Colony Capital Continues Digital Expansion with $1.2B Data Center Investment
This year, the L.A.-based group aims to establish itself as the only global REIT that owns and operates all components of the digital ecosystem
By Greg Cornfield July 7, 2020 6:20 pmreprints
Colony Capital is continuing to expand its digital footprint and announced a massive $3.5-billion partnership with Vantage Data Centers.
Colony will invest $1.2 billion in Vantage’s portfolio, which includes 12 data centers in the United States and Canada. The properties are located in Santa Clara, Calif. and Quincy, Wash., as well as Montreal and Quebec City in Canada.
The partnership is expected to be finalized later this month. Vantage will continue to manage the assets, and will use the capital to develop and operate additional data center campuses in North America and Europe. Citi served as financial advisor to Vantage.
The partnership marks another major milestone for Colony as it pivots sharply from industrial real estate to digital infrastructure around the world. Last year, the firm started moving towards tech-based real estate as more infrastructure is needed for the rollout of advancements like 5G.
“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,” said Marc Ganzi, CEO of Colony Capital, in a statement.
Sureel Choksi, president and CEO of Vantage Data Centers, said the firm is now better positioned to capitalize on 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.”
Los Angeles-based Colony Capital aims to establish itself this year as the only global REIT that owns, manages and operates all components of the digital ecosystem, including data centers, expansive fiber networks and cell tower sites. The firm has more than $20 billion in digital real estate investments through Digital Colony, its digital infrastructure platform.
In 2018, Colony Capital launched Digital Colony to focus on digital infrastructure investment. In May 2019, Digital Colony acquired Zayo Group Holdings, which managed a 130,000-mile network in North America and Europe, in a merger valued at $14.3 billion.
Last June, Digital Colony closed on $4.1 billion of commitments, which was the largest first-time fund for digital real estate in history, according to the firm. A year ago this month, the Colony Capital acquired Digital Bridge Holdings and its mobile and internet infrastructure for $325 million.
Then in September 2019, the firm sold its industrial operating platform to Blackstone for $5.7 billion, as it started shedding warehouse real estate. In 2019, Colony also unloaded nine-figure industrial portfolios to Nuveen Real Estate and Lincoln Property Company. The funds from those blockbuster sales helped bulk up Colony’s digital real estate portfolio.
Earlier this year, Colony also signed an $185-million agreement for a 20.4-percent stake in DataBank, a private owner and manager of edge data centers.
When the firm announced the Digital Bridge acquisition, it simultaneously announced that founder Thomas J. Barrack would eventually exit his role as president and CEO. Ganzi, Digital Bridge’s founder and CEO, replaced Barrack on July 1 this year. Barrack will remain as executive chairman, and said Ganzi will position the firm to be the “premier investment partner for companies enabling the next generation of mobile and internet connectivity.”
“Three years ago we embarked on a pivot to the digital frontier and its incredible potential of growth and opportunity,” Barrack said in a statement. “The final piece we needed to complete this critical transition is the exact right CEO to lead Colony in its transformation and build on Colony’s strong global legacy.”