Netrality Properties continues to build its national network of carrier hotels, acquiring two Internet gateway properties in St. Louis from Digital Realty. Netrality is buying 400,000 square foot 210 N. Tucker building, along with 900 Walnut. Netrality has also acquired a colocation facility located within 210 N. Tucker from 365 Data Centers.
The two buildings, often referred to as the Bandwidth Exchange buildings, are the leading network interconnection sites in St. Louis, serving as a gateway to long haul fiber in the region. 210 N. Tucker and 900 Walnut each offer customers access to more than 40 network operators, and provide hdata center operations with robust power and HVAC infrastructure. Each facility offers carrier-neutral, building-owned and managed meet-me rooms (MMRs).
Netrality plans to integrate the operations of the two buildings, along with the 365 Data Centers facility under common management. The colocation site at 210 N. Tucker features 8,663 square feet of colo space, according to seller 365 Data Centers.
The Netrality deal with Digital Realty included a total of four properties – the two St. Louis buildings as well as two fully-leased sites in northern Virginia, at 1807 Michael Faraday Court in Reston and 251 Exchange Place in Herndon. Digital Realty has been seeking to sell the properties as portfolio as part of an ongoing effort to divest non-core holdings. Netrality indicated it will seek to sell the northern Virginia properties, which don’t fit its strategic focus on carrier hotels in major cities.
A Growing Portfolio of Carrier Hotels
The acquisition of the St. Louis properties highlights the renewed interest in carrier hotels, multi-tenant connectivity hubs in the central business districts of large cities.
“The acquisition of this portfolio enhances Netrality’s growing national footprint,” said Gerald M. Marshall, Netrality’s President and Chief Executive Officer. “St. Louis is a key interconnection point for carriers, service providers and enterprise customers in the region. It was a pleasure working with Mike Darragh and the entire Digital Realty team on this transaction, and we look forward to building on their tremendous legacy in St. Louis.”
Netrality is building a chain of carrier hotels and upgrading their interconnection infrastructure to boost the flow of data between carriers, network operators and content specialists. Netrality, a joint venture between Amerimar and industry veteran Hunter Newby, has acquired buildings in New York, Philadelphia, Chicago, Houston and Kansas City. The company, named for its focus of networks and neutrality, is creating advanced meet-me rooms in each property. Meet-me rooms are common areas where providers can make connections between their networks. These interconnection facilities can be operated by building owners, non-profits or commercial service providers.
The St. Louis buildings’ history tracks the boom and bust of the data center industry. The Bandwidth Exchange properties featured in an unusual series of transactions during the dot-com boom. The buildings were redeveloped for telecom by a team led by Bob Guller, which then sold the properties to wireless network operator Pinnacle, which paid $56 million for them in August 2000. Pinnacle’s expansion into the colocation market was short-lived, and it soon put the buildings on the market. In November 2001 Guller and his partners bought the buildings back for $22 million, $34 million less than they had sold them for barely a year earlier.
Digital Realty acquired the two St. Louis properties from Guller for $53 million in 2007, and has invested in upgrades to the buildings, including a $30 million power upgrade in 2012 that added 16 megawatts of power capacity at 210 N Tucker.
Digital sold its four-building portfolio to Netrality for $114 million, according to media reports, but has not yet broken out the sale valuation of the two St. Louis buildings.
“We appreciate the opportunity we have had to work with Netrality on their strategic acquisition of these St. Louis data centers,” said Scott Peterson, Digital Realty’s Chief Investment Officer. “We also thank our operations team in St. Louis as well as the acquisitions team, who worked seamlessly with Netrality to facilitate the transaction and deliver on our capital recycling commitments.”