Digital Realty partnered with TPG Real Estate, the real estate investment platform of TPG, to establish a Joint Venture (JV). In this partnership, TPG will acquire an 80 percent majority stake in three stabilized hyperscale data centres in Northern Virginia, collectively valued at USD 1.5 billion, according to the joint statement.
TPG Acquires Majority Stake
Under this collaboration, Digital Realty will retain a minority interest in the portfolio while overseeing day-to-day operations. The move comes as a strategic effort to strengthen and diversify Digital Realty's capital sources through an experienced partner, further enhancing the efficiency of its balance sheet, said Digital Realty.
The assets related to the JV, located in Northern Virginia, the largest and most interconnected data centre hub globally, are strategically positioned to address surging demand for data centres. TPG Real Estate anticipates that recent advancements in artificial intelligence will further fuel the growth of this sector.
"We are excited by the outlook for the Ashburn market and look forward to working alongside a world-class partner in Digital Realty," said TPG Real Estate.
Hyperscale DCs Capacity
The three hyperscale data centres contributing to the joint venture have a combined IT capacity of approximately 104 megawatts and are predominantly leased by investment-grade customers. According to the official release, the value of the transaction is estimated at a cap rate of around 6.0 percent based on annualized in-place cash NOI on June 30, 2023, net of signed leases and known move-outs.
Digital Realty is a global provider of cloud and carrier neutral data centers. The company is set to receive approximately USD 1.3 billion of gross proceeds from the joint venture and associated financing. The funds will be utilized to pay down debt, cover transaction-related expenses, and support general corporate purposes.
The investment in the Portfolio is executed through TPG Real Estate Partners, TPG Real Estate's dedicated opportunistic real estate fund series.