Market Overview

Digital Realty To Buy 8 Premium Data Centers In Equity For $874 Million From Equinix


Digital Realty Trust, Inc. (NYSE: DLR), a global provider of data center, revealed Monday that it signed a definitive agreement to buy a portfolio of eight high-quality, carrier-neutral data centers in Europe for about $874 million. The company indicated that it consisted of five in London, two in Amsterdam and one in Frankfurt, which were being acquired from Equinix. The company indicated that the total purchase price represented a multiple of approximately 13 times the anticipated full-year 2016 portfolio EBITDA.

Digital Realty said it granted Equinix an option to buy its facility at 114 rue Ambroise Croizat in Paris and its associated business, for a purchase price of about $215 million, before closing costs and prorations. The company added that the option remained subject to some conditions. This included confirmatory due diligence, any mandatory governmental or local authority approval, and any required employee consultation processes. The company said that it could not provide any guarantee whether the option would be exercised.

The company disclosed that it would buy a fee interest in one data center in Amsterdam while it would opt for leasehold interests in the other seven data centers, with a weighted-average remaining lease term of about 23 years. That included the exercise of contractual extension options. Aside from that, a number of leased facilities were eligible to statutory rights, which give the tenant the ability to renew upon lease expiration.

Digital Realty's CEO, William Stein, said, "The acquisition of this portfolio of eight highly attractive facilities will enhance Digital Realty's strong global presence and offer us even greater scale on the increasingly important European data center landscape. We have made several recent strategic investments in Europe, and this new portfolio – which is concentrated in three of the most strategically important data center and interconnection hubs in Europe – will immediately bring on board a large, diversified customer base and will also provide significant opportunities to grow and extend our footprint across the continent for years to come."

He added, "I would like to thank Chris Kenney, Senior Vice President, Investments, along with the entire London-based acquisitions team, for their hard work and dedication which made this compelling transaction possible."

The company revealed that the European portfolio acquisition was expected to close in the second half of the current year and is subject to customary closing conditions. Also, Equinix's divesture of the eight assets was a condition of the European Commission's approval of Equinix's acquisition of Telecity that closed in January last.

Posted-In: News Asset Sales


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