Tuesday March 13, 2012
by Stephen Leeb, editor Income Performance LetterDigital Realty Trust (
DLR), which owns and manages technology-related real estate, ended 2011 on a high note; it remains a safe income play with one of the best growth profiles in the REIT space.
The key difference was Digital’s foray last year into the Asian Pacific markets (34 percent of new leases in terms of footage, notably Singapore and Australia), where rates are substantially higher.
For example, the average rate per sq. foot for turnkey data centers leased during the quarter was $178 in the U.S., but $232 in Asia.
Demand for data center space in the Asia-Pacific region is estimated to be three to four times supply (hence the stronger pricing). Digital’s current presence there is still relatively small, but it expects to increase investments in the region.
The company also provided per share funds from operations (FFO) guidance of $4.34-4.48 for 2012; the midpoint represents an increase of approximately 9 percent over 2011 figures.
For income-oriented investments like REITs, growing cash flow is a good thing. Digital tends to be conservative when it comes to guidance, so we expect actual results to be in the upper end of its stated range.
The company has easily outperformed its REIT peers. Investors are currently rewarded with $2.72 per share in dividends annually. Digital’s boasts a 3-year dividend growth rate of 29 percent, and already hiked its payout 7.4 percent in mid-February.
Learn more about this financial newsletter at Stephen Leeb's Income Performance Letter.
Related articles:
