Tuesday, February 9th, 2016

Time	Event
1:00p	Vantage Raises $300M to Fund Data Center Construction Vantage Data Centers has borrowed an additional $295 million to pay for data center construction in Silicon Valley and Washington State. There has been a shortage of ready data center space in some major US markets, including Silicon Valley, and several data center providers have been racing to expand inventory. For example, it was welcome news for Vantage when an existing customer decided they wanted to reduce the amount of capacity they had reserved at the company’s Santa Clara, California, campus last year, because the provider would be able to immediately bring new capacity to what has been a seller’s market. Read more: Silicon Valley – a Landlord’s Data Center Market While data center providers enjoyed a boom last year, it’s unclear at this point how the sharp drop in stocks across the tech sector that has been happening this month will affect demand for wholesale data center space in 2016. The sell-off of tech stocks has dragged down share prices of all of Vantage’s major publicly-traded competitors, such as CoreSite Realty Corp., Digital Realty Trust, and DuPont Fabros Technology to varying degrees. The new financing brings Vantage’s credit facility from the previous $275 million to $570 million. Expansion of the credit facility was led by RBC Capital Markets. After bringing the 12MW of capacity to market that was freed up by an existing customer in October, Vantage started construction of a fourth building on its Santa Clara campus, a project expected to bring 6MW of capacity online in the fourth quarter. Sureel Choksi, Vantage president and CEO, said in a statement that the company was also expanding capacity on its Quincy, Washington, campus and was eyeing potential entry into new markets. Demand for wholesale data center space in North America exploded last year, as major providers of Web content and cloud services, and other technology companies expanded capacity to support their growth. Vantage signed at least four big leases in Santa Clara last year, according to a report by North American Data Centers, a commercial real estate firm focused on data centers. The deals included 10MW with Microsoft, 3MW with Arista Networks, 2MW with VMware, and 2MW with Symantec, the report said. Read more: Who Leased the Most Data Center Space in 2015? (Comment on this)
4:00p	Key Considerations for Investing in Data Center REITs If you work around data centers every day, things like exponential growth of data, hybrid cloud, and the growth in outsourcing to third-party data center operators are old news. But the large publicly traded Real Estate Investment Trusts that own and operate big fleets of wholesale and retail data centers are just beginning to develop a broader audience on Wall Street. Back in October 2013, San Francisco-based data center REIT Digital Realty Trust (DLR) was a trail blazer when it entered into an 80/20 joint venture valued at $366 million, or $346 per square foot, with a Prudential Financial real estate fund. PREI senior portfolio manager Cathy Marcus said at the time, “The long lease terms and contractual rental rate increases on these Powered Base Building data centers provide a stable income stream…” One week later, shares of QTS Realty Trust (QTS) debuted on the New York Stock Exchange. Twitter started trading on NYSE one month later. Today, Twitter shares are trading 65 percent lower than their IPO price, while QTS has more than doubled its share value and paid a tidy cash dividend each quarter since that week. Click chart to enlarge New Spotlight for Data Center Providers Previously, strong performance of data center stocks like QTS and DLR was obscured by being lumped into Diversified, Office, or Industrial classifications. It was easy for investors to glance at a NAREIT (National Association of Real Estate Investment Trusts) table and see that self-storage REITs were performing well and the Lodging REITs were in a significant decline in November 2015. FTSE and NAREIT started reporting the six publicly traded data center REITs (Equinix, CoreSite Realty Corp., Digital Realty, DuPont Fabros Technology, QTS Realty Trust, and CyrusOne) as a separate sector for the first time in December 2015, signaling that the sector has finally come of age. Formal REIT approval last year for Equinix (EQIX), an S&P 500 company with an $18 billion dollar market cap, may have been helpful in achieving this recognition. What investors could not see at a glance was that total returns by data center REITs for 2015 averaged 32.48 percent on an equal-weight basis. The playing field has now been leveled for 2016 and beyond. Read more: JP Morgan: Data Center REIT Stocks Undervalued Investors should realize that while data centers are a strong REIT sector, they are certainly not bulletproof. The six data center stocks are not immune to broader market and technology sector sell-offs, and the sharp drop in stock values the overall tech sector has been experiencing since last week has had a negative impact on all the major data center providers. Why Invest in REITs? Many investors look to diversify their portfolio beyond cash, stocks, and bonds by including alternative assets like real estate. Historically, equity REITs that own and operate trophy commercial real estate assets have outperformed many other investments. Source: NAREIT December 2015. Click chart to enlarge Publicly traded REITs are fairly easy to understand. In