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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Grommit who wrote (51513)	5/9/2013 11:54:17 AM
From: E_K_S	1 Recommendation Read Replies (1) \| Respond to of 78751

Re: DLR When looking at BV which was one of his concerns (selling 3x book), I believe his valuation does not include all those upgrade costs. Several of the properties bought were retrofitted at some "significant" expense to make them "cloud centric". This includes special power and cable runs, air conditioning and such. This is why the higher rents are obtained. These retrofit additions also change as new technologies are adopted (ie optical cable vs Cat5) and these upgrades prevent tenants leaving as many of the upgrades are also tenant specific (ie black fiber connections) . The concern I do have is how these capitalized expenses are depreciated (probably short term in nature) and if these types of expenses/upgrade cycles are standard for the industry and/or if tenants pay the improvements and/or leases allow for increases for such upgrades. Management has been in the business a long time and understand this much better and probably have set up their accounting accordingly. There are a lot of value added "new" technologies being added to these facilities including (1) solar power sources, (2) NG powered Bloom Energy fuel cell technologies and (3) direct power from local hydro/electric all decentralized sources of power. eBay: Bloom Boxes Will Power Utah Data Center The newest eBay data center project in Utah will run entirely on power generated by fuel cells from Bloom Energy, the company said this week. The use of the Bloom Energy Servers – also known as “Bloom boxes” – will give eBay a cleaner energy profile, allowing it to power its facility with biogas rather than coal-sourced power from local utilities. “The Bloom can reduce energy consumption and eliminate a significant number of high-cost components,” said Gross. “It’s highly unlikely that both power sources (the Bloom and the utility) would go away.” --------------------------------------------------------------- The data centers are evolving and the next generation of decentralized power systems can actually lower costs and increase reliability. This is a huge positive for those Data Center that are early adopters of this technology and can use these "plug-in" components in their designs. It becomes much more cost effective than a one-up custom build. EKS