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Mitsubishi partners with Digital Realty in Dallas data centre joint venture

Written by Mon 4 Mar 2024

Digital Realty and Mitsubishi Corporation have announced a joint venture to support the development of two data centres in the Dallas metro area.

Mitsubishi has acquired a 65% equity interest in the venture for an initial contribution of around £157 million ($200 million). Meanwhile, Digital Realty maintains a 35% interest and will manage the development and day-to-day operations for which it will receive customary fees.

Digital Realty and Mitsubishi will fund its pro rata share of the remaining £78.8 million ($100 million) estimated development cost for the first phase of the project, slated for completion and commencement in late 2024. 

Chief Investment Officer at Digital Realty, Greg Wright, said the transaction enhances Digital Realty’s balance sheet, providing incremental capital to support its stakeholders’ longer-term capacity requirements.

“This development joint venture leverages the success of our established Japanese partnership into the United States while supporting our customer’s data centre requirements with a like-minded, long-term investor,” said Wright.

The data centres are 100% pre-leased to an S&P 100 investment-grade customer on a long-term basis. 

The two data centres began construction in Q4 of 2022, with the first phase scheduled to deliver 16MW of initial capacity. The budget for the first phase of these yield-on-cost developments is around £315 million ($400 million). 

The user can expand the projects up to 48MW of total IT load during the initial lease term. This could increase the combined budget up to £630 million ($800 million), based on current development cost estimates.

In December, Digital Realty announced a similar data centre venture with asset manager Blackstone.

Led by Blackstone’s Infrastructure, Real Estate, and Tactical Opportunities funds, the £5.5 billion ($7 billion) venture is expected to provide a total capacity of 500MW to develop four data centre campuses across Frankfurt, Paris, and Northern Virginia.

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Written by Mon 4 Mar 2024

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