Realty Income Acquires 80% Equity Interest in Two Data
Centers Currently Under Construction in Northern Virginia, with Up to 48 Megawatts of
Potential IT Load
AUSTIN,
Texas and SAN DIEGO,
Nov. 13,
2023 /PRNewswire/ -- Digital Realty (NYSE:
DLR), the largest global provider of cloud- and
carrier-neutral data center, colocation and interconnection
solutions, and Realty Income Corporation (Realty Income, NYSE: O),
The Monthly Dividend Company®, announced that they have established
a joint venture to support the development of two build-to-suit
data centers in Northern Virginia.
Realty Income invested approximately $200 million to acquire an 80% equity interest in
the venture, while Digital Realty maintains a 20% interest.
Each partner will fund its pro rata share of the remaining
$150 million estimated development cost for the first phase of
the project, which is slated for completion in mid-2024. The
build-to-suit facilities were 100% pre-leased to an S&P 100
investment grade client prior to construction and are expected to
generate a 6.9% initial cash lease yield upon lease commencement in
mid-2024. The facilities are subject to a 10-year initial
lease term with extension options and 2.0% annual rent
escalators.
The two build-to-suit data centers commenced construction in the
fourth quarter of 2022 and are slated to deliver 16 megawatts (MW)
of initial data center capacity, which is expandable up to 48MW at
the client's option. The budget for the first phase of these
yield-on-cost developments is approximately $400 million. The client maintains the
option to expand the projects up to 48MW of total capacity during
the initial lease term, which could increase the budget up to
$800 million, based on current
development cost estimates.
"We are delighted to partner with Realty Income, a blue-chip
net-lease REIT, in their first investment in the data center
sector," said Digital Realty President and Chief Executive Officer
Andy Power. "The formation of
this development joint venture supports our customer's
build-to-suit requirements with a like-minded, long-term investor
as our partner. The transaction also further bolsters and
diversifies Digital Realty's capital sources, while enhancing our
flexibility so that we can prudently support our stakeholders'
longer term capacity requirements."
"One of Realty Income's core strategies is to partner with
companies that are leaders in their respective industries. To
that end, for our initial investment in the net lease data center
vertical, we are pleased to partner with Digital Realty, the
largest provider of cloud- and carrier-neutral data centers whose
global platform is well respected in the industry," said
Sumit Roy, Realty Income's President
and Chief Executive Officer. "This transaction offers our
stockholders attractive risk-adjusted returns and will support the
development of two state-of-the-art facilities located in
Northern Virginia, the largest
data center market in the world."
About Realty Income
Realty Income, The Monthly Dividend Company®, is an S&P 500
company and member of the S&P 500 Dividend Aristocrats® index.
We invest in people and places to deliver dependable monthly
dividends that increase over time. The company is structured
as a REIT, and its monthly dividends are supported by the cash flow
from over 13,250 real estate properties primarily owned under
long-term net lease agreements with commercial clients. To
date, the company has declared 641 consecutive common stock monthly
dividends throughout its 54-year operating history and increased
the dividend 122 times since Realty Income's public listing in 1994
(NYSE: O). Additional information about the company can be
obtained from the corporate website at www.realtyincome.com.
About Digital Realty
Digital Realty brings companies and data together by delivering
the full spectrum of data center, colocation and interconnection
solutions. PlatformDIGITAL®, the company's global data center
platform, provides customers with a secure data meeting place and a
proven Pervasive Datacenter Architecture (PDx®) solution
methodology for powering innovation and efficiently managing Data
Gravity challenges. Digital Realty gives its customers access
to the connected communities that matter to them with a global data
center footprint of 300+ facilities in 50+ metros across 25+
countries on six continents. To learn more about Digital
Realty, please visit digitalrealty.com or follow us on
LinkedIn and X.
For Additional Information
Investor Relations
Steve
Bakke / Tyler Grant
Realty Income
+1 858 284 5425 / +1 858 284 5112
ir@realtyincome.com
Jordan Sadler / Jim Huseby
Digital Realty
+1 737 281 0101
InvestorRelations@digitalrealty.com
Media Contacts
Helen
Bleasdale
Digital Realty
+1 737 267 6822
hcbleasdale@digitalrealty.com
Safe Harbor Statement
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995, Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Exchange Act of 1934, as amended. When
used in this press release, the words "estimated," "anticipated,"
"expect," "believe," "intend," "continue," "should," "may,"
"likely," "plans," and similar expressions are intended to identify
forward-looking statements. Forward looking statements
include statements related to the joint venture, the data center
development, expansion options, lease terms, cash lease yields,
disposition, customer demand, expected benefits, use of proceeds
and strategy. These forward-looking statements are based on
current expectations, forecasts and assumptions and are subject to
risks, uncertainties, and assumptions that could cause actual
outcomes and results to differ materially. Some of the risk
factors that could cause actual results to differ materially are,
among others, the timing and ability to consummate the pending
transaction or the occurrence of any event, change or other
circumstance that could delay closing or result in the termination
of the agreement for the transaction. Other factors that
could cause results to differ materially are described in the
filings made from time to time by Digital and Realty Income with
the U.S. Securities and Exchange Commission and include the risk
factors and other risks and uncertainties described in Digital
Realty's and Realty Income's respective Annual Reports on Form 10-K
for the fiscal year ended December 31,
2022 and Quarterly Reports on Form 10-Q and subsequent
filings. Readers are cautioned not to place undue reliance on
forward-looking statements. Forward-looking statements are
not guarantees of future plans and performance and speak only as of
the date of this press release. Except as required by law,
Digital Realty and Realty Income do not undertake any obligation to
update or revise forward-looking statements, whether as a result of
new information, future events, or otherwise, or publicly release
the results of any forward-looking statements that may be made to
reflect events or circumstances occurring after the date hereof or
the occurrence of unanticipated events.
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SOURCE Digital Realty