US data center investment firm Cloud Capital and Bahrain asset manager Arcapita have acquired a data center in Minneapolis, Minnesota.

The companies this week announced the formation of a joint venture partnership to acquire a 21MW facility in Minneapolis, with plans to expand its capacity to 31MW.

Details on the location of the data center and terms of the deal were not shared. Cloud Capital made the deal through Fund III, its newly launched closed-end fund focused on value-add acquisition and development opportunities.

However, an image on the Arcapita website shows 1001 3rd Ave S, a data center in Minneapolis, previously owned by Legacy Investing. Legacy has since confirmed the sale of 1001 3rd to BizJournal.

The acquired data center is reportedly primarily leased on a long-term basis to a “leading provider of sovereign AI and cloud inferencing solutions.”

Martin Tan, chief investment officer at Arcapita, said: “Artificial intelligence and digital infrastructure are forming an increasingly important part of Arcapita’s long-term strategy, aligned with our focus on resilient, income-generating assets. Our partnership with Cloud Capital, a specialized data center investment management firm with top-tier tenant relationships, represents a key milestone for Arcapita in this segment and provides us with a strong foundation to scale across key markets.”

Established in 2020 as the investment management affiliate of data center operator CloudHQ, Cloud Capital describes itself as a specialized investment management firm focused on acquiring, managing, and operating high-quality data centers.

This latest announcement states that it has more than $5.5bn worth of data center assets under management, with 26 assets owned and more than 330MW in contracted IT load across more than 4.2 million sq ft. These investments are concentrated in the US.

Founded in 1997, Arcapita is a global alternative investments firm focused on private equity and real estate, with a total transaction value of more than $32 billion. The firm aims to offer Shari’ah-compliant investments to investors across the Gulf and Asia. Its investments include industrial and logistics real estate, senior living residences, legal services, and payment solutions providers.

Arcapita added that this data center acquisition is expected to be the “first of multiple investments in this segment” by the company over the near to medium term.

Shariar Mohajer, president and chief investment officer at Cloud Capital, added: “Our investment in this Minneapolis data center reflects our commitment to identifying strategic assets that offer both immediate income and significant upside. With 21MW of stabilized capacity and an additional 10MW of expansion potential, we are delivering a highly attractive investment that provides a downside-protected return profile. Further, we are thrilled to partner with Arcapita and broaden our universe of strategic relationships.”

Built in 1988 and renovated in 2004, 1001 3rd was originally built for IDS as a mainframe and print operations facility. Later known as the Ameriprise Operations Center, it served as a recovery data center site for American Express in the late 1990s. It was sold in 2004 to Western Retail Real Estate Trust, with American Express spin-off Ameriprise Financial remaining a tenant. It was on sale again around 2014, with American Express and Ameriprise exiting.

Legacy Investing acquired the site in 2019, and in 2021, Cogent signed on to be a tenant at the T5@Minneapolis data center in the building.

Last year, however, Legacy said it had secured new financing for 1001 3rd Avenue, which would accommodate a “leading AI cloud provider’s accelerated build-out.”

At the time, Legacy's managing partner, Daniel English, said: "This was a strategic move that showcases our team's ability to reposition existing assets to become modern AI-ready facilities for the world’s leading hyperscalers."

Last month, CLAR Minneapolis MN LLC filed for permission to allow the mixed-use office site to be entirely dedicated to data center use.