Digital Core REIT, on Sept 22, entered into an agreement with its sponsor, Digital Realty, to acquire stakes in two core data centres in Germany and the US.
The REIT has proposed to acquire a 25% interest in an institutional quality freehold data centre in Frankfurt, Germany valued at €558 million ($781.5 million) at 100% share, with the option to acquire up to an 89.9% interest in the Frankfurt facility.
At the same time, the REIT has proposed to acquire a 90% interest in an institutional quality freehold data centre in Dallas, Texas, valued at US$199 million ($281.4 million) at 100% share.
In its statement, the REIT manager says the effective interests to be acquired as well as the distribution per unit (DPU) accretion to be generated will depend on whether the REIT raises capital through an equity fundraising to partially finance the transaction.
If the equity fundraising does not occur, Digital Core REIT will pursue a 100% debt-funded transaction. Should that happen, the REIT will acquire the 25% interest in the Frankfurt facility and none in the Dallas data centre.
Both data centres are purpose-built by Digital Realty. They are also both primarily powered by renewable energy via un-bundled Guarantees of Origin in Europe, and wind energy power purchase agreements in the US.
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In addition, both facilities are fully integrated into the sponsor’s global platform, which provides connectivity as well as consistency of deployment and operations.
According to the manager, the proposed transaction will enable it to establish a presence in top-tier global data centre markets characterised by robust, diverse and durable customer demand. Frankfurt is the second-largest data centre market in Europe, while Dallas is the fifth-largest data centre market in North America.
The proposed acquisition will also “meaningfully” improve portfolio diversification, reduce geographic and customer concentration and establish important new commercial relationships.
See also: CICT's manager proposes to acquire ION Orchard at $1.85 billion, subject to EGM
The debt-funded transaction is also expected to be 2.0% accretive to the REIT’s DPU while the equity fundraising scenario is expected to be approximately 3.1% accretive to DPU.
“We are pleased to contribute to the next phase of Digital Core REIT’s growth, reinforcing Digital Core REIT’s position as an ideal perpetual capital partner for Digital Realty, while continuing to provide our customers ubiquitous connectivity and a seamless customer experience across our global platform,” says A. William Stein, CEO of Digital Realty.
“The acquisition of these state-of-the-art facilities will enable Digital Core REIT to deliver upon our external growth strategy and establish a presence in two leading core global data centre markets,” adds John J. Stewart, CEO of the manager.
“This transaction also strengthens Digital Core REIT’s portfolio through improved customer and geographic diversification, while delivering near-term DPU accretion and long-term value for unitholders,” he continues.
As at 9.21am, units in Digital Core REIT are trading 0.5 cent higher or 0.63% up at 80.5 US cents.
