One of the industry’s established brands is beginning a new phase, as T5 Data Centers today unveiled plans to build or buy up to $2.5 billion in data center real estate. The expansion is backed by an investment by QuadReal Property Group, a global real estate company.
The QuadReal investment in T5 is the latest example of a platform strategy in the data center industry, with an experienced executive team backed by a new investor with serious financial resources. It also provides new direction for T5, expanding the scope of its operations. The company has been pursuing new capital partners amid an active investment environment for data center operators.
QuadReal and T5 say they will launch a fully-integrated platform to develop, acquire and operate data centers. T5 has a long history building data centers for leading technology firms, and also has a growing facilities management business. The company will continue using the T5 Data Centers brand, and aims to provide “holistic” solutions for enterprise and hyperscale users.
“Our alliance with QuadReal is a game-changer for current and future customers in the enterprise and hyperscale markets, allowing us to build the world’s most advanced and customized data center facilities faster and at scale in strategic markets in North America and beyond,” said Pete Marin, CEO of T5 Data Centers. “This is the first step in our next decade of strategic growth, market leadership, and best-in-class customer service.”
An Experienced Team in Development, Operations
T5 Data Centers is a 10-year-old company, and was an early player in the market for build-to-suit wholesale data centers. initially focusing on single-tenant facilities for marquee tenants. T5 helped establish western North Carolina as a key data center destination, and soon expanded to Atlanta, Los Angeles, Portland, Colorado Springs, suburban New York, Chicago and Ireland. In 2014 the company launched its T5FM facilities management arm, which gained strong traction, adding 11 new facilities as clients in 2018.
T5’s early backers included Iron Point Partners, and the company later added Silicon Valley investment management firm Iconiq Partners as an equity investor in several of its properties. In 2016 Iron Point and Iconiq formed IPI Data Center Partners, and then acquired wholesale assets that were previously part of Infomart Data Centers. IPI acquired several assets from the T5 portfolio, and combined them with the Infomart properties to create STACK Infrastructure, a new platform play targeting hyperscale opportunities.
The T5 management team retained a group of core properties and began seeking new capital partners. Enter QuadReal, a diversified player with holdings in office, industrial, retail and residential real estate. QuadReal was established to manage the real estate program of British Columbia Investment Management Corporation (BCI), one of Canada’s largest asset managers. QuadReal’s $27.4 billion portfolio spans 23 cities across 17 countries.
The companies’ announcement didn’t provide details on the deal structure or amount of the strategic investment, but said the T5 platform will be capitalized to support the development and acquisition of more than $2.5 billion in data centers.
“The data center market continues to experience very strong growth, driven by the accelerating digitalization of information,” said Jameson Weber, Head of Special Situations for QuadReal. “This strategic investment puts us in a very unique position to participate in this growing market alongside a trusted company with a proven track record in data center development, construction, and management. T5 Data Centers is the logical partner to help us build a long-term business in tech-related real estate while ensuring our users receive the highest levels of service and security for their mission-critical data.”
An Era of New Investment, New Platforms
The new T5 Data Centers will compete in an active and increasingly sophisticated market for data center investment and growth. As hyperscale computing transforms the world of Internet infrastructure, new investors and new data center platforms are emerging to focus on the needs of hyperscale players.
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QuadReal is the latest in a series of large investment companies seeking to build integrated platforms to develop and operate data centers. This new class of data center investors includes infrastructure funds and sovereign wealth funds with deep pockets and the ability to quickly bring together experienced executives, data center assets, and development opportunities.
In T5 Data Centers, QuadReal was able to invest in an existing player with key pieces of the equation, including its own construction design team and facilities management subsidiary, as well as five existing data center properties. T5 has properties in Los Angeles, Charlotte (Kings Mountain), Colorado Springs, the New York suburbs and Cork, Ireland.
T5 Data Centers has served leading companies in IT, finance, insurance, health care, and telecommunications. The company has built a strong reputation for data center reliability, having been a serial recipient of the Uptime Institute’s Continuous Uptime Award for uninterrupted service. T5’s motto is “Forever On.”
What’s next for the new T5? Much of QuadReal’s investment has been in its home market of Canada, but it has outlined a strategy of investing in “Global Cities,” which it identifies as “the world’s most economically powerful centers.” That includes cities like New York, London, Paris, San Francisco and Hong Kong.
It’s worth noting that T5 has experience in major U.S. markets, having developed and then divested data centers in Dallas, Atlanta and Chicago. It currently has no facilities in those markets, which are all the focus of active data center development. The T5 footprint provides capacity in New York, Ireland and Los Angeles.