KDC, Digital Realty Join Forces

January 26, 2009
By Allison Landa, News Editor

A recent alliance between commercial real estate development and investment firm KDC and wholesale data center provider Digital Realty Trust may be a deal to watch for companies looking to spearhead data center projects.

The joint venture has created a national development firm that is able to finance and develop build-to-suit data centers customized to a client’s location and technical needs. KDC has developed 110 facilities over the past decade, while Digital Realty has an 81-property portfolio comprising approximately 14.4 million rentable square feet in 27 markets across North America and Europe.

“With this alliance, we bring to the table technical design expertise, site acquisition, real estate development and construction, financing, and operations capabilities to the extent that an enterprise company can tell us their requirements and their technology needs and we can help them design it, build it, and operate it,” KDC senior vice president and data center development expert Ab Atkins told CPE.

Digital Realty senior vice president of corporate development Chris Crosby added that the combined companies are able to provide a lease for custom data centers, including mechanical and electrical plants, without financial contingency. In a statement, he called this “a simple financial model that saves customers significant capital.”

Atkins said the joint venture fills a unique market need for owners and operators of data centers, since this asset class is not only difficult to finance, but has significant barriers of entry including technical expertise, specific data center development experience, and the ability to provide full financing.

“That’s very, very unique right now in this current capital market to be able to put all those components in one package,” he said. “For a customer, it really reduces time and capital and it alleviates the enterprise companies’ need to deploy a lot of their own personnel as well as capital into the development of these properties, which is very time-consuming. In short, we make what is complicated much more simple for corporate America.”