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$9 billion technology REIT
Digital Realty Trust(DLR - Get Report) is one of the most unique niche REITs on the market today -- and arguably my favorite name in the category. But it's not other investors' favorite name. With a short interest ratio of 18.3, it would take close to a month of buying pressure for shorts to exit their bets against DLR. That makes it a prime short squeeze candidate right now.
Digital Realty Trust is unique in that it's a technology REIT. The firm owns 16.8 million square feet of datacenters, internet gateways, and tech firm office buildings spread across the country. Exposure to such an in-demand, specialized type of properties presents a major tailwind for DLR right now -- particularly in the datacenter business, which has been growing at a fast pace as consumers' appetites for hosted data continues to grow.
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Because DLR's properties are so specialized, it boasts stickier tenants than most REITs can. Most often, datacenters are built to suit a tenant's specific technology needs, so any tenant that wants to bear the costs of breaking a lease have to bear the additional switching costs of replicating their previous setup. Those high switching costs should continue to provide a nice backstop for Digital Realty Trust right now.
And DLR's nearly 4% dividend yield should be a nice backstop for investors -- particularly since short sellers have to pay it back.