Allied Confirms Sale Plans for 151 Front Street Carrier Hotel

Jan. 20, 2023
Allied Properties REIT says it "optimal financially and operationally" to find a buyer for its urban data center portfolio in Downtown Toronto, which includes the city's leading carrier hotel at 151 Front Street.

Allied Properties Real Estate Investment Trust said this week that it is "optimal financially and operationally" to find a buyer for its urban data center portfolio in Downtown Toronto, which includes the city's leading carrier hotel at 151 Front Street. The company said it is working with Scotiabank and CBRE Limited on a sale process.

The decision to sell the three-building portfolio follows a two-month review of the assets and market interest. The Allied UDC assets include 151 Front Street and 905 King Street West and a leasehold interest in 250 Front Street West. The properties are connected through diverse fiber rings to support the connectivity needs of telecommunication, cloud and content networks.

As we recently noted carrier hotels have once again become the focus of investment, expanding interconnection ecosystems in urban centers. Since there are fewer carrier hotels than scale-out data centers, premier buildings don't come on the market often. 151 Front Street houses dozens of telecom networks and is home to data centers for Digital Realty, Equinix, Cologix and eStruxture, among others. 

The strong recent valuations for data center acquisitions suggest that Allied could fetch a strong return on its investment in the UDC portfolio, providing Allied with funds to reinvest in its core focus of urban workspaces. 

“Our UDC portfolio was connected to our mission from the beginning, but it is not core to our mission in the way urban workspace is,” said Michael Emory, President & CEO of Allied. “As a stabilized asset in a currently favored sector, the portfolio represents a promising and timely monetization opportunity, one that could enable Allied to grow its business going forward in the most flexible and prudent manner. 

“Our principal motivation here is two-fold,” Emory added. "“First, we want to reaffirm our mission and pursue it over the next few years with low-cost capital. Second, we want to supercharge our balance sheet and reduce our dependence on the capital markets going forward.”

Allied said it expects to use a significant portion of any sale proceeds to retire debt, and the balance to fund its current development activity.       

Carrier hotels were the early cornerstones of the Internet economy, and some of the most successful properties in the colocation industry. A key piece of the business model is the meet-me room, a common area where providers can make connections between their networks. Interconnection facilities can be operated by building owners, non-profits or commercial service providers.

About the Author

Rich Miller

I write about the places where the Internet lives, telling the story of data centers and the people who build them. I founded Data Center Knowledge, the data center industry's leading news site. Now I'm exploring the future of cloud computing at Data Center Frontier.

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