Investments In Real Estate

12 Months Ended

Dec. 31, 2011

Investments In Real Estate [Abstract]

Investment In Real Estate

3. Investments in Real Estate

A summary of our investments in properties as of December 31, 2011 and 2010 is as follows:

	As of December 31, 2011
	(in thousands)
Property Type	Land		Ground Lease		Building and Improvements(1)		Tenant Improvements		Accumulated Depreciation and Amortization			Net Investment in Properties
Internet Gateway Datacenters	$	83,992	$	—	$	1,107,581	$	84,870	$	(318,874	)	$	957,569
Corporate Datacenters		438,323		4,892		3,996,266		211,235		(553,445	)		4,097,271
Technology Manufacturing		20,602		1,322		65,450		5,938		(20,290	)		73,022
Technology Office		10,031		—		31,670		1,459		(5,248	)		37,912
Other		2,165		—		52,787		—		(2,187	)		52,765
	$	555,113	$	6,214	$	5,253,754	$	303,502	$	(900,044	)	$	5,218,539

	As of December 31, 2010
	(in thousands)
Property Type	Land		Ground Lease		Building and Improvements(1)		Tenant Improvements		Accumulated Depreciation and Amortization			Net Investment in Properties
Internet Gateway Datacenters	$	84,381	$	—	$	1,062,148	$	83,976	$	(251,609	)	$	978,896
Corporate Datacenters		361,450		5,052		3,269,020		192,119		(386,624	)		3,441,017
Technology Manufacturing		20,602		1,322		65,373		5,938		(18,240	)		74,995
Technology Office		10,031		—		33,705		1,459		(3,018	)		42,177
Other		2,165		—		28,801		—		(1,209	)		29,757
	$	478,629	$	6,374	$	4,459,047	$	283,492	$	(660,700	)	$	4,566,842

Net investments in properties outside the United States was $963.3 million and $760.5 million as of December 31, 2011 and 2010, respectively.

(1) Balances related to construction in progress, without the proportionate acquisition cost of land and property, the construction cost amounted to $148.4 million, or $251.8 million including construction accruals and other capitalized costs, and $90.4 million, or $163.2 million including construction accruals and other capitalized costs, as of December 31, 2011 and 2010, respectively. Including the proportionate acquisition cost of land and property, the amounts were $345.0 million, or $448.4 million including construction accruals and other capitalized costs, and $205.9 million, or $278.8 million including construction accruals and other capitalized costs, as of December 31, 2011 and 2010, respectively. These amounts, without the proportionate acquisition cost of land and property, included within building and improvements, are primarily related to construction of datacenters.

We acquired the following real estate properties and made the following investments during the years ended December 31, 2011 and 2010:

Acquisitions

Location	Metropolitan Area	Date Acquired	Amount (in millions)
Loudoun Parkway North(1)	Northern Virginia	April 15, 2011	$	17.3
Erskine Park(1)	Sydney, Australia	July 21, 2011		10.9
Fountain Court, Chessington	London, England	July 26, 2011		21.1
72/98 Radnor Drive(1)	Melbourne, Australia	August 19, 2011		4.3
3825 NW Aloclek(1)	Portland, Oregon	August 26, 2011		1.6
11085 Sun Center Drive	Sacramento, California	September 23, 2011		30.0
Profile Park(1)	Dublin, Ireland	October 21, 2011		6.3
760 Doug Davis Drive	Atlanta, Georgia	December 15, 2011		63.0
1506 Moran Road	Northern Virginia	December 22, 2011		2.8
360 Spear Street(2)	San Francisco, California	December 28, 2011		85.0
Total Acquisitions—Year Ended December 31, 2011			$	242.3

Location	Metropolitan Area	Date Acquired	Amount (in millions)
New England Portfolio(3)	Various(3)	January 22, 2010	$	375.0
1725 Comstock Street(4)	Silicon Valley	April 30, 2010		14.1
3105/3115 Alfred Street	Silicon Valley	May 24, 2010		10.0
Cateringweg 5(5)	Amsterdam	June 17, 2010		6.4
365 Main Portfolio(6)	Various(6)	July 13, 2010		725.0
800 Central Expressway(7)	Silicon Valley	August 5, 2010		27.1
2950 Zanker Road / 900 Dorothy Drive	Silicon Valley / Dallas	August 19, 2010		50.3
29A International Business Park(8)	Singapore	November 23, 2010		132.7
Total Acquisitions—Year Ended December 31, 2010			$	1,340.6

Investments

Year Ended December 31, 2011

Location	Metropolitan Area		Date of Investment		Amount (in millions)
2020 Fifth Avenue(9)		Seattle, Washington		October 13, 2011	$	4.1

Year Ended December 31, 2010

Location	Metropolitan Area		Date of Investment		Amount (in millions)
700 / 750 Central Expressway(10)		Silicon Valley		August 5, 2010	$	10.3

(1) Represents vacant land which is not included in our operating property count.

