Digital Realty Ties Up Another 640,000 SF

SAN FRANCISCO-Locally headquartered Digital Realty Trust Inc. is acquiring six buildings in Colorado and California totaling 640,000 sf for $109 million. The purchase includes five data centers and one office building. All of the properties are fully leased for an average of 13 years. Digital Realty says the purchase price equates to an initial year unleveraged cash cap rate of approximately 10.8%. One of the five data centers is an 82,000-sf building near Denver that is 100% leased to AmeriQuest Mortgage Co. through February 2012. The building, which houses corporate data center operations, is being acquired for approximately $16.5 million at an expected initial year unleveraged cash cap rate of approximately 9.25%. That acquisition is scheduled to close next week.The remaining four data centers and office building are 100% leased to Savvis Inc. through February 2019. Three of the data centers and the office building are located in Santa Clara, CA, where Digital Realty already owns several properties, and the fourth data center is located in the Southern California city of El Segundo, CA. The 560,000-sf portfolio will be purchased for approximately $92.5 million at an expected initial year unleveraged cash cap rate of approximately 11%. The acquisition is expected to close by the end of June 2005. The Denver property is Digital Realty’s second in that market. It also owns Stanford Place II, a 17-story, 348,000-sf office tower located in the Denver Technology Center. Digital Realty chief executive Mike Foust tells GlobeSt.com the company is looking for additional acquisitions in the market.Earlier this week the company closed on Lakeside Technology Center serves as the Midwest’s main Internet Gateway and data center. The eight-story building is approximately 72% leased, including 275,000 sf of shell space. Digital Realty says the property is expected to generate an initial year unleveraged cash cap rate of approximately 9.0%. The purchase was funded through a $100-million first mortgage provided by Morgan Stanley Mortgage Capital Inc. plus borrowings under the Company’s credit facility and from working capital. Foust tells GlobeSt.com it is the company’s first acquisition in the Chicago area and the company is on the lookout for other Chicago-area assets. “[Lakeside Technology Center] really is the dominant data center and telecom facility in Chicago and the Midwest,” he says. “It expands service offering, especially for corporate data center users.”