Digital Realty, the largest global provider of cloud- and carrier-neutral data center, colocation, and interconnection solutions, announced today it has entered into a definitive agreement to sell a non-core, mixed-use data center property in a transaction valuing the asset at approximately $205 million. The property is expected to generate 2022 cash net operating income of approximately $10.7 million, representing a 5.2% cap rate.
Digital Realty originally acquired the 370,000 square foot facility in 2004, prior to its IPO. Most of the rental revenue is derived from a Tier III Powered Base Building data center, while a portion of the property is leased to commercial and retail tenants on a longer-term basis.
This disposition opportunistically recycles an operationally mature asset to fund strategic investments aimed at enhancing our longer-term growth profile, since 2018, Digital Realty has sold approximately $4 billion of assets and redeployed proceeds into highly connected facilities around the world, providing our customers with a global, full spectrum data center solution.” Greg Wright Chief Investment Officer Digital Realty.
Digital Realty expects proceeds from the transaction will initially be used to pay down debt and will ultimately be used to fund future investment activity.
The transaction is expected to close in the third quarter of 2022 and is subject to customary closing conditions. Eastdil Secured served as advisor to Digital Realty on the transaction.