Data centers include locations in North Carolina and New Jersey, with CyrusOne noting focus on health care and financial verticals.
CyrusOne is set to purchase a pair of data centers from Sentinel Data Centers for $490 million in a move set to bolster CyrusOne’s footprint in the Northeast and provide a new foothold in the Southeast.
The deal includes facilities in Raleigh-Durham, North Carolina, and Somerset, New Jersey, accounting for 160,000 colocation square feet and a claimed 21 megawatts of power capacity. CyrusOne noted 85% of the power capacity is leased, with the facilities generating $50 million in combined revenues last year.
“We are very excited about this transaction, which establishes a presence for us in the Southeast, adds a high quality portfolio of large enterprise customers and features an attractive long-term lease profile,” said Gary Wojtaszek, president and CEO of CyrusOne, in a statement. “We respect the work of the Sentinel founders. Their focus on great facilities and personalized customer service matches ours. The transaction is expected to be immediately accretive and provides significant opportunities to grow the combined business and create value for our shareholders.”
CyrusOne said the deal would be financed with proceeds from a forward equity sale completed last August and a recently expanded credit facility. The deal is expected to close within the next 45 days.
Outside of the financial impact, CyrusOne claimed the deal provides for enhanced geographic diversification, including the new Southeast presence, which was a previously stated strategic goal for the company. The facilities are also set to boost CyrusOne’s penetration of the health care and financial services verticals, with more than 80% of the rent generated by both facilities coming from those two market segments.
Looking ahead, CyrusOne cited the locations’ approximately 34,000 colocation square feet and eight megawatts of power capacity either available for lease or that can be developed in the near term at a claimed cost of less than $15 million, with another 230,000 colocation square feet and 37 megawatts of power capacity available at costs inline with current pricing models.
Investors have been cool on the deal, with CyrusOne’s stock (CONE) losing about 1.5% of its value on Monday.
Verizon Communications late last year closed on the sale of 24 data center locations to Equinix for $3.6 billion. The deal, which is expected to close mid-2017, includes 29 data center buildings across 15 metro locations in the U.S. and Latin America. Equinix will assume 250 current Verizon employees as part of the deal.
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