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DuPont Fabros Files for $700M IPO

DuPont Fabros Technology has filed for an IPO as a real estate investment trust, in which it hopes to raise $700 million.

Data center developer DuPont Fabros Technology has filed for an initial public offering (IPO) as a real estate investment trust, in which it hopes to raise $700 million. The Washington-based company is an experienced player in the data center space, which currently owns and operates five fully-leased data centers in northern Virginia to tenants including Microsoft, Yahoo and Google. It also holds 13 properties for development as data centers. DuPont Fabros has also developed and then sold properties to Equinix (EQIX) and Digital Realty Trust (DLR). The company plans to trade on the New York Stock Exchange under the symbol DFT.

DuPont Fabros just completed the 150,000 square foot first phase of a major new data center in its Ashburn Corporate Center, which was fully-leased upon its opening. The company will complete the second phase in November (which is already 43 percent leased), and also expects to bring a data center in Elk Grove, Ill. on the market early next year.

The IPO will provide DuPont Fabros with additional capital to develop its portfolio of expansion properties in an environment where rising power and cooling requirements mandate significant infrastructure investment. That's especially true for companies like DuPont Fabros that focus on developing the most highly-engineered facilites for premium tenants in the Internet and financial sectors.

DuPont Fabros estimates that it will invest between $880 million and $1.1 billion to complete the four data centers on its construction schedule for 2008 and 2009, which are located in Chicago, Ashburn, Santa Clara, Calif. and Piscataway, N.J. The four projects will bring an additional 735,000 square feet of premium data center space onto the market. The nine remaining development properties in DuPont Fabros' portfolio total about 1.1 million square feet of space.

In the three months ended March 31, DuPont Fabros had revenue of $21.6 million, net operating income of $1.15 million, and funds from operations (FFO, a key metric for REITs) of $8.14 million, the company says in its S1 filing with the SEC. DuPont Fabros' five completed buildings generate annual rent of nearly $77 million, with Microsoft and Yahoo accounting for 86 percent of that total.

In the discussion of its business, DuPont Fabros said the success of Internet companies is a major factor in its growth plans. "Many of these companies are now profitable entities that are willing and able to enter into long-term leases for their data center needs