Digital Realty Trust Inc. (DLR), a provider of data center, colocation and interconnection solutions, said it has entered into agreements with affiliates of Mapletree Investments Pte Ltd and Mapletree Industrial Trust for the sale of a portfolio of 10 Powered Base Building data centers as well as the establishment of a joint venture on three existing Turn-Key Flex hyper-scale data centers.
The total consideration for both transactions will be about $1.4 billion.
Under the terms of the deals, Mapletree Investments and Mapletree Industrial Trust will acquire the Powered Base Building portfolio from Digital Realty for about $557 million. These 10 fully-leased properties are expected to generate 2020 cash net operating income of approximately $37 million, representing a 6.6 percent cap rate.
Digital Realty will provide transitional property management services for the Powered Base Building portfolio for one year from the closing date at a customary market rate.
Separately, an entity jointly owned by Mapletree Investments and Mapletree Industrial Trust will buy an 80 percent interest, while Digital Realty will retain a 20 percent interest, in a joint venture on three fully stabilized hyper-scale facilities located in Ashburn, Virginia.
Mapletree Investments and Mapletree Industrial Trust will acquire the 80 percent stake for about $811 million, valuing these three assets at about $1.0 billion.
These three facilities are fully leased and are expected to generate 2020 cash net operating income of approximately $61 million, representing a 6.0 percent cap rate. Digital Realty said it will continue to operate and manage these facilities.
Digital Reality expects the transactions to close in late 2019 or early 2020. The company will use proceeds from the transactions to pay down debt and ultimately use it to fund future investment activity.
Digital Realty added that it plans to revisit 2019 guidance to reflect the impact of these transactions on its third-quarter earnings call, scheduled for Tuesday, October 29, 2019.
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