Publicly traded data center owner CyrusOne plans to outsource all U.S.-based data center operations to JLL.
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In a letter to customers, CyrusOne announced that JLL would take over facility management and operations at all of its 30 U.S. data centers by Jan. 1, 2022. The announcement comes ahead of the colocation provider’s Q3 earnings report and amid rumors of a potential sale.
"The transition of our Facility Management Operations to JLL is centered around our similar cultures fostering collaboration, flexibility, technology. and operational excellence," read CyrusOne’s message to customers, Data Center Dynamics reports.
"We expect the transition to be seamless for our customers. Furthermore, we recognize and understand the value of maintaining the working relationships between our Facility Management teams and our customer base, and this will continue to be a critical marker of CyrusOne's operational success."
The decision to farm out its operations may mark the beginning of a period of transition for Dallas-based CyrusOne, which owns around 50 data centers around the globe and has a market capitalization close to $9B.
The company was “exploring strategic alternatives," including a possible sale, in the wake of a tumultuous two years marked by CEO resignations and stock performance lagging behind other REITs in the data center space, Reuters reported last month.
In July, CEO Bruce Duncan stepped down after just one year on the job, replaced on an interim basis by company co-founder David Ferdman, who remains at the helm. This was just the most recent turnover at the top for CyrusOne, which has seen four different people in the CEO’s office since the start of 2020.
Amid this instability, CyrusOne has struggled to match the investor performance of other data center REITs. The company’s average shareholder return of 26.22% over the past three years falls well short of competitors and the market at large, according to Reuters. By comparison, Reuters reports that QTS Realty Trust brought investors a 98% total return on investment over that same period prior to being acquired and taken private over the summer.
Under pressure from investors, CyrusOne has begun working with Morgan Stanley to help chart a new strategic direction, Reuters reports. Morgan Stanley advised QTS ahead of the $10B deal that saw the REIT taken private by private equity firm Blackstone, leading to speculation that the decision to outsource facilities operation won’t be the only big change in CyrusOne’s near-term future.
Shares of CyrusOne dropped sharply following Wednesday's announcement, ending the day down more than a half-point.
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