EQIX - Data Center REITs: Cloud Is Getting Crowded

• Data Center REITs - the best-performing property sector of 2020 - have stumbled over the last quarter as lukewarm earnings results and intense competition have clouded the outlook for 2021.
• The vaccine-driven sector rotation within the REIT sector has further pressured these "work from home winners." These REITs have pulled back 10% this past month and are nearly 20% below recent-highs.
• Leasing activity - the most closely-watched earnings metric - disappointed in Q3, pulling back from the record-highs. Even so, all five data center REITs boosted full-year FFO guidance.
• The Cloud Is Getting Crowded. Risks remain as intense competition from the hyperscale giants – Amazon, Microsoft, and Google - and relentless supply growth have pressured pricing power and AFFO growth.
• All five data center REITs have now boosted their dividend in 2020. The pullback does appear to be a long-awaited buying opportunity, but further growth won't come as easy in the 2020s as it has over the past decade.

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