Digital Realty and Mitsubishi Corporation form data center development JV

Digital Realty, the largest global provider of cloud- and carrier-neutral data center, colocation and interconnection solutions, and Mitsubishi Corporation, announced the formation of a new joint venture to support the development of two data centers in the Dallas metro area, which are 100% pre-leased to an S&P 100 investment grade customer on a long-term basis. 

Mitsubishi has acquired a 65% equity interest in the venture for an initial contribution of approximately $200 million, while Digital Realty maintains a 35% interest and will manage the development and day-to-day operations of the joint venture, for which it will receive customary fees. Each partner will fund its pro rata share of the remaining $100 million estimated development cost for the first phase of the project, which is slated for completion and commencement in 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.”

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