Company acquires 575,000 square foot campus for redevelopment
SAN FRANCISCO, June 6, 2012 /PRNewswire/ -- Digital Realty Trust, Inc. (DLR), a leading global provider of data center solutions, announced today that it has acquired a 575,000 square foot redevelopment property, located in suburban Chicago. The purchase price was approximately $22.3 million.
The future data center campus, entitled Digital Chicago, is located 10 miles southeast of O'Hare International Airport along Grand Avenue. It totals twenty-two acres and consists of three buildings. Combined, the three-building data center campus will have the capacity to accommodate up to twenty 1.125 megawatt Turn-Key Flex(SM) data center PODs, or 32.6 megawatts of IT load. The first phase of construction, which includes six Turn-Key Flex PODs, is expected to be delivered and operational by mid-2013.
The seller and current tenant occupies approximately two-thirds of the property on a short-term lease basis, which is subject to a termination option at the landlord's request. This option would be exercised in response to customer demand to facilitate a recapture of additional redevelopment inventory.
"This acquisition provides stabilized cash flow in the short term, with a substantial, near-term redevelopment opportunity to expand the Digital Realty footprint in the suburban Chicago market," said Michael F. Foust, Chief Executive Officer of Digital Realty. "Similar to our other data center campuses in major markets such as Dallas, Santa Clara and Northern Virginia, this property is designed to accommodate corporate customers seeking fully-dedicated, enterprise quality data center space."
Primary electrical service will be provided by Commonwealth Edison Company, better known as ComEd. ComEd provides service to approximately 3.8 million customers across Northern Illinois, or 70 percent of the state's population. Working with ComEd, Digital Realty has the option of expanding the current capacity of the site to 45 MVA of total power, providing solid infrastructure and access to competitive rates with ComEd's proven track record of strong reliability.
"This campus enables Digital Realty to offer customers a wide variety of solutions, from our move-in ready Turn-Key Flex and Powered Base Building data center solutions to a highly customized, build-to-suit data center facility," added Dave Caron, Senior Vice President, Portfolio Management, for Digital Realty. "By expanding into suburban Chicago, we can continue to accommodate the growing needs of our diverse customer base looking to locate their next facility in this important data center market."
"Based on our conservative underwriting, which assumes redevelopment of all three existing buildings, we expect to generate attractive risk adjusted returns on this investment," added Scott Peterson, Chief Acquisitions Officer of Digital Realty. "With the redevelopment opportunity of the existing buildings, we believe this investment has considerable upside potential."
Digital Realty's Turn-Key Flex data center solution is a modular approach to delivering secure, enterprise quality data center space to meet customers' just-in-time requirements. Designed to provide maximum flexibility, reliability and efficiency, each Turn-Key Flex facility comes fully commissioned with its own dedicated electrical and mechanical infrastructure. Utilizing Digital Realty's proprietary POD Architecture® and extensive supply chain, Digital Realty's next generation Turn-Key Flex data centers are designed for the future and ready today.
About Digital Realty
Digital Realty Trust, Inc. focuses on delivering customer driven data center solutions by providing secure, reliable and cost effective facilities that meet each customer's unique data center needs. Digital Realty's customers include domestic and international companies across multiple industry verticals ranging from information technology and Internet enterprises, to manufacturing and financial services. Digital Realty's 103 properties, excluding three properties held as investments in unconsolidated joint ventures, comprise approximately 19.7 million square feet as of June 6, 2012, including 2.3 million square feet of space held for redevelopment. Digital Realty's portfolio is located in 31 markets throughout Europe, North America, Singapore and Australia. Additional information about Digital Realty is included in the Company Overview, which is available on the Investors page of Digital Realty's website at http://www.digitalrealty.com.
Safe Harbor Statement
This press release contains forward-looking statements which are based on current expectations, forecasts and assumptions that involve risks and uncertainties that could cause actual outcomes and results to differ materially, including statements related to our acquisition of the redevelopment property in suburban Chicago, expected size and capacity of the redevelopment property, expected timing for completion of construction, the short-term lease and termination option, and supply and demand in the Chicago market for data center space. These risks and uncertainties include, among others, the following: the impact of the recent deterioration in global economic, credit and market conditions, including the downgrade of the U.S. government's credit rating; current local economic conditions in our geographic markets; decreases in information technology spending, including as a result of economic slowdowns or recession; adverse economic or real estate developments in our industry or the industry sectors that we sell to (including risks relating to decreasing real estate valuations and impairment charges); our dependence upon significant tenants; bankruptcy or insolvency of a major tenant or a significant number of smaller tenants; defaults on or non-renewal of leases by tenants; our failure to obtain necessary debt and equity financing; increased interest rates and operating costs; risks associated with using debt to fund our business activities, including re-financing and interest rate risks, our failure to repay debt when due, adverse changes in our credit ratings or our breach of covenants or other terms contained in our loan facilities and agreements; financial market fluctuations; changes in foreign currency exchange rates; our inability to manage our growth effectively; difficulty acquiring or operating properties in foreign jurisdictions; our failure to successfully integrate and operate acquired or redeveloped properties or businesses; risks related to joint venture investments, including as a result of our lack of control of such investments; delays or unexpected costs in development or redevelopment of properties; decreased rental rates or increased vacancy rates; increased competition or available supply of data center space; our inability to successfully develop and lease new properties and space held for redevelopment; difficulties in identifying properties to acquire and completing acquisitions; our inability to acquire off-market properties; our inability to comply with the rules and regulations applicable to reporting companies; our failure to maintain our status as a REIT; possible adverse changes to tax laws; restrictions on our ability to engage in certain business activities; environmental uncertainties and risks related to natural disasters; losses in excess of our insurance coverage; changes in foreign laws and regulations, including those related to taxation and real estate ownership and operation; and changes in local, state and federal regulatory requirements, including changes in real estate and zoning laws and increases in real property tax rates. For a further list and description of such risks and uncertainties, see the reports and other filings by the Company with the U.S. Securities and Exchange Commission, including the Company's Annual Report on Form 10-K for the year ended December 31, 2011 and Quarterly Report on Form 10-Q for the quarter ended March 31, 2012. The Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
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|A. William Stein||Pamela M. Garibaldi|
|Chief Financial Officer and||Vice President, Investor Relations and|
|Chief Investment Officer||Corporate Marketing|
|Digital Realty Trust, Inc.||Digital Realty Trust, Inc.|
|+1 (415) 738-6500||+1 (415) 738-6500|