Colony Capital is leading a group that will invest $1.2 billion in Vantage Data Centers’ data centers, providing Vantage with capital to build more data centers.
The deal represents a new phase in the relationship between the two companies, charting an aggressive growth trajectory for Vantage, the wholesale data center component of Colony Capital’s digital infrastructure portfolio. The 12 data center assets being contributed to the partnership are valued at $3.5 billion.
It also demonstrates that Marc Ganzi will continue to champion the Vantage platform as he begins his new job as CEO of Colony Capital. Ganzi was previously the founder and CEO of Digital Bridge Holdings, which led the acquisition of Vantage in 2017. Digital Bridge was subsequently acquired by Colony Capital, with Ganzi agreeing to succeed investor Thomas Barrack as CEO of Colony.
That CEO transition happened last week, and Ganzi moved quickly to define the path forward for Vantage, which follows a similar (albeit smaller) financial commitment to DataBank, the retail colocation unit in the Colony portfolio.
A group of investors led by Colony will invest $1.2 billion in Vantage’s portfolio of 12 stabilized North American data centers, with Colony investing $200 million from its own balance sheet and outside investors providing $1 billion. Colony did not identify the other investors.
“This innovative transaction establishes the most valuable portfolio of hyperscale data center assets in North America, backed and managed by the best-in-class management team at Vantage,” said Marc Ganzi, CEO of Colony Capital. “As Colony continues to build momentum around our strategic transformation to digital infrastructure, this investment demonstrates our commitment to acquire high-quality digital assets on our balance sheet. We expect this will benefit our shareholders by providing consistent, predictable earnings from long-term leases with the highest-caliber, investment-grade customers.”
Joint Ventures Build Opportunity for Investors, Providers
These types of joint ventures are becoming an important tool for data center companies to fund growth, and provide a vehicle for investors to gain a foothold in the data center industry as it emerges as an important new asset class.
The Vantage assets being contributed to the partnership span more than 1.4 million gross square feet and 150 megawatts of IT capacity, including Vantage’s U.S. facilities in Santa Clara and Quincy, Washington, as well as Canadian data centers in Montreal and Quebec City. The Vantage campus in Ashburn, Virginia is not included, as it is in early development, with one data center open and four more planned for the property. Real estate joint ventures typically focus on “stabilized” assets that are leased and generating rental income.
The Vantage management team, led by president and CEO Sureel Choksi, will continue to manage and operate the 12 data centers, and the capital provided by the transaction will support Vantage’s expansion strategy.
“This strategic partnership with the Colony Capital-led investor group provides Vantage with a partner that deeply understands digital infrastructure,” said Choksi. “Vantage and its investor group are now even more well positioned to capitalize on a number of attractive market opportunities and deploy the necessary capital to drive innovation, deliver state-of-the-art facilities for our customers, and accelerate our expansion plans in existing and new markets globally.”
Earlier this year Vantage announced a $2 billion push into Europe, acquiring service provider Etix Everywhere along with land parcels in five markets. It also has acquired Next Generation Data (NGD), a data center campus in Wales.