Investors Gain Comfort with Data Center REITs
July 29th, 2010 By: Rich Miller
In an interview from the annual National Association of Real Estate Investment Trusts (NAREIT) conference, CEO Hossein Fateh of DuPont Fabros Technology (DFT) discusses the market acceptance of data center REITs like DFT and Digital Realty Trust (DLR). “The market is now starting to mature,” Fateh says, noting that CoreSite has also filed papers for an IPO. “Investors are getting used to data centers as an asset class of their own, rather than as a very niche special product.” This video runs about 3 minutes, 30 seconds.
The issue isn’t investors getting comfortable with DC REITs, but too comfortable. Many would give DLR another look if its price wasn’t as high and its yield just 3.5%. Moreover, within the next 5 years, I wouldn’t be surprised if DLR surpassed all the publicly-traded office REITs in rent revenue, market cap, NOI, and dividend payout. DFT will also likely be larger than most of the office and apartment REITs as well. DC REITs are the future of REIT investing, which is why so many commercial real estate investors are now trying to understand them better.