September 04, 2019
Macquarie Infrastructure Partners (MIP) has bought Netrality Data Centers, the companies confirmed today. The deal closed on August 30, with the management of Netrality partnering with Macquarie Infrastructure Fund IV to acquire the company from Abrams Capital Management. The announcement follows reports that the companies were in advanced talks.
Netrality operates carrier hotel buildings in Philadelphia, Chicago, Houston, Kansas City and St. Louis. Carrier hotels are multi-tenant data centers located in the central business districts of major cities, serving as critical connectivity hubs. The company, named for its focus on networks and neutrality, is creating advanced meet-me rooms in each property to enable customers to easily exchange network traffic.
“Netrality’s facilities represent a critical form of digital infrastructure,” said Karl Kuchel, CEO of MIP. “In addition to facilitating the operation of the public internet, the sites also allow companies to build direct private connections between networks, improving performance, reliability and security. We are very pleased to partner with Netrality’s experienced management team as we expand our portfolio of investments in communications infrastructure.”
Macquarie Expands its Data Center Investments
Macquarie Infrastructure Partners is a division of the Macquarie Group, an Australia-based firm that invests in major infrastructure projects. MIP is also a major investor in Aligned Energy, providing the financial resources to help the company expand its data center footprint and executive team, and innovate in data center construction and sustainability.
As with Aligned Energy, the Netrality executive team will stay on, with Macquarie’s resources enabling it to pursue growth opportunities.
“We look forward to collaborating with our new partners to continue to grow our platform,” said Gerald Marshall, CEO of Netrality Data Centers. “Partnering with (Macquarie’s) highly experienced investment team affords Netrality the opportunity to leverage their sector and institutional relationships and provide access to significant growth capital to acquire new properties and businesses that are complementary to our current portfolio.”
The new owners have considerable resources to support its investments in the data center sector. MIP is part of Macquarie Infrastructure and Real Assets (MIRA) which manages $129 billion in assets, including 155 portfolio businesses, about 600 properties and 4.7 million hectares of farmland.
M&A Action for Carrier Hotels
Netrality was launched in 2015, with a vision for acquiring carrier hotels and upgrading their interconnection infrastructure to boost the flow of data between carriers, network operators and content specialists.
Netrality’s offerings include colocation, powered shell, and wholesale data center solutions. Its portfolio includes six data centers in five markets: 210 North Tucker and 900 Walnut in St. Louis, 1102 Grand in Kansas City, 1301 Fannin in Houston, 401 North Broad in Philadelphia and 717 South Wells in Chicago.
All the buildings are positioned to benefit from growing demand for connectivity in major cities, driven by the digital transformation of enterprise IT, as well as the movement to create “smart cities” harnessing data and automation to improve residents’ lives.
As we noted yesterday, the Netrality deal builds on an active period of M&A and investment in carrier hotel properties. Here’s a recap of recent developments:
- In April, American Tower bought Colo Atl, a colocation and meet-me room business in downtown Atlanta, saying it saw the investment as an opportunity to evaluate connected colocation as a future growth opportunity.
- Equinix acquired the Dallas Infomart for $800 million last year, and is investing an additional $138 million to add a second building at the property. Equinix is also investing $60 million in an expansion of the NAP of the Americas in Miami, the primary carrier hotel in south Florida.
- DataGryd has just completed new space within 60 Hudson Street, the most prominent carrier hotel in Manhattan.
- A 2017 renovation at One Wilshire, the leading carrier hotel in Los Angeles, brought infrastructure upgrades that will add up to 28 megawatts of power capacity for the 30-story building.
The announcement of the Netrality deal continues a busy week for MIP, which said Tuesday that it has acquired Bluebird Networks, a telecom and fiber provider serving the Midwest United States.