STOCKS | Bernstein Analysts Say Data Center REIT Strength Is Often Undervalued

Bernstein analysts said in a research report that the strength of data center real estate investment trusts (REITs) is often underestimated. According to Odaily, the analysts said traditional valuation metrics often fail to capture the long-term value of capital-intensive assets designed to generate cash flow over decades. They said segment metrics such as adjusted operating cash flow and development yields can more accurately assess the sector’s growth potential. The analysts added that a key advantage of the sector is its ability to reinvest funds to expand data center computing capacity while maintaining shareholder distributions. Overall, Bernstein said it remains optimistic about the outlook for data center REITs.