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Lincoln Rackhouse Doubles Down on U.S. Data Center Holdings

Centerpiece of 3-State, 900,000-SF Deal Includes Hot Dallas Data Center Market
September 5, 2018
Lincoln Rackhouse has acquired a data center at 1000 Coit Rd. in Plano, Texas, as part of a portfolio purchase spanning three states.

Lincoln Rackhouse, the data center division of Lincoln Property Co., nearly doubled its U.S. data center holdings with a purchase of properties that gives it more access to the Dallas-Fort Worth area that's emerging as a national data processing stronghold.

The 904,593-square-foot portfolio includes a data center in Plano, Texas, that sold for $81.35 million, according to CoStar data. Lincoln Rackhouse's partner in the purchase is Principal Real Estate Investors, a unit of Principal Financial Group.

The purchase comes as big data center players Digital Realty and RagingWire have plans to add billion-dollar data halls in nearby Garland. Meanwhile, CyrusOne plans to build a massive campus in Allen, and mega-users Facebook and Google are expanding in the region.

The portfolio acquisition gives Lincoln Rackhouse the ability to immediately lease up data center space in key markets, said Martin Peck, a senior managing director in Lincoln Rackhouse's Dallas office.

"We have space ready to go right now," said Peck. "Dallas is so hot right now. While the big providers have some space, they don't have a lot of space, which is why all the big boys are building new facilities or putting them on the drawing boards in North Dallas, north Fort Worth and Garland.

"We like the fact that this puts us in the queue for data center space in the market," Peck added.

The three-property portfolio, which includes facilities in greater Phoenix and Kansas City, Missouri, recently underwent $200 million in upgrades by the previous owner, Charlotte, North Carolina-based Bank of America.

The 191,061-square-foot data center at 2500 W. Fry Rd. in Chandler, Arizona, includes an on-site substation on a 24.4-acre tract and sold for $39.7 million, according to CoStar data. Terms of the 259,111-square-foot Kansas City facility at 11155 NW Airworld Dr. weren't immediately known. The two-story Plano data center at 1000 Coit Rd. has 454,421 square feet of space.

Lincoln Rackhouse has hired a CBRE team to manage the data center facilities.

The addition of the data center portfolio doubles Lincoln Rackhouse's data center holdings in the United States to almost 2 million square feet. Peck said he expects that portfolio to grow as deals in the works begin to close.

In all, the new portfolio gives Lincoln Rackhouse immediate availability in Plano and Kansas City. The Phoenix data center is completely leased to INAP, formerly Internap, for the entire 10 megawatts of power capacity and substation.

Ryan Crabtree, Lincoln Rackhouse's vice president of asset management and property operations who joined the team this summer, said the company plans to install a new client in the Plano data center next week.

Lincoln Rackhouse has 8 megawatts immediately available for lease in North Texas, which is expandable by 16 megawatts. In Kansas City, the company has 10 megawatts of power capacity and 100,000 square feet of raised-floor space ready to occupy.

Peck said Lincoln Rackhouse plans keep adding to its portfolio by buying high-quality, well-maintained second-generation facilities with existing cash flows, fueling further expansion of the company's footprint.

For more information on the transaction, please see CoStar Comp #4470058.

Candace Carlisle, Dallas-Fort Worth Reporter  CoStar Group   
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