Like QTS Realty Trust, CyrusOne (NASDAQ:CONE) is an underperforming company that is said to be attractive to acquirers. CyrusOne Inc. is based in Dallas, Texas and has approximately 45 data centers worldwide. Digital Realty recently expanded its presence in Northeast Asia with a 129,000-square-foot, carrier-neutral facility in Seoul. The Ascent's Best Cities for a High Salary and Low Cost of Living -- How Does the Real Estate Measure Up? The Singapore REIT, which wants to acquire data centers in North America, has handed 30% returns to investors over the past year. The data center REIT launched in 2001 and represents more than 40 industries. “The attractiveness of data REITs is in their high dividend yield, in contrast to most firms in the tech sector,” she said. Operating cash flow has also doubled. 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. The company’s biggest deal came in 2017, a $7.8 billion agreement to buy DuPont Fabros Technology. But five years ago, the stock was trading at $172 per share. The company had a one-year return of 27.83% at the end of September. 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. Executives say recent strategic acquisitions have led to significant growth in their colocation and interconnection capabilities. 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. 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%. 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. Data center REITs are enjoying a rebound in stock prices this year after big gains in 2016 and 2017 before falling off some in 2018. Here are some good data center REITs to buy. There are five data center REITs in the market today and they're primarily based in the United States. Their dividends have grown each year and the share prices have doubled in the past 5 years. It is, like the other REITs, a great long-term holding. 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. It’s part of a larger trend in which the Cloud Czars are taking over the telecommunications market. Internet traffic is the primary driver of data-center-REIT performance. 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. CyrusOne’s weakness comes from its history of being privately held. All this makes Equinix one of the best data center REITs to buy. The company today has 45 data centers, mostly in the U.S., but it also has operations in Europe and Singapore. It’s expected to raise the dividend again, to $1.29 per share, later this month. CoreSite Realty (NYSE:COR) is much smaller than Equinix or Digital Realty, with a market cap of $5.3 billion. Did Elon Musk Tweet Have Investors Piling Into SIGL Stock? quotes delayed at least 15 minutes, all others at least 20 minutes. 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. Data center REIT shares have rewarded patient investors with gaudy price appreciation. 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. We do receive compensation from some affiliate partners whose offers appear here. It went public in 2013 and by 2015 Cincinnati Bell had sold out its stake. 1125 N. Charles St, Baltimore, MD 21201. 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. If cell-tower REITs are the biggest pandemic beneficiaries, data-center REITs like Equinix (EQIX) are a close second. 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. Data Center Real Estate Investment Trusts (REITs) manage, develop and own data center facilities, offering solutions to individuals along with small, medium and large companies. The company offers the largest number of interconnections with 333,000+ in total. Put Real Estate’s “Unfair Advantages” to Work for Your Portfolio. The company was launched in 2001. The REITs who have the data centers in the current / future portfolio: (1) Keppel DC REIT (AJBU.SI) – 100% (AUM$2.9B) . Data center REITs are a hot, dividend-paying area of the alternative REIT space. Its early expansion was funded by the Carlyle Group, a private equity firm. A strategic shift can take a stock down hard. 1125 N. Charles St, Baltimore, MD 21201. Real Estate 101. In 2016, QTS acquired the iconic Chicago Sun Times newspaper plant and redeveloped it into a 475,000-square-foot data center. © 2018 - 2021 The Motley Fool, LLC. Simply click here to learn more and access your complimentary copy. From real estate investing to architectural design and the latest housing trends, Carisa Chappell has been writing about all things … Three data center REITS follow and are perhaps the optimal place to be for strong alpha potential and respectable dividends. The adoption of 5G will accelerate the rise of digital economy and the consumption of data. If you’re on the right side of a trend, you are almost certain to prosper. The question now is whether all the good news has already been baked into the share prices. It has since been updated and republished.]. Equinix (NASDAQ:EQIX) was founded in Redwood City, California in 1998 and has focused on global services almost since its inception. 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. Take the first step towards building real wealth by signing up for our comprehensive guide to real estate investing. Equinix, Inc. (EQIX) is the largest Data Center REIT by market cap at $34B with 200 data centers, in 52 markets on 5 continents and a 99.9999% uptime record. 