How Much Are Bear's Data Centers Worth?

Bear Stearns (BSC) has been bought for $270 million. Where do its technology real estate assets fit into the picture?

In a stunning case of reverse sticker shock, Bear Stearns has been sold to J.P. Morgan for $270 million, or just $2 a share. Bear's stock (BSC) had closed at $30 Friday and $57 Thursday. Shortly after the announcement, the Federal Reserve cut its discount rate by a quarter-point to 3.25 percent, and Wall Street braced for a difficult Monday.

The sale price shows little confidence in the value of Bear Stearns' financial assets. Paul Kedrosky noted Saturday that "the value of Bear's head office in a prime location on Madison Avenue, near JPMorgan's offices, may account for a big portion of the eventual sale price."

And what about its data centers? Bear Stearns has facilities in Whippany, New Jersey and MetroTech Center in Brooklyn, as well as a two-story network operations center (NOC) within its New York headquarters.

Bear Stearns' Whippany data center is a 100,000 square foot mission-critical facility, built in 1997 as part of a 600,000 square foot campus. Bear also has a data center as part of its operations at One Metrotech Center in Brooklyn, a 950,000 square foot facility. Both data centers have high-speed connections to Bear Stearns' headquarters building at 383 Madison Avenue, a 43-story, 1.2 million-square-foot office tower. Bear Stearns also has substantial infrastructure supporting its low-latency trading operation.

How might these facilities be valued in a rational market? It remains to be seen. In coming hours we will see how the J.P. Morgan-Bear Stearns deal is digested by the market, and who ends up making decisions about the company's technology real estate assets.

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