Data Center REIT Digital Realty: 2015 Guidance - A Closer Look

While the entire equity REIT sector performed well during 2014, one of the best performing subsectors was data center REITs, including

.

Data center REITs are essentially technology landlords who are well positioned to benefit from secular trends such as the exponential growth of wireless data and increased adoption of

across a wide range of industries.

Top data center performers from 2014 also included:

Although Equinix has yet to receive formal IRS REIT approval, its board has given the green-light to begin reporting as a REIT as of Jan. 1, 2015.

Digital Realty and Equinix both operate on a global basis, with Equinix being a significant tenant for Digital.

The arrangement appears to be mutually beneficial, with lease extensions having been announced during 2014 for the majority of the Equinix occupied facilities.

It was a big win for Digital, as the company continues to focus on increasing returns on invested capital under newly-confirmed CEO Bill Stein.

On January 5, Digital announced that it had signed new leases during Q4 2014 totaling over $45 million of annualized

, bringing its full-year total to more than $155 million.

On average, these Q4 leases are expected to commence in approximately five months, with a weighted-average initial lease term of just over eight years.

There was no clarification of the leasing revenues by product type: Turn-Key Flex, Powered Base Building (PBB) or colocation.

Digital also provided an initial 2015 core FFO per share guidance range of $5.00 to $5.10. This represents an increase of only 1 to 4 percent over full-year 2014 core FFO per share guidance of $4.90 to $4.95.

Qualifying assumptions as of January 5, included:

1. The sale of non-core assets will be dilutive to core FFO per share. The range above reflects a dilution of approximately 2 percent of core FFO per share in 2015, resulting from Digital Realty's capital-recycling program.

2. Projected core FFO per diluted share was adjusted up by $0.05 from projected FFO per diluted share to account for items that do not represent core expenses and revenues.

3. International results are anticipated to be under pressure from a strong U.S. dollar, which is reflected by a reduction of just over 1 percent per diluted share in the current guidance.

It is notable that the

traded as low as $1.1860, on January 5 -- its lowest level since 2006.

Kudos to Digital management for being proactive and giving preliminary guidance so early after the end of Q4 2014. However, since there was no break-out of leasing activity -- either geographically, by product type or by $/SF -- it appears investors will need to wait until Digital reports its Q4 and FY 2014 earnings, scheduled for after the bell on February 12, in order to learn more.