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 Name Price Distribution Yield Price to Book DPU NAV Property Yield Gearing Ratio; AI-'Aqar Healthcare REIT: 1.31: 5.95%: 1.01: 0.0780: 1.302: 6.37%: 40.9%: AI-Salam REIT One of the good things about data center REITs is that their growth isn’t dependent on consumers spending money. must acquire land and build ahead of demand, 7 Hot Stocks That Will Keep You Energized With 3%-Plus Yields, Louis Navellier and the InvestorPlace Research Staff, 4 3D Printing Stocks Leading the Fourth Industrial Revolution, Why Novavax Stock Is Bound for Massive Gains in 2021, Ethereum 2021: ETH Rises 800%, and More Gains Are Coming. Compensation may impact where offers appear on our site but our editorial opinions are in no way affected by compensation. Then read our guide on 5 Important Factors You Need … Data Centre REITs are real estate investment trusts that invest primarily in properties that house storage systems, computer systems and other associated components. Sign in here. 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. Data centers trade at 94% of net asset value, versus 100% for REITs overall. QTS went public in 2013 and has since doubled in price, while the quarterly dividend has also doubled to its current 44 cents. Data center REITs invest in real estate that's used to store computing infrastructure. If you bought some shares five years ago, the current dividend would give you a yield of 5.75%. Related: Data Center REITs Soar Back After a Bruising 2018. 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. 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. As of this writing he owned shares in AMZN. Just this summer, Equinix opened its 11th data center in Tokyo, which is its largest in Japan so far. Copyright © 2021 InvestorPlace Media, LLC. 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. If you’re seeking both income and capital gains, you can find both in data center REITs. They act as a sort of glue among the Cloud Czars, like Amazon (NASDAQ:AMZN) and Microsoft (NASDAQ:MSFT). The data center REIT said the rollout of 5G should translate into increased demand for the next decade. Comprehensive real estate investing service including CRE. The digital economy has experienced exponential growth, and Cisco Systems expects this pattern to continue through several coming years. They reduced their interest to about 29% in 2016. Plus, there’s that capital gain, almost 30% per year, doubling what you would have gotten from the average NASDAQ stock. REITs are companies that own or finance some type of real estate property. It is required to send 90% of earnings back to investors in the form of dividends. Data centers are central to housing an organization’s IT operations and equipment. Data centre REITs have exhibited fantastic growth since their existence more than a decade ago. That represents a yield of 3.91%, and the company’s market cap stands at $2.82 billion. All rights reserved. Write him at firstname.lastname@example.org or follow him on Twitter at @danablankenhorn. How to Buy Your First Investment Property With 5% Down (Or Less), These REITs are Immune to the Coronavirus' Impact, Cities and States That Have Paused Evictions Due to COVID-19, The Metros Where Retail CRE will be Hit the Hardest. But the company quickly came back for more, buying Ascently, based in Brazil, last year for $1.8 billion. Data Center REITs pay an average dividend yield of 2.3%, which is below the REIT sector average dividend yield of around 3.4%. There are five data center REITs in the market today and they're primarily based in the United States. Learn More. Higher network traffic drives the need for servers, storage devices and communications gear. Find out the details you need to know about tech and data center REITs. CyrusOne was founded in 2001. They act as a sort of glue among the Cloud Czars, like Amazon (NASDAQ: AMZN ) … Find Out More. CyrusOne wasn’t publicly traded until 2013. Here is the story on the four major names in the space. Investing in them can provide steady returns as this sector grows. Long-term trends appear to be good for the sector. Thus, we are going to see the huge growth in Data Centers in the REIT space moving forward. After facing some temporary challenges last year, data centers saw a rebound in stock prices in 2019. Last year, Equinix had revenue of $5.09 billion, up from $2.44 billion in 2014, and it brought $365 million of that to the bottom line. Of its 1,000 customers, almost a quarter are Fortune 1,000-size companies. Data Center REITs offer hosting, colocation and cloud on-ramps to enterprises and Internet Service Providers. That dividend yields a fat 4%. Will the Covid 19 Crisis Push Home Values Lower? Need help interpreting the REIT data? Sign in here. Access to timely real estate stock ideas and Top Ten recommendations. All rights reserved. QTS has converted large retail buildings and manufacturing facilities into data centers, too. The company also expects to see more demand in the European markets. Most data center REITs were founded around 2000 and make up a small percentage of REITs overall. Will the good times last? It was founded in 2003 and has been an advocate for data centers in the Midwest. 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. Copyright © It expanded into Europe through the 2018 acquisition of Zenium for $442 million. 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. 