Carter Validus Sells $750M Data Center Portfolio

By Tudor Scolca

Data center at 7337 Trade St. in San Diego, occupied by AT&T

A joint venture of Mapletree Investments Pte Ltd. and Mapletree Industrial Trust has formed an unlisted, single-purpose trust, Mapletree Redwood Data Centre Trust (MRDCT), to invest in a 14-asset data center portfolio. Carter Validus Mission Critical REIT sold the properties for approximately $750 million. Per the agreement, Mapletree Investments holds a 60 percent interest in MRDCT, while Mapletree Industrial Trust holds the other 40 percent.

“We are pleased with the completion of this sale of the portfolio to Mapletree, which we strategically assembled over a period of years through on- and off-market acquisitions, and represents a notable gain for the company,” said Michael Seton, president of Carter Validus Mission Critical REIT, in a prepared statement.

The data centers are situated across nine states, in established data center submarkets. All properties are on freehold land, except for a parking deck at 150 Carnegie Way N.W. in downtown Atlanta, which has a remaining land lease tenure. The net leasable area (NLA) of the portfolio totals approximately 2.3 million square feet. The following properties are 97 percent occupied by 15 tenants: 

• N15W24250 Riverwood Drive in Pewaukee, Wis., 42,952 square feet
• 19675 W. Ten Mile Road in Southfield, Mich., 52,940 square feet
• 2 Christie Heights in Leonia, N.J., 67,000 square feet
• 2000 Kubach Road in Philadelphia, Penn., 124,190 square feet
• 1805 Center Park Drive in Charlotte, N.C., 60,850 square feet
• 5150 McCrimmon Parkway in Morrisville, N.C., 143,770 square feet
• 402 Franklin Road in Brentwood, Tenn., 347,515 square feet
• 180 N.W. Peachtree St. in Atlanta, Ga., 357,411 square feet
• 1001 Windward Concourse in Alpharetta, Ga., 184,553 square feet
• 2775 Northwoods Parkway in Norcross, Ga., 32,740 square feet
• 1221 Coit Road in Plano, Texas, 128,753 square feet
• 3300 Essex Drive in Richardson, Texas, 20,000 square feet
• 5000 S. Bowen Road in Arlington, Texas, 90,689 square feet
• 7337 Trade St. in San Diego, Calif., 499,402 square feet

Strong tenant base

Data center at 2000 Kubach Road in Philadelphia, occupied by The Vanguard Group

Tenants of the properties include Hewlett-Packard, AT&T, The Vanguard Group, General Electric, Level 3 Communications and Equinix. The weighted average lease expiration date is 6.7 years, and only 1.3 percent of leases will expire within three years. Approximately 97.6 percent of leases have fixed annual rental escalations, resulting in embedded rental growth.

“We are pleased to extend our presence in the United States in a sector with strong growth prospects. The target portfolio is anchored by long leases from established tenants, including Fortune Global 500 corporations and NYSE-listed/Nasdaq-listed companies. The growth in data creation and cloud computing will continue to drive the demand for data center space, especially in the United States,m leveraging on the highly developed infrastructure and favorable business environment,” said Hiew Yoon Khong, group CEO of Mapletree Investments, in a prepared statement.

Carter Validus Mission Critical REIT also recently sold a Chicago data center to an affiliate of Digital Realty Trust for $315 million.

Images via Google Street View