These agreements were finalised in line with Brookfield's announcement to acquire Cyxtera, subject to its Plan of Reorganization under its Chapter 11 proceedings and subject to bankruptcy court and regulatory approval.
"We are pleased to have worked with Digital Core REIT and Brookfield to successfully resolve our relationship with Cyxtera. This agreement mitigates the financial impact related to their bankruptcy, while also enhancing our financial position, and demonstrating our commitment to and sponsorship of Digital Core REIT," said Greg Wright, chief investment officer at Digital Realty
"Digital Realty will benefit from an improved overall customer credit profile, additional capital to fund new investment, and be better positioned to deliver sustainable value to all of our stakeholders."
Under the terms of these agreements, Brookfield is to acquire Digital Realty's interest in four data centres for approximately USD$275 million.
Secondly, Digital Realty will spend $55 million to buy out Cyxtera's leases in three colocation data centres in Singapore and Frankfurt. Before using a further $220 million of remaining net proceeds to repay debt and fund development.
Next, Brookfield will take over the leases on three facilities previously leased to Cyxtera and amend the leases on three additional data centres in New Jersey and Los Angeles, extending the expiration date to September 2024.
Lastly, Brookfield has given Digital Realty a purchase option to acquire a colocation data centre in the Slough Trading Estate.
"By partnering with our sponsor, Digital Core REIT realised a comprehensive resolution to our relationship with our second-largest customer," said John Stewart, CEO of Digital Core REIT.
"In the process, we were able to remain insulated against a broader financial impact, while improving our customer credit quality with approximately 85% of our annualised rent coming from investment grade customers and positioning our balance sheet to execute on our strategy, through $160 million of asset sales at attractive valuations."
