DataBank Buying 4 Houston Data Centers From CyrusOne for $670 Million

Colocation provider DataBank has agreed to purchase four data centers in Houston from CyrusOne for $670 million, the company said today. The divestiture of assets comes as CyrusOne prepares for its planned $15 billion acquisition by KKR and Global Infrastructure Partners.

The deal enables DataBank to expand its footprint to Houston, where it did not previously operate any data centers. It builds upon the company’s strong Texas presence, which includes seven data centers in the Dallas/Fort Worth market as well as facilities in Austin and Waco.

“We are excited to add the Houston market to the DataBank portfolio,” said Raul Martynek, the CEO of DataBank. “With our deep roots in Texas, it was a logical metro for us to expand into and allows us to bring our digital infrastructure and interconnection solutions to the 4th largest metro in the U.S. With the addition of Houston, DataBank now covers 27 metro markets, a larger geographic footprint in the U.S. than any other data center operator.”

DataBank Footprint Now Spans 2 Million SF

Houston becomes the 27th U.S. market for DataBank, which has been in accelerated growth mode as it seeks to build out a national network of regional data centers to support the growth of edge computing. The four Houston facilities add more than 300,000 square feet of raised-floor data center capacity, and 42.5 MW of critical IT load, as well as a roster of blue-chip customers from the area’s fast-growing healthcare, financial, energy, media, and software sectors.

The DataBank portfolio now spans 65 facilities and 2 million square feet of raised-floor data center capacity. DataBank is owned by DigitalBridge, a real estate firm with a vision for converged digital infrastructure, bringing together hyperscale, colocation, modular data centers, small cell networks and fiber to create a converged digital infrastructure.

CyrusOne was founded in Houston in 2000, and quickly built a niche specializing in high-density colocation services for energy companies in Houston and Dallas. It has since grown into a huge global player in data center services, being acquired by Abry Partners and then Cincinnati Bell before going public through an IPO. The company now operates more than 40 data centers and 4 million square feet of data center space.

The Houston facilities include the data center located 4201 Southwest Freeway, currently known as the CyrusOne Galleria data center, as well as three others known as West I, West II, and West III, which are all located on the Westway Park Blvd Campus 20 minutes west of Downtown Houston.

CyrusOne will lease back from DataBank the Houston West III shell to support a lease signed with a hyperscale customer in the fourth quarter of 2021. The company said the sale of the Houston portfolio will provide capital to fund future development projects. The transaction is expected to close in late Q1 2022.

“We are excited to execute on our capital recycling initiative to fund our continued growth,” said David Ferdman, Interim President & Chief Executive Officer of CyrusOne. “This divestiture further optimizes our portfolio as we redeploy capital into accretive developments across core markets with diverse hyperscale and enterprise demand in the U.S. and Europe. We are pleased to partner with the DataBank team on this important transaction for our respective companies.”

The sale of the Houston assets is a clear opportunity for DataBank, which specializes in colocation, in which providers sell capacity in cabinets and cages. Much of the Houston data center are space is dedicated to colocation, and thus fits with DataBank’s focus.

The deal raises some interesting questions about CyrusOne’s future strategy as it is acquired by KKR and GIS, and whether it will “optimize its portfolio” any further and divest additional assets. CyrusOne offers colocation services in many facilities, but much of its growth has been driven by its wholesale data center business, which leases larger increments of space in suites, data halls and even entire buildings.

The sale of CyrusOne is scheduled to close in the second quarter of 2022.