Wednesday, October 18, 2017

Digital Realty closes $7.6bn acquisition of DuPont Fabros

Colocation operator also adds new members to its board as portfolio jumps to 158 properties and more than 26 million sqf of hosting space.

Digital Realty (NYSE: DLR) has officially completed the merger of DuPont Fabros (NYSE: DFT) following its blockbuster $7.6bn acquisition which has generated one of the largest solo-owned data centre footprints across North America and the world.

The mega-merger was originally announced last June following the unanimous approval by the board of directors of both companies.

With the addition of DuPont Fabros’ portfolio into its fleet, Digital Realty is gaining 12 purpose-built data centres which combined amount to 3.2 million gross sqf and 278MW of critical load capacity.

The combined company boosts now 158 facilities comprising more than 26 million sqf.

Digital Realty has also become the ninth largest publicly traded US REIT in the RMZ index with an equity market cap of approximately $27bn, and a total enterprise value of over $35bn.

William Stein, Digital Realty’s Chief Executive Officer, said in a company blog: “This strategic transaction represents the biggest step we have taken to date in accelerating our commitment to provide the most comprehensive set of data centre solutions and expertise in the market – supporting single-cabinet colocation and interconnection, to multi-megawatt, and now hyperscale deployments.”

Digital Realty’s investment in its hyperscale vision comes as capital expenditure (CAPEX) in this segment booms. In 2016, hyperscale cloud CAPEX topped $25.3bn, up from $21.1bn in 2015 and the same value in 2014. Back in 2010, CAPEX in this vertical ‘only’ amounted to $7.2bn.

The M&A of DuPont Fabros gives Digital Realty not only fully-working hosting assets, but also a portfolio capable of being expanded by up to 163MW of power.

Stein said: “DFT’s development pipeline enables strong growth of the Digital Realty Connected Campus portfolio. Six data centre development projects currently under construction in Ashburn, Chicago, Santa Clara and Toronto are expected to be completed in the next 12 months and are already 48% pre-leased.

“Adding to this, DFT also has strategic land holdings in Ashburn, Phoenix and Oregon which enable further expansion as additional capacity is needed.

“In addition to world-class assets in the nation’s top metros, DFT has an outstanding team with a deep knowledge of industry best practices for customer engagement and ongoing satisfaction.

“In the coming weeks, we will continue to execute the strategic integration of Digital Realty and DFT, designed to offer greater choice and flexibility for our customers.”


Digital Realty’s updated global footprint.

DFT execs enter DLR family

In conjunction with the merger closing, Digital Realty appointed former DuPont Fabros Board members Michael A. Coke and John T. Roberts, Jr. to Digital Realty’s Board of Directors.

Coke is a real estate executive, having co-founded Terreno Realty Corporation, a publicly traded US industrial REIT, where he serves as President and as a member of the Board of Directors.

Previously, he served as Chief Financial Officer and Executive Vice President for AMB Property Corporation, a global developer and owner of industrial real estate focused on major hub and gateway distribution markets.

As for Roberts, he is also a veteran real estate investor, having held various positions at AMB Property Corporation, including President of AMB Capital Partners LLC, a subsidiary of AMB Property Corporation responsible for AMB’s global private capital ventures.