This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Cramer's Action Alerts PLUS - See his portfolio and get alerts BEFORE every trade. Learn more NOW!

A REIT at the Intersection of Technology and Real Estate

The company announced on June 21 that it had also acquired a 269,000-square-foot data center in Dallas, Texas.

The one-year chart below of DLR underscores how well its shares, which currently yield around 4%, have performed.

Content on this page requires a newer version of Adobe Flash Player.

Get Adobe Flash player

Since its Sept. 22, 2011 low of $51.75, it has soared as high as $76.04. It closed Tuesday at $72.84.

DLR has grown and skillfully managed its business to the point where it reported a profit margin (trailing 12 months) of 15% and an operating margin of 30% as of March 31, 2012.

As of the same date, its quarterly earnings growth (year over year) was an impressive 28%. Quarterly revenue growth increased by nearly 13% in comparison to last year's revenue numbers.

There are two obvious red flags. First is the payout ratio, which is more than 200%. Second is the debt the company has incurred. After the latest offering, it will total nearly $4 billion.

There aren't any directly comparable publicly traded REITs. But you could look at the numbers of office REIT Liberty Property Trust (LRY) for an indirect comparison.

Liberty Property pays a 5.3% yield from its funds-from-operation (FFO). It has a payout ratio of 114% as of the first quarter 2012. It also reported total debt as of that quarter of $2.37 billion.

Its forward estimated price-to-earnings ratio is 13.29, vs. DLR's 14.54.

When you look at a one-year chart of shares of LRY and DLR, you'll see they've pretty much moved in tandem.

Content on this page requires a newer version of Adobe Flash Player.

Get Adobe Flash player

My crystal ball is quite foggy on the near-term future for REITS like DLR.

If the European financial malaise continues to cause some deep hiccups in the U.S. stock market, you may have a chance to pick up shares at lower prices.

Back on May 21, DLR traded as low as $67.84. There's a decent chance of seeing that price or lower before too long.

At the time of publication, Courtenay had no positions in any securities mentioned.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

2 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
LRY $0.00 0.00%
DLR $65.96 -1.20%
AAPL $124.43 -1.54%
FB $82.22 -1.18%
GOOG $548.00 -0.73%


DOW 17,776.12 -200.19 -1.11%
S&P 500 2,067.89 -18.35 -0.88%
NASDAQ 4,900.8850 -46.5560 -0.94%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs