Investments in Unconsolidated Entities

12 Months Ended

Dec. 31, 2024

Investments in Unconsolidated Entities.

Investments in Unconsolidated Entities

8. Investments in Unconsolidated Entities

A summary of the Company’s investments in unconsolidated entities accounted for under the equity method of accounting is shown below (in thousands):

	Balance as of		Balance as of
		December 31, 2024		December 31, 2023
Americas (1)(5)	$	1,311,950	$	1,363,226
APAC (2)		615,534		569,996
EMEA (3)		422,570		28,334
Global (4)		289,746		334,333
Total	$	2,639,800	$	2,295,889

Includes the following unconsolidated entities along with our ownership percentage:

(1) Ascenty (49%), Blackstone (20%), Clise (50%), GI Partners (20%), Mapletree (20%), Menlo (20%), Mitsubishi (35%), Realty Income (20%), TPG Real Estate (20%), and Walsh (86%).

(2) Digital Connexion (33%), Lumen (50%), and MC Digital Realty (50%).

(3) Blackstone (20%), Medallion (60%), and Mivne (50%).

(4) Digital Core REIT (38%) and Greenfield (35%).

(5) In May 2024, we liquidated our 17% interest in Colovore, generating gross proceeds of approximately $35 million. We realized a gain of approximately $27 million on our original investments, made in 2015 and 2017. The gain is included within Other income, net on our consolidated income statements.

Generally, we serve as the managing member responsible for operations in the ordinary course of business of the joint ventures. We perform the day-to-day accounting and property management functions for the joint ventures and, as such, will earn management fees. However, certain approval rights are granted through the terms of the joint venture agreements and require unanimous consent of both members with respect to any major decisions. Generally, major decisions are defined to include the annual plan which sets out joint venture and property level budgets, including lease revenues, operating expenses, and capital expenditures. As such, we concluded we do not own a controlling interest and accounted for our interest in the joint ventures under the equity method of accounting.

Blackstone Inc. Joint Venture – On January 11, 2024, we formed a joint venture with Blackstone Inc. to develop four hyperscale data center campuses across Frankfurt, Paris and Northern Virginia. The campuses are planned to support the construction of 10 data centers with approximately 500 megawatts of potential IT load capacity. The first phase of the joint venture closed on hyperscale data center campuses in Paris and Northern Virginia. We received approximately $231 million of net proceeds from the contribution of our data centers to the first phase of the joint venture and retained a 20% interest in the joint venture. As a result of transferring control, we derecognized the data centers and recognized a loss on disposition of approximately $0.3 million. In the fourth quarter, the second phase of the joint venture closed on hyperscale data center campuses in Frankfurt and Northern Virginia. We received approximately $385 million of net proceeds from the contribution of our data centers to the second phase of the joint venture and retained a 20% interest in the joint venture. As a result of transferring control, we derecognized the data centers and recognized a gain on disposition of approximately $44.5 million.

GI Partners Joint Venture – On July 13, 2023, we formed a joint venture with GI Partners, and GI Partners acquired a 65% interest in two stabilized hyperscale data center buildings in the Chicago metro area that we contributed. We retained a 35% interest in the joint venture. As a result of transferring control, we derecognized the data centers. In addition, GI Partners had a call option to increase their ownership interest in the joint venture from 65% to 80%. The call option top-up election notice was delivered to the Company on December 21, 2023. On January 12, 2024, GI Partners made an additional cash capital contribution, pursuant to the exercise of such call option, in the amount of $68 million, resulting in such additional 15% ownership in the joint venture. Currently, GI Partners has an 80% interest in the joint venture, and we have retained a 20% interest. We also granted GI Partners an option to purchase an interest in the third facility on the same hyperscale data center campus in Chicago. On April 16, 2024, we expanded our existing joint venture with GI Partners with the sale to GI Partners of a 75% interest in this third facility, see Note 7. “Acquisitions and Dispositions of Properties”.

As of the date of the joint venture formation, we used a discounted cash flow model to calculate the fair value of our retained equity interest. The fair value of the retained interest was $157 million and is classified as a Level 3 investment in the fair value hierarchy. The primary inputs to the valuation included volatility, hold period, and dividend yield.

TPG Real Estate Joint Venture – On July 25, 2023, we formed a joint venture with TPG Real Estate. We contributed three stabilized hyperscale data center buildings in Northern Virginia, at a purchase price of $1.5 billion, to the new joint venture. We received approximately $1.4 billion of gross proceeds from the contribution of our data centers to the joint venture and the associated financing and retained a 20% interest in the joint venture. TPG Real Estate contributed such cash to the joint venture in exchange for an 80% interest in the joint venture. We perform the day-to-day accounting and property management functions for the joint venture and, as such, will earn a management fee. We serve as the managing member responsible for operations in the ordinary course of business. However, certain approval rights are granted through the terms of the joint venture agreement and require unanimous consent of both members with respect to any major decisions. Major decisions are defined to include the annual plan which sets out joint venture and property level budgets, including lease revenues, operating expenses, and capital expenditures. As such, we concluded we do not own a controlling interest and accounted for our interest in the joint venture under the equity method of accounting.

As of the date of the joint venture formation, we used a discounted cash flow model to calculate the fair value of our retained equity interest. The fair value of the retained interest was $121 million and is classified as a Level 3 investment in the fair value hierarchy. The primary inputs to the valuation included volatility, hold period, and dividend yield.

Realty Income Joint Venture – On November 10, 2023, we formed a joint venture with Realty Income to support the development of two data centers in Northern Virginia. The facilities were 100% pre-leased prior to construction. We contributed the two data center buildings at a purchase price of $185 million, which represented costs spent through

November 10, 2023, to the new joint venture. We received approximately $148 million of gross proceeds from the contribution of our data centers to the joint venture and retained a 20% interest in the joint venture. Realty Income contributed such cash to the joint venture in exchange for an 80% interest in the joint venture. Each partner will fund its pro rata share of the remaining $150 million estimated development cost for the first phase of the project, which was completed in mid-2024. We perform the day-to-day accounting and property management functions for the joint venture and, as such, will earn a management fee. We serve as the managing member responsible for operations in the ordinary course of business. However, certain approval rights are granted through the terms of the joint venture agreement and require unanimous consent of both members with respect to any major decisions. Major decisions are defined to include the annual plan which sets out joint venture and property level budgets, including lease revenues, operating expenses, and capital expenditures. As such, we concluded we do not own a controlling interest and accounted for our interest in the joint venture under the equity method of accounting.

DCREIT – Digital Core REIT is a standalone real estate investment trust formed under Singapore law, which is publicly traded on the Singapore Exchange under the ticker symbol “DCRU”. DCREIT owns 12 operating data center properties. The Company has ownership interest in the units of DCREIT, as well as ownership interests in the operating properties of DCREIT.

As of December 31, 2024, the Company held 32% of the outstanding DCREIT units and separately owned a 10% direct retained interest in the underlying North American operating properties and a 35% direct retained interest in a Frankfurt asset.

The Company’s 32% interest in DCREIT consisted of 418 million units and 406 million units as of December 31, 2024 and 2023, respectively. Based on the closing price per unit of $0.58 and $0.65 as of December 31, 2024 and 2023, respectively, the fair value of the units the Company owned in DCREIT was approximately $242 million and $264 million as of December 31, 2024 and 2023, respectively.

Pursuant to contractual agreements with DCREIT and its operating properties, the Company will earn fees for asset and property management services as well as fees for aiding in future acquisition, disposition and development activities. Certain of these fees are payable to the Company in the form of additional units in DCREIT or in cash. During the years ended December 31, 2024 and 2023, the Company earned fees pursuant to these contractual agreements of approximately $9.1 million and $13.6 million, respectively, which is recorded as fee income and other on the consolidated income statement.

On April 19, 2024, we completed the sale of an additional 24.9% interest in a data center facility in Frankfurt, Germany to DCREIT for total consideration of approximately $126 million, and DCREIT then had a 49.9% interest in the Frankfurt data center. Because the Company still controlled this asset, no gain or loss was recorded on this 49.9% interest. In connection with this transaction, DCREIT loaned the consolidated subsidiary that owns the data center approximately $80 million. In addition, on December 5, 2024, we completed the sale of an additional 15.1% interest in the data center facility in Frankfurt for total consideration of approximately $77 million, and DCREIT now owns a 65.0% interest in the Frankfurt data center. As a result, the Company will account for its retained ownership interest in accordance with the equity method of accounting.

During the year ended December 31, 2023, we concluded that the decline in fair value of our equity investment in DCREIT was other than temporary due to the length of time and extent to which the fair value of our investment has been less than the carrying value. As a result, we recorded an impairment charge of $95 million for the three months ended September 30, 2023, which was recorded to provision for impairment in our consolidated income statements. The charge reflected the difference between the fair value of our equity investment in DCREIT using DCREIT's unit price as

of September 30, 2023 and the carrying value of our equity investment in DCREIT at September 30, 2023.

Ascenty – The Company’s ownership percentage in Ascenty includes an approximate 2% interest held by one of the Company’s non-controlling interest holders. This 2% interest had a carrying value of approximately $23 million and $18 million as of December 31, 2024 and 2023, respectively. Ascenty is a variable interest entity (“VIE”) and the Company’s maximum exposure to loss related to this VIE is limited to our equity investment in the entity.

Summarized Financial Information of Investments in Unconsolidated Entities

The subsequent tables provide summarized financial information for all of our investments in unconsolidated entities accounted for using the equity method. Amounts are shown in thousands.

									Net		Net
	Total		Total						Operating		Income
December 31, 2024	Assets		Liabilities		Equity		Revenues		Income		(Loss)
Unconsolidated entities
Americas	$	7,473,799	$	3,532,248	$	3,941,551	$	824,027	$	464,637	$	(336,627)
APAC		2,127,166		823,921		1,303,245		273,833		140,594		55,376
EMEA		1,009,055		740,433		268,622		11,976		5,108		(14,016)
Global		2,007,082		995,721		1,011,361		106,705		66,258		(17,785)
Total Unconsolidated entities	$	12,617,102	$	6,092,323	$	6,524,779	$	1,216,541	$	676,597	$	(313,052)
Our investment in and share of equity in earnings of unconsolidated entities					$	2,639,800					$	(120,138)

									Net		Net
	Total		Total						Operating		Income
December 31, 2023	Assets		Liabilities		Equity		Revenues		Income		(Loss)
Unconsolidated entities
Americas	$	6,627,520	$	3,105,127	$	3,522,393	$	590,264	$	326,042	$	(13,097)
APAC		2,097,115		880,972		1,216,143		257,905		121,053		42,244
EMEA		80,525		83,819		(3,294)		1,601		939		(8,225)
Global		1,542,331		591,470		950,861		112,931		73,390		(60,867)
Total Unconsolidated entities	$	10,347,491	$	4,661,388	$	5,686,103	$	962,701	$	521,424	$	(39,945)
Our investment in and share of equity in loss of unconsolidated entities					$	2,295,889					$	(29,791)

									Net		Net
	Total		Total						Operating		Income
December 31, 2022	Assets		Liabilities		Equity		Revenues				(Loss)
Unconsolidated entities
Americas	$	3,648,169	$	1,350,163	$	2,298,006	$	406,325	$	240,498	$	(38,874)
APAC		1,705,553		541,509		1,164,044		201,405		90,924		25,946
EMEA		121,950		68,223		53,727		1,632		851		(5,475)
Global		1,602,725		551,088		1,051,637		118,233		77,582		(19,455)
Total Unconsolidated entities	$	7,078,397	$	2,510,983	$	4,567,414	$	727,595	$	409,855	$	(37,858)
Our investment in and share of equity in earnings of unconsolidated entities					$	1,991,426					$	(13,497)

The amounts reflected in the previous tables on this topic are based on the historical financial information of the respective individual entities and have not been adjusted to show only the portion that is owned by the Company. The

debt of our unconsolidated entities generally is non-recourse to us, except for customary exceptions pertaining to such matters as intentional misuse of funds, environmental conditions, and material misrepresentations.