Deal will fetch $557 million as company looks to close $8.4 billion acquisition of Interxion
Digital Realty, which has been an aggressive buyer in the global data center and colocation market, has sold 10 data centers in North America to Mapletree, a real estate development and investment firm based in Singapore.
The Lowdown: The $557 million deal comes as Digital Realty works to close its planned $8.4 billion acquisition of Interxion, which owns more than 50 colocation data centers in 13 cities in Europe, which serve more than 2,000 customers. The Interxion deal was announced in October.
The Details: The data centers sold to Mapletree are part of Digital Realty’s portfolio Power Base Building facilities, which are essentially sites that are move-in ready, with power infrastructure and fiber networking already in place. Customers can move in quickly, easily customize the facilities, and reduce initial capital costs associated with data centers.
All 10 sites are fully leased and should generate operating income of about $37 million in 2020, according to Digital Realty officials.
This isn’t Digital Realty’s first deal with Mapletree. In November – days after announcing the proposed Interxion acquisition – Digital Realty closed a $1 billion joint venture deal in which Mapletree took over 80% ownership of three Turn-Key Flex hyperscale data centers. Digital Realty kept a 20% stake in the sites, which were fully leased and expected to generate operating income of $61 million this year.
Background: Digital Realty runs more than 210 data centers in 15 countries. The San Francisco-based company in November announced its PlatformDigital initiative to essentially turn its collection of data centers into a networked platform of interconnected facilities to help enterprise adapt to the increasingly distributed nature of IT that includes not only central data centers but also the cloud and edge environments.
The company also has been a major player in an increasingly active M&A data center environment. Synergy Research Group said that the number of data center deals has been growing over the past five years, fueled in large part by rising enterprise desire to not own or run their own data centers. The analyst firm said that Digital Realty and Equinix have been the most active companies in a market in which, as of August 2019, more than 300 data center deals totaling more than $65 billion have closed.
The Buzz: “We are pleased to have closed the second tranche of our transaction with Mapletree, which represents an important step towards our goal of self-funding our growth and diversifying our sources of equity capital, while setting the stage for accelerating growth as proceeds are redeployed into accretive investment opportunities,” Digital Realty CEO A. William Stein said. “We are delighted to partner with the high-caliber team at Mapletree to close a transaction that meets both companies’ objectives, and we look forward to collaborating with Mapletree as joint venture partners and exploring additional opportunities together worldwide.”