers, enterprises, content providers and other entities across a global network.

After the close, Digital Realty reported funds from operations (FFO) and sales that exceeded expectations.

The company also raised its FFO outlook this year to $5.12-$5.18 a share from a prior range of $5.05-$5.15. Analysts are at $5.13. Shares were unchanged in after-hours trading.

Analysts expect 2015 sales to rise 6% to just over $1.7 billion, but growth is expected to accelerate in 2016, rising 14% to $1.95 billion.

In July, the company reported funds from operations of $1.30 a share, up 7% from a year ago. Sales rose 5% to $420.3 million.

The company is known for its dividend stability. It paid a dividend of 85 cents a share on Sept. 30. Its annualized yield is around 4.7%.

After hitting a low of 60.66 in mid-September, Digital Realty has rallied strongly with some volume bursts along the way. It's been consolidating gains since January and has climbed to within 4% of its all-time high.

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


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

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