Data centre market outlook
Real Estate
Kolytics’ report, the first in a series on the data centre sector, examines how the landscape is evolving amid surging AI-driven demand, mounting infrastructure pressures and a shift in focus from compute capacity to power availability. As the AI revolution transitions from hype to application, investor attention is shifting from core performance to grid access as the primary constraint. While current market conditions remain favourable and landlords benefit from pricing power amid grid bottlenecks, elevated valuations leave limited room for execution missteps. Risk-adjusted opportunities remain attractive; however, the materialisation of substantial downside risks could swiftly reshape the outlook. REITs covered include Digital Realty, Equinix and Iron Mountain.
Edition: 217
- 08 August, 2025
Do you worry about stocks at 50x earnings?
According to Trivariate's analysis, companies that reach 50x price-to-forward earnings for the first time in 3 years consistently see their multiples begin to contract on average back to 37x earnings 12 months after the initial “eclipse”. Although the data suggests that there is no need to panic sell, it does appear that beginning 6-to 9-months later, the odds of outperformance start to deteriorate. Unless earnings explode to the upside, Trivariate’s advice would be to trim these positions 6 months after the initial eclipse of 50x earnings occurs. Recent examples of companies joining the “50x” club include Costco, Carvana, Albermarle and Iron Mountain.
Edition: 199
- 15 November, 2024
Real Estate
AFFO = Absurd Funds from Operations. Many investors do not realise that the company’s definition of AFFO features adjustments that are completely unrealistic and that without these adjustments, AFFO does not cover the dividend. BTN’s note examines this as well as multiple one-time benefits that made the latest quarter’s figure even less reliable. Click here to read more.
Edition: 143
- 02 September, 2022
Earnings Quality Matters
Increasingly aggressive accounting practices means it is only a matter of time before these companies face a day of reckoning:
Keurig Dr Pepper (KDP) - touts its debt reduction efforts, but a closer look reveals the company is simply moving debt to unorthodox short-term financing instruments.
Iron Mountain (IRM) - many integral cash costs are ignored by the company’s REIT metrics and are set to rise when the impact of Covid wanes. If these costs are subtracted from AFFO, IRM is not covering the dividend.
IBM (IBM) - large, never-ending charges and non-operational benefits have significantly eroded the quality of reported profit growth.
Edition: 119
- 17 September, 2021