Acquisitions and Dispositions of Properties

12 Months Ended

Dec. 31, 2022

Acquisitions and Dispositions of Properties

Acquisitions and Dispositions of Properties

7. Acquisitions and Dispositions of Properties

Acquisitions of Properties

For the years ended December 31, 2022, 2021 and 2020, acquisitions of properties that did not qualify as business combinations were immaterial to our financial statements – both individually and in the aggregate.

Disposition of Properties to Digital Core REIT

On December 6, 2021, we completed the listing of Digital Core REIT as a standalone real estate investment trust publicly traded on the Singapore Exchange (“SGX”) under the ticker symbol: DCRU. Hereafter, Digital Core REIT and its associated subsidiaries are collectively referred to as the Singapore REIT (“SREIT”). In connection with the listing, the Company contributed a portfolio of 10 operating data center properties to the SREIT. The fair value of these properties was determined to be approximately $1.4 billion based on two separate third party appraisal reports. In exchange for the contribution of these properties, the Company received: 1). $919 million cash and 2). a 39.4% equity interest in the publicly-traded Digital Core REIT entity, while retaining a 10% direct interest in the operating properties that were contributed by the Company to the SREIT. In addition, the Company received approximately $13 million of acquisition fees paid to the Company by Digital Core REIT in the form of additional units in Digital Core REIT.

The Company determined the fair market value of its 10% retained investment in the properties contributed to the SREIT based on its retained ownership percentage applied to the appraised value of the properties. This approach was deemed appropriate because the Company determined that a discount for lack of marketability and/or lack of control associated with its 10% direct interest in the properties was not warranted.

As a result of this transaction, the Company recognized a gain on sale of assets of approximately $1.0 billion – which is summarized below (in millions).

Cash received	$	919.1
Fair market value of retained investment in SREIT		521.4
Acquisition fees paid in Digital Core REIT units		13.0
Tax on acquisition fees		(3.0)
Net book value of assets contributed		(439.3)
Gain on disposition of properties	$	1,011.2

The Company provides property management and other services to the SREIT in exchange for contractual fees that are payable to the Company in cash or in additional units of the SREIT. The Company’s retained investment in the SREIT is accounted for as an equity method investment, based on the conclusion that the Company has significant influence over (but does not control) the SREIT.

On December 13, 2022, we completed the sale of a 25% interest in a data center facility in Frankfurt, Germany to the SREIT for total consideration of approximately $146 million. Because the Company still controls this asset, no gain or loss was recorded on this 25% interest. In connection with this transaction, the SREIT loaned the consolidated subsidiary that owns the data center $79.8 million.

The assets and liabilities sold to the SREIT were not representative of a significant component of our portfolio, nor did the sale represent a significant shift in our strategy.

Disposition of Other Properties

The Company sold the following other real estate properties during the years ended December 31, 2022, 2021 and 2020:

			Gross Proceeds / Fair Value		Gain on Sale / contribution
Location / Portfolio	Metro Area	Date Sold	(in millions)		(in millions)
Non-core building	Dallas	Aug 8, 2022	$	203.0	$	174.0
Other	Various	2022		2.8		2.8
European Portfolio	Various	Mar 16, 2021		680.0		332.0
Other	Various	2021		109.6		37.7
Naritaweg 52	Amsterdam	Dec 30, 2020		6.1		—
Liverpoolweg 10	Amsterdam	Jul 17, 2020		21.5		10.4
Mapletree portfolio	Various	Jan 14, 2020		557.0		306.5

Non-core Building - On August 8, 2022, we sold a non-core building in Dallas for net proceeds of approximately $203 million resulting in a net gain on sale of approximately $174 million. The assets and liabilities sold were not representative of a significant component of our portfolio nor did the sale represent a significant shift in our strategy.

European Portfolio - On March 16, 2021, we sold a portfolio of 11 data centers in Europe (four in the United Kingdom, three in the Netherlands, three in France and one in Switzerland) to Ascendas Reit, a CapitaLand sponsored REIT, for total consideration of approximately $680.0 million (subject to customary final adjustments for working capital and other items). The total gain recorded during the three months ended March 31, 2021 as a result of this sale was approximately $332.0 million. The assets and liabilities sold were not representative of a significant component of our portfolio, nor did the sale represent a significant shift in our strategy.

Mapletree Portfolio - In January 2020, we closed on the sale of 10 Powered Base Building® properties, which comprise 12 data centers, in North America to Mapletree Investments Pte Ltd (“Mapletree Investments”) and Mapletree Industrial Trust (“MIT” and together with Mapletree Investments, “Mapletree”), at a purchase consideration of approximately $557.0 million, which resulted in a gain of approximately $306.5 million. The 12 data centers were not representative of a significant component of our portfolio, nor did the sale represent a significant shift in our strategy. We provided transitional property management services for one year from the closing date at a customary market rate. Prior to sale of the 10 Powered Base Building properties in January 2020, we contributed three data centers to the joint venture with Mapletree in November 2019 – total gain on contribution of these assets was $266.0 million.