Stonepeak Forms Joint Venture with American Tower to Construct a New Data Center in Denver, Colorado

Rhea-AI Summary

Stonepeak and American Tower's subsidiary CoreSite have formed a joint venture called CoreSite DevCo JV to develop an 18 megawatt data center in Denver, Colorado. Stonepeak will hold 85% equity, while CoreSite retains 15%. The project, named DE3, will be constructed in three 6 MW phases with a total estimated cost of over $250 million. Located less than 3.5 miles from CoreSite's existing DE1 and DE2 facilities, DE3 will be CoreSite's third data center in Denver.

The joint venture aims to capitalize on Denver's growing market and CoreSite's established presence as the primary carrier hotel in this key interconnection hub. DE3 will benefit from CoreSite's leading interconnection platform through dedicated dark fiber to existing facilities, providing customers with immediate access to an established ecosystem.

Positive

• Formation of a strategic joint venture to expand data center capacity in a growing market
• Estimated development cost of over $250 million, indicating significant investment
• Leveraging CoreSite's established presence and interconnection platform in Denver
• Modular construction approach allowing for phased development and scalability

Negative

• None.

Insights

Financial Analyst

The joint venture between Stonepeak and American Tower's CoreSite to develop an 18 MW data center in Denver represents a significant $250 million investment in the growing digital infrastructure sector. This move is strategically important for several reasons:

• It expands CoreSite's presence in the Denver market, strengthening its position as the primary interconnection hub in the area.
• The modular construction approach (three 6 MW phases) allows for flexible capacity expansion in response to market demand.
• Stonepeak's 85% equity stake in the joint venture demonstrates strong confidence in the project's potential returns.
• The proximity to existing CoreSite facilities (DE1 and DE2) creates operational synergies and enhances the overall network effect of CoreSite's Denver platform.

From an investor's perspective, this venture aligns with the growing trend of data center investments driven by increasing digital transformation and cloud adoption. The partnership structure also allows American Tower to leverage external capital for growth while maintaining operational control, potentially enhancing returns on invested capital. However, investors should monitor the project's execution and leasing progress, as the data center market can be competitive and subject to technological shifts.

Tech Expert

The new DE3 data center project in Denver showcases several technical advantages that could position it favorably in the market:

• The dedicated dark fiber connection to CoreSite's existing facilities is a important differentiator, offering customers immediate access to an established ecosystem.
• Its downtown location, less than 3.5 miles from DE1 and DE2, minimizes latency for interconnection-sensitive applications.
• The 18 MW capacity, while not massive, is substantial for a downtown location and suitable for a wide range of enterprise and cloud service provider needs.
• The modular construction approach allows for agile capacity management, potentially optimizing capital efficiency.

From a technical standpoint, this data center is well-positioned to serve both traditional colocation customers and emerging edge computing use cases. The integration with CoreSite's existing interconnection platform could be particularly attractive for customers requiring robust connectivity options. However, the success of this facility will also depend on its power efficiency, cooling solutions and ability to accommodate high-density computing environments, details of which are not provided in the announcement.

NEW YORK & BOSTON--(BUSINESS WIRE)-- Stonepeak, a leading alternative investment firm specializing in infrastructure and real assets, today announced that it has executed definitive documentation with American Tower (NYSE:AMT) subsidiary CoreSite to form a new joint venture (“CoreSite DevCo JV”) to develop, construct, and operate an 18 megawatt (“MW”) data center in Denver, Colorado (“DE3”), with CoreSite operating DE3. Stonepeak is expected to hold 85% of the equity of the CoreSite DevCo JV, with CoreSite holding the remaining 15% ownership interest. The investment is being made primarily through the Stonepeak Opportunities Fund, which targets both control and structured capital solutions across North America and Europe.

American Tower operates a leading North American interconnection-focused data center platform through its investment in CoreSite, in which Stonepeak holds a minority interest having invested in the platform in 2022. CoreSite operates 28 facilities across 11 U.S. markets and has built an established presence in the growing Denver market over the past decade, operating the primary carrier hotel in this key interconnection hub. DE3 is a new, 18 MW purpose-built data center to be constructed on a modular basis over three 6 MW phases, for a total estimated development cost of over $250 million. The campus will be situated on owned land in downtown Denver, located less than 3.5 miles from CoreSite’s existing DE1 and DE2 facilities, and will be the third data center asset in CoreSite’s Denver platform once constructed.

