Digital Realty

A portfolio holding in focus is Digital Realty, a US-listed data centre REIT with a global platform of 300+ data centres spanning 25+ countries. It is one of the world’s largest owners of hyperscale data centres (a type of data centre that is leased by big technology companies), including a sizeable presence in the US.

Quay expects Digital Realty to benefit from the following:

• Its global platform allows it to meet customer demand for global capacity. This is a significant advantage compared to many of its peers who tend to be smaller and more localised.
• Its US-centric (>40%) portfolio – the US is the epicentre of AI-investment and data centre demand.
• Its tilt towards hyperscale – benefiting from the arms race amongst US mega-cap tech companies to invest heavily in AI and the Cloud.
• Power constraints in the US are slowing new developments and allowing existing owners like Digital Realty to have strong pricing power.
• Landbanks located in the best locations give it the ability to generate strong returns from development in the future.

It is Quay’s view that these factors should continue to drive Digital Realty’s earnings growth and valuation upside going forward.

Source : Quay Global Investors