Real Estate Investment Trusts (REITs) Keep Buying Data Centers
Carter Validus Mission Critical REIT II, a non-traded real estate investment trust, has acquired a Tempe, Arizona-based data center for $16.2 million. The seller was El Dorado Holdings Inc., according to multiple reports. It’s the latest in a growing list of data center M&A involving REITs.
The data center has 44,244 rentable square feet, redundant power feeds, and is minutes from downtown Phoenix and downtown Tempe. The data center has been 100% leased since 1997 to a national provider of wireless voice, messaging, and data services, Carter Validus says.
“We believe the Tempe Data Center’s premier location, high fiber connectivity, tenant quality, lease solidity and the critical nature of its operations make it an ideal investment for our portfolio,” said John E. Carter, CEO of CVMC REIT II, in a prepared statement.
REITs Buying Up Data Centers: But for How Long?
Carter Validus has been buying up data centers across the country — making the organization part of the broader REIT buying binge involving data centers. For instance, CyrusOne Inc., a real estate investment trust (REIT) that owns data centers, acquired two data centers from Sentinel Data Centers LLC for $490 million earlier this month.
At first glance, data center REITs sound like a hot investment opportunity — especially since more and more businesses are moving workloads to third-party MSPs and CSPs. But data center REIT stocks experienced a pullback in late 2016 amid concerns about interest rates, the election and difficult year-over-year comparisons.
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