TPG Real Estate has acquired an 80 percent stake in three Digital Realty data centers in Northern Virginia, US.
Digital will continue to manage the day-to-day operations of the facilities in the joint venture. The data center company will make $1.3 billion from the deal, which it plans to use to pay down debt.
"We welcome this partnership with TPG, a highly distinguished investment partner," Digital Realty chief investment officer Greg Wright said.
"The completion of this stabilized hyperscale data center joint venture bolsters and diversifies Digital Realty's capital sources with an experienced partner and further enhances the efficiency of our balance sheet. We remain focused on positioning Digital Realty to prudently support our stakeholders' longer-term capacity requirements and look forward to executing on the remaining elements of our capital plan for 2023."
TPG Real Estate, the real estate investment platform of alternative asset management firm TPG, previously invested in a joint venture with Quantum Loophole for its planned gigawatt data center campus in Frederick County, Maryland.
"Demand for data centers continues to grow rapidly due to data proliferation and the mass adoption of cloud computing. These are long-term trends that we expect will only be accelerated by recent advancements in AI," Ty Newell, business unit partner with TPG Real Estate, said.
"Located in the largest and most densely connected data center hub in the world, the Portfolio is well-positioned to address this demand. We are excited by the outlook for the Ashburn market and look forward to working alongside a world-class partner in Digital Realty."
The three hyperscale data centers contain approximately 104MW of IT capacity and are primarily leased by investment-grade customers. Based on annualized in-place cash net operating income at June 30, net of signed leases and known move-outs, the transaction values the three facilities at approximately a six percent cap rate.