Mitsubishi Corporation and Digital Realty have formed a new joint venture to finance the building of two pre-leased data centers in Dallas, Texas.

The Japanese conglomerate says the deal represents its first overseas investment in data centers. The development, which has been pre-leased to an an S&P 100 investment grade customer on a long-term basis, could eventually be worth up to $800 million.

The two companies already have a joint venture through which they develop data centers in the Japanese market.

digital osaka 2
One of Mitsubishi's Osaka data centers – Digital Core REIT

New JV between Mitsubishi Corp and Digital Realty

Mitsubishi holds a 65 percent equity interest in the new JV for an initial contribution of approximately $200 million, according to a statement from Digital Realty.

For its part, Digital Realty will retain a 35 percent stake and manage the development and day-to-day operations of the joint venture, for which it will receive customary fees.

The two data centers, located in the Dallas metro area, have been under construction since late 2022, with the first phase set to deliver 16MW of capacity when it comes online later this year.

The budget for the first phase of these yield-on-cost developments is approximately $400 million, but Digital Realty said the customer maintains the option to expand the projects up to 48MW of total IT load during the initial lease term, which could increase the combined budget to $800 million based on current estimates.

"We are delighted to expand our partnership with Mitsubishi," said Digital Realty's chief investment officer Greg Wright. "This development joint venture leverages the success of our established Japanese partnership into the United States, while supporting our customer's data center requirements with a like-minded, long-term investor. The transaction enhances Digital Realty's balance sheet, providing incremental capital to prudently support our stakeholders' longer term capacity requirements."

Dallas deal builds on Mitsubishi data center 'expertise'

Mitsubishi said in a statement that the decision to invest “was fueled by the expertise in the data center industry that Mitsubishi has built up in Japan, as well as its track record in US real estate and urban development projects.”

Mitsubishi Corporation has been active in Japan’s data center market since 2017, when it formed its first JV with Digital Realty known as MC Digital Realty (MCDR), a partnership worth an initial $1.8 billion. As part of the deal, Digital Realty’s existing data center in Saito, Osaka, and Mitsubishi’s Mitako facility in Tokyo were transferred to the JV, and it now operates nine data centers in Tokyo and Osaka.

MCDR opened the first data center in the Kansai region, the 8MW KIX10, also known as Digital Osaka 1, in Osaka in 2017, followed by the 25MW KIX11 facility in 2019. A third data center opened in 2021 alongside a new site in Tokyo.

Last year it opened KIX13, the fourth data center in its Osaka campus. The three-storey building has 21MW of IT capacity.

Mitubishi's plans for international data center expansion

The Mitsubishi statement added: “Mitsubishi Corporation is aiming to grow our data center business both domestically and internationally, focusing on peripheral advanced fields such as generative AI, semiconductors, and communication technologies, while taking into account their ripple effects.

“We shall continue exploring ways to leverage green energy and energy-conservation work to accelerate the supply of sustainable computing resources, thereby contributing to society's ongoing growth and development.”

The company added that it has a “strong business history” in Texas, having “engaged in real-estate projects there for more than three decades through our Dallas office.”

It added: “We look forward to leveraging that network and expertise to help strengthen and grow our data center business throughout the US.”

Mitsubishi claims it will "continue exploring ways to leverage green energy and energy-conservation work to accelerate the supply of sustainable computing resources".

In January the company announced it was working with Honda to test a small data center that runs on hydrogen from an industrial electrolysis plant run by Tokuyama Corporation.