return for getting a pass on paying corporate taxes, REITs must pay out at least 90 percent of taxable income to shareholders in dividend distributions. While non-traded REITs do exist, there are few reasons for most investors to own them. Publicly traded REITs provide investors with daily liquidity and transparency through mandatory SEC and stock exchange reporting. Why Invest in Data Center REITs? Data centers sit squarely at the intersection of real estate and technology. The secular trends of cloud computing, Big Data, and Internet of Things are tailwinds for both wholesale- and retail-focused data center REITs. However, data center stocks like DLR, EQIX, or COR (CoreSite) are a very different investment than other tech stocks. Rather than placing a bet on IBM, Microsoft, Rackspace, Oracle, Google, or Amazon, you are betting on the landlords that own and operate a lot of those companies’ data center real estate. Read more: Who Leased the Most Data Center Space in 2015? Third-party data center providers run the gamut, from selling just space and power to providing colocation, interconnection, cloud, managed services, and facility outsourcing. They serve tech companies as well as large enterprises, who outsource to them so they can allocate capital to core business initiatives. A New Home for Equity REITs in 2016 Later this year the investment spotlight is going to be shining brightly on institutional quality real estate, including data centers. Equity REITs, which own and operate property, will be joining a newly created GICS top level Real Estate Sector. GICS stands for Global Industry Classification Standard. Source: MSCI Real Estate will become the eleventh GICS sector at the close of trading on August 31, 2016. This means that there will be a lot of rebalancing in index funds and ETFs, and likely there will be new real estate investment products offered as well. Mortgage REITs that own and trade securities and derivatives will remain in Financials, along with commercial banks and insurance companies. Read more: US Data Center REITs Enjoying a Booming Market REIT ETFs: a Simple Strategy An easy way to gain exposure to US REIT stocks, including data center stock, is buying ETF shares. The Vanguard REIT Index ETF (VNQ) is a simple way to own a basket of RETs across all of the sectors, including office, retail, industrial, apartments, self-storage, and hotels. The VNQ is the largest ETF by market cap. This REIT ETF closely tracks the MSCI REIT Index (RMZ), while only charging a 0.12 percent fee. It is important to realize that the top four REIT exchange traded funds are all market-cap weighted. That means the Top 10 holdings can dominate performance, in a similar fashion that large-cap tech stocks heavily impact the NASDAQ 100 performance. Notably, mall giant Simon Property Group, which has a $58 billion market cap, is the largest VNQ holding at 8.25 percent. Source: etf.com February 2015. Click to enlarge The “Big 3” healthcare REITs Welltower, Ventas and HCP, Inc. are all included. There are two large multifamily REITs, one self-storage giant, an office REIT, a global industrial REIT, and now Equinix joins the list. In the aggregate, these Top 10 REITs represent a 37.1 percent weighting, out of a total of number of 153 REIT holdings. If you don’t happen to like the prospects for malls, CBD offices, and healthcare real estate, you might want to consider another strategy. Smart Beta Data Center Sector ETF Strategy If you are a regular Data Center Knowledge reader, you may already have an ownership interest in a private company or own shares in a publicly traded employer. Investing in a basket of REITs is a way to diversify while maintaining an overweight exposure to the data center sector. In a January Seeking Alpha article, I suggested a strategy of simply creating an equal-weight portfolio of the six data center REITs. Investors need to take a DIY approach because there is not an ETF investment product “on the shelf” just focused on data centers. My bullish data center thesis concluded that a “DIY Smart Beta ETF” will outperform the broader equity REIT sector (RMZ) in 2016. The bonus for investors was my suggestion that this simple strategy would also outperform the S&P 500. In January, the six data center stocks were up 6.48 percent vs a loss of 3.6 percent for the S&P 500. During February, the data center REIT spotlight will be on Q4 2015 earnings and initial guidance for 2016. (Comment on this)
5:40p	USB as an Analog/RF Port Michael Hopkins is the Founder and CEO of CurrentRF. Most people associate USB and its hardware as a digital and system data transfer protocol only. Thinking of USB in terms of analog and RF has only recently been a subject of interest in USB design, a necessity with the advent of USB 3 speeds and protocols. In fact, RF effects become dominant in the data transfer speeds involved within USB 3. There is current technology and methodology available today that allows server and network device USB ports, normally thought of as digital and system data transfer ports, to be used as analog/RF pickup ports for system noise and power reduction. If we open and ignore the data lines used for any flavor of USB, and focuse only on the resident +5V power and ground lines, we will see a rich source of RF frequencies of significant magnitude. Energy harvesting techniques can be employed to recover this resident, generated energy. Utilizing an AC-coupled spectrum analyzer of sufficient bandwidth, will