CyrusOne buys two data centers from Sentinel for $34 mn

CyrusOne Austin III data centerData center company CyrusOne announced its deal to purchase two data centers located in Raleigh-Durham, North Carolina and Somerset, New Jersey from Sentinel Data Centers for approximately $34 million.

“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 chief executive officer of CyrusOne.

Josh Rabina and Todd Aaron is Sentinel’s co-founders and co-CEOs.

CyrusOne intends to finance the acquisition with proceeds from its forward equity sale completed last August 2016 and its recently expanded credit facility.

When completed the transaction will add two data centers serving the Southeast and Northeast, complementing CyrusOne’s existing data center platform. In 2016, these data centers generated revenue of nearly $50 million.

As of December 31, 2016, the two properties consisted of more than 160,000 colocation square feet and approximately 21 megawatts of power capacity, with nearly 85 percent of the power capacity leased. The Facilities will be owned by CyrusOne.

This deal enhances CyrusOne’s geographic diversification, establishing a presence in the Southeast. The Raleigh-Durham market will represent the lowest power cost in CyrusOne’s portfolio and one of the lowest in the United States.

Somerset, New Jersey data center expands the company’s Northeast footprint, providing additional options for the combined customer base to deploy disaster recovery facilities across New Jersey using the Company’s National IX product to link them together.

The weighted average remaining lease term of the Sentinel portfolio is more than 8 years, with only 3 percent of rent due for renewal through 2019. The Facilities consist of nearly 30 customers, more than two-thirds of which will be new to CyrusOne, including five new Fortune 1000 companies. Approximately 70 percent of the portfolio rent is generated from investment grade customers.

Over 80 percent of rent from the data centers is generated from customers in the Healthcare and Financial Services verticals. The transaction is expected to more than double the contribution from this industry group to the combined CyrusOne portfolio.

There are approximately 34,000 colocation square feet and 8 MW of power capacity that are either currently available for lease or can be developed in the near term at a total cost of less than $15 million.

CyrusOne also has the ability to add another 230,000 colocation square feet and 37 MW of power capacity at a cost expected to be in line with the Company’s current build cost per MW, more than doubling the footprint of the two data centers.

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