Digital Core REIT is acquiring stakes in two Digital Realty data centers in Frankfurt, Germany, and Osaka, Japan.
DC Core REIT acquires a larger stake in Frankfurt
The company said this week that it will acquire an additional 20 percent interest in a freehold facility in Frankfurt from Digital Realty for €94 million ($99m). The deal is expected to close in Q2 2024 and will take the company's stake in the facility to 45 percent.
The facility, at Wilhelm-Fay Straße 15 and 24 in the Sossenheim area, offers 34MW across 449,545 sq ft. It is operated by Digital Realty as FRA2. Digital Core REIT already owned 25 percent of the facility, which in total is valued at $494 million, after acquiring a stake late last year.
The data center is 92 percent occupied – though Digital Realty and Digital Core REIT this week announced they had agreed to pay a combined $10 million to terminate Cyxtera’s lease at the facility, where the colo provider leased 1.5MW.
Digital Core REIT expects to fund the transaction with a portion of the proceeds from the sale of 2401 Walsh Avenue and 2403 Walsh Avenue, two facilities in Silicon Valley that are being sold to Brookfield amid the company’s acquisition of Cyxtera.
Digital Core REIT expands into Japan
The company also expanded into Japan with the acquisition of a 10 percent interest in a freehold data center in Osaka from Mitsubishi Corporation for ¥7.725 billion, ($51.5 million). The deal was completed this week.
Digital Core REIT said the move would establish the company in a “top-tier global data center market characterized by robust, diverse and durable customer demand.”
“The proposed acquisition will improve Digital Core REIT’s overall geographic diversification and achieve international expansion with the entry into a new region,” the company said.
The facility, located at 6-chome, Ao-kita, Saito, Minoh-city, is operated by Digital Realty as Digital Osaka 2 (aka KIX11). Built in 2019, it offers 25.5MW across 114,940 sq ft (10,680 sqm) and is predominantly leased to “leading global cloud providers,” according to the company, with an occupancy of 95 percent.
Digital Realty currently owns 50 percent of the facility, and Mitsubishi will own 40 percent once the deal closes; the entire facility is valued at around $515 million.
Digital Core REIT expects to fund the transaction with Yen-denominated borrowings on its multi-currency global revolving credit facility.
Digital Realty and Mitsubishi formed a $1.8bn joint venture known as MC Digital Realty in 2017. Digital Realty’s existing data center in Saito, Osaka, and Mitsubishi’s Mitako facility in Tokyo were transferred to the JV; the JV now operates nine data centers across Tokyo and Osaka.
MCDR opened its first data center in the Kansai region, the 8MW KIX10 (also known as Digital Osaka 1) in Osaka in 2017, followed by the 25MW KIX11 facility in 2019. A third facility opened in 2021 alongside a new data center in Tokyo, with a fourth Osaka facility, known as KIX13, opening earlier this year.
Singapore-listed Digital Core REIT was set up by Digital Realty to hold a number of its stabilized data centers. The company was seeded with a portfolio of 10 data centers from Digital Realty across the US & Canada in Northern Virginia, Northern California, Los Angeles, and Toronto totaling more than 1.2 million sq ft and 49MW.
However, two of its tenants, Cyxtera and Sungard, have filed for bankruptcy since the company launched.
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