Current Occupant to Vacate Facility
Digital Core REIT is actively seeking a new tenant for its data center located at 8217 Linton Hall Road in Bristow, Prince William County, Northern Virginia. The property’s current occupant, described previously as a “Fortune 50 software company,” has opted not to renew its lease, which expires on June 30, 2025.
Tenant History and Facility Overview
Built in 2001, the data center has been leased by the same tenant since 2005. This facility was originally developed on the site of a former Dupont Fabros Technology property. Spanning 230,000 square feet (approximately 21,367 square meters), the data center boasts 9.6MW of IT capacity.
Financial Implications of Vacancy
Impact on Distribution Per Unit (DPU)
The potential vacancy of this facility could have a significant impact on Digital Core REIT’s financial performance. According to the trust, the data center currently contributes about 11 percent of its annualized rent as of September 30, 2024. If the property remains unoccupied, Digital Core estimates a reduction of 0.06 cents in distribution per unit (DPU) for every month of vacancy.
Long-Term Value Creation Potential
Despite the short-term financial hit, Digital Core REIT views this as an opportunity for long-term value creation. The company aims to relist the property at current market rates, potentially generating higher returns. Additionally, the 32-acre site offers the possibility of further development to expand its data center footprint in Northern Virginia, a key market for the data center industry.
Market Opportunities and Strategic Positioning
Northern Virginia’s Data Center Market
As one of the world’s largest data center hubs, Northern Virginia remains an attractive market for new tenants. With robust infrastructure, access to critical fiber networks, and proximity to major business centers, the region continues to be a hotspot for data center investments.
Competitive Advantages of the Facility
Digital Core’s facility on Linton Hall Road offers a well-established infrastructure, making it an appealing option for potential tenants. The combination of its sizable capacity, strategic location, and development potential strengthens its position in a highly competitive market.
About Digital Core REIT
Overview of Portfolio
Singapore-listed Digital Core REIT was established by Digital Realty to manage a portfolio of stabilized data centers. Its initial portfolio included 10 facilities across the US and Canada, totaling over 1.2 million square feet (111,484 square meters) and 49MW of IT capacity. Key locations include Northern Virginia, Northern California, Los Angeles, and Toronto.
Recent Acquisitions and Divestments
Since its inception, the REIT has actively optimized its portfolio. Notable transactions include:
- Acquiring a stake in a Digital Realty facility in Osaka, Japan
- Increasing its stake in a Frankfurt, Germany, data center in March 2024
- Divesting two facilities in Santa Clara, California
These strategic moves highlight Digital Core’s focus on expanding its global presence and maximizing shareholder value.
Potential Scenarios for the Vacant Facility
Relisting at Market Rates
The current market environment offers a favorable opportunity to relist the Linton Hall Road data center at higher rental rates. With the strong demand for data center space in Northern Virginia, Digital Core expects to attract interest from major enterprises seeking high-performance infrastructure.
Development of Additional Data Centers
The 32-acre property provides ample room for expansion. By leveraging this space, Digital Core could further solidify its position in the data center market and cater to the growing demand for scalable IT infrastructure.
FAQs
1. Who is the current tenant of the Linton Hall Road data center?
The tenant, described as a “Fortune 50 software company,” has occupied the facility since 2005 but will vacate upon lease expiration in June 2025.
2. How much capacity does the facility offer?
The Linton Hall Road data center provides 9.6MW of IT capacity across 230,000 square feet.
3. What is the financial impact of the vacancy on Digital Core REIT?
Each month the facility remains vacant will result in a reduction of 0.06 cents in DPU for investors.
4. What are the future plans for the property?
Digital Core plans to relist the facility at current market rates and explore further development opportunities on the 32-acre site.
5. Why is Northern Virginia significant for data centers?
Northern Virginia is a global leader in data center infrastructure due to its robust network connectivity, business-friendly environment, and strategic location.
