Digital Realty Buys Santa Clara Data Centers

Digital Realty Trust (DLR) has acquired two data center facilities in Santa Clara, Calif. for $90.5 million, the company said today. The facilities at 1350 Duane Avenue, and 3080 Raymond Street are adjacent to Digital Realty’s primary data center campus in Santa Clara, and are both fully-leased to Internet service providers.

The larger building, 1350 Duane Avenue, consists of 160,000 square feet of data center space. The entire building is leased on a triple net basis to Sprint, who in 2004 subleased the building to a major colocation provider. The second property at 3080 Raymond Street totals 25,000 square feet and is leased on a triple net basis to a Layer 42 Networks, which provides Internet services and business applications.

The announcement comes just days after Digital Realty signaled its intent to buy additional occupied data centers as income properties, which generate revenue through rent from existing tenants.

“The buildings are strategically located near our existing Santa Clara facilities and should benefit from our operational efficiencies,” said Scott Peterson, Senior Vice President of Acquisitions for Digital Realty Trust. “They are situated on a 5.56 acre site across from a Silicon Valley Power substation with 17.2 MVA of current power capacity expandable to 22.5 MVA.”

Digital Realty said its assumed a $52.8 million mortgage upon completion of the transaction, which bears interest at 5.42% and is interest-only through the initial maturity date of October 1, 2012.

“This acquisition illustrates the continued execution of our strategy to grow FFO (funds from operation) by investing in income producing facilities at attractive risk-adjusted returns,” said Peterson.

Digital Realty Trust is a real estate investment trust (REIT) that owns, acquires, develops and manages data center real estate. It owns 79 properties in 27 markets spanning 14 million square feet, including 1.9 million square feet of space held for redevelopment.

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About the Author

Rich Miller is the founder and editor at large of Data Center Knowledge, and has been reporting on the data center sector since 2000. He has tracked the growing impact of high-density computing on the power and cooling of data centers, and the resulting push for improved energy efficiency in these facilities.

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