Investment firm Stonepeak is to acquire a large stake in American Tower’s CoreSite data center business.

The two companies announced this week that Stonepeak, on behalf of certain affiliated investment vehicles, will acquire an ownership interest of approximately 29 percent in American Tower’s US data center business for $2.5 billion.

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– CoreSite

The partnership will be realized through an investment in common equity and mandatorily convertible preferred equity in a deal that implies an enterprise value of approximately $10.5 billion for the business, which comprises 27 facilities in 10 US markets.

American Tower first announced the equity sale in an SEC filing in early June but didn’t reveal the name of the company making the investment. The US Real Estate Investment Trust (REIT) will retain managerial and operational control, as well as day-to-day oversight of the business, with Stonepeak obtaining certain governance rights. The transaction is expected to close in the third quarter of 2022, subject to customary closing conditions.

“The transaction will position American Tower and Stonepeak to mutually benefit from the demand for low-latency, hybrid IT solutions, and agile interconnection across the platform’s data center campuses, which are strategically located in key US metro areas,” the companies said in an announcement.

American Tower, a company traditionally focused on owning cell towers, acquired CoreSite for $10.1 billion in November 2021. The company added three previously-acquired data centers in Georgia and Florida into CoreSite’s portfolio in June.

Tom Bartlett, American Tower’s President and CEO said: “We are pleased to partner with Stonepeak in our US data center business, where we expect to create value through growth in our highly interconnected, cloud on-ramp rich portfolio of data center assets. In Stonepeak, we’ve found a like-minded partner, with deep communications infrastructure experience and a long-term investment philosophy that aligns with the principles of American Tower and our longer-term strategy in the data centers segment. While this transaction supports the equity financing component for our previously completed CoreSite acquisition, it also creates a platform through which growth opportunities can be strategically evaluated and financed, with American Tower and Stonepeak committed to executing on opportunities as the 5G ecosystem continues to develop.”

Stonepeak already owns Cologix in the US and Digital Edge in Asia. The investment firm acquired a majority stake in Cologix in March 2017 and founded Digital Edge in August 2020.

Andrew Thomas, Managing Director and Co-Head of Communications at Stonepeak, added: “American Tower has established one of the premier network-dense, interconnection-focused data center platforms in the US through CoreSite and previous acquisitions, which we view as a great fit for our core infrastructure strategy.”

J.P. Morgan is serving as lead financial advisor to American Tower, along with CDX Advisors. Cleary Gottlieb Steen & Hamilton LLP is serving as principal legal advisor to American Tower, along with Sullivan & Worcester LLP with respect to certain REIT and tax matters.

MUFG Bank, Ltd. is serving as sole financial advisor to Stonepeak with Sidley Austin LLP serving as principal legal advisor to Stonepeak.

Prior to acquiring CoreSite, American Tower entered the data center colocation business in 2019 after acquiring Colo Atl and renaming its presence at the 55 Marietta Street carrier hotel in downtown Atlanta, Georgia, to Metro Data Center. It then expanded at 55 Marietta and acquired Cyber Wurx, taking its space in the facility in May 2021.

Last year the company also acquired colo provider DataSite, taking over another two data centers in Atlanta and Orlando, Florida, totaling more than 200,000 sq ft (18,580 sqm).

The company also operates a number of small Edge colocation sites in Pittsburgh, Pennsylvania; Jacksonville, Florida; Atlanta, Georgia; Austin, Texas; and Denver and Boulder, Colorado.

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