185,000-SF Data Center Fetches $90M

SANTA CLARA, CA-The fully-leased, 185,000-square-foot Bayshore Data Center here changed hands in November for $90.5 million in cash and assumed debt. Locally based Digital Realty Trust acquired the two-building asset from Inland Western Retail Real Estate Trust, which paid $95.7 million for the data center in 2005. Holiday Fenoglio Fowler LP had the disposition assignment.

Bayshore Data Center is adjacent to Silicon Valley Power and U.S. Highway 101 in the Santa Clara data center cluster in Silicon Valley. Its two buildings–a 160,000-square-foot building at 1350 Duane Ave. and a 25,000-square-foot building at 3080 Raymond St.–are fully leased to tenants including Sprint Communications, Equinix and Layer42.Net.

Bryan Ley and John Crump of HFF’s Los Angeles office and Gerry Rohm and Zane Sweet of HFF’s San Francisco were the brokers with the marketing assignment. Rohm says the offering attracted “tremendous interest” due to its in-place assumable debt, its “terrific location” in Santa Clara and generally growing demand for the product type. Digital Realty assumed a $52.8 million mortgage that bear s interest at 5.423% and is interest-only through the initial maturity date of October 1, 2012.

“Demand for data centers such as Bayshore continues to outpace supply by a margin of two to one,” he says. “There is limited new supply in the data center cluster coming online in the next three years due to a lack of construction financing, which will continue to drive up rents for data center services.”

Digital Realty Trust has an interest in 13.8 million square feet of datacenter space in 77 properties in 27 markets throughout Europe and North America. In September, it acquired 444 Toyama Dr., a 42,000-square-foot [net rentable] datacenter in Sunnyvale that is net leased through 2022 by a single tenant. The datacenter REIT also announced the purchase of the interest it did not already own in 1525 Comstock, a 42,000-square-foot LEED Platinum datacenter in Santa Clara that is also fully leased. In August, the company acquired a 60% interest in Collins Technology Park, a seven-building, 787,000-square-foot development in Richardson, TX, that it plans to convert to a datacenter. Its JV partner is Dallas-based Skyrise Properties.

Inland Western Retail Real Estate Trust owns 49 million square feet in 299 wholly-owned properties and two consolidated joint venture properties. The company also has interests in 12 unconsolidated properties and 14 properties in seven development joint ventures. On Dec. 1, the company announced a new secured loan from JPMorgan Chase Bank. The $625 million, non-recourse ten-year loan is secured by a portfolio of 55 retail properties in a joint venture owned by Inland Western and principals of The Inland Real Estate Group Inc. Inland Western has refinanced, paid down and extinguished debt totaling $1.3 billion in 2009.