NEW YORK CITY AND MIAMI — Brookfield Infrastructure Partners LP (NYSE: BIP) and its institutional partners have entered into an asset purchase agreement (APA) with Miami-based data center owner-operator Cyxtera. Brookfield will acquire “substantially all” of Cyxtera’s assets for $775 million.
As part of the agreement, the New York City-based investment firm will purchase the real estate supporting seven Cyxtera data centers in the United States. The locations of the affected properties were not disclosed.
According to the company’s website, Cyxtera operates facilities in Albuquerque, Atlanta, Boston, Chicago, Columbus, Dallas/Fort Worth, Denver, Los Angeles, Minneapolis, New York/New Jersey, Northern Virginia, Phoenix, Seattle, Silicon Valley, Tampa and Canada.
Brookfield will purchase the real estate that supports the data centers from several landlords, including Digital Realty Trust Inc. (NYSE: DLR) and Digital Core REIT.
The court-supervised process stems from Cyxtera’s Chapter 11 bankruptcy proceedings. The company cited financial challenges and lack of funding when it filed for bankruptcy this past summer, about two years after it went public. Cyxtera’s stock price peaked at $14.60 per share in May 2022 before dipping below $1.80 by December 2022.
“We are pleased to reach this agreement with Brookfield, which represents a favorable path forward for our customers, partners and employees,” says Nelson Fonseca, CEO of Cyxtera. “Throughout our restructuring process, our business has continued to perform well. With Brookfield’s deep global infrastructure expertise, experienced team and demonstrated track record, we will move ahead with a partner that recognizes the strength of our business and will provide the guidance and resources to drive our next phase of growth.”
The full terms of the APA have been filed with the U.S. Bankruptcy Court for the District of New Jersey. The hearing to approve the Cyxtera’s Chapter 11 plan and transaction with Brookfield is scheduled for Nov. 16.
In addition to court approval, the APA is subject to regulatory approval and customary closing conditions. The transaction with Brookfield is expected to close in the first quarter of 2024.
Wells Fargo and TD Securities are serving as joint financial advisors to Brookfield on the real estate transactions and are providing debt financing for the broader acquisition.
Separately, Cyxtera has entered into an agreement with Digital Realty Trust to amend the terms of its current leases at three U.S. sites and three international sites to allow Cyxtera to exit those facilities in 2024.
Additionally, Cyxtera has signed an agreement to sell its business in its Montreal and Vancouver data centers to Cologix.
Brookfield Infrastructure Partners is an entity of Brookfield Asset Management and has four investment categories: utilities, transportation, midstream (energy) and data. The company owns 70 data centers as of June 30.
Brookfield Infrastructure’s stock price closed on Wednesday, Nov. 1 at $25.09 per share, down from $36.04 a year ago, a more than 30 percent decrease.
— John Nelson