By: Paul Dionne | Vizzda
Friday saw the sale of two major data center assets in the Phoenix
market, as IO—a modular data and co-location center manufacturer—unloaded IO
Phoenix and IO Scottsdale in a sale-leaseback valuing the properties at $125m.
Vizzda had previously reported on IO’s acquisition of IO Phoenix—then a vacant bottling
facility for the defunct beverage maker Le-Nature—for $73m in April of last
year. IO Phoenix was sold for $95m or nearly $180 per square foot, while the
smaller IO Scottsdale facility sold for $30m or more than $300 per square foot.
Both properties were leased back to IO under terms discussed below and IO
monetized its new leasehold interest in the properties under a $250m line of
credit with Wells Fargo. Validus Mission Critical REIT is a Kansas City,
Missouri based real estate investment trust focused on purpose-built facilities
in the tech and healthcare sectors of the economy.
IO Phoenix is a 530,856 ft2 data and co-location
center located at the southeast corner of SR-143 and Loop 202. It is a 2-story
building built in 2005 on 30.4 acres, zoned CP/GCP. There are twenty-two dock
doors and four grade doors with a dedicated, on-site utility sub-station. DirectTV
is a sub-lessee at the Phoenix location, though lease terms were not disclosed.
IO Scottsdale is a 96,300 ft2 data center in the Perimeter Center
west of the Loop 101 and Pima Road. It too is a two-story building comprised of
23,930 ft2 of office space, 28,740 ft2 of warehouse and
21,500 ft2 each for a clean room and mechanical use. The building
was completed in 2000 on a 4.5 acre site, zoned I-1. Scottrade Inc. sub-leases
space at the Scottsdale location through February 2019. Both facilities were
leased back to IO following the sale for fifteen years with four five-year
options to extend and a right of first refusal.
IO previously acquired the Scottsdale facility in 2006 for
$13.5m or $140 per square foot. The property was subsequently encumbered under
a $24.605m note with Merrill Lynch which was released more than a year prior to
maturity. The property was refinanced through Mutual of Omaha to the tune of
$25m in 2009, increased to $30m in 2010 and taken out by a $130m line of credit
with Bank of America, subsequently increased to $260m. IO Phoenix was developed
built-to-suit for Le-Nature by First Industrial Realty Trust and sold to CBRE
in 2006 for $88.5m. CBRE sold it’s interest to 36 investors who, following the
failure of Le-Nature—sold their interest back to CBRE for a total of $20m and
assumption of the outstanding debt. IO had previously leased the space from
CBRE with a purchase option through September 1st, 2014. IO
exercised that option on April 30th, 2013 with the $72m purchase of
the facility.
To Contact the Author:
Paul Dionne – pdionne@vizzda.com
