Cowen & Company Previews Data Center REITs

• CoreSite Realty CorpCOR: $2.3 billion cap, 3.4 percent yield
<liCyrusOne Inc CONE: $1.65 billion cap, 4 percent yield
• DuPont Fabros Technology, Inc. DFT: $2.6 billion cap, 5.2 percent yield
• Digital Realty Trust, Inc. DLR: $8.9 billion cap, 5.2 percent yield
• Equinix Inc EQIX: $13.5 billion cap, 2.8 percent yield

Cowen – CoreSite: Market Perform

Cowen expects CoreSite to report "in-line with previous guidance" on April 23.

Cowen noted CoreSite appears to be fairly valued and pointed out that it is trading at 17.6x 2015E FFO, the highest of its peer group.

A limiting factor to COR revenue upside could be a focus on signing smaller tenants after bagging "multiple key anchor tenants" last year; however, that could be a positive when it comes to growing margins from leasing to smaller colocation tenants.

Cowen – CyrusOne: Outperform

Cowen expects CyrusOne to report earnings "slightly ahead of expectations" on May 7.

Cowen noted that CyrusOne's stock is up 12.6 percent YTD and continues to feel that "it remains cheap relative to its normalized FFO growth and therefore believe its current stock price offers a compelling risk/reward scenario."

Cowen cited strong leasing trends in meetings with management, powered shell space availability in each market and reduction of Cincinnati Bell's ownership overhang, as positives for the shares going into earnings.

Cowan – Digital Realty: Market Perform

Cowen expects Digital Realty to report earnings "in-line with expectations""on May 5.

Cowen sees Digital Realty's foreign exchange (FX) headwinds worsening and, combined with the Net Data Center bankruptcy issue, expects 2015 FFO to be at the lower end of guidance.

Cowen expects Digital Realty's data center dispositions to be dilutive to earnings and is looking for an update on its capital recycling program.

Cowan – DuPont Fabros: Outperform

Cowen expects DuPont Fabros to report earnings "slightly ahead of consensus" and maintain 2015 guidance on May 7.

Cowen foresees several scenarios that would allow DuPont Fabros to hit the high-end of 2015 guidance, including the possibility that funds from Net Data Center may be better than expected.

Cowen will be looking for color on leasing/pricing trends and sub-lease of Yahoo! ACC2 space.

Cowen – Equinix: Market Perform

Cowen expects Equinix to report Q1 results "in-line with estimates" on April 29.

Despite FX headwinds, Cowen expects Equinix to maintain 2015 AFFO guidance.

Cowen noted that a positive IRS REIT determination is already factored into the share price; with EQIX already trading at 17x 2015E AFFO, Cowen believes "the risk/reward is not attractive and [will] remain comfortable on the sidelines."

Investor Takeaway

CyrusOne is Cowen's top data center REIT pick going into Q1 2015 earnings and expects that it could trade up 3 percent or more based upon the earnings call.