3 REITs Getting Paid as Big Tech Builds Out AI

3 REITs Getting Paid as Big Tech Builds Out AI

Chris Lange

Fri, September 4, 2026 at 10:22 PM GMT+3 8 min read

Quick Read

• Digital Realty signed its largest-ever hyperscale deal (200 MW), while Equinix posted the biggest single guidance raise in company history.

• Iron Mountain's records storage business, which boasts a 93.4% retention rate, bankrolls a data center segment that grew 39% year over year in Q2.

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Data centers are the physical layer under the AI buildout: leased, powered warehouses that house the servers running training and inference. Landlords sign multi-year rent contracts, often with hyperscalers (the largest cloud and AI operators such as Amazon, Microsoft, Google, Meta, and Oracle), which makes the cash flows look like industrial real estate with a technology tailwind. Iron Mountain management has cited an industry expectation that data center capacity grows at a 15% to 25% CAGR, and leasing activity across the three names below supports that framing. All three are US-listed equity REITs that own the properties and collect the rent, not mortgage REITs. (we profiled seven suppliers powering this same buildout, from power to cooling, in a free report you can grab here: 7 Stocks Powering the AI Boom.)

Digital Realty Trust: Global Landlord to the Hyperscalers

Digital Realty Trust (NYSE:DLR) operates PlatformDIGITAL, Interxion, and ServiceFabric across 733 data centers in 39 metros, with major development markets in Northern Virginia, Charlotte, Atlanta, São Paulo, and Marseille. The customer base spans traditional hyperscalers, network carriers, and enterprise AI adopters.

Q1 2026 delivered $707 million in annualized GAAP base rent bookings at 100% share, anchored by a 200 megawatt AI inference lease, the largest hyperscale deal in company history. In Q2, backlog reached a record $1.9 billion at 100% share and $1.4 billion at Digital Realty share, which management called roughly 30% of in-place data center revenue. Cash releasing spreads on renewals exceeded 25% in the quarter.

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The quarterly dividend of $1.22 per share, implies an annual $4.88, compared with a share price of $187.79. That payout has been held at $1.22 quarterly since the March 2022 ex-date, so this is a dividend that has been maintained rather than raised through the AI cycle. Coverage on Core FFO is comfortable: 2026 guidance was raised to $8.15 to $8.20 per share of Core FFO excluding net promote income, well ahead of the $4.88 annual dividend.

Bull case: a 1.4 gigawatt development pipeline that is 63% pre-leased pro forma for July signings, with an average expected stabilized yield of 11.5%, plus 600 megawatts of secured Kansas City utility power ramping in 2028, points to multi-year rent growth without heroic assumptions.

Bear case: development capital intensity. Digital Realty already sold 7.3 million shares under its ATM for about $1.3 billion of net proceeds and raised 2026 net capex guidance to $4.25 billion to $4.75 billion. A flat dividend during a heavy equity-issuance phase is the cost of growth, and an AI capex slowdown would leave that unfunded pipeline exposed.

Equinix: Interconnection Moat Meets AI Inference

Equinix (NASDAQ:EQIX) runs a global colocation and interconnection platform, with 52 expansion projects underway across 33 markets. The differentiator is density of network connections. Interconnection is the paid cross-connect that lets a tenant plug directly into another tenant, a cloud, or a carrier inside the same building, which cuts latency and backhaul cost. Equinix says its ecosystem is approximately twice the size of the next largest provider, and that eight of the top 10 model providers and eight of the top 10 neoclouds are already running key networking workloads on Equinix.

Revenue reached $2.625 billion, up 16.4% year over year, with annualized gross bookings of $424 million, up 23%, and a record 9,700 net interconnections added. Adjusted EBITDA margin was 53%, up 300 basis points year over year. Management raised full-year AFFO per share growth expectations to 10% to 12% and called it "the largest single guidance raise in the history of our company".

Currently the quarterly dividend pays out $5.16 per share, annualized for $20.64, against a share price of $1,040.83. The dividend has moved from $4.26 in 2024 to $4.69 in 2025 to $5.16 in 2026. AFFO coverage is conservative: full-year 2026 AFFO per share is guided to $42.69 to $43.29 against expected cash dividends of roughly $2.039 billion for the full year. Long term, management expects dividend per share growth to approximate AFFO per share growth, which is guided at 9% to 12% annually through 2029.

Bull case: CEO Adaire Fox-Martin said "the AI-driven infrastructure cycle continues to accelerate and it's playing directly to our strengths", and the stabilized portfolio is already generating a 27% cash-on-cash yield on gross property and equipment. That is the kind of unit economics that funds continued dividend growth.

Bear case: power, land, and cost of capital. Equinix is committing to $5 billion to $7 billion of annual capex through 2029, and management expects the blended cost of capital to rise by approximately 150 basis points and leverage to increase by about a turn across the plan.

Iron Mountain: Records Storage Cash Cow Bankrolling a Data Center Ramp

Iron Mountain (NYSE:IRM) is a hybrid equity REIT: a legacy physical records storage business with record storage volume of 735 million cubic feet and a 93.4% retention rate, layered with fast-growing data center, digital, and asset lifecycle management segments. Those three growth segments grew more than 50% year over year and now account for 35% of second-quarter revenue.

Revenue was $263 million in Q2, up 39% year over year, with renewal pricing spreads of 12% cash and 14% GAAP. Year-to-date leasing reached 110 megawatts through July, including 75 megawatts in July alone, capped by a 51 megawatt Mumbai lease with a major global hyperscaler on a 10-year contract and a 25 megawatt lease that fully leased London 3. Approximately 325 megawatts of leasable capacity is expected to energize over the next 24 months.

T quarterly dividend comes in at $0.864 per share, for an annualized $3.456, compared with a share price of $114.98. The dividend has stepped up in four consecutive years, from $0.65 through mid-2024, to $0.715, to $0.785, and now $0.864 quarterly. AFFO coverage: full-year AFFO per share guidance of $5.87 to $5.93 against the $3.456 annualized dividend, consistent with management's stated low-60s% AFFO payout ratio target.

Bull case: the records business funds a data center build with signed, hyperscaler-anchored backlog that supports additional revenue growth of $370 million beyond 2026, and the ALM segment now runs at $288 million of quarterly revenue, up 88% year over year, giving Iron Mountain a second growth lever tied to the same hyperscaler refresh cycle.

Bear case: the balance sheet. Iron Mountain carries $17.3 billion of net debt, negative shareholders' equity of $955 million, and net lease-adjusted leverage of 4.8 times. It recently issued a $1.5 billion bond with a 6.25% fixed coupon maturing in 2035. Higher rates and continued data center capex needs mean interest expense is a real headwind if hyperscale leasing lumpiness slows the AFFO ramp.

Bottom Line for Income Portfolios

Current yields here are moderate by design: dividends are covered by AFFO or Core FFO, and the growth is coming from real, signed hyperscale leases against gigawatt-scale pipelines. Equinix is the compounder with the interconnection moat and a rising dividend. Iron Mountain is the highest-growth data center story on the roster, funded by a records business that keeps paying the bills. Digital Realty is the pure-play landlord with the largest hyperscale lease in its history in the bag, though income buyers should recognize the dividend has been flat while the company issues equity to fund the build. For a retirement income sleeve tied to the AI buildout, owning the physical rent stream beats owning the chip cycle.

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