Investment firm Novacap and H5 Data Centers have launched a new data center venture and acquired three carrier hotels in the US from 365.

The companies this week announced the formation of HyscaleIX Data Centers, a joint venture focused on “acquiring and operating mission-critical carrier hotels” throughout North America.

The JV will be anchored by four carrier hotel facilities, including three acquired from 365 Data Centers located in Buffalo, New York; Nashville, Tennessee; and Tampa, Florida. The JV will also acquire a fourth facility in the Midwestern US. Each of the assets hosts the local Internet exchange.

Terms of the deals were not shared.

Full details of the acquired facilities weren’t shared in the release, either, but the sites were likely 350 Main Street in Buffalo; 655 North Franklin Street in Tampa; and 147 Fourth Avenue N. in Nashville.

“The formation of HyscaleIX continues on our strategy of building a diversified portfolio of high-quality digital infrastructure assets,” said Ted Mocarski, senior partner and head of digital infrastructure at Novacap. “Carrier hotels are highly sought-after data centers that perform a critical role in core network ecosystems. Partnering with H5 allows us to combine experienced institutional capital with proven operating expertise as we execute on the platform’s growth strategy.”

On its website, H5 now lists Buffalo III, a 19,000 sq ft (1,765 sqm) facility located in the Main Place Tower at 350 Main Street. The 26-story tower was built in 1969 for the Erie County Savings Bank.

The 22-floor 655 North Franklin Street, also known as the Franklin Exchange Building, was the tallest building in Tampa when it was completed in 1966. The data center there totals 30,400 sq ft (2,824 sqm) and houses the TPA IX (Tampa Internet Exchange).

147 Fourth Avenue in Nashville spans 19,700 sq ft (1,830 sqm).

“This transaction reflects our continued focus on disciplined acquisitions and operational excellence,” said Josh Simms, CEO of H5 Data Centers. “This joint venture brings together institutional capital and deep operating expertise, and the anchor portfolio fits squarely within our focus on carrier density, connectivity, and facilities capable of supporting next-generation workloads.”

Founded in 1981, Novacap is a Canadian private equity firm with more than C$10 billion (US$7bn) in assets under management.

H5 operates more than 4 million sq ft (371,610 sqm) of data center space across 20 US markets.

HyscaleIX is the second joint venture between Novacap and H5 Data Centers, following the formation of Hyscale last year. That venture was focused on providing wholesale data center colocation across four facilities in North America.

“365 is proud to have developed each of these data centers into the leading regional network hub and pleased that HyscaleIX, under the stewardship of H5 Data Centers and Novacap, is a customer-focused, best-in-class operator,” said Derek Gillespie, CEO of 365 Data Centers. “The sales proceeds will further enable 365 to expand and deliver higher-density MW services at a number of our larger facilities.”

Founded in 2014 and initially comprising a group of data centers built by Switch and Data, today 365 operates more than 20 facilities across the US with around 53MW of capacity. The company is primarily focused on smaller markets outside the usual Tier 1 hubs. 365 was bought by Stonecourt Capital in 2020 from Chirisa Investments, Lumerity, and Longboart, who had acquired the company in 2017.

H5 previously listed another Nashville facility at 211 Commerce Street, but that site is no longer on the company's website.

Fasken Martineau Dumoulin LLP and Hogan Lovells LLP acted as legal advisors, and Willkie Farr & Gallagher LLP acted as financing counsel to Novacap and H5 Data Centers. TD Securities acted as financial advisor, and Shipman & Goodwin LLP served as legal advisor to 365 Data Centers.