result in frequency spikes and noise related to USB data transfers. However, “coupled in” frequencies and noise energies are also related to other aspects of servers and network devices. LDOs (low drop out regulators) and switch mode regulators, commonly used in data center and business devices today, do little to contain processing and clock noise energies. This noise, or dynamic power dissipation, is sufficiently high frequency in nature to couple through the system almost unimpeded. The Earth only receives a portion of the sun’s radiated energy, so only a portion of this server and network device generated noise couples to the USB port +5V line. Thus, with this coupled in noise, a portion of radiated noise energy can be picked up and processed back into the system as usable, “green” power. This energy, captured and recycled, acts to reduce the load current on system voltage regulators, lessening the power drawn from either the wall plug or batteries. CurrentRF can recover and recycle this radiated, high frequency noise, visible at the server and network USB ports, saving power and money in data center and business networks and servers. The USB port, then, becomes the “eyes into the system” and serves as an RF pickup of radiated energy from processors, memory, graphics cards, HDDs, SSDs, and internet activity, etc. This energy is normally ignored and treated by the industry as “throw away” and waste. If captured and recycled, even at a partial level, it proves to be a substantial source of generated energy; and if used, can result in substantial power savings and TCO reduction in data centers. Industry Perspectives is a content channel at Data Center Knowledge highlighting thought leadership in the data center arena. See our guidelines and submission process for information on participating. View previously published Industry Perspectives in ourKnowledge Library. (Comment on this)
6:11p	Good Time to Consider Microgrids for Data Centers? The modern data center has evolved into an engine that drives the entire business, and the pressure to maintain uptime is greater than ever. Since companies rely more and more on their data centers, are there better, more resilient mission critical support systems? At Data Center World this March, Justin Jurek, regional sales manager at Pillar USA, will talk about the applicability of microgrids in the mission critical market and an elegant approach to microgrid systems that has been adopted by multiple end users. Remember, we’re seeing an evolution taking place in the business and in the data center. Market strategies are now built around the capabilities of your facility. Changes around governance, uptime classification, and even weather patterns are all impacting facility uptime: State legislation like AB32, California’s bill that requires reduction of carbon emissions, may become drivers for onsite power generation, while large end users, such as data center operators, may simply want to rely less on aging electrical grid. Uptime Institute’s Tier IV classification of power generation onsite having to be rated for prime power may drive some data center operators to explore Combined Heat and Power plants and other on-site power generation technologies. The rise of superstorms may also lead more companies to want to rely less on the grid. Trends like these are driving growth in the microgrid market, Jurek said. “When working with microgrid systems, it’s critical to understand the challenges of onsite power generation, but also both the resiliency and economic drivers for onsite power generation,” he pointed out. “This means knowing multiple unique mission critical microgrid systems that are in operation in the USA and across the globe and how they impact your facility.” Join him at Data Center World in Las Vegas and be sure to attend his session, titled Mission Critical Microgrid System to learn more about: Why it makes sense to adopt the mission critical microgrid architecture if, as an end user, you’re already committing to a microgrid architecture for your data center. Why a centralized power stabilizer for your microgrid enabling a mission critical microgrid architecture makes more sense than point-of-use UPS combined with onsite power generation. The architectures and case studies discussed in the session eliminate the use of UPS, batteries, and other commonly used mission critical system components (in some cases diesel generators). Want to learn more? Join Pillar’s Justin Jurek and 1,300 of your peers at Data Center World Global 2016, March 14-18, in Las Vegas, NV, for a real-world, “get it done” approach to converging efficiency, resiliency and agility for data center leadership in the digital enterprise. More details on the Data Center World website. (Comment on this)
