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Prudential forms $369M joint venture

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San Fancisco-based data center company Digital Realty Trust announced Wednesday it has formed a joint venture with Prudential Real Estate Investors, a business unit of Newark-based Prudential Financial Inc., in the amount of $369 million.

According to the announcement, Digital Realty seeded the joint venture, which was formed in late September, with nine data centers totaling 1.06 million square feet and valued at approximately $366.4 million, plus closing costs. The properties are expected to generate cash net operating income of approximately $24.5 million in 2013, representing a 6.7 percent cap rate. The properties are 100 percent leased, with an average remaining lease term of approximately nine years. The Prudential-managed fund will take an 80 percent interest in the joint venture and Digital Realty will retain a 20 percent interest.

The transaction generated approximately $328.6 million of net proceeds to Digital Realty. It will recognize a gain on depreciated book value of approximately $115 million on the sale of the 80 percent interest in the nine properties during the third quarter of 2013, the company said in a statement.

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