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Digital Realty signs $1.4B data center deal with Singapore's Mapletree

Singapore's Mapletree Investments Pte Ltd. and Mapletree Industrial Trust signed a two-pronged deal with Digital Realty Trust Inc. worth roughly $1.4 billion.

They will acquire 10 Powered Base Building data centers from Digital Realty for about $557 million. The properties are fully leased and are expected to generate approximately $37 million in cash net operating income, representing a 6.6% cap rate, in 2020. The vendor will provide transitional property management for one year from the closing date at a customary market rate.

Separately, an entity jointly owned by Mapletree Investments and Mapletree Industrial Trust will purchase an 80% interest in a joint venture on three hyperscale facilities in Ashburn, Va., for approximately $811 million. Digital Realty will retain a 20% stake and continue to operate the assets, which are fully leased and are expected to generate about $61 million cash net operating income, representing a 6% cap rate, in 2020.

The San Francisco-based real estate investment trust plans to use the proceeds from the transactions to pay down debt, as well as fund future investments.

The company said it will revisit its 2019 guidance on its third-quarter earnings call to reflect the impact of the deals that are expected to close in late 2019 or early 2020, subject to customary closing conditions.

Citigroup is the lead financial adviser to Digital Realty, while CBRE and Park Hill serve as co-advisers. Latham & Watkins and Mayer Brown are Digital Realty's legal advisers on the transaction.