Digital Realty Trust (DLR) said today that it had reclaimed 120,000 square feet of prime space in the company's Chicago carrier hotel at 350 East Cermak (pictured at left) which it will redevelop and lease through its Turn-Key Datacenter program. The announcement was included in Digital Realty's third-quarter earnings report. The company negotiated an agreement to take back the space from Qwest (Q), which leased the space but was not using it as a data center, in exchange for a one-time payment of approximately $14 million.
The additional revenue from the Qwest agreement prompted Digital Realty to raise its financial guidance for 2008 for Funds From Operations (FFO), the key financial measurement for real estate investment trusts. Digital Realty now expects FFO in a range of $2.58 to $2.60 per share, up from $2.40 to $2.50 per share. For 2009, Digital Realty expects FFO of between $2.75 and $2.90 per share.
The company, the largest data center landlord, reported funds from operations (FFO) of $62.6 million, or 69 cents per share, from $51 million, or 59 cents per share, in the year-ago period.
The space will be redeveloped as Turn-Key Datacenter space, providing Digital Realty with additional inventory in a high-demand market. 350 East Cermak was fully leased prior to the Qwest transaction.
Digital Realty also emphasized the strength of its financial position in the midst of the credit crisis.
"Since the end of the second quarter of 2008 we were able to source and close over $492 million of debt and equity capital plus an additional $142 million remaining on the uncommitted, unsecured funds from the private shelf facility with Prudential," said Bill Stein, Chief Financial Officer and Chief Investment Officer of Digital Realty. "This is a testament to DLR's ability to access well-priced capital from a variety of sources, even in the face of extremely volatile capital markets and challenging economic conditions."