SAN FRANCISCO-Those who follow @GlobeStcom on Twitter and @GlobeStLIVE may have seen a post teasing the announcement, but GlobeSt.com has learned that Digital Realty Trust Inc. has formed a $369-million joint venture with an investment fund managed by Prudential Real Estate Investors, the real estate investment management and advisory business of Prudential Financial.
Digital Realty seeded the joint venture with nine Powered Base Building data centers totaling 1.06 million square feet and valued at approximately $366.4 million (excluding $2.8 million of closing costs), or $346 per square foot. The properties are expected to generate cash net operating income of approximately $24.5 million in 2013, representing a 6.7% cap rate.
According to Digital Realty Trust, the properties are 100% leased, with an average remaining lease term of approximately nine years.
The PREI-managed fund will take an 80% interest in the joint venture and Digital Realty will retain a 20% interest. The joint venture is structured to provide a current annual preferred return from cash flow to the PREI-managed interest, while Digital Realty will receive fees and a promote participation for managing the properties.
This transaction represents “an important validation of the appeal of data centers as an asset class to a sophisticated, core real estate investor,” says Michael F. Foust, Digital Realty's CEO.
We will follow up on this story in the morning with more information so stay tuned.
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Natalie Dolce
Natalie Dolce, editor-in-chief of GlobeSt.com and GlobeSt. Real Estate Forum, is responsible for working with editorial staff, freelancers and senior management to help plan the overarching vision that encompasses GlobeSt.com, including short-term and long-term goals for the website, how content integrates through the company’s other product lines and the overall quality of content. Previously she served as national executive editor and editor of the West Coast region for GlobeSt.com and Real Estate Forum, and was responsible for coverage of news and information pertaining to that vital real estate region. Prior to moving out to the Southern California office, she was Northeast bureau chief, covering New York City for GlobeSt.com. Her background includes a stint at InStyle Magazine, and as managing editor with New York Press, an alternative weekly New York City paper. In her career, she has also covered a variety of beats for M magazine, Arthur Frommer's Budget Travel, FashionLedge.com, and Co-Ed magazine. Dolce has also freelanced for a number of publications, including MSNBC.com and Museums New York magazine.
