US real estate player buys Dublin data centre


8 May 2006

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A US real estate player responsible for spending US$466.3m in property acquisitions in the past year has acquired a 20,000 sq ft data centre in Clonshaugh in north Dublin from Ken Peterson’s Hibernia Atlantic. Siliconrepublic.com has learned that internet retail giant Amazon has signed a 10-year lease to occupy the centre.

New York Stock Exchange-listed Digital Realty Trust also bought a further 2.6 acres adjacent to the building upon which it intends to build additional data centre facilities.

The company did not disclose how much it paid for the Dublin property, which before being acquired by Peterson four years ago was built by 360 Networks as part of a €900m investment plan to lay a transatlantic network.

Digital Realty said that along with the acquisition of a second “vacant” data centre in Dallas it spent a total of US$22.5m in the first quarter of 2006 on the two properties.

Digital Realty Trust describes itself as a company that owns, acquires, repositions and manages technology-related real estate. It owns 49 properties in 17 US and four European metropolitan areas that are considered to be key technology hubs, including Dublin.

The company’s 49 properties consisting of 69 buildings contain applications and operations critical to the day-to-day operations of technology industry tenants and corporate enterprise data centre tenants. Comprising approximately 9.3 million net rentable square feet, including space held for redevelopment, Digital Realty Trust’s property portfolio is located throughout the US and in Europe.

The company, which was established in 2004, has been aggressively snapping up hi-tech real estate in the US, Canada and Europe and prior to its acquisition of the Dublin and Dallas properties made major acquisitions in Toronto, Atlanta, Houston and Amsterdam.

Digital Realty’s strategy of acquiring property assets at the bottom of a cycle in the telecoms market and reconditioning them in time for growth in an uncanny way matches Ken Peterson’s own methodology. Peterson made his fortune in the US by buying aluminium plants while at the bottom of an economic cycle and later selling them on when prices recovered.

The data centre that Peterson has sold to Digital Realty was acquired by Peterson’s investment vehicle Columbia Ventures four years ago along with a 12,200km transatlantic network for US$18m. The data centre and the trans-Atlantic cable system was originally built in Dublin at a cost of €900m and was sold for the €18m when 360 Networks filed for Chapter 11 bankruptcy. In recent weeks Hibernia Atlantic, which also owns Magnet Networks, signed a major deal to link Virgin Radio with New York via the transatlantic cable at Gigabit Ethernet speeds.

Digital Realty’s acquisition strategy appears to be paying off with the company already claiming on average 93.9pc occupancy by clients that include major international brand names like Verizon, Fidelity, Yahoo!, eBay, Microsoft, AT&T and Fidelity.

On Friday Digital Realty reported revenues of US$61m for the first quarter of 2006 and a profit of US$5.1m.

According to the company the Dublin property that it acquired from Hibernia Atlantic consists of a 20,000 sq ft data centre and an adjoining 2.6-acre parcel that is earmarked for an additional facility.

In its quarterly statement Digital Realty said: “In connection with the closing of the acquisition, the company signed a 10-year lease with a leading US-based internet enterprise company for the entire existing building.”

An industry source revealed to siliconrepublic.com that that anchor tenant will be internet retail giant Amazon.com, which is in the process of creating more than 450 jobs in Cork in a new multilingual customer support centre.

By John Kennedy