Data Center Reits: Best Data Center Reits to Consider in 2022

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With data usage across industries increasing exponentially, Real Estate Investment Trusts (REITs) have emerged as an excellent investment option which has low-risk and high growth potential. Data center REITs guarantee their investors passive income without ownership and are among the top REIT sectors that are primed to expand rapidly in the coming years. 


Here are a few things to know about data center REITs before you invest in real estate.

What Are Data Center REITs?

A REIT is a company/facility that owns a variety of real estate assets and properties. They primarily receive their funding from investors who wish to buy into the REITs. 

REITs provide an income investment option by allowing investors to have a stake in the property without actually buying it. The law requires REITs to pay their investors a minimum of 90% dividend, and hence, investors make a lot of money.

Data center REITs invest in server storage facilities, which also host other data-based equipment. These data centers must have stable power supplies, top-notch security, and cutting-edge cooling technology in order to be both secure and reliable for the organizations that rely on them.

Although data centers are still a new form of technology, they are estimated to grow massively in the next few years. This is because almost all major corporations and even startups depend on data storage facilities. Data storage can be cloud-based or even on artificial intelligence platforms. 

Advantages of Data Center REITs

  1. Great performance: Data REITs performed extremely well in 2020 and 2021. They are only going to grow exponentially in the upcoming years. The credit for the growth of data center REITs can be attributed to expansion of artificial intelligence, cloud storage, and remote working trends. Hence, data center REITs are slated to grow even more.
  2. Passive income opportunities: According to law, data center REITs must pay their investors a minimum of 90% in the form of dividends. Investors can choose whether they want to reinvest this money or use it for other financial goals they might have.
  3. Unique portfolio: Buying into REITs gives investors the opportunity to diversify their investments without having to own or manage any capital. This holds true even for data center REITs.

Data Center REITs to Consider in 2022

1. CoreSite Realty

CoreSite Realty is a data center REIT that operates 25 data centers in eight different cities throughout the United States. Its data centers are positioned in some of the country’s most important marketplaces. CoreSite clients have access to 22 percent of the US population and 31 percent of GDP.

Consistent growth has been one of the keys to its success. CoreSite creates purpose-built data center projects that allow it to grow when its clients want additional capacity. As a result, it has been able to gradually expand its sales, cash flow, and dividend. These growth factors aided its capacity to provide market-beating total returns.

2. CyrusOne

CyrusOne is among the top data center REITs to invest in 2022. In their current capacity, they are capable of building data halls in 12–16 weeks. CyrusOne intends to expand more in the future years. It predicts that when clients want more capacity, it will be able to build more data centers, allowing it to generate robust revenue and profitability growth.

3. Digital Realty

Digital Realty is among the largest data center REITs which owns and leases data shells to major operators. This REIT has spent billions in buying data centers to grow organically and deliver results to its investors. Not only does this company have a strong financial profile, it also has a good dividend payout.

4. Equinix

Equinix is a powerful data center REIT with over 10,000 clients and 406,000 interconnections. Equinix is famous for increasing its revenue for 74 quarters straight with its revenue business models. This is the longest track record any company has ever held in the S&P 500. What’s more, the REIT is still expanding through acquisitions. It is estimated that the REIT has given 1000% return in dividends to its investors throughout the past 10 years.

Bottom Line

Data center REITs are among the top REIT sectors with tremendous growth potential since technological innovations are quite commonplace in the current digital era. With the emergence of data center REITs, real estate is no longer a playground for the wealthy and well-connected; it offers a fair opportunity to every individual to invest in real estate and earn sizable revenue and dividends. 

Given their promising demand, high performance, and potential to hedge risks against inflation, interest in REITs is unlikely to slow down in the near future. 

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