Colony Capital Leads $1.2B Investment in Vantage Data Centers

Valued at $3.5 billion, the new strategic partnership will both boost Vantage’s ability to expand its portfolio and help accelerate Colony’s reorientation toward digital infrastructure.

Vantage data center in Santa Clara, Calif. Image courtesy of Vantage Data Centers

As part of a new $3.5 billion strategic partnership, an investor group led by Colony Capital Inc. will invest $1.2 billion in Vantage Data Centers’ portfolio, which includes 12 stabilized North American data centers. Citi served as financial advisor to Vantage.

READ ALSO: Coronavirus Brings Challenges, Opportunities to Data Centers

The definitive agreement to form the strategic partnership is expected to close in late July. The partnership aims at two goals, according to the parties. One is to provide capital that can accelerate the expansion of Vantage’s hyperscale, wholesale data centers throughout North America and Europe. The other mission is to boost Colony’s ongoing digital transformation. In fact, $200 million of the investment is coming from Colony’s balance sheet.

Mark Ganzi, CEO, Colony Capital. Image courtesy of Colony Capital

Vantage’s 12 North American data centers total more than 1.4 million gross square feet and 150 MW of capacity in Santa Clara, Calif.; Quincy, Wash.; and Montreal and Quebec City, Canada. The Vantage management team, led by President/CEO Sureel Choksi, will continue to manage and operate these assets, while also developing additional data centers throughout North America and Europe.

Big moves, big money

Earlier this year, Vantage agreed to acquire Next Generation Data, Europe’s largest data center, in Wales, for an undisclosed amount. The deal capped a series of European acquisitions that included Luxembourg-based data center developer Etix Everywhere and, in separate deals, sites on which to develop hyperscale data center campuses in Berlin, Milan, Warsaw and Zurich. The whole package of acquisitions was valued around $2 billion.

In a prepared statement, Colony Capital CEO Marc Ganzi noted that the company is continuing to build momentum in its strategic transformation to focus on digital infrastructure. That pivot took a major stride last summer, when Colony bought Digital Bridge Holdings for $325 million.

The two companies were already connected, having two months prior jointly formed Digital Colony Partners, a $4 billion fund intended to pursue opportunities in digital infrastructure. As part of all this, Ganzi was to succeed Colony’s Thomas Barrack as CEO, while Barrack would retain his position as executive chairman.

Before COVID-19, the data center sector in Europe was thriving, especially in the largest markets, with very substantial absorption and preleasing, according to a May report from CBRE. And now the pandemic is highlighting how crucial data centers are to businesses and individuals.

CBRE predicted that for the most part, leasing negotiations already under way will go to completion, and although new construction could become problematic, development pipelines will generally move forward.

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