Carter Validus Mission Critical REIT has sold 15 data center properties for $1.06 billion in two transactions, the company said today. The company agreed to sell a data center in suburban Chicago to Digital Realty, while selling a 14-property portfolio to Singapore-based real estate firm Mapletree.
In the first transaction, Digital Realty will buy a data center in Northlake, Illinois for $315 million. The data center was built by Ascent Corp., which operates it as a multi-tenant wholesale data center and colocation facility. Carter Validus bought the property in 2014 for $211.7 million, while Ascent continues to operate and manage the facility. The facility, known as CH2, is several miles from a Digital Realty campus on Grand Avenue in Franklin Park.
Carter Validus also announced that it has agreed to sell a 14-property portfolio to an affiliate of Mapletree Investments and Mapletree Industrial Trust (MIT), a Singapore Exchange listed Real Estate Investment Trust, for approximately $750 million. The 14 data centers are 97 percent occupied by 15 tenants, with a total area of 2.3 million square feet The transactions are expected to close in the fourth quarter of 2017.
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The deal includes 180 Peachtree Street, a major mixed-use property that houses data center space for Equinix, Green House Data, Level 3 and TW Telecom, along with the city of Atlanta’s 911 operations. It was originally a Macy’s store, and was retrofitted for data center and office use.
The sale to Mapletree reflects the growing interest in the data center sector from global investment firms. Mapletree Industrial Trust recently announced an expanded investment strategy, which includes a focus on income-producing data centers around the world. The company owns four data centers in Singapore, and intends to pursue acquisitions in Europe and other parts of Asia as well as the United States. The company’s appetite is substantial, as it wants overseas data centers to comprise up to 20 percent of its assets.
Carter Validus has been a major acquirer of income-producing data centers, which are typically leased to a single-tenant with quality credit.
“The proposed acquisition is in line with the expansion of MIT’s investment strategy to acquire data centers worldwide beyond Singapore,” said Tham Kuo Wei, Chief Executive Officer of Mapletree Industrial Trust, who called it “a prudent and measured approach for MIT’s first overseas investment in the United States, the largest data center market in the world.”
Some of the buildings being acquired by Mapletree include:
- 180 Peachtree Street, Atlanta
- 7337 Trade Street, San Diego
- 402 Franklin Road, Brentwood
- 2000 Kubach Road, Philadelphia
We are seeking the full list of buildings and will provide more details as they are available.
“We are pleased to extend our presence in the United States in a sector with strong growth prospects,” said Hiew Yoon Khong, Group Chief Executive Officer of Mapletree Investments. “The target portfolio is anchored by long leases from established tenants, including Fortune Global 500 corporations and NYSE-listed/Nasdaq-listed companies. The growth in data creation and cloud computing will continue to drive the demand for data center space, especially in the United States, leveraging on the highly developed infrastructure and favorable business environment.”
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Carter Validus Mission Critical REIT was created in 2012 to invest in data centers and healthcare facilities such as medical office buildings, specialty surgical centers, and hospital properties. It has since accumulated $3.5 billion in assets, including 64 healthcare facilities and 20 data centers.
Carter Validus is a non-traded public REIT. Like a public REIT, they invest in real estate, make regular SEC disclosures, and distribute 90 percent of their taxable income to shareholders. A major difference is that non-traded REITs don’t trade on a national securities exchange, and thus are less liquid investments (meaning funds are harder to buy and sell than with an exchange-traded REIT).
Over the years, Carter Validus has acquired facilities owned by AT&;T, IO, Ascent and Stream Realty, among others. Its list of tenants includes Equinix, Level 3, Internap and Peak 10.