Technically, Digital Realty Trust puts its chips in real estate. The real estate investment trust (REIT) owns properties that are leased to firms in the technology sector. Its portfolio includes more than 100 properties in the US, Europe, and Asia, including data communications hubs, electronic storage and processing centers, tech manufacturing facilities, and offices of tech companies. All told, the REIT owns more than 18 million sq. ft. of rentable space, including space held for redevelopment. Digital Realty Trust focuses on hot tech markets such as Chicago, Dallas, Phoenix, New Jersey, New York, northern Virginia, and California's San Francisco Bay area and Silicon Valley (its largest market).
Digital Realty Trust's occupancy rate stood at nearly 95% at the end of 2011. Its largest tenant, Century Link, accounts for more than 10% of its annualized rent; other major tenants include Equinix, AT&T, Level 3 Communications, and Facebook.
The REIT's growth strategy includes real estate acquisitions and redevelopment of its existing properties. It has approximately 2 million sq. ft. of space under development. The company believes that upgrades to its properties lead to low tenant turnover and longer lease terms.
Digital Realty Trust acquired 15 properties in 2010 (the busiest that the company had been since 2007), including some in new markets. The REIT added its first property in Asia when it bought a data center in Singapore. It entered Massachusetts and Connecticut with the acquisition of three data centers there.
Digital Realty Trust continued its acquisition activity into 2011 and 2012, when it purchased more than a dozen properties, including some in new markets such as London and Sydney. The latter deals added to the company's international presence in Dublin, Melbourne, Paris, and Singapore.
The acquisitions in 2010 and 2011 also helped to boost the company's revenues and net income for both years. Digital Realty Trust reported a more than 50% increase in net income from fiscal 2010 to 2011 ($105.4 million to $162.1 million) and a nearly 25% gain in operating income ($865.4 million to nearly $1.1 billion). – less