Digital Realty Trust has acquired the Convergence Business Park, an 819,000 square foot data center and office campus in the Dallas suburb of Lewisville, Texas. The $123 million deal provides Digital Realty (DLR) with immediate income from the current tenants, as well as the potential to build as much as 700,000 square feet of new data center space.
It also expands the company's already large presence in the Dallas market, where Digital Realty owns a major downtown connectivity hub (2323 Bryan, also known as the Univision building) as well as the huge Datacenter Park - Dallas in Richardson.
The 168-acre Convergence Business Park campus includes 10 buildings and 39 acres of land for future development. The property is 99 percent leased on a long-term basis to eight tenants. About 35 of that space is leased as data center space to three tenants, with the remainder used for office and lab space. Tenants include colocation provider CyrusOne and a large financial services firm.
"This acquisition will immediately contribute stabilized cash flow to our portfolio from the existing long-term leases, while providing a wide range of future development and potential redevelopment opportunities," said Michael F. Foust, Chief Executive Officer of Digital Realty (DLR). "Dallas continues to be a very strong market for us. When combined with Datacenter Park Dallas in Richardson, located approximately 25 miles from this site, we believe that we will be able to accommodate a large majority of the data center requirements from customers seeking space in the Dallas market."
The campus currently has 16.5 megawatts of capacity from Texas New Mexico Power (TNMP) via a high-voltage utility-owned onsite substationy. NMP is in the process of adding two transformers at the site, which will provide approximately 67 megawatts of additional power. Based on current zoning, the property is capable of supporting up to 700,000 square feet of new development.
"With the availability of developable land and increased power from the expanding substation, we believe this investment has considerable upside potential," said Scott Peterson, Chief Acquisitions Officer for Digital Realty. "Based on our conservative underwriting, which uses the current operating configuration, we expect to generate attractive risk adjusted returns on our investment."
Digital Realty is the world's largest operator of data centers, with 102 properties spanning 19.1 million square feet in 31 markets throughout Europe, North America, Singapore and Australia.