JPMorgan analyst Anthony Paolone citing his view that DCT's stock price offers relatively "decent" value to investors for the upgrade. He added that the company's " economically leveraged properties such as industrial should see more of a benefit as the recovery continues to unfold."

Paolone also believes DCT "is gaining some traction on the capital deployment front, and we suspect that its earnings should begin to turn the corner in 2011."

Keefe, Bruyette & Woods's Sheila McGrath highlighted DCT as one of her top REIT picks, saying that "although the company will continue to be negatively impacted by weak economy, it has the balance sheet strength to navigate through this challenging market and emerge as a beneficiary with external growth opportunities over the next several years."

She added that DCT's 86.9% occupancy remains below stability "which we believe should allow for more potential upside as markets recover." McGrath also said that "DCT's internal growth profile can surprise on the upside by driving occupancy and acquisition opportunities are starting to emerge."

Digital Realty shares closed 1.1% higher Thursday at $53.80 while DCT rose 1.9% to close at $5.78.

-- Written by Miriam Marcus Reimer in New York.

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Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.

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