Colorado Real Estate Journal -

REIT pays $90.85 million for data center

A real estate investment trust paid $90.85 million for a data center and office complex in the southeast Denver metro area, according to public records.

The 287,231-square-foot center at 11900 E. Cornell Ave. in Aurora is 94 percent leased.

ViaWest, a co-location provider, leases the data center space, and the U.S. Bureau of Prisons occupies the office space.

San Francisco-based Digital Realty Trust Inc., which specializes in buying and developing data centers, purchased the property from an entity created by DCI Technology Holdings LLC, based in Palo Alto, Calif.

“We have been tracking that asset for a long time. We know the seller quite well. We thought it was an attractive risk-adjusted return for our shareholders,” said A. William Stein, Digital Realty Trust chief financial officer and chief investment officer.

“This acquisition adds a high-quality, income-producing asset to our portfolio,” Scott Peterson, chief acquisitions officer, said in a statement. “The property is located near our 8534 Concord Center Drive facility, expanding our presence in the Denver market and contributing to our revenue stream with long-term, stabilized leases.” No brokers were involved in the transaction.

“It’s a significant transaction,” said broker Jason Addlesperger of Newmark Knight Frank Frederick Ross, who has been involved in data center sales and leasing in the Denver area.

Addlesperger said significant data centers rarely come on the market in Denver, and when they do they attract attention.

“There is a lot of investor interest – at strong cap rates – due to the investment that these data center operators put into the property. The investment they put into the building gives the landlord a lot of security that they’ll have a tenant for the long haul,” he said, adding there are a number of investment pools that focus specifically on data center investments.

The East Cornell property consists of three interconnected buildings with 170,000 sf of data center space. The weighted average lease term for the two tenants is 10 years.

Newmark Knight Frank Frederick Ross is the property manager.

Digital Realty Trust owns 109 properties comprising 21.1 million sf, including 2.2 million sf held for redevelopment. Its portfolio spans 32 markets in North America, Europe, Asia and Australia.