Digital Realty, TPG announce joint venture of hyperscale data centers

Digital Realty (DLR) and TPG Real Estate, the real estate investment platform of alternative asset management firm TPG (TPG), announced that they have established a joint venture in which TPG will acquire a majority stake in three stabilized hyperscale data centers in Northern Virginia. Digital Realty will maintain a minority interest in the portfolio while continuing to manage the day-to-day operations of the assets, providing a seamless customer experience. The three hyperscale data centers were contributed to the joint venture at an aggregate value of $1.5B. The assets contain approximately 104 megawatts of IT capacity and are primarily leased by investment grade customers. Based on annualized in-place cash NOI at June 30, 2023, net of signed leases and known move-outs, the transaction values the three facilities at approximately a 6.0% cap rate. Digital Realty will receive approximately $1.3B of gross proceeds related to the joint venture and the associated financing, which will be used to pay down debt, for transaction related expenses, and general corporate purposes. TPG is investing in the Portfolio through TPG Real Estate Partners, TPG Real Estate’s dedicated opportunistic real estate fund series.