Publishing Date: Feb 04, 2022

Datacentres for better security

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PRESS RELEASE: Electronic trading platform E*TRADE’s longstanding Alpharetta data centre has sold for $80 million to Datasphere, a newly-formed affiliate of Strategic Capital Fund Management.

Strategic Datasphere, the management fund’s data centre investment platform, bought the 165,000 square foot fully-leased building in a deal that closed on Jan. 21, according to Fulton County property records. The data centre is Datasphere’s first acquisition since forming in September 2021.

E*TRADE opened up its data centre in Alpharetta in 1999 with bond financing from the Development Authority of Fulton County. The company simultaneously opened another data centre in Rancho Cordova, California, that also served as a backup operational system in the event of a service interruption at either location, according to its Form 10-K from the prior fiscal year.

The Alpharetta location is currently the company’s largest real estate asset by square footage, though another tenant operates data storage equipment in the building. Datasphere would not disclose the second tenant or the amount of space it is leasing.

E*TRADE sold the property through a sale-leaseback transaction with Carter Validus Mission Critical REIT Inc., now Sila Realty Trust, for $56.7 million in 2014. Sila then turned the property over to Virginia’s Legacy Investing, LLC in 2018 for $64 million.

The big picture: Investor interest in data centres has boomed over the last half-decade, enabled by steady growth in both consumer and corporate demand for data computing, storage and networking capabilities, according to CBRE. The COVID-19 pandemic further accelerated this growth, with cloud service providers like Amazon Web Services and social media companies driving the herd.

The market specifics: Atlanta is one of seven primary markets for data centre real estate or facilities housing critical computing systems to store and process data, though it has the second lowest inventory, which is measured in power, not square footage. Despite this, Atlanta saw the third-highest data centre leasing activity in North America in the first half of 2021, according to research from real estate services firm CBRE. Several large-scale companies have invested in data centres outside of the urban core, including Microsoft, which is building three massive data centres in Douglas and Fulton Counties, and Facebook, which has invested $42 billion into data centres in Newton County.

The strategy: Datasphere did not specifically target Alpharetta as its first market to enter, said CEO Bryan Marsh. Rather, “it was just a matter of the right property coming along at the right time.” The building was fully leased, had a “decent cash flow” and had available vacant land to add future data centre development down the line, which made the property attractive, Marsh said.

The buyer: Datasphere spun off from Strategic Capital in Q3 of last year. The company aims to put together a portfolio of over $1.5 billion in data centre real estate assets across the United States and Europe, Marsh said.


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