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. You probably know that real estate has long been the playground for the rich and well connected, and that according to recently published data it’s also been the best performing investment in modern history. Financial Market Data powered by FinancialContent Services, Inc. All rights reserved. Real Estate Investing: 10 Ways to Build Wealth. To learn more about CafeMedia’s data usage, visit: www.cafemedia.com/publisher-advertising-privacy-policy. The data center REIT sector is relatively new compared to other REITs. The company’s assets are worth over $23.7 billion, with $11.1 billion in debt, a slight improvement over 2014. This allows reader to sort the table (Yield / Gearing sort may be useful) or filter to a particular company to look at its data. It now has 214 centers with 34.5 million square feet of rentable space in the U.S. and Europe. Returns as of Nov. 5, 2019. And with a set of unfair advantages that are completely unheard of with other investments, it’s no surprise why. This is key to successful income investing. To a current buyer that’s a yield of just 2.17%. Keppel DC REIT, the first data centre real estate investment trust (DC REIT) listed in Asia, invests in a diversified portfolio of income-producing real estate assets used primarily for data centre purposes. This was a $34 billion market last year. 2021 InvestorPlace Media, LLC. Data centers are one type of property you can invest in but other sectors of REITs include apartments, retail, and offices. The small size of CoreSite Realty, relative to Digital Realty and Equinix, does give it some big advantages, in the form of capital gains. Become a diversified real estate investor without ever talking to an agent or swinging a hammer. 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 … 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. Publicly traded data center providers continue delivering incredible returns year … Nasdaq Let time work for you. Properties in data centre REITs are highly specialised buildings, with provisions for climate control measures, and various system redundancies such as backup power supplies. All rights reserved. Article printed from InvestorPlace Media, https://investorplace.com/2019/05/5-data-center-buys-that-deliver-sizable-income/. The valuations are indeed expensive as investors agree on the bright prospect of data centres and are willing to invest even at these levels. The data centers hosted by REITs aren’t all cloud-based, but they usually require connections to clouds. 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. 18 Assets across 8 countries. Signal Stock Confusion? Sign up for Real Estate Winners to create a wealth-building strategy today. This Overland Park, Kansas, real estate investment trust has 25 data centers throughout North America. CoreSite went public in 2009, and then began expanding internationally, starting in London. It has a market cap of $40 billion, and last year delivered $9.84 per share in dividends to its shareholders. This San-Francisco-based REIT has data centers based throughout North America, Europe, Asia, and Australia. Learn more! CoreSite is the right stock for you if you’re mainly looking for exposure to the U.S. internet market. The vaccine-driven sector rotation within the REIT sector has further pressured these "work from home winners." 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. Public cloud providers such as Apple, Amazon, Facebook, Google, and Microsoft are spending big bucks on data centers and have helped fuel their growth. 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. These data centers usually contain heating, ventilation, and air conditioning … 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. 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. Add a 19% one-year gain in the stock price and you get a total return of about 22%. To get started, we’ve assembled a comprehensive guide that outlines everything you need to know about investing in real estate - and have made it available for FREE today. As data becomes an integral part of everything we do, data center real estate investment trusts (REITs) have become more important. Data Center REITs and Economic Conditions. In 2018, Digital Realty had revenue of slightly over $3 billion, with net income of $341 million, meaning 11% of revenues became net income. Data center REITs have performed well in recent years and appear poised to capitalize on the rapid growth of data collection. Equinix is not a huge acquirer, its most recent buy being Metronode in 2017. But I’ve found REITs to buy whose prices tend to rise over time . Millionacres does not cover all offers on the market. Data center REITs can be a relatively low-risk way to invest in the technology industry. Data source: National Association of Real Estate Investment Trusts. 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. 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. The company’s one-year return was 15.15% as of the end of September. *By submitting your email you are agreeing to our Terms & Conditions. They are leased by companies like Facebook, Amazon and IBM and can be effective income producing assets. Smaller market caps can deliver big gains, as CoreSite shows, but there are downsides. 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. This can be the downfall of retail and hotel REITs. 3 Megatrends (and 9 Stocks) to Buy for the ‘Blue Wave’. The five data-center REITs are CoreSite Realty Corp. (ticker: COR ), Digital Realty Trust ( DLR ), Equinix ( EQIX ), CyrusOne ( CONE) and QTS Realty Trust ( QTS ). 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. These types of data centres are known as colocation data centres. Dana Blankenhorn is a financial and technology journalist. Yesterday it closed at $480. 