Digital Core REIT, a subsidiary of Digital Realty, is strategically expanding its global data center presence by acquiring stakes in two Digital Realty data centers. The company aims to increase its footprint in Frankfurt, Germany, and enter the lucrative market in Osaka, Japan. These acquisitions reflect Digital Core REIT’s commitment to meeting strong and diverse customer demand in top-tier data center markets.
Data Center in Frankfurt, Germany
Situated at Wilhelm-Fay-Straße 15 and 24 in the Sossenheim area, the Frankfurt data center offers an impressive capacity of 34MW across 449,545 square feet. This modern facility is equipped with state-of-the-art infrastructure to support the growing demands of the digital era. The acquisition of this data center by Digital Core REIT signifies its strategic expansion plans in Europe.
Funding Source for the Frankfurt Acquisition
Digital Core REIT plans to finance the transaction through a portion of the proceeds generated from the sale of two facilities located in Silicon Valley, namely 2401 Walsh Avenue and 2403 Walsh Avenue. The sale of these properties will provide the necessary capital to support the acquisition and reinforce the company’s growth strategy.
Expansion into Osaka, Japan
In line with its global expansion plans, Digital Core REIT is venturing into the Japanese market with the acquisition of a 10 percent interest in a freehold data center located in Osaka. This strategic move comes through a deal with Mitsubishi Corporation, where Digital Core REIT will acquire the stake for ¥7.725 billion ($51.5 million). By entering the thriving Osaka data center market, Digital Core REIT aims to establish itself as a key player in the region.
Overview of the Osaka Data Center
The acquired data center in Osaka, located at 6-chome, Ao-kita, Saito, Minoh-city, is operated by Digital Realty under the name Digital Osaka 2, also known as KIX11. With this acquisition, Digital Core REIT gains access to a technologically advanced facility that is well-suited to meet the increasing demands of businesses in the digital age. By operating within this cutting-edge data center, Digital Core REIT aims to cater to the diverse needs of its clients in the Osaka market.
To fund the Osaka acquisition, Digital Core REIT plans to utilize yen-denominated borrowings from its multi-currency global revolving credit facility. This financial strategy ensures efficient and cost-effective utilization of resources, enabling Digital Core REIT to expand its presence in the Japanese market without stretching its financial capacity.
Ownership and Valuation of the Osaka Facility
Currently, Digital Realty holds a 50 percent ownership stake in the Osaka data center, and with the completion of the deal, Mitsubishi Corporation will own 40 percent. The entire facility is valued at approximately $515 million, highlighting its significance in the data center industry. This valuation reflects the state-of-the-art infrastructure, strategic location, and robust demand that the Osaka market offers.
Background on Digital Realty and Mitsubishi Joint Venture
In 2017, Digital Realty and Mitsubishi Corporation formed a joint venture named MC Digital Realty, with a total investment of $1.8 billion. This venture aimed to leverage the combined expertise of both companies to develop and manage world-class data centers globally. The recent acquisition of a stake in the Osaka data center represents a further collaboration between Digital Realty and Mitsubishi Corporation, strengthening their partnership and market presence.
Role of Digital Core REIT in Holding Stabilized Data Centers
Digital Core REIT, a Singapore-listed subsidiary of Digital Realty, was established to hold and manage several stabilized data centers within the Digital Realty portfolio. This strategic move allows Digital Realty to focus on its core business operations while ensuring efficient management and growth of its data center assets. By consolidating its stabilized data centers under Digital Core REIT, Digital Realty ensures the long-term sustainability and profitability of these assets.
Digital Core REIT’s acquisitions in Frankfurt and Osaka mark significant milestones in the company’s global expansion strategy. These investments enable Digital Core REIT to establish a presence in top-tier data center markets characterized by robust and diverse customer demand. With its enhanced portfolio, Digital Core REIT is well positioned to cater to the evolving needs of businesses relying on secure and reliable data center services. The company’s expansion into Frankfurt and Osaka demonstrates its commitment to driving growth and innovation in the global data center industry.