Digital Realty Trust is a REIT that operates over 30 million square feet of rentable space for data centres. A significant chunk of its customers is the Forbes Global 2000 Enterprises, including star names like LinkedIn, Oracle, and Facebook. Cloud computing is the number one application that Digital Realty Trust’s customers lease data centre space for. As a result, the retention rate for data centres is relatively high at around 80%. While commercial REITs that deal with traditional office spaces are having a tough time due to the pandemic and the shift towards work-from-home, other REITs like self-storage and data centre are doing quite well. As an investor looking for the top REIT stocks for 2021, you may want to dig deeper with Digital Realty Trust.
The Performance of Digital Realty Trust
For any REIT, the fund from operations is an important metric. In Digital Realty Trust, funds from operations have grown from $488 million in 2011 to $1.4 billion in 2019. Another important metric is the adjusted funds from operations. For Digital Realty Trust, that number has increased from $406 million in 2011 to $1.29 billion in 2019. The largest customer of Digital Realty Trust accounts for roughly 9.5% of the total annualized recurring revenue or ARR. The top 20 customers together account for almost 49% of the ARR. Digital Realty Trust has its data centre spread out across the world. About 59% are based in North America, 29% in Europe, Middle East & Africa (mainly Europe), 8% in Asia-Pacific, and 4% in Latin America. Digital Realty Trust is among the best office REIT stocks at this moment.
Digital Realty Trust was trading at a price-to-book ratio of 2.51 in mid-May 2021. The historical 5-year price-to-book average was 3.26. The dividend yield on offer at the time was slightly above 3%. The 5-year average dividend yield was 3.35%.