The Wall Street Journal's Wednesday MarketBeat column looks at defensive plays in real estate investment trusts, and spotlights the recent success of the two data center REITs, Digital Realty Trust (DLR) and Dupont Fabros Technology (DFT). Both stocks are up about 10 percent this month. An excerpt:
For technology names, much of the strength is being pushed by data center facilities, which remain a hot commodity, especially in a faltering economy when companies are looking to outsource data storage and cut down on costs. ... "This is a close as you're going to get in a growth story for REITs," said Steve Salopek, head of small-cap equities for ING Investment Management. He added that data center REITs have a significant advantage over a "pure" data center bet, because they only own the building. By not also providing the services of a data center, these companies are more adaptable to change should demand fall in one part of the data storage world.
Some of our earlier coverage has focused on the competitive advantages enjoyed by Digital Realty, Dupont Fabros and other data center builders in the current environment.