Digital Realty Trust paid $156 million in a series of transactions for land in Atlanta and in Charlotte, North Carolina, for data center developments as the company’s chief executive doesn’t expect a significant impact from tariffs on its current development projects.
The Texas-based real estate investment trust announced the acquisitions on Thursday as part of its first-quarter earnings release. Digital Realty said funds from operations, REITs' preferred financial metric, rose 4.8% to $570.7 million compared to the previous quarter on “robust demand across our key product segments,” CEO Andy Power said in a news release.
Data center developers continue to pursue new projects through land acquisitions, but President Donald Trump’s tariffs on steel and aluminum threaten to increase costs for the developments, according to industry analysts. However, Digital Realty’s supply chain is heavily focused on the U.S. and Power said during the conference call the REIT doesn’t expect to see its costs rise as much as rival data center developers.
In terms of the impact of tariffs on Digital Realty’s projects, Power said, “I don't think you'd see this really unfold and probably until call it several quarters when it comes to actual development cycles, given what you have today in … actual contractual orders for equipment.”
“And I do think it's going to be pretty modest, assuming there isn't a dramatic change of events to what our current understanding of the tariff implications,” Power said.
In the largest of its recent transactions, Digital Realty this month acquired a 97-acre site on Metcalf Road in the Atlanta suburb of Forest Park for $120 million from TPA Group, according to CoStar data. The real estate investment trust expects to build a data center on the site with 200 megawatts of capacity.
Digital Realty currently operates three data centers in the Atlanta market, two in downtown Atlanta and one in suburban Douglas County.
In North Carolina, Digital Realty paid $20 million in February for a 4-acre site at 13101 Moores Chapel Road, near Charlotte/Douglas International Airport. The seller was Childress Klein. Digital Realty will combine the parcel with an adjacent 156-site at 12901 Moores Chapel Road that it acquired in November for $160 million. Digital Realty plans to develop a data center on the combined acreage for a data center with 400 megawatts of capacity.
Also in Charlotte, Digital Realty paid $16.1 million for two parcels adjacent to its existing data center facility on North Myers Street. The newly acquired properties are at 725 E. Trade St. and 712 E. 5th St. The seller was Shamrock Management.
Separately, Digital Realty announced Thursday that it formed a new investment fund to own data centers and development sites. The REIT has thus far raised $1.7 billion toward a projected $10 billion for its U.S. Hyperscale Data Center Fund. The fund will include its operating hyperscale data centers and development sites in Northern Virginia, Dallas, Atlanta, Charlotte, New York and Silicon Valley.