Digital Realty and Mitsubishi Corporation have announced a new collaboration aimed at facilitating the establishment of two data centers in the Dallas metropolitan area. These centers have already secured full leasing to an S&P 100 investment-grade client for a long-term period. Mitsubishi Corporation has taken up a 65% ownership stake in this venture, contributing an initial sum of around $200 million. Meanwhile, Digital Realty retains a 35% interest and will oversee both the development and day-to-day operations of the joint endeavor, earning standard fees in return. Both partners will contribute funds proportional to their ownership shares for the remaining estimated development cost of $100 million for the first phase of the project. Completion and commencement of operations are expected by late 2024.
The two data centers commenced construction in the fourth quarter of 2022, with the first phase slated to deliver 16 megawatts (MW) of initial data center capacity. The budget for the first phase of these yield-on-cost developments is approximately $400 million. The customer maintains the option to expand the projects up to 48 MW of total IT load during the initial lease term, which could increase the combined budget up to $800 million, based on current development cost estimates.
“We are delighted to expand our partnership with Mitsubishi,” said Digital Realty Chief Investment Officer Greg Wright. “This development joint venture leverages the success of our established Japanese partnership into the United States, while supporting our customer’s data center requirements with a like-minded, long-term investor. The transaction enhances Digital Realty’s balance sheet, providing incremental capital to prudently support our stakeholders’ longer term capacity requirements.”
Wells Fargo Securities served as financial advisor to Digital Realty on the transaction.
Learn more about the joint partnership between Digital Realty and Mitsubishi Corporation and two new data centers in North America.
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