The manager of Digital Core REIT has proposed the REIT’s acquisition of a further 24.9% interest in a data centre in German for a purchase consideration of EUR117.0 million ($170.65 million).
On March 6, the manager announced that Digital CR Singapore 5, a subsidiary of Digital Core REIT, has agreed to purchase a 24.9% interest in the shares of Digital Greenfield B.V., which owns the German data centre, from Digital Germany Holding, LLC, a wholly-owned subsidiary of Digital Realty Trust.
The property, located at Wilhelm-Fay-Straße 15 and Wilhelm-Fay-Straße 24 in Frankfurt, Germany, is an institutional quality, freehold data centre concentrated within a core data centre market, which totals 449,546 net rentable sq ft as at Dec 31, 2023.
In addition, the Frankfurt facility is 92.0% leased to a roster of blue-chip customers, each with numerous deployments across Digital Realty’s global platform.
The agreed market value of the entire share capital of the Frankfurt facility stands at EUR470.0 million.
The sale agreement comes together with an equivalent percentage participation interest in the existing €300 million unsecured intercompany revolving loan facility between Digital Euro Finco L.P., another wholly-owned subsidiary of Digital Realty, and Digital Greenfield.
See also: Changes in ICR, leverage to come into effect immediately, with additional disclosures in March
The manager of Digital Core REIT says the acquisition of the stake in the Frankfurt facility will enhance the REIT’s portfolio diversification and improve its overall portfolio credit quality, increasing the total annualised rent contribution from investment grade customers from 78.0% as at Dec 31, 2023, to 87.0% after the transaction.
The transaction will also solidify important commercial relationships and improve the geographic diversification of Digital Core REIT’s portfolio with a more meaningful presence in Frankfurt, reducing the total annualised rent contribution from North America from 82.0% as at Dec 31, 2023, to 71.0% after the transaction.
The manager intends to fund the acquisition costs with proceeds from the sale of its Silicon Valley properties and a portion of the proceeds from the 1QFY2024 private placement.
Units in Digital Core REIT closed 1.5 US cents higher or 2.52% up at 61 US cents.
