In a phone interview with the WHIR, Pamela Matthews discusses Digital Realty Trust’s recent acquisitions of data centers in Northern Virginia, Massachusetts and Connecticut.
(WEB HOST INDUSTRY REVIEW) — As the recession continues to impact companies across a range of industry sectors, data center operator Digital Realty Trust (www.digitalrealtytrust.com) has managed to more than endure the economic challenges, pulling off a strong fiscal year in 2009.
Last week, the company revealed in two separate announcements that it completed in December the acquisitions of five data center properties in New England and Northern Virginia areas.
The company invested $375 million for three data center properties totalling 550,000 square feet in Massachusetts and Connecticut, as well as $63.3 million for two fully leased data center properties.
All five properties are fully-leased to existing tenants and will run accordingly to the company’s strict standards.
Pamela Matthews, director of investor relations at Digital Realty Trust, discusses in the following interview the details of the acquisitions and how they fit into the company’s overall strategy.
The WHIR: How do the acquisitions fit into Digital Realty Trust’s overall strategy, moving into 2010?
Pamela Matthews: We acquire and own, manage data center properties. Recently, we’ve been acquiring data centers to expand our footprint in the greater Boston and New England market. The Northern Virginia acquisitions does the same for us. We have a significant presence in Northern Virginia. We have a couple of properties in Boston that are fully leased — it’s a large regional office for us. It’s a good opportunity to expand our business in those markets with very good customers.
Why are Northern Virginia and New England such desirable markets for data center activity?
PM: They’re just markets with a lot of demand and relatively limited supply. In both cases for these acquisitions we were acquiring income-producing properties. A lot of customers like to be colocated in those regions for a variety of reasons. These are properties in areas where there aren’t necessarily a lot of leasing opportunities but they’re stablized properties. We’re actively developing in Northern Virginia as well.
How will Digital Realty Trust operate these acquired data center facilities?
PM: We will run them the way they’ve been run in the past and consistent with the way Digital Realty Trust runs our properties. The leases are contractual so I don’t think there would be much difference in the way we run them. Digital Realty Trust will run the same way, if not better.
Are there any plans for expansions or upgrades for any of the properties?
PM: For New England, none that I know of. There was 10.73 acres of land associated with the Northern Virginia acquisition that is a developable parcel. We didn’t attribute it at the time of the sale. There’s potential opportunity for development there, although nothing specific or that we’ve been asked of.
Has Digital Realty Trust experienced a shift in the data center industry within the past year in the midst of the recession?
PM: We continue to see growth. Demand has remained steady for data center space. A lot of people have been outsourcing so we’ve seen a continued pace of demand. It’s not necessarily tied to what is going on in the greater economy like [how it is] in other areas of real estate. Consumer spending has a lot to do with both retail and office properties. We saw some longer sale cycle lead times in terms of folks making decisions to sign leases. A lot of it required higher levels of approvals within the organization.
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