CoreSite Realty Corporation (COR) catches investor attention among REITs due to its capacity to engage in multiple verticals in data storage and its capacity to expand multiples, especially as valuations are mixed in the REIT space in general, says Jonathan Atkin, Managing Director at RBC Capital Markets.
“CoreSite is the name that stands out among the listed REIT data center operators that saw the most notable multiple expansion, reflecting that company’s ability to tap into both retail and wholesale demand,” Atkin said. “In the wholesale space, going back to second quarter and third quarter, there was some softness in the operating results, but I think that’s gradually improving. The retail space performed better overall, reflecting stronger supply/demand and pricing dynamics.”
CoreSite, a fairly recent REIT convert among data centers, and its competition are currently looking to expand geographically through small M&A activity, although Atkin says larger deals may occur.
“I think you will continue to see tuck-in acquisitions. Recent examples of companies doing that are CoreSite, Equinix, Telecity, Digital, and then larger deals have been done by Digital and Equinix. I think that this should continue, driven principally by geographic expansion, maybe a little less so in footprint consolidation,” Atkin said.
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