SAN FRANCISCO, Digital Realty (NYSE: DLR), a leading global provider of data center, colocation and interconnection solutions, announced today it has entered into definitive agreements with affiliates of Mapletree Investments Pte Ltd and Mapletree Industrial Trust for the sale of a portfolio of 10 Powered Base Building® data centers and the establishment of a joint venture on three existing Turn-Key Flex® hyper-scale data centers. The total consideration for both transactions will be approximately $1.4 billion.
Under the terms of the agreements, Mapletree Investments and Mapletree Industrial Trust will acquire the Powered Base Building® portfolio from Digital Realty for a total purchase price of approximately $557 million. These 10 properties are fully leased and are expected to generate 2020 cash net operating income of approximately $37 million, representing a 6.6% cap rate. Digital Realty will provide transitional property management services for the Powered Base Building® portfolio for one year from the closing date at a customary market rate.
Separately, an entity jointly owned by Mapletree Investments and Mapletree Industrial Trust will purchase an 80% interest, and Digital Realty will retain a 20% interest, in a joint venture on three fully stabilized hyper-scale facilities located in Ashburn, Virginia. Mapletree Investments and Mapletree Industrial Trust will acquire its 80% stake for approximately $811 million, valuing these three assets at approximately $1.0 billion. These three facilities are fully leased and are expected to generate 2020 cash net operating income of approximately $61 million, representing a 6.0% cap rate. Digital Realty will continue to operate and manage these facilities, and the transaction will be completely seamless from a customer perspective.
Mr Hiew Yoon Khong, Group Chief Executive Officer of Mapletree Investments, said, “We have deepened our presence in the fast-growing data center sector with our second portfolio acquisition in North America. These transactions add high-quality properties in key data center markets underpinned by global cloud and colocation players. Our strategic collaboration with a leading global provider of data center solutions like Digital Realty will enable us to scale up meaningfully in developed economies for this resilient asset class.”
Mr Tham Kuo Wei, Chief Executive Officer of the manager of Mapletree Industrial Trust added, “The proposed transactions will enhance the sustainability of our returns to Unitholders with the increased freehold land component and long leases with embedded rental growth. This transaction and partnership with Digital Realty mark another significant milestone in expanding our presence in a sector with strong growth prospects.”
“These transactions represent an important step towards our goal of self-funding our growth and diversifying our sources of equity capital while shrinking our asset base and setting the stage for accelerating growth as the proceeds are redeployed into accretive investment opportunities,” said Digital Realty Chief Executive Officer A. William Stein. “We are pleased to partner with the high-caliber team at Mapletree to effect a transaction that meets both companies’ objectives, and we look forward to collaborating with Mapletree as joint venture partners and exploring additional opportunities together worldwide.”
The transactions are expected to close in late 2019 or early 2020 and are subject to customary closing conditions. Proceeds from the transactions will initially be used to pay down debt and will ultimately be used to fund future investment activity. Digital Realty plans to revisit 2019 guidance to reflect the impact of these transactions on its third-quarter earnings call, scheduled for Tuesday, October 29, 2019.
Citigroup is serving as lead financial advisor to Digital Realty, along with CBRE and Park Hill who are serving as co-advisors. Latham & Watkins and Mayer Brown are serving as Digital Realty’s legal advisors on the transaction.
About Digital Realty
Digital Realty supports the data center, colocation and interconnection strategies of more than 2,000 firms across its secure, network-rich portfolio of data centers located throughout North America, Europe, Latin America, Asia and Australia. Digital Realty’s clients include domestic and international companies of all sizes, ranging from cloud and information technology services, communications and social networking to financial services, manufacturing, energy, healthcare and consumer products. www.digitalrealty.com. Follow Digital Realty on social media: LinkedIn, Twitter, Facebook, Instagram and YouTube.
About Mapletree Investments Pte Ltd
Mapletree Investments Pte Ltd (“MIPL”) is a leading real estate development, investment, capital and property management company headquartered in Singapore. Its strategic focus is to invest in markets and real estate sectors with good growth potential. By combining its key strengths, MIPL has established a track record of award-winning projects, and delivers consistent and high returns across real estate asset classes.
MIPL currently manages four Singapore-listed REIT and six private equity real estate funds, which hold a diverse portfolio of assets in Asia Pacific, Europe, the United Kingdom and the United States.
As at 31 March 2019, MIPL owns and manages S$55.7 billion of office, retail, logistics, industrial, residential and lodging properties.
MIPL’s assets are located across 12 markets globally, namely Singapore, Australia, China, Europe, Hong Kong SAR, India, Japan, Malaysia, South Korea, the United Kingdom, the United States and Vietnam. To support its global operations, MIPL has established an extensive network of offices in these countries.
About Mapletree Industrial Trust
Mapletree Industrial Trust is a real estate investment trust (“REIT”) listed on the Main Board of Singapore Exchange. Its principal investment strategy is to invest in a diversified portfolio of income-producing real estate used primarily for industrial purposes in Singapore and income-producing real estate used primarily as data centres worldwide beyond Singapore, as well as real estate-related assets.
MIT’s property portfolio comprises 87 industrial properties in Singapore and 14 data centres in the United States (40% interest through the joint venture with Mapletree Investments Pte Ltd). The properties in Singapore include Hi-Tech Buildings, Flatted Factories, Business Park Buildings, Stack-up/Ramp-up Buildings and Light Industrial Buildings. As at 30 June 2019, MIT’s total assets under management was S$4.8 billion.
MIT is managed by Mapletree Industrial Trust Management Ltd. and sponsored by Mapletree Investments Pte Ltd.
Andrew P. Power Chief Financial Officer Digital Realty (415) 738-6500 Investor Relations John J. Stewart Digital Realty (415) 738-6500 firstname.lastname@example.org Media Inquiries John Christiansen / Scott Lindlaw Sard Verbinnen & Co. (415) 618-8750 Mapletree Investments Pte Ltd Marilyn Tan Assistant Manager, Corporate Communications Tel: +65 6807 4072 Email: email@example.com Website: www.mapletree.com.sg Mapletree Industrial Trust Management Ltd. Melissa Tan Director, Investor Relations Tel: +65 6377 6113 Email: firstname.lastname@example.org Website: www.mapletreeindustrialtrust.com
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