- Toronto high-Tech data center sold for $553.84 per square foot
- Allied Properties REIT pays $180 million for eight-story property
- Seller Northam Realty Advisors doubles its original purchase
- Deal is second-largest in Canada this year
- Construction cost of new data centers pegged at $1,300 per square foot
- Buyer uses about $96 million (Canadian) cash and $96 million loan for the acquisition
- Building is 92 percent lease at average rent of $56 per square foot
(TORONTO, CANADA) -- One of the oldest data center buildings in North America is under new ownership today.Toronto-based Allied Properties Real Estate Investment Trust paid $180 million (192 million Canadian) for 151 Front Street, a 55-year-old, eight-story, 325,000-square-foot international telecom hotel and data center.
Seller Northam Realty Advisors Ltd. more than doubled the $76.3 million (Canadian) it paid for the property in 2004. (The Canadian dollar Sunday, Nov. 1 was valued at $93.6 cents U.S.)
Northam increased the occupancy in five years to 92 percent from 42 percent at the time of its purchase.
The deal marked the second-largest commercial real estate transaction in Canada this year. The largest deal to date was the $297 million (Canadian) sale of Bentall V, a Vancouver, BC office building.
Michael Emory
He partially funded the purchase of the 92 percent-leased building by selling $125 million (Canadian) in company shares.
"...The equity capital markets came roaring back faster than we thought they wood," Emory told The Wall Street Journal. That movement marked "a big change in the Canadian (realty capital) enviropnment."
Allied outbid three other potential purchasers.
To acquire 151 Front Street, Allied is using about $96 million from its stock sale and a $96 million, 10-year mortgage loan from the British Columbia Investment Management Corp. The interest rate is 7.5 percent. The lender previously held a $40 million mortgage on the property.
Allied plans to lease out the remaining space in the building to high-tech tenants. The average rent is $56 per square foot, double the average downtown class A office rent of $27.10 (Canadian) per square foot.
According to the building's web site, 151 Front Street is home to more than 150 telecommunications companies and is one of North America's most connected buildings with 9 unique fiber-optic networks, 25 diverse entrances, and more than 7,000 strands of fiber.
Among the tenants are Telus Corp., AT&T Inc. and International Business Machines Corp.
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