(2) Includes the assumption of a $47.6 million mortgage loan.

(3) The New England Portfolio consists of 55 Middlesex Turnpike, Bedford, Massachusetts and a 100% condominium interest that represents 87.5% of the square footage of 128 First Avenue, Needham, Massachusetts, both located in the Boston metropolitan area, as well as 60-80 Merritt Boulevard, Trumbull, Connecticut, located in the New York Metro area. The New England Portfolio is considered three properties for our property count.

(4) As part of the acquisition, we have agreed with the seller to remit an earnout payment based on leasing activities in the building. The purchase price includes an accrual of $4.3 million, which is the estimated fair value of the contingent purchase price per the agreement. As of June 30, 2010, the entire building was leased. The final payment to the seller of approximately $4.3 million was made in July 2010 to fully settle the contingent purchase price amount.

(5) A land parcel subject to a ground lease along with a vacant shell building.

(6) The 365 Main Portfolio consists of 365 Main Street, San Francisco, California and 720 2^nd Street, Oakland, California, both located in the San Francisco metropolitan area; 2260 East El Segundo Boulevard, El Segundo, California, located in the Los Angeles metropolitan area; 2121 South Price Road, Chandler, Arizona, located in the Phoenix metropolitan area; and 4030-4050 Lafayette Center Drive, Chantilly, Virginia, located in the Northern Virginia metropolitan area. The 365 Main Portfolio is considered five properties for our property count.

(7) In August 2010, we acquired a 50% controlling interest in a joint venture formed to own and redevelop 800 Central Expressway. The other noncontrolling 50% member contributed land and a vacant building with a fair market value of approximately $27.1 million, lender required impound accounts of approximately $2.1 million, a mortgage loan of $13.4 million and a mezzanine loan of approximately $10.5 million. At close, the joint venture refinanced the assumed debt which included a principal paydown of approximately $3.4 million. Since we have a controlling interest in the joint venture, we have consolidated the joint venture and presented the member interest not owned by us of approximately $2.6 million as noncontrolling interest in consolidated joint venture.

(8) This acquisition lacked key inputs to qualify as a business combination under purchase accounting guidance, and has therefore been accounted for as an asset acquisition, not a business combination. As part of the asset acquisition, the seller could earn additional consideration based on future net operating income growth in excess of certain performance targets, as defined. The maximum amount that could be earned by the seller is S$50.0 million (or approximately $38.6 million based on the exchange rate as of December 31, 2011). The earnout contingency expires in November 2020. See note 18(b) for further discussion of the earnout contingency.

(9) In October 2011, we made an initial cash contribution of approximately $4.1 million to acquire an effective 50% interest in a joint venture formed to own and develop a building located at 2020 Fifth Avenue. The other member contributed land and building at the date of investment. We have concluded that we do not have controlling financial interest in this entity and as such have accounted for our interest in the joint venture under the equity method of accounting and it is presented as an investment in unconsolidated joint venture in the accompanying consolidated balance sheet.

(10) In August 2010, we made an initial cash contribution of approximately $6.0 million to acquire a 50% common interest in a joint venture formed to own and operate two fully leased office buildings located at 700 and 750 Central Expressway. The other 50% common member contributed the fully leased properties, mortgage loan of approximately $24.1 million and a mezzanine loan of approximately $5.0 million. At close, the joint venture refinanced the assumed debt which included a principal paydown of approximately $4.1 million. The debt paydown was funded by our preferred equity contribution which is entitled to an 11% preferred return. Each member has guaranteed their proportionate share of the remaining debt balance of $25.0 million. Subject to certain conditions in the joint venture's operating agreement, we have the right to put our common interest in the joint venture to the other member at a price equal to our initial contribution amount of $6.0 million. We have concluded that the joint venture is a variable interest entity primarily due to the fact that we have participating voting rights through our common interest, but the common interest is not considered to be equity due to the fixed price put option. The other member explicitly and implicitly bears 100% of the common equity risk. In addition, the other member, as the manager of the joint venture has more power than the Operating Partnership to direct the activities that most significantly impact the joint venture's economic performance, and therefore was determined to be the primary beneficiary. Our maximum exposure to loss in the joint venture is our common and preferred investment totaling $10.3 million and our share of the joint venture's debt of $12.5 million. Upon our exercise of our put option, our exposure to loss will be limited to the remaining balance of our preferred interest in the joint venture. We have accounted for our variable interest in the joint venture under the equity method of accounting and it is presented as an investment in an unconsolidated joint venture in the accompanying consolidated balance sheet.