Data Centers Attracting Private Equity and Public Institutional Investors in 2017

April 11, 2017

Data Centers Attracting Private Equity and Public Institutional Investors in 2017

April 3, 2017 | by  | National Real Estate Investor

When data center properties change hands the transactions do not always make a big splash in the news. If present conditions continue, however, 2017 has the potential to become one of the industry’s most storied periods yet. It is all due to the perpetual expansion of the information superhighway, and novel methods of fulfilling investment mandates.

In the first quarter of 2017 data center REITs posted a gain of 10.41 percent on the FTSE NAREIT All Equity REITs Index, easily surpassing the total index gain of 1.98 percent, according to the National Association of Real Estate Investment Trusts (NAREIT). That performance followed up an equally strong 2016, when data center REITs posted a gain of 26.41 percent, the second largest gain of all equity REITs. The sector comprises slightly less than 6.0 percent of the total REIT market cap, representing $58 billion in market value.

Data centers properties are also gaining attention outside the REIT sector. TIAA Investments, an affiliate of Nuveen, partnered with the Public Sector Pension Investment Board and Digital Bridge Holdings to acquire Vantage Data Centers recently, according to several news reports. Although the financial details of that transaction were not disclosed, Digital Bridge Holdings was formed in 2013 with more than $6 billion in equity and debt capital to invest in data centers, according to the Sovereign Wealth Fund Institute (SWFI), which provides research and consulting services to sovereign and public investment funds.

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John E. Moriarty, ChFC
December 2015
February 3, 2016

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