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
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

REIT Investing: Necessity is the Mother of Invention

Stocks in this article: DLR EXR SKT CONE COR DFT PSA AAPL FB

I just returned from a data center conference in New York City. While there, I learned a lot about the demand for "cloud" space and the durability of the highly innovative data sector industry. It was there that I discovered the extraordinary demand for cloud storage and the fundamentals that make the asset sector so desirable.

One of my favorite data sector REITs is Digital Realty (DLR). With a market cap of around $8.67 billion, Digital is the largest data sector in a class that includes CyrusOne (CONE), CoreSite Realty (COR) and DuPont Fabros (DFT). Digital's current price is $67.66 and the REIT has the highest dividend yield (4.61%) in the sector. Innovation pays off! Digital has increased its dividend by 37% in 2010, 35% in 2011 and 7% in 2012.

Digital is trading around 20% below its 52-week high of $80.59 and the P/FFO of 13.3 makes the San Francisco-based REIT an attractive buy.

Another innovative REIT I really like is Extra Space Storage (EXR). The Salt-Lake City REIT is second in size to Public Storage (PSA); however, the innovation is best to none. For the $4.2 billion (market cap) REIT, "innovation is anything, but business as usual."

Guiding the 900 property self-storage chain is Spencer Kirk, a veteran of innovation. The former chairman and CEO of Megahertz grew his previous business from a basement operation to become the leading supplier of solution-oriented mobile data communications products. Kirk has since been a visionary leader in building out a highly innovative self-storage brand.

Extra Space's innovative management team recently announced FFO of 43 cents per diluted share, resulting in 23% FFO growth compared to the fourth quarter of 2011. In addition, the company reported that it has increased same-store revenue and net operating income by 6.5% and 8.5%, respectively, compared to the same period in 2011. Also, the company increased same-store occupancy by 170 basis points to 88.6% at Dec. 31, 2012, compared to 86.9% as of Dec. 31, 2011

Shares are somewhat expensive today so I would wait on a dip -- my target $32.00. The current dividend yield is 2.67% and the moderately high P/FFO multiple is 22.5.

2 of 4

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

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
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, 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
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

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

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
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!


DOW 17,804.80 +26.65 0.15%
S&P 500 2,070.65 +9.42 0.46%
NASDAQ 4,765.38 +16.9840 0.36%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

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