Multi-Tenant Data Centers (MTDC) to See Accelerated Growth Due to Increasing Enterprise Strength: We believe industry commentary/channel checks suggest that enterprise demand

momentum should strengthen into 2021, acting as a strong tailwind versus 2020 performance, which was partially hindered by COVID-19, albeit still maintaining a solid backdrop. Robust enterprise demand would boost both colocation and interconnection revenues for Outperform-rated EQIX, DLR, COR, and SWCH. We view that enterprise demand will be especially strong in 2021 for a couple main reasons – (1) demand looked to be solid heading into 2020, but COVID-19 altered some plans for expansion, as many companies deploying in smaller retail colocation environments chose to be cautious with spend in an uncertain environment; and (2) COVID-19 then acted as an accelerant for digital transformation, turning many enterprises to a WFH model, and growing gaming and video streaming to new heights. All in, we believe the stars are aligned for enterprise demand to accelerate in 2021E creating a favorable situation for MTDCs.

 Hyperscale Capex Spend Projected to Grow 14.7%/5.4% in 2021E/2022E, Driving More Business to MTDCs: Hyperscale Capex is a leading indicator for the Multi-Tenant Data Center industry largely because ~60% (2020 assumption) of all data center space, power, cooling, and interconnection is outsourced to third party data centers (MTDCs) rather than built and maintained by the cloud service providers (insourcing). We expect this percent of outsourcing to begin indexing closer to the ~50% range through 2021E, largely a by-product of the vast scale the MTDCs have gained over the last five years, driving even more business to MTDCs, especially wholesale providers that have specialized in large scale data center developments across top tier markets. Notably, across Tier 1 European Markets cloud providers have been reported to outsource almost 100% of capacity as they seek to collaborate with experienced operators when globally expanding.

 Backlog Intensity Has Surged Above 2018 Highs: MTDC backlogs remain high as of 4Q20, and backlog intensity (backlog / last quarter’s annualized revenue) has leveled at 7.2%, above the last major high water mark levels seen in mid-2018 (6.4% in 3Q18). We expect intensity to come down in 2021E as major data center builds are delivered to customers, commencing backlog revenues. Review: Using history as a guidepost, following the 1H18 high backlog intensity levels, 2019 was a year of pronounced outperformance with strong commenced leases, revenue growth, and further follow-on leasing activity, strengthening the financial visibility and supply chains of MTDCs. We expect 2021E to see similar characteristics as 2019, a year that several publicly traded data centers outperformed market indices and comparable asset classes.

 MTDC Construction Intensity at 3.7% in 3Q20, As U.S. Hyperscale Capex Spend is Accelerating in 2021, Signaling Increases in Outsourcing in 2021E: U.S. hyperscale capex spend is

accelerating in the U.S. to +16% y/y growth, but the construction intensity ratio is at 3.7% in 3Q 2020 and we expect it to compress even further in 4Q 2020 given the development completionsand lease commencements guided to by the U.S. based DC operators. We believe there are two potential scenarios that may play-out in 2021E: (1) the rate of hyperscale DC developmentinsourcing accelerates (lower MTDC hyperscale/wholesale demand relative to prior build cycles), reflected in the fact that construction intensity is reaching a trough at ~3%, or (2) there is anexpectation from operators that DC demand/development should slow significantly on the back of lower workload or compute (power) needs. We believe that it is likely that insourcing may increasein 2021E, coming in below 50% on total DC footprints, and we believe this is happening due to cloud buildouts occurring in tier 2 and 3 markets (non-core markets), but we do think that there isgoing to be more construction projects to be announced near term largely because data center supply is running very low in the top tier markets, like Ashburn and Northern California, etc. Theimplications for wholesale DCs is more negative than retail operators given the wholesaler need for constant bookings to supplement future revenue growth.

 Valuation – Following a Cooling Period, Data Centers Are on Sale: Data Center shares are trading at 20x EV/FY+2 EBITDA, versus their August 2020 peak of 22x and we think this presentsan attractive entry point opportunity given the aforementioned indicators/dynamics and the fundamental strength yet to come in a lease commencement year of major backlog builds. Note, webelieve it is possible that DC REITs could remain a victim to broader sector rotation, however we believe this dynamic will take a backseat to inflections in data center topline, EBITDA, and AFFOSgrowth as the year goes on, resulting in a share price momentum throughout 2021.