Digital Realty Trust and Behringer Harvard Form Joint Venture to Develop New Datacenter in Silicon Valley
The three-building campus is located in Santa Clara, CA, approximately 45 miles south of San Francisco in the heart of California's Silicon Valley, the home of many technology and electronics companies. As a result of this agreement, Digital Realty Trust has acquired a 50 percent equity interest in Santa Clara Tech Center, which was previously owned exclusively by Behringer Harvard.
"We are pleased to partner with Digital Realty Trust, a strong national leader in technology-related real estate," said Samuel A. Gillespie, COO of Behringer Harvard Opportunity REIT I, Inc. "With their proven reputation and operational expertise in the data center market, we are confident that Digital Realty Trust will make important contributions to our success as we execute our strategy to enhance the value of Santa Clara Tech Center."
Located on Central Expressway near its intersection with Lafayette Street, Santa Clara Tech Center consists of three buildings providing a total of 456,144 sq ft of space. The 700/750 Central Expressway buildings provide office space for research and development that is fully leased to Hitachi Data Systems as its corporate headquarters. The 800 Central Expressway building is a single-story 150,000-sq-ft, highly improved shell building.
"Digital Realty Trust will be responsible for the datacenter redevelopment, leasing and management of 800 Central Expressway and Behringer Harvard will continue to operate the two office buildings. Construction is already underway on base building improvements and two Turn-Key Datacenter PODs that are expected to be completed in the first quarter of 2011," said David Caron, senior vice president of Portfolio Management for Digital Realty Trust. "The 150,000-sq-ft facility can support the development of six Turn-Key Datacenter PODs totaling approximately 80,000 sq ft of raised floor."
The capital released via this equity sale will be reinvested by Behringer Harvard to fund its share of the initial capital required for the first phase of redevelopment of the 800 Central Expressway building, which will be shared equally by Behringer Harvard and Digital Realty Trust. The redevelopment of this building also will redeploy for datacenter use millions of dollars' worth of systems and structural improvements made by a previous tenant.
"Consistent with our acquisition of 1725 Comstock Street and 3105 and 3115 Alfred Street earlier this year, we continue to add inventory in this key market to meet the demand for high-quality datacenter space," said Scott Peterson, senior vice president of acquisitions for Digital Realty Trust. "By acquiring properties attractive for redevelopment, we are able to build out and deliver a new Turn-Key Datacenter product quickly and cost-effectively. This new product, combined with our access to efficient capital, allows us to provide superior value for our tenants while enhancing our competitive advantage over other developers in the region."