Digital Realty Terminates Denver Lease
August 10th, 2007 By: Rich Miller
Data center REIT Digital Realty Trust (DLR) confirmed this week that it has terminated a lease with the tenant in its data center in Englewood, Colorado data center. The company said it would take a $400,000 charge to earnings as a result. Digital Realty did not name the tenant, but in past SEC filings has identified the occupant of the 82,000 square foot Englewood data center as Ameriquest Inc., a mortgage company that has been a significant player in the troubled subprime mortgage market.
It’s important to note that the termination is not related to the most recent troubles in the subprime market, but has been in the works since earlier this year. Ameriquest has been shrinking its real estate portfolio for some time, closing more than 200 retail offices in 2006. Digital Realty disclosed the likelihood of a lease termination in May during its earnings call for the first quarter.
At the time, Digital executives noted that the Denver termination would be a material event, but would create opportunities for improved revenue in the future. They said that improved demand and market rates made it likely that they would be able to lease the facility for more than Ameriquest was paying.
Shares of Digital Realty are trading at $37.04 today, off $2.01 a share (down 5.37%) in midday trading on Wall Street.