Digital Realty Trust Inc. (DLR), a niche real estate investment trust (REIT), has recently extended its footprint with its second acquisition in Australia. The company has acquired a 30,250 square meter development site in Melbourne for approximately AU $4.1 million.
The property is located within the Paramount Industrial Park development, which is in close proximity to the Melbourne central business district. Besides its strategic location, the property offers significant revenue-generating opportunities for the company as Melbourne reportedly has limited data centre space available to meet increased customer demand for reliable, flexible and secure facilities.
Digital Realty has long been scouting for high-quality data centre facilities to expand its presence in Australia. At the same time, the company has been strengthening its operating platform in the country with the addition of several new local team members to deliver secure, reliable and cost effective data centre solutions to customers that are expanding their IT operations in the region.
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 97 properties throughout Europe and North America spanning approximately 17.2 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 to pay out solid dividends to its shareholders.
The rating on Digital Realty is currently ‘Neutral’ and the stock presently has a Zacks #2 Rank, which translates into a short-term ‘Buy’ recommendation. MPG Office Trust Inc. (MPG), one of the peers of Digital Realty, also has a ‘Neutral’ recommendation and a Zacks #3 Rank translating into a short-term ‘Hold’ rating.
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