Boston, MA 09/10/2014 (wallstreetpr) – According to reports, Digital Realty Trust, Inc. (NYSE:DLR) recently announced that an affiliate of it and Griffin Capital Essential Asset REIT (GCEAR) had decided to enter into a joint venture deal worth around $187.6 million. DLR is one of the leading colocation and data center solutions in the world.
Insights of deal:
With the help of this deal that took place on September 9, 2014, both the companies formed a massive 132,280 square foot Turn-Key Flex data center in Ashburn, Virginia. The total value of this joint venture date center is around $185.5 million (it excludes closing cost worth of $2.1 million) or $20,611 per kW. The management of Digital Realty Trust, Inc. (NYSE:DLR) expects from this property a minimum of $13.1 million cash net operating income for next 12-months period. It also represents a cap rate of 7.05%. The entire property is leased out, and the weighted average remaining lease period of this property is approximately seven years.
As per the information revealed by the companies, Digital Realty Trust, Inc. (NYSE:DLR) will hold a 20% interest while GCEAR will hold the 80% interest in the joint venture. DLR has been managing this property for some time, so it will continue to do so in the future as well. It will be entitled to receive management fees and other capital proceeds and excess cash flow for managing this property.
The JV has arranged a bank loan of $102.0 for the tenure of five years at LIBOR and extra basis points of 225. The total loan to value ratio for this loan is approximately 55% for both the companies. Due to this transaction, Digital Realty Trust, Inc. (NYSE:DLR) was able to generate as much as $168.4 million in net proceedings. It comprised of DLR’s share of initial drawn down on the bank loan, in-addition of equity contribution of GCEAR fund minus closing cost of DLR’s shares.
