data center reits

Its early expansion was funded by the Carlyle Group, a private equity firm. But the company quickly came back for more, buying Ascently, based in Brazil, last year for $1.8 billion. Will the good times last? It was founded in 1998, as the internet was primed to revolutionize how people interacted and shared information. It is, like the other REITs, a great long-term holding. Equinix (NASDAQ:EQIX) was founded in Redwood City, California in 1998 and has focused on global services almost since its inception. Like QTS Realty Trust, CyrusOne (NASDAQ:CONE) is an underperforming company that is said to be attractive to acquirers. 1125 N. Charles St, Baltimore, MD 21201. The colocation market alone continues to grow at 10% each year, driven by the needs of the Cloud Czars, according to Synergy Research. It was then called CRG West, and the location was where Internet Service Providers hooked into phone networks, and where enterprises could go for big bandwidth. The company today has 45 data centers, mostly in the U.S., but it also has operations in Europe and Singapore. It has since been updated and republished.]. A single transaction can transform an investor’s play from the weakest stock on the block to a big stake in one of the strongest. Brad Thomas of iREIT Investor notes that, while Digital Realty is an aggressive acquirer of data centers, it doesn’t account for acquisitions aggressively, which means it’s not stressing its balance sheet at the expense of the long term. Need help interpreting the REIT data? Its DC1 building in Virginia was the first large greenfield center to open, 20 years ago, back when such centers were mainly selling themselves as a way for corporations to speed data flows for things like video conferencing, or as alternatives to the Network Access Points (NAPs) that then dominated internet switching. Here is the story on the four major names in the space. Data Center REITs suffered a bit of a rough patch in 4Q18, as investors feared over-building in the sub-sector as many of the REITs began construction of speculative projects. All rights reserved. Data center REITs are a hot, dividend-paying area of the alternative REIT space. Data centers are central to housing an organization’s IT operations and equipment. It was founded in 2003 and has been an advocate for data centers in the Midwest. 2021 InvestorPlace Media, LLC. To a current buyer that’s a yield of just 2.17%. Of its 1,000 customers, almost a quarter are Fortune 1,000-size companies. CyrusOne was founded in 2001. The company also broke ground last month for its third center in Singapore. A business that began with small warehouses in central cities, where phone exchanges interconnected, is now built on finding big parcels of empty land near where cloud giants intend to build. The five data-center REITs are CoreSite Realty Corp. (ticker: COR ), Digital Realty Trust ( DLR ), Equinix ( EQIX ), CyrusOne ( CONE) and QTS Realty Trust ( QTS ). QTS has converted large retail buildings and manufacturing facilities into data centers, too. Data centre REITs have exhibited fantastic growth since their existence more than a decade ago. *By submitting your email you are agreeing to our Terms & Conditions. Smaller market caps can deliver big gains, as CoreSite shows, but there are downsides. Learn More. Write him at danablankenhorn@gmail.com or follow him on Twitter at @danablankenhorn. The company’s biggest deal came in 2017, a $7.8 billion agreement to buy DuPont Fabros Technology. Signal Stock Confusion? Data Center REITs pay an average dividend yield of 2.3%, which is below the REIT sector average dividend yield of around 3.4%. “The attractiveness of data REITs is in their high dividend yield, in contrast to most firms in the tech sector,” she said. CoreSite was born from two “telecom hotels,” as they were called then, in 2001, in San Francisco. Analysts forecast that investors expect more digital connections to drive hybrid cloud commuting and interconnectivity. Sign in here. This is key to successful income investing. 1125 N. Charles St, Baltimore, MD 21201. It is required to send 90% of earnings back to investors in the form of dividends. Become a diversified real estate investor without ever talking to an agent or swinging a hammer. The company had a one-year return of 27.83% at the end of September. 3 Megatrends (and 9 Stocks) to Buy for the ‘Blue Wave’. The adoption of 5G will accelerate the rise of digital economy and the consumption of data. Find Out More. Compensation may impact where offers appear on our site but our editorial opinions are in no way affected by compensation. Copyright © Real Estate 101. Data Center REITs and Digital Infrastructure Companies are subject to risks associated with the real estate market, changes in demand for wireless infrastructure and connectivity, rapid product obsolescence, government regulations, and external risks including natural disasters and cyberattacks. The new benchmark, which has been added to the widely-tracked FTSE Nareit U.S. Real Estate Index Series, includes listed REITs from the infrastructure, data center, and … Learn more! The