6:49p	Ballmer on Microsoft: Nadella’s Done Good, with Caveats By WindowsITPro Steve Ballmer has never been one to be quiet, and his time since stepping down as CEO of Microsoft has been no exception. Even though he now describes himself as anoutsider at the company who sits down with his successor Satya Nadella a few times a year, he still has plenty of thoughts on how the company is doing — and where its head should be at. In a recent interview with Business Insider, Ballmer admitted he can’t say I’m checked out because I do spend lot of time thinking about the place as an investment. I feel free to interject the things I can see from my vantage point, he said. Certainly I’m not shy about sharing those. He’s particularly bullish about Microsoft’s forays into hardware. I really think the work Microsoft’s doing with Surface, with HoloLens, with Xbox, that stuff’s absolutely essential to the company’s future, said Ballmer. Because innovation in the future will either be from the cloud out to all devices, or from devices as supported by software in the cloud. He’s also impressed with Azure — with some small caveats: When you take a look at the transition from server software to Azure, what’s going on in terms of cloud infrastructure, the company is absolutely the No. 1 company serving enterprise backbone needs, which is fantastic. It’s making the migration to cloud. We started a good thing with Azure, and the company has made well more than two years of progress in terms of being able to compete with the right cost profile, margin structure, and innovation versus Amazon. There’s still a lot to do on that. It’s not like the company rides the same momentum. I think the company in terms of the investments it’s making in evangelizing those products, supporting those products technically, I think it’s really doing a good job. That’s a big challenge. Amazon has also done a very nice job with AWS. In some senses it’s part of the nomenclature now, particularly in the startup community even more than in the enterprise community. I see that in some of the startups I’ve been involved with just in the sports arena. He loves Azure so much, he finds he wishes he just knew a little more about it. As a shareholder I have expressed my frustration with not getting more information about revenue and margins from the cloud, he said. He also grumbled a bit about Nokia. The board as I was leaving took the company on a path by buying Nokia, they kind of went ahead with that after I told them I was going to go, he told Rosoff. The company, between me and the board, had taken that sort of view. Satya, he’s certainly changed that. He needs to have a clear path forward. But I’m sure he’ll get there. Read the rest of the interview at Business Insider. This first ran at http://windowsitpro.com/industry/ballmer-microsoft-nadellas-done-very-good-job-few-tiny-caveats (Comment on this)
10:45p	Average Cloud User Leverages Six Different Clouds: Report By The WHIR Maturing cloud practices are leading the average cloud user to leverage six different clouds, between running applications and experimenting on public and private clouds, RightScale said in its latest report. The RightScale 2016 State of the Cloud Report shows that enterprise workloads continue to be moved into the cloud, particularly private clouds, driving a sustained increase in hybrid adoption. The report is assembled from the answers of over 1,000 technical professionals surveyed about cloud adoption. While it confirms the well-established dominance of hybrid approaches to enterprise cloud use, it also indicates some shifts from a year ago significant to service providers. Private cloud adoption grew from 63 percent to 77 percent of organizations, driving a 13 percent year-over-year increase in hybrid adoption to 71 percent. Seventeen percent of organizations have 1,000 or more VMs in public cloud, up four percent from a year ago. At the same time 31 percent now run thousand-VM private clouds, up 9 percent on the year. The number of clouds used by each user is split roughly evenly between private and public, and between running applications and experimenting. Usage increases are paralleled by an increased acknowledgement of the role of central IT in setting policies, from 31 up to 44 percent, and selecting clouds, which went up 34 to 42 percent for public, and 35 to 44 percent for private. This lead to the number of companies with established approval policies for cloud increasing from 30 to 38 percent. Another change is the top challenge for cloud computing, as a lack of resources and expertise passed security (32 to 29 percent) as the most cited top cloud challenge. The number of users mentioning cloud cost management as a challenge continues to increase. Overall adoption of DevOps rose from 66 to 74 percent, and more than four out of five enterprises, with Docker adoption doubling to 27 percent, and 35 percent planning to use the leading DevOps container. Chef and Puppet are still the most popular DevOps tools in use right now, however, at 32 percent each, and Ansible use also doubled, to 20 percent. For every other DevOps tool RightScale asked about, the number of respondents planning to make use of it is much higher than the number who currently do so, suggesting big growth on the horizon for Salt, Kubernetes, Docker Swarm,Mezosphere, Docker Tutum, Rocket, and Rancher. AWS continues to lead public cloud adoption, with 57 percent of respondents using it overall, while the number of enterprises on AWS grew and the number of small business declined. Azure IaaS increased 5 percent to 17 percent, and Azure PaaS use increased from 9 to 13 percent. All providers saw increased private cloud adoption, lead by VMware vSphere, which grew to 44 percent. OpenStack and VMware vCloud Suite are used by 19 percent of organizations, with OpenStack holding the edge for those with fewer than a thousand employees. The report also includes bare metal for the first time, which is used by 15 percent of respondents. This first ran at http://www.thewhir.com/web-hosting-news/average-cloud-user-leverages-six-different-clouds-report (Comment on this)

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