Last Week in REITs: Housing Remains Muted; AI Demand Keeps Building

Research evidence excerpt

Last Week in REITs: Housing Remains Muted; AI Demand Keeps Building

roadening beyond traditional markets to meet

AI power needs. Highlighted by DLR's ~$475M acquisition of ~1,440 acres at Astra Enterprise Park

in De Soto, KS, backed by a 600 MW Evergy ESA by early 2028, scalable to 2 GW. We see this as

evidence Tier 1 growth is constrained by power, interconnect, and NIMBYism, underscored by QTS'

July 2 withdrawal of its VA Supreme Court appeals on the ~$30B Digital Gateway project in Prince

William County after courts invalidated the rezonings on procedural grounds. Given the depth of AI

demand, including reports Anthropic has signed 10+ LOIs with developers, DLR's push into friendlier

markets looks inevitable. DLR's development track record, in our view, gives it a clear edge over

newer entrants in delivering capacity for hyperscalers.

TRNO Operating Update: TRNO delivered a strong operating update, with occupancy improving

130 bps sequentially to 97.6%, roughly 80 bps above our estimate. Leasing spreads were the key

highlight at +27.7%, accelerating from +22% last quarter and exceeding both our estimate and

Street expectations of +21%/+25%. The company also remained active on the external growth Jonathan Petersen * | Equity Analyst

front, acquiring $172M of assets during the quarter ($274M YTD) with an additional $90M pipeline +1 (212) 284-1705 | jpetersen@jefferies.com

under contract or LOI. On the balance sheet, TRNO took advantage of its higher share price by Joe Dickstein * | Equity Analyst

issuing approximately $132M of equity through its ATM program and further strengthened its +1 (212) 778-8771 | jdickstein1@jefferies.com

capital position with a first-time Baa1 issuer rating from Moody's, complementing its existing BBB Ahmed Mehri * | Equity Analyst