Andrew Thomas, Senior Managing Director at Stonepeak, said, “We are excited to continue our long-term partnership with the American Tower and CoreSite teams to help accelerate investment behind key digitalization tailwinds. We believe the CoreSite DevCo JV will immediately benefit from CoreSite’s leading interconnection platform in the fast-growing Denver market through dedicated dark fiber to CoreSite’s existing facilities, which provides DE3 customers with differentiated access to an established ecosystem on Day 1.”

Steven Vondran, American Tower’s President and Chief Executive Officer, added, “We are pleased to continue our partnership with Stonepeak in our U.S. data center platform, with the formation of a new joint venture to construct a new data center in the growing Denver market. The CoreSite DevCo JV enables us to strategically execute on key growth opportunities by expanding our data center campus model in the region and create value by capitalizing on demand tailwinds as the primary interconnection hub in Denver.”

Sidley Austin LLP is serving as legal advisor to Stonepeak. Cleary Gottlieb Steen & Hamilton LLP is serving as legal advisor to American Tower, who is also being advised by Sullivan & Worcester LLP with respect to certain REIT and tax matters.

About Stonepeak

Stonepeak is a leading alternative investment firm specializing in infrastructure and real assets with approximately $71.2 billion of assets under management. Through its investment in defensive, hard-asset businesses globally, Stonepeak aims to create value for its investors and portfolio companies, with a focus on downside protection and strong risk-adjusted returns. Stonepeak, as sponsor of private equity and credit investment vehicles, provides capital, operational support, and committed partnership to grow investments in its target sectors, which include communications, energy and energy transition, transport and logistics, and real estate. Stonepeak is headquartered in New York with offices in Hong Kong, Houston, London, Singapore, and Sydney. For more information, please visit www.stonepeak.com.

About American Tower

American Tower, one of the largest global REITs, is a leading independent owner, operator and developer of multitenant communications real estate with a portfolio of over 224,000 communications sites and a highly interconnected footprint of U.S. data center facilities. For more information about American Tower, please visit the “Earnings Materials” and “Investor Presentations” sections of our investor relations hub at www.americantower.com.

About CoreSite

CoreSite, an American Tower company (NYSE: AMT), provides hybrid IT solutions that empower enterprises, cloud, network, and IT service providers to monetize and future-proof their digital business. Its highly interconnected data center campuses offer a native digital supply chain featuring direct cloud onramps to enable its customers to build customized hybrid IT infrastructure and accelerate digital transformation. For more than 20 years, CoreSite’s team of technical experts has partnered with customers to optimize operations, elevate customer experience, dynamically scale, and leverage data to gain competitive edge. For more information, please visit www.coresite.com.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240731217920/en/

Stonepeak

Kate Beers / Maya Brounstein

corporatecomms@stonepeak.com

+1 (646) 540-5225



American Tower

Adam Smith

Senior Vice President, Investor Relations and FP&A

investor.relations@americantower.com

+1 (617) 375-7500



CoreSite

Megan Ruszkowski

Vice President of Marketing and Sales Development

Megan.Ruszkowski@CoreSite.com

+1 (720) 446-2014

Source: Stonepeak

FAQ

What is the capacity of the new data center (DE3) being developed by Stonepeak and American Tower (AMT) in Denver?

The new data center (DE3) being developed in Denver will have a capacity of 18 megawatts (MW), constructed in three 6 MW phases.

How much is the estimated development cost for the DE3 data center project by American Tower (AMT) and Stonepeak?

The total estimated development cost for the DE3 data center project is over $250 million.

What is the ownership structure of the CoreSite DevCo JV between Stonepeak and American Tower (AMT)?

Stonepeak is expected to hold 85% of the equity in the CoreSite DevCo JV, while CoreSite (American Tower's subsidiary) will hold the remaining 15% ownership interest.

How far is the new DE3 data center from CoreSite's existing facilities in Denver?

The new DE3 data center will be located less than 3.5 miles from CoreSite's existing DE1 and DE2 facilities in Denver.