The owners of Infomart Data Centers have sold three wholesale data center properties to investment firm IPI Data Center Partners. Financial terms of the deal were not disclosed. The divestment follows a deal last month in which Infomart sold its flagship Dallas Infomart carrier hotel to Equinix for $800 million.
The deal is the latest in a series of acquisitions in the data center industry, which saw more than $20 billion in investment last year, according to CBRE. The surge of M&A activity has helped fund the expansion of data center developers and new capacity for cloud computing providers.
IPI Data Center Partners has been one of the major new investors in the industry. The company is backed by Iron Point Partners and Iconiq Capital, a wealth manager to Silicon Valley clients. IPI was created in 2016, and has announced a series of investments in wholesale data center projects, working primarily with T5 Data Centers.
IPI Becomes a Larger Player
The acquisition of the Infomart properties raises the profile of IPI, which is becoming a large player in the wholesale real estate market. The announcement of the deal provides a clear path forward for the three properties, which are likely to see fresh investment under the new ownership.
The three data centers total 665,000 square feet of space, with 27.2 megawatts of total in-place capacity. Significantly, the properties also include enough land to support up to 29.7 megawatts of additional data center capacity, which represents potential upside for the new investors.
Infomart Data Centers was created in 2014 by ASB Real Estate, which owned both the Infomart and Fortune Data Centers, a wholesale data center specialist based in San Jose that also operated a property in Hillsboro, Oregon. ASB merged the companies under the banner of Infomart Data Centers, with Fortune CEO John Sheputis heading the combined company. To create a national data center footprint, Infomart Data Centers acquired an existing facility in Ashburn, Virginia.
IPI also acquired Infomart’s management company, suggesting the current Infomart team will remain in place. It may not remain “Infomart” for much longer, as that brand is closely associated with the Dallas property now operated by Equinix. It’s also not clear how the Infomart sites will relate to the T5 properties in which IPI has invested. T5 also has an experienced management team and a facilities management operation.
What’s clear is that IPI has a growing collection of data center assets and talent, and the capital to be a player in the wholesale sector.
Growth Potential for Infomart Portfolio
ICONIQ is an investment management firm whose clients reportedly include Facebook CEO Mark Zuckerberg, LinkedIn chairman Reid Hoffman and Napster co-founder Sean Parker. In 2016 the company recently registered a subsidiary (Iconiq DC Management) to invest in data center properties, with an initial capital pool of $242 million, according to SEC documents.
In 2016, the fund made equity investments in T5 data centers in Portland and Dallas. In 2017 it teamed with Iron Point Partners to become IPI (Iron Point Iconiq), and announced plans for T5@Alliance, a 400-megawatt project in Fort Worth, Texas The project will occupy at least 350 acres within the AllianceTexas business park operated by Hillwood and the Perot family.
The deal with Infomart makes IPI a leading player in the data center market in Portland, Oregon, where it now owns two data centers – a large campus built by Infomart (which houses a cutting-edge LinkedIn data center), and another operated by T5.
In San Jose and Portland, Infomart has worked with utilities to develop direct access programs that allow industrial customers to source electricity from a selection of energy suppliers. Infomart’s growth in Portland is driven by a major expansion by LinkedIn, which has created a data center combining high density with exceptional efficiency and sustainability.
Infomart also has a new data center in Northern Virginia, which is the hottest market on the planet right now. The Infomart Ashburn property which was built for AOL in 1998 as a sturdy and resilient Tier IV facility. Infomart has recently completed commissioning of the first phase, which offers 10,000 square feet of raised floor space. The 180,000 square foot building has 18 megawatts of power capacity, along with a new cooling and mechanical plant.