“The highlight of the quarter was the announcement of our entry into Latin America with a definitive agreement to acquire Ascenty for $1.8 billion.” So said Digital Realty’s A. William Stein.
He explains that “Ascenty is the leading data center platform in a rapidly growing market. It’s best-in-class management team and proprietary fiber network have made it the partner of choice for the leading global cloud providers, and as a result, it has the largest market share. Ascenty’s portfolio is comprised of eight in-service, purpose-built, world-class data centers and another six data centers currently under construction, totaling 106 megawatts of planned capacity.”
The in-service portfolio was approximately 97% leased as of September 30, explained Stein. “While the data centers under construction were approximately 83% pre-leased. Since our announcement, the Ascenty management team has continued to execute generating additional fiber revenue and leasing another 3.6 megawatts in October to two leading global cloud providers, bringing their year-to-date leasing tally to approximately 30 megawatts.”
He explained on the third quarter call that he believes the company can further accelerate on Ascenty’s success, capture additional market share and expand the company’s total addressable market by “leveraging digital realties global platform.”
In fact, he said that the company has received a number of inbound calls from existing customers inquiring about data center capacity in Brazil since the announcement in late September. “The transaction also presents significant growth potential in a key emerging market.”
He pointed out that Brazil has the eighth largest economy in the world and it’s the fifth most populous country, but less than 60% of the population currently has internet access. “As this relatively young market continues to come online and as consumers, local enterprise customers and global IT service providers begin to expand their presence in Latin America, we see significant opportunities to ride this next wave of growth. Finally we’ve structured the transaction to benefit from two sets of partners with local market expertise and a strong track record of execution.”
On the call, he said that Digital Realty is “pleased to be partnering with Brookfield, a leading global asset manager with a well-established track record of investments in Brazil, across infrastructure, renewable power, real estate and private equity. Brookfield has committed to initially invest $613 million in exchange for a 49% equity interest in a joint venture expected to ultimately own Ascenty. Brookfield has been investing in Brazil for over 100 years, and is now one of the largest investors in the country with over $40 billion of assets under management. The partnership with Brookfield provides unparalleled access, experience and resources within the market to help us grow and rollout our strategy.”
At the same time that Digital Realty revealed Ascenty, it also announced the pending acquisition of 424 acres of land next to Dulles International Airport for $237 million or a little less than $560,000 per acre, he added. “This is the parcel highlighted in Royal Blue at the bottom of the map here on page 3. The land purchase is consistent with our stated objective of securing our supply chain and our cost basis compares very favorably to recent comps of over $1 million per acre demonstrating how our global scale, balance sheet capacity and real estate heritage have further enhanced our ability to support our customers growth in the most important data center market in the world.”