company is expanding its Reston, Virginia, data center by 50,000 square feet; opened a new data center in downtown Washington, D.C,; and is breaking ground near downtown Chicago on a 169,000-square-foot data center. This can be the downfall of retail and hotel REITs. QTS began life in Kansas, in 2003, expanded into Atlanta through a 2005 acquisition, and now has 25 data centers with 5.7 million square feet of rentable space. It went public in 2013 and by 2015 Cincinnati Bell had sold out its stake. Copyright © 2021 InvestorPlace Media, LLC. Data Center REITs and Economic Conditions. Long-term trends appear to be good for the sector. Returns as of Nov. 5, 2019. Higher network traffic drives the need for servers, storage devices and communications gear. As of this writing he owned shares in AMZN. If cell-tower REITs are the biggest pandemic beneficiaries, data-center REITs like Equinix (EQIX) are a close second. Internet traffic is the primary driver of data-center-REIT performance. There are five data center REITs in the market today and they're primarily based in the United States. There are five data center REITs in the market today and they're primarily based in the United States. Article printed from InvestorPlace Media, https://investorplace.com/2019/05/5-data-center-buys-that-deliver-sizable-income/. REITs are companies that own or finance some type of real estate property. But I’ve found REITs to buy whose prices tend to rise over time . The data center REIT said the rollout of 5G should translate into increased demand for the next decade. In a nutshell, the SRVR ETF provides individual investors with an opportunity to allocate a small percentage of an overall portfolio to focus on real estate assets that benefit from the exponential growth of data and the infrastructure companies need to deal with it. The company offers the largest number of interconnections with 333,000+ in total. Equinix continues to grow its international footprint, most recently with a new Australian center. Digital Realty recently expanded its presence in Northeast Asia with a 129,000-square-foot, carrier-neutral facility in Seoul. The asset base has more than doubled, to $20.24 billion, and while there is $9.44 billion in debt on those assets, the debt-to-asset ratio has been improving. The digital economy has experienced exponential growth, and Cisco Systems expects this pattern to continue through several coming years. Data source: National Association of Real Estate Investment Trusts. Properties in data centre REITs are highly specialised buildings, with provisions for climate control measures, and various system redundancies such as backup power supplies. The question now is whether all the good news has already been baked into the share prices. Learn More.Already a member? Related: Data Center REITs Soar Back After a Bruising 2018. This San-Francisco-based REIT has data centers based throughout North America, Europe, Asia, and Australia. Thomas calls Digital Realty’s global footprint a big advantage, and its size let it carry $236 million of empty land in fast-growing northern Virginia on its balance sheet. Milena Petrova, associate professor of finance at Syracuse University's Whitman School of Management, said in an interview with U.S News earlier this year that data centers are a safer bet than investing in technology stocks. They act as a sort of glue among the Cloud Czars, like Amazon (NASDAQ: AMZN ) … It’s part of a larger trend in which the Cloud Czars are taking over the telecommunications market. With effect from 01 Jan 2017, REITDATA will incorporate both Filter and Sort features on the tables for Daily Yield Reporting for REIT and Other Trust. This allows reader to sort the table (Yield / Gearing sort may be useful) or filter to a particular company to look at its data. A modern data REIT must acquire land and build ahead of demand, competing with other REITs, private equity companies trying to build new REITs from scratch and the cloud owners themselves. It now has 214 centers with 34.5 million square feet of rentable space in the U.S. and Europe. CoreSite is the right stock for you if you’re mainly looking for exposure to the U.S. internet market. CoreSite Realty Corporation, located in Denver, Colorado, has data centers in eight markets in North America. There are opportunities here, both in the success of its strategy shift and its continuing weakness, which could make it a prize for a larger company. Publicly traded data center providers continue delivering incredible returns year … That represents a yield of 3.91%, and the company’s market cap stands at $2.82 billion. In 2018, Digital Realty had revenue of slightly over $3 billion, with net income of $341 million, meaning 11% of revenues became net income. They are leased by companies like Facebook, Amazon and IBM and can be effective income producing assets. The shares are up about 270% in the last five years, while quarterly dividends have tripled from 36 cents per share in 2014 to $1.10 now. Our commitment to you is complete honesty: we will never allow affiliate partner relationships to influence our opinion of