Commercial real estate meets data center
August 9, 2022
Satisfying real estate, IT and investment criteria objectives
DIAL was appointed and acting in partnership with an international real estate and infrastructure fund to explore an interesting commercial property acquisition with a data center twist on the US West Coast.
Expertise. Support. Processes.
Virtual develoment manager
The DIAL team acted as the investment fund’s virtual development manager to assess the long term potential of the deal and in particular the option of developing a modern data center facility.
The deal was based on the disposal of a commercial building by a global 500 company, the building incorporated a corporate data center with the complication that an existing occupier of the data centre was required to continue to deliver services after the building was sold.
In order to act quickly DIAL established a JV business to support the deal and to negotiate with the real estate broker, whilst investigating and evaluating the options for the site.
An international team was assembled to evaluate the site options and provide valuations of the building based on the development options.
Our Objectives
The primary objective was to establish the suitability of redeveloping the existing building as a modern data center and creating an additional facility on the adjacent land.
The technical team engaged with the local planning authorities and power providers to establish the parameters for the development and established a new site master plan based on modern data center requirements and the local market opportunity.
Creative thinking
The resulting evaluation identified a number of challenges and limitations with the initial data center development ambitions so alternative development options were also evaluated.
The DIAL team reworked the financial model based on a sale and partial leaseback model working with the incoming investors to take a medium term view on returns based on a scaled back data center development and re-purposing the building for commercial office use as the base case. If needed the DIAL team would take operational responsibility of the data center for the duration of the ICT providers contract to minimise risk of the lease back element of the proposed transaction.