IBM Technology Park is about 20 minutes from the Frankfurt International Airport. It is comprised of 11 buildings on an approximately 80 acre campus. IBM Deutschland's mission critical data center, software development operations and support functions lease on a long-term basis 100% of the park's 545,000-sf first phase and 45,000 sf in the park's 955,000-sf second phase. The second phase is 55% leased, according to an 8K on the transaction that Digital Realty filed with the SEC.
Technically, according to the filing, Digital Realty is acquiring 90% of the shares of two Germany-based entities that together own the two phases of the development. The remaining 10% is being acquired by a subsidiary of which Digital Realty owns 94% and Global Innovation Partners LLC owns the remainder. GI Partners is an affiliated entity that owns approximately 40% of Digital Realty on a fully diluted basis.
The aggregate purchase price for IBM Technology Park, excluding expenses, is approximately $93.03 million (77.1 million euros), including assumption of a $75-million (62-million euros) mortgage held by Credit Suisse First Boston. The expected unleveraged cash cap rate is 9.5%. In the event that additional leases are signed for the vacant space within three years, the seller has the opportunity to receive and earn-out payment based on the performance of the property as a whole.
The Geneva Data Center is located in the Meyrin Industrial area near Downtown Geneva. The three-story building underwent a major renovation in 2003, converting it to a mission critical data center. The property is 100% leased on a long-term basis to a single tenant that provides web hosting and IT services for a customer base that includes major international financial services and consumer product companies. The purchase price was about $12 million (10 million euros) and the expected unleveraged cash cap rate is 9%.
A. William Stein, Digital Realty's chief investment officer, did not return a phone call seeking comment. Digital Realty chief executive Michael Foust says that upon closing of these transactions, the company's European portfolio will contain four properties totaling about 1.7 million sf in London, Frankfurt, Amsterdam, and Geneva. Its overall portfolio totals about 8.2 million sf.
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