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CBRE Caledon buys into $1.6B Vantage data centre investment

CBRE Caledon Capital Management Inc. has acquired a significant minority stake in a new platform...

IMAGE: CBRE Caledon partner and chief investment officer of private infrastructure strategies Stephen Dowd. (Courtesy CBRE Caledon)

CBRE Caledon partner and chief investment officer of private infrastructure strategies Stephen Dowd. (Courtesy CBRE Caledon)

CBRE Caledon Capital Management Inc. has acquired a significant minority stake in a new platform with 12 Vantage Data Centers operating assets.

CBRE Caledon completed its investment, alongside an investor group led by Colony Capital Inc., on behalf of a fund sponsored by CBRE Caledon and its separately managed accounts. Several institutional co-investors, including Hana Financial Investment and a fund sponsored by Rasmala, are also participating in the partnership.

“When we look at the digital infrastructure sector, what we see is revenue that’s based on data growth,” CBRE Caledon partner and chief investment officer of private infrastructure strategies Stephen Dowd told RENX. “Data growth is uncorrelated with economic cycles, which has been an especially strong point this year.

“At the same time, we’re getting those infrastructure characteristics of predictability and resilience that we look for across all of our investments.”

Growth of Vantage Data Centers

The overall value of the strategic partnership is $4.7 billion Cdn and will accelerate the expansion of Vantage’s data centres throughout North America and Europe.

Denver-headquartered Vantage acquired Luxembourg-based Etix Everywhere, and entered data centre markets in Frankfurt, Berlin, Milan, Warsaw and Zurich in February.

Vantage, which was formed in 2010, then closed on the purchase of Next Generation Data and its data centre in Newport, Wales on July 27. The Welsh data centre campus is Europe’s largest, with an existing 72-megawatt facility and 108 megawatts of expansion capacity.

Vantage also plans to build new data centres in Ashburn, Va. and Phoenix.

CBRE Caledon and data centres

CBRE Caledon first became involved with data centres in October 2016 with an investment in an American provider with six centres in three regions. The company made its first investment in Vantage in March 2017.

Dowd said CBRE Caledon has between 20 and 30 infrastructure investors. The company declined to disclose the value of its investment in this new partnership, or in data centres overall.

The investor group that includes CBRE Caledon will invest $1.6 billion in Vantage’s 12 stabilized North American data centres.

The facilities span more than 1.4 million square feet and more than 150 megawatts of information technology capacity in Santa Clara, Calif., Quincy, Wash., Montreal and Quebec City.

IMAGE: CBRE Caledon partner Jeff DeBlock. (Courtesy CBRE Caledon)

CBRE Caledon partner Jeff DeBlock. (Courtesy CBRE Caledon)

“We’ve known the company and have been involved with the company,” CBRE Caledon partner Jeff DeBlock told RENX. “We know the team and know the assets and know the markets they’re in.

“This is an opportunity for us to put even more capital to work compared to what we had before. By just focusing on the operating assets, which this is, this is something that matches up very well with our investors’ objectives for a return profile.”

CBRE Caledon also appreciates Vantage’s commitment to reducing emissions and improving energy efficiency, as its Washington and Quebec data centres draw power from renewably sourced electricity.

CBRE Caledon’s other investments

While DeBlock said the firm sees data centres as an “exciting growth platform,” Dowd emphasized the company isn’t putting all of its eggs in one basket.

“We’re certainly looking to emphasize the sector, but we’re trying to build balance and diversification across our investors’ holdings and within our funds. So, we’re not going to significantly overweight in any particular sector.”

CBRE Caledon’s private infrastructure platform includes pooled vehicle solutions and customized separately managed accounts consisting of investments in energy, transportation, digital infrastructure, social infrastructure, telecommunications and utilities.

On the private equity front, CBRE Caledon builds diversified global portfolios comprised of mid-market funds and co-investments that leverage multiple strategies, including buyout, growth and distressed.

CBRE Caledon’s history and growth

Caledon Capital was launched in Toronto in 2006 by David Rogers – who was previously head of private equity for the OMERS pension plan – to develop and manage private equity and infrastructure investment programs.

It entered a definitive agreement with CBRE Global Investors to become a separate internal business unit called CBRE Caledon in 2017.

CBRE Global Investors is a real assets investment management firm that had $144.4 billion in global assets under management as of March 31.

It’s an independently operated affiliate of CBRE Group, Inc., the world’s largest commercial real estate services and investment firm, which has more than 100,000 employees and more than 530 offices worldwide.

Toronto-headquartered CBRE Caledon opened a London office in August 2018 led by Andreas Köttering, the former co-head of infrastructure at GIC.

CBRE Caledon has 50 employees and its investment professionals have invested more than $24 billion globally in infrastructure assets for several large institutional investors, including Borealis Infrastructure (now known as OMERS Infrastructure), Ontario Teachers’ Pension Plan, Canada Pension Plan Investments and Abu Dhabi Investment Authority.

It exceeded $10 billion in capital for infrastructure and private equity investments last year.

“We have grown quite considerably over time, but we continue to bring that same sort of long-term, value-oriented direct investment expertise to our clients, whether through fund products or whether through separate managed accounts, which is how we operate across our client base,” said Dowd.

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