Digital Realty Trust has named William Stein its permanent CEO. Stein, the company’s CFO, has been at the helm as interim chief executive since resignation of its founding CEO Michael Foust in March.
Stein’s appointment signals that the real estate investment trust’s board likes the direction he has taken the company since taking the helm earlier this year, and that the world’s largest wholesale data center landlord will stay the course. Digital Realty’s shares were down 0.22 percent late Monday morning Eastern Time.
This has been a year of changes for Digital Realty. The two biggest strategic shifts are pruning its massive real estate portfolio (something it has never done since it was founded in 2004) and going after partnerships with a variety of service providers to offer packaged deals that include its bread-and-butter wholesale data center space and services up the stack, such as network connectivity and cloud.
The company’s stock has been going up throughout the year, from about $50 per share in early January to close to $70 per share this month.
Getting Rid of Non-Core Properties
In October’s earnings call, Stein said Digital Realty had identified first nine of the properties it was going to divest. The company’s CTO Jim Smith told us earlier this year that pruning the portfolio was standard practice in the real estate business, and the current effort was something that should have been done earlier.
“We will continue to focus on growing our portfolio with the highest quality properties while culling under-performing assets, and will strive to improve operational efficiencies and strategically expand our global footprint,” Stein said in a statement.
Unneeded, or non-core properties for Digital Realty are properties that aren’t data centers or data center properties in markets the company’s leadership doesn’t want to grow in. They can also be simply overvalued properties in markets that are hot at the moment and can be sold at a premium, Smith said.
Diversifying Available Services
To help grow its ecosystem of service provider partners, Digital Realty hired Michael Bohlig, a former business development exec at Amazon Web Services.
The company has struck deals with carriers that can provide private network connections from its data centers to big cloud providers, such as AWS and Microsoft Azure. It has also partnered with smaller cloud service providers.
One of the most recent partnerships is with Carpathia Hosting. The two companies will jointly market infrastructure solutions that combine colocation space and a range of services offered by Carpathia, including hosting and cloud.
Another big partnership was with VMware, giving tenants at one of Digital Realty’s Dallas data centers direct access to VMware’s public cloud service called vCloud Air (formerly vCloud Hybrid Service).