Digital Realty Trust (DLR) said today that it plans to acquire three data center properties in Massachusetts and Connecticut, paying $375 million for 550,000 square feet of buildings operated by Sentinel Data Centers. The deal expands Digital Realty's footprint in the Boston market, where its three existing properties are fully leased.
Digital Realty also said it may sell up to $400 million in common stock through equity distribution agreements with Citigroup, Merrill Lynch, and Credit Suisse. The shares will be sold under a shelf registration agreement filed with the SEC in May 2009. Under a shelf registration, a company may sell securities in one or more separate offerings with the size, price and terms to be determined at the time of sale.
The additional funds will help Digital Realty manage its borrowings as it continue to acquire leased data center properties. The company reported in an SEC filing that it entered into definitive purchase agreements on Dec. 24 to acquire three properties:
- 55 Middlesex Turnpike in Bedford, Massachusetts.
- A 100% condominium interest that represents 87.5% of the square footage of 128 First Avenue, Needham, Massachusetts, a 200,000 square foot facility initially built by Level 3 Communications.
- 60-80 Merritt Boulevard, Trumbull, Connecticut.
The properties have been renovated to "modern data center standards" within the last four years, the company said. The buildings have 35 tenants, with leases totaling more than 306,000 sauqre feet, which Digital Realty says represents about 98 percent of the leasable space. Those leases are currently generating annualized rent of about $40 million. Digital Realty said it plans to fund the acquisition from its revolving credit facility, and expects the deal to close by Jan. 15.
In October Digital Realty signaled its intent to buy additional occupied data centers as income properties, which generate revenue through rent from existing tenants.