Real estate investment firm Stonepeak is adding $570M to its already sizable investment in data center provider CoreSite.
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The alternative asset investor now has $3B tied up in CoreSite, accounting for a 36% equity stake in the company, the companies announced Friday. Stonepeak initially invested $2.5B in CoreSite over the summer, shortly after the provider’s acquisition by Boston-based cell tower REIT American Tower. The firm said in a statement the investment is being made “on behalf of certain affiliated investment vehicles.”
CoreSite, which provides colocation data center space along with cloud and IT network services, operates a portfolio of 28 data centers across 10 U.S. markets. The company was structured as a publicly traded REIT prior to its acquisition by American Tower in a $10.1B deal last year — one of the largest M&A transactions in the history of the sector and part of a wave of large data center acquisitions in 2021.
CoreSite’s business model differs slightly from many of its competitors. While most colocation data center operators rely on leasing as much server space as possible to tech giants and Fortune 500 companies, CoreSite’s revenue is tied to its ability to provide connectivity — access to fiber networks connecting different markets and facilities. As the advent of 5G and the wireless edge increasingly decentralizes digital infrastructure, this focus on connectivity is big part of why CoreSite was of such interest to American Tower, one of the world’s largest owners of the cell towers where much of this computing will be located.
With $51.7B in assets under management, New York-based Stonepeak is a major player in alternative real estate assets and digital infrastructure, and it already has a significant foothold in the data center sector beyond its investment in CoreSite. The firm owns data center provider Cologix, which it acquired in 2017, and launched a billion-dollar Asia-Pacific data center portfolio called Digital Edge in 2020.
With rising interest rates making capital more expensive and access to debt markets tightening, data center providers are increasingly turning to equity investors like Stonepeak to finance growth. That capital is urgently needed in a sector with little available inventory and where new supply is trailing record demand growth that few see slowing any time soon.
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