US investment firm I Squared Capital has acquired a portfolio of data centers from fiber provider Cogent Communications.

The companies this week announced they had entered into a purchase and sale agreement for I Squared to acquire a portfolio of ten data center facilities from Cogent for $225 million in cash. The deal is expected to close in Q3 2026.

The portfolio comprises approximately 53MW of installed power capacity and approximately 259,000 sq ft (24,060 sqm) of available colocation space across nine US markets: Chicago, Atlanta, Phoenix, Los Angeles, Kansas City, Baltimore, Houston, Nashville, and Stockton.

The facilities will be used to seed a new US data center operating platform focused on colocation, high-density deployments, and AI inference infrastructure. I Squared said it has committed up to $1 billion to build the platform through targeted capital investment, customer-led expansion, and additional acquisitions.

All ten facilities are purpose-built data centers owned fee simple and have room for expansion. I Squared said the facilities are capable of supporting higher-density deployments, including liquid-cooling-enabled configurations.

Gautam Bhandari, co-founder, managing partner, and global chief investment officer, I Squared Capital, said: “Location, power, and connectivity are the three variables that determine a data center’s long-term value, and these facilities have all three in markets where new supply is severely constrained. As AI moves from the training phase — where models are built — to the inference phase, where they are used by people and businesses every day, demand for high-density, low-latency facilities like these will only grow.”

Bhandari continued: “This transaction is consistent with I Squared’s disciplined approach to building infrastructure platforms from the ground up by acquiring strategically located assets and investing the capital and operational expertise needed to unlock their full potential.”

Founded in 2012, US-based I Squared Capital has assets worth $60 billion under management, and is an investor in other digital infrastructure companies, including European data center firm nLighten and APAC data center operator BDx, fiber firms Exa and Lightstorm, and thousands of cell tower sites. In 2021, I Squared acquired Mexican data center firm, Kio. It acquired Brazilian operator Elea earlier this year.

TVG Consulting Group LLC served as commercial and market advisor. Kirkland & Ellis LLP served as legal counsel. FTI Consulting served as carve-out and stand-up advisor.

Cogent sells legacy Sprint sites

The deal marks a major milestone in Cogent’s journey to repurpose and monetize dozens of former Sprint fiber switching sites for modern data center use.

T-Mobile sold its wireline business to Cogent for just $1 in September 2022. Much of what was sold was Sprint‘s legacy US long-haul fiber network, which T-Mobile had acquired as part of its $26 billion merger with Sprint in 2020.

Cogent’s acquisition included hundreds of technical buildings and switch sites previously used for Sprint’s wireline business, with the firm set to convert more than 100 into colocation sites. That conversion project was completed earlier this year.

Originally set to offer colocation, the company later pivoted and planned to sell or lease the largest 24 facilities on a wholesale basis – keeping back a small portion of each facility for its own network needs.

As of its most recent earnings results, Cogent had 185 Cogent data centers and Edge data centers totaling 2.1+ million sq ft (195,096 sqm), 40,954 racks, and 211MW. The portfolio includes 99 data centers and 86 Edge facilities.

During the company’s earnings call earlier this month, Cogent CEO Dave Schaeffer said his firm had entered into a non-binding letter of intent to sell ten of the converted Sprint sites, noting that the deal was expected to close in early summer. He added that the LOI did not include the company’s largest or smallest facilities that it is looking to sell.

“We continue to have multiple parties interested in other former Sprint data centers,” he added, saying a number of other parties are conducting due diligence on multiple other data centers – some are looking to buy one facility, others several.

In October, Cogent announced it had signed a letter of intent to sell two data centers it acquired and repurposed in connection with its Sprint acquisition for $144 million in cash. By February, however, the deal had fallen through due to financing issues, according to the fiber firm.

I Squared’s new venture will likely need to conduct a sizable amount of upgrade work to make the acquired sites suitable for inferencing.

DCD understands that at least two US-based colocation companies and one US-based real estate firm were previously interested in acquiring some of these facilities, with at least two of those firms previously backing out.

According to an engineering report seen by DCD, some of the facilities would likely need major refurbishment and upgrades, as well as removal of obsolete equipment, especially if the facilities were set to host high-density equipment.

Remediation work would likely require removing distribution equipment, PDUs, busways, and legacy cooling equipment. Additional power and cooling infrastructure would likely have to be placed in parking lots.

DCD also understands that the amount of previously unutilized utility power available at some sites may not be as high as previously assumed, limiting expansion potential at some locations.

DCD has previously spoken with Cogent CEO Dave Schaeffer to discuss the company’s repurposing of legacy Sprint switch sites. Read it here.