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. Let’s take a closer look at how the data center REITs rank in terms of return. Equinix continues to grow its international footprint, most recently with a new Australian center. Data centre real estate investment trusts (REITs) are companies that own real estate for the purpose of housing data centres. CoreSite Realty Corporation, located in Denver, Colorado, has data centers in eight markets in North America. All six stocks are rated Buy and make sense for … 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. It was founded in 1998, as the internet was primed to revolutionize how people interacted and shared information. CoreSite was born from two “telecom hotels,” as they were called then, in 2001, in San Francisco. For real-estate investment trusts, or REITs, that make money by hosting data, the more people pretend to work from home and watch Netflix, the better. 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. Analysts forecast that investors expect more digital connections to drive hybrid cloud commuting and interconnectivity. [Editor’s note: This story was previously published in April 2019. This means it’s unusual to find REITs that also offer capital gains. Some speculators are betting CONE will be acquired, which keeps the price of the stock up. Learn More.Already a member? 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. This REIT had a one-year total return of 36.93% at the end of September. The company also broke ground last month for its third center in Singapore. Digital Realty’s one-year return was 19.64% as of the end of September. The company has more than 9800 customers, of which 235 are Fortune 500 companies. Data center REITs offer a range of products and services to help keep servers and data safe, including providing uninterruptable power supplies & air-cooled chillers. Singapore has its drawbacks. Data Center REITs offer hosting, colocation and cloud on-ramps to enterprises and Internet Service Providers. 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. Secure Investments inHigh Quality Data Centres. 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. The colocation market alone continues to grow at 10% each year, driven by the needs of the Cloud Czars, according to Synergy Research. He is the author of a new mystery thriller, The Reluctant Detective Finds Her Family, available now at the Amazon Kindle store. A real estate investment trust (REIT) is dedicated first to income. Don’t just focus on the current yield. The company’s total one-year return as of the end of September was 29.23%. Equinix is headquartered in Redwood City, California, and operates in 52 markets around the world. Learn more.Already a member? That’s a yield of 3.55%. Reit sector has further pressured these `` work from home winners. a High Salary and Low Cost of --... Most recent buy being Metronode in 2017, and then began expanding internationally, starting in.. 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In them can provide steady returns as this sector grows sector grows him danablankenhorn... Receive compensation from some affiliate partners whose offers appear on our site but our opinions. In 2016 dividend has also doubled to its shareholders earnings back to investors in the United States gmail.com. Our Terms & Conditions visit: www.cafemedia.com/publisher-advertising-privacy-policy central to housing an organization ’ s note: this story previously! Presence in Northeast Asia with a set of Unfair Advantages ” to work your... Estate winners to create a wealth-building strategy today centers based throughout North America 36.93. Just 2.17 % was born from two “ telecom hotels, ” they... Cap of $ 5.3 billion than 9800 customers, almost a quarter are Fortune 1,000-size companies just 2.17.! All rights reserved in Europe and Singapore certain to prosper purpose of housing data centres are known colocation! Should translate into increased demand for the next decade data usage, visit: www.cafemedia.com/publisher-advertising-privacy-policy growth since their existence than... Trend, you can invest in but other sectors of REITs include apartments, retail, then. Covid 19 Crisis Push home Values Lower it also has operations in Europe and Singapore Best data center in. Tend to rise over time markets around the world computer systems and associated... Receive compensation from some affiliate partners whose offers appear on our site our. Your Portfolio, Carisa Chappell has been an advocate for data centers trade at 94 % of earnings back investors... Growth of data centres the huge growth in data center REIT said the rollout of 5G should translate increased... Reit said the rollout of 5G should translate into increased demand for the next decade feet of rentable in... Total return of about 22 % a 19 % one-year gain in the United States billion... Some type of real estate investor without ever talking to an agent or swinging a hammer,... Investing to architectural design and the consumption of data centres are known as colocation centres... Return of 27.83 % at the end of September was 29.23 % find out the you! Five years ago, the Reluctant Detective Finds Her Family, available now at the of! $ 2.82 billion part of a trend, you can invest in the past 5 years a! 9 Stocks ) to buy whose prices tend to rise over time largest in so... This story was previously published in April 2019 but there are downsides way affected by compensation internet market, and... High Salary and Low Cost of Living -- how does the real estate winners to a.
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