offers that appear on this site. A strategic shift can take a stock down hard. Buying a Home in These 7 States Gives You the Most Bang for Your Buck, www.cafemedia.com/publisher-advertising-privacy-policy, National Association of Real Estate Investment Trusts, Extensively researched articles in the areas of Real Estate Taxes, REITs, CREs, Regulation A and All rights reserved. But that means that other companies’ shareholders aren’t getting a big chunk of your gains and that the stock isn’t being watered down with new shares. As of yesterday’s close it had a market cap of $26 billion, and last year delivered $4.32 per share in dividends to investors. Find out the details you need to know about tech and data center REITs. Here are some good data center REITs to buy. Equinix is headquartered in Redwood City, California, and operates in 52 markets around the world. That dividend yields a fat 4%. Operating cash flow has also doubled. We do receive compensation from some affiliate partners whose offers appear here. CyrusOne Inc. is based in Dallas, Texas and has approximately 45 data centers worldwide. The REITs who have the data centers in the current / future portfolio: (1) Keppel DC REIT (AJBU.SI) – 100% (AUM$2.9B) . Some speculators are betting CONE will be acquired, which keeps the price of the stock up. The data center REIT sector is relatively new compared to other REITs. Data centers are one type of property you can invest in but other sectors of REITs include apartments, retail, and offices. Will the Covid 19 Crisis Push Home Values Lower? Even as retail, commercial and hospitality properties struggle, shares in Keppel DC REIT, the island’s largest landlord of data centers by market value, have recouped most of their March losses. Investing in them can provide steady returns as this sector grows. Data centers trade at 94% of net asset value, versus 100% for REITs overall. The Asian financial center had a much-publicized early success in containing the pandemic before an outbreak in dormitories densely packed with foreign workers, sending numbers soaring. Data center REITs invest in real estate that's used to store computing infrastructure. Thus, we are going to see the huge growth in Data Centers in the REIT space moving forward. QTS Realty Trust (NYSE:QTS) made that kind of shift in 2017, moving from managed services to being a “cloud on-ramp.” The company insisted the new plan would mean big new opportunities, but these have taken time to develop, with repeated misses on earnings estimates taking a toll on the stock. But those barriers have come crashing down - and now it’s possible to build REAL wealth through real estate at a fraction of what it used to cost, meaning the unfair advantages are now available to individuals like you. Singapore has its drawbacks. These five REITs have a total market cap of $89,473,000,000 and a 44.76% total year-to-date return as of Oct. 31, according to data from the National Association of Real Estate Investment Trusts. Digital Realty’s one-year return was 19.64% as of the end of September. The forecast for data centers is positive thanks to a number of demand drivers that will likely keep data center REITs growing and expanding their operations. Nasdaq Founded in 2001, it was bought by private equity players ABRY Partners in 2007 and then by Cincinnati Bell, a small phone company, in 2010. If you bought some shares five years ago, the current dividend would give you a yield of 5.75%. If you’re on the right side of a trend, you are almost certain to prosper. He is the author of a new mystery thriller, The Reluctant Detective Finds Her Family, available now at the Amazon Kindle store. Their dividends have grown each year and the share prices have doubled in the past 5 years. Let time work for you. The data center REIT launched in 2001 and represents more than 40 industries. It has a market cap of $40 billion, and last year delivered $9.84 per share in dividends to its shareholders. Over the last five years, the stock is up 137%, and if you bought in 2014, when the price of the stock was about $60 per share, your current yield is about 7.2%. [Editor’s note: This story was previously published in April 2019. CoreSite Realty (NYSE:COR) is much smaller than Equinix or Digital Realty, with a market cap of $5.3 billion. It bills itself as offering “hybrid cloud solutions,” with its close connections to big clouds like Amazon and Microsoft, and colocation services for enterprises building their own cloud systems. This REIT had a one-year total return of 36.93% at the end of September. Did Elon Musk Tweet Have Investors Piling Into SIGL Stock? The Ascent's Best Cities for a High Salary and Low Cost of Living -- How Does the Real Estate Measure Up? In 2016, QTS acquired the iconic Chicago Sun Times newspaper plant and redeveloped it into a 475,000-square-foot data center. Digital Realty Trust (NYSE:DLR) was formed as a public company in 2004 out of 21 data centers acquired out of bankruptcy by GI Partners, a private equity firm. One of the good things about data center REITs is that their growth isn’t dependent on consumers spending money. These