We recently published a list of 10 Best REIT Stocks to Buy According to Billionaires. In this article, we are going to take a look at where Digital Realty Trust, Inc. (NYSE:DLR) stands against other best REIT stocks to buy according to billionaires.
News from the US Real Estate Market
Although the spring housing season started off with more sellers and increasing homes for sale as pointed out by the chief economist at Realtor.com, Danielle Hale, home buyers are still facing a high cost of buying in addition to economic concerns thereby suggesting a rather ‘sluggish response from buyers in early spring’.
With regards to the tariff impact on real estate, the announcement of the new Trump tariffs resulted in a sell-off and a sharp drop in mortgage rates while homeowners and home buyers seized the moment, with mortgage applications moving to a six-month high. Realtor.com suggests that tariffs often translate into higher costs for the consumer. In the case of housing, the new tariffs could result in increased construction costs for homebuilders considering the fact that 10% of the building materials utilized in residential construction tend to be imported. Realtor.com Senior Economist Joel Berner emphasized the downside of these tariffs as he talked about many homebuyers being sidelined in case of a small rise in costs and stated:
“The US faces a supply gap of nearly 4 million homes, and the only long-term solution to this problem is to build them, but the implementation of these tariffs will make it more costly to do so, putting a question mark on whether they can be built at the lower price points that are most undersupplied”
Although many economists still think that tariffs could lead to a recession which typically results in lower mortgage rates, another concern looming over real estate is that tariffs could keep inflation higher for longer which might lead to the Federal Reserve reversing or reducing future cuts to its policy rate which would keep mortgage rates higher for longer.
Our Methodology:
To compile our list of the best REIT stocks to buy according to billionaires, we used Insider Monkey’s exclusive database of billionaire stock holdings. Firstly, we shortlisted the most prominent REIT stocks using a stock screener and ETFs. Then, we selected the top 10 REIT stocks based on the highest number of billionaire investors, updated as of Q4 2024. For the stocks with the same number of billionaire holdings, we have used the total value of billionaire holdings as a secondary metric to rank the stocks.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A close-up view of a technician installing a server in the data center facility, representing the reliable services provided by the company.
Digital Realty Trust, Inc. (NYSE:DLR)
Number of Billionaires: 10
Number of Hedge Fund Holders: 47
Digital Realty Trust, Inc. (NYSE:DLR) is a real estate investment trust that owns, operates, and invests in carrier-neutral data centers. The firm delivers the full spectrum of data center, colocation, and interconnection solutions thereby supporting leading enterprises and service providers.
The REIT’s leading data center platform benefits from the growing global demand from a diversified, high-quality customer base. The firm continues to grow its global footprint as it recently announced a joint venture with a leading Southeast Asian digital infrastructure platform, Bersama Digital Infrastructure Asia, to operate and develop data centers in Indonesia.
Furthermore, secular tailwinds currently remain strong for the REIT with digital transformation driving a strong data center demand. With embedded internal expertise as one of the world’s largest data center acquiror, developers, owners, and operators, Digital Realty Trust, Inc. (NYSE:DLR) is a promising stock. Reiterating the strong demand drivers for the REIT, Baron Funds stated the following in its Q4 2024 investor letter:
“Data center landlords such as Equinix and Digital Realty Trust, Inc. (NYSE:DLR) are benefiting from record low vacancy, demand outpacing supply, more constrained power availability, and rising rental rates. Several secular demand vectors, which are currently broadening, are contributing to robust fundamentals for data center space globally. They include the outsourcing of information technology infrastructure, increased cloud computing adoption, the ongoing growth in mobile data and internet traffic, and AI as a new wave of data center demand. Put simply, each year data continues to grow exponentially, and all of this data needs to be processed, transmitted, and stored – supporting increased demand for data center space. In addition, while it is still early innings, we believe AI could not only provide a source of incremental demand but also further accelerate existing secular trends by driving increased prioritization and additional investment in digital transformation among enterprises.”
Overall, DLR ranks 6th on our list of best REIT stocks to buy according to billionaires. While we acknowledge the potential of the best REIT stocks, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than DLR but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.
Disclosure: None. This article is originally published at Insider Monkey.
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