SAN FRANCISCO, Sept. 9, 2014 /PRNewswire/ — Digital Realty Trust, Inc. (DLR), a leading global provider of data center and colocation solutions, announced today the formation of a $187.6 million joint venture between an affiliate of Digital Realty and an affiliate of Griffin Capital Essential Asset REIT, Inc. (“GCEAR”).
Digital Realty contributed to the joint venture, which was formed on September 9, 2014, an approximately 132,280 square foot Turn-Key Flex® data center in Ashburn, Virginia valued at approximately $185.5 million (excluding $2.1 million of closing costs), or $20,611 per kW. The property is expected to generate forward 12-month cash net operating income of approximately $13.1 million, representing a 7.05% cap rate. The property is 100% leased, with a weighted average remaining lease term of approximately seven years. GCEAR will hold an 80% interest in the joint venture and Digital Realty will retain a 20% interest. Digital Realty will continue to manage the property, and will receive management fees and will also be entitled to participate in certain excess cash flow and capital proceeds for managing the Property.
The joint venture has arranged a $102.0 million five-year bank loan at LIBOR plus 225 basis points, representing a loan-to-value ratio of approximately 55%. The transaction generated net proceeds to Digital Realty of approximately $168.4 million, comprised of Digital Realty’s share of the initial draw-down on the bank loan in addition to the GCEAR fund’s equity contribution, less Digital Realty’s share of closing costs.
“We are pleased to establish this relationship with Griffin Capital Essential Asset REIT,” commented Jeff Hoppen, Managing Director, Capital Markets for Digital Realty. “This joint venture transaction is a significant milestone for Digital Realty, as it furthers our objective of maximizing the menu of available capital options, while minimizing the related cost. The transaction also has the ancillary benefit of reducing our tenant concentration while establishing an attractive private market valuation benchmark for our Turn-Key Flex® properties.”
Proceeds from the transaction will initially be used to pay down debt, and will eventually be used to fund ongoing investment activity and other corporate purposes. Digital Realty’s 2014 core FFO per share guidance remains unchanged at $4.85-$4.95.
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For Additional Information |
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A. William Stein |
John J. Stewart |
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Interim Chief Executive Officer |
Senior Vice President |
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and Chief Financial Officer |
Investor Relations |
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Digital Realty Trust, Inc. |
Digital Realty Trust, Inc. |
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+1 (415) 738-6500 |
+1 (415) 738-6500 |
About Digital Realty
Digital Realty Trust, Inc. supports the data center and colocation strategies of more than 600 firms across its secure, network-rich portfolio of data centers located throughout North America, Europe, Asia and Australia. Digital Realty’s clients include domestic and international companies of all sizes, ranging from financial services, cloud and information technology services, to manufacturing, energy, gaming, life sciences and consumer products. www.digitalrealty.com
Additional information about Digital Realty is included in the Company Overview and additional information about the Digital Realty / GCEAR fund joint venture is included in the Digital Realty/ Griffin Capital Essential Asset REIT Joint Venture materials, which are available on the Investors page of Digital Realty’s website at http://www.digitalrealty.com.
About Griffin Capital Essential Asset REIT
Griffin Capital Essential Asset REIT, Inc. is an SEC registered non-traded real estate investment trust focused on providing individual investors dependable monthly income through the ownership of a diversified portfolio of ‘business essential’ office and industrial properties net leased on a long-term basis to creditworthy corporate tenants. Griffin Capital Essential Asset REIT is focused on acquiring office, industrial and manufacturing assets that are 100% triple- or absolute- net leased to single, creditworthy tenants where we believe the property is essential to the ongoing business operations of the tenant. The assets are predominantly leased to blue chip, investment grade companies. http://www.griffincapital.com/griffin-capital-essential-asset-reit/
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 joint venture with the GCEAR fund and related financing; our expected returns, fees and benefits from the joint venture; cap rate, rent to be received in future periods and remaining lease terms related to the joint venture property; expected use of proceeds from the joint venture transaction; and expected impact on financial results. These risks and uncertainties include, among others, the following: the impact of current global economic, credit and market conditions; 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; 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 developed properties or businesses; the suitability of our properties and data center infrastructure, delays or disruptions in connectivity, failure of our physical infrastructure or services or availability of power; risks related to joint venture investments, including as a result of our lack of control of such investments; delays or unexpected costs in development of properties; decreased rental rates, increased operating costs or increased vacancy rates; increased competition or available supply of data center space; our inability to successfully develop and lease new properties and development space; 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, as amended, for the year ended December 31, 2013 and Quarterly Reports on Form 10-Q for the quarters ended March 31, 2014 and June 30, 2014. 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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