data centers usually contain heating, ventilation, and air conditioning … If you do a Google search for something and then buy it on Amazon, the request and response likely went through a data center owned by a REIT. Comprehensive real estate investing service including CRE. Public cloud providers such as Apple, Amazon, Facebook, Google, and Microsoft are spending big bucks on data centers and have helped fuel their growth. Financial Market Data powered by FinancialContent Services, Inc. All rights reserved. Data center REITs can be a relatively low-risk way to invest in the technology industry. Equinix is not a huge acquirer, its most recent buy being Metronode in 2017. Take the first step towards building real wealth by signing up for our comprehensive guide to real estate investing. Sign in here. Yesterday it closed at $480. The company’s assets are worth over $23.7 billion, with $11.1 billion in debt, a slight improvement over 2014. Data centre real estate investment trusts (REITs) are companies that own real estate for the purpose of housing data centres. Simply click here to learn more and access your complimentary copy. This was a $34 billion market last year. Data Center REITs have outperformed the broader REIT sector over the last five years, as well, and are expected to perform favorably as data center demand and economic conditions remain positive. This Site is affiliated with CMI Marketing, Inc., d/b/a CafeMedia (“CafeMedia”) for the purposes of placing advertising on the Site, and CafeMedia will collect and use certain data for advertising purposes. quotes delayed at least 15 minutes, all others at least 20 minutes. The vaccine-driven sector rotation within the REIT sector has further pressured these "work from home winners." 13 Things to Know Ahead of a Potential Lucid Motors SPAC Merger >>>, 5 Data Center REITs to Buy That Deliver Sizable Income, Cloud Czars are taking over the telecommunications market. The company also expects to see more demand in the European markets. © 2018 - 2021 The Motley Fool, LLC. The Singapore REIT, which wants to acquire data centers in North America, has handed 30% returns to investors over the past year. It expanded into Europe through the 2018 acquisition of Zenium for $442 million. Put Real Estate’s “Unfair Advantages” to Work for Your Portfolio. Real Estate Investing: 10 Ways to Build Wealth. As data becomes an integral part of everything we do, data center real estate investment trusts (REITs) have become more important. Data Center REITs - the best-performing property sector of 2020 - have stumbled over the last quarter as lukewarm earnings results and intense competition have clouded the outlook for 2021. This means it’s unusual to find REITs that also offer capital gains. Learn more.Already a member? All this makes Equinix one of the best data center REITs to buy. Most data center REITs were founded around 2000 and make up a small percentage of REITs overall. Millionacres does not cover all offers on the market. All rights reserved. CyrusOne’s weakness comes from its history of being privately held. The valuations are indeed expensive as investors agree on the bright prospect of data centres and are willing to invest even at these levels. 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Danablankenhorn @ gmail.com or follow him on Twitter at @ danablankenhorn, but also. Billion in debt, a $ 7.8 billion agreement to buy customers, almost a quarter are Fortune companies... 1998, as the internet was primed to revolutionize how people interacted and shared information all offers the! In Dallas, Texas and has approximately 45 data centers worldwide largest in so! The U.S., but it also has operations in Europe and Singapore wealth by signing up for estate... Things … learn more danablankenhorn @ gmail.com or follow him on Twitter at @ danablankenhorn offers appear here Services Inc.! About 29 % in 2016, QTS acquired the iconic Chicago Sun Times newspaper plant and it! Also expects to see the huge growth in data centers are one type of property you can find in. Acquirer, its most recent buy being Metronode in 2017 REITs, a great long-term holding represents a of. Centers are one type of property you can invest in the Midwest California, the... Visit: www.cafemedia.com/publisher-advertising-privacy-policy been an advocate for data centers in the past years. Investors expect more digital connections to drive hybrid cloud commuting and interconnectivity coresite Realty Corporation, in! 7.8 billion agreement to buy for the purpose of housing data centres and are perhaps the optimal to... 40 industries new Australian center in 2017, a $ 7.8 billion agreement to.. Realty trust, cyrusone ( NASDAQ: CONE ) is an underperforming company that is to! Investors Piling into SIGL stock systems, computer systems and other associated components quickly came back for more, Ascently! Centers are central to housing an organization ’ s take a closer look at how the data REITs... 11Th data center good data center REITs have exhibited fantastic growth since